Kross Ltd

Kross Ltd Management Discussions

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Apr 25, 2025|12:00:00 AM

Kross Ltd Share Price Management Discussions

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

The following discussion of our financial condition and results of operations is based on, and should be read in conjunction with, our Restated Financial Information (including the schedules, notes and significant accounting policies thereto), included in the section titled "Restated Financial Information " beginning on page 243 of this Draft Red Herring Prospectus.

Our Restated Financial Information has been derived from (i) our audited financial statements for Fiscal 2023;

(ii) our audited special purpose financial statements for Fiscal 2022, 2021 and (iii) our audited special purpose interim financial statements for the three month period ended June 30, 2023; and have been restated in accordance with the SEBIICDR Regulations and the ICAI Guidance Note. Our financial statements for Fiscal 2023, our audited special purpose financial statements for Fiscal 2022, 2021 and our audited special purpose interim financial statements for the three month period ended June 30, 2023 are prepared in accordance with Ind AS, notified under the Companies (Indian Accounting Standards) Rules, 2015, and read with Section 133 of the Companies Act, 2013 to the extent applicable. Ind AS differs in certain material respects from IFRS and U.S. GAAP and other accounting principles with which prospective investors may be familiar. Accordingly, the degree to which the financial statements prepared in accordance with Ind AS included in this Draft Red Herring Prospectus will provide meaningful information is entirely dependent on the readers level offamiliarity with Ind AS accounting policies. We have not attempted to quantify the impact of IFRS or U.S. GAAP on the financial information included in this Draft Red Herring Prospectus, nor do we provide a reconciliation of our financial information to IFRS or U.S. GAAP. Any reliance by persons not familiar with Ind AS accounting policies on the financial disclosures presented in this Draft Red Herring Prospectus should accordingly be limited.

Unless otherwise indicated or the context requires otherwise, the financial information for the three month period ended June 30, 2023 andfor the Fiscals 2023, 2022 and 2021 included herein have been derivedfrom our restated statements of assets and liabilities as of June 30, 2023, March 31, 2023, March 31, 2022 and March 31, 2021 and restated statements of profit and loss (including other comprehensive income), restated statements of cash flows and restated statements of changes in equity for the three month period ended June 30, 2023 and for the fiscal years ended March 31, 2023, March 31, 2022 and March 31, 2021 of the Company, together with the statement of significant accounting policies, and other explanatory information thereon.

Our fiscal year ends on March 31 of each year, and references to a particular fiscal period are to the 12 months ended March 31 of that year. All references to a year are to that Fiscal Year, unless otherwise noted.

Some of the information contained in this section, including information with respect to our strategies, contain forward-looking statements that involve risks and uncertainties. You should read the section titled "Forward- Looking Statements" beginning on page 19 of this Draft Red Herring Prospectus for a discussion of the risks and uncertainties related to those statements and also the section titled "Risk Factors" and "Our Business" beginning on pages 27 and 181, respectively, of this Draft Red Herring Prospectus for a discussion of certain factors that may affect our business, results of operations and financial condition. The actual results of the Company may differ materially from those expressed in or implied by these forward-looking statements.

Unless otherwise indicated, industry and market data used in this section has been derived from the report "Market dynamics for select forged and machined components and assemblies in the commercial vehicle and tractor segment" dated November, 2023 (the "CRISIL Report") prepared and released by CRISIL Limited and commissioned and paid for by us in connection to the Offer. A copy of the CRISIL Report will be available on the website of our Company at www.krosslimited.com from the date of the Red Herring Prospectus. Unless otherwise indicated, all financial, operational, industry and other related information derived from the CRISIL Report and included herein with respect to any particular year refers to such information for the relevant calendar year.

Unless otherwise stated, references to "the Company", "our Company", "we", "us", and "our" are to Kross Limited.

Overview

We are a diversified player focused on manufacturing and supply of trailer axle and suspension assembly and a wide range of forged and precision machined high performance safety critical parts for medium and heavy commercial vehicles ("M&HCV") and farm equipment segments. We are widely recognized as one of the prominent manufacturers of trailer axles and suspension assembly in India (Source: CRISIL Report). In 2019, we

commenced manufacture and sale of trailer axle and suspension assemblies and have witnessed robust growth in the past three years (between Fiscal 2020 and Fiscal 2023) (Source: CRISIL Report). We have become one of the fastest growing player in the organised trailer axle manufacturing industry competing with major trailer axle manufacturers (Source: CRISIL Report). With over three decades of experience, we rely on our product development capabilities to design and deliver proprietary products such as trailer axle and suspension assembly. We are one of the few players domestically, with the competency to manufacture trailer axles and suspension assembly in-house (Source: CRISIL Report).

With a diversified portfolio of high performance and safety critical components for the M&HCV and farm equipment segments, we are a specialist in manufacturing of safety critical components for M&HCV segment which include axle shafts, companion flanges, anti-roll bars and stabilizer bar assembly, suspension linkages, differential spiders, bevel gears, planet carriers, inter-axle kits, rear end spindles, pole wheels and wide variety of tractor components for the hydraulic lift arrangement, power take-off ("PTO") shafts and front axle spindles.

We supply our products to a diversified client base which includes large original equipment manufacturers ("OEMs") manufacturing M&HCV and tractors, tier one suppliers to the OEMs in the M&HCV segment domestic dealers and fabricators for our trailer axle and suspension business. In the past we have been recognized by customers for the high-quality of the products supplied by us, which is one of the factors that has helped us establish long term relationships with several large domestic and global OEMs, including, Ashok Leyland Limited, a leading Indian automobile OEM and a Indian farm equipment OEM, each of whom we have been associated with for a period of more than 18 years and Tata International DLT Private Limited with whom we have been associated since 2019. Due to our track record and diverse product portfolio, we have also been able to attract new customers such as Leax Falun AB and a Japan based OEM manufacturing commercial vehicles. We have also commenced our bulk exports to Leax Falun AB, a Sweden based company manufacturing propeller shafts for commercial vehicle OEMs, in August 2023 with supplies of Universal Joint Crosses and are in stages of validation for other critical parts.

We are backward integrated with design, process engineering, forging, casting and machining capabilities which allows us greater control over process, timelines, pricing and quality. We believe that our in-house design capabilities have been instrumental in our success by allowing us to work closely with customers for design and development of high performance and safety-critical components and assemblies, such as, anti-roll bars and stabiliser bars, where we along with the OEMs design team, conceptualised the design and framework of the product. For our trailer axles and suspension assemblies, we are also forward integrated with a network of sales and service locations across key states in India, as of the date of this Draft Red Herring Prospectus. Design, technology used for development, backward integration and after-sale service provided are crucial aspects for trailer axle manufacturers (Source: CRISIL Report). For our trailer axle and suspension assembly business, we operate our service on a mobile and on road basis, where once a complaint is registered by the customer, our service associate is deployed to the location of origin of the compliant to resolve the same. We have a custom service software developed by Sales force which gives us accurate tracking of service complaints as well as service history of the vehicle.

We operate out of five manufacturing facilities in Jamshedpur, Jharkhand, equipped with (i) forging presses and upsetters equipped with induction billet heaters, (ii) foundry with a high pressure mould line, (iii) high-precision machining equipment such as turning centres, vertical and horizontal milling centres, grinding, broaching, hobbing, shaping and robotic welding, (iv) in-house cathodic electro-disposition plant ("CED Plant"), powder coating, spray painting and (v) heat treatment furnaces and induction hardening equipment. Our manufacturing facilities (Units I, II, III, IV and V) have obtained ISO 9001:2015 for manufacture of axle shaft, PTO shaft, lift shaft, ring gear, bevel gear assembly and related parts from TUV NORD CERT GmbH and IATF 16949:2016 quality certifications for manufacture of axle shafts, universal joints (for steering and propeller shaft), differential spiders, companion flanges, anti-roll bar, bevel kit assembly and trailer axle assembly from TUV NORD CERT GmbH.

We currently manufacture a large variety of components and have the capacity to manufacture forged parts of up to 40 kg input weight. We enhanced our backward integration capabilities by establishing a new casting facility at Unit V, setting up a high-pressure mould line foundry along with a machine shop. We are in the process of expanding our capacity and increasing our product offerings through the expansion of our existing facilities, through the addition of further production lines, which will allow us to produce a new line of parts such as the hydraulic cover for tractors and in-house machining line of hubs and brake drums. For further details of the proposed expansion, see "Objects of the Offer - Funding of capital expenditure requirements of our Company towards purchase of machinery and equipment on page 106.

Our Chairman and Managing Director, Sudhir Rai, has been an integral part in the establishment and growth of our Company and with over three decades of experience in the automotive component manufacturing industry, and has been instrumental in our continued growth. Most of the Key Management Personnel and the Senior Management Personnel of the Company have also been associated with us for more than a decade and have contributed to the growth of the Company through their commitment and expertise. We believe our experienced and dedicated senior management team also enables us to identify market opportunities, formulate and execute business strategies, manage customer expectations and proactively address changes in market conditions.

Our key performance indicators for the three-month period ended June 30, 2023 and for the last three Fiscals are as follows:

Particulars	As of / For the three month period ended June 30, 2023	As of/ For the year ended March 31,
Particulars	As of / For the three month period ended June 30, 2023	2023	2022	2021
Revenue from Operations (Rs. million)	1,437.09	4,886.28	2,974.55	1,837.69
Total Income (Rs. million)	1,438.74	4,893.57	2,978.81	1,842.05
Gross Profit (Rs. million)?	544.90	1,989.19	1,371.69	950.37
Gross Margin (%)⁽²⁾	37.92%	40.71%	46.11%	51.72%
EBITDA (Rs. million)?	151.80	575.22	295.48	191.71
EBITDA Margin (%)⁽⁴⁾	10.56%*	11.77%	9.93%	10.43%
Restated Profit Before Tax (Rs. million)	110.16	417.10	163.10	58.34
Restated Profit for the period/ year (Rs. million)	80.01	309.31	121.69	47.67
PAT Margin (%)⁽⁵⁾	5.56%*	6.32%	4.09%	2.59%
Return on Equity (%)⁽⁶⁾	7.25%*	30.29%	16.81%	7.96%
Return on Capital Employed (%)⁽⁷⁾	6.66%*	27.51%	14.97%	10.03%
Gross Block (i.e. cost of property, plant and equipment right of use assets, capital work-inprogress and cost of intangible assets) (Rs. million)	1,445.53	1,398.34	1,222.97	1,111.16
Gross Fixed Assets Turnover Ratio (in times)⁽⁸⁾	0.99*	3.49	2.43	1.65
Net Debt to EBITDA (in times)⁽⁹⁾	5.89*	1.29	2.89	4.32

* The ratios have not annualized Notes:

1. Gross profit is calculated as revenue from operations minus cost ofraw materials and components consumed minus changes in inventories of finished products and work in progress.

2. Gross Margin is calculated as gross profit divided by Revenue from Operations.

3. EBITDA is calculated as restated profit for the period/ year minus other income plus finance costs, depreciation and amortisation expense and total tax expense.

4. EBITDA Margin is calculated as EBITDA divided by Revenue from Operations.

5. PAT Margin is calculated as restated profit for the period/ year divided by total income.

6. Return on Equity is calculated as restated profit for the period/ year divided by total equity.

7. Return on Capital Employed is calculated as EBIT divided by capital employed Capital employed is calculated as total equity plus deferred tax liability plus lease liabilities (current and non-current) plus total borrowings while EBIT is calculated as restated profit for the period/ year plus total tax expense plus finance costs.

8. Gross Fixed Assets Turnover Ratio is calculated as revenue from operations divided by Gross Block as at the end of the period/year.

9. Net Debt to EBITDA is calculated as net debt divided by EBITDA. Net Debt is calculated as total of non-current borrowings and current borrowings minus total of cash and cash equivalents and bank balances.

For reconciliation in relation to the Gross Profit, Gross Margin, EBITDA, EBITDA Margin, Return on Equity, Return on Capital Employed, PAT Margin, Gross Fixed Asset Turnover Ratio and Net Debt to EBITDA, see " -

Non-GAAP Financial Measures" on page 311.

Principal Factors Affecting our Results of Operations and Financial Condition

Our results of operations have been, and will continue to be, affected by a number of events and actions, some of which are beyond our control. However, there are some specific items that we believe have impacted our results of operations and, in some cases, will continue to impact our results. We believe that the following factors, amongst others, have, or could have an impact on these results, the manner in which we generate income and incur the expenses associated with generating this income.

Trends affecting demand in sectors our customers operate in

Demand for our products is directly related to the production and sales of M&HCV and farm equipment by our customers. Production and sales of M&HCV and farm equipment may be affected by general economic or industry

conditions, improving industrial activity, agricultural output, the pace of infrastructure development as well as evolving regulatory requirements, government initiatives and trade agreements. Our sales are directly dependent on the production level of OEMs in M&HCV and farm equipment as well as manufacturers of tractor trailers and are affected by inventory levels of manufacturers operating in these industries. Set out below are the revenues generated from various end-use industries and as a percentage of our revenue from sale of products:

(in f million, except percentages)

Particulars	Three month period ended June 30, 2023		Fiscal 2023		Fiscal 2022		Fiscal 2021
Particulars	Amount (in Rs. million)	% of total revenue from operation	Amount (in Rs. million)	% of total revenue from operation	Amount (in Rs. million)	% of total revenue from operations	Amount (in Rs. million)	% of total revenue from operations
Commercial Vehicles*	1,234.24	85.88%	4043.46	82.75%	2,230.92	75.00%	1,162.83	63.28%
Farm Equipment	162.24	11.29%	592.73	12.13%	546.52	18.37%	563.66	30.67%
Total	1,396.48	97.17%	4,636.18	94.88%	2,777.44	93.37%	1,726.49	93.95%

*Commercial vehicles include trailer axle and suspension

Further, production and sales of the vehicles for which we supply products are affected by a variety of other factors that are beyond our control, including changes in government policies, changes in consumer demand, product mix shifts favouring other types of vehicles, fuel prices, vehicle electrification, economic conditions, demographic trends, employment and income levels and interest rates, disruptions in these industries supply chain, vehicle age, labour relations, regulatory requirements, credit availability and cost of credit and general economic and industry conditions.

See "Industry Overview on page 138, for a discussion of macroeconomic conditions in the global economy and Indian economy and trends affecting the demand for MH&CV and farm equipment.

Raw Material Costs and Operating Costs

Our business, financial condition, results of operations and prospects are significantly impacted by the prices of raw materials purchased by us, particularly prices of steel. The cost of raw materials consumed (including changes in inventories of finished products and work in progress) was Rs.892.19 million, Rs.2,897.09 million, Rs.1,602.86 million and Rs.887.32 million in the three month period ended June 30, 2023, Fiscal 2023, 2022 and 2021 which represented 62.01%, 59.02%, 53.81% and 48.17% of our total income for the respective periods. Raw material pricing can be volatile due to a number of factors beyond our control, including global demand and supply, general economic and political conditions, transportation and labour costs, labour unrest, natural disasters, competition, import duties, fuel prices and availability, power tariffs and currency exchange rates. This volatility in commodity prices can significantly affect our raw material costs. While some of the contracts we have with our customers provide for pass through of any variation in the raw material costs, our cash flows may still be adversely affected because of any gap in time between the date of procurement of those primary raw materials and date on which we can reset the product prices for our customers, to account for the increase in the prices of such raw materials.

Our ability to manage our operating costs and operations efficiencies is critical to maintaining our competitiveness and profitability. Our profitability is partially dependent on our ability to increase our productivity and reduce our operating expenses.

Relationship with and dependence on key customers

We have established long-standing relationships with several large domestic and global OEMs, including, Ashok Leyland Limited, a leading Indian automobile OEM and a Indian farm equipment OEM, each of whom we have been associated with for a period of more than 18 years and Tata International DLT Private Limited with whom we have been associated since 2019. Due to our track record and diverse product portfolio, we have also been able to attract new customers such as Leax Falun AB and a Japan based OEM manufacturing commercial vehicles. We have also commenced our bulk exports to Leax Falun AB, a Sweden based company manufacturing propeller shafts for commercial vehicle OEMs, in August 2023 with supplies of Universal Joint Crosses and are in stages of validation for other critical parts.

Set out in the table below are our revenues from operations from our top three and top five customers, based on our Restated Financial Information during the three month period ended June 30, 2023 and the Fiscals 2023, 2022 and 2021:

	Three month period ended June 30, 2023		Fiscal 2023		Fiscal 2022		Fiscal 2021
Particular s	Amoun t (in Rs. million)	% of total revenue from operation s	Amoun t (in Rs. million)	% of total revenue from operation s	Amoun t (in Rs. million)	% of total revenue from operation s	Amoun t (in Rs. million)	% of total revenue from operation s
Top three customers	797.83	55.52%	2,467.7 7	50.50%	1,620.9 1	54.49%	1,081.4 4	58.85%
Top five customers	1,025.9 0	71.39%	3,340.9 5	68.37%	2,025.1 2	68.08%	1,448.3 2	78.81%

We plan our production scheduled based on the forecasts from our customers, as is standard in the automotive and non-automotive sectors. Any increases or decreases in the levels of inventory and activity by our customers, in turn, are likely to have an effect on our revenues and our results of operations. Our customers, in turn, are dependent on general trends impacting their operation. See, "-Trends affecting demand in sectors our customers operate in" on page 297.

Success of new products and geographies

We entered the trailer axle and suspension assembly business in 2019, and have witnessed robust growth in the past 3 years (between Fiscal 2020 and Fiscal 2023), becoming one of the fastest growing players in the organized trailer axle manufacturing industry (Source: CRISIL Report). Our revenues for operations from trailer axle and suspension business over the periods is as under:

Particular

Three month period ended June 30, 2023

Fiscal 2023

Fiscal 2022

Fiscal 2021

Amoun t (in Rs. million)

% of total revenue from operation

Amoun t (in Rs. million)

% of total revenue from operation

Amoun t (in Rs. million)

% of total revenue from operatio n

Amoun t (in Rs. million)

% of total revenue from operation

Trailer axle and

suspension

629.35

43.79%

1,628.2

33.32%

668.96

22.49%

225.11

12.25%

The trailer axle and suspension business differs significantly from our core business as this required us to set up distribution and servicing capabilities which were earlier not as critical in the component business. Having grown the business at a CAGR of 168.94% between Fiscal 2021 and Fiscal 2023, we intend to expand our product profile in axle business and will evaluate business segments which require similar capabilities. Once commissioned, we plan to utilize our capabilities in axle beam extrusion and seamless tube to explore areas of growth which are not available to us at this point in time.

Due to our track record and diverse product portfolio, we have also been able to attract new customers such as Leax Falun AB and a Japan based OEM manufacturing commercial vehicles. We have also commenced our bulk exports to Leax Falun AB, a Sweden based company manufacturing propeller shafts for commercial vehicle OEMs, in August 2023 with supplies of Universal Joint Crosses and are in stages of validation for other critical parts.The success of these industries, products and geographies depends on our managements ability to identify high growth potential opportunities and utilise our resources to develop these opportunities, which could have a significant impact on our results of operations.

Availability offunds for capital expenditure

We invest in machinery and equipment on an ongoing basis to expand our capacities as well as capabilities to seize opportunities for growth in the market. In the three month period ended June 30, 2023 and Fiscal 2023, 2022 and 2021, our cumulative capital expenditure (i.e. payments for acquisition of property, plant and equipment and intangible assets (including capital work in progress)) was Rs.457.02 million while our gross block (i.e. cost of property, plant and equipment, right of use assets, capital work-in-progress and cost of intangible assets) as at June 30, 2023 was Rs.1,445.53 million. Around 31.62% of our gross block as at June 30, 2023, was a result of our capital expenditure made between beginning of Fiscal 2021 and June 30, 2023.

We intend to use Rs.700.00 million from the net proceeds from the Offer for further capital expenditure. We also intend to create manufacturing capabilities in axle beam extrusion and intend to backward integrate into the seamless tube. The actual amount and timing of our future capital expenditure may deviate from initial estimates due to various factors including unforeseen delays or cost overruns, unanticipated expenses, regulatory changes, economic conditions, engineering design changes, technological advancements, and emerging market developments and opportunities in the sectors we focus on.

Significant Accounting Policies

Basis of Accounting and preparation of financial statements

The Restated Financial Information of the Company comprises the Restated Statement of Assets and Liabilities as at June 30, 2023, March 31, 2023, 2022 and 2021, the Restated Statement of Profit and Loss (including Other Comprehensive Income), the Restated Statement of Cash Flows and the Restated Statement of Changes in Equity for the three month period ended June 30, 2023 and the years ended March 31, 2023, 2022 and 2021, and a summary of significant accounting policies and other explanatory information .

The Restated Financial Information has been approved by the Board of Directors of the Company on November 30, 2023 and have been prepared in all material respects with the requirements of:

(a) Section 26 of Part I of Chapter III of the Companies Act 2013 (the "Act"), as amended from time to time;

(b) SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, (the "SEBI ICDR Regulations"), as amended from time to time, and

(c) The Guidance Note on Reports in Company Prospectuses (Revised 2019) issued by the Institute of Chartered Accountants of India (ICAI), as amended from time to time ("the Guidance Note").

The Restated Financial Information has been compiled from:

Audited financial statement of the Company as at year ended March 31, 2023 and Audited Special Purpose Interim Financial Statements for the three month period ended June 30, 2023, Audited Special Purpose Financial Statements for the years ended March 31, 2022 and 2021 which were prepared in accordance with Indian Accounting Standard 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 (referred to as "Ind AS"), which have been approved by the Board of Directors at their meetings held on September 27, 2023, November 30, 2023, November 30, 2023 and November 30, 2023, respectively.

Functional and presentation currency

These financial statements are presented in Indian Rupees Rs., which is also the Companys functional currency. All amounts have been rounded-off to the nearest Millions upto two decimals, unless otherwise stated.

Basis of measurement

These Restated Financial Information has been prepared on the historical cost basis except certain financial assets and liabilities which are measured at fair values.

Use of estimates and critical accounting judgements

In the preparation of the Restated Financial Information, the Company makes judgements, estimates and assumptions about the carrying value of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and future periods affected.

Key source of estimation of uncertainty at the date of the Restated financial information, which may cause material adjustment to the carrying amounts of assets and liabilities within the next financial year are provided below:

(a) Property, plant and equipment and intangible assets - useful life

Property, plant and equipment represents a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an assets expected useful life and the expected residual value at the end of its life. The useful lives and residual values of the Companys assets are determined by the Company at the time the asset is acquired and reviewed periodically, including at the end of each reporting period. The lives are based on historical experience with similar assets.

(b) Assets and obligations relating to employee benefits

The cost of the defined benefit gratuity plan and the present value of the gratuity 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 and mortality rates. 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.

Ind AS 116, Leases 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 the Company will continue the lease beyond non-cancellable period and whether 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 terminating the lease and the importance of the underlying asset to Companys operations taking in to 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 material changes are required to lease period relating to the existing lease contracts.

(d) Contingent Liabilities

At each balance sheet date, on the basis of the management judgment, changes in facts and legal aspects, the Company assesses the requirement of disclosure against the outstanding contingent liabilities. However, the actual future outcome may be different from this judgement.

Measurement of fair values

A number of the Companys accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.

The Company has an established control framework with respect to the measurement of fair values. The Company regularly reviews significant unobservable inputs and valuation adjustments. If third party information is used to measure fair values, then the Company assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be classified.

Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

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

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

- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The Company recognises transfer between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Significant accounting policies

Current versus non-current classification

The Company presents assets and liabilities in the balance sheet based on current/non-current classification.

An asset is classified current when it is:

(a) Expected to be realised or intended to be sold or consumed in the normal operating cycle;

(b) Held primarily for the purpose of trading;

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

All other assets are classified as non-current.

A liability is classified current when:

(a) It is expected to be settled in the normal operating cycle;

(b) It is held primarily for the purpose of trading;

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

Current liabilities include current portion of non- current financial liabilities .All other liabilities are classified as non - current.

Deferred tax assets and liabilities are always classified as non-current assets and liabilities.

Financial instruments

(a) Recognition and initial measurement

Trade receivables are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument.

A financial asset or financial liability is initially measured at fair value plus, for an item not at fair value through profit and loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue.

(b) Classification and subsequent measurement

Financial assets- On initial recognition, a financial asset is classified as measured at

- amortised cost;

- Fair value through profit or loss (FVTPL) or Fair value through other comprehensive income (FVOCI)

Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:

- the asset is held within a business model whose objective is to hold assets 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.

A financial asset is measured at fair value through other comprehensive income (FVOCI) if it meets both of the following conditions and is not designated as at FVTPL:

- the asset is held within a business model whose objective is to hold assets to collect contractual cash flows and cash flows from sales; 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.

All financial assets not classified as measured at amortised cost as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Equity instruments are always classified fair value through profit and loss, except in cases where the Company has elected an irrevocable option of designating the same as fair value through other comprehensive income (FVOCI).

Financial assets: Subsequent measurement and gains and losses

Financial assets at FVTPL: These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss.

Financial assets at amortised cost: These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.

Financial assets at FVOCI : These assets are subsequently measured at fair value through other comprehensive income i.e., subsequent changes in fair value of the instrument is recognised in other comprehensive income. Any dividend received on such instruments are recognised in Statement of Profit and Loss.

Financial liabilities: Classification, subsequent measurement and gains and losses

Financial liabilities are classified and measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held for trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss.

Any gain or loss on derecognition is also recognised in profit or loss.

Financial assets

The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset. If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.

Financial liabilities

The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.

The Company also derecognises a financial liability when its terms are modified and the cash flows under the modified terms are substantially different. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognised in profit or loss.

(d) Impairment of financial assets

Loss allowance for expected credit losses is recognised for the "financial assets measured at amortised cost" and "fair value through other comprehensive income".

The Company has applied life time expected credit losses for determining loss allowances for all trade receivables that do not constitute a financing transaction.

For financial assets (apart from trade receivables that do not constitute of financing transaction) whose credit risk has not significantly increased since initial recognition, loss allowance equal to twelve months expected credit losses is recognised. Loss allowance equal to the lifetime expected credit losses is recognised if the credit risk of the financial asset has significantly increased since initial recognition.

(e) Offsetting

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

(f) Contract Assets

Contract assets is right to consideration in exchange for goods or services transferred to the customer and performance obligation satisfied. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional, in the nature of unbilled receivables. Upon completion of the attached condition and acceptance by the customer, the amounts recognised as contract assets is reclassified to trade receivables upon invoicing. A receivables represents the Companys right to an amount of consideration that is unconditional. Contract assets are subject to impairment assessment.

(g) Contract Liabilities

A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer or has raised the invoice in advance. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company performs under the contract (i.e., transfers control of the related goods or services to the customer).

Revenue

Revenue from contracts with customers is recognised when the control of the goods/services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods/services. Such revenue is recognised upon the Companys performance of its contractual obligations and on satisfying all the following conditions:

(1) Parties to the contract have approved the contract and undertaken to perform their respective obligations;

(2) Such contract has specified the respective rights and obligations of the parties in connection with the transfer of goods or rendering of services (hereinafter the "Transfer");

(3) Such contract contains specific payment terms in relation to the Transfer;

(4) Such contract has a commercial nature, namely, it will change the risk, time distribution or amount of the Companys future cash flow;

(5) The Company is likely to recover the consideration it is entitled to for the Transfer to customers.

Revenue is recognised when no significant uncertainty exists regarding the collection of the consideration. The amount recognised as revenue is exclusive of all indirect taxes and net of returns and discounts.

(a) Sale of goods

For contracts with customers for sale of goods, revenue is recognised net of discount and rebates, at a point in time when control of the asset is transferred to the customer, which is when the goods are delivered to the customers as per the terms of the contracts. Delivery happens when the goods have been shipped or delivered to the specific location, as the case may be, the risk of loss has been transferred, and either the customer has accepted the goods in accordance with the contracts or the Company has objective evidence that all criteria related for acceptance has been satisfied.

No element of significant financing is deemed present as the sales are generally made with a credit term which is consistent with the market practice. A receivable is recognised when the goods are delivered and this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

(b) Sale of Services

Revenue from service contracts are recognised in the accounting period in which the services are rendered. Where the contracts include multiple performance obligations, the transaction price is allocated to each performance obligation based on the standalone selling price and revenue is recognised over time as and when the customer receives the benefit of the Companys performance based on the actual service provided to as proportion of the total services to be provided. In case, the service contracts include one performance obligation revenue is recognised based on the actual service provided to the end of the reporting period as proportion of the total services to be provided. This is determined based on the actual expenditure incurred to the total estimated cost.

Dividend income is recognised when the companys right to receive payment has been established and that the economic benefits will flow to the Company and amount of income can be measured reliably.

Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the assets net carrying amount on initial recognition.

Government grants

Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognised as income in equal amounts over the expected useful life of the related asset.

Income Taxes

Current tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date.

Current tax relating to items recognised directly in equity is recognised in equity and not in the statement of profit or loss. Company periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred tax

Deferred tax is provided using the balance sheet liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognised for all taxable temporary differences.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying value of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences. In contrast, deferred tax assets are only recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.

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

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on the tax rates and tax laws that have been enacted or substantially enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying value of its assets and liabilities.

Deferred tax assets and liabilities are offset to the extent that they relate to taxes levied by the same tax authority and there are legally enforceable rights to set off current tax assets and current tax liabilities within that jurisdiction.

Current and deferred tax are recognised as an expense or income in the statement of profit and loss, except when they relate to items credited or debited either in other comprehensive income or directly in equity, in which case the tax is also recognised in other comprehensive income or directly in equity.

Foreign currencies

Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The Companys financial statements are presented in Indian Rupees, which is the Companys functional and presentation currency.

Transactions and balances

Transactions in foreign currencies are initially recorded by the Company in its functional currency spot rates at the date the transaction first qualifies for recognition.

Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date. Differences arising on settlement or translation of monetary items are recognised in profit or loss unless they relates to the qualifying cash flow hedges.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.

In determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the transaction is the date on which the Company initially recognises the non-monetary asset or nonmonetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, the Company determines the transaction date for each payment or receipt of advance consideration.

Property, plant and equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Capital Work-in-Progress is stated at cost, net of accumulated impairment losses, if any.

Cost of Property, plant and equipment includes the costs directly attributable to the acquisition or constructions of assets, or replacing parts of the plant and equipment and borrowing costs for qualifying assets, if the recognition

criteria are met. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives.

Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with them will flow to the Company and the cost of the item can measured reliably. All other repair and maintenance costs are recognised in profit or loss as incurred.

Advance given for acquisition / construction of Property, Plant and Equipment and Intangible assets are presented as "Capital Advance" under Other Non Current Assets.

The assets in the process of construction or acquisition but not ready for managements intended use are included under Capital Work in progress.

Depreciation is provided on written down value method in the manner and on the basis of useful lives prescribed in Schedule II to the Companies Act, 2013. Depreciation on addition / deduction is calculated pro-rata from/to the month of addition / deduction.

An item of property, plant and equipment and any significant part initially recognised is derecognised 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 on 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 or loss when the asset is derecognised.

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.

The estimated useful lives of the assets considered by the Company is stated hereunder:

Assets Description	Useful Life in Years
Office Building	60
Heavy Equipments	15
Heavy Vehicles	6
Office Appliances	5
Computer	3
Other Machinery	15
Motor Cycle, Scooter	10
Motor Vehicles	8
Furniture	10
Electrical Equipments	10

Leases

The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The Company as a lessee

The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

Right-of-use assets

The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.

If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.

Lease liabilities

At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate.

Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments.

The Companys lease obligations are presented on the face of the Balance Sheet.

Short-term leases and leases of low value assets

The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date). It also applies the lease of low-value assets recognition exemption to leases of assets that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.

The Company as a lessor

Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.

Borrowing costs

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 capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. Subsequent to initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred.

Intangible assets are amortised over the useful economic life (5 years for computer software) and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period.

An intangible asset is derecognised 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 Restated Statement of Profit and Loss (including other comprehensive income).

Impairment of assets (other than financial assets)

At each balance sheet date, the Company reviews the carrying value of its property, plant and equipment and intangible assets to determine whether there is any indication that the carrying value of those assets may not be recoverable through continuing use. If any such indication exists, the recoverable amount of the asset is reviewed in order to determine the extent of impairment loss, if any. Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. An impairment loss is recognised in the statement of profit and loss as and when the carrying value of an asset exceeds its recoverable amount.

Where an impairment loss subsequently reverses, the carrying value of the asset (or cash generating unit) is increased to the revised estimate of its recoverable amount so that the increased carrying value does not exceed the carrying value that would have been determined had no impairment loss been recognised for the asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognised in the statement of profit and loss immediately.

Provisions and contingencies

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.

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.

Disclosure for contingent liabilities is made when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources embodying economic benefits will be required to settle or a reliable estimate of the amount cannot be made.

Inventories

Raw materials, work-in-progress and finished products are valued at lower of cost and net realisable value after providing for obsolescence and other losses, where considered necessary. Cost includes purchase price, nonrefundable taxes and duties and other directly attributable costs incurred in bringing the goods to the point of sale.

Work-in-progress and finished goods include appropriate proportion of overheads.

Stores and spares and consumables are valued at cost comprising of purchase price, non refundable taxes and duties and other directly attributable costs after providing for obsolescence and other losses, where considered necessary.

Cash and short-term deposits

Cash and short-term deposits in the statement of financial position comprise cash at banks and on hand and shortterm highly liquid deposits with a maturity of three months or less, that are readily convertible to a known amount of cash and subject to an insignificant risk of changes in value.

For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above.

Employee benefits

Short-term employee benefits- Liabilities for short-term employee benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee related liabilities under other financial liabilities in balance sheet.

Post - employment benefits- The liability or asset recognised in the Balance Sheet in respect of defined benefit plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually at year end by actuaries using the projected unit credit method.

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

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in ‘Employee Benefits Expense in the Statement of Profit and Loss.

Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. These are included in the Statement of Changes in Equity and in the Balance Sheet.

Changes in the present value of the defined benefit obligations resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost.

Defined contribution plan - The Company pays provident fund contributions to publicly administered provident fund as per local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

Earnings per share

Basic earnings per share is calculated by dividing:

• the profit attributable to owners of the Company

• by the weighted average number of equity shares outstanding during the period

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:

• the after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and

• the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.

The weighted average number of Equity shares have been adjusted for the events such as bonus issue and share split that have changed the number of equity shares outstanding, without corresponding changes in resources

Contributed equity

Equity shares are classified as equity. Incremental cost directly attributable to the issue of new shares or options are shown in equity as reduction, net of tax from the proceeds.

Dividend

The Company recognises a liability to pay a final dividend when the distribution is authorised, and the distribution is no longer at the discretion of the Company. As per the corporate laws of India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.

The Company recognises a liability to pay the interim dividend when the distribution is authorised by the board of directors subject to the approval of the shareholders.

Segment reporting

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

The CODM is responsible for allocating resources and assessing performance of the operating segments and has been identified as the Board of Directors of the Company.

New amendments issued and effective w.e.f. April 1, 2023

The Ministry of Corporate Affairs has vide notification dated March 23, 2023 notified Companies (Indian Accounting Standards) Amendment Rules, 2022 which amends certain accounting standards, and are effective April 1, 2023.

The Rules predominantly amend Ind AS 12, Income taxes, and Ind AS 1, Presentation of financial statements. The other amendments to Ind AS notified by these rules are primarily in the nature of clarifications. These amendments are not expected to have a material impact on the Company in the current or future reporting periods and on foreseeable future transactions. Specifically, no changes would be necessary as a consequence of amendments made to Ind AS 12 as the groups accounting policy already complies with the now mandatory treatment.

Changes in the accounting policy, if any, in the last three years and their effect on our profits and reserves

Other than the transition to Ind AS from IGAAP, with effect from April 1, 2021, there have been no changes in accounting policies of the Company during Fiscal 2023, Fiscal 2022 and Fiscal 2021.

Non-GAAP Financial Measures

Earnings before Interest, Taxes, Depreciation and Amortization Expenses ("EBITDA")/ EBITDA Margin/ Return on Capital Employed / PAT Margin / Return on Equity / Gross Fixed Assets Turnover Ratio / Gross Profit/ Gross Margin / Net Debt to EBITDA

In addition to our results determined in accordance with Ind AS, we believe the following Non-GAAP measures are useful to investors in evaluating our operating performance and liquidity. We use the following Non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that Non-GAAP financial information, when taken collectively with financial measures disclosed in the financial statements prepared in accordance with Ind AS, may be helpful to investors because it provides an additional tool for investors to use in evaluating our ongoing operating results and trends and in comparing our financial results with other companies in our industry because it provides consistency and comparability with past financial performance. However, our management does not consider these Non-GAAP measures in isolation or as an alternative to financial measures.

Gross Profit, Gross Margin, EBITDA, EBITDA Margin, Return on Equity, Return on Capital Employed, PAT Margin, Gross Fixed Asset Turnover Ratio and Net Debt to EBITDA ("Non-GAAP Measures") presented in this Draft Red Herring Prospectus is a supplemental measure of our performance and liquidity that is not required by, or presented in accordance with, Ind AS, Indian GAAP, IFRS or US GAAP. Further, EBITDA is not a measurement of our financial performance or liquidity under Ind AS, Indian GAAP, IFRS or US GAAP and should not be considered in isolation or construed as an alternative to cash flows, profit/ (loss) for the periods or any other measure of financial performance or as an indicator of our operating performance, liquidity, profitability or cash flows generated by operating, investing or financing activities derived in accordance with Ind AS, Indian GAAP, IFRS or US GAAP. In addition, Non-GAAP Measures are not standardised terms, hence a direct comparison of Non-GAAP Measures between companies may not be possible. Other companies may calculate the Non-GAAP Measures differently from us, limiting its usefulness as a comparative measure. Although Non- GAAP Measures are not a measure of performance calculated in accordance with applicable accounting standards,

our Companys management believes that it is useful to an investor in evaluating us because it is a widely used measure to evaluate a companys operating performance. See "Risk Factors - Certain non-GAAP financial measures and certain other statistical information relating to our operations and financial performance Gross Profit, Gross Margin, EBITDA, EBITDA Margin, Return on Equity, Return on Capital Employed, PAT Margin, Gross Fixed Asset Turnover Ratio and Net Debt to EBITDA have been included in this Draft Red Herring Prospectus. These non-GAAP financial measures are not measures of operating performance or liquidity defined by Ind AS and may not be comparable." on page 47.

Reconciliation of Restated Profit for the period/ year to EBITDA and EBITDA Margin

The following table sets forth our EBITDA, EBITDA Margin, including a reconciliation of EBITDA and EBITDA Margin to our restated profit for the period/ year, for the mentioned time periods.