2. Material accounting policies

2.1 Statement of compliance and basis of preparation

The standalone financial statements of the Company have
been prepared and presented in accordance with the Generally
Accepted Accounting Principles (GAAP). GAAP comprises of
Indian Accounting Standards (Ind AS) as specified in Sec 133
of the Companies Act, 2013 ('the Act') read together with Rule
4 of the Companies (Indian Accounting Standards) Rules,
2015 and the relevant amendment rules issued thereafter,
pronouncements of regulatory bodies applicable to the
Company and other provisions of the Act.

Accounting policies have been consistently applied except
where a newly issued accounting standard is initially
adopted or a revision to existing accounting standard
requires a change in the accounting policy hitherto in use.

These Standalone Financial Statements are presented
in Indian rupees, which is the functional currency of the
Company. All financial information presented in Indian
rupees has been rounded to the nearest million, except
otherwise indicated.

The standalone financial statements has been prepared
as a going concern on the basis of relevant Ind AS that
are effective at the reporting date, March 31, 2025.

Transactions and balances with values below the
rounding off norm adopted by the Company have been
reflected as “0” in the relevant notes in these standalone
financial statements.

The standalone financial statements of the Company
for the year ended March 31, 2025 were approved and
authorized for issue in accordance with the resolution of
the Board of Directors on May 16, 2025.

2.2 Basis of measurement

These standalone financial statements have been prepared
under the historical cost basis, except for defined benefit
obligation which are measured at fair values at the end of
each reporting period, as explained in accounting policies
below. Historical cost is generally based on the fair value of
the consideration given in exchange for goods and services.

Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date, regardless of

whether that price is directly observable or estimated using
another valuation technique. In estimating the fair value of
an asset or a liability, the Company takes into account the
characteristics of the asset or liability if market participants
would take those characteristics into account when pricing
the asset or liability at the measurement date.

In addition, for financial reporting purposes, fair value
measurements are categorized into Level 1, 2, or 3
based on the degree to which the inputs to the fair value
measurements are observable and the significance of the
inputs to the fair value measurement in its entirety, which
are described as follows:

(i) Level 1 inputs are quoted prices (unadjusted) in
active markets for identical assets or liabilities that
the entity can access at the measurement date;

(ii) Level 2 inputs are other than quoted prices included
within Level 1, that are observable for the asset or
liability, either directly or indirectly; and

(iii) Level 3 inputs are unobservable inputs for the asset
or liability.

2.3 Use of judgements and estimates

In the application of the Company's accounting policies,
the management of the Company is required to make
judgements, estimates and assumptions about the
reported amounts of assets, liabilities, income and
expenses. The estimates and associated assumptions
are based on historical experience and other factors that
are considered to be relevant. Actual results may differ
from these estimates. The estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognized in the period in
which the estimate is revised if the revision affects only
that period, or in the period of the revision and future
periods if revision affects both current and future periods.

Information about judgements made in applying
accounting policies that have the most significant effects
on the amounts recognized in the standalone financial
statement is included in the following notes:

(i) Judgements

♦ Lease term: whether the Company is reasonably
certain to exercise extension options. (Refer
Note 2.16).

I nformation about assumptions and estimation
uncertainties at the reporting date that have a
significant risk of resulting in a material adjustment to
the carrying amounts of assets and liabilities within the
next financial year is included in the following notes:

(ii) Estimates

♦ Useful lives of Property, plant and equipment and
intangible assets (Refer Note 2.9 and Note 2.10)

♦ Measurement of defined benefit obligation; key
actuarial assumptions (Refer Note 2.15)

♦ Provision for warranty (Refer Note 2.21)

♦ Measurement of Lease liabilities and Right of
Use Asset (Refer Note 2.16)

♦ Recognition and measurement of provisions
and contingencies: key assumptions about
the likelihood and magnitude of an outflow of
resources. (Refer Note 2.21)

2.4 Inventories

Inventories are valued at the lower of cost and net
realizable value.

The cost of raw materials, components, consumable stores
and spare parts and stock in trade are determined on a
weighted average basis. Cost includes freight, taxes and
duties and other charges incurred for bringing the goods
to the present location and condition and is net of credit
under the Goods and Services Tax ('GST') where applicable.

The valuation of manufactured finished goods and work-
in-progress includes the combined cost of material, labor
and manufacturing overheads incurred in bringing the
goods to the present location and condition.

Due allowance is estimated and made by the management
for slow moving / non-moving items of inventory, wherever
necessary, based on the past experience and such allowances
are adjusted against the carrying inventory value.

Net realisable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and
the estimated costs necessary to make the sale.

The net realisable value of work-in-progress is determined
with reference to the selling prices of related finished
goods. Raw materials, components and other supplies
held for use in the production of finished products are not
written down below cost except in cases when a decline
in the price of materials indicates that the cost of the
finished products shall exceed the net realisable value.

The comparison of cost and net realisable value is made
on an item-by-item basis.

Sale of raw materials

Sale of raw materials are considered as a recovery of cost of
materials and adjusted against cost of materials consumed.

2.5 Cash and cash equivalents

The Company's cash and cash equivalents consist of cash
on hand and in banks and demand deposits with banks,
which can be withdrawn at any point of time, without
prior notice or penalty on the principal and without any
significant risk of change in value.

For the purposes of the statement of cash flows, cash
and cash equivalents include cash on hand, in banks and

deposits with banks, net of outstanding bank overdrafts
that are repayable on demand and are considered part
of the Company's cash management system.

2.6 Cash flow statement

Cash flows are reported using the indirect method,
whereby profit / (loss) after tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or
accruals of past or future cash receipts or payments.
The cash flows from operating, investing and financing
activities of the Company are segregated based on the
available information.

2.7 Revenue recognition

Revenue towards satisfaction of a performance obligation is
measured at the amount of transaction price (net of variable
consideration) allocated to that performance obligation. The
transaction price of goods sold and services rendered is net
of variable consideration on account of various discounts
and schemes offered by the Company and any taxes or
duties collected on behalf of the government. Revenue is
recognized when recovery of consideration is probable.

Sale of products

Revenues from domestic sale is recognized on
unconditional appropriation of goods from factory /
stockyard on transfer of goods to common carrier and
there are no unfulfilled obligations to the customer as
per the terms of sale / understanding with the customers.
Further revenues from export sale is recognized when
goods are shipped on board or delivery of goods at the
destination port as per the terms of sale / understanding
with the customers.

Sale of services

Income from sale of maintenance services and extended
warranties are recognized as income over the relevant
period of service or extended warranty. When the
Company sells products that are bundled with additional
service or extended period of warranty, such services
are treated as a separate performance obligation only
if the service or warranty is optional to the customer or
includes an additional service component. In such cases,
the transaction price allocated towards such additional
service or extended period of warranty is recognized as a
contract liability until the service obligation has been met.

Income from service activities are recognized at the
time of satisfaction of performance obligation towards
rendering of such services in accordance with the terms
of arrangement.

The consideration received in respect of transport
arrangements made for delivery of vehicles to the dealers
are shown as revenue and the corresponding cost is shown
separately as part of expenses.

The contract liabilities primarily relate to the advance
consideration received from customers towards services,
for which revenue is recognized over the relevant period
of service.

2.8 Recognition of dividend income and interest
income

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

Interest income is recognized using the effective interest
rate method.

♦ the gross carrying amount of the financial asset; or

♦ the amortized cost of the financial liability.

In calculating interest income and expense, the effective
interest rate is applied to the gross carrying amount of
the asset (when the asset is not credit-impaired) or to the
amortized cost of the liability. However, for financial assets
that have become credit-impaired subsequent to initial
recognition, interest income is calculated by applying the
effective interest rate to the amortized cost of the financial
asset. If the asset is no longer credit-impaired, then the
calculation of interest income reverts to the gross basis.

2.9 Property, plant and equipment ('PPE')

The cost of an item of property, plant and equipment shall be
recognized as an asset if, and only if 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.

Property, plant and equipment held for use in the
production or supply of goods or services, or for
administrative purposes, are stated in the balance sheet
at cost less accumulated depreciation and accumulated
impairment losses, if any. Freehold land is measured at
cost and is not depreciated.

Cost includes purchase price, non-recoverable taxes
and duties, labor cost and direct overheads for self-
constructed assets and other direct costs incurred up to
the date the asset is ready for its intended use. Interest
cost incurred is capitalized up to the date the asset is
ready for its intended use for qualifying assets, based on
borrowings incurred specifically for financing the asset
or the weighted average rate of all other borrowings, if
no specific borrowings have been incurred for the asset.

Any part or components of PPE which are separately
identifiable and expected to have a useful life which is
different from that of the main assets are capitalized
separately, based on the technical assessment of
the management.

Subsequent expenditure is capitalized only if it is probable
that the future economic benefits associated with the
expenditure will flow to the Company and the cost of the
item can be measured reliably.

Internally manufactured vehicles are capitalized at cost
including an appropriate share of relevant overheads.

Capital work-in-progress:

Properties in the course of construction for production,
supply or administrative purposes are carried at cost, less
any recognized impairment loss.

Depreciation:

Depreciation on property, plant and equipment is provided
using the straight-line method, pro-rata from the month of
capitalization over the useful lives of the assets, assessed
as below:

Individual PPE costing less than ? 5,000 each are
depreciated in the year of purchase considering the type
and usage pattern of these assets.

The useful lives mentioned above are different from the
useful lives specified for these assets as per Schedule II of
the Companies Act, 2013, where applicable. The useful lives
followed in respect of these assets are based on management's
assessment, based on technical advice, taking into account
factors such as the nature of the assets, the estimated
usage pattern of the assets, the operating conditions, past
history of replacement, anticipated technological changes,
manufacturers' warranties and maintenance support etc.
Depreciation methods, useful lives and residual values are
reviewed at each reporting date and adjusted if appropriate.

Depreciation is accelerated on PPE, based on their
condition, usability, etc. as per the technical estimates
of the management, wherever necessary.

Derecognition of property, plant and equipment:

An item of property, plant and equipment is derecognized
upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset. Any
gain or loss on disposal or retirement of an item of property,
plant and equipment is determined as the difference

between the sale proceeds and the carrying amount of the
asset and is recognized in the statement of profit and loss.

2.10 Intangible assets

An intangible asset is recognized only if it is probable
that future economic benefits attributable to the asset
will flow to the Company and the cost of the asset can
be measured reliably Intangible assets with finite useful
lives that are acquired separately are carried at cost less
accumulated amortization and impairment losses, if any.
The cost of an intangible asset comprises its purchase
price, including any import duties and other taxes (other
than those subsequently recoverable from the taxing
authorities) and any directly attributable expenditure on
making the asset ready for its intended use.

The intangible assets are amortized over their respective
individual estimated useful lives on a straight-line basis,
commencing from the date, the asset is available to the
Company for its use. Amortization methods, useful lives
and residual values are reviewed at each reporting date
and adjusted if appropriate.

Subsequent expenditure is capitalized only when it
increases the future economic benefits embodied in the
specific asset to which it relates. All other expenditure is
recognized in profit or loss as incurred.

The useful lives considered for the intangible assets are
as under:

An intangible asset is derecognized on disposal or when
no future economic benefits are expected to arise from
continued use of the asset. Gains or losses arising from
derecognition of an intangible asset, measured as the
difference between the net proceeds from disposal and
the carrying amount of the asset, are recognized in the
statement of profit and loss when the asset is derecognized.

2.11Foreign currencies

Transactions in foreign currencies are initially
recognized in the standalone financial statement
using exchange rates prevailing on the date of
transaction or an average rate if the average rate
approximates the actual rate at the date of the transaction.
Monetary assets and liabilities denominated in foreign
currencies are translated to the relevant functional currency
at the exchange rates prevailing at the reporting date. Non¬
monetary assets and liabilities denominated in foreign
currencies that are measured at fair value are translated to
the functional currency at the exchange rate prevailing on
the date that the fair value was determined. Non-monetary

assets and liabilities denominated in foreign currency and
measured at historical cost are translated at the exchange
rate prevalent at the date of transaction.

Exchange differences on monetary items are recognized
in the statement of profit and loss in the period in which
they arise, except for exchange differences on foreign
currency borrowings relating to assets under construction
for future productive use, which are included in the cost
of those assets when they are regarded as an adjustment
to interest cost on those foreign currency borrowings.

2.12Government grants and export benefits

Government grants are not recognized until there is
reasonable assurance that the Company will comply with
the conditions attaching to them and that the grants will
be received.

Government grants are recognized in the statement of profit
and loss on a systematic basis over the periods in which
the Company recognizes as expenses the related costs for
which the grants are intended to compensate. Specifically,
government grants whose primary condition is that the
Company should purchase, construct or otherwise acquire
non-current assets are recognized as deferred income in
the balance sheet and transferred to the statement of profit
and loss on a systematic and rational basis.

Government grants that are receivable as compensation
for expenses or losses already incurred or for the purpose
of giving immediate financial support to the Company
with no future related costs are recognized in the
statement of profit and loss in the period in which they
became receivable.

The benefit of a government loan at a below-market rate
interest is treated as a government grant, measured as
the difference between the proceeds received and the
fair value of the loan based on prevailing market interest
rates has been disclosed as "Other non-operating income"
under "Other income".

Export benefits in the nature of duty drawback are
recognized in the statement of profit and loss in the year
of exports based on eligibility / expected eligibility duly
considering the entitlements as per the policy, industry
specific developments, interpretations arising out of
judicial / regulatory proceedings where applicable,
management assessment etc. and when there is no
uncertainty in receiving the same.

Export benefits in the nature of RoDTEP & Merchandise
Exports from India Scheme (MEIS) under Foreign Trade
Policy are recognized in the statement of profit and loss
when there is no uncertainty in receiving / utilizing the
same, taking into consideration the prevailing regulations.

Adjustments, if any, to the amounts recognized in
accordance with the accounting policy, based on
final determination by the authorities, are dealt

with appropriately in the year of final determination
and acceptance.

2.13 Financial instruments - Classification, initial
recognition and measurement

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 other than
equity instruments are classified into categories: financial
assets at fair value through profit and loss and at amortized
cost. Financial assets that are equity instruments are
classified as fair value through profit and loss or fair value
through other comprehensive income. Financial liabilities
are classified into financial liabilities at fair value through
profit and loss and other financial liabilities.

Financial instruments are recognized on the balance sheet
when the Company becomes a party to the contractual
provisions of the instrument.

Initially, a financial instrument is recognized at its fair value.
Transaction costs directly attributable to the acquisition or
issue of financial instruments are recognized in determining
the carrying amount, if it is not classified as at fair value
through profit and loss. However, trade receivables that
do not contain a significant financing component are
measured at transaction price. Subsequently, financial
instruments are measured according to the category in
which they are classified.

Determination of fair value:

The fair value of a financial instrument on initial recognition is
normally the transaction price (fair value of the consideration
given or received). Subsequent to initial recognition, the
Company determines the fair value of financial instruments
that are quoted in active markets using the quoted bid
prices (financial assets held) or quoted ask prices (financial
liabilities held) and using valuation techniques for other
instruments. Valuation techniques include discounted cash
flow method and other valuation models.

2.14 Financial instruments - Financial assets and
Liabilities - Classification

Financial assets at amortized cost:

Financial assets having contractual terms that give rise
on specified dates to cash flows that are solely payments
of principal and interest on the principal outstanding and
that are held within a business model whose objective is to
hold such assets in order to collect such contractual cash
flows are classified in this category. Subsequently, these
are measured at amortized cost using the effective interest
method less any impairment losses.The amortized cost is
reduced by impairment losses. Interest income, foreign
exchange gains and losses and impairment are recognized
in profit or loss. Any gain or loss on derecognition is
recognized in profit or loss.

Financial assets at fair value through profit and loss:

Financial assets are measured at fair value through profit and
loss unless it is measured at amortized cost or at fair value
through other comprehensive income on initial recognition.
The transaction costs directly attributable to the acquisition
of financial assets and liabilities at fair value through profit
and loss are immediately recognized in profit and loss.

Impairment of financial assets:

The Company recognizes loss allowances for expected
credit losses ('ECL') on financial assets measured at
amortized cost, if any.

The Company measures loss allowances at an amount
equal to lifetime ECLs. Loss allowances for trade and
finance lease receivables, loans and contract assets are
always measured at an amount equal to lifetime ECLs.
Lifetime expected credit losses are the expected credit
losses that result from all possible default events over the
expected life of a financial instrument.

In all cases, the maximum period considered when
estimating expected credit losses is the maximum
contractual period over which the Company is exposed
to credit risk.

Measurement of ECLs

Credit losses are measured as the present value of all cash
shortfalls (i.e. the difference between the cash flows due to
the entity in accordance with the contract and the cash flows
that the Company expects to receive). Loss allowances for
financial assets measured at amortized cost are deducted
from the gross carrying amount of the assets, if any.

Write-off

The gross carrying amount of a financial asset is written
off (either partially or in full) to the extent that there is no
realistic prospect of recovery. This is generally the case
when the Company determines that the debtor does not
have assets or sources of income that could generate
sufficient cash flows to repay the amounts subject to the
write-off. However, financial assets that are written off
could still be subject to enforcement activities in order
to comply with the Company's procedures for recovery
of amounts due.

Financial liabilities:

Financial liabilities at FVTPL are measured at fair value
and net gains and losses, including any interest expense,
are recognized in profit or 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 profit or loss.
Financial liabilities are classified as at FVTPL when the
financial liability is either held for trading or it is designated
as at FVTPL.

Equity Instruments:

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

Derecognition of financial assets and financial liabilities:

The Company derecognizes a financial asset only when the
contractual rights to the cash flows from the asset expires or
it transfers the financial asset and substantially all the risks
and rewards of ownership of the asset to another entity. If
the Company neither transfers nor retains substantially all
the risks and rewards of ownership and continues to control
the transferred asset, the Company recognizes its retained
interest in the asset and an associated liability for amounts it
may have to pay. If the Company retains substantially all the risks
and rewards of ownership of a transferred financial asset, the
Company continues to recognize the financial asset and also
recognizes a collateralized borrowing for the proceeds received.

Financial liabilities are derecognized when these are
extinguished, that is when the obligation is discharged,
cancelled or has expired. Any gain or loss on derecognition
of financial asset or financial liabilities (whether classified
at amorttized costs or at fair value through P&L) is
recognized in profit or loss.

The Company recognizes a loss allowance for expected
credit losses on a financial asset that is at amortized cost.

Offsetting:

Financial assets and financial liabilities are offset and
the net amount is presented in the balance sheet when,
and only when, the Company currently has a legally
enforceable right to set off amounts and it indents either
to settle them on a net basis or to realise the asset and
settle the liability simultaneously.

2.15 Employee benefits

Employee benefits include provident fund, superannuation,
gratuity, National Pension Scheme ('NPS') and
compensated absences.

Defined contribution plans:

Provident fund:

Contributions towards Employees' Provident Fund
are made to the Employees' Provident Fund Scheme
maintained by the Central Government and the Company's
contribution to the fund are recognized as an expense in the
year in which the services are rendered by the employees.

Superannuation fund:

the Company contributes a specified percentage of eligible
employees’ salary to a superannuation fund administered
by trustees and managed by the insurer. The Company has
no liability for future superannuation benefits other than its

annual contribution and recognizes such contributions as
an expense in the year in which the services are rendered
by the employees.

National pension scheme:

The Company contributes a specified percentage of the
eligible employees' salary to the National Pension Scheme
of the Central Government. The Company has no liability
for future pension benefits and the Company's contribution
to the scheme are recognized as an expense in the year
in which the services are rendered by the employees.
Obligations for contributions to defined contribution plan
are expensed as an employee benefits expense in the
statement of profit and loss in period in which the related
service is provided by the employee.

Defined benefit plans:

Gratuity:

The Company contributes to a gratuity fund administered
by trustees and managed by the Insurer. The Company
accounts its liability for future gratuity benefits based
on actuarial valuation, as at the balance sheet date,
determined every year by an independent actuarial using
the projected unit credit method. Obligation under the
defined benefit plan is measured at the present value
of the estimated future cash flows using a discount rate
that is determined by reference to the prevailing market
yields at the balance sheet date on government bonds.

For defined benefit retirement benefit plans, the cost
of providing benefits is determined using the projected
unit credit method, with actuarial valuations being
carried out at the end of each annual reporting period.
Remeasurement, comprising actuarial gains and losses,
the effect of the changes to the asset ceiling (if applicable)
and the return on plan assets (excluding net interest), is
reflected immediately in the balance sheet with a charge
or credit recognized in other comprehensive income in the
period in which they occur. Remeasurement recognized in
other comprehensive income is reflected immediately in
retained earnings and is not reclassified to profit or loss.
Past service cost is recognized in the Statement of profit
or loss in the period of a plan amendment. Net interest is
calculated by applying the discount rate at the beginning
of the period to the net defined benefit liability or asset.
Defined benefit costs are categorized as follows:

♦ Service cost (including current service cost,
past service cost, as well as gains and losses on
curtailments and settlements);

♦ Net interest expense or income; and

♦ Remeasurement

The Company presents the first two components of
defined benefit costs in profit or loss in the line item
'Employee benefits expense'. Curtailment gains and losses
are accounted for as past service costs.

The retirement benefit obligation recognized in the
balance sheet represents the actual deficit or surplus in
the Company's defined benefit plans. Any surplus resulting
from this calculation is limited to the present value of any
economic benefits available in the form of refunds from
the plans or reductions in future contributions to the plans.

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

Compensated absences:

Accumulated absences expected to be carried forward
beyond twelve months is treated as long-term employee
benefit for measurement purposes. The Company accounts
for its liability towards compensated absences based on
actuarial valuation done as at the balance sheet date by an
independent actuary using the Projected Unit Credit Method.
The liability includes the long term component accounted
on a discounted basis and the short term component which
is accounted for on an undiscounted basis.

The obligations are presented as current liabilities in
the balance sheet if the Company does not have an
unconditional right to defer the settlement for at least
twelve months after the reporting date.

Short-term employee benefits

Short-term employee benefits are measured on an
undiscounted basis and expensed as the related service is
provided. A liability is recognized for the amount expected
to be paid under short-term employee benefits, 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.

2.16 Leases
As a Lessee

The Company’s lease asset classes primarily consist of
leases for land and buildings. The Company assesses
whether a contract is or 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 evaluates if an arrangement qualifies to be
a lease as per the requirements of Ind AS 116 and this
may require significant judgment. the Company also uses
significant judgement in assessing the lease term (including
anticipated renewals) and the applicable discount rate.

At the date of commencement of the lease, the Company
recognizes a right-of-use asset (“ROU”) and a corresponding
lease liability for all lease arrangements in which it is a
lessee, except for leases with a term of twelve months
or less (short-term leases) and leases of low value assets.
For these short-term and leases of low value assets, the
Company recognizes the lease payments as an operating
expense on a straight-line basis over the term of the lease.

The Company determines the lease term as the non¬
cancellable period of a lease, together with both periods
covered by an option to extend or terminate the lease if the
Company is reasonably certain based on relevant facts and
circumstances that the option to extend will be exercised
/ the option to terminate will not be exercised. If there is
a change in facts and circumstances, the expected lease
term is revised accordingly.

The right-of-use assets are initially recognized 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 incentives. They are subsequently measured
at cost less accumulated depreciation and impairment
losses, if any. Right-of-use assets are depreciated from the
commencement date on a straight-line basis over the shorter
of the lease term and useful life of the underlying asset.

The lease liability is initially measured at the present
value of the future lease payments that are not paid
at the commencement date. The lease payments are
discounted using the interest rate implicit in the lease
or, if not readily determinable, using the incremental
borrowing rates. the Company determines its incremental
borrowing rate by obtaining interest rates from various
external financing sources and makes certain adjustments
to reflect the terms of the lease and type of the asset
leased. The lease liability is measured at amortized cost
using the effective interest method. The lease liability
is subsequently remeasured by increasing the carrying
amount to reflect interest on the lease liability, reducing
the carrying amount to reflect the lease payments made.

Lease liability and right-of-use assets have been separately
presented in the Balance Sheet and lease payments have
been classified as financing cash flows.

As a lessor

At inception or on modification of a contract that
contains a lease component, the Company allocates the
consideration in the contract to each lease component
on the basis of their relative stand-alone prices.

When the Company acts as a lessor, it determines at
lease inception whether each lease is a finance lease or
an operating lease.

To classify each lease, the Company makes an overall
assessment of whether the lease transfers substantially
all of the risks and rewards incidental to ownership of

the underlying asset. If this is the case, then the lease
is a finance lease; if not, then it is an operating lease. As
part of this assessment, the Company considers certain
indicators such as whether the lease is for the major part
of the economic life of the asset.

When the Company is an intermediate lessor, it accounts
for its interests in the head lease and the sub-lease
separately. It assesses the lease classification of a sub¬
lease with reference to the right-of-use asset arising from
the head lease, not with reference to the underlying asset.
If a head lease is a short-term lease to which the Company
applies the exemption described above, then it classifies
the sub-lease as an operating lease.

If an arrangement contains lease and non-lease
components, then the Company applies Ind AS 115 to
allocate the consideration in the contract.

The Company applies the derecognition and impairment
requirements in Ind AS 109 to the net investment in the
lease. The Company recognizes lease payments received
under operating leases as income on a straight-line basis
over the lease term as part of ‘other income'.

2.17 Earnings per share

Basic earnings per share is computed by dividing the
profit / (loss) after tax (including the post tax effect of
extraordinary items, if any) by the weighted average
number of equity shares outstanding during the year.

Diluted earnings per share has been computed using the
weighted average number of shares and dilutive potential
shares, except where the result would be anti-dilutive.

2.18 Taxation
Current tax:

The tax currently payable is based on taxable profit for the
year and any adjustment to the tax payable or receivable in
respect of previous years. Taxable profit differs from 'profit
before tax' as reported in the statement of profit and loss
because of items of income or expense that are taxable or
deductible in other years and items that are never taxable
or deductible. The Company's current tax is calculated
using tax rates that have been enacted or substantively
enacted by the end of the reporting period. The amount of
current tax payable or receivable is the best estimate of the
tax amount expected to be paid or received that reflects
uncertainty related to income taxes, if any.

Deferred tax:

Deferred tax is recognized on temporary differences
between the carrying amounts of assets and liabilities in the
standalone financial statement and the corresponding tax
bases used in the computation of taxable profit. Deferred
tax liabilities are generally recognized for all taxable
temporary differences. Deferred tax assets are generally
recognized for all deductible temporary differences to the

extent that it is probable that taxable profits will be available
against which those deductible temporary differences can
be utilized. Deferred tax is also recognized in respect of
carried forward tax losses and tax credits.

Deferred tax is not recognized for:

(i) temporary differences on the initial recognition of
assets and liabilities in a transaction that: is not a
business combination; and at the time of transaction
(a) affects neither the accounting nor taxable profit
or loss and (b) does not give rise to equal taxable and
deductible temporary differences.

(ii) temporary differences related to investment in
subsidiaries to the extent the Company is able to
control the timing of the reversal of the temporary
differences and it is probable that they will not
reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at
the end of each reporting period and reduced to the extent
that it is no longer probable that sufficient taxable profits will
be available to allow all or part of the asset to be recovered.

Deferred tax liabilities and assets are measured at the tax
rates that are expected to apply in the period in which the
liability is settled or the asset realized, based on tax rates
(and tax laws) that have been enacted or substantively
enacted by the end of the reporting period.

The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from the
manner in which the Company expects, at the end of the
reporting period, to recover or settle the carrying amount
of its assets and liabilities.

Offsetting:

Current tax assets and current tax liabilities are offset when
there is a legally enforceable right to set off the recognized
amounts and there is an intention to settle the asset and the
liability on a net basis. Deferred tax assets and deferred tax
liabilities are offset when there is a legally enforceable right
to set off current tax assets against current tax liabilities;
and the deferred tax assets and the deferred tax liabilities
relate to income taxes levied by the same taxation authority.

Current and deferred tax for the year:

Current and deferred tax are recognized in profit or loss,
except when they relate to items that are recognized in other
comprehensive income or directly in equity, in which case,
the current and deferred tax are also recognized in other
comprehensive income or directly in equity respectively.

2.19 Research and development expenditure

Expenditure on research activities are recognized as
expense in the period in which it is incurred.

An internally generated intangible asset arising from
development (or from the development phase of an
internal project) is recognized if, and only if, all the
following have been demonstrated:

♦ the technical feasibility of completing the intangible
assets so that it will be available for use or sale;

♦ the intention to complete the intangible asset and
use or sell it;

♦ the ability to use or sell the intangible asset;

♦ how the intangible asset will generate probable
future economic benefits;

♦ the availability of adequate technical, financial and
other resources to complete the development and to
use or sell the intangible asset; and

♦ the ability to reliably measure the expenditure attributable
to the intangible asset during its development.

The amount initially recognized for internally-generated
intangible assets is the sum of the expenditure incurred
from the date when the intangible asset first meets the
recognition criteria listed above. Where no internally-
generated asset can be recognized, development
expenditure is recognized in the statement of profit and
loss in the period in which it is incurred.

Subsequent to initial recognition, internally-generated
intangible assets are reported at cost less accumulated
amortization and accumulated impairment losses, on the
same basis as intangible assets that are acquired separately.

2.20 Impairment of 'PPE' and intangible assets

At the end of each reporting period, the Company reviews
the carrying amounts of its PPE and intangible assets or
cash generating units to determine whether there is any
indication that those assets have suffered an impairment
loss. If any such indication exists, the recoverable amount
of the asset is estimated in order to determine the extent
of the impairment loss (if any). When it is not possible to
estimate the recoverable amount of an individual asset,
the Company estimates the recoverable amount of the
cash-generating unit to which the asset belongs. When
a reasonable and consistent basis of allocation can be
identified, corporate assets are also allocated to individual
cash-generating units, or otherwise they are allocated
to the smallest company of cash-generating units for
which a reasonable and consistent allocation basis can
be identified.

Intangible assets with indefinite useful lives and intangible
assets not yet available for use are tested for impairment
at least annually, or whenever there is an indication that
the asset may be impaired.

Recoverable amount is the higher of fair value less costs
of disposal and value in use. 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 for which the estimates
of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to
its recoverable amount. An impairment loss is recognized
immediately in the statement of profit and loss, unless the
relevant asset is carried at a revalued amount, in which case
the impairment loss is treated as a revaluation decrease.

When an impairment loss subsequently reverses, the
carrying amount of the asset (or a cash-generating unit)
is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been
determined had no impairment loss been recognized for
the asset (or cash-generating unit) in prior years. A reversal
of an impairment loss is recognized immediately in the
statement of profit and loss, unless the relevant asset is
carried at a revalued amount, in which case the reversal
of the impairment loss is treated as a revaluation increase.