Highway Infrastructure Ltd Management Discussions

OPERATION

The following discussion of our financial condition and results of operations should be read in conjunction with our Restated Consolidated Financial Information, which are included in this Red Herring Prospectus

Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors including the considerations described under "Forward Looking Statements", "Risk Factors", "Industry Overview" and "Our Business" beginning on pages 29, 31,133 and 180, respectively, and elsewhere in this Red Herring Prospectus. The manner of calculation and/or presentation of some of the financial and other performance indicators, and the assumptions and estimates used in such calculation, may vary from that used by other companies in India and other jurisdictions.

Unless otherwise indicated or the context otherwise requires, the financial information for Fiscal 2025, Fiscal 2024 and Fiscal 2023, included herein is based on or derived from our Restated Consolidated Financial Information included in this

Red Herring Prospectus. For further information, see "Restated Consolidated Summary Statements" beginning on page

253. Additionally, please refer to "Definitions and Abbreviations" on page 1 for certain terms used in this section. The Restated Consolidated Financial Information is based on our audited financial statements and is restated in accordance with the Companies Act, 2013, and the SEBI ICDR Regulations. For details, see "Risk Factors Significant differences exist between Ind AS used to prepare our financial information and other accounting principles, such as US GAAP and

IFRS, which may affect investors assessments of our Companys financial condition" on page 70.

Unless the context otherwise requires, in this section, references to "we", "us", "our" "our Company" or "the Company" refers to Highway Infrastructure Limited and its Subsidiary and the AOP on a consolidated basis as derived from Restated Consolidated Financial Information.

Unless otherwise indicated, industry and market data used in this section has been derived from industry publications, in particular, the report titled "Research Report on Road Toll, Infrastructure EPC & Real Estate Industry in India" dated

July 07, 2025 by CARE Advisory Research & Training Limited ("CareEdge Report") commissioned and paid for by our Company. A copy of the CareEdge Report is available on the website of our Company at www.highwayinfrastructure.in/investor-information. Unless otherwise indicated, financial, operational, industry and other related information derived from the CareEdge Report and included herein with respect to any particular year refers to such information for the relevant calendar year. For more information, see "Risk Factors Certain sections of this Red Herring Prospectus disclose information from an industry report commissioned by us from CareEdge Research, which is an independent third-party entity and is not related to the Company, its Promoters or Directors, in any manner whatsoever. Any reliance on such information for making an investment decision in the Offer is subject to inherent risks" on page 65. Also see, "Certain Conventions, Currency of Presentation, Use of Financial Information and Market Data" on page 26.

OVERVIEW

We are an infrastructure development and management Company. Our Company is engaged in the business of tollway collection, EPC Infra, and real estate business. While the Companys business spans facets of infrastructure development and management, tollway collection stands out as a significant mix of its business, driving our revenues and financial performance. As on May 31, 2025 our consolidated Order Book is 6,663.07 million, comprising of 595.30 million in tollway collection business and 6,067.77 million in EPC Infra business.

HIL is one of the few toll operators who have managed tollway collection based on ANPR technology on Delhi-Meerut Expressway. The Company has operated tolls on some of the known inter-state and intra-state expressways across 11 states and one Union Territory. The Company employs updated Electronic Tollway Collection (ETC) systems, which leverage Radio Frequency Identification (RFID) tags and digital payment platforms to facilitate seamless and contactless toll payments. This model not only reduces congestion at toll plazas but also enhances operational efficiency by reducing transaction times and errors, thereby resulting in overall better management. (Source: CareEdge Report).

Our projects usually use both fund-based and non-fund-based banking facilities to meet the working capital requirements. Fund-based facilities provide the cash flow to cover our operating expenses, while non-fund-based facilities such as bank guarantees, etc. are used by us to offer as a security under bid terms and are crucial for securing contracts in our EPC Infra and tollway collection projects. For securing bank guarantees, we need to provide cash margin in the form of fixed deposits. The requirement to set aside incremental cash margins for additional contracts contributes to the overall need for higher working capital.

Tollway collection business:

One of the primary revenue streams for our Company is the operation and management of tollway collection systems on highway projects. Such projects are procured by way of a competitive bidding process. As on, May 31, 2025 we have completed 27 tollway collection projects and are currently operating 04 tollway collection projects.

EPC Infra projects:

Over the years, the Company has developed its EPC Infra business and has gradually added facilities to support and supplement its EPC Infra business through auxiliary services. It has developed in-house resources to deliver a project from conceptualization to completion. As on May 31, 2025, we have completed 66 projects in EPC Infra and 24 projects are under execution.

Real Estate:

Real Estate is our smallest business segment. Under this segment, we own, develop, construct and sell commercial and residential properties. Over time, it we have developed gated communities and housing projects.

Key Performance Indicators of our Company

Key Financial Performance	Metric	Fiscal 2025	Fiscal 2024	Fiscal 2023
Revenue from operations(1)	in millions	4,957.15	5,734.54	4,551.33
EBITDA(2)	in millions	313.22	384.42	276.87
EBITDA Margin (3)	%	6.32	s6.70	6.08
PAT(4)	in millions	223.98	214.14	138.00
PAT Margin (5)	%	4.44	3.71	3.02
Debt-Equity Ratio(6)	times	0.61	0.69	0.85
ROCE (7)*	%	16.56	24.45	19.47
ROE (8) *	%	19.03	21.37	18.45
Revenue CAGR (Fiscal 2023 to Fiscal 2025)(9)	%			4.36
EBITDA CAGR (Fiscal 2023 to Fiscal 2025) (9)	%			6.36
Tolls Operated(10)	Number	15	7	12
Operation in states(11)	Number	7	5	8

(1) Revenue from operation means revenue from operating activities

(2) EBITDA means Earnings before interest, taxes, depreciation and amortisation expense, arrived at by obtaining the profit before tax/ (loss) for the year and adding back finance costs, depreciation and amortisation and impairment expense and reducing other income. ⁽³⁾ ‘EBITDA Margin is calculated as EBITDA as a percentage of revenue from operations. ⁽⁴⁾ PAT represents total net profit after tax for the year. ⁽⁵⁾ ‘PAT Margin is calculated as PAT divided by total income. ⁽⁶⁾ Debt Equity Ratio: is calculated as total debt divided by total equity. Total debt is the sum of total current & non-current borrowings; total equity means Net worth ⁽⁷⁾ ROCE is calculated as EBIT divided by capital employed where (i) EBIT means EBITDA minus depreciation and amortisation expense and (ii) Capital employed means Net worth + total current & non-current borrowings cash and cash equivalents and bank balance appearing under current assets. ⁽⁸⁾ ROE is calculated as PAT divided by Net worth. ⁽⁹⁾ CAGR = Compounded Annual Growth Rate ⁽¹⁰⁾ Tolls Operated is number of tolls operated during the fiscal. ⁽¹¹⁾Operation in states means the number of states in which the company operated /did business, in a particular year.

FACTORS AFFECTING OUR RESULTS OF OPERATIONS

Some of the key factors affecting our operations are as under:

Seasonal and other fluctuations

Our business and operations may be affected by seasonal factors which may restrict our ability to carry on activities related to our projects and fully utilize our resources. Heavy or sustained rainfalls or other extreme weather conditions such as cyclones could result in delays or disruptions to our operations during the critical periods of our projects and cause severe damages to our premises and equipment. Due to these seasonal changes, our revenue trend during the fiscal year may not be consistent. In our EPC Infra segment, rainfall and other seasonal occurrences may necessitate a stoppage of work or an unavailability of site, resulting in delays in execution and completion of projects in a timely manner. The toll collection industry in India often faces a decline during the second quarter of the fiscal, largely attributed to the monsoon season. This seasonal fluctuation is closely tied to Indias varied geographical landscapes, where heavy rainfall and adverse weather conditions disrupt traffic flow, particularly in regions prone to flooding and poor road conditions. As a result, the monsoons intensity and duration directly influence toll revenues, with certain regions experiencing sharper drops in collections compared to others, reflecting the diverse climatic patterns across the country (Source: CareEdge Report). Any such fluctuations may adversely affect our total income, cash flows, results of operations and financial conditions.

Increase in the prices of raw materials and labour

The cost of construction materials, fuel, labour and equipment maintenance constitutes a significant part of our operating expenses of EPC Infra business. We are vulnerable to the risk of rising and fluctuating prices, which are determined by demand and supply conditions in the global and Indian markets as well as government policies. Any unexpected price fluctuations after placement of orders, shortage, delay in delivery, quality defects, or any factors beyond our control may result in an interruption in the supply of such materials and adversely affect our business, financial performance and cash flows.

Revenue concentration from our key customers

We currently derive majority of our revenues from tollway collection business which are primarily from NHAI. Our EPC business is substantially of projects which are awarded or funded by the Central or State Governments or local authorities. Our business is thus subject to risks relating to or arising from the Government or State Governments, including but not limited to:

a. Delay in payment and/or non- payment by Government or State Governments. b. Change of priority, policies, focus area and initiatives at Central Government, State Government and other Local

Authority, corporations. c. Any downward changes in budgetary allocations in the infrastructure sector. d. Termination of a contract by a government client; pursuant to the terms of some of our contracts.

In the event any one or more customers cease to continue doing business with us, our results of operations and financial performance may be adversely affected.

Regional concentration of our business

As on May 31, 2025, our ongoing projects are spread across the states of Madhya Pradesh, Maharashtra, Haryana and Uttar Pradesh.

This concentration of current business subjects us to various risks in these states, including but not limited to:

a. regional slowdown in construction activities or reduction in infrastructure projects; b. vulnerability to change in laws, policies and regulations of the political and economic environment; c. perception by our potential customers that we are a regional construction company which hampers us d. from competing for large and complex projects at the national level; and e. limitation on our ability to implement the strategy to cluster projects in the states where we intend to conduct business.

While as a part of our overall growth strategy, we do intend to reach out to newer geographies, however, we cannot assure that our decision to expand our presence to newer geographies will be met with the same response and we cannot assure that we will be able to replicate a business plan for the same.

Competitive tender bidding process

Our projects are typically awarded to us following a competitive bidding process and satisfaction of prescribed technical and financial pre-qualification criteria. For example. there are 134 pre-qualified entities which are eligible to bid for NHAI tollway collection projects. While the track record, experience of project execution, service quality, delivery schedule, pricing, technical expertise, reputation and sufficiency of financial resources are important considerations in awarding contracts, there can be no assurance that we would be able to meet such technical and financial qualification criteria always and accordingly be awarded with a project contract. We cannot assure you that we would bid where we have been pre-qualified to submit a bid, or that our bids, when submitted or if already submitted, would result in projects being awarded to us.

Regulated industry

We operate in a regulated industry and are required to obtain a number of approvals and licenses from governmental and regulatory authorities, for example in relation to the operation of our EPC Infra business and real estate business. Certain of our services, are operated through third parties, and such parties are responsible for obtaining the requisite licenses and approvals.

In most of our contracts/tenders the requirement to obtain the specific licenses and approvals on a project specific wise may either be on us or on the other party and failure to obtain the same and any violations of existing regulations may adversely affect our business, financial condition, results of operations and cash flows.

Our licenses, approvals and accreditations are subject to periodic renewals, various maintenance and compliance requirements and governmental investigations and reviews, which could be time-consuming and may incur substantial expenditure. If our compliance systems and process are deemed inadequate or fail and such investigations or reviews find any non-compliance or violations, we may suffer brand and reputational harm and become subject to regulatory actions or litigation, which could adversely affect our business, cash flows, operating results or financial position. and cash flows.

BASIS OF PREPARATION OF RESTATED CONSOLIDATED FINANCIAL INFORMATION

1B.1

The Restated Consolidated Financial Information of the Group comprise of the Restated Consolidated Statement of Assets and Liabilities of the Company and its subsidiaries, the Restated Consolidated Statement of Profit and Loss (including Other Comprehensive Income), the Restated Consolidated Statement of Changes in Equity and the Restated Consolidated Statement of Cash Flows and the Summary Statement of Significant Accounting Policies and Other Explanatory Information for the years ended March 31st, 2025, March 31st, 2024 and March 31st, 2023 (collectively, the Restated Consolidated Financial Information").

These Restated Consolidated Financial Information have been prepared by the Management of the Company for the purpose of inclusion in the Red Herring Prospectus/ Prospectus ["RHP"/"Prospectus"] to be filed by the Company with Securities and Exchange Board of India [the SEBI"], BSE Limited and National Stock Exchange of India Limited (collectively, the Stock Exchanges") and the Registrar of Companies, Madhya Pradesh, in connection with the proposed Initial Public Offering (IPO") of its equity shares of the Company (the Offer").

The Restated Consolidated Financial Information, which have been approved by the Board of Directors of the Company, have been prepared in accordance with the requirements of:

(d) Section 26 of Part I of Chapter III of the Companies Act, 2013 ("the Act");

(e) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended ("ICDR Regulations"); and (f) The Guidance Note on Reports in Company Prospectuses (Revised 2019) issued by the Institute of Chartered

Accountants of India (ICAI), as amended (the "Guidance Note").

These Restated Consolidated Financial Information have been compiled by the management from

(a) the Audited Consolidated Financial Statements of the Group as at and for the year ended March 31st, 2025, prepared in accordance with the Indian Accounting Standards (referred to as "Ind AS") as prescribed under Section

133 of the Act read with Companies (Indian Accounting Standards) Rules 2015, as amended, and other accounting principles generally accepted in India, to the extent applicable, which have been approved by the Board of Directors of the company at their meeting held on June 17th, 2025, by consolidating :

(i) the Audited Standalone Financial Statements of the Company as at and for the year ended March 31st, 2025 prepared in accordance with the Indian Accounting Standards (referred to as "Ind AS") as prescribed under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules 2015, as amended, and other accounting principles generally accepted in India, to the extent applicable, which have been approved by the Board of Directors at their meeting held on June 17th, 2025.

(ii) the Audited Financial Statements of the subsidiary Company as at and for the year ended March 31st, 2025 prepared in accordance with the Indian Accounting Standards (referred to as "Ind AS") as prescribed under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules 2015, as amended, and other accounting principles generally accepted in India, to the extent applicable, which have been approved by the Board of Directors at their meeting held on June 12th, 2025.

(iii) the Audited Financial Statements of the unincorporated subsidiary as at and for the year ended March 31st, 2025 prepared in accordance with the Indian Accounting Standards (referred to as "Ind AS") as prescribed under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules 2015, as amended, and other accounting principles generally accepted in India, to the extent applicable, which have been approved by the members of such subsidiary at their meeting held on June 12th, 2025.

(b) the Audited Special Purpose Consolidated Financial Statements of the Group as at and for the years ended March 31st, 2024 and March 31st, 2023, prepared in accordance with the Indian Accounting Standards (referred to as "Ind AS") as prescribed under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules 2015, as amended, and other accounting principles generally accepted in India, to the extent applicable, which have been approved by the Board of Directors of the company at their meeting held on June 17th, 2025, by consolidating financial statements referred in paras (c), (d) & (e) below.

(c) the Audited Special Purpose Standalone Financial Statements of the Company as at and for the years ended March 31st, 2024 and March 31st, 2023, prepared in accordance with the Indian Accounting Standards (referred to as "Ind AS") as prescribed under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules 2015, as amended, and other accounting principles generally accepted in India, to the extent applicable, which have been approved by the Board of Directors at their meeting held on June 17th, 2025. The same has been compiled by the Management from the Audited Standalone Financial Statements of the Company as at and for the years ended 31st March, 2024 and 31st March, 2023 prepared in accordance with Generally Accepted Accounting Principles in India ("Indian GAAP") which have been approved by the Board of Directors at their meetings held on May 28th, 2024 and September 5th, 2023 respectively, by making Ind AS adjustments to such financial statements.

(d) the Audited Special Purpose Financial Statements of its subsidiary Company as at and for the years ended March 31st, 2024 and March 31st, 2023, prepared in accordance with the Indian Accounting Standards (referred to as "Ind AS") as prescribed under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules 2015, as amended, and other accounting principles generally accepted in India, to the extent applicable, which have been approved by the Board of Directors of such Company at their meeting held on June 12th, 2025. The same has been compiled by the Management from the Audited Financial Statements of the subsidiary Company as at and for the years ended 31st March, 2024 and 31st March, 2023, prepared in accordance with Generally Accepted Accounting Principles in India ("Indian GAAP") which have been approved by the Board of Directors of such Company at their meetings held on April 30th, 2024 and September 10th, 2023 respectively, by making Ind AS adjustments to such financial statements.

(e) the Audited Special Purpose Financial Statements of its unincorporated subsidiary as at and for the years ended March 31st, 2024 and March 31st, 2023, prepared in accordance with the Indian Accounting Standards (referred to as "Ind AS") as prescribed under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules 2015, as amended, and other accounting principles generally accepted in India, to the extent applicable, which have been approved by the members of such subsidiary at their meeting held on June 12th, 2025. The same has been compiled by the Management from the Audited Financial Statements of the unincorporated subsidiary as at and for the years ended 31st March, 2024 and 31st March, 2023, prepared in accordance with Generally Accepted Accounting Principles in India ("Indian GAAP") which have been approved by the members of such subsidiary at their meetings held on April 30th, 2024 and September 2nd, 2023 respectively, by making Ind AS adjustments to such financial statements.

These Restated Consolidated Financial Information have been prepared by the Group on the basis that it will continue to operate as a going concern.

The Restated Consolidated Financial Information do not reflect the effects of events that occurred subsequent to the respective dates of reports.

Unless otherwise stated, the Restated Consolidated Financial Information are presented in Indian Rupee (Rs.) and all values are rounded to the nearest millions.

1B.2 Principles of Consolidation

The Restated Consolidated Financial Information comprise the Financial Statements of the Parent company and its subsidiaries (which includes one unincorporated entity being an Association of Persons over which the Company is having control) for the years ended March 31st, 2025, March 31st, 2024 and March 31st, 2023.

The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Power is demonstrated through existing rights that give the current ability to direct the relevant activities of the entity that significantly affect the entitys returns.

Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has: (a) Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee),

(b) Exposure, or rights, to variable returns from its involvement with the investee, and

(c) The ability to use its power over the investee to affect its returns.

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control.

Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

(a) The contractual arrangement with the other vote holders of the investee (b) Rights arising from other contractual arrangements (c) The Groups voting rights and potential voting rights

(d) The size of the Groups holding of voting rights relative to the size and dispersion of the holdings of the other voting rights holders

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the restated consolidated financial information from the date the Group gains control until the date the Group ceases to control the subsidiary.

The Restated Consolidated Financial Information are prepared using uniform accounting policies for like transactions and other events in similar circumstances. If a member of the group uses accounting policies other than those adopted in the consolidated financial information for like transactions and events in similar circumstances, appropriate adjustments are made to that group members financial information in preparing the consolidated financial information to ensure conformity with the groups accounting policies.

Consolidation Procedure

(a) Combine like items of assets, liabilities, equity, income, expenses and cash flows of the parent with those of its subsidiaries.

(b) Offset (eliminate) the carrying amount of the parents investment in each subsidiary and the parents portion of equity of each subsidiary. Business combinations policy explains how to account for any related goodwill.

(c) Eliminate in full intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between entities of the group (profits or losses resulting from intragroup transactions that are recognised in assets, such as inventory and property, plant and equipment, are eliminated in full). Intragroup losses may indicate an impairment that requires recognition in the consolidated financial statements. Ind AS 12 Income Taxes applies to temporary differences that arise from the elimination of profits and losses resulting from intragroup transactions.

Restated Consolidated Statement of Profit and Loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the statements of subsidiaries to bring their accounting policies into line with the Groups accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

Non-controlling interests in subsidiaries are identified separately from the Groups equity therein. Those interests of non-controlling shareholders that are present ownership interests entitling their holders to a proportionate share of net assets upon liquidation may initially be measured at fair value or at the non-controlling interests proportionate share of the fair value of the acquirees identifiable net assets. The choice of measurement is made on an acquisition-by-acquisition basis. Other non-controlling interests are initially measured at fair value. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests share of subsequent changes in equity.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Group and to the non-controlling interests. Total comprehensive income of the subsidiaries is attributed to the owners of the Group and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Changes in the Groups interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amount of the Groups interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the Group.

When the Group loses control of a subsidiary, the gain or loss on disposal recognised in profit or loss is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), less liabilities of the subsidiary and any non-controlling interests. All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as required/permitted by applicable Ind ASs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under Ind AS 109 when applicable, or the cost of initial recognition of an investment in an associate or a joint venture.

Following subsidiaries, which are incorporated in India, have been considered in the preparation of Restated Consolidated Financial Information:

Name of the Subsidiary	Percentage of Holding
	As at 31st March, 2025	As at 31st March, 2024	As at 31st March, 2023
Highway and Tandon Tollways Private Limited	51	51	51
Highway and Tandon Tollways (Association of persons)	51	51	51

1B.3 Basis of Measurement

The Restated Consolidated Financial Information have been prepared on a going concern basis using historical cost convention and on accrual method of accounting, except for the Plan assets under Defined Benefit Plans which have been measured at fair value. The accounting policies have been consistently applied by the Group unless otherwise stated.

1B.4 Functional and Presentation Currency

These Restated Consolidated Financial Information have been prepared and presented in Indian Rupees (INR), which is also the Groups functional currency.

1B.5 Rounding Off

All amounts disclosed in the Restated Consolidated Financial Information and notes have been rounded off to the nearest Millions, unless otherwise stated.

1B.6 Summary of Significant Accounting Policies

1B.6.1 Property, Plant and Equipment (PPE)

(a) Property, Plant and Equipment are stated at cost, net of recoverable taxes, trade discounts and rebates less accumulated depreciation and impairment losses, if any. Such cost includes purchase price, borrowing cost and any other cost directly attributable to bringing the assets to its working condition for its intended use, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the assets. Advances paid for the acquisition/ construction of PPE which are outstanding at the balance sheet date are classified under Capital Advances.

(b) Subsequent costs are included in the assets carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost can be measured reliably. In the carrying amount of an item of PPE, the cost of replacing the part of such an item is recognized when that cost is incurred if the recognition criteria are met. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition principles.

(c) Depreciation on Property, Plant and Equipment is provided by parent company and subsidiary company on the basis of useful life of the assets as prescribed in Schedule II to the Companies Act, 2013, whereas Depreciation on Property, Plant and Equipment by the Unincorporated subsidiary has been provided on the rates prescribed by the Income-Tax Rules, 1962. If, significant parts of an item of Property, Plant and Equipment have different useful lives, then they are accounted and depreciated for as separate items (major components) of Property, Plant and Equipment.

(d) The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

(e) Gains or losses arising from derecognition of a property, plant and equipment 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 derecognised.

(f) Spare parts procured along with the Plant & Machinery or subsequently which meet the recognition criteria are capitalized and added in the carrying amount of such item. The carrying amount of those spare parts that are replaced is derecognized when no future economic benefits are expected from their use or upon disposal. Other machinery spares are treated as "stores & spares" forming part of the inventory.

(g) The Group has adopted the cost model of subsequent recognition to measure the Property, Plant and Equipment. Consequently, all Property, Plant and Equipment are carried at its cost less accumulated depreciation and accumulated impairment losses, if any.

1B.6.2 Intangible Assets

(i) Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses. Internally generated intangibles, excluding capitalized development costs, are not capitalized and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred.

(ii) The useful lives of intangible assets are assessed as either finite or indefinite.

(iii) 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 amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. 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 amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.

(iv) An intangible asset is derecognized upon disposal (i.e., at the date the recipient obtains control) or when no future economic benefits are expected from its use or disposal. Any gain or loss arising upon derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss. when the asset is derecognized.

1B.6.3 Depreciation and Amortisation

(i) Depreciation on Property, Plant and Equipment is provided by Parent Company on the straight line method and Subsidiary Company by Written down value method in the manner prescribed under Schedule II to the Companies Act, 2013. Further, its unincorporated subsidiary entity has provided depreciation on the written down value method as per depreciation rate prescribed in Schedule VI of the Income Tax Rules,1962.

(ii) Depreciation on addition to Property, Plant and Equipments in case of parent and subsidiary company are provided on pro-rata basis from the date of assets are ready for intended use. Depreciation on sale/discarded from Property, Plant and Equipments are provided for up to the date of sale, deduction or discard of pro-rata as the case may be.

(iii) 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 amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. 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 amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.

(iv) The useful live of PPE Assets are estimated as follows:

S.No Type of Asset	Schedule II Life (years)	Useful Lives
1 Furniture & Fixtures	10	10
2 Plant & Machineries	9-15	9-15
3 Other Machineries	15	15
4 Earth Moving Equipments	9	9
5 Electrical Fittings & Equipments	15	15
6 Office/ Electric Equipments	5	5
7 Vehicles	8	8
8 Computers	3	3

(v) The useful live of intangible assets are estimated as follows:

Type of Asset	Schedule II Life (years)	Useful Lives
Software	5	5

1B.6.4 Capital Work-in-Progress

(a) Expenditure incurred on assets under construction (including a project) is carried at cost under Capital Work-in-Progress. Such costs comprises purchase price of asset including import duties and non-refundable taxes and costs that are directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and after deducting trade discounts and rebates.

(b) Cost directly attributable to projects under construction include costs of employee benefits, expenditure in relation to survey and investigation activities of the projects, cost of site preparation, initial delivery and handling charges, installation and assembly costs, professional fees, expenditure on maintenance and up-gradation etc. of common public facilities, depreciation on assets used in construction of project, interest during construction and other costs if attributable to construction of projects. Such costs are accumulated under Capital Work-in-Progress and subsequently allocated on systematic basis over major assets, other than land and infrastructure facilities, on commissioning of projects.

(c) Capital Expenditure incurred for creation of facilities, over which the Company does not have control but the creation of which is essential principally for construction of the project is capitalized and carried under Capital Work-in-Progress and subsequently allocated on systematic basis over major assets, other than land and infrastructure facilities, on commissioning of projects, keeping in view the "attributability" and the Unit of Measure" concepts in Ind AS 16- "Property, Plant & Equipment". Expenditure of such nature incurred after completion of the project, is charged to Statement of Profit and Loss.

1B.6.5 Impairment of Non-Financial Assets - Property, Plant and Equipment

(a) The Company and its Subsidiaries assesses at each reporting date as to whether there is any indication that any Property, Plant and Equipment and Intangible Assets or group of Assets, called Cash Generating Units (CGU) may be impaired. If any such indication exists, the recoverable amount of an asset or CGU is estimated to determine the extent of impairment, if any. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the CGU to which the asset belongs.

(b) An impairment loss is recognised in the Statement of Profit and Loss to the extent, assets carrying amount exceeds its recoverable amount. The recoverable amount is higher of an assets fair value less cost of disposal and value in use. Value in use is based on the estimated future cash flows, discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and risk specific to the assets. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.

(c) The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior.

(d) Intangible assets with indefinite useful lives are tested for impairment annually at the end of the financial year at the CGU level, as appropriate, and when circumstances indicate that the carrying value may be impaired.

1B.6.6 Leases

The Company as a lessee

(a) The Companys lease asset classes primarily consist of leases for land and building. The Company assesses whether a contract 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.

(b) Ind AS 116 requires lessees to determine the lease term as the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Company makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably certain that any options to extend or terminate the contract will be exercised. In evaluating the lease term, the Company considers factors such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the importance of the underlying asset to Companys operations taking into account the location of the underlying asset and the availability of suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances. After considering current and future economic conditions, the Company has concluded that no changes are required to lease period relating to the existing lease contracts.

(c) At the date of commencement of the lease, the Company recognizes a Right-of-Use (ROU) asset and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of 12 months or less (short-term leases) and low value leases. For these short term and low-value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.

(d) The lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.

(e) The ROU 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.

(f) ROU 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. ROU assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.

(g) The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. 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.

(h) Lease liability and ROU assets have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.

The Company as a lessor

(a) The Company has not entered into any material lease contract in the capacity of "Lessor".

1B.6.7 Investment Property

Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes). Investment properties are measured initially at cost, including import duties, non- refundable taxes, after deducting trade discounts & rebates, borrowing cost if capitalization criteria are met and any cost directly attributable in bringing the asset to the location and condition necessary for it to be ready for its intended use. After initial recognition, the Company measures investment property by using cost model.

An investment property is derecognized upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on de recognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss in the period in which the property is derecognized.

Although investment property is measured using cost model, the fair value of investment property is disclosed in the Notes in accordance with Ind AS 40-; Investment Property.

1B.6.8 Assets Held For Sale

The assets are classified as held for sale if their carrying amount is intended to be recovered principally through sale rather than through continuing use. The condition for classification of held for sale is met when the asset is available for immediate sale and the same is highly probable of being completed within one year from the date of classification under the head Assets Held for Sale. The Company, is not holding any asset which is to be classified as Assets Held For Sale.

1B.6.9 Financial Instruments

(a) Financial Assets

(i) Initial recognition and measurement

All financial assets are initially recognized at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, which are not at fair value, are adjusted to the fair value, through profit and loss, on initial recognition. Purchase and sale of financial assets are recognised using trade date accounting.

(ii) Subsequent measurement

Financial assets carried at amortised cost

A financial asset is measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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

A financial asset is measured at FVTOCI if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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

A financial asset not classified as either amortised cost or FVTOCI, is classified as FVTPL.

(iii) Reclassification of Financial Assets

Financial assets are reclassified subsequent to their recognition, if the Company changes its business model for managing those financial assets. Changes in business model are made and applied prospectively from the reclassification date which is the first day of immediately next reporting period following the changes in business model in accordance with principles laid down under Ind AS 109 ? Financial Instruments.

(iv) Other Equity Investments

All other equity investments are measured at fair value, with value changes recognised in Statement of Profit and Loss, except for those equity investments for which the Company has elected to present the value changes in Other Comprehensive Income. However, dividend on such equity investments are recognised in Statement of Profit and loss when the companys right to receive payment is established.

(v) Impairment of financial assets

In accordance with Ind AS 109, the Company uses Expected Credit Loss (ECL) model, for evaluating impairment of financial assets other than those measured at fair value through profit and loss (FVTPL).

Expected credit losses are measured through a loss allowance at an amount equal to:

The 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or

Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument)

For trade receivables Company applies simplified approach which requires expected lifetime losses to be recognised from initial recognition of the receivables. The Company uses historical default rates to determine impairment loss on the portfolio of trade receivables. At every reporting date these historical default rates are reviewed and changes in the forward looking estimates are analysed.

For other assets, the Company uses 12 month ECL to provide for impairment loss where there is no significant increase in credit risk. If there is significant increase in credit risk full lifetime ECL is used.

(b) Financial Liabilities

(i) Initial recognition and measurement

All financial liabilities are recognized at fair value and in case of loans, net of directly attributable cost. Fees of recurring nature are directly recognised in the Statement of Profit and Loss as finance cost.

(ii) Subsequent measurement

Financial liabilities are carried at amortized cost using the effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.

(c) Derivative financial instruments and Hedge Accounting

Derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are also subsequently measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are taken directly to Statement of Profit and Loss, except for the effective portion of cash flow hedges which is recognised in Other Comprehensive Income and later to Statement of Profit and Loss when the hedged item affects profit or loss or treated as basis adjustment if a hedged forecast transaction subsequently results in the recognition of a non-financial assets or non-financial liability.

Hedges that meet the criteria for hedge accounting are accounted for as follows:

(i) Cash flow hedge

The Company designates derivative contracts or non derivative financial assets / liabilities as hedging instruments to mitigate the risk of movement in interest rates and foreign exchange rates for foreign exchange exposure on highly probable future cash flows attributable to a recognised asset or liability or forecast cash transactions. When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognized in the cash flow hedging reserve being part of other comprehensive income. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in the Statement of Profit and Loss. If the hedging relationship no longer meets the criteria for hedge accounting, then hedge accounting is discontinued prospectively. If the hedging instrument expires or is sold, terminated or exercised, the cumulative gain or loss on the hedging instrument recognized in cash flow hedging reserve till the period the hedge was effective remains in cash flow hedging reserve until the underlying transaction occurs. The cumulative gain or loss previously recognized in the cash flow hedging reserve is transferred to the Statement of Profit and Loss upon the occurrence of the underlying transaction. If the forecasted transaction is no longer expected to occur, then the amount accumulated in cash flow hedging reserve is reclassified in the Statement of Profit and Loss.

(ii) Fair Value Hedge

The Company designates derivative contracts or non derivative financial assets / liabilities as hedging instruments to mitigate the risk of change in fair value of hedged item due to movement in interest rates, foreign exchange rates and commodity prices.

Changes in the fair value of hedging instruments and hedged items that are designated and qualify as fair value hedges are recorded in the Statement of Profit and Loss. If the hedging relationship no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortised to Statement of Profit and Loss over the period of maturity.

(d) Derecognition of financial instruments

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized from the Companys Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires.

(e) Modification

A modification of a financial asset or liabilities occurs when the contractual terms governing the cash flows of a financial asset or liabilities are renegotiated or otherwise modified between initial recognition and maturity of the financial instruments. Any gain/ loss on modification is charged to restated consolidated statement of profit and loss.

(f) Offsetting

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

1B.6.10 Inventories

(a) Raw materials, components, construction materials, stores, spares are valued at lower of the cost or net realisable value.

(b) Work-in-Progress, Developed properties and Properties under development are valued at lower of specifically identifiable cost or net realisable value.

1B.6.11 Cash and Cash Equivalents

Cash and cash equivalents comprise cash on hand, cash at banks and short-term deposits with banks with an original maturity of three months or less, that are readily convertible to a known amount of cash and subject to an insignificant risk of change in value.

1B.6.12 Provisions, Contingent Liabilities and Contingent Assets

(a) Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Such provisions are determined based on managements estimate of the amount required to settle the obligation at the balance sheet date. When the Company expects some or all of a provision to be reimbursed, the reimbursement is recognised as a standalone asset only when the reimbursement is virtually certain.

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

(c) Contingent liabilities are disclosed on the basis of judgment of the management. These are reviewed at each balance sheet date and are adjusted to reflect the current managements estimate.

(d) Contingent assets are not recognized but are disclosed in the financial statements only when inflow of economic benefits is probable.

1B.6.13 Operating Cycle

(a) The Company presents its assets and liabilities in the balance sheet based on current/non-current classification which is based upon the Companys operating cycle. The Company has identified twelve months as its operating cycle.

(b) An asset is treated as current when it is:

(i) Expected to be realized or intended to be sold or consumed in normal operating cycle; (ii) Held primarily for the purpose of trading; (iii) Expected to be realized within twelve months after the reporting period; or

(iv) Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period

(c) A liability is treated as current when:

(i) It is expected to be settled in normal operating cycle; (ii) It is held primarily for the purpose of trading;

(iii) It is due to be settled within twelve months after the reporting period; or

(iv) There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period

(d) Deferred tax assets and liabilities are classified as non-current assets and liabilities.

1B.6.14 Revenue from Operations

Revenue is recognised to the extent it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue comprises:

(a) Toll Revenue

Toll Revenue is recognised in respect of toll charges collected at the respective Tolls.

(b) Works Contract Receipts

In respect to Construction activities, the company is following the Percentage of Completion method and accordingly, the revenue is recognized and recovered on bill to bill basis and expenses are booked as incurred thereby giving rise to work in progress. However, it is not practicable to disclose stage of completion of contract. The main activity of the Group, besides operating / maintaining toll plazas, is taking Government & other Contracts, which are fixed in terms of item rate basis or percentage on C.S.R. / S.O.R. basis, and billing is made on running verification by the Contractee.

(c) Real Estate Sales

In respect to Real Estate Business as Land Owner, Builder & Colonizer, the Group is following the method to recognize revenue when the ownership of the property is transferred i.e. on execution of the registered sale deed of the said property in the name of customer.

(d) Machinery & Equipment Hire Charges

Hire Charges from Machinery & equipment is accounted on accrual basis.

1B.6.15 Other Income

(a) Interest Income

For all Debt Instruments measured either at Amortized Cost or at Fair Value through Other Comprehensive Income, interest income is recorded using the Effective Interest Rate [EIR]. EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortized cost of a financial liability.

(b) All Other Incomes are recognized and accounted for on accrual basis.

1B.6.16 Government Grants

(i) The Group recognizes government grants only when there is reasonable assurance that the conditions attached to them will be complied with, and the grants will be received. Government grants related to assets are presented by deducting the grant from the carrying amount of the asset. Government grants related to revenue are recognized on a systematic basis in net profit in the Statement of Profit and Loss over the periods necessary to match them with the related costs which they are intended to compensate.

(ii) Government grants are recognized where there is reasonable assurance that the grant will be received, and all attached conditions will be complied with.

(iii) When loans or similar assistance are provided by governments or related institutions, with an interest rate below the current applicable market rate, the effect of this favorable interest is regarded as a government grant. The loan or assistance is initially recognized and measured at fair value and the government grant is measured as the difference between the initial carrying value of the loan and the proceeds received. The loan is subsequently measured as per the accounting policy applicable to financial liabilities.

1B.6.17 Employee Benefits Expense

(a) Short Term Employee Benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised as an expense during the period when the employees render the services.

(b) Post-Employment Benefits - Defined Contribution Plans

A defined contribution plan is a post-employment benefit plan under which the Group pays specified contributions to a separate entity. The Group makes specified monthly contributions towards Provident Fund and ESIC Fund. The Group recognises contribution payable to the provident fund scheme and ESIC fund scheme, as an expense, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognised as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognised as an asset to that extent.

(c) Post-Employment Benefits - Defined Benefits Plans

(i) The cost of the defined benefit plan and other post-employment benefits and the present value of such obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

(ii) The Group pays gratuity to the employees whoever has completed five years of service with the Group at the time of resignation/superannuation. The gratuity is paid @15 days salary for every completed year of service as per the provisions of the Payment of Gratuity Act, 1972.

(iii) The gratuity liability amount is contributed to the approved gratuity fund formed exclusively for gratuity payment to the employees. The gratuity fund has been approved by the governing Income-Tax authorities.

(iv) The liability in respect of gratuity and other post-employment benefits is calculated using the Projected Unit Credit Method , with Actuarial Valuations and spread over the period during which the benefit is expected to be derived from employees services. The liability recognized in the statement of financial position for defined benefit plans is the present value of the Defined Benefit Obligation (DBO) at the reporting date less the fair value of plan assets.

(v) Re-measurements of defined benefit plans in respect of post-employment are charged to the Other Comprehensive Income.

1B.6.18 Finance Cost

(a) Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the asset. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use.

(b) Interest income earned on temporary investment of specific borrowing pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

(c) All other borrowing costs are charged to the Statement of Profit and Loss for the period for which they are incurred.

1B.6.19 Income Taxes

(a) Income-Tax expense comprises of current and deferred income tax. Income tax expense is recognised in net profit in the Statement of Profit and Loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in other comprehensive income or Equity.

(b) Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted at the Balance sheet date.

(c) Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.

(d) 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 realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The carrying amount of deferred tax liabilities and assets are reviewed at the end of each reporting period.

(e) Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity.

(f) Deferred tax assets are recognised to the extent it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax losses can be utilised.

1B.6.20 Foreign Currency Transactions and Translations

(a) Transactions in foreign currencies are initially recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rates of exchange at the reporting date.

(b) Exchange differences arising on settlement or translation of monetary items are recognised in Statement of Profit and Loss except to the extent of exchange differences which are regarded as an adjustment to interest costs on foreign currency borrowings that are directly attributable to the acquisition or construction of qualifying assets which are capitalised as cost of assets.

(c) Non-monetary items that are measured in terms of historical cost in a foreign currency are recorded using the exchange rates at the date of the transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in OCI or Statement of Profit and Loss are also recognised in OCI or Statement of Profit and Loss, respectively).

1B.6.21 Earnings Per Share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period are adjusted for events of shares issued during the year including bonus issue.

For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as at the beginning of the period unless issued at a later date.

1B.6.22 Dividend Distribution

Dividends paid are recognised in the period in which the interim dividends are approved by the Board of Directors, or in respect of the final dividend when approved by the shareholders.

1B.6.23 Statement of Cash Flows

(a) Cash and Cash equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, other short-term and highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(b) The Statement of Cash Flows has been prepared under the Indirect Method as set out in Indian Accounting Standard (Ind AS) 7 on Statement of Cash Flows.

1B.6.24 Segment Reporting

An operating segment is component of the Group that engages in the business activity from which the Group earns revenues and incurs expenses, for which discrete financial information is available and whose operating results are regularly reviewed by the chief operating decision maker (CODM), in deciding about resources to be allocated to the segment and assess its performance. The Groups chief operating decision maker are the Whole-time Director and CEO.

Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment. Inter segment revenue is accounted on the basis of transactions which are primarily determined based on market / fair value factors. Revenue, expenses, assets and liabilities which relate to the Group as a whole and are not allocable to segments on a reasonable basis have been included under unallocated revenue / expenses / assets / liabilities".