Estimation of fair value

The Company obtains independent valuation for its investment properties at least annually. The best evidence of fair value is current prices in an active market for similar properties. Where such information is not available, the Company considers information from a variety of sources including:

• current prices in an active market for properties of different nature or recent prices of similar properties in less active markets, adjusted to reflect those differences

• discounted cash flow projections based on reliable estimates of future cash flows

• capitalised income projections based upon a property's estimated net market income, and a capitalisation rate derived from an analysis of market evidence

The fair value of investment properties have been determined by an independent valuer who is a registered valuer. The fair value is measured using external expert appraisals and by applying input factors for comparable assets not traded on active markets. All resulting fair value estimates for investment properties are included in level 2.

The goods in transit pertaining to raw materials during the year ended December 31, 2023 were INR 634.20 lakhs (December 31, 2022 : INR 485.22 lakhs).

Amounts recognized in profit or loss

Provision for excess and obsolete inventory amounted to INR 216.41 lakhs (December 31, 2022 : INR 107 lakhs). Increase/(decrease) in provisions were recognized in the respective years in the Statement of Profit and Loss and included in 'Cost of materials consumed'.

15 Right-of-use assets

The note provides information for leases where the Company is a lessee. The Company has taken on lease various land parcels. Rental contracts are typically made for fixed period of 99 years, but have extension options.

Lease Liabilities:

The Company does not possess any material leased assets other than leasehold land rights for which the total lease payment for the period of lease has been made. Therefore, the Company is not required to create any corresponding liability.

*The total lease payment for the period of the lease has already been paid off. Refer note above.

The total cash outflow for leases for the year ended 31 December 2023 is INR Nil (31 December 2022: INR Nil). Extension and Termination option :

Extension and termination options are included in lease agreements. These terms are used to maximise operational flexibility in terms of managing contracts. The majority of extension and termination options held are exercisable only by the Company and not by the respective lessor.

(ii) Terms and rights attached to equity shares

The Company has only one class of equity shares having a par value of INR 10 per share. Each Shareholder is eligible for one vote per share held. In the event of liquidation, the equity Shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding. The dividend, if any proposed by the Board of Directors is subject to approval of the Shareholders in the ensuing annual general meeting, except in case of interim dividend.

A Defined contribution plan

Provident and superannuation fund

The Company has certain defined contribution plans. Contributions are made to provident fund for employees at the rate of 12% of basic salary as per regulations as well as to superannuation fund. The contributions are made to registered provident fund administered by the Government and superannuation trust administered through Life Insurance Corporation of India (LIC). The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognised during the year towards defined contribution plan (provident fund) is INR 130.81 lakhs (December 31, 2022 - INR 124.76 lakhs) and defined contribution plan (superannuation fund) is INR 129.70 lakhs (December 31, 2022 - INR 107.16 lakhs).

B Defined benefit plan

I Compensated absences

Company has liabilities for earned and sick leaves that are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related services. These obligations are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the appropriate market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit or loss.

The Company does not have an unconditional right to defer settlement for any of these obligations, hence the entire amount of provision is presented as current. However, based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months."

II Gratuity

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972 (amended). Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employee's last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity plan is a funded plan and the Company makes contribution to fund managed by Life Insurance Corporation of India.

The above sensitivity analysis is based on a change in an assumption while holding all the other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

(vi) Risk Exposure

Through its defined benefit plan, the Company is exposed to a number of risks, the most significant of which are detailed below:

Asset volatility:

The plan liabilifies are calculated using a discount rate set with reference to bond yields; if plan assets underperform this yield, this will create a deficit. All plan assets are maintained in a trust fund managed by a public sector insurer i.e., LIC of India. LIC has a sovereign guarantee and has been providing consistent and compefifive returns over the years. The Company has opted for a tradifional fund wherein all assets are invested primarily in risk averse markets. The Company has no control over the management of funds but this opfion provides a high level of safety for the total corpus. A single account is maintained for both the investment and claim settlement and hence, 100% liquidity is ensured. Also, interest rate and inflafion risk are taken care of.

Changes in bond yields:

A decrease in bond yields will increase plan liabilifies, although this will be parfially offset by an yields increase in the value of the plans' bond holdings.

Future salary escalation and inflation risk:

Since price inflafion and salary growth are linked economically, they are combined for disclosure purposes. Rising salaries will often result in higher future defined benefit payments resulfing in higher present value of liabilifies. Further, unexpected salary increases provided at the discrefion of the management may lead to uncertainfies in esfimafing this increasing risk.

Asset-Liability mismatch risk:

Risk which arises if there is a mismatch in the durafion of the assets relafive to the liabilifies. By matching durafion with the defined benefit liabilifies, the Company is successfully able to neutralize valuafion swings caused by interest rate movements. Hence, companies are encouraged to adopt asset-liability management.

Life expectancy risk:

Increases in life expectancy of employee will result in an increase in the plan liabilifies. This is parficularly significant where inflafionary increases result in higher sensifivity to changes in life expectancy.

III Cash rewards at retirement

The Company has a defined benefit plan of cash rewards whereby at the time of normal retirement, INR 2,500 is payable to employees for each year of service rendered. The scheme is unfunded.

Movement in balances - Cash rewards at retirement

The above sensitivity analysis are based on a change in an assumption while holding all the other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

The weighted duration of the defined benefit obligation is 7 years (December 31, 2022 : 7 years).

(iv) Risk Exposure

Through its defined benefit plan, the Company is exposed to a number of risks, the most significant of which is detailed below:

Changes in bond yields:

A decrease in bond yields will increase plan liabilities, although this will be partially offset by an yields increase in the value of the plans' bond holdings.

IV Long service awards

Long Service Awards are payable to employees on completion of specified years of service wherein a cash amount as a percentage of monthly basic salary is paid at the time of retirement/resignation/termination (ranging from 75% to 300% of basic monthly salary basis number of years served). There are no changes in acturial assumptions used compared to previous year and are aligned with the other defined benifit plans mentioned above.

(iii) On March 6, 2019, the Company was directed for closure of its operations in Ankleshwar by the Gujarat Pollution Control Board (GPCB) due to a suspected ground water contamination issue. The GPCB through its subsequent orders had granted temporary revocation of the closure order. The Company has represented to the GPCB for a permanent revocation of the closure order and is expecting a favourable response.

Note:

The Company's pending litigations comprise of proceedings pending with Excise and Income tax authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for cases where provisions are required and disclosed as contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial results. In respect of the claims against the Company not acknowledged as debts as above, the management does not expect these claims to succeed. It is not practical to indicate the uncertainity which may affect the future outcome and estimate the financial effects of the above liabilities.

The Supreme Court had issued a Judgement in case of "Vivekananda Vidyamandir And Others Vs The Regional Provident Fund Commissioner (II) West Bengal" and the related circular (Circular No. C-I/1(33)2019/Vivekananda Vidya Mandir/284) dated March 20, 2019 was issued by the Employees' Provident Fund Organisation in relation to non-exclusion of certain allowances from the definition of "basic wages" of the relevant employees for the purposes of determining contribution to provident fund under the Employees' Provident Funds & Miscellaneous Provisions Act, 1952. In the assessment of the management, the aforesaid matter is not likely to have a significant impact.

The Code on Social Security, 2020 ('Code') relating to employee benefits received Presidential assent in September 2020. However, the date on which the Code will come into effect has not yet been notified. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.

b) Capital commitments

Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for is INR 956.98 lakhs (December 31, 2022 : INR 223.29 lakhs).

c) Lease commitments

There were no non-cancellable operating leases as on December 31, 2023 and December 31, 2022.

Notes:

(1) Key Managerial Personnel who are under the employment of the Company are entitled to post employment benefits and other long term employee benefits recognised as per Ind AS 19 - 'Employee Benefits' in the financial statements. As these employee benefits are lump sum amounts provided on the basis of actuarial valuation, the same is not presented above.

(2) Transactions during the year reported above include impact of increase/(decrease) in provision for expenses accounted for as on year end.

(3) In case of transactions with related parties during the year, the amounts are exclusive of applicable taxes.

III Terms and conditions for outstanding balances

Transactions with related parties were made on normal commercial terms and conditions. All outstanding balances are unsecured and payable in cash.

37 Segment reporting

(a) Description of segments and principal activities

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (CODM).

The Managing Director of the Company have been identified as the chief operating decision maker.

The CODM evaluates the performance based on the revenues and operating profit for the two segments, the composition of which is explained below:

Segment Products covered

Electrical Insulations The Electrical Insulation System business line comprises three product groups: wire

enamels, insulating varnishes and resins, and casting and poffing compounds. These products are used in the light and heavy electrical industries.

Engineering & Electronic Resins This comprises of complete solutions for printed circuit boards (PCBs), PCB and Materials protection solutions, construction chemicals used for post-construction coating

applications and flexible electrical insulations.

Level 1: The fair value of financial instruments traded in acfive markets (such as publicly traded derivafives and equity securifies) is based on quoted market prices at the end of the reporfing period. The mutual funds are valued using the closing NAV. The quoted market price used for financial assets held by the Company is the NAV of these mutual funds as at year end. These instruments are included in level 1.

Level 2: The fair value of financial instruments that are not traded in an acfive market is determined using valuafion

techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

ii) Valuation technique used to determine fair value

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

Specific valuation techniques used to value financial instruments include:

The use of quoted market prices for same or similar instruments as on the reporting date.

iii) Valuation process

The finance department of the Company includes a team that oversees the valuations of financial assets and liabilities required for financial reporting purposes, including level 3 fair values.

External valuers are involved for valuation of significant assets, such as unquoted financials assets. Involvement of external valuers is decided by the finance team. Selection criteria includes market knowledge, reputation, independence and whether professional standards are maintained. The Finance team decides, after discussions with the Company's external valuers, which valuation techniques and inputs to use for each case.

Changes in level 3 fair values are analysed at the end of each reporting period during the valuation discussion between the valuation team and external valuer. As part of this discussion the team presents a report that explains the reason for the fair value movements.

iv) Fair value of financial assets and liabilities measured at amortised cost

The carrying amounts of trade and other receivables, security deposits, loans and advances to employees, fixed deposits with banks, interest accrued on deposits, cash and cash equivalents, other bank balances, trade payables, security deposits from customers, capital creditors, employee benefits payable, unpaid dividend and other payables are considered to be reasonable approximation of their fair values.

39 Financial risk management

The Company's activities exposes it to market risk, liquidity risk and credit risk. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk. The Company's risk management is carried out by the Company's finance department under policies approved by the Board of Directors. The Finance department identifies, evaluates and manages financial risk. This note explains the Company's exposure to financial risks and how these risks could affect the Company's future financial performance.

(A) Credit risk

The Company is exposed to credit risk from its operating activities (primarily trade receivables) and deposits with banks and other financial instruments. For banks and other financial institutions, only high rated banks/ financial institutions are accepted. The balances with banks, loans given to related parties, loans given to employees, security deposits are subject to low credit risk and the risk of default is negligible or nil. Hence, no provision has been created for expected credit loss for credit risk arising from these financial assets. The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in the credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the Company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forward-looking information, for eg, external credit rating (to the extent available), actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant change to borrower's ability to meet its obligations.

Trade receivables

Credit risk arises from the possibility that customer will not be able to settle their obligations as and when agreed. To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends, analysis of historical bad debts, ageing of accounts receivable and forward looking information. Individual credit limits are set accordingly. General payment terms include advances and payments with a credit period ranging from 30 to 60 days. The Company has a detailed review mechanism of overdue customer receivables at various levels within the organisation. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on provision matrix.The provision matrix takes into accout historical credit loss experience and adjusted for forward looking information.

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk , being the total of the carrying amount of balances with bank, short term deposits with banks, trade receivables and other financial assets is disclosed at the end of the each reporting period. Refer relevant notes for details. At the reporting date, there were no significant arrangements which reduced the maximum credit risk.

(B) Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Company's finance department is responsible for liquidity, funding as well as settlement management. In addition, processes and polices related to such risks are overseen by Senior Management.

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. To assure the solvency and financial flexibility, the Company retains a liquidity reserve through cash and cash equivalents. The tables below analyse the Company's financial liabilities into relevant maturity group based on their contractual maturities for:

(C) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and price risk. Financial instruments affected by market risk include loans give, deposits, trade receivables, trade payables, derivative financial instruments and other financial assest and liabilities.

I) Foreign currency risk

The Company is engaged in international trade and thereby exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD and EUR. Foreign exchange risk arises from recognised assets and liabilities denominated in a currency that is not the Company's functional currency (INR). The Company's exposure to foreign currency arises from short term receivables and payables where fluctuations in the foreign exchange rates are generally not significant and consequently limiting the Company's exposure.

II) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Generally, the Company's exposure to the risk of changes in the market interest rates primarily relate to the Company's short term debt obligations with the floating interest rates. The Company does not have any borrowings in the current year as well as previous year.

III) Price risk

The Company's exposure to equity securities price risk arises from investments held by the Company and classified in the Balance sheet either as fair value through OCI or fair value through profit and loss. The Company invests into mutual funds which are subject to price risk changes. These investments are generally for short duration and therefore impact of price changes is generally not significant. Investment in these funds are made as a part of Treasury management activities.

40 Capital Management

a) Risk management

The Company's objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide returns for Shareholders and benefits for other stakeholders, and maintain an optimal capital structure to reduce the cost of capital. For the purpose of the Company's capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company's capital management is to maximise the Shareholders value. The Company manages its capital structure and makes adjustments in the light of changes in the economic conditions and the requirements of the financial covenants, if any. The total equity as at December 31, 2023 is INR 73,199.41 lakhs (December 31, 2022: INR 59,860.02 lakhs).

No changes were made in the objectives, policies or processes for managing capital during the years ended December 31, 2023 and December 31, 2022. The Company has no borrowings during the years under consideration and hence there has been no breach in the financial covenants of any borrowings.

b) Dividends

As a part of Company's capital management policy, dividend distribution is also considered as a key element and management ensures that dividend distribution is in accordance with defined policy. Below mentioned are the details of dividend distributed and proposed during the year.

41 At the year end, the Company has long term contracts for which there were no material foreseeable losses. The Company does not have any derivative contracts as at year end.

43 Pursuant to the amendments in the rule 3 of the Companies (Accounts) Rules, 2014, the back-up of the books of account and other books and papers of the Company maintained in electronic mode, including at a place outside India, if any, shall be kept in servers physically located in India on a daily basis. Data center for the ERP used by the management is hosted in a place outside India. Considering the requirement of the amendments, the Company developed a mechanism to take daily backup of the books of account in India which has been implemented in the current year from February 18, 2023. As a part of the mechanism, management saved auto generated logs for successful completion of backup from June 22, 2023 onwards. For the period of February 18, 2023 to June 21, 2023, the Company maintained manual logs to monitor the completion of backup on daily basis.

Further on account of a technical issue the daily backup could not be completed on 12 days during the year. However, the Company has taken appropriate remedial actions with respect to this technical issue.

44 Additional regulatory information required by Schedule III

(i) Details of benami property held

No proceedings have been initiated on or are pending against the Company for holding any benami property under the Prohibition of Benami Property Transactions Act, 1988 (as amended in 2016) and Rules made thereunder."

(ii) Willful defaulter

The Company has not been declared willful defaulter by any bank or financial institution or government or any government authority.

(iii) Relationship with struck off companies

The Company has no transactions with the companies struck off under Companies Act, 2013 or Companies Act, 1956.

(iv) Compliance with number of layers of companies

The Company doesn't have any investment in associate or joint venture or subsidiary, hence this disclosure is not applicable.

(v) Compliance with approved scheme(s) of arrangements

The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.

(vi) Utilisation of borrowed funds and share premium

a. The Company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person or entity, including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary shall:

i. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries); or

ii. provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries:

b. The Company has not received any funds from any person or entity, including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

i. 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

ii. provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(vii) Undisclosed income

There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.

(viii) Details of crypto currency or virtual currency

The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.

(ix) Valuation of PP&E, intangible asset and investment property

The Company has not revalued its property, plant and equipment (including right-of-use assets), investment properties or intangible assets during the current or previous year.

(x) There are no charges or satisfaction which are yet to be registered with the Registrar of the Companies beyond the statutory period.

(xi) Payment to political parties

There were no payments made by the Company to political parties during current or previous year.

(xii) Borrowing secured against current assets

The Company does not have any borrowings from banks or financial institutions or government or government authorities or any other lender.

45 Previous year figures

Previous year figures have been reclassified to conform to current year's classification.