Avalon Technologies Ltd. కంపెనీ అకౌంటింగ్ విధానాలు

Mar 31, 2025

B MATERIAL ACCOUNTING POLICIES

1 Use of Estimates

The preparation of the Standalone Financial
Statements in conformity with accounting
principles generally accepted in India requires
the management to make judgements,
estimates and assumptions that effect the
reported amount of assets and liabilities as
of the Balance Sheet date, reported amount
of revenues and expenses for the year and
disclosure of contingent liabilities as of the
Balance Sheet date. These estimates and
associated assumptions are based on
historical experience and other factors that
are considered to be relevant. Actual results
may differ from these estimates.

Although these estimates are based on the
management''s best knowledge of current
events and actions, uncertainty about the
assumptions and estimates may result in
outcomes requiring a material adjustment to
the carrying amount of assets or liabilities in
future periods.

The estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in
the period in which the estimate is revised
if the revision affects only that period, or in
the period of the revision and future periods
if the revision affects both current and future
periods.

2 Property, Plant and Equipment

Property, Plant and Equipment are stated
at cost less accumulated depreciation and
impairment in value, if any. Cost includes
purchase price, (inclusive of import duties
and non - refundable purchase taxes, after
deducting trade discounts and rebates),
other costs directly attributable to bringing
the asset to the location and condition
necessary for it to be capable of operating
in the manner intended by management and
an initial estimate of the costs of dismantling,
removing the item and restoring the site on
which it is located, if any.

If the Company has acquired a Property,
Plant and Equipment on deferred term
basis and terms are beyond normal credit

terms, property plant and equipment will
be recognized on cash price equivalent, i.e.
discounted amount.

The cost of Assets not ready for use as at
the Balance Sheet date are disclosed under
Capital Work-In-Progress.

The cost of replacement spares/ major
inspection relating to property, plant and
equipment is capitalized only when it is
probable that future economic benefits
associated with these will flow to the Company
and the cost of the item can be measured
reliably. When parts of an item of property
plant and equipment have different useful
lives, they are accounted for as separate
items (major components) of property, plant
and equipment.

Depreciation

Depreciation on Property , Plant and
Equipment (Tangible assets) is generally
computed on a pro-rata basis on the basis
of the estimated life specified in Schedule II
of the Companies Act, 2013 under Straight line
method. The useful life of assets prescribed
in Schedule II to the Companies Act, 2013 are
considered for the purpose of Computation of
Depreciation. However, If the management''s
estimate of the useful life of a fixed asset at
the time of acquisition of the asset or of the
remaining useful life on an annual review is
different from that envisaged in the aforesaid
schedule, depreciation is provided at a such
rate based on the useful life / remaining
useful life as technically advised. Accordingly,
depreciation is provided based on the useful
life as indicated below which is different from
that stated in Schedule II to the Companies
Act,2013.

* Useful life of tools are based on internal estimate
of the Company. Tools and dies used are
depreciated based on quantity of components
manufactured and the life of tools and dies,
subject to a maximum of 5 years. Tools and dies
used for low volume products are depreciated at
higher rate.

Depreciation charge on additions / deletions
is restricted to the period of use. Depreciation
methods, useful lives and residual values are
reviewed annually.

3 Intangible Assets

I ntangible assets are stated at acquisition
cost, net of accumulated amortization and
accumulated impairment losses, if any.
Intangible assets are amortized on a straight
line basis over their estimated useful life as
given below.

Amortization method and useful lives are
reviewed annually.

4 Leases

As lessee

The Company assesses whether a contract
contains a lease, at inception of a contract.
A contract is, or contains, a lease if the
contract conveys the right to control the use
of an identified asset for a period of time
in exchange for consideration. To assess
whether a contract conveys the right to control
the use of an identified asset, the Company
assesses whether: (l) the contact involves the
use of an identified asset (2) the Company
has substantially all of the economic benefits
from use of the asset through the period of
the lease and (3) the Company has the right
to direct the use of the asset.

The Company recognizes a right-of-use
asset and a corresponding lease liability for

all lease arrangements in which it is a lessee,
except for leases with a term of twelve months
or less (short-term leases) and leases for low
value underlying assets. For these short-term
and leases for low value underlying assets,
the Company recognizes the lease payments
as an operating expense on a straight-line
basis over the term of the lease.

Certain lease arrangements include the
options to extend or terminate the lease
before the end of the lease term. Right-of
use assets and lease liabilities include these
options when it is reasonably certain that the
option to extend the lease will be exercised/
option to terminate the lease will not be
exercised.

The right-of-use assets are initially
recognized at cost, which comprises the
initial amount of the lease liability adjusted for
any lease payments made at or prior to the
commencement date of the lease plus any
initial direct costs less any lease incentives.
They are subsequently measured at cost less
accumulated depreciation/amortization and
impairment losses.

Right-of-use assets are depreciated/
amortized from the commencement date
to the end of the useful life of the underlying
asset, if the lease transfers ownership of the
underlying asset by the end of lease term or if
the cost of right-of-use assets reflects that the
purchase option will be exercised. Otherwise,
Right-of-use assets are depreciated /
amortized from the commencement date on
a straight-line basis over the shorter of the
lease term and useful life of the underlying
asset.

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

The lease liability is initially measured at
amortized cost at the present value of the
future lease payments. The lease payments
are discounted using the interest rate implicit
in the lease or, if not readily determinable,
using the incremental borrowing rate.
Lease liabilities are re-measured with a
corresponding adjustment to the related
right-of-use asset if the Company changes
its assessment whether it will exercise an
extension or a termination option.

5 Impairment

Assessment is done annually as to whether
there is any indication that an asset (tangible
and intangible) may be impaired. For the
purpose of assessing impairment, the
smallest identifiable Company of assets that
generates cash inflows from continuing use
that are largely independent of the cash
inflows from other assets or group of assets,
is considered as a cash generating unit. If
any such indication exists, an estimate of
the recoverable amount of the asset / cash
generating unit is made. Assets whose carrying
value exceeds their recoverable amount are
written down to the recoverable amount.
Recoverable amount is higher of an asset''s
or cash generating unit''s fair value less cost
to sell and its value in use. Value in use is the
present value of estimated future cash flows
expected to arise from the continuing use of
an asset and from its disposal at the end of
its useful life. Assessment is also done at each
Balance Sheet date as to whether there is any
indication that an impairment loss recognized
for an asset in prior accounting periods may
no longer exist or may have decreased. In
such cases, impairment losses are reversed
to the extent the assets carrying amount does
not exceed, the carrying amount that would
have been determined if no impairment loss
had previously been recognized.

6 Borrowing Cost

Borrowing costs that are attributable to
the acquisition / construction / production
of qualifying assets (assets which require
substantial period of time to get ready for its
intended use) are capitalized as part of the
cost of that asset. All other borrowing costs
are charged to revenue. In accordance with
the ICAI Guidance Note on Schedule III to the

Companies Act, 2013, exchange losses (net)
relating to foreign currency borrowings to the
extent not capitalized in accordance with Ind
AS 23 is presented under finance costs.

7 Inventories

Cost of raw materials, components, stores and
spares are ascertained on a moving weighted
average cost basis. Cost of finished goods
and work-in-progress comprise of direct
materials, direct labour and an appropriate
proportion of variable and fixed overhead.
Such costs are assigned to individual items of
inventory on the basis of weighted average
costs. Costs of purchased inventory are
determined after deducting rebates taxes
(not recoverable from the taxing authorities)
and discounts. Goods that are consigned to
the Company are not considered in inventory.

Net realizable 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. Materials and supplies held for use in
production of inventories are not written
down if the finished products in which they
will be used are expected to be sold at or
above cost. Slow and non-moving material,
obsolescence, defective inventories as
identified by the management are duly
provided for/ written down to the realizable
value, as the case maybe.

Raw materials, components and other
supplies held for use in the production of
finished products are not written down below
cost except in cases where material prices
have declined and it is estimated that the
cost of the finished products will exceed their
net realisable value.

The comparison of cost and net realisable
value is made on an item-by-item basis.

8 Foreign Currency Transaction
Functional Currency

Items included in the financial statements
are measured using the currency of the
primary economic environment in which the
Company operates (''the functional currency'').
The financial statements are presented in
Indian rupee (inr), which is the Company''s
functional and presentation currency.

Initial Recognition

On initial recognition, all foreign currency
transactions are recorded by applying to
the foreign currency amount the exchange
rate between the Functional currency and
the foreign currency at the date of the
transaction.

Subsequent Recognition

As at the reporting date, non-monetary
items which are carried in terms of historical
cost denominated in a foreign currency are
reported using the exchange rate at the date
of the transaction. All non-monetary items
which are carried at fair value or other similar
valuation denominated in a foreign currency
are reported using the exchange rates that
existed when the values were determined.

All monetary assets and liabilities in foreign
currency are reinstated at the end of
accounting period.

Exchange differences on reinstatement of
all monetary items are recognized in the
Statement of Profit and Loss.

Foreign operations

The assets and liabilities of foreign operations
are translated into Indian rupees (inr), the
functional currency of the Company at the
exchange rate at the reporting date. The
income and expenses of foreign operations
are translated to Indian rupees (inr) at
exchange rates at the date of transactions
or an average rate if the average rate
approximates the actual rate at the date of
transaction.

Foreign currency translation differences are
recognised in other comprehensive income
and accumulated in equity separately under
foreign currency translation reserve. The
amounts recognized are transferred to the
Standalone statement of profit and loss on
disposal of the related foreign subsidiaries.

9 Revenue Recognition

Revenue from contracts with customers is
recognized on transfer of control of promised
goods or services to a customer at an amount
that the Company is expected to be entitled
to in exchange for those goods or services.

Revenue towards satisfaction of a
performance obligation is measured at the
amount of transaction price (net of variable
consideration) allocated to that performance
obligation. The transaction price of goods
sold and services rendered is net of variable
consideration on account of various discounts
and rebates offered by the Company as part
of the contract. This variable consideration is
estimated based on the expected value of
outflow.

Sale of goods

Revenue from sale of products is recognized
when the control on the goods have
been transferred to the customer. The
performance obligation in case of sale of
product is satisfied at a point in time i.e.,
when the material is shipped to the customer
or on delivery to the customer, the risks of
obsolescence and loss have been transferred
to the customer, and either the customer has
accepted the products in accordance with
the sales contract, the acceptance provisions
have lapsed, or the Company has objective
evidence that all criteria for acceptance
have been satisfied. Revenue from the sale
of goods is measured at the fair value of the
consideration received or receivable, net of
returns and allowances, trade discounts and
volume rebates.

Advance from customers is recognized under
other current liabilities which is released
to revenue on satisfaction of performance
obligation.

Rendering of Services

Revenue from other service activities are
recognized at a point in time on satisfaction
of performance obligation towards rendering
of such services in accordance with the terms
of arrangement.

Revenue is recorded exclusive of goods and
service tax.

Other Income

Interest : Interest income is recognized on
effective interest method taking into account
the amount outstanding and the rate
applicable.

Dividend : Dividend income is recognized
when the right to receive dividend is
established.

Insurance Claims : Insurance claims are
accounted for on the basis of claims lodged
with insurance Company and to the extent
that there is a reasonable certainty in realizing
the claims.

10 Employee Benefits

1. Short - Term employee benefits

All employee benefits payable wholly
within twelve months of rendering the
service are classified as short-term
employee benefits and recognized in the
period in which the employee renders
the related service.

2. Defined Contribution Plans

Contribution towards provident fund/
Employee State Insurance for employees
working with the Company''s operations
in India is made to the regulatory
authorities, where the Company has
no further obligations. Such benefits
are classified as Defined Contribution
Schemes as the Company does not
carry any further obligations, apart from
the contributions made on a monthly
basis.

3. Defined Benefit Plan

The Company provides for gratuity,
a defined benefit plan (the "Gratuity
Plan") which is funded covering eligible
employees in accordance with the
Payment of Gratuity Act, 1972. The Gratuity
Plan provides a lump sum payment
to vested employees at retirement,
death, incapacitation or termination of
employment, of an amount based on
the respective employee''s salary and the
tenure of employment. The Company''s
liability is actuarially determined (using
the Projected Unit Credit method) at
the end of each year. Actuarial losses
/ gains are recognized in the other
comprehensive income in the year
in which they arise. Remeasurement
recognized in other comprehensive
income is reflected immediately in

retained earnings and is not reclassified
to profit or loss.

4. Other Long term employee benefits

Accumulated compensated absences,
which are expected to be availed or
encashed within 12 months from the
end of the year are treated as short
term employee benefits. The obligation
towards the same is measured at
the expected cost of accumulating
compensated absences as the
additional amount expected to be paid
as a result of the unused entitlement as
at the year end.

Accumulated compensated absences,
which are expected to be availed or
encashed beyond 12 months from the end
of the year end are treated as other long
term employee benefits. The Company''s
liability is actuarially determined (using
the Projected Unit Credit method) at the
end of each year. Actuarial losses / gains
are recognized in the Profit and Loss
Statement in the year in which they arise.

10A Share Based Payments

Employees (including senior executives) of the
Company receive remuneration in the form of
share based payments, whereby employees
render services as consideration for equity
instruments (equity-settled transactions).

The cost of equity-settled transactions is
determined by the fair value at the date
when the grant is made using an appropriate
valuation model.

That cost is recognised, together with a
corresponding increase in Employee Stock
option Plan (ESOP) reserves in equity, over
the period in which the performance and/or
service conditions are fulfilled, in employee
benefits expense. The cumulative expense
recognised for equity-settled transactions
at each reporting date until the vesting
date reflects the extent to which the vesting
period has expired and the Company''s best
estimate of the number of equity instruments
that will ultimately vest. The expense or
credit for a period recognised in employee
benefits expense represents the movement

in cumulative expense recognised as at the
beginning and end of that period.

Performance conditions which are market
conditions are taken into account when
determining the grant date fair value
of the awards. Service and non-market
performance conditions are not taken into
account when determining the grant date
fair value of awards, but the likelihood of the
conditions being met is assessed as part of
the Company''s best estimate of the number
of equity instruments that will ultimately vest.

No expense is recognised for awards that
do not ultimately vest because non-market
performance and/or service conditions have
not been met.

When the terms of an equity-settled award are
modified, the minimum expense recognised is
the expense had the terms not been modified
if the original terms of the award are met.
An additional expense is recognised for any
modification that increases the total fair value
of the share-based payment transaction or
is otherwise beneficial to the employee as
measured at the date of modification.

Where an award is cancelled by the entity or
by the counterparty, any remaining element
of the fair value of the award is expensed
immediately through profit or loss.

The dilutive effect of outstanding options is
reflected as additional share dilution in the
computation of diluted earnings per share.

The cost of share based payments pertaining
to employees of subsidiaries, where the
ultimate obligation is settled by the Company,
is accounted for as an increase in the
Company''s investment in the subsidiaries in
its standalone financial statements.

11 Taxes on Income

Tax expense for the period, comprising current
tax and deferred tax, are included in the
determination of the net profit or loss for the
period. Current tax is measured at the amount
expected to be paid to the tax authorities in
accordance with the relevant prevailing tax
laws. Tax expenses relating to the items in
profit and loss shall be treated as current tax

as part of profit and loss and those relating to
items in other comprehensive income (OCI)
shall be recognized as part of the OCI.

Deferred tax is recognized for all the temporary
differences between the carrying amounts
of assets and liabilities in the Standalone
Financial Statements and corresponding
tax bases used in computation of taxable
profit. Deferred tax assets are recognized and
carried forward only to the extent that it is
probable that taxable profit will be available
against which those deductible temporary
differences can be utilized. Deferred tax assets
and liabilities are measured using the tax
rates and tax laws that have been enacted
or substantively enacted by the Balance
Sheet date. At each Balance Sheet date, the
Company re-assesses unrecognized deferred
tax assets, if any and the same is recognized
to the extent it has become probable that
future taxable profit will allow the deferred tax
asset to be recovered.

Current tax assets and current tax liabilities
are offset when there is a legally enforceable
right to set off the recognized amounts and
there is an intention to settle the asset and
the liability on a net basis. Deferred tax assets
and deferred tax liabilities are offset when
there is a legally enforceable right to set off
assets against liabilities representing current
tax and where the deferred tax assets and
the deferred tax liabilities relate to taxes
on income levied by the same governing
taxation law.

Minimum Alternate Tax (MAT) credit is
recognized as an asset only when and to
the extent there is convincing evidence that
the Company will pay normal income tax
during the specified period. Such asset is
reviewed at each Balance Sheet date and
the carrying amount of the MAT credit asset
is written down to the extent there is no longer
a convincing evidence to the effect that the
Company will pay normal income tax during
the specified period. MAT shall be treated as
part of deferred tax assets.

12 Financial instruments
Initial recognition

The Company recognizes Financial assets
and Financial liabilities when it becomes

a party to the contractual provisions of
the instruments. All Financial assets and
liabilities are recognized at fair value on
initial recognition. Transaction costs that are
directly attributable to the acquisition or issue
of Financial assets and Financial liabilities, that
are not at fair value through profit or loss, are
added to the fair value on initial recognition.

Financial liabilities and equity instruments:

Classification as debt or equity
Financial liabilities and equity instruments
issued by the Company are classified
according to the substance of the
contractual arrangements entered into and
the definitions of a financial liability and an
equity instrument.

Equity instruments:

An equity instrument is any contract that
evidences a residual interest in the assets
of the Company after deducting all of its
liabilities. Instruments (including convertible
preference shares) that meet the definition
of ''Equity'' in its entirety and which do not
have any component of liability, is classified
as Equity and grouped under ''Instruments
entirely equity in nature''. Equity instruments
are recorded at the proceeds received, net
of direct issue costs. The transaction costs of
an equity transaction are accounted for as
a deduction from equity to the extent they
are incremental costs directly attributable
to the equity transaction that otherwise
would have been avoided. The costs of an
equity transaction that is abandoned are
recognised as an expense.

In case of equity investment that is not
held for trading, the group may irrevocably
elect to present subsequent changes in the
investment''s fair value in OCI (designated
as FVOCI - equity investment). This election
is made on an investment-by-investment
basis.

Subsequent measurement

i. Financial assets carried at amortized
cost

A Financial asset is subsequently
measured at amortized cost if it is
held within a business model whose
objective is to hold the asset in order to

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

ii. Financial assets at fair value through
profit or loss

A Financial asset which is not classified in
the above category is subsequently fair
valued through profit or loss.

iii. Financial assets at fair value through
Other Comprehensive Income

Equity investments at FVOCI: These assets
are subsequently measured at fair value.
Dividends are recognised as income in
profit and loss unless the dividend clearly
represents a recovery of part of the cost
of the investment. Other net gains and
losses are recognised in OCI and are not
reclassified to profit and loss.

iv. Financial liabilities

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

Derecognition of Financial instruments

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

Impairment

All Financial assets classified as at amortized
cost shall be tested for impairment under Ind
AS 109 and measured using Expected Credit
Loss (ECL) model.

13 Fair Value

The Company measures Financial
instruments at fair value in accordance with
the accounting policies mentioned above.
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.

All assets and liabilities for which fair value
is measured or disclosed in the Standalone
Financial Statements are categorized within
the fair value hierarchy that categorizes into
three levels, described as follows, the inputs to
valuation techniques used to measure value.
The fair value hierarchy gives the highest
priority to quoted prices in active markets for
identical assets or liabilities (Level 1 inputs)
and the lowest priority to unobservable inputs
(Level 3 inputs).

Level 1 — quoted (unadjusted) market prices
in active markets for identical assets or
liabilities

Level 2 — inputs other than quoted prices
included within Level 1 that are observable for
the asset or liability, either directly or indirectly

Level 3 —inputs that are unobservable for the
asset or liability

14 Government Grants

Grants from the government are recognized
at their fair value where there is a reasonable
assurance that the grant will be received and
the Company will comply with all attached
conditions. All government grants are initially
recognized by way of setting up as deferred
income. Government grants relating to
income are subsequently recognized in the
profit or loss over the period necessary to
match them with the costs that they are
intended to compensate. Government grants
relating to the purchase of property, plant
and equipment are subsequently recognized
in profit or loss on a systematic basis over
the expected life of the related depreciable
assets. Grants recognized in Profit and Loss
as above are presented within other income
or adjusted against the corresponding
expenditure head as specifically disclosed
thereunder.

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Mar 31, 2024

B Material Accounting Policies

1 Use of Estimates

The preparation of the Standalone Financial Statements in conformity with accounting principles generally accepted in India requires the management to make judgements, estimates and assumptions that effect the reported amount of assets and liabilities as of the Balance Sheet date, reported amount of revenues and expenses for the year and disclosure of contingent liabilities as of the Balance Sheet date. These estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about the assumptions and estimates may result in outcomes requiring a material adjustment to the carrying amount of assets or liabilities in future periods. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

2 Property, Plant and Equipment

Property, Plant and Equipment are stated at cost less accumulated depreciation and impairment in value, if any. Cost includes purchase price, (inclusive of import duties and non - refundable purchase taxes, after deducting trade discounts and rebates), other costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and an initial estimate of the costs of dismantling, removing the item and restoring the site on which it is located, if any. If the Company has acquired a Property, Plant and Equipment on deferred term basis and terms are beyond normal credit terms, property plant and equipment will be recognized on cash price equivalent, i.e. discounted amount. The cost of Assets not ready for use as at the Balance Sheet date are disclosed

under Capital Work-In-Progress.

The cost of replacement spares/ major inspection relating to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably. When parts of an item of property plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Depreciation

Depreciation on Property , Plant and Equipment (Tangible assets) is generally computed on a pro-rata basis on the basis of the estimated life specified in Schedule II of the Companies Act, 2013 under Straight line method. The useful life of assets prescribed in Schedule II to the Companies Act, 2013 are considered for the purpose of Computation of Depreciation. However, If the management''s estimate of the useful life of a fixed asset at the time of acquisition of the asset or of the remaining useful life on an annual review is different from that envisaged in the aforesaid schedule, depreciation is provided at a such rate based on the useful life / remaining useful life as technically advised. Accordingly, depreciation is provided based on the useful life as indicated below which is different from that stated in Schedule II to the Companies Act,2013.

*Useful life of tools are based on internal estimate of the Company. Tools and dies used are depreciated based on quantity of components manufactured and the life of tools and dies, subject to a maximum of 5 years. Tools and dies used for low volume products are depreciated at higher rate.

Depreciation charge on additions / deletions is restricted to the period of use. Depreciation methods, useful lives and residual values are reviewed annually.

3 Intangible Assets

Intangible assets are stated at acquisition cost, net of accumulated amortization and accumulated impairment losses, if any. Intangible assets are amortized on a straight line basis over their estimated useful life as given below.

Amortization method and useful lives are reviewed annually.

4 Leases As lessee

The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (1) the contact involves the use of an identified asset (2) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (3) the Company has the right to direct the use of the asset.

The Company recognizes a right-of-use asset and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and leases for low value underlying assets. For these shortterm and leases for low value underlying assets, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease. Certain lease arrangements include the options to extend or terminate the lease before the end of the lease term. Right-of use assets and lease liabilities include these

options when it is reasonably certain that the option to extend the lease will be exercised/ option to terminate the lease will not be exercised.

The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation/amortization and impairment losses.

Right-of-use assets are depreciated/ amortized from the commencement date to the end of the useful life of the underlying asset, if the lease transfers ownership of the underlying asset by the end of lease term or if the cost of right-of-use assets reflects that the purchase option will be exercised. Otherwise, Right-of-use assets are depreciated / amortized from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.

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

The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rate. Lease liabilities are re-measured with a corresponding adjustment to the related right-of-use asset if the Company changes its assessment whether it will exercise an extension or a termination option.

5 Impairment

Assessment is done annually as to whether there is any indication that an asset (tangible and intangible) may be impaired. For the purpose of assessing impairment, the smallest identifiable Company of assets that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or group of assets, is considered as a cash generating unit. If any such indication exists, an estimate of the recoverable amount of the asset / cash generating unit is made. Assets whose carrying value exceeds their recoverable amount are written down to the recoverable amount. Recoverable amount is higher of an asset''s or cash generating unit''s fair value less cost to sell and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Assessment is also done at each Balance Sheet date as to whether there is any indication that an impairment loss recognized for an asset in prior accounting periods may no longer exist or may have decreased. In such cases, impairment losses are reversed to the extent the assets carrying amount does not exceed, the carrying amount that would have been determined if no impairment loss had previously been recognized.

6 Borrowing Cost

Borrowing costs that are attributable to the acquisition / construction / production of qualifying assets (assets which require substantial period of time to get ready for its intended use) are capitalized as part of the cost of that asset. All other borrowing costs are charged to revenue. In accordance with the ICAI Guidance Note on Schedule III to the Companies Act, 2013 , exchange losses (net) relating to foreign currency borrowings to the extent not capitalized in accordance with Ind AS 23 is presented under finance costs.

7 Inventories

Cost of raw materials, components, stores and spares are ascertained on a moving weighted average cost basis. Cost of finished goods and work-in-progress comprise of direct materials, direct labour and an appropriate

proportion of variable and fixed overhead. Such costs are assigned to individual items of inventory on the basis of weighted average costs. Costs of purchased inventory are determined after deducting rebates taxes (not recoverable from the taxing authorities) and discounts. Goods that are consigned to the Company are not considered in inventory.

Net realizable 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. Materials and supplies held for use in production of inventories are not written down if the finished products in which they will be used are expected to be sold at or above cost. Slow and non-moving material, obsolescence, defective inventories as identified by the management are duly provided for/ written down to the realizable value, as the case maybe.

Raw materials, components and other supplies held for use in the production of finished products are not written down below cost except in cases where material prices have declined and it is estimated that the cost of the finished products will exceed their net realisable value. The comparison of cost and net realisable value is made on an item-by-item basis.

8 Foreign Currency Transaction Functional Currency

Items included in the financial statements are measured using the currency of the primary economic environment in which the Company operates (''the functional currency''). The financial statements are presented in Indian rupee (INR), which is the Company''s functional and presentation currency

Initial Recognition

On initial recognition, all foreign currency transactions are recorded by applying to the foreign currency amount the exchange rate between the Functional currency and the foreign currency at the date of the transaction.

Subsequent Recognition

As at the reporting date, non-monetary items which are carried in terms of historical

cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. All non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.

All monetary assets and liabilities in foreign currency are reinstated at the end of accounting period.

Exchange differences on reinstatement of all monetary items are recognized in the Statement of Profit and Loss.

Foreign operations

The assets and liabilities of foreign operations are translated into Indian rupees (INR), the functional currency of the Company at the exchange rate at the reporting date. The income and expenses of foreign operations are translated to Indian rupees (INR) at exchange rates at the date of transactions or an average rate if the average rate approximates the actual rate at the date of transaction.

Foreign currency translation differences are recognised in other comprehensive income and accumulated in equity separately under foreign currency translation reserve. The amounts recognized are transferred to the Standalone statement of profit and loss on disposal of the related foreign subsidiaries."

9 Revenue Recognition

Revenue from contracts with customers is recognized on transfer of control of promised goods or services to a customer at an amount that the Company is expected to be entitled to in exchange for those goods or services.

Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable consideration) allocated to that performance obligation. The transaction price of goods sold and services rendered is net of variable consideration on account of various discounts and rebates offered by the Company as part of the contract. This variable consideration is

estimated based on the expected value of outflow.

Sale of goods

Revenue from sale of products is recognized when the control on the goods have been transferred to the customer. The performance obligation in case of sale of product is satisfied at a point in time i.e., when the material is shipped to the customer or on delivery to the customer, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Company has objective evidence that all criteria for acceptance have been satisfied. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates.

Advance from customers is recognized under other current liabilities which is released to revenue on satisfaction of performance obligation.

Rendering of Services

Revenue from other service activities are recognized at a point in time on satisfaction of performance obligation towards rendering of such services in accordance with the terms of arrangement.

Revenue is recorded exclusive of goods and service tax.

Other Income

Interest : Interest income is recognized on effective interest method taking into account the amount outstanding and the rate applicable.

Dividend : Dividend income is recognized when the right to receive dividend is established.

Insurance Claims : Insurance claims are accounted for on the basis of claims lodged with insurance Company and to the extent that there is a reasonable certainty in realizing the claims.

10 Employee Benefits

1. Short - Term employee benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits and recognized in the period in which the employee renders the related service.

2. Defined Contribution Plans

Contribution towards provident fund/ Employee State Insurance for employees working with the Company''s operations in India is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as Defined Contribution Schemes as the Company does not carry any further obligations, apart from the contributions made on a monthly basis.

3. Defined Benefit Plan

The Company provides for gratuity, a defined benefit plan (the “Gratuity Plan”) which is unfunded covering eligible employees in accordance with the Payment of Gratuity Act, 1972. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment. The Company''s liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses / gains are recognized in the other comprehensive income in the year in which they arise. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss.

4. Other Long term employee benefits

Accumulated compensated absences, which are expected to be availed or encashed within 12 months from the end of the year are treated as short term employee benefits. The obligation towards the same is measured at the expected cost of accumulating

compensated absences as the additional amount expected to be paid as a result of the unused entitlement as at the year end.

Accumulated compensated absences, which are expected to be availed or encashed beyond 12 months from the end of the year end are treated as other long term employee benefits. The Company''s liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses / gains are recognized in the Profit and Loss Statement in the year in which they arise.

10A Share Based Payments

Employees (including senior executives) of the Company receive remuneration in the form of share based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions).

The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model.

That cost is recognised, together with a corresponding increase in Employee Stock option Plan (ESOP) reserves in equity, over the period in which the performance and/or service conditions are fulfilled, in employee benefits expense. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company''s best estimate of the number of equity instruments that will ultimately vest. The expense or credit for a period recognised in employee benefits expense represents the movement in cumulative expense recognised as at the beginning and end of that period.

Performance conditions which are market conditions are taken into account when determining the grant date fair value of the awards. Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the Company''s best estimate of the number of equity instruments that will ultimately vest.

No expense is recognised for awards that do not ultimately vest because non-market performance and/or service conditions have not been met.

When the terms of an equity-settled award are modified, the minimum expense recognised is the expense had the terms not been modified if the original terms of the award are met. An additional expense is recognised for any modification that increases the total fair value of the share-based payment transaction or is otherwise beneficial to the employee as measured at the date of modification.

Where an award is cancelled by the entity or by the counterparty, any remaining element of the fair value of the award is expensed immediately through profit or loss.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.

11 Taxes on Income

Tax expense for the period, comprising current tax and deferred tax, are included in the determination of the net profit or loss for the period. Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the relevant prevailing tax laws. Tax expenses relating to the items in profit and loss shall be treated as current tax as part of profit and loss and those relating to items in other comprehensive income (OCI) shall be recognized as part of the part of OCI.

Deferred tax is recognized for all the temporary differences between the carrying amounts of assets and liabilities in the Standalone Financial Statements and corresponding tax bases used in computation of taxable profit. Deferred tax assets are recognized and carried forward only to the extent that it is probable that taxable profit will be available against which those deductible temporary differences can be utilized. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. At each Balance Sheet date, the Company re-assesses unrecognized deferred tax assets, if any and the same is recognized to the extent it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle the asset and the liability on a net basis. Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off assets against liabilities representing current tax and where the deferred tax assets and the deferred tax liabilities relate to taxes on income levied by the same governing taxation law.

Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period. MAT shall be treated as part of deferred tax assets.

12 Financial instruments Initial recognition

The Company recognizes Financial assets and Financial liabilities when it becomes a party to the contractual provisions of the instruments. All Financial assets and liabilities are recognized at fair value on initial recognition. Transaction costs that are directly attributable to the acquisition or issue of Financial assets and Financial liabilities, that are not at fair value through profit or loss, are added to the fair value on initial recognition.

Financial liabilities and equity instruments: Classification as debt or equity

Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Instruments (including convertible preference shares) that meet the definition of ''Equity'' in its entirety and which do not have any component of liability, is classified as Equity and grouped under ''Instruments entirely equity in nature''. Equity instruments are recorded at the proceeds received, net of direct issue costs. The transaction costs of an equity transaction are accounted for as a deduction from equity to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided. The costs of an equity transaction that is abandoned are recognised as an expense.

Subsequent measurement

i. Financial assets carried at amortized cost A Financial asset is subsequently

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

ii. Financial assets at fair value through profit or loss

A Financial asset which is not classified in the above category is subsequently fair valued through profit or loss.

iii. Financial liabilities

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

Derecognition of Financial instruments

The Company derecognizes a Financial asset when the contractual rights to the cash flows

from the Financial asset expire or it transfers the Financial asset and the transfer qualifies for derecognition under IND AS 109. A Financial liability (or a part of a Financial liability) is derecognized from the Company''s Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires.

Impairment

All Financial assets classified as at amortized cost shall be tested for impairment under Ind AS 109 and measured using Expected Credit Loss (ECL) model."

13 Fair Value

The Company measures Financial instruments at fair value in accordance with the accounting policies mentioned above. 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.

All assets and liabilities for which fair value is measured or disclosed in the Standalone Financial Statements are categorized within the fair value hierarchy that categorizes into three levels, described as follows, the inputs to valuation techniques used to measure value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs).

Level 1 — quoted (unadjusted) market prices in active markets for identical assets or liabilities

Level 2 — inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3 —inputs that are unobservable for the asset or liability

14 Government Grants

Grants from the government are recognized at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions. All government grants are initially recognized by way of setting up as deferred income. Government grants relating to

income are subsequently recognized in the profit or loss over the period necessary to match them with the costs that they are intended to compensate. Government grants relating to the purchase of property, plant and equipment are subsequently recognized in profit or loss on a systematic basis over the expected life of the related depreciable assets. Grants recognized in Profit and Loss as above are presented within other income or adjusted against the corresponding expenditure head as specifically disclosed thereunder.

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Mar 31, 2023

1 CORPORATE INFORMATION

Avalon Technologies Limited (formerly known as Avalon Technologies Private Limited) (“the Company”) is a company domiciled and incorporated in India. The company has converted from Private Limited company into a Public Limited Company with effect from 29th July, 2022. The company has its registered office situated at B-7, First Main Road, MEPZ-SEZ, Tambaram, Chennai - 600 045, Tamil Nadu, India. The company has three subsidiaries, two of which are incorporated in India and one in the United States of America. The Company together with its subsidiaries (collectively referred to as the “Company”) are Electronics Manufacturing Service (ems) providers with capabilities in Printed Circuit Assembly Boards (PCBA''s), custom cable, wire harness, metal, plastic, magnetics components and assemblies with enhanced capabilities in engineering design and development.

2 BASIS OF PREPARATION, MEASUREMENT AND SIGNIFICANT ACCOUNTING POLICIESA BASIS OF PREPARATION

The standalone financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Section 133 of the 2013 Act read with the Companies (Indian Accounting Standards) Rules 2015 and other relevant provisions of the 2013 Act.Upto the year ended 31 March, 2021, the Company prepared the standalone financial statements in accordance with the requirements of the previous GAAP, which includes standards notified under the Companies (Accounting Standards) Rules, 2006 and other relevant provisions of the 2013 Act.These are the Company''s first Ind AS standalone financial statements.The date of transition to the Ind AS is 01 April, 2021. Refer Note 32 for details of the firsttime adoption exceptions and exemptions availed by the Company.

The standalone financial statements are prepared under historical cost convention except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below, in accordance with the Generally Accepted Accounting Principles in India and comply in all material respects with the accounting standards specified under the section 133 of the Act.

All assets and liabilities have been classified as Current and non- Current as per the Company''s normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013

Assets

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

a. i t is expected to be realised in, or is intended for sale or consumption in, the company''s normal operating cycle;

b. i t is held primarily for the purpose of being traded;

c. i t is expected to be realised within 12 months after the reporting date; or

d. it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 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:

a. it is expected to be settled in the company''s normal operating cycle;

b. it is held primarily for the purpose of being traded;

c. it is due to be settled within 12 months after the reporting date; or

d. the company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

Current liabilities include current portion of non-current Financial liabilities. All other 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 identified 12 months as its operating cycle

The Standalone Financial Statements have been presented in Indian Rupees (Rs. or INR), which is also the Company''s functional currency. All amounts have been rounded-off to the nearest millions and decimals thereof, unless otherwise mentioned. Figures in brackets represents negative figures unless otherwise mentioned. “-” denotes zero or figures which are below the rounding off norms adopted by the Company.

B SIGNIFICANT ACCOUNTING POLICIES

1 Use of Estimates

The preparation of the Standalone Financial Statements in conformity with accounting principles generally accepted in India requires the management to make judgements, estimates and assumptions that effect the reported amount of assets and liabilities as of the Balance Sheet date, reported amount of revenues and expenses for the year and disclosure of contingent liabilities as of the Balance Sheet date. These estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about the assumptions and estimates may result in outcomes requiring a material adjustment to the carrying amount of assets or liabilities in future periods.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

2 Property, Plant and Equipment

Property, Plant and Equipment are stated at cost less accumulated depreciation and

impairment in value, if any. Cost includes purchase price, (inclusive of import duties and non - refundable purchase taxes, after deducting trade discounts and rebates), other costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and an initial estimate of the costs of dismantling, removing the item and restoring the site on which it is located, if any.

If the Company has acquired a Property, Plant and Equipment on deferred term basis and terms are beyond normal credit terms, property plant and equipment will be recognized on cash price equivalent, i.e. discounted amount.

The cost of Assets not ready for use as at the Balance Sheet date are disclosed under Capital Work-In-Progress.

The cost of replacement spares/ major inspection relating to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably. When parts of an item of property plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Depreciation

Depreciation on Property , Plant and Equipment (Tangible assets) is generally computed on a pro-rata basis on the basis of the estimated life specified in Schedule II of the Companies Act, 2013 under Straight line method. The useful life of assets prescribed in Schedule II to the Companies Act, 2013 are considered for the purpose of Computation of Depreciation. However, If the management''s estimate of the useful life of a fixed asset at the time of acquisition of the asset or of the remaining useful life on an annual review is different from that envisaged in the aforesaid schedule, depreciation is provided at a such rate based on the useful life / remaining useful life as technically advised. Accordingly, depreciation is provided based on the useful life as indicated below which is different from that stated in Schedule II to the Companies Act, 2013.

Category	Useful life
Buildings	3 - 60 years
Plant and machinery	1 - 15 years
Computers	3 - 6 years
Office equipment	5 - 15 years
Furniture and fixtures	10 - 15 years
Vehicles	4 - 8 years
Tools*	3 - 5 years

*Useful life of tools are based on internal estimate of the Company. Tools and dies used are depreciated based on quantity of components manufactured and the life of tools and dies, subject to a maximum of 5 years. Tools and dies used for low volume products are depreciated at higher rate.

Depreciation charge on additions / deletions is restricted to the period of use. Depreciation methods, useful lives and residual values are reviewed annually.

3 Intangible Assets

Intangible assets are stated at acquisition cost, net of accumulated amortization and accumulated impairment losses, if any. Intangible assets are amortized on a straight line basis over their estimated useful life as given below.

Category	Useful life
Patent	10 years
Software	4 years

Amortization method and useful lives are reviewed annually.

4 Leases As lessee

The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (1) the contact involves the use of an identified asset (2) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (3) the Company has the right to direct the use of the asset.

The Company recognizes a right-of-use asset and a corresponding lease liability for all lease

arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and leases for low value underlying assets. For these short-term and leases for low value underlying assets, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.

Certain lease arrangements include the options to extend or terminate the lease before the end of the lease term. Right-of use assets and lease liabilities include these options when it is reasonably certain that the option to extend the lease will be exercised/option to terminate the lease will not be exercised.

The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation/amortization and impairment losses.

Right-of-use assets are depreciated/ amortized from the commencement date to the end of the useful life of the underlying asset, if the lease transfers ownership of the underlying asset by the end of lease term or if the cost of right-of-use assets reflects that the purchase option will be exercised. Otherwise, Right-of-use assets are depreciated / amortized from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.

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

The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rate. Lease liabilities are re-measured with a corresponding adjustment to the related right-of-use asset if the Company changes its assessment whether it will exercise an extension or a termination option.

5 Impairment

Assessment is done annually as to whether there is any indication that an asset (tangible and intangible) may be impaired. For the purpose of assessing impairment, the smallest identifiable Company of assets that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or Company''s of assets, is considered as a cash generating unit. If any such indication exists, an estimate of the recoverable amount of the asset / cash generating unit is made. Assets whose carrying value exceeds their recoverable amount are written down to the recoverable amount. Recoverable amount is higher of an asset''s or cash generating unit''s fair value less cost to sell and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Assessment is also done at each Balance Sheet date as to whether there is any indication that an impairment loss recognized for an asset in prior accounting periods may no longer exist or may have decreased. In such cases, impairment losses are reversed to the extent the assets carrying amount does not exceed, the carrying amount that would have been determined if no impairment loss had previously been recognized.

6 Borrowing Cost

Borrowing costs that are attributable to the acquisition / construction / production of qualifying assets (assets which require substantial period of time to get ready for its intended use) are capitalized as part of the cost of that asset. All other borrowing costs are charged to revenue. In accordance with the ICAI Guidance Note on Schedule III to the

Companies Act, 2013 , exchange losses (net) relating to foreign currency borrowings to the extent not capitalized in accordance with Ind AS 23 is presented under finance costs.

7 Inventories

“Cost of raw materials, components, stores and spares are ascertained on a moving weighted average cost basis. Cost of finished goods and work-in-progress comprise of direct materials, direct labour and an appropriate proportion of variable and fixed overhead. Such costs are assigned to individual items of inventory on the basis of weighted average costs. Costs of purchased inventory are determined after deducting rebates taxes (not recoverable from the taxing authorities) and discounts. Goods that are consigned to the Company are not considered in inventory.

Net realizable 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. Materials and supplies held for use in production of inventories are not written down if the finished products in which they will be used are expected to be sold at or above cost. Slow and non-moving material, obsolescence, defective inventories as identified by the management are duly provided for/ written down to the realizable value, as the case maybe.

Raw materials, components and other supplies held for use in the production of finished products are not written down below cost except in cases where material prices have declined and it is estimated that the cost of the finished products will exceed their net realisable value.

The comparison of cost and net realisable value is made on an item-by-item basis.

8 Foreign Currency Transaction Functional Currency

I tems included in the financial statements are measured using the currency of the primary economic environment in which the Company operates (''the functional currency''). The financial statements are presented in Indian rupee (inr), which is the Company''s functional and presentation currency

Initial Recognition

On initial recognition, all foreign currency transactions are recorded by applying to the foreign currency amount the exchange rate between the Functional currency and the foreign currency at the date of the transaction.

Subsequent Recognition

As at the reporting date, non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. All non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.

All monetary assets and liabilities in foreign currency are reinstated at the end of accounting period.

Exchange differences on reinstatement of all monetary items are recognized in the Statement of Profit and Loss.

Foreign operations

The assets and liabilities of foreign operations are translated into Indian rupees (inr), the functional currency of the Company at the exchange rate at the reporting date. The income and expenses of foreign operations are translated to Indian rupees (inr) at exchange rates at the date of transactions or an average rate if the average rate approximates the actual rate at the date of transaction.

Foreign currency translation differences are recognised in other comprehensive income and accumulated in equity separately under foreign currency translation reserve. The amounts recognized are transferred to the Standalone statement of profit and loss on disposal of the related foreign subsidiaries.

9 Revenue Recognition

Revenue from contracts with customers is recognized on transfer of control of promised goods or services to a customer at an amount that the Company is expected to be entitled to in exchange for those goods or services.

Revenue towards satisfaction of a performance obligation is measured at the

amount of transaction price (net of variable consideration) allocated to that performance obligation. The transaction price of goods sold and services rendered is net of variable consideration on account of various discounts and rebates offered by the Company as part of the contract. This variable consideration is estimated based on the expected value of outflow.

Sale of goods

Revenue from sale of products is recognized when the control on the goods have been transferred to the customer. The performance obligation in case of sale of product is satisfied at a point in time i.e., when the material is shipped to the customer or on delivery to the customer, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Company has objective evidence that all criteria for acceptance have been satisfied. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates.

Advance from customers is recognized under other current liabilities which is released to revenue on satisfaction of performance obligation.

Rendering of Services

Revenue from other service activities are recognized at a point in time on satisfaction of performance obligation towards rendering of such services in accordance with the terms of arrangement.

Revenue is recorded exclusive of goods and service tax.

Other Income

Interest : Interest income is recognized on effective interest method taking into account the amount outstanding and the rate applicable.

Dividend: Dividend income is recognized when the right to receive dividend is established.

Insurance Claims : Insurance claims are accounted for on the basis of claims lodged with insurance Company and to the extent that there is a reasonable certainty in realizing the claims.

10 Employee Benefits

1. Short - Term employee benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits and recognized in the period in which the employee renders the related service.

2. Defined Contribution Plans

Contribution towards provident fund/ Employee State Insurance for employees working with the Company''s operations in India is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as Defined Contribution Schemes as the Company does not carry any further obligations, apart from the contributions made on a monthly basis.

3. Defined Benefit Plan

The Company provides for gratuity, a defined benefit plan (the “Gratuity Plan”) which is unfunded covering eligible employees in accordance with the Payment of Gratuity Act, 1972. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment. The Company''s liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses / gains are recognized in the other comprehensive income in the year in which they arise. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss.

4. Other Long term employee benefits

Accumulated compensated absences, which are expected to be availed or

encashed within 12 months from the end of the year are treated as short term employee benefits. The obligation towards the same is measured at the expected cost of accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlement as at the year end.

Accumulated compensated absences, which are expected to be availed or encashed beyond 12 months from the end of the year end are treated as other long term employee benefits. The Company''s liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses / gains are recognized in the Profit and Loss Statement in the year in which they arise.

10A Share Based Payments

Employees (including senior executives) of the Company receive remuneration in the form of share based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions).

The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model.

That cost is recognised, together with a corresponding increase in Employee Stock option Plan (ESOP) reserves in equity, over the period in which the performance and/or service conditions are fulfilled, in employee benefits expense. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company''s best estimate of the number of equity instruments that will ultimately vest. The expense or credit for a period recognised in employee benefits expense represents the movement in cumulative expense recognised as at the beginning and end of that period.

Performance conditions which are market conditions are taken into account when determining the grant date fair value of the awards. Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the Company''s best estimate of the number of equity instruments that will ultimately vest.

No expense is recognised for awards that do not ultimately vest because non-market performance and/or service conditions have not been met.

When the terms of an equity-settled award are modified, the minimum expense recognised is the expense had the terms not been modified if the original terms of the award are met. An additional expense is recognised for any modification that increases the total fair value of the share-based payment transaction or is otherwise beneficial to the employee as measured at the date of modification.

Where an award is cancelled by the entity or by the counterparty, any remaining element of the fair value of the award is expensed immediately through profit or loss.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.

11 Taxes on Income

Tax expense for the period, comprising current tax and deferred tax, are included in the determination of the net profit or loss for the period. Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the relevant prevailing tax laws. Tax expenses relating to the items in profit and loss shall be treated as current tax as part of profit and loss and those relating to items in other comprehensive income (oci) shall be recognized as part of the part of OCI.

Deferred tax is recognized for all the temporary differences between the carrying amounts of assets and liabilities in the Standalone Financial Statements and corresponding tax bases used in computation of taxable profit. Deferred tax assets are recognized and carried forward only to the extent that it is probable that taxable profit will be available

against which those deductible temporary differences can be utilized. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. At each Balance Sheet date, the Company re-assesses unrecognized deferred tax assets, if any and the same is recognized to the extent it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Minimum Alternate Tax (mat) credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period. MAT shall be treated as part of deferred tax assets.

12 Financial instruments Initial recognition

The Company recognizes Financial assets and Financial liabilities when it becomes a party to the contractual provisions of the instruments. All Financial assets and liabilities are recognized at fair value on initial recognition. Transaction costs that are directly attributable to the acquisition or issue of Financial assets and Financial liabilities, that are not at fair value through profit or loss, are added to the fair value on initial recognition.

Financial liabilities and equity instruments: Classification as debt or equity

Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Instruments (including convertible

preference shares ) that meet the definition of ''Equity'' in its entirety and which do not have any component of liability, is classified as Equity and grouped under ''Instruments entirely equity in nature''. Equity instruments are recorded at the proceeds received, net of direct issue costs. The transaction costs of an equity transaction are accounted for as a deduction from equity to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided. The costs of an equity transaction that is abandoned are recognised as an expense.

Subsequent measurement

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

ii. Financial assets at fair value through profit or loss

A Financial asset which is not classified in the above category is subsequently fair valued through profit or loss.

iii. Financial liabilities

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

Derecognition of Financial instruments

The Company derecognizes a Financial asset when the contractual rights to the cash flows from the Financial asset expire or it transfers the Financial asset and the transfer qualifies for derecognition under IND AS 109. A Financial liability (or a part of a Financial liability) is

derecognized from the Company''s Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires.

Impairment

All Financial assets classified as at amortized cost shall be tested for impairment under Ind AS 109 and measured using Expected Credit Loss (ECL) model.

13 Fair Value

The Company measures Financial instruments at fair value in accordance with the accounting policies mentioned above. 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.

All assets and liabilities for which fair value is measured or disclosed in the Standalone Financial Statements are categorized within the fair value hierarchy that categorizes into three levels, described as follows, the inputs to valuation techniques used to measure value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs).

Level 1 — quoted (unadjusted) market prices in active markets for identical assets or liabilities

Level 2 — inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3 —inputs that are unobservable for the asset or liability

14 Government Grants

Grants from the government are recognized at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions. All government grants are initially recognized by way of setting up as deferred income. Government grants relating to income are subsequently recognized in the profit or loss over the period necessary to

match them with the costs that they are intended to compensate. Government grants relating to the purchase of property, plant and equipment are subsequently recognized in profit or loss on a systematic basis over the expected life of the related depreciable assets. Grants recognized in Profit and Loss as above are presented within other income or adjusted against the corresponding expenditure head as specifically disclosed thereunder.

15 Provisions and Contingent Liabilities

Provisions : Provisions are recognized when there is a present obligation as result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date and are not discounted to its present value unless the effect of time value of money is material. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

Contingent Liabilities : Contingent liabilities are 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 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 or a reliable estimate of the amount cannot be made. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources embodying economic benefits is remote, no provision or disclosure is made.

16 Segment Reporting

The Company is engaged in providing Electronics Manufacturing Services (EMS) with capabilities in printed circuit board assembly, custom cable and wire harnesses, etc. Since the Chief Operating Decision Maker (Board of Directors) review the operating results as a whole for purposes of making decisions about resources to be allocated and to assess

its performance, the entire operations are to be classified as a single business segment, namely EMS.

17 Earnings Per Share

Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the Company''s earnings per share is the net profit for the period after deducting equity dividends and any attributable tax thereto for the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares, that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.

18 Share issue expense

The transaction costs of an equity transaction are accounted for as a deduction from equity to the extent they are incremental costs directly attributable to the equity transaction.

19 Cash & Cash Equivalents

Cash and cash equivalents comprises cash on hand and at banks and short-term deposits with an original maturity of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

20 Exceptional items

Exceptional items are those items that management considers, by virtue of their size or incidence, should be disclosed separately to ensure that the financial information allows an understanding of the underlying performance of the business in the year, so as to facilitate comparison with prior periods. Such items are

material by nature or amount to the year''s result and require separate disclosure in accordance with Ind AS.

3 CRITICAL ACCOUNTING JUDGEMENTS, ASSUMPTIONS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

The following are the critical judgements, assumptions concerning the future, and key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next Financial year.

3.1. Useful lives of property, plant and equipment

As described above, the charge in respect of periodic depreciation for the year is derived after determining an estimate of an asset''s expected useful life and the expected residual value at the end of its life. The useful lives and residual values of Company''s assets are determined by the management at the time the asset is acquired and reviewed annually. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technical or commercial obsolescence arising from changes or improvements in production or from a change in market demand of the product or service output of the asset.

3.2. Employee Benefits

The cost of defined benefit plans are determined using actuarial valuation, which involves making assumptions about discount rates, expected rates of return on assets, future salary increases, and mortality rates. Due to the long-term nature of these plans, such estimates are subject to significant uncertainty.

3.3. Taxation

Significant assumptions and judgements are involved in determining the provision for tax based on tax enactments, relevant judicial pronouncements and tax expert opinions, including an estimation of the likely outcome of any open tax assessments / litigations.

Deferred income tax assets are recognized to the extent that it is probable that future taxable income will be available, based on estimates thereof. Significant assumptions are also involved in evaluating the recoverability of deferred tax assets recognised on unused tax losses.

3.4 Provisions and contingencies

Critical judgements are involved in measurement of provisions and contingencies and estimation of the likelihood of occurrence thereof based on factors such as expert opinion, past experience etc.

3.5 Impairment of Trade receivable -Expected Credit loss

The impairment provisions for trade receivables are based on assumptions about risk of default. The Company uses judgement in making these assumptions and selecting the inputs for the impairment calculation, based on Company''s past history at the end of each reporting period

3.6 Estimation of uncertainties relating to the global health pandemic due to COVID-19 (COVID-19):

The Company, based on the internal and external information available up to the date of approval of these Standalone Financial Statements, has concluded that no adjustments are required in the carrying amounts of its Financial assets and other assets. Given the uncertainties associated with the nature and duration of the pandemic, actual results may differ from those estimated as at the date of approval of the Standalone Financial Information. The Company will continue to monitor future economic conditions and update its assessment.

4 RECENT ACCOUNTING PRONOUNCEMENTS

Ministry of Corporate Affairs (“MCA”) notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 31, 2023, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2023, as below:

I nd AS 1 - Presentation of Financial Statements -This amendment requires the entities to disclose their material accounting policies rather than their significant accounting policies. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023. The Company has evaluated the amendment and the impact of the amendment is insignificant in the standalone financial statements.

Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors - This amendment has introduced a definition of ''accounting estimates'' and included amendments to Ind AS 8 to help entities distinguish changes in accounting policies from changes in accounting estimates. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023. The Company has evaluated the amendment and there is no impact on its standalone financial statements.

Ind AS 12 - Income Taxes - This amendment has narrowed the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023. The Company has evaluated the amendment and there is no impact on its standalone financial statement.