M. K. Sons Fine Jewels Ltd Management Discussions

OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

Our Companys financial year commences on April 1 and ends on March 31 of the immediately subsequent year, and references to a particular fiscal year are to the 12 months ended March 31 of that particular year. Unless otherwise indicated or the context otherwise requires, the financial information for the period ended December 31, 2025, Fiscal 2025, 2024 and 2023, included herein is based on or derived from our Restated Financial Information included in this Draft Red Herring Prospectus. For further information, see "Restated Financial Information" beginning on page 222. Please also refer to "Definitions and Abbreviations" on page 1 for certain terms used in this section. The Restated Financial Information is based on audited financial statements and is restated in accordance with the Companies Act, 2013, and the SEBI ICDR Regulations.

This Draft Red Herring Prospectus also contains certain forward-looking statements that involve risks, assumptions, estimates and uncertainties. Our actual results could differ from those anticipated in these forward- looking statements as a result of certain factors, including the considerations described below and elsewhere in this Draft Red Herring

Prospectus. See "Forward-Looking Statements" on page 21.

Unless the context otherwise requires, in this section, references to "we", "us", "our" "our Company" or "the Company" refers to M. K. Sons Fine Jewels Limited.

Unless otherwise indicated, industry and market data used in this section has been derived from the industry report titled

"Gems and Jewellery Industry in India" dated April 23, 2026 (the "CareEdge Report", and the date of the CareEdge Report, the "Report Date") which is exclusively prepared for the purpose of the Offer and issued by CARE Analytics and Advisory Private Limited ("CareEdge") and is exclusively commissioned for an agreed fee and paid for by our Company in connection with the Offer. CareEdge was appointed pursuant to an engagement letter entered into with our Company dated October 10, 2025. CareEdge is not related in any other manner to our Company. The data included herein includes excerpts from the CareEdge Report and may have been re-ordered by us for the purposes of presentation. Further, the CareEdge Report was prepared on the basis of information as of specific dates and opinions in the CareEdge Report may be based on estimates, projections, forecasts and assumptions that may be as of such dates. CareEdge has prepared this study in an independent and objective manner, and it has taken all reasonable care to ensure its accuracy and has further advised that it has taken due care and caution in preparing the CareEdge Report based on the information obtained by it from sources which it considers reliable. 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. A copy of the CareEdge Report will be available on the website of our Company at https://www.mkjewels.in/pages/investor-relations#others from the date of the Draft Red Herring Prospectus until the Bid/ Offer Closing Date. Further, the CareEdge Report is not a recommendation to invest or disinvest in any company covered in the report. Prospective investors are advised not to unduly rely on the CareEdge Report. The views expressed in the CareEdge Report are that of CareEdge. For more information and risks in relation to commissioned reports, see "Risk Factors 51 Extracts of industry information included in this Draft Red Herring Prospectus has been derived from an industry report prepared by CARE Analytics and Advisory Private Limited exclusively commissioned and paid for by us exclusively in connection with the Offer. Any reliance on such information for making an investment decision in the Offer is subject to inherent risks." on page 49. Also see, "Certain Conventions, Presentation of Financial, Industry and Market Data Industry and Market Data" on page 176.

Industry Overview

Overview of the Global Gems and Jewellery Industry

The global jewellery market is shaped by diverse economic trends, cultural practices, and shifting consumer preferences. The interest in gold chains and necklaces extends beyond weddings and special events. People increasingly wear platinum and gold rings, delicate gold chains, bracelets, and anklets as everyday fashion accessories. These items are also commonly given as gifts for occasions like birthdays and anniversaries. This shifting consumption pattern is likely to drive market growth. Modern designs and emerging fashion trends are drawing in customers, and manufacturers are capitalising on these frequent changes by creating unique products to attract buyers. Coloured gemstones such as emeralds, sapphires, and opals are gaining prominence, adding vibrant touches and uniqueness to jewellery collections. While classic earring and necklace sets remain popular, artificial jewellery is exploring new avenues, with items like hair clips, headbands, anklets, and waist chains gaining popularity as ways to showcase personal style. (Source: CareEdge Report)

The global appetite for jewellery is anticipated to grow as more individuals seek luxury items. Jewellery offers various benefits, including enhancing certain body features, reflecting fashion trends and styles, and improving ones appearance or that of others. Its appeal as a status symbol among higher-income groups has accelerated its consumption. The rising demand for contemporary designs and the influx of new designers are further driving market expansion. (Source: CareEdge Report)

The global gold jewellery market is likely to grow due to increasing consumer disposable income and the appeal of gold as a long-term investment. Gold is considered a haven, and most investors turn to gold during market turmoil for safe investment. Between CY20 to CY24, the global gems and jewellery market rebounded, achieving a (CAGR) of 5.7%. The diamond-studded gold jewellery segment has also gained traction, particularly in developed markets like North America and China, where it holds a higher share due to consumer preference for branded and certified jewellery.

(Source: CareEdge Report)

Chart: Global Gems and Jewellery Market Size (CY20-CY30P)

332

(Source: CareEdge Report)

Overview of the Indian Gems and Jewellery Industry

The Indian gems and jewellery industry is a significant pillar of the national economy, contributing approximately 7% to GDP and around 15% of total merchandise exports. The sector is expected to grow steadily, supported by strong domestic consumption and resilient international demand. India is the worlds largest diamond-cutting and polishing hub, accounting for over 90% of global polished diamond production. (Source: CareEdge Report)

The industry comprises multiple segments, including gold jewellery, diamond jewellery, coloured gemstones, and diamond-studded gold jewellery, with gold jewellery dominating due to its deep cultural and religious significance. Jewellery continues to play an integral role in weddings, festivals, and ceremonial occasions, reinforcing sustained demand. The manufacturing ecosystem is geographically concentrated in Maharashtra, Gujarat, and Tamil Nadu.

(Source: CareEdge Report)

(Source: CareEdge Report)

Our Business

We are a retail-focused jewellery company engaged in the marketing and sale of a wide range of gold, diamond and Cubic Zirconia (CZ) jewellery through our own chain of retail showrooms since 2012. One of our Promoters, namely Ramchand Murlidhar Raimalani has been in the business of jewellery since 1999 vide proprietorship firm namely, M. K. Sons Jewellers. Subsequently, on March 29, 2025, our Company acquired the proprietorship business of one of our Promoters, Ramchand Murlidhar Raimalani, to consolidate operations under a single corporate entity through a Business Succession Agreement and to eliminate potential related party or partiality concerns, and align the business structure with the interests of a broader set of stakeholders.

Our Company offers a diverse portfolio of contemporary and bridal designs with a focus on craftsmanship, design quality and customer-centric jewellery collections. We have established our presence in the retail jewellery markets of Maharashtra and Gujarat by expanding our retail footprint across Mumbai and Ahmedabad, two key commercial centres in Western India. Our Company currently operates three showrooms in Mumbai and two showrooms in Ahmedabad and has developed recognition as a regional jewellery brand in these markets. We are committed to serving the Western India market with jewellery certified by the Bureau of Indian Standards (BIS) Hallmark through our five showrooms located across Mumbai and Ahmedabad, with a total operational area of 6,513 square feet as December 31, 2025.

Over the years, our Company has built a strong reputation and fostered customer trust in the region by offering high-quality, culturally resonant jewellery while adhering to ethical business practices. We cater to a broad and diverse customer base that places significant importance on quality, authenticity and craftsmanship. Our inventory sourcing is guided by a data-driven approach, enabling us to effectively respond to evolving customer preferences and changing market trends. We procure our inventory from a network of suppliers located across the western region of India, primarily in Maharashtra and Gujarat, which provides flexibility in our supply chain and ensures the timely availability of products across our retail outlets. While we do not generally enter into long-term definitive agreements with our suppliers, our procurement strategy allows us to maintain a steady and consistent flow of inventory aligned with customer demand.

Significant Developments after December 31, 2025 that may affect our Future Results of Operations

Except as mentioned below, there is no significant development.

1. The Company was converted from Private Limited to a Limited Company on January 30, 2026.

2. Company Secretary Pratiksha Shah was appointed on March 02, 2026 vide Board resolution dated March 02, 2026

3. Kavita Pandey was appointed as the CFO of the Company vide board resolution dated March 02, 2026 and has resigned on April 01, 2026 and Varsha Shah was appointed as the CFO vide Board resolution dated April 01, 2026

FACTORS AFFECTING OUR RESULT OF OPERATIONS

Except as otherwise stated in the Draft Red Herring Prospectus and the Risk Factors given in the Draft Red Herring Prospectus, the following important factors could cause actual results to differ materially from the expectations include, among others:

General economic and market conditions in India and globally

Our business is significantly influenced by the economic and political conditions both in India and globally. The overall economic and political landscape in India and other countries can have a significant impact on the commodities market, which in turn can affect our business. These conditions encompass a range of factors such as macroeconomic policies, industry-specific trends, legislation and regulations, market fluctuations, consumer confidence, and currency and interest rate fluctuations.

It is important to note that market conditions can change rapidly in response to adverse economic and political circumstances. In such cases, we may face challenges in promptly and effectively adapting to these changes. This could potentially have a material adverse effect on our business, financial condition, cash flows, results of operations, and future prospects.

Therefore, it is crucial for us to closely monitor and assess the general economic and political conditions in order to mitigate any potential risks and make informed decisions for the success of our business.

Ability to expand our design portfolio for our product offering

Our ability to expand our design portfolio for our product offering is a critical factor influencing our results of operations and financial condition. We recognize that customer satisfaction, loyalty, and continuous innovation are essential to maintaining and growing our market position. The following aspects play a pivotal role in this area:

M.K. Sons Fine Jewels Ltd. is a Mumbai-based jewellery retailer specializing in gold, diamond, and CZ jewellery.

Operating under the brand "MK Jewels," the company offers a wide range of contemporary and bridal designs through its showrooms and online platform. Founded by the Raimalani family, the brand has been active since the late 1990s and focuses on craftsmanship, design quality, and customer-centric jewellery collections. (Source: CareEdge Report) Our ability to introduce new designs for our product offering that align with current trends, consumer preferences, and market demands is key to expanding our customer base and enhancing our revenue streams.

Cost of procuring raw materials and manufacturing of our products

The cost of procuring raw materials, along with the manufacturing of our products, is a significant factor that directly impacts our results of operations and financial condition. Our jewellery production is primarily dependent on raw materials. These raw materials represent a substantial portion of our overall cost structure and have a direct impact on our profitability and cost management strategies.

Set forth below is a break-up of raw materials obtained from our suppliers in the corresponding periods:

(in million)

For the period

Particulars	For the period ended December 31, 2025		Fiscal 2025		Fiscal 2024		Fiscal 2023
	Purchases	% of total Purchases	Purchases	% of total Purchases	Purchases	% of total Purchases	Purchases	% of total Purchases
Gold	3,078.53	92.22%	3,100.52	91.48%	2,209.30	92.05%	388.44	90.02%
Diamonds	203.97	6.11%	206.24	6.08%	164.18	6.84%	35.41	8.21%
Colour	19.11	0.57%	25.64	0.76%	9.64	0.40%	3.84	0.89%
Stones
Making	30.00	0.90%	49.54	1.46%	15.35	0.64%	3.48	0.81%
Charges
Platinum	4.16	0.12%	3.12	0.09%	0.85	0.04%	0.09	0.02%
Silver	1.72	0.05%	3.37	0.10%	-	0.00%	-	0.00%
Other	0.83	0.02%	0.96	0.03%	0.85	0.04%	0.23	0.05%
Costs*

Particulars	For the period ended December 31, 2025		Fiscal 2025		Fiscal 2024		Fiscal 2023
	Purchases	% of total Purchases	Purchases	Purchases	% of total Purchases	Purchases	% of total Purchases	Purchases
Total	3,338.33	100.00%	3,389.39	100.00%	2,400.17	100.00%	431.49	100.00%
*Other Costs include Hallmarking Charges, Certification Charges and other direct costs

*Other Costs include Hallmarking Charges, Certification Charges and other direct costs

Our business is significantly dependent on timely procurement, quality and price of our raw material, especially gold, for jewellery production. As a result, we are exposed to fluctuations in the price and availability of gold, both of which are influenced by regulatory factors such as global economic conditions, geopolitical factors, and fluctuations in demand and supply in the international markets.

Consumer spending and general economic and market conditions

Domestic demand is being propelled by rising disposable incomes, urbanisation, and evolving lifestyle preferences. On the export front, key markets such as the U.S., UAE, and Hong Kong continue to support growth, while policy initiatives and trade agreements strengthen Indias global competitiveness. (Source: CareEdge Report)

The sector, however, faces challenges including gold price volatility, dependency on imports, competition from synthetic diamonds, and regulatory compliance requirements. These risks are being mitigated through government interventions, product diversification, and technological improvements. Although the adoption of advanced technologies such as blockchain and digital retail platforms is still at an early stage, they are expected to enhance transparency and operational efficiency over time. (Source: CareEdge Report)

Our business is significantly influenced by consumer spending patterns, general economic conditions, and broader market dynamics. Domestic and international demand for our products is driven by various factors, including rising disposable incomes, urbanization, and changing consumer preferences.

SIGNIFICANT ACCOUNTING POLICIES

1. A. Corporate information

M. K. Sons Fine Jewels Limited (Formerly known as M. K. Sons Fine Jewels Private Limited) (the ‘Company) was incorporated on January 12, 2012. The Registration Number of the Company is U27310MH2012PLC225971. The Company is engaged in the business of Retail of Jewellery through Multiple Retail Jewellery Stores and through Online Channels.

The Company has changed its name from M. K. Sons Fine Jewels Private Limited to M. K. Sons Fine Jewels Limited w.e.f. 30 January 2026. The Company was converted into a public limited company under Companies Act, 2013, pursuant to a special resolution passed by the shareholders dated 19 January 2026, and consequently, the name of the company was changed to "M. K. Sons Fine Jewels Limited" and a fresh certificate of incorporation dated 30 January 2026 was issued by Registrar of Companies.

B. Basis of preparation of Restated Financial Information

The Restated Financial Information comprises of the Restated Statement of Assets and Liabilities as at December 31, 2025, March 31, 2025, March 31, 2024 and March 31, 2023, The Restated Statements of Profit and Loss, The Restated Statement of Cash Flows, The Restated Statement of Changes in Equity for the period ended December 31, 2025 and for the years ended March 31, 2025, March 31, 2024 and March 31, 2023, The Material Accounting Policies to Restated Financial Information, Statement of Material Adjustments and Notes to Restated Financial Information (Collectively, The "Restated Financial Information") .

These Restated Financial Information have been prepared by the Management as required under the Securities and

Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended ("ICDR Regulations") issued by the Securities and Exchange Board of India (SEBI), in pursuance of the Securities and

Exchange Board of India Act, 1992, for the purpose of inclusion in the Draft Red Herring Prospectus ("DRHP") in connection with the proposed initial public offering of equity shares of face value of Rs. 10, prepared in terms of the requirements of: a. Section 26 of Part I of Chapter III of the Companies Act, 2013 ("the Act");

b. The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 as amended.

c. The Guidance Note on Reports in Company Prospectuses (Revised 2019) issued by the Institute of Chartered

Accountants of India (ICAI) (the "Guidance Note").

The Restated Financial Information has been prepared by the Management of the Company and compiled from:

a) Audited special purpose interim Ind AS financial statements of the Company as at and for the nine months period ended December 31, 2025, prepared in accordance with Indian Accounting Standard (Ind AS) 34 "Interim Financial Reporting", prescribed under Section 133 of the Act and other accounting principles generally accepted in India (the "Special Purpose Interim Ind AS Financial Statements"), which have been approved by the Board of Directors at their meeting held on April 10, 2026.

b) Audited financial statements of the Company as at and for the years ended March 31, 2025, March 31, 2024 and March 31, 2023, prepared in accordance with the accounting standards notified under Section 133 of the Act ("Indian GAAP"), and other accounting principles generally accepted in India, which have been approved by the Board of Directors at their meeting held on September 3, 2025, September 29, 2024 and September 13, 2023 respectively. The Special Purpose Ind AS financial Statements for the years ended March 31, 2025, March 31, 2024 and March 31, 2023 has been prepared by the management by making Ind AS adjustments to the said audited Indian GAAP financial statements after giving effect to accounting policy and accounting policy choices (both mandatory exceptions and optional exemptions availed as per Indian Accounting Standards 101 "First-time Adoption of Indian Accounting Standards" (Ind AS 101) as initially adopted on transition date i.e. April 01, 2022 (For the purpose of preparing Restated Financial Information). Suitable restatement adjustments (both re-measurements and reclassifications) as per Ind AS 101, are made to these Financial Statements for the year ended March 31, 2023, March 31, 2024 and March 31, 2025, which have been approved by the Board of Directors at their meeting held on April 10, 2026.

The preparation of these Special Purpose Restated Ind AS Financial Statements resulted in changes to the

Companys accounting policies as compared to the most recent annual Financial Statements prepared under

Previous GAAP, wherever necessary. All accounting policies and applicable Ind AS adjustments have been applied consistently and retrospectively to all periods, including the previous financial year presented and the Ind AS opening balance sheet as at 1st April, 2022 (Transition Date for the purpose of Restated Financial Information). The resulting difference between the carrying amounts under Ind AS and Previous GAAP as on the Transition Date has been recognised directly in Retained Earnings. An explanation of the effect of the transition from Previous GAAP to Ind AS on the Companys equity and profit is provided in Annexure VII of the Restated Financial Information.

The Special Purpose Restated Ind AS Financial statements referred above have been prepared solely for the purpose of preparation of Restated Financial information for inclusion in the Offer Documents in relation to proposed IPO. Hence these Restated Financial statements are not suitable for any other purpose other than for the purpose of preparation of Restated Financial Information.

C. Presentation of Restated Financial Information

Functional and presentation currency:

These Restated Financial Information are presented in Indian Rupees ( ), which is also the Companys functional currency. All financial information presented in Indian rupees have been rounded off to two decimal places to the nearest million except for share and per share data and unless otherwise stated.

c) Basis of Measurement

These Restated Financial Information have been prepared on the historical cost convention and on an accrual basis, except for the following material items in the Restated Statement of Assets and Liabilities:

I. Certain financial assets are measured either at fair value or at amortized cost depending on the classification;

II. Long-term borrowings are measured at amortized cost using the effective interest rate method;

III. Employee defined benefit assets/(liability) are recognized as the net total of the fair value of plan assets, plus actuarial losses, less actuarial gains and the present value of the defined benefit obligation; and

IV. Right-of-use assets are recognised at the present value of lease payments that are not paid at that date. This amount is adjusted for any lease payments made at or before the commencement date, lease incentives received and initial direct costs, incurred, if any;

d) Current and non-current classification

The Schedule III of the Act requires assets and liabilities to be classified as either current or non-current. The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.

An asset is classified as current when it satisfies any of the following criteria:

a) It is expected to be realized in, or is intended for sale or consumption in, the Companys normal operating cycle;

b) It is held primarily for the purpose of being traded;

c) It is expected to be realized within twelve months after the reporting period; or

d) It is cash or a cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date.

All other assets are classified as non-current.

A liability is classified as current when it satisfies any of the following criteria: a) It is expected to be settled in the Companys normal operating cycle; b) It is held primarily for the purpose of being traded; c) It is due to be settled within twelve months after the reporting period; or

d) The Company does not have an unconditional right to defer settlement of liability for at least twelve months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

All other liabilities are classified as non-current.

Current assets/ liabilities include the current portion of non-current assets/ liabilities respectively. Deferred tax assets and liabilities are classified as non-current.

Operating cycle: Operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. The Company has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities.

2. Material accounting policies

2.1 Revenue Recognition

Revenue is recognized upon transfer of control of promised goods or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services.

Revenue from the sale of products is recognised at the point in time when control is transferred to the customer. Revenue is measured based on the transaction price, which is the consideration, net of customer incentives, discounts, variable considerations, payments made to customers, other similar charges, as specified in the contract with the customer.

Additionally, revenue excludes taxes collected from customers, which are subsequently remitted to governmental authorities.

Other income

Interest income is recognized on time proportion basis taking into account the outstanding amount and rate applicable.

Miscellaneous income is recognized when the Company has a right to receive the income, there is reasonable certainty of ultimate collection, and the income can be measured reliably

2.2 Inventories

Inventories are stated at the lower cost and net realizable value.

Cost of inventories is determined using the location wise weighted average cost. Cost includes all expenditures incurred in bringing inventories to their present location and condition.

Net realizable value represents the estimated selling price for inventories for less costs necessary to make the sale.

2.3 Determination of Fair Value

The Company measures financial instruments, at fair value at each balance sheet date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

In the principal market for the asset or liability, or

In the absence of a principal market, in the most advantageous market for the asset or liability The principal or the most advantageous market must be accessible by the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participants ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques, as summarised below:

Level 1 financial instruments Those where the inputs used in the valuation are unadjusted quoted prices from active markets for identical assets or liabilities that the Company has access to at the measurement date. The Company considers markets as active only if there are sufficient trading activities with regards to the volume and liquidity of the identical assets or liabilities and when there are binding and exercisable price quotes available on the balance sheet date.

Level 2 financial instruments Those where the inputs that are used for valuation and are significant, are derived from directly or indirectly observable market data available over the entire period of the instruments life.

Level 3 financial instruments Those that include one or more unobservable input that is significant to the measurement as whole. For assets and liabilities that are recognized in the Restated Financial Information on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. The Company periodically reviews its valuation techniques including the adopted methodologies and model calibrations.

Therefore, the Company applies various techniques to estimate the credit risk associated with its financial instruments measured at fair value, which include a portfolio-based approach that estimates the expected net exposure per counterparty over the full lifetime of the individual assets, in order to reflect the credit risk of the individual counterparties for non-collateralised financial instruments.

The Company evaluates the levelling at each reporting period on an instrument-by-instrument basis and reclassifies instruments, when necessary, based on the facts at the end of the reporting period.

2.4 Leases

Company as a Lessee

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

Rights-of-use assets

The Company recognizes right-of-use assets at the commencement date of the lease (i.e. the date of underlying asset is available for use). Rights-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 rights-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Rights-of-use assets are amortised on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.

Lease Liabilities

At the commencement date of the lease, the Company recognizes 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 and amounts expected to be paid under residual value guarantees. In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date as 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 lease term, a change in lease payments or a change in the assessment of an option to purchase the underlying asset.

Short term lease

The Company has elected not to recognise right of use asset and lease liabilities for short term leases of property that has lease term of 12 months or less. The Company recognises lease payment associated with these leases as an expense.

2.5 Borrowing Costs:

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

2.6 Cash Flow Statement

The Cash Flow Statement is prepared in accordance with Ind AS 7 using the indirect method, whereby profit before tax is adjusted for the effects of non-cash transactions, changes in working capital, and items of income or expense associated with investing or financing cash flows.

Cash and cash equivalents comprise cash on hand, balances with banks, and short-term highly liquid investments with original maturities of three months or less that are readily convertible into known amounts of cash and are subject to insignificant risk of changes in value.

Cash flows are classified into operating, investing, and financing activities:

Operating activities: Principal revenue-generating activities of the Company.

Investing activities: Acquisition and disposal of long-term assets and investments.

Financing activities: Activities that result in changes in the size and composition of equity and borrowings. Interest paid is classified as financing activities and interest received is classified as investing activities.

Non-cash transactions, including recognition of right-of-use assets and lease liabilities, are excluded from the Cash Flow Statement and disclosed separately wherever material.

2.7 Earnings per share

Basic earnings per share is computed by dividing the Profit for the year attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding for the year. The weighted average number of shares is adjusted for events such as bonus issues.

Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue equity shares were exercised or converted during the year. Diluted earnings per share is computed by dividing the Profit for the year attributable to the equity shareholders for the year by weighted average number of equity shares considered for deriving basic earnings per share and weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares.

2.8 Retirement and other employee benefit

Provident fund and national pension scheme

The Company contributes to a recognized provident fund and national pension scheme which is a defined contribution scheme. The contributions are accounted for on an accrual basis and recognized in the statement of profit and loss.

Gratuity

The Companys gratuity scheme is a defined benefit plan. The Companys net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that the employees have earned in return for their service in the current and prior periods, that benefit is discounted to determine its present value, and the fair value of any plan assets, if any, is deducted. The present value of the obligation under such benefit plan is determined based on independent actuarial valuation using the Projected Unit Credit Method. Benefits in respect of gratuity are funded with an insurance company approved by Insurance Regulatory and Development Authority (IRDA).

Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognized immediately in the Restated Statement of Assets and Liabilities with a corresponding debit or credit to retained earnings through OCI in the period in which they occur.

Remeasurements are not reclassified to Restated Statement of Profit and Loss in subsequent periods. Past service costs are recognised in Restated Statement of Profit and Loss on the earlier of:

- The date of the plan amendment or curtailment, and

- The date that the Company recognises related restructuring costs

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognises the following changes in the net defined benefit obligation as an expense in the consolidated statement of Restated Statement of Profit and Loss:

- Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements; and

- Net interest expense or income

Compensated Absences

The Company has no policy of accumulation of compensated policies

2.9 Property, plant and equipment

Property plant and equipment is stated at cost excluding the costs of day to day servicing, less accumulated depreciation and accumulated impairment in value. Changes in the expected useful life are accounted for by changing the amortization period or methodology, as appropriate, and treated as changes in accounting estimates.

Subsequent costs incurred on an item of property, plant and equipment is recognized in the carrying amount thereof when those costs meet the recognition criteria as mentioned above. Repairs and maintenance are recognized in profit or loss as incurred.

Depreciation is recognized so as to write off the cost of assets (other than freehold land and properties under construction) less their residual values over their useful lives. Depreciation is provided on a written down value basis from the date the asset is ready for its intended use or put to use whichever is earlier. In respect of assets sold, depreciation is provided up to the date of disposal.

As per the requirement of Schedule II of the Companies Act, 2013, the Company has evaluated the useful lives of the respective fixed assets which are as per the provisions of Part C of the Schedule II for calculating the depreciation.

Estimated useful lives of the assets are as follows:

Nature of assets	Estimated useful life
Plant and Machinery	15 years
Office Equipment	5 years
Computers	3 years
Furniture and Fixtures	10 years
Motor Vehicles	10 years

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. The carrying amount of those components which have been separately recognized as assets is derecognized at the time of replacement thereof. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss. Derecognition occurs when control of the asset is transferred to the buyer.

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

Intangible assets are stated at cost less accumulated amortization and impairment. Intangible assets are amortized over their respective individual estimated useful lives on a straight-line basis, from the date that they are available for use. The estimated useful life of an identifiable intangible asset is based on a number of factors including the effects of obsolescence, demand, competition, and other economic factors. Amortization methods and useful lives are reviewed periodically including at each financial year end. Changes in the expected useful life, or the expected pattern of consumption of future economic benefits embodied in the asset, are accounted for by changing the amortization period or methodology, as appropriate, which are then treated as changes in accounting estimates.

Estimate useful life of software is considered as 3 years.

Impairment of non-current assets

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired based on internal/external factors. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of cash generating unit which the asset belongs to is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Restated Statement of Profit and Loss. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is re-assessed and the asset is reflected at the recoverable amount subject to a maximum of the depreciable historical cost.

2.10 Cash and cash equivalents

Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits 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 changes in value.

2.11 Provisions and other contingent liabilities

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company 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 determined by discounting the expected future cash flows to net present value using an appropriate pre-tax discount rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

A present obligation that arises from past events, where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is disclosed as a contingent liability. Contingent liabilities are also disclosed 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. Claims against the Company, where the possibility of any outflow of resources in settlement is remote, are not disclosed as contingent liabilities.

Contingent assets are not recognized in the Restated Financial Information since this may result in the recognition of income that may never be realized. However, when the realization of income is virtually certain, then the related asset is not a contingent asset and is recognized.

2.12 Income tax expenses

Income tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

Current tax assets and liabilities for the current and prior years are measured at the amount expected to be recovered from, or paid to, the taxation authorities. The tax currently payable is based on taxable profit for the year. Taxable profit differs from ‘profit before tax as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Companys current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the Restated Financial Information and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised.

Deferred tax assets are also recognized with respect to carry forward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilised.

It is probable that taxable profit will be available against which a deductible temporary difference, unused tax loss or unused tax credit can be utilised when there are sufficient taxable temporary differences which are expected to reverse in the period of reversal of deductible temporary difference or in periods in which a tax loss can be carried forward or back. When this is not the case, deferred tax asset is recognized to the extent it is probable that:

The Company will have sufficient taxable profit in the same period as reversal of deductible temporary difference or periods in which a tax loss can be carried forward or back; or

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

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

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

Current and deferred tax for the year

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

Goods and services tax paid on acquisition of assets or on incurring expenses

Expenses and assets are recognized net of the goods and services tax paid, except:

When the tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case, the tax paid is recognized as part of the cost of acquisition of the asset or as part of the expense item, as applicable.

When receivables and payables are stated with the amount of tax included. The net amount of tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.

2.13 Events after reporting date

Events after the reporting date are accounted for in accordance with Ind AS 10.

Events occurring after the reporting date that provide evidence of conditions that existed at the reporting date (adjusting events) are recognised in the financial statements.

Events occurring after the reporting date that are indicative of conditions arising after the reporting date (non-adjusting events) are not recognised but are disclosed in the financial statements if they are material, including the nature of the event and an estimate of its financial effect.

Events are considered up to the date on which the financial statements are approved for issue.

2.14 Standards (including amendments) issued but not yet effective

The Ministry of Corporate Affairs has notified amendments to various Indian Accounting Standards through the Companies (Indian Accounting Standards) Amendment Rules, 2025, which will be effective from April 01, 2025 and April 01, 2026. The Company will evaluate the requirements and apply these amendments from the effective date.

Amendments to Ind AS 1 and Ind AS 10: Classification of Liabilities as Current or Non-current

These amendments are introduced to clarify the requirements on determining whether a liability is current or non-current and require new disclosures for non-current liabilities that are subject to future covenants. These amendments apply for the annual reporting periods beginning on or after April 01, 2025, while certain amendments are effective for annual reporting periods beginning on or after April 01, 2026. These amendments may particularly affect the classification and disclosures relating to non-current borrowings subject to future covenant compliance.

Impact: The Company has no impact of these amendments in its classification criteria of current and non-current liabilities.

Amendments to Ind AS 107 and Ind AS 7: Supplier Finance Arrangements

These amendments introduce new disclosures relating to supplier finance arrangements that assist users of the

Restated Financial Information to assess the effects of these arrangements on an entitys liabilities and cash flows and on an entitys exposure to liquidity risk. The amendments apply for the annual reporting periods beginning on or after April 01, 2025.

Impact: The Company does not have any supplier finance arrangements; hence, no material impact is expected.

Amendments to Ind AS 21: The Effects of Changes in Foreign Exchange Rates (Lack of Exchangeability)

These amendments require assessing currency exchangeability and estimating exchange rates when currencies are not readily exchangeable and also require specific disclosures viz. the nature and financial effects of the currency not being exchangeable, the spot exchange rates used, the estimation process, and the risks to which the entity is exposed because of the currency not being exchangeable. The amendment also lays down transition requirements, while specifically stating that an entity shall not restate comparative information in applying Lack of Exchangeability. These amendments are effective from April 01, 2025; however, these amendments are not expected to have a material impact on the Companys Restated Financial Information.

Impact: The Company currently does not deal in such currencies and hence there is no impact on the financial statements. The Company will assess the implications of this amendment for future periods.

2.15 Operating Segments

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating

Decision Maker (CODM). Based on the ‘management approach as defined in Ind AS 108 "Operating Segments", the CODM evaluates the Companys performance and allocation resources based on an analysis of various performance indicators by business segments. The accounting principles used in the preparation of the financial statements are consistently applied to record revenue and expenditure in individual segments.

2.16 Financial Instruments: Date of recognition

Financial assets and financial liabilities are initially recognized on the trade date, i.e., the date that the Company becomes a party to the contractual provisions of the instrument. This includes regular way trades purchases or sales of financial assets that require delivery of assets within the time frame generally established by regulation or convention in the marketplace.

Initial measurement of financial instruments

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

Day 1 profit or loss

When the transaction price of the financial instrument differs from the fair value at origination and the fair value is based on a valuation technique using only inputs observable in market transactions, the Company recognizes the difference between the transaction price and fair value in net gain on fair value changes. In those cases where fair value is based on models for which some of the inputs are not observable, the difference between the transaction price and the fair value is deferred and is only recognized in profit or loss when the inputs become observable, or when the instrument is derecognized.

Measurement categories of financial instruments

Financial assets:

The Company classifies all of its financial assets based on the business model for managing the assets and the assets contractual terms, measured at either:

Fair value through profit or loss [FVTPL]

Amortized cost and Effective Interest method

The Company measures debt financial assets that meet the following conditions at amortized cost:

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

All other financial assets are initially measured at fair value and subsequently measured at FVTPL.

Amortized cost and Effective interest method

The amortized cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortization using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. On the other hand, the gross carrying amount of a financial asset is the amortized cost of a financial asset before adjusting for any loss allowance.

i) Financial assets at fair value through profit or loss

Financial assets in this category are those that are not held for trading and have been either designated by management upon initial recognition or are mandatorily required to be measured at fair value under Ind AS 109. Management only designates an instrument at FVTPL upon initial recognition when the following criteria is met. Such designation is determined on an instrument-by-instrument basis:

The designation eliminates, or significantly reduces, the inconsistent treatment that would otherwise arise from measuring the assets or recognizing gains or losses on them on a different basis.

Financial liabilities

Financial liabilities at FVTPL are recorded in the balance sheet at fair value. Changes in fair value are recorded in profit or loss including Variable Additional Return (VaR) from the funds.

In accordance with the principles under Ind AS 109 (Financial Instruments) and Ind AS 113 (Fair Value Measurement), the Variable Additional Return (VaR) arising from investments in Alternative Investment Funds (AIFs) or Partnership Interests is recognized through profit or loss as part of the net gain or loss from fair value changes. The recognition of VaR is guided by the waterfall distribution mechanism specified in the respective fund documentation. Subject to these terms, the VaR is estimated and recognized progressively over the remaining life of the fund, up to the expected date of the realization.

Financial liabilities measured at amortized cost.

Debt securities and other borrowed funds

After initial measurement, other borrowed funds are subsequently measured at amortized cost. Amortized cost is calculated by taking into account any discount or premium on issue funds, and costs that are an integral part of the EIR.

ii) Financial liabilities at fair value through profit or loss

Financial liabilities in this category are those that are not held for trading and have been either designated by management upon initial recognition or are mandatorily required to be measured at fair value under Ind AS 109.

Financial liabilities at FVTPL are recorded in the balance sheet at fair value. Changes in fair value are recorded in profit and loss. Interest incurred on financial liabilities designated at FVTPL is accrued in interest finance cost, respectively, using the EIR, taking into account any discount/ premium and qualifying transaction costs being an integral part of instrument.

Financial liabilities and equity instruments

Financial instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

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

Repurchase of the Companys own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Companys own equity instruments.

Reclassification of financial assets and financial liabilities

The Company does not reclassify its financial assets subsequent to their initial recognition, apart from the exceptional circumstances in which the Company acquires, disposes of, or terminates a business line. Financial liabilities are never reclassified.

Derecognition of financial assets and financial liabilities

Derecognition of financial assets due to substantial modification of terms and conditions

The Company derecognizes a financial asset, when the terms and conditions have been renegotiated to the extent that, substantially, it becomes a new financial asset with the difference recognized as a derecognition gain or loss, to the extent that an impairment loss has not already been recorded.

If the modification does not result in cash flows that are substantially different, the modification does not result in derecognition. Based on the change in cash flows discounted at the original EIR, the Company records a modification gain or loss, to the extent that an impairment loss has not already been recorded.

ii) Derecognition of financial assets (other than due to substantial modification of terms and conditions)

A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is derecognized when the rights to receive cash flows from the financial asset have expired. The Company also derecognizes the financial asset if it has both transferred the financial asset and the transfer qualifies for derecognition.

The Company has transferred the financial asset if, and only if, either:

The Company has transferred its contractual rights to receive cash flows from the financial asset; or

It retains the rights to the cash flows, but has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass through arrangement.

A transfer only qualifies for derecognition if either:

The Company has transferred substantially all the risks and rewards of the asset; or

The Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

The Company considers control to be transferred if and only if, the transferee has the practical ability to sell the asset in its entirety to an unrelated third party and is able to exercise that ability unilaterally and without imposing additional restrictions on the transfer.

iii) Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expires.

Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability. The difference between the carrying value of the original financial liability and the consideration paid, including modified contractual cash flow recognized as new financial liability, would be recognized in profit or loss.

e. Impairment of financial assets

The Company records allowance for expected credit losses for all loans, other debt financial assets not held at

FVTPL, together with loan commitment and financial guarantee contracts, in this section all referred to as ‘financial instruments. Equity instruments are not subject to impairment.

The Company follows ‘simplified approach for recognition of impairment loss allowance on trade receivables.

The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition. The Company uses a provision matrix to determine impairment loss allowance on portfolio of its receivables. The provision matrix is based on its historically observed default rates over the expected life of the receivables. However, if receivables contain a significant financing component, the Company chooses as its accounting policy to measure the loss allowance by applying general approach to measure ECL.

For all other financial instruments, the Company recognizes lifetime ECL when there has been a significant increase in credit risk (SICR) since initial recognition. If, on the other hand, the credit risk on the financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses (12m ECL). The assessment of whether lifetime ECL should be recognized is based on significant increases in the likelihood or risk of a default occurring since initial recognition instead of evidence of a financial asset being credit-impaired at the reporting date or an actual default occurring.

Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12m ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

The measurement of expected credit losses is a function of the probability of default, loss given default (i.e. the magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of default and loss given default is based on historical data adjusted by forward-looking information. As for the exposure at default,(EAD) for financial assets, this is represented by the assets gross carrying amount at the reporting date; for loan commitments and financial guarantee contracts, the exposure includes the amount drawn down as at the reporting date, together with any additional amounts expected to be drawn down in the future by default date determined based on historical trend, the Companys understanding of the specific future financing needs of the debtors, and other relevant forward-looking information.

For financial assets, the expected credit loss (ECL) is estimated as the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive, discounted at the original effective interest rate. The Company recognizes an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

If a financial instrument includes both a loan (i.e. financial asset) and an undrawn commitment (i.e. loan commitment) component and the Company cannot separately identify the ECL on the loan commitment component from those on the financial asset component, the ECL on the loan commitment have been recognized together with the loss allowance for the financial asset. To the extent that the combined expected credit losses exceed the gross carrying amount of the financial asset, the expected credit losses have been recognized as a provision. Also, for other loan commitments and all financial guarantee contracts, the loss allowance has been recognized as a provision.

Write off

Financial assets are written off either partially or in their entirety only when the Company has no reasonable expectation of recovery.

2.17 Use of Estimates and Judgements:

Significant accounting judgements, estimates, and assumptions

The preparation of the Restated Financial Information in conformity with Ind AS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. These estimates and associated assumptions are based on historical experiences and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. In particular, the areas involving critical estimates or judgment are:

Right-of-use assets and lease liability

The Company has exercised judgement in determining the lease term as the non-cancellable term of the lease, together with the impact of options to extend or terminate the lease if it is reasonably certain to be exercised.

Where the rate implicit in the lease is not readily available, an incremental borrowing rate is applied. This incremental borrowing rate reflects the rate of interest that the lessee would have to pay to borrow over a similar term, with a similar security, the funds necessary to obtain an asset of a similar nature and value to the right-of-use asset in a similar economic environment. Determination of the incremental borrowing rate requires estimation.

Property, plant and equipment

The depreciation of property, plant and equipment is derived from determining an assets expected useful life and the expected residual value at the end of its life. The residual values of the Companys assets are determined by management at the time of acquisition of such assets and are reviewed periodically, including at each period end.

Impairment of financial and non-financial assets

Significant management judgement is required to determine the amounts of impairment loss on the financial and non-financial assets. The calculations of impairment loss are sensitive to underlying assumptions.

Tax provisions and contingencies

Significant management judgement is required to determine the amounts of tax provisions and contingencies. Deferred tax assets are recognised for unused tax losses to the extent it is probable that taxable profit will be available against which losses and credit entitlements can be utilized. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

Defined benefit plans

The cost of the defined benefit plan and the present value of the obligation are determined using actuarial valuation. An actuarial valuation involves various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, attrition rates 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 period. The parameter which is most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds where remaining maturity of such bond correspond to expected term of defined benefit obligation.

The mortality rate is based on publicly available mortality tables. Those mortality tables tend to change only at intervals in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates.

Fair value measurement of financial instruments

When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using internal valuation techniques. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.