Tempsens Instruments India Ltd

Tempsens Instruments India Ltd Management Discussions

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Nov 6, 2026|03:59:35 PM

Tempsens Instruments India Ltd Share Price Management Discussions

OPERATIONS

The following discussion is intended to convey our managements perspective on our financial condition and results of operations included in the Financial Statements.

Please read Certain Conventions, Presentation of Financial, Industry and Market Data - Financial Data on page 15 before reading this section. This section should be read together with Risk Factors, Industry Overview, Our Business, Other Financial Information and Restated Consolidated Financial Information on pages 20, 163, 256, 463 and 363, respectively.

This section contains forward-looking statements. Our actual results may differ materially from those expressed in or implied by these forward-looking statements. See Forward-Looking Statements on page 18 for a discussion of the risks and uncertainties related to those statements and Risk Factors on page 20 for a discussion of certain factors that may affect our business, financial condition, results of operations or cash flows.

Unless stated otherwise, all financial information in this section is based on or derived from the Restated Consolidated Financial Information included on page 363 of this Red Herring Prospectus. Our Companys financial year ends on March 31 of every year, so all references to a particular Fiscal are to the twelve-month period ended March 31 of that year.

The financial information presented for Fiscals 2026, 2025, and 2024 includes the results of our Company and reflects the impact of the amalgamation of Marathon Heater (India) Private Limited ( Marathon Heater ) with our Company and the acquisitions of Tempsens Instruments GmbH, Tempsens Polska Sp. z o.o. and Tempsens Measurement and Control Private Limited (formerly known as Techin Gauges India Private Limited). Our Board of Directors approved the scheme of amalgamation of Marathon Heater with our Company ( Marathon Amalgamation Scheme ) on April 4, 2024, and the National Company Law Tribunal, Ahmedabad sanctioned the Marathon Amalgamation Scheme on February 6, 2025 with an appointed date of April 1, 2024. The Marathon Amalgamation Scheme became effective on March 6, 2025 following the necessary regulatory filings. Accordingly, the financial results for Fiscals 2026 and 2025 include the operations of Marathon Heater from April 1, 2024 onwards, in accordance with the acquisition method of accounting as prescribed under Ind AS 103 Business combinations. Further, the financial results for Fiscal 2026 reflect the impact of the acquisitions of Tempsens Instruments GmbH and Tempsens Polska Sp. z o.o., which became effective on January 16, 2026, and the acquisition of Tempsens Measurement and Control Private Limited (formerly Techin Gauges India Private Limited), which became our Subsidiary with effect from March 30, 2026. As a result, the figures for Fiscal 2026 are not directly comparable with those for Fiscal 2025 and Fiscal 2024, and the figures for Fiscal 2025 are not directly comparable with those for Fiscal 2024. Investors should bear this in mind when considering period-on-period trends. For further details in relation to the Marathon Amalgamation Scheme and the acquisitions, see History and Certain Corporate Matters - Details regarding Material Acquisitions or Divestments of Business/ Undertakings, Mergers, Amalgamation, any Revaluation of Assets, etc. in the last 10 Years - Amalgamation of Marathon Heater (India) Private Limited into our Company and consequently Pyrosens and Accurate Opto becoming our Subsidiary and Step-Down Subsidiary, respectively on page 317.

Unless otherwise indicated, industry and market data used in this section has been derived from the report titled, Industry Report on Sensors, Specialty Cables and Heating Solutions in India and Globally ( F&S Report ) dated August 6, 2026, prepared and issued by Frost & Sullivan ( F&S ), which has been commissioned and paid for by us for an agreed fee and prepared exclusively in connection with this Offer. The F&S Report is available on the website of our Company at https://tempsens.com/investors. Unless otherwise indicated, all financial, operational, industry and other related information derived from the F&S Report and included herein with respect to any particular year, refers to such information for the relevant year. For more information, see Risk Factors - Internal Risk Factors - This Red Herring Prospectus contains information from third parties, including an industry report prepared by an independent third-party research agency, Frost & Sullivan, which we have commissioned and paid for to confirm our understanding of our industry exclusively in connection with the Offer and reliance on such information for making an investment decision in the Offer is subject to inherent risks. on page 60. Also see, Certain Conventions, Presentation of Financial, Industry and Market Data- Industry and Market Data on page 17. F&S is an independent agency and is not related to our Company, Directors, Promoters or any of the Selling Shareholders.

OVERVIEW

For details in relation to our business, see Our Business on page 256.

SIGNIFICANT FACTORS AFFECTING OUR RESULTS OF OPERATIONS

Our financial results and growth prospects are driven by core strengths, each of which has a direct and measurable impact on revenue, profitability, and resilience. The analysis below integrates deeper insights into operational effectiveness, margin outcomes, and business risk mitigation.

The table below sets forth details of certain parameters of our financial and operational performance for Fiscals 2026, 2025 and 2024:

Particulars	Fiscal 2026	Fiscal 2025	Fiscal 2024
Revenue from operations (Rs. million)	4,448.78	3,785.26	2,748.10
Profit After Tax (2) (Rs. million)	710.67	625.55	409.19
Profit After Tax Margin (%)	15.59	16.36	14.72
EBITDA (4) (Rs. million)	1,131.73	973.22	611.27
EBITDA margin (%)	24.83	25.45	21.98
Adjusted Profit After Tax (6) (Rs. million)	748.69	663.03	409.19
Adjusted Profit After Tax Margin (%)	16.42	17.34	14.72
EBITDA CAGR (Fiscals 2024-2026) (8) (%)	36.07
PAT CAGR (Fiscals 2024-2026) (9) (%)	31.79
Adjusted PAT CAGR (Fiscals 2024-2026) (10) (%)	35.27

Notes:

1. Revenue from operations includes sale ofproducts, services and other operating revenue.

2. Profit After Tax: Profit for the year after deducting total tax expense from profit before tax.

3. Profit After TaxMargin: PAT divided by total income.

4. EBITDA: Profit for the year add finance costs, depreciation and amortization expense and total tax expenses.

5. EBITDA Margin: EBITDA divided by total income.

6. Adjusted Profit After Tax: Profit for the year, adjusted to exclude the amortisation impact of intangible assets (net of tax) created on account of the Marathon Amalgamation Scheme and acquisitions, which has been accounted as per Ind AS 103 Business combinations.

7. Adjusted Prof t After Tax Margin: Adjusted PAT di vi d ed by total income.

8. EBITDA CAGR (Fiscals 2024-2026): (EBITDA for Fiscal 2026 / EBITDA for Fiscal 2024)^(1/Number of years) minus 1, expressed as a percentage.

9. PAT CAGR (Fiscals 2024-2026): (PAT for Fiscal 2026 / PAT for Fiscal 2024)^(1/Number of years) minus 1, expressed as a percentage

10. Adjusted PAT CAGR (Fiscals 2024-2026): (Adjusted PAT for Fiscal 2026 / Adjusted PAT for Fiscal 2024) A -(1/Number of years) minus 1, expressed as a percentage.

Diversified and resilient business model

We serve more than 3,800 customers across multiple end-use industries, including metals, oil & gas, power, automotive, glass, chemicals, defence, and renewables. In Fiscal 2026, our top 10 customers contributed only 18.59% of our revenue from operations, confirming low concentration risk. This diversity protects us from demand volatility in any single sector, supporting a consistent revenue base and helping to maintain EBITDA stability. For instance, as new applications arise, such as thermocouples for glass, emission monitoring solutions for automotive, or cables for oil wells, we are able to quickly respond, translating sectoral opportunities into topline growth while minimising downside risk.

Complementing our diverse customer base, our cross-sell performance has shown sustained improvement. Revenue from customers purchasing across multiple product categories reached U2,668.14 million in Fiscal 2026, representing 59.97% of our revenue from operations, compared to Rs.2,123.73 million (57.89%) in Fiscal 2025 and Rs.1,583.73 million (57.60%) in Fiscal 2024. This trend demonstrates deepening client engagement and successful expansion of our solutions within existing accounts. Our increasing cross-sell share reflects both the breadth of our product portfolio and our ability to identify and fulfil evolving customer needs, supporting resilient topline growth. Higher cross-sell rates also help mitigate dependence on any one product verticals and underline the strength of our relationships in enabling upsell opportunities.

Market leadership, scale, and high entry barriers

We hold a leading position in temperature sensing, electric heating, and specialist cable solutions. Our fully integrated manufacturing, paired with strong R&D and long-term customer relationships, creates meaningful barriers for potential entrants. From Fiscal 2024 to Fiscal 2026, our revenue from operations expanded at a CAGR of 27.23% (Rs.2,748.10 million for Fiscal 2024 to Rs.4,448.78 million for Fiscal 2026), while EBITDA grew at a CAGR of 36.07% (from Rs.611.27 million for Fiscal 2024 to Rs.1,131.73 million for Fiscal 2026). This outperformance reflects commercial gains from large project wins, lifecycle services, and the technical certification required for many of our core products.

Commitment to innovation and portfolio expansion

We maintain a specialised team of 83 employees across our R&D operations as of March 31, 2026. Research and development are fundamental to our product development strategy. It enables us to meet evolving market requirements, advance our technological capabilities, and maintain a pipeline of innovative products. Ongoing initiatives focus on slot resistance temperature detectors, mid-voltage heaters, pressuriser heaters for nuclear reactors, and a new generation of high-performance infrared pyrometers and online thermal imagers. Our focus on portfolio renewal and technical differentiation has been essential to sustaining profitable growth amid changing industry and regulatory landscapes.

International expansion through joint ventures

We have established a broad global presence through a combination of collaborations, joint ventures, subsidiaries, a diverse customer base and a steadily growing export business. These collaborations and international operations have enabled us to expand our product categories, create cross-selling opportunities, and efficiently enter new markets by leveraging local insights and networks.

Our physical presence in key regions, including through our Subsidiaries in the United Arab Emirates (Tempsens Gulf LLC), Germany (Tempsens Instruments GmbH), Poland (Tempsens Polska Sp. z o.o.), a subsidiary of Tempsens Instruments GmbH) and our Joint Ventures in Indonesia (PT. Tempsens Asia Jaya) and in the Republic of Korea (South Korea) (Tempsens Korea Co. Ltd.), enables us to maintain proximity to our customers. This presence supports a deeper understanding of local market needs, facilitates the delivery of tailored solutions, and enables rapid service and support. Local operations also help us to address regulatory, technical and logistical requirements effectively.

The amalgamation of Marathon Heater with our Company, approved by the National Company Law Tribunal, Ahmedabad, on February 6, 2025 and with an appointed date of April 1, 2024, reflects our strategic focus on integrating related product lines and customer bases for long-term growth. Previously, Marathon Heater was part of our promoter group, and our Company held a minority stake in Marathon Heater. Marathon Heater specialised in industrial heaters and thermal engineering solutions, overlapping with our own activities.

This integration was undertaken to achieve operational synergies, consolidate resources and expertise, and offer a more comprehensive product portfolio. As a result, our capabilities in electrical heating solutions have expanded, allowing us to provide broader and more efficient solutions for our customers. The amalgamation has also significantly increased our customer base and extended our reach across various industries, including advanced space technology, where Marathon Heater has strong relationships and has delivered specialised thermal solutions. In addition, through the Marathon Amalgamation Scheme, our Company holds a 50.01% stake in Pyrosens and, via Pyrosens, owns 100% of Accurate Opto as a Step-Down Subsidiary. In June 2025, Micro-Epsilon became a strategic shareholder in Pyrosens with a 49.99% shareholding, while we retained the balance. These provided us with non-contact temperature sensor technologies (through Pyrosens), opened up new clients and sectors, and enabled access to advanced online thermal imaging applications and industries through Accurate Opto. For further details in relation to the Marathon Amalgamation Scheme, see History and Certain Corporate Matters-Details regarding Material Acquisitions or Divestments of Business/ Undertakings, Mergers, Amalgamation, any Revaluation of Assets, etc. in the last 10 Years-Amalgamation of Marathon Heater (India) Private Limited into our Company and consequently Pyrosens and Accurate Opto becoming our Subsidiary and Step-Down Subsidiary, respectively and History and Certain Corporate Matters-MaterialAgreements on pages 317 and 329.

Our integrated approach, product innovation, and customer-centric strategy have enabled us to develop strong cross-selling capabilities across our diverse product categories and customer segments. As a result, a significant and growing proportion of our revenue is now derived from customers purchasing more than one product verticals. Revenue from customers purchasing across multiple product categories reached Rs.2,668.14 million in Fiscal 2026, representing 59.97% of our revenue from operations, compared to Rs.2,123.73 million (57.89%) in Fiscal 2025 and Rs.1,583.73 million (57.60%) in Fiscal 2024. This not only reflects deeper customer relationships and trust but also demonstrates our ability to meet multiple operational needs for our customers, increasing customer stickiness and lifetime value, while mitigating dependence on any one product vertical.

By combining expertise and resources, we can now serve a wider range of industries that demand advanced thermal solutions. This strengthens our position as a trusted partner in critical applications and enhances our innovation and manufacturing capabilities. To further strengthen our international footprint, we are in the process of expanding our sales presence in Mexico; an entity in Mexico has been incorporated for this purpose and its registration process has been completed, although our capital infusion and the process for this entity to become our subsidiary are currently ongoing. In addition, our Company acquired a majority stake in Tempsens Measurement and Control Private Limited (formerly known as Techin Gauges India Private Limited). This acquisition has expanded our manufacturing capabilities in temperature and pressure gauges and enabled us to integrate diaphragm seals and level products into our product portfolio. Further, our Company has acquired 50.00% 3 of the share capital of Tempsens Instruments GmbH pursuant to the agreement of sell and purchase of shares dated September 23, 2025 (as amended), and Tempsens Instruments GmbH was a Joint Venture of our Company from December 17, 2025 until January 15, 2026. Upon our Company acquiring control over Tempsens Instruments GmbH pursuant to the voting rights, agency and governance agreement dated January 16, 2026, Tempsens Instruments GmbH has become our Subsidiary with effect from January 16, 2026. Tempsens Polska Sp. z.o.o., Poland, a subsidiary of Tempsens Instruments GmbH, has, as a consequence of this acquisition, also become our Step-Down Subsidiary with effect from January 16, 2026. In addition, we have incorporated a joint venture company, Victura Tempsens Technologies Private Limited, in Udaipur, India, to manufacture, assemble, market and sell exhaust gas heater components and assemblies for commercial vehicles and allied products. These developments have strengthened our manufacturing capabilities and expanded our presence in India and Europe.

This has positioned us for sustainable long-term growth, enabled swift adaptation to market changes, and established high barriers to entry for competitors.

Furthermore, our Companys growth strategy, including through expansion of our international operations, joint ventures, subsidiaries and other strategic initiatives, as well as the continued broadening of our customer base and product offerings, may result in significant new orders and business opportunities. While such growth is expected to support revenue generation over time, it may also require increased employee-related and other operating expenses, including in connection with new hiring, strengthening execution and delivery capabilities, and other ramp-up costs. Such costs may be incurred in advance of the corresponding revenue being realised and may therefore affect our margins, profitability and free cash flows in the near term.

Strong financial discipline and sustained profitability

Our focus on premium engineering solutions, price discipline, and cost management has sharply improved profitability. EBITDA increased from Rs.611.27 million in Fiscal 2024 to Rs.1,131.73 million in Fiscal 2026, supported by both topline growth and higher margins. EBITDA margin expanded from 21.98% in Fiscal 2024 to 24.83% in Fiscal 2026, as a result of product mix enhancements and economies of scale. Profit for the year also grew from Rs.409.19 million to Rs.710.67 million over the same period. Despite aggressive revenue expansion (CAGR of 27.23%), return on capital employed was 21.61% in Fiscal 2026, underlining high asset productivity. These outcomes provide the financial flexibility to invest in capacity, technology, and talent, and act as a buffer in volatile macroeconomic conditions.

Vertical impact on performance

Vertical	Revenue in Fiscal 2026 (Rs. million)	CAGR (Fiscal 2024-Fiscal 2026) (%)	Key Drivers/Comments
Temperature sensing	1,966.64	9.08	Metals, glass, automotive, and energy adoption; new launches in fibre- optics and emission monitoring
Electric heating	913.27	192.97	Amalgamation of Marathon Heater; rapid expansion in industrial and renewables, major oil & gas win
Specialised cables	1,531.13	25.71	Growth in process, infrastructure, and energy transmission projects; new export markets

In addition, our Company may continue to incur capital expenditure in connection with its expansion plans, including towards the acquisition of land, setting up new manufacturing facilities, capacity enhancement and investments supporting our broader business expansion and strategic growth initiatives. Such capital expenditure may be funded through internal accruals and not necessarily through borrowings. Accordingly, while this may reduce reliance on external indebtedness, the deployment of internal accruals towards such expenditure, together with increased operating costs associated with growth and expansion initiatives, may adversely affect our free cash flows. If the related expenses and capital expenditure

3 Tempsens Instruments GmbH was a Joint Venture of our Company from December 17, 2025 (following the acquisition of50.00% of its shares) until January 15, 2026, and became our Subsidiary with effect from January 16, 2026, upon our Company acquiring control pursuant to the voting rights, agency and governance agreement dated January 16, 2026 which established a governance framework granting our Company the ability to direct the activities of Tempsens Instruments GmbH. As of the date of this Red Herring Prospectus, consideration for 0.01 % of the shares of Tempsens Instruments GmbH, amounting to EUR 153, remains pending payment. increase more quickly than revenues, or if there are delays in execution or revenue recognition in respect of new orders, our results of operations, profitability and cash flows may be adversely affected.

PRESENTATION OF FINANCIAL INFORMATION

The restated consolidated financial information of our Company along with our subsidiaries (collectively referred to as Group ) comprises of the restated consolidated statement of assets and liabilities as at March 31, 2026, March 31, 2025 and March 31, 2024, the restated consolidated statements of profit and loss (including other comprehensive income), the restated consolidated statement of changes in equity, the restated consolidated cash flow statement for the years ended March 31, 2026, March 31, 2025 and March 31, 2024, notes to the restated consolidated financial information, including material accounting policy information and other explanatory information (collectively, the Restated Consolidated Financial Information ).

MATERIAL ACCOUNTING POLICIES

The summary of accounting policies set out below have been applied consistently to the period presented in these Restated Consolidated Financial Information.

Significant accounting judgements, estimates and assumptions

The preparation of the Groups Restated Consolidated Financial Information is in conformity with the Indian Accounting Standards requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures (including contingent liabilities). The management believes that the estimates used in preparation of the Restated Consolidated Financial Information are prudent and reasonable. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

In the process of applying the Groups accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the Restated Consolidated Financial Information:

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

Provisions & contingent liabilities

The Group estimates the provisions that have present obligations as a result of past events and it is probable that outflow of resources will be required to settle the obligations. These provisions are reviewed at the end of each reporting period and are adjusted to reflect the current best estimates.

The Group uses significant judgements to assess contingent liabilities. Contingent liabilities are recognised when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the Group or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made. Contingent assets are neither recognised nor disclosed in the Restated Consolidated Financial Information.

Allowance for expected credit loss

The allowance for expected credit loss reflects managements estimate of losses inherent in its credit portfolio. This allowance is based on Groups estimate of the losses to be incurred, which derives from past experience with similar receivables, current and historical past due amounts, write-offs and collections, the careful monitoring of portfolio credit quality and current and projected economic and market conditions. Should the present economic and financial situation persist or even worsen, there could be a further deterioration in the financial situation of the Group debtors compared to that already taken into consideration in calculating the allowances recognised in the Restated Consolidated Financial Information.

Allowance for obsolete and slow-moving inventory

The allowance for obsolete and slow-moving inventory reflects managements estimate of the expected loss in value and has been determined on the basis of past experience and historical and expected future trends. A worsening of the economic and financial situation could cause a further deterioration in conditions compared to that taken into consideration in calculating the allowances recognised in the Restated Consolidated Financial Information.

Useful lives of property, plant and equipment and intangible assets

Management reviews its estimate of the useful lives of depreciable/amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utility of certain plant and equipments.

Defined benefit obligations (DBO)

Managements estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses. Refer note 42 for key assumptions used in developing estimate of DBO.

Impairment of non-financial assets (including goodwill) - The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.

Current/non-current classification

All assets and liabilities have been classified as current or non-current as per the Groups normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of business and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Group has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities.

Assets

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

It is expected to be realised in, or is intended to be sold or consumed in, the Groups normal operating cycle;

It is held primarily for the purpose of being traded;

It is expected to be realised within twelve months after the reporting date; or

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

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

Liabilities

A liability is classified as current when it satisfies any of the following criteria:

It is expected to be settled in the Groups normal operating cycle;

It is held primarily for the purpose of being traded;

It is due to be settled within twelve months after the reporting date; or

The Group does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

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

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

Foreign currency transactions and translations

Monetary and non-monetary transactions in foreign currencies are initially recorded in the functional currency of the Groups entities at the exchange rates at the date of the transactions. Monetary foreign currency assets and liabilities remaining unsettled on reporting date are translated at the rates of exchange prevailing on reporting date. Gains / (losses) arising on account of realization /settlement of foreign exchange transactions and on translation of monetary foreign currency assets and liabilities are recognised in the restated consolidated statement of profit and loss. Financial instruments designated as hedge instruments are mark to market using the valuation given by the bank on the reporting date. Exchange differences arising on settlement of monetary items on actual payments / realisations and year end translations including on forward contracts are dealt with in the restated consolidated statement of profit and loss.

Foreign operations

The assets and liabilities of foreign operations (subsidiaries and joint ventures) are translated into t, the functional currency of the Holding Company, at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into t at the exchange rates at the dates of the transactions or an average rate if the average rate approximates the actual rate at the date of the transaction. Foreign currency translation differences are recognised in OCI and accumulated in equity (as exchange differences on translating the financial information of a foreign operation), except to the extent that the exchange differences are allocated to NCI.

Property, plant and equipment

Recognition and measurement

Items of property, plant and equipment are stated at historical cost less accumulated depreciation and accumulated impairment loss, if any. The cost of assets comprises of purchase price and directly attributable cost of bringing the assets to working condition for its intended use including borrowing cost and incidental expenditure during construction incurred upto the date when the assets are ready to use. Capital work in progress includes cost of assets at sites, construction expenditure and interest on the funds deployed less any impairment loss, if any. At the point, when asset is operating at managements intended use, the cost of construction is transferred to the appropriate category of property, plant and equipment.

The cost of a self-constructed item of property, plant and equipment comprises the cost of materials and direct labour, any other cost directly attributable to bringing the item to working condition for its intended use.

If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as a separate items (major components) of property, plant and equipment. As per the assessment made by the management, property plant and equipment does not comprises any significant components with different useful life.

De-recognition

An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of property, plant and equipment (calculated as the difference between the net disposal proceeds and the carrying amount of property, plant and equipment) is included in the restated consolidated statement of profit and loss when such asset is derecognised.

Subsequent measurement

Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is probable that the future economic benefits associated with expenditure will flow to the Group and the cost of the item can be measured reliably. All other subsequent cost are charged to the restated consolidated statement of profit and loss at the time of incurrence.

Depreciation

Depreciation on property, plant and equipment is provided on the straight-line basis, computed on the basis of useful lives prescribed in Schedule II to the Act, for Holding Company and subsidiaries covered under the Act.

For foreign subsidiary:

Particulars	Management estimate of useful life (years)
Buildings	15
Furniture and fixtures	10
Plant and equipments	15
Vehicles	8
Office equipments	3

Freehold land is not depreciated.

Depreciation on additions to or on disposal of assets is calculated on pro-rata basis. Leasehold land is being amortised over the period of lease tenure.

Depreciation methods, useful lives and residual values are reviewed in each financial year end and changes, if any, are accounted for prospectively.

Intangible assets

Intangible assets that are acquired are recognised only if it is probable that the expected future economic benefits that are attributable to the asset will flow to the Group and the cost of assets can be measured reliably. The intangible assets are recorded at cost of acquisition including incidental costs related to acquisition and installation and are carried at cost less accumulated amortisation and impairment losses, if any.

De-recognition

Gain or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the intangible asset and are recognised in the Restated consolidated statement of profit and loss when the asset is derecognised.

Other indirect expenses incurred relating to project, net of income earned during the project development stage prior to its intended use, are considered as pre-operative expenses and disclosed under Intangible Assets under Development.

Subsequent cost

Subsequent costs is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All the subsequent expenditure on intangible assets is recognized in restated consolidated statement of profit and loss, as incurred.

Amortisation

Amortisation of intangible asset is calculated over their estimated useful lives as stated below using straight-line method. Amortisation is calculated on a pro-rata basis for assets purchased /disposed during the year. Amortisation has been charged based on the following useful lives;

Asset category	Useful life (in years)
Software and licenses	3-5
Customer relationship	10
Technical know-how	10

Amortisation method, useful lives and residual values are reviewed at each reporting date and adjusted prospectively, if appropriate.

Leases

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

The Group recognizes a right-of-use asset at the commencement date, except for short-term leases of twelve months or less and leases for which the underlying asset is of low value, which are expensed in the statement of operations on a straightline basis over the lease term.

The right-of-use asset comprises, at inception, any initial direct costs and, when applicable, the obligations to refurbish the asset, less any incentives granted by the lessors. The right-of-use asset is subsequently depreciated, on a straight-line basis, over the lease term. Right-of-use assets are also subject to testing for impairment if there is an indicator for impairment.

Impairment of non-financial assets

The Group, at each reporting date, reviews carrying values of its non-financial assets and assesses whether there is an indication that an asset may be impaired. If any indication exists, the recoverable amount, being higher of fair value less costs of disposal and value in use of the assets, is estimated to determine the impairment losses and are recognised in the restated consolidated statement of profit and loss. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. If this is the case, recoverable amount is determined for the cash-generating unit (CGU) to which the asset belongs unless either the assets fair value less costs of disposal is higher than its carrying amount; or the assets value in use can be estimated to be close to its fair value less costs of disposal and fair value less costs of disposal can be measured.

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. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples or other available fair value indicators. For assets, an assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists, the Group estimates the assets or CGUs recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the assets recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the restated consolidated statement of profit and loss.

Borrowing costs

Borrowing costs are interests and other costs (including foreign exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs) incurred by the Group in connection with the borrowing of funds. Borrowing costs are recognized in the restated consolidated statement of profit and loss in the period in which it is incurred, except where the cost is incurred for acquisition, construction, production or development of an asset that takes a substantial period of time to get ready for its intended use in which case it is capitalized up to the date the assets are ready for their intended use. All other borrowing costs are recognized as expense in the period in which these are incurred.

Employee benefits

Short term employee benefits

Liabilities for wages and salaries, including non-monetary 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 benefit obligations in the restated consolidated statement of assets and liabilities.

Defined contribution plans

The Group pays contribution under provident fund scheme and employee state insurance to Government administered schemes for eligible employees. The Group recognises contribution payable to the respective employee benefit fund scheme as an expenditure, as and when they are due. The Group has no obligations other than to make the specified contributions.

Gratuity

The liability or asset recognised in the restated consolidated statement of assets and liabilities in respect of defined benefit gratuity plans are 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 by actuaries using the projected unit credit method.

The present value of the defined benefit obligation denominated in Rs. 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 benefit expense in the restated consolidated statement of profit and loss. The Group gratuity plan is a funded plan and the Group makes contributions to Life Assurance Schemes administered by the LIC of India.

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. They are included in retained earnings in the statement of changes in equity and in the restated consolidated statement of assets and liabilities.

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

Compensated absences

The liabilities for compensated absences that are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. These obligations are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the appropriate market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit or loss. The Group compensated absences is a funded plan and the Group makes contributions to Schemes administered by the LIC of India.

Revenue recognition

Sale of goods

Sales are recognised when control of the products is transferred, which happens when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the acceptance of the products by the customer.

Revenue is recognised based on the price specified in the contract, net of the estimated volume discounts and incentive schemes and the revenue is only recognised to the extent that it is highly probable that a significant reversal in the revenue will not occur. Revenue is net of sales returns. The validity of assumptions used to estimate variable consideration and expected return of products is reassessed annually.

A receivable is recognised when the goods are delivered as this is the point in time when the consideration is unconditional because only passage of time is required before the payment is due.

Service revenue

Service income is recognised on accrual basis in the accounting period in which the services are rendered as per the contractual terms with the customers.

Export incentive

Export incentive is recognized when it is reasonably certain that the collection will be made.

Interest income

Interest income is recognized on time proportion basis using the effective interest rate method.

Other income

Rental income is recognised on a straight-line basis over the lease term, except for contingent rental income which is recognised when it arises

Inventories

Raw materials, work in progress, stock-in-trade and finished goods

Raw materials, work in progress, stock-in-trade and finished goods are stated at the lower of cost and net realisable value. Cost of raw materials and stock-in-trade comprises cost of purchases and also include all other costs incurred in bringing the inventories to their present location and condition. Cost is ascertained on a weighted average basis. Materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.

Cost of work-in-progress and finished goods comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity.

Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

Provisions, contingent assets and liabilities

Provisions

Provisions for legal claims and warranties are recognised when the Group has a present legal or constructive obligation as a result of a past events, 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 current market assessments of the time value of money and 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.

Contingent liabilities

Contingent liabilities are possible obligations that arise from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote.

Contingent assets

Contingent assets are not recognised but disclosed in the Restated Consolidated Financial Information when an inflow of economic benefits is probable.

Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Financial assets

Initial recognition and measurement

The classification of financial assets at initial recognition depends on the financial assets contractual cash flow characteristics and the Groups business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under Ind AS 115. Refer to the accounting policies in section Revenue from contracts with customers.

In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. Financial assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model.

The Groups business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets classified and measured at amortised cost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows while financial assets classified and measured at fair value through OCI are held within a business model with the objective of both holding to collect contractual cash flows and selling.

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset.

Subsequent measurement

Financial assets carried at amortised cost - a financial asset is measured at the amortised cost, if both the following conditions are met:

The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and

Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest method.

Financial assets at FVOCI- The Group accounts for financial assets at FVOCI if the assets meet the following conditions:

they are held under a business model whose objective it is hold to collect the associated cash flows and sell, and

the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and

interest on the principal amount outstanding

Any gains or losses recognised in OCI will be recycled upon derecognition of the asset. However, there is an exception to this, which is an irrevocable option to present subsequent changes in the fair value of an investment in equity, in which case there is no recycling even at the time of derecognition, except for dividend income recognised in profit or loss.

Financial assets at FVTPL - Financial assets held within a different business model other than hold to collect or hold to collect and sell are categorised at FVTPL. Further, irrespective of the business model used, financial assets whose contractual cash flows are not solely payments of principal and interest are accounted for at FVTPL. For all equity investments the Group accounts for the investment at FVTPL.

The fair value is determined in line with the requirements of Ind AS 113 Fair Value Measurement. Assets in this category are measured at fair value with gains or losses recognised in profit or loss.

The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists.

Trade receivables - Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business and reflects the Group unconditional right to consideration (that is, payment is due only on the passage of time). Trade receivables are recognised initially at the transaction price as they do not contain significant financing components. The Group holds trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method, less loss allowance. For trade receivables, the Group applies the simplified approach required by Ind AS 109, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

Cash and cash equivalents - Cash and cash equivalents comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purposes of the restated consolidated statement of cash flow, cash and cash equivalents is as defined above.

Impairment of financial assets

In accordance with Ind-AS 109, the Group applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:

Financial assets are measured at amortised cost e.g., loans, deposits and trade receivables

Trade receivables under Ind-AS 115.

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

The application of simplified approach does not require the Group 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.

For recognition of impairment loss on other financial assets and risk exposure, the Group determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12- month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL.

ECL is the difference between all contractual cash flows that are due to the Group in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR. When estimating the cash flows, an entity is required to consider:

All contractual terms of the financial instrument (including prepayment extension, call and similar options) over the expected life of the financial instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated reliably, then the entity is required to use the remaining contractual term of the financial instrument.

Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

As a practical expedient, the Group uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.

ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/expense in the restated consolidated statement of profit and loss. This amount is reflected under the head other expenses in the restated consolidated statement of profit and loss.

For financial assets measured as at amortised cost, ECL is presented as an allowance, i.e. as an integral part of the measurement of those assets in the restated consolidated statement of assets and liabilities. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Group does not reduce impairment allowance from the gross carrying amount.

For assessing increase in credit risk and impairment loss, the Group combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis.

De-recognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a Group of similar financial assets) is primarily derecognised (i.e. removed from the Groups restated consolidated statement of assets and liabilities) when:

The rights to receive cash flows from the asset have expired, or

The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a pass-through arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of the Groups continuing involvement. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Financial liabilities

Financial instrument which requires the Company to deliver cash or another financial asset, or otherwise to settle it in such a way that it would be a financial liability, and where Company does not have an unconditional right to avoid such obligation, are classified as financial liability. Such classification is in substance of the contractual arrangement and as per the definitions of the financial liability. Such financial instruments are recognized as financial liability at the full amount, without taking into account the timing of the contingent event. This is as per the rules of contingent settlement provisions. The equity component for such financial instruments will be nil.

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

The Groups financial liabilities include trade and other payables and loans and borrowings including bank overdrafts.

Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. Gains or losses on liabilities held for trading are recognised in the profit or loss.

Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the initial date of recognition, and only if the criteria in Ind-AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk are recognized in OCI. These gains/loss are not subsequently transferred to the restated consolidated statement of profit and loss. However, the Group may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the restated consolidated statement of profit and loss.

Loans and borrowings

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the restated consolidated statement of profit and loss. This category generally applies to borrowings.

Trade and other payables

These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which are unpaid. The amounts are unsecured and are usually paid as per the payment cycle of the Group. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

De-recognition of financial liabilities

A financial liability is de-recognized when the obligation under the liability is discharged or cancelled or expires. When 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 the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the restated consolidated statement of profit or loss.

Re-classification of financial assets

The Group determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The Groups senior management determines change in the business model as a result of external or internal changes which are significant to the Groups operations. Such changes are evident to external parties. A change in the business model occurs when the Group either begins or ceases to perform an activity that is significant to its operations. If the Group reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Group does not restate any previously recognized gains, losses (including impairment gains or losses) or interest.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the restated consolidated statement of assets and liabilities if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

Measurement of fair values

In determining the fair value of its financial instruments, the Group uses a variety of methods and assumptions that are based on market conditions and risks existing at each reporting date. All methods of assessing fair value result in general approximation of value, and such value may never actually be realised.

Assets and liabilities are to be measured based on the following valuation techniques:

a) Market approach - Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

b) Income approach - Converting the future amounts based on market expectations to its present value using the discounting methodology.

c) Cost approach - Replacement cost method.

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

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

b) 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).

c) 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 Group 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 Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Income taxes

Income tax expense comprises current and deferred tax. It is recognized in profit or loss except to the extent that it relates to items recognized directly in equity or in Other Comprehensive Income.

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 in India, at the reporting date.

Current tax relating to items recognised outside restated consolidated statement of profit and loss is recognised outside restated consolidated statement of profit and loss (either in other comprehensive income or in equity). Management 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.

Current tax assets are offset against current tax liabilities if, and only if, a legally enforceable right exists to set off the recognised amounts and there is an intention either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

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 generally recognised for all the temporary differences. On the contrary, deferred tax assets are recognised for deductible temporary differences, the carry forward of unused tax credits and any unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

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

Deferred tax relating to items recognised outside restated consolidated statement of profit and loss is recognised outside restated consolidated statement of profit and loss (either in other comprehensive income or in equity).

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Business combination and goodwill

Business combinations, other than through common control transactions, are accounted for using the purchase (acquisition) method. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the re-assessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in Other Comprehensive Income (OCI) and accumulated in other equity as capital reserve. However, if there is no clear evidence of bargain purchase, the entity recognises the gain directly in other equity as capital reserve, without routing the same through OCI. Consideration transferred includes the fair values of the assets transferred, liabilities incurred by the Group to the previous owners of the acquiree, and equity interests issued by the Group.

Any goodwill that arises on account of such business combination is tested annually for impairment.

Transaction costs that the Group incurs in connection with a business combination, such as stamp duty for title transfer in the name of the Group, legal fees and other professional and consulting fees, are expensed as incurred.

Share-based employee remuneration

The Group operates equity-settled share-based remuneration plans for its employees. None of the Groups plans are cash- settled.

Where employees are rewarded using share-based payments, the fair value of employees services is determined indirectly by reference to the fair value of the equity instruments granted. This fair value is determined with the assistance of an external valuer at the grant date and excludes the impact of nonmarket vesting conditions (for example profitability and sales growth targets and performance conditions).

Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised if there is any indication the number of share options expected to vest differs from previous estimates. Any adjustment to cumulative share-based compensation resulting from a revision is recognised in the current period. The number of vested options ultimately exercised by holder does not impact the expense recorded in any period.

Market conditions are taken into account when estimating the fair value of the equity instruments granted.

All share-based remuneration is recognised as an expense in profit or loss with a corresponding credit to share based payment reserve. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest.

Upon exercise of share options, the proceeds received, net of any directly attributable transaction costs, are allocated to share capital up to the nominal (or par) value of the shares issued with any excess being recorded as share premium.

CHANGES IN ACCOUNTING POLICIES

There have been no changes in our accounting policies as of and for Fiscals 2026, 2025 and 2024.

NON-GAAP MEASURES

EBITDA, EBITDA Margin, PAT Margin, Adjusted PAT, Adjusted PAT Margin, Return on equity, Adjusted return on equity, Return on Capital Employed, debt to equity and debt to EBITDA ratio (together, Non-GAAP Measures ), presented in this 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, U.S. GAAP or any other GAAP. Further, these Non-GAAP Measures are not a measurement of our financial performance or liquidity under Ind AS, Indian GAAP, IFRS, U.S. GAAP or any other GAAP and should not be considered in isolation or construed as an alternative to cash flows, profit for the years 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, U.S. GAAP or any other GAAP. In addition, these Non-GAAP Measures are not standardized terms, hence a direct comparison of these Non-GAAP Measures between companies may not be possible. Other companies may calculate these Non-GAAP Measures differently from us, limiting its usefulness as a comparative measure. Although such Non-GAAP Measures are not a measure of performance calculated in accordance with applicable accounting standards, our Companys management believes that they are useful to an investor in evaluating us as they are widely used measures to evaluate a companys operating performance.

Reconciliation of EBITDA and EBITDA Margin

The table below provides a reconciliation of EBITDA and EBITDA Margin.

( Rs. million, unless otherwise indicated)

Particulars	Fiscal 2026	Fiscal 2025	Fiscal 2024
Profit for the year (A)	710.67	625.55	409.19
Finance costs (B)	52.21	20.84	15.95
Depreciation and amortization expense (C)	138.25	120.77	53.48
Total tax Expense (D)	230.60	206.06	132.65
EBITDA (E= A + B +C +D)	1,131.73	973.22	611.27
Total Income (F)	4,558.55	3,824.68	2,780.42
EBITDA Margin (G = E/F) (%)	24.83	25.45	21.98

Reconciliation of PAT Margin

The table below provides a reconciliation of PAT Margin.