L) Provisions
General

Provisions are recognised when the Company
has a present obligation (legal or constructive)
as a result of a past event, it is probable that
an outflow of resources embodying economic
benefits will be required to settle the obligation
and a reliable estimate can be made of the
amount of the obligation.

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

Warranty provisions

Provisions for warranty-related costs are
recognised when the product is sold or service
provided to the customer. Initial recognition is
based on historical experience. The initial estimate
of warranty-related costs is revised annually.

Coupon scheme provision

Provision for coupon scheme is recognised based
on historical coupon redemption information and
any recent trends towards supplies pertaining to
other than OEMs. These coupons are expected
to be redeemed within 2 to 3 years.

Onerous contracts

If the Company has a contract that is onerous,
the present obligation under the contract is
recognised and measured as a provision.

M) Earnings Per Share

(i) Basic earnings per share

Basic earnings per share is calculated by
dividing the profit attributable to owners of
the Company by the weighted average

number of equity shares outstanding during
the reporting 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.

(ii) Diluted earnings per share

For 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.

N) Cash and Cash Equivalents

Cash and cash equivalent in the balance sheet
comprise cash at banks and on hand and
short-term deposits with an original maturity of
three months or less, which are subject to an
insignificant risk of changes in value.

For the purpose of the statement of cash flows,
cash and cash equivalents consist of cash
and short-term deposits, as defined above,
net of outstanding bank overdrafts as they are
considered an integral part of the Company's
cash management. Bank overdraft are
shown within borrowings in current liabilities in
the balance sheet.

O) Segment reporting

In accordance with paragraph 4 of notified Ind
AS 108 "Operating segments", the Company has
disclosed segment information only on the basis
of the consolidated financial statements.

P) Financial Instruments
Financial Assets

Initial Recognition and measurement

Financial assets are classified, at initial recognition,
as subsequently measured at amortised cost,
fair value through other comprehensive income
(OCI), and fair value through profit or loss.

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

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

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

Purchases or sales of financial assets that require
delivery of assets within a time frame established
by regulation or convention in the marketplace
(regular way trades) are recognised on the trade

date, i.e., the date that the company commits
to purchase or sell the asset.

Subsequent measurement

For purposes of subsequent measurement,

financial assets are classified in four categories:

- Financial assets at amortised cost

(debt instruments)

- Financial assets at fair value through other

comprehensive income (FVTOCI) with
recycling of cumulative gains and losses
(debt instruments)

- Financial assets designated at fair value
through OCI with no recycling of cumulative
gains and losses upon derecognition
(equity instruments)

- Financial assets at fair value through

Statement of Profit and Loss

Debt instruments at amortized cost

A ‘debt instrument' is measured at the amortized
cost if both the following conditions are met:

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

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

This category is the most relevant to the Company.
After initial measurement, such financial assets
are subsequently measured at amortized cost
using the effective interest rate (EIR) method.
Amortized cost is calculated by taking into
account any discount or premium on acquisition
and fees or costs that are an integral part of EIR.
The EIR amortization is included in finance costs/
income in the Statement of Profit and Loss. The
losses arising from impairment are recognised in
the Statement of Profit and Loss. This category
generally applies to trade and other receivables.

Equity investments

All equity investments in scope of Ind-AS 109 are
measured at fair value. Equity instruments which
are held for trading are classified as at FVTPL. For
all other equity instruments, the Company may
make an irrevocable election to present in other
comprehensive income subsequent changes
in the fair value. The Company makes such an
election on an instrument-by-instrument basis.
This classification is made on initial recognition
and is irrevocable.

Equity instruments included within the FVTPL
category are measured at fair value with all
changes recognised in Statement of Profit and Loss.

Derecognition

A financial asset (or, where applicable,
a part of a financial asset or part of a
company of similar financial assets) is primarily
derecognised (i.e. removed from the Company
balance sheet) when:

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

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

When the Company has transferred its rights to
receive cash flows from an asset or has entered
into a pass-through arrangement, it evaluates
if and to what extent it has retained the risks
and rewards of ownership. When it has neither
transferred nor retained substantially all of the risks
and rewards of the asset, nor transferred control
of the asset, the Company continues to recognize
the transferred asset to the extent of the Company
continuing involvement. In that case, the

Company also recognizes an associated liability.
The transferred asset and the associated liability
are measured on a basis that reflects the rights
and obligations that the Company has retained.

Impairment of financial assets

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

(a) Financial assets that are debt instruments,
and are measured at amortized cost e.g.
loans, debt securities, deposits, trade
receivables and bank balance

(b) Trade receivables or any contractual right
to receive cash or another financial asset

The Company follows ‘simplified approach' for
recognition of impairment loss allowance on:

Trade receivables

In respect of other financial assets E.g. debt
securities, deposits, bank balances etc), the
Company generally invests in instruments
with high credit rating and consequently low
credit risk. In the unlikely event that the credit
risk increases significantly, from inception of
investment, lifetime ECL is used for recognising
impairment loss on such assets.

Lifetime ECL are the expected credit losses
resulting from all possible default events over the
expected life of a financial instrument.

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

- All contractual terms of the financial
instrument (including prepayment,
extension, call and similar options) over the
expected life of the financial instrument.

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

ECL impairment loss allowance (or reversal)
recognised during the period is recognised
as income/expense in the Statement of Profit
and Loss (P&L). This amount is reflected under
the head ‘other expenses' in the P&L. The
balance sheet presentation for various financial
instruments is described below:

Financial assets measured at amortized cost,
contract assets:

ECL is presented as an allowance, i.e. as an
integral part of the measurement of those
assets in the balance sheet. The allowance
reduces the net carrying amount. Until the asset
meets write-off criteria, the Company does not
reduce impairment allowance from the gross
carrying amount.

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

Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial
recognition, as financial liabilities at fair value
through Statement of Profit and Loss, loans and
borrowings, payables, as appropriate.

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

The Company's financial liabilities include trade
and other payables, loans and borrowings
including bank overdrafts

Loans and borrowings

This is the category most relevant to the
Company. After initial recognition, interest¬
bearing loans and borrowings are subsequently
measured at amortized cost using the effective
interest rate ( EIR) method. Gains and losses are
recognised in Statement of Profit and Loss when
the liabilities are derecognised as well as through
the EIR amortization process.

Amortized cost is calculated by taking into
account any discount or premium on acquisition
and fees or costs that are an integral part of the
EIR. The EIR amortization is included as finance
costs in the Statement of Profit and Loss. This
category generally applies to interest bearing
loans and borrowings.

Derecognition

A financial liability is derecognised when the
obligation under the liability is discharged or
cancelled or expires when an existing financial
liability is replaced by another from the same
lender on substantially different terms, or the
terms of an existing liability are substantially
modified, such an exchange or modification
is treated as the derecognition of the original
liability and the recognition of a new liability. The
difference in the respective carrying amounts is
recognised in the Statement of Profit and Loss.

Fair value measurement

The Company measures financial instruments,
such as, derivatives and investments at fair value
at each balance sheet date.

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

- In the principal market for the asset
or liability, or

- In the absence of a principal market, in
the most advantageous market for the
asset or liability

The principal or the most advantageous market
must be accessible by the Company. The
fair value of an asset or a liability is measured
using the assumptions that market participants
would use when pricing the asset or liability,
assuming that market participants act in their
economic best interest.

A fair value measurement of a non-financial
asset takes into account a market participant's
ability to generate economic benefits by using
the asset in its highest and best use or by selling it
to another market participant that would use the
asset in its highest and best use.

The Company uses valuation techniques that
are appropriate in the circumstances and for
which sufficient data are available to measure
fair value, maximizing the use of relevant
observable inputs and minimizing the use of
unobservable inputs. All assets and liabilities for
which fair value is measured or disclosed in the
financial statements are categorised within the
fair value hierarchy, described as follows, based
on the lowest level input that is significant to the
fair value measurement as a whole:

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

Level 2 — Valuation techniques for which the
lowest level input that is significant to the fair value
measurement is directly or indirectly observable

Level 3 — Valuation techniques for which the
lowest level input that is significant to the fair
value measurement is unobservable

For assets and liabilities that are recognised in
the financial statements on a recurring basis, the
Company determines whether transfers have
occurred between levels in the hierarchy by

re-assessing categorisation (based on the lowest
level input that is significant to the fair value
measurement as a whole) at the end of each
reporting period.

For the purpose of fair value disclosures, the
Company has determined classes of assets and
liabilities on the basis of the nature, characteristics
and risks of the asset or liability and the level of
the fair value hierarchy as explained above.

This note summarizes accounting policy for fair
value. Other fair value related disclosures are
given in the relevant notes.

Disclosures for valuation methods, significant
estimates and assumptions (Note 2A)

Quantitative disclosures of fair value
measurement hierarchy (Note 42)

Financial instruments (including those carried at
amortized cost) (Note 43, 44 and 45)

Derivative financial instruments and hedge
accounting

Initial recognition and subsequent measurement

The Company uses derivative financial
instruments, such as forward currency contracts
and interest rate swaps, to hedge its foreign
currency risks and interest rate risks, respectively.
Such derivative financial instruments are initially
recognised at fair value on the date on which
a derivative contract is entered into and
are subsequently re-measured at fair value.
Derivatives are carried as financial assets when
the fair value is positive and as financial liabilities
when the fair value is negative.

Any gains or losses arising from changes in the
fair value of derivatives are taken directly to
Statement of Profit and Loss, except for the
effective portion of cash flow hedges, which
is recognised in OCI and later reclassified to
Statement of Profit and Loss when the hedge
item affects Statement of Profit and Loss or
treated as basis adjustment if a hedged forecast

transaction subsequently results in the recognition
of a non-financial asset or non-financial liability.

For the purpose of hedge accounting, hedges
are classified as:

1 Fair value hedges when hedging the
exposure to changes in the fair value
of a recognised asset or liability or an
unrecognised firm commitment

2 Cash flow hedges when hedging the
exposure to variability in cash flows that
is either attributable to a particular risk
associated with a recognised asset or liability
or a highly probable forecast transaction or
the foreign currency risk in an unrecognised
firm commitment

Hedges of a net investment in a foreign operation-

At the inception of a hedge relationship, the
Company formally designates and documents
the hedge relationship to which the Company
wishes to apply hedge accounting and the
risk management objective and strategy for
undertaking the hedge. The documentation
includes the Company's risk management
objective and strategy for undertaking hedge,
the hedging/ economic relationship, the hedged
item or transaction, the nature of the risk being
hedged, hedge ratio and how the entity will
assess the effectiveness of changes in the hedging
instrument's fair value in offsetting the exposure to
changes in the hedged item's fair value or cash
flows attributable to the hedged risk. Such hedges
are expected to be highly effective in achieving
offsetting changes in fair value or cash flows and
are assessed on an ongoing basis to determine
that they actually have been highly effective
throughout the financial reporting periods for
which they were designated.

Hedges that meet the strict criteria for
hedge accounting are accounted for, as
described below:

Cash flow hedges

The effective portion of the gain or loss on the
hedging instrument is recognised in OCI in the
cash flow hedge reserve, while any ineffective
portion is recognised immediately in the
Statement of Profit and Loss.

The Company uses derivative contracts as
hedges of its exposure to foreign currency risk in
forecast transactions and firm commitments. The
ineffective portion relating to foreign currency
contracts is recognised in finance costs.

Amounts recognised as OCI are transferred to
Statement of Profit and Loss when the hedged
transaction affects Statement of Profit and Loss,
such as when the hedged financial income
or financial expense is recognised or when a
forecast sale occurs. When the hedged item is
the cost of a non-financial asset or non-financial
liability, the amounts recognised as OCI are
transferred to the initial carrying amount of the
non-financial asset or liability.

If the hedging instrument expires or is sold,
terminated or exercised without replacement
or rollover (as part of the hedging strategy),
or if its designation as a hedge is revoked, or
when the hedge no longer meets the criteria for
hedge accounting, any cumulative gain or loss
previously recognised in OCI remains separately
in equity until the forecast transaction occurs or
the foreign currency firm commitment is met.

Q) Contingent liabilities

A disclosure for a contingent liability is made
where there is a possible obligation that arises
from past events and 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
the past events where it is either not probable
that an outflow of resources will be required to
settle the obligation or a reliable estimate of the
amount cannot be made.

R) Changes in accounting policies and disclosures
New and amended standards

The Company applied for the first-time certain
standards and amendments, which are effective
for annual periods beginning on or after April 01,
2025. The Company has not early adopted any
standard, interpretation or amendment that has
been issued but is not yet effective.

(i) Amendments to Ind AS 21 - Lack of
exchangeability

The Ministry of Corporate Affairs (MCA)
notified the Companies (Indian Accounting
Standards) Amendment Rules, 2025, which
amend Ind AS 21, The Effects of Changes in
Foreign Exchange Rates to specify how an
entity should assess whether a currency is
exchangeable and how it should determine
a spot exchange rate when exchangeability
is lacking. The amendments also require
disclosure of information that enables users
of its financial statements to understand how
the currency not being exchangeable into
the other currency affects, or is expected to
affect, the entity's financial performance,
financial position and cash flows.

The amendments are effective for
annual reporting periods beginning on
or after April 01, 2025. When applying the
amendments, an entity cannot restate
comparative information.

The amendments do not have a
material impact on the Company's
financial statements.

(ii) Amendments to Ind AS 1 - Classification
of Liabilities as Current or Non-current and
Non-current Liabilities with Covenants

In August 2025, the MCA notified
amendments to paragraphs 69 to 76 of
Ind AS 1 to specify the requirements for
classifying liabilities as current or non¬
current. The amendments clarify:

• What is meant by a right to
defer settlement

• That a right to defer must exist at the
end of the reporting period

• That classification is unaffected by the
likelihood that an entity will exercise
its deferral right

• That only if an embedded derivative in
a convertible liability is itself an equity
instrument would the terms of a liability
not impact its classification

In addition, a requirement has been
introduced to require disclosure when a
liability arising from a loan agreement is
classified as non-current and the entity's
right to defer settlement is contingent
on compliance with future covenants
within twelve months.

If there is a breach of a material covenant
of a long term loan arrangement on or
before the end of the reporting period,
resulting in the liability becoming payable
on demand as at the reporting date, and
the lender agrees—after the reporting
period but before the financial statements
are approved for issue—not to demand
repayment for at least 12 months as a
consequence of the breach, this shall be
treated as an adjusting event. Accordingly,
the entity is not required to classify the
liability as current.

The amendments are effective for
annual reporting periods beginning on
or after April 01 , 2025 retrospectively in
accordance with Ind AS 8.

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

(iii) Amendments to Ind AS 7 and Ind AS 107 -
Supplier Finance Arrangements

In August 2025, the MCA notified
amendments to Ind AS 7 Statement of Cash
Flows and Ind AS 107 Financial Instruments:
Disclosures to clarify the characteristics of

supplier finance arrangements and require
additional disclosure of such arrangements.
The disclosure requirements in the
amendments are intended to assist users of
financial statements in understanding the
effects of supplier finance arrangements
on an entity's liabilities, cash flows and
exposure to liquidity risk.

As a result of implementing the amendments,
the Company has provided additional
disclosures about its supplier finance
arrangement. Please refer to Note 24.

(iv) International Tax Reform—Pillar Two Model
Rules - Amendments to Ind AS 12

In August 2025, the MCA notified
amendments to Ind AS 12 Income Taxes
in response to the OECD's BEPS Pillar Two
rules and include:

• A mandatory temporary exception
to the recognition and disclosure
of deferred taxes arising from the
jurisdictional implementation of the
Pillar Two model rules; and

• Disclosure requirements for affected
entities to help users of the financial
statements better understand an
entity's exposure to Pillar Two income
taxes arising from that legislation,
particularly before its effective date.

The mandatory temporary exception - the
use of which is required to be disclosed
- applies immediately. The remaining
disclosure requirements apply for annual
reporting periods beginning on or after
April 01,2025 but not for any interim periods
ending on or before March 31,2026.

The amendments had no impact on
the Company's standalone financial
statements as the Company is not in scope
of the Pillar Two model rules

Recent accounting pronouncements

Standards issued but not yet effective

The new and amended standards that
are notified by the Ministry of Corporate
Affairs (MCA), but not yet effective, up to
the date of issuance of the Company's
financial statements are disclosed below.
The Company will adopt these new
and amended standards, when they
become effective.

(i) Amendments to Ind AS 1 - Classification
of Liabilities as Current or Non-current
and Non-current Liabilities with
Covenants and Ind AS 10 Events after
the Reporting Period

Ind AS 10 has been amended to
remove the previous treatment under
which a lender's post-reporting-date
waiver granted before the financial
statements were approved for issue
of a breach of a material covenant
in a long-term loan arrangement that
occurred on or before the end of the
reporting period, resulting in the liability
becoming payable on demand at the
reporting date, was regarded as an
adjusting event.

For annual reporting periods beginning
on or after April 01 , 2026 any breach
of a covenant—whether material or
immaterial—occurring on or before the
reporting date will, in accordance with
Ind AS 1, require the related liability
to be classified as current, unless the
lender has granted a waiver of the
breach on or before the reporting
date and has agreed not to demand
repayment for at least 12 months after
the reporting date as a consequence
of the breach. Such a waiver shall be
treated as an adjusting event.

The amendments are effective for
annual reporting periods beginning on
or after April 01,2026 retrospectively in
accordance with Ind AS 8.

Note 2A: Significant accounting judgements,
estimates and assumptions

The preparation of the Company's financial
statements requires management to make
judgments, estimates and assumptions that affect
the reported amounts of revenues, expenses,
assets, liabilities and the accompanying
disclosures, and the disclosure of contingent
liabilities. Uncertainty about these assumptions
and estimates could result in outcomes that
require a material adjustment to the carrying
amount of assets or liabilities affected in
future periods.

Judgements

In the process of applying the Company's
accounting policies, following are significant
judgements made by the management:

1) Revenue from contracts with customers

The Company provides product
development/engineering services to
its customers. Under Ind AS 115, the
Company has determined that such
services generally do not constitute a
separate performance obligation under
the contracts with customers but are
part of the performance obligation of
the Company to supply finished goods to
the customer. Accordingly, under Ind AS
115, revenue from product development/
engineering services is recognised over
the period of production from the start of
production (SOP) date. Payments received
from customers in respect of such services
before SOP date are considered as
contract liability. Further, the Company has
determined that the costs incurred in respect
of product development/engineering
services are eligible to be capitalised as
intangible assets and accordingly such
costs have been presented as ‘Capitalised

development cost' under Intangible assets
(also refer note 5).

Development of toolings for the customers
has been identified by the Company to
be a separate performance obligation.
Further,the Company has determined that
the performance obligation in respect
of development of toolings is satisfied at
a point in time.

2) De-recognition of trade receivables under
factoring arrangements

The Company enters into non-recourse
factoring arrangements for its trade
receivables with various banks/financial
institutions. The Company derecognizes
the receivables from its books if it transfers
substantially all the risks and rewards
of ownership of the financial asset (i.e.
receivables). The assessment of de¬
recognition of trade receivables under the
factoring arrangements is complex and
requires judgement (refer note 12).

3) Allowability of deduction on write-off of
loans to subsidiary under the Income Tax
Act, 1961

During the year ended March 31, 2024,
the Company derecognised (written-off)
loans given to VarrocCorp Holding BV
(‘VCHBV'), Netherlands including interest
on such loans aggregating to H 13,533.33
million(including H 1,736.89 million by Varroc
Polymers Limited (‘VPL'), wholly owned
subsidiary, now merged with the Company
as explained in Note 54(c)) after making
requisite submissions to AD Bank. The
Company claimed this write-off on loans as
an allowable business loss, considering that
these loans extended to VCHBV were in the
nature of trade investments to derive benefits
for the Company's businesses rather than
for earning dividend/capital appreciation.
The Company obtained legal opinions from
two independent senior counsels who have
supported their view on claiming this write-

off of loans as an allowable business loss.
Accordingly, VPL considered this loss as tax
deductible for computation of current tax
provision to the extent of H 437.14 million
and the Company recognised deferred tax
asset of Rs 2,968.93 million during the year
ended March 31, 2024. Deferred tax asset
on such losses available for set off against
future income is H 211.18 million as at March
31, 2026 (March 31,2025: H 1,378.38 million).
Significant management judgement
involved with respect to deductibility of
such expenditure under Income tax Act,
1961 considering the same as business
expenditure (refer note 23).

Estimates and assumptions

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

1) Defined benefit plans

The cost of the defined benefit gratuity
plan and the present value of the gratuity
obligation are determined using actuarial
valuation. An actuarial valuation involves
making various assumptions that may differ
from actual developments in the future.
These include the determination of the
discount rate, future salary increases and
mortality rates. Due to the complexities
involved in the valuation and its long-term
nature, a defined benefit obligation is highly

sensitive to changes in these assumptions.
All assumptions are reviewed at each
reporting date.

Further details about gratuity obligation are
given in Note 41.

2) Deferred taxes

At each reporting date, the Company
assesses whether the realization of future tax
benefits is sufficiently probable to recognize/
carry forward deferred tax assets. This
assessment requires the use of significant
estimates/assumptions with respect to
assessment of future taxable income.
The recorded amount of total deferred
tax assets could change if estimates of
projected future taxable income change
or if changes in current tax regulations are
enacted. (Refer note 23 for details)

3) Provision for warranty and claims

Warranties are provided for a specified
period of time. The estimated liability for
warranties is recorded when the products
are sold. These estimates are established
using historical information on the nature,
frequency and average cost of warranty
claims and our estimates regarding possible
future incidence based on actions on
product failures.

The Company estimates the provisions
towards claims basis probability of expenses
arising out of claims from legal disputes
that have present obligations as a result of
past events and it is probable that outflow
of resources will be required to settle the
obligations. These provisions for warranties
and claims are reviewed at the end of each
reporting date and are adjusted to reflect
the current best estimates.

4) Useful life of property, plant and equipment
and intangible assets:

The Company uses its technical expertise
along with historical and industry trends

for determining the economic useful life
of assets. The useful lives are reviewed by
management periodically and revised,
if appropriate. In case of a revision, the
unamortised amount is charged over the
remaining useful life of the assets.

5) Impairment of non-current investments
(other than financial assets)

Impairment exists when the carrying value
of an asset or cash generating unit exceeds
its recoverable amount, which is the higher
of its fair value less costs of disposal and
its value in use. The fair value less costs of
disposal calculation is based on available

data from binding sales transactions,
conducted at arm's length, for similar assets
or observable market prices less incremental
costs for disposing of the asset. The value in
use calculation is based on a DCF model.
The cash flows are derived from the budget
for the next five years and do not include
restructuring activities that the Company is
not yet committed to or significant future
investments that will enhance the asset's
performance of the CGU being tested.
The recoverable amount is sensitive to the
discount rate used for the DCF model as well
as the expected future cash-inflows and the
growth rate used for extrapolation purposes.

There are no CWIP for which completion is overdue or has exceeded its cost compared to its original budget.

Capital work in progress mainly comprises Factory building, plant and machinery, vehicle and factory equipments
under installation.

Notes:

(i) Refer note 47 for disclosure of contractual commitments for the acquisition of property, plant and equipment.

(ii) Office building includes premises on ownership basis in a Co-operative Society H 6.3 Million, including cost of
shares therein of H 125/- per share.

(iii) Refer note 20 for disclosures relating to charges/securities created against PP&E

(iv) The title deeds for all the immovable properties are in the name of the Company as at March 31, 2026,
except as follows:-

Note 1 : The title of the asset transferred pursuant to the scheme of amalgamation are in the process of being
transferred in the name of the Company.(refer note 54 (c)

Note 2 : Period held has been considered from the appointed date as defined in the scheme of amalgamation.

(v) Transition to Ind AS: On transition to Ind AS (i.e. April 01,2017), the Company has elected to continue with the
carrying value of all property, plant and equipment measured as per previous GAAP and use that carrying
value as the deemed cost of property, plant and equipment.

There are no CWIP for which completion is overdue or has exceeded its cost compared to its original budget.

Capital work in progress mainly comprises Factory building, plant and machinery, vehicle and factory equipments
under installation.

Notes:

(i) Refer note 47 for disclosure of contractual commitments for the acquisition of property, plant and equipment.

(ii) Office building includes premises on ownership basis in a Co-operative Society H 6.3 Million, including cost of
shares therein of H 125/- per share.

(iii) Refer note 20 for disclosures relating to charges/securities created against PP&E

(iv) The title deeds for all the immovable properties are in the name of the Company as at March 31,2025, except
for the following:

Note 1: The title of the asset transferred pursuant to the scheme of amalgamation are in the process of being
transferred in the name of the Company.

Note 2: Period held has been considered from the appointed date as defined in the scheme of amalgamation.

Note 3: Subsequent to March 31,2025, title deeds of Freehold land having Gross carrying amount of Rs 98.60 million
have been transferred in the name of the Company.

(v) Transition to Ind AS: On transition to Ind AS (i.e. April 01, 2017), the Company has elected to continue with the
carrying value of all property, plant and equipment measured as per previous GAAP and use that carrying
value as the deemed cost of property, plant and equipment.

Goodwill acquired through business combination has been allocated to the CGUs Plant 3300 - Bangalore [earlier known
as Team Concepts Private limited (‘TCPL')- merged with the Company in FY 2020-21] for impairment testing .

Carrying amount of goodwill allocated TCPL - CGUs as at March 31,2026 and March 31,2025 is H 183.90 million.

The Company performed its annual impairment test for years ended March 2026 and March 2025 on March 31,2026 and
March 31, 2025 respectively. The Company considers the relationship between the fair value (based on DCF) of each
CGU and its book value, among other factors, when reviewing for indicators of impairment.

The recoverable amount of the CGU, has been determined based on a value in use calculation using cash flow projections
for a period of five years from financial budget approved by senior management. As a result of the analysis, management
did not identify impairment.

Key assumptions used for value in use calculations for CGUs which have Goodwill amounts which are significant in
comparison to the total carrying amount of goodwill are as follows:

The Company has lease contract premises/building used for its operations with lease terms of 2-10 years, and for lease
hold land with lease term of 30-99 years The Company's obligations under its leases are secured by the lessor's title to the
leased assets. The Company is restricted from assigning and subleasing the leased assets.

The Company applies the short-term lease recognition exemption to its short-term leases of machinery and equipment
(mainly Laptops) (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not
contain a purchase option).

Credit risk

There are no trade receivables which have significant increase in credit risk as at March 31,2026 and March 31,2025 other
than disclosed above.

Credit period

Trade receivables are non-interest bearing and are generally on payment terms of 30 to 120 days.

No trade or other receivable are due from directors or other officers of the Company either severally or jointly with any
other person. Nor any trade or other receivable are due from firms or private companies respectively in which any director
is a partner, a director or a member, except as disclosed in note 46.

Pursuant to an arrangement with certain banks, the company has sold to the banks certain of its trade receivable on
a non-recourse basis. The receivables sold were mutually agreed upon with the respective bank after considering the
creditworthiness and contractual terms with the customers. The company has transferred substantially all the risks and
rewards of ownership of such receivables sold to the bank, and accordingly, the same were derecognised in the Balance-
sheet . As at March 31 , 2026, the amount of trade receivable derecognised pursuant to the aforesaid arrangement
H 7,582.94 mn (March 31,2025 : H 6,993.36 mn)

Note (a): KTM AG, one of the customer of the Company, filed for insolvency and the Court admitted restructuring with
self administration in Austria. Considering these developments, the Company has recognised a provision for the expected
credit loss of trade receivables as exceptional item amounting to H12.10 million for the year ended March 31,2025.

Nature and purpose of reserves
Retained Earnings

Retained earnings are the profits/(loss) that the Company has earned/incurred till date, less any transfers to general
reserve or other reserve as well as dividends or other distributions paid to shareholders. Retained earnings include re¬
measurement loss / (gain) on defined benefit plans, net of taxes that will not be reclassified to Statement of Profit and Loss.
The amount is available for distribution to the shareholders.

General reserve

General reserve is the retained earning of the Company which is kept aside out of the Company's profits to meet future
(known or unknown) obligations.

Capital reserve

Capital reserve is not available for distribution as dividend.

Securities premium

Securities premium is used to record the premium on issue of shares. It is utilised in accordance with the provisions of the
Companies Act, 2013.

Nature of Security

1) Rupee Term Loans from Banks are secured by:

(a) HSBC BANK

(i) Working Capital Term Loan (WCTL) of H 435 Million having outstanding balance of H 181.25 Million, by way
of Guaranteed Emergency Credit Line (GECL) under ECLGS scheme of National Credit Guarantee Trustee
Company Ltd. (NCGTC) is secured by way of second pari-passu charge on current assets of the Company
along with other banks. Further secured by second charge on movable PPE of the Company situated at:

(1) Varroc Engineering Limited, Plant IV - Plot No. M-140-141, MIDC Industrial Area, Waluj, Chhatrapati
Sambhaji Nagar (Aurangabad) 431 136, Maharashtra

(2) Varroc Engineering Limited, Corporate Office, Plot No. L-4, MIDC Industrial Area, Waluj, Chhatrapati
Sambhaji Nagar (Aurangabad) 431 136, Maharashtra

(3) Varroc Engineering Limited, Pant Nagar - Plot No.20 Sector 9, Integrated Industrial Area, Pant Nagar,
Dist. Udhamsingh Nagar, Uttarakhand

(4) Varroc Engineering Limited, Plant V - Plot No. 6/2, MIDC Industrial Area, Waluj, Chhatrapati Sambhaji
Nagar (Aurangabad) - 431 136, Maharashtra

(5) Varroc Engineering Limited, R&D, Plot No. 6/2, MIDC Industrial Area, Waluj , Chhatrapati Sambhaji
Nagar (Aurangabad) - 431 136, Maharashtra

(ii) Term Loan of INR 1,000 Million availed in November 2023 outstanding balance as on March 31,2026 H 437.50
million is secured by way of hypothecation of movable fixed assets of the following plants:

(1) Varroc Engineering Limited, Plant IV - Plot No. M-140-141, MIDC Industrial Area, Waluj, Chhatrapati
Sambhaji Nagar (Aurangabad) 431 136, Maharashtra

(2) Varroc Engineering Limited, Corporate Office, Plot No. L-4, MIDC Industrial Area, Waluj, Chhatrapati
Sambhaji Nagar (Aurangabad) 431 136, Maharashtra

(3) Varroc Engineering Limited, Pant Nagar - Plot No.20 Sector 9, Integrated Industrial Area, Pant Nagar,
Dist. Udhamsingh Nagar, Uttarakhand

(iii) New Term Loan of INR 1,300 Million availed in March 2026 outstanding balance as on March 31, 2026
H 1,300 million is secured as exclusive charge by way of hypothecation of movable fixed assets of the
following plants:

(1) Varroc Engineering Limited - 4W Lighting Plant - Gut No. 51 to 59, Plot No. 1, Bhamboli, Chakan, Pune
410 501, Maharashtra

(2) Varroc Engineering Limited - Forging Plant - Plot No. L-4, MIDC Industrial Area, Waluj, Chhatrapati
Sambhaji Nagar (Aurangabad) 431 136, Maharashtra

(b) Induslnd Bank

(i) IndusInd Bank Ltd Rupee Term loan of H 1,000 Million (balance as on March 31, 2026 H 703.75 million)
is secured on exclusive first charge by way of Hypothecation of Fixed Assets of the following plants of
Company situated at :

(1) Varroc Engineering Limited, Plot No. E-4, MIDC, Waluj, Chhatrapati Sambhaji Nagar (Aurangabad) -
431136 (M.S.) : Movable Fixed Assets

(2) Varroc Engineering Limited, Plot No. B-24 & 25, MIDC, Chakan, Pune - 410501 (M.S.) : R&D Centre
Movable Fixed Assets

(3) Varroc Engineering Limited, Gat No. 12/1 and Gat No. 12/2 situated at Village Shivaji Nagar , Tal. Sakri,
Dist. Dhule (M.S.) : Movable Fixed Assets

(4) Varroc Engineering Limited, Plot No. 103/4, Maswad, GIDC, Expansion Estate, Halol-II, Dist. Panchmahal,
Gujarat - 389 350 : Movable and Immovable Fixed Assets

(5) Varroc Engineering Limited, Gut No. 390, Takve Bk, Tal. Maval, Dist. Pune : Movable Fixed Assets

(6) Varroc Engineering Limited, Plot No. K - 103, MIDC, Waluj, Chhatrapati Sambhaji Nagar (Aurangabad)
- 431136 (M.S.) - Movable and Immovable Fixed Assets

2) Borrowings pertaining to following charges have been repaid, however the Company is in process of filing charge

satisfaction documents as at March 31,2026:

(a) Tata Capital: Immovable fixed assets located at

(1) Varroc Engineering Limited, Plot No.20 Sector 9, Integrated Industrial Area, Pant Nagar, Dist. Udhamsingh
Nagar, Uttrakhand

(b) HSBC: Immovable fixed asset located at:

(1) Varroc Engineering Limited, Plant IV - Plot No. M-140-141, MIDC Industrial Area, Waluj, Chhatrapati Sambhaji
Nagar (Aurangabad) 431 136, Maharashtra

(2) Varroc Engineering Limited, Corporate Office, Plot No. L-4, MIDC Industrial Area, Waluj, Chhatrapati
Sambhaji Nagar (Aurangabad) 431 136, Maharashtra

(3) Varroc Engineering Limited, Pant Nagar - Plot No.20 Sector 9, Integrated Industrial Area, Pant Nagar, Dist.
Udhamsingh Nagar, Uttarakhand

(4) Varroc Engineering Limited, Plant V - Plot No. 6/2, MIDC Industrial Area, Waluj, Chhatrapati Sambhaji Nagar
(Aurangabad) - 431 136, Maharashtra

5) Varroc Engineering Limited, R&D, Plot No. 6/2, MIDC Industrial Area, Waluj , Chhatrapati Sambhaji Nagar
(Aurangabad) - 431 136, Maharashtra

(c) IndusInd Bank Ltd. - Immovable fixed asset located at:

(1) Varroc Engineering Limited, Survey no. 128-1 b & 129b, Ezhichur village, Taluka Sriperumbudur,
Kancheepuram, Chennai.

(2) Varroc Engineering Limited, Plot no. 601-A & B, Sector III, Pithampur, Dist. Dhar, Madhya Pradesh, and

(3) Varroc Engineering Limited, Revenue Survey Nos. 533, 534 & 537 of Mouje Karasanpura, Taluka Mandal,
District Ahmedabad, Gujarat

3) During the year, the following Term Loans & Non-Convertible Debentures have been fully re-paid and were outstanding

as on March 31,2025 against the following securities:

(a) Saraswat Co. operative Bank Ltd. Term loan of H 750 million was secured on exclusive charge by way of mortgage

of immovable properties situated at:

(1) Varroc Engineering Limited, Plot no E-88 , MIDC, Ranjangaon, Tal. Shirur, Dist. Pune, Maharashtra

(2) Varroc Engineering Limited, Plot No M-165-167, MIDC Industrial Area, Waluj , Chhatrapati Sambhaji Nagar
(Aurangabad) - 431 136, Maharashtra

(b) ICICI BANK Ltd. Rupee Term Loan of of H1,250 Million was secured on exclusive charge by way of mortgage of

the immovable properties situated at:

(1) Varroc Engineering Limited, B-3020 & 3040, Marvel Edge, Viman Nagar, Pune, Maharashtra

(2) Varroc Engineering Limited, Plot No. 35-A, Udyog Vihar, Greater Noida, Uttar Pradesh

(3) Varroc Engineering Limited, 58^th Mile Stone, Opp. Mittal Orchards, Village Binola, Dist. Gurgaon, Haryana State

(4) Varroc Engineering Limited, Plot No. 136-B, Harohalli Industrial Area, Kanakapura Taluk, Ramanagara
Distt. Karnataka

(5) Varroc Engineering Limited, Plot No. 271 & 272(P), Nara Sapura Industrial Area, Nara Sapura, Dist. Kolar -
563133 Karnataka State

(c) IndusInd Bank Ltd Rupee Term loan of H 1,250 Million was secured on exclusive charge by way of Hypothecation
on Movable and Immovable Fixed Assets of the following plants of Company situated at :

(1) Varroc Engineering Limited, Gut No. 390, Takve Bk, Tal. Maval, Dist. Pune - 412106 (M.S.) : Immovable Fixed Assets

(2) Varroc Engineering Limited, Plot No. E-88, MIDC, Ranjangaon, Tal. Shirur, Dist. Pune (M.S.) : Movable Fixed Assets

(3) Varroc Engineering Limited, Gut No. 99, Village Pharola, Tal. Paithan, Dist. Chhatrapati Sambhaji Nagar -

431105 : Immovable Fixed Assets

(d) 8.60% Non-Convertible Debentures of H 100,000 each was secured on exclusive charge by way of Hypothecation
on the specific identified movable properties situated at:

(1) Varroc Engineering Limited, Plot No. B-24 & 25, MIDC, Chakan, Pune - 410501, Maharashtra

(2) Varroc Engineering Limited, (Valves), Plot No. L-4, MIDC, Waluj, Chhatrapati Sambhaji Nagar (Aurangabad)
- 431 136, Maharashtra

(3) Varroc Engineering Limited, (Forging), Plot No. L-4, MIDC, Waluj, Chhatrapati Sambhaji Nagar (Aurangabad)
-431 136, Maharashtra

(4) Varroc Engineering Limited, Lighting Plant, Plot No. B-14, MIDC, Chakan, Pune - 410501, Maharashtra

(5) Varroc Engineering Limited, Lighting Plant, Plot No. 1(P), Gut No. 51 to 59, Village Bhambholi, Tal. Khed, Dist.
Pune- 410501, Maharashtra

4) Debt covenants :

Bank loans contain certain debt covenants relating to limitation on indebtedness, debt-equity ratio, net borrowings
to EBITDA ratio and debt service coverage ratio which are to be tested on half yearly or annual basis. All covenants
in respect of non-current borrowings are complied as at March 31,2026 and as at March 31,2025.

Note 2 Includes Post closure entries posted at the time of finalisation of quarterly financial statement.

Note 3 Primarily includes intercompany debtors, provision for customer rate increase/decrease and debtors of
ageing more than 90 days.

Note 4 Mainly includes inter company creditors and provision for expenses.

Note 5 Trade payable shown in stock statement is net of vendor advances outstanding as of that date.

21(b) Disclosure of quarterly statements submitted to the banks for the working capital facilities availed by the
Company for the year ended March 31,2025:

(i) For Varroc Engineering Limited (before considering the impact of VPL merger):

Note 2 Includes Post closure entries posted at the time of finalisation of quarterly financial statement.

Note 3 Primarily includes intercompany debtors, provision for customer rate increase/decrease and debtors of
ageing more than 90 days.

Note 4 Mainly includes inter company creditors and provision for expenses.

Note 5 Trade payable shown in stock statement is net of vendor advances outstanding as of that date.

Note 2 Includes Post closure entries posted at the time of finalisation of quarterly financial statement.

Note 3 Primarily includes intercompany debtors, provision for customer rate increase/decrease and debtors of
ageing more than 90 days.

Note 4 Mainly includes inter company creditors and provision for expenses.

Note 5 Trade payable shown in stock statement is net of vendor advances outstanding as of that date.

Note:

i. Deferred tax assets and deferred tax liabilities have been offset as at March 31,2026 they relate to the same governing
taxation laws and Company has legally enforceable right to set-off.

ii. During the year ended March 31,2024, the Company derecognised (written-off) loans given to VarrocCorp Holding
BV (‘VCHBV'), Netherlands including interest on such loans aggregating to H 13,533.33 million(including H 1,736.89
million by Varroc Polymers Limited (‘VPL'), wholly owned subsidiary, now merged with the Company as explained
in Note 54(c)) after making requisite submissions to AD Bank. The Company claimed this write-off on loans as an
allowable business loss, considering that these loans extended to VCHBV were in the nature of trade investments to
derive benefits for the Company's businesses rather than for earning dividend/capital appreciation. The Company
obtained legal opinions from two independent senior counsels who have supported their view on claiming this write¬
off of loans as an allowable business loss. Accordingly, VPL considered this loss as tax deductible for computation of
current tax provision to the extent of H 437.14 million and the Company recognised deferred tax asset of Rs 2,968.93
million during the year ended March 31, 2024. Deferred tax asset on such losses available for set off against future
income is H 211.18 million as at March 31,2026 (March 31,2025: H 1,378.38 million).

(i) Credit period

Trade payables are non interest bearing and are normally settled on 30 to 90 days terms

(ii) Supplier finance arrangement (Acceptances)

The Company has established a supplier finance arrangement that is offered to some of the Company's suppliers in
India. Participation in the arrangement is at the suppliers' own discretion. Suppliers that participate in the supplier finance
arrangement will receive early payment on invoices sent to the Company from the Company's external finance provider.
In order for the finance provider to pay the invoices, the goods must have been received or supplied and the invoices
approved by the Company. Payments to suppliers ahead of the invoice due date are processed by the finance provider
and, in all cases, the Company settles the original invoice by paying the finance provider in line with the original invoice
maturity date described above. Payment terms with suppliers have not been renegotiated in conjunction with the
arrangement. The Company provides no security to the finance provider and there is no change in the Company's
original obligation towards the supplier.

Accordingly, the trade payables subject to the supplier finance arrangement are included within trade payables heading
in the standalone balance sheet.

*Deferred government grant

Grants from the government are recognised 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.

Government grants relating to purchase of property, plant and equipment are included in current and non-current
liabilities as deferred income and are credited to profit or loss on straight-line basis over the expected lives of the related
assets and presented within other operating revenue.

D Performance obligation

Revenue from contracts with customers include revenue from finished goods, tooling, engineering services and Job work.
Finished goods / tooling / engineering services

For the sale of finished goods the performance obligation is generally satisfied upon its delivery or as per
the terms of the customer contract and payment is generally due within 30 to 120 days from delivery.
Product development/engineering services are considered as related to sale of parts rather than a separate
performance obligation. As a result, revenue from engineering services is recognised over the period of production
from the date of start of production. Costs incurred in respect of providing engineering services are recognised as
intangible assets and amortised over the period of production from the date of start of production. Payments received
from customers in respect of product development/engineering services are presented as contract liabilities.

For supply of engineering services to group companies, performance obligation is generally satisfied on the basis of
time/work completed as per the contract with the group companies and payment is generally due within 30-60 days.

Development of toolings for the customers has been identified by the Company to be a separate performance
obligation. Further, the Company has determined that the performance obligation in respect of development of
toolings is satisfied at a point in time. The revenue is recognised at an amount that reflects the consideration to which
the Company expects to be entitled in exchange for supply of tooling

The Company provides normal warranty provisions on some of its products sold, in line with the industry practice.
The Company considers that the contractual promise made to the customer in the form of warranties for the parts
supplied does not meet the definition of separate performance obligation as it does not give rise to additional service.

Job work revenue is recognised when the work is completed and billed to customer.

Note : The Company has a process of sending out confirmations to all vendors, regarding their status as Micro and small
enterprises. Based on responses received, the Company marks vendors as Micro, Small and Medium Enterprises and others.

Note 41 - Employee benefit obligation
A Defined contribution plans:

The Company has certain defined contribution plans. Contributions are made to provident fund in India for
employees at the rate of 12% of basic salary as per regulations. The contributions are made to registered provident
fund administered by the government. The obligation of the Company is limited to the amount contributed and it
has no further contractual nor any constructive obligation. The expense recognised during the year towards defined
contribution plan is as under :

B Defined benefit plan (Gratuity)

Defined benefit plan comprises gratuity (included in "Contribution to gratuity and other funds" in Note 33). Present
value of the obligation under such defined benefit plan is determined based on actuarial valuation as at reporting
date using the Projected Unit Credit method. The gratuity plan is a funded plan and the Company makes contributions
to recognised funds in India. The Company does not fully fund the liability and maintains a target level of funding to
be maintained over a period of time based on estimations of expected gratuity payments.

The amounts recognised in the balance sheet and the movements in the net defined benefit obligation over the
year are as follows:

Expected contributions for the next year

The Company intends to contribute H218.40 million towards its gratuity fund during the year ending March 31,
2027. During the year ended March 31,2026, the Company has contributed H 101.59 million to its gratuity fund.

Risk Exposure and Asset Liability Matching

Provision of a defined benefit scheme poses certain risks, some of which are detailed here under as companies
take on uncertain long-term obligations to make future benefit payments.

1) Liability Risks

Asset-Liability mismatch risk-

Risk which arises if there is a mismatch in the duration of the assets relative to the liabilities. By matching duration
with the defined benefit liabilities, the Company is successfully able to neutralize valuation swings caused
by interest rate movements. Hence, companies are encouraged to adopt asset-liability management.

Discount rate risk-

Variations in the discount rate used to compute the present value of the liabilities may seem small, but in
practice can have a significant impact on the defined benefit liabilities.

Future salary escalation and inflation risk -

Since price inflation and salary growth are linked economically, they are combined for disclosure purposes.
Rising salaries will often result in higher future defined benefit payments resulting in a higher present value
of liabilities especially unexpected salary increases provided at management's discretion may lead to
uncertainties in estimating this increasing risk.

2) Asset risks

All plan assets are maintained in a trust fund managed by a public sector insurer viz. LIC of India. LIC has a
sovereign guarantee and has been providing consistent and competitive returns over the years.

The Company has opted for a traditional fund wherein all assets are invested primarily in risk averse markets.
The Company has no control over the management of funds but this option provides a high level of safety
for the total corpus. A single account is maintained for both the investment and claim settlement and
hence 100% liquidity is ensured. Also, interest rate and inflation risk are taken care of.

(ii) Valuation technique used to determine fair value

The following methods and assumptions were used to estimate the fair value of the financial instruments included in
the above tables:

- The Company enters into derivative financial instruments with financial institutions with investment grade credit
ratings. Foreign exchange forward contracts, interest rate swaps are valued using valuation techniques, which
employs the use of market observable inputs. The most frequently applied valuation techniques include forward
pricing model, using present value calculations. The models incorporate various inputs including the credit
quality of counterparties, foreign exchange spot and forward rates, yield curves of the respective currencies,
currency basis spread between the respective currencies, interest rate curves etc. The changes in counterparty
credit risk had no material effect on financial instruments recognised at fair value through profit and loss.

The carrying amounts of trade receivables, loans, other financial assets, cash and bank balances, trade
payables/acceptances, current borrowings and other financial liabilities are considered to be the same as their
fair values due to their short-term nature. The fair values of non-current financial assets and non-current financial
liabilities also approximate their carrying values. The borrowings which are at floating rate of interest, fair values
as at March 31,2026 approximate their carrying values.

For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.

Note 43 - Financial risk management

The Company's principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other
payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Company's
operations and to provide guarantees to support its operations. The Company's principal financial assets include loans,
trade and other receivables, and cash and cash equivalents that derive directly from its operations. The Company also
enters into derivative transactions.

The Company is exposed to market risk, credit risk and liquidity risk. The Company's senior management oversees the
management of these risks. All derivative activities for risk management purposes are carried out by specialist teams
that have the appropriate skills, experience and supervision. It is the Company's policy that no trading in derivatives for
speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these
risks, which are summarised below:

A Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes
in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk such as
equity price risk and commodity price risk. Financial instruments affected by market risk include loans and borrowings,
receivables, payables, deposits, investments and derivative financial instruments.

(a) Foreign currency risk

The Company operates internationally and the business is transacted in several currencies. Consequently, the
Company is exposed to foreign exchange risk through its sale and purchase of goods and services, mainly in
the North America and Europe . The exchange rate between the rupee and foreign currencies has changed
substantially in recent years and may fluctuate substantially in the future. Consequently, the results of the
Company's operations are affected positively/adversely as the rupee appreciates /depreciates against these
currencies. The Company evaluates exchange rate exposure arising from these transactions and enters into
foreign exchange forward contracts,to mitigate the risk of changes in exchange rates on foreign currency
exposures. The Company follows established risk management policies, to hedge forecasted cash flows
denominated in foreign currency. The Company has designated certain derivative instruments as cash flow
hedges to mitigate the foreign exchange exposure.

Sensitivity Analysis

For the year ended March 31,2026 and March 31,2025, every 5% percentage point appreciation/depreciation
in the exchange rate between the Indian rupee and U.S. Dollar, would have affected the Company's profit
before taxes by approximately H 58.7 million and H 4.31 million respectively. And for Euro, every 5% percentage
point appreciation/depreciation in the exchange rate would have affected the Company's profit before taxes
by approximately H 33.47 million, previous year H 50.77 million. The sensitivity for net exposure in JPY and in other
currencies does not have material impact to Statement of Profit and Loss.

Sensitivity analysis is computed based on the changes in the receivables and payables in foreign currency upon
conversion into functional currency, due to exchange rate fluctuations between the previous reporting period
and the current reporting period.

(b) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
change in market interest rates. The Company's exposure to the risk of changes in market interest rates relates
primarily to the Company's long term debt obligations with floating interest rates.

Interest rate sensitivity

The sensitivity analysis below have been determined based on exposure to interest rate. For floating rate
liabilities, analysis is prepared assuming the amount of liability outstanding at the end of the reporting period
was outstanding for the whole year. With all other variables held constant, the Company's profit before tax is
affected through the impact on floating rate borrowings, as follows:

(c) Other price risk

The Company does not have material investments in equity securities other than investments in its subsidiaries.
Hence, equity price risk is considered to be low. Further, the Company's operating activities require the ongoing
purchase of various commodities for manufacture of automotive parts. However, the movement in commodity
prices are substantially adjusted through price differences as per customer contracts and hence commodity
price risk for the Company is also considered to be low.

B Credit risk management

Credit risk arises when a customer or counterparty does not meet its obligations under a financial instrument or
customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities
(primarily trade receivables) and from its investing activities, including deposits with banks and financial institutions,
foreign exchange transactions and other financial instruments. The Company only deals with parties which have
good credit rating/worthiness given by external rating agencies or based on the Company's internal assessment.

Trade receivables

Customer credit risk is managed by the Company's established policy, procedures and control relating to customer
credit risk management. Further, Company's customers includes marquee OEMs and Tier I companies, having long
standing relationship with the Company. Outstanding customer receivables are regularly monitored and reconciled.
At March 31, 2026, receivable from Company's top 5 customers accounted for approximately 44.44% (March 31,
2025: 43.48%) of all the receivables outstanding. The maximum exposure to credit risk at the reporting date is the
carrying value of trade receivables disclosed in Note 12. The Company does not hold collateral as security.

Generally, trade receivables are provided for if past due for more than one year (domestic/export). An impairment
analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The provisions
are based on days past due for groupings of various customers.

Financial instruments and cash deposits

Credit risk from balances with banks and financial institutions is managed by the Company's corporate treasury
department in accordance with the Company's policy. Investments of surplus funds are made only with approved
counterparties. Credit limits are set to minimise the concentration of risks and therefore mitigate financial loss through
counterparty's potential failure to make payments.

The Company's maximum exposure to credit risk for the components of the balance sheet at March 31, 2026 and
March 31,2025 is the carrying amounts as disclosed in note 13 and 14 except for financial guarantees. The Company's
maximum exposure relating to financial guarantees is disclosed in note 50 (C).

C Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or
at a reasonable price. The Company's corporate treasury department is responsible for liquidity and funding as
well as settlement management. In addition, processes and policies related to such risks are overseen by senior
management. Management monitors the Company's net liquidity position through rolling forecasts on the basis of
expected cash flows. As at March 31,2026, cash and cash equivalents are held with major banks.

Note 44 - Capital management
(a) Risk management

The Company's capital comprises equity share capital, securities premium, retained earnings and other equity
attributable to shareholders.

The Company's objectives when managing capital are to :

- Safeguard their ability to continue as a going concern, so that they can continue to provide returns for
shareholders and for other stakeholders, and

- Maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to
shareholders, return capital to shareholders or issue new shares .

Loan covenants

The Company's capital management aims to ensure that it meets financial covenants attached to the interest¬
bearing loans and borrowings that define capital structure requirements. Refer note 20 for details.

(b) Dividends not recognised at the end of the reporting period

The Board of Directors have recommended the payment of a final dividend of H 229.19 million at H 1.5 per equity
share (March 31,2025 H 152.79 million at Re 1 per equity share). This proposed dividend is subject to the approval of
shareholders in the ensuing annual general meeting.

Notes:¬
* All the amounts exclusive of taxes, if any.

** The balances at year end pertain to guarantees outstanding as at Balance sheet date.

# This amount is before impairment provision.

## Amount below rounding off norm adopted by the company.

a Remuneration disclosed above represents salary paid during respective years and excludes the value of perquisites.
Also, post employment benefits payable in the form of gratuity and other long term benefits in the form of compensated
absence are calculated on the basis of acturial valuation. Amount payable for individual employees as at March 31,2026
(March 31,2025) cannot be separately identified and therefore has not been included in above. There are no termination
benefits, share based payments given to key Management Personnel and their relative

Terms and conditions of outstanding balances with related parties:

(i) In respect of sale of goods and services (including rental service, management consultancy, royalty,
reimbursement of expenses) to related parties

Trade receivables outstanding balances are unsecured, interest free and require settlement in cash. No guarantee
or other security has been received against these receivables. The amounts are recoverable within 30 to 120 days
from the reporting date (March 31, 2025: 30 to 120 days from the reporting date). For the year ended March 31,
2026, the Company has not recorded any impairment on receivables due from related parties (March 31, 2025: Nil).

(ii) In respect of purchase of goods and services (including royalty, reimbursement of expenses and sales
commission):

Trade payables outstanding balances are unsecured, interest free and require settlement in cash. No guarantee
or other security has been given against these payables. The amounts are payable within 30 to 90 days from the
reporting date (March 31,2025: 30 to 90 days from the reporting date).

(iii) Loans to subsidiaries

The loans granted to subsidiaries are intended for meeting working capital requirements of those subsidiaries and
for further investment in other subsidiaries. The loans are unsecured and terms related to repayment and interest
rates are explained in Note 15. The loan has been utilized for the purpose it was granted. For the year ended
March 31, 2026, the Company has not recorded any additional impairment on loans due from its subsidiaries
(March 31,2025: Nil).

(iv) Guarantees for subsidiaries

The financial guarantees granted to subsidiaries are in respect of borrowing facilities availed by the subsidiaries.
Guarantee commission at the rate of 1% on the amount of borrowings drawn down against the guarantee
during the year is charged by the Company (refer note 50C)

(i) The Company is contesting various income tax, excise, Service Tax and Goods and Service Tax demand/notices
and the management, including its tax advisors, believe that it's position will likely be upheld in the appellate
process. No expense has been accrued in the financial statements for the tax demands/notices raised. The
management believes that the ultimate outcome of the proceedings will not have a material adverse effect
on the Company's financial position and results of the operations. The Company has deposited H 56.00 million
(previous year H 49.47 million) with the tax authorities against the above matters to comply with the order of the
tax authorities.

(ii) Contingent liabilities disclosed above include the following litigations:

The Company had received following GST orders in relation to inappropriate classification of certain goods
supplied during the period from July 1,2017 to September 30, 2023:

a. Order dated November 5, 2024 from Additional Commissioner of CGST & Central Excise for appropriation
of GST dues amounting to H 629 million along with equivalent penalty and applicable interest;

b. Order dated January 03, 2025 from Commercial Tax Officer (Divisional GST office, Karnataka) consisting
of demand for GST dues amounting to H 0.03 million along with interest of H 302.67 million and penalty
of H 564.19 million (received by Varroc Polymers Limited (‘VPL') (wholly owned subsidiary, now merged
with the Company)

The Company had paid the principal demand and had filed appeals against the above orders which
have been partly allowed resulting in reduction of total demand to H 284 million. The Company proposes
to pursue further appellate remedies in respect of the interest and penalty components. Based on legal
advice and assessment of the merits of the cases, management believes that it has adequate grounds to
successfully defend the matters. Pending conclusion of the proceedings, no adjustments have been made
in respect of these matters in the standalone financial statements for the year ended March 31,2026.

(iii) Management believes that such claims will not succeed and that ultimate outcome of these claims will not
have a material adverse effect on the Company's financial position and results of the operations. Accordingly,
no provision for any liability has been considered necessary in these financial statements.

(iv) There are numerous interpretative issues relating to the Supreme Court (SC) judgement on Provident Fund dated
February 28, 2019. As a matter of caution, the company has made a provision on a prospective basis from the
date of the SC order. The company will update its provision, on receiving further clarity on the subject.

Formulae for calculation of ratios are as follows:

(i) Current ratio = [ Current Assets / Current Liabilities ]

(ii) Debt-Equity Ratio = [ Total Debt / Total Equity ]

(iii) Debt service coverage ratio = [ (Earning before Interest Tax & Depreciation & amortization and exceptional items)/
(Interest Expense Principal repayments of long term loan made during the period (including prepayments)) ]

(iv) Return on Equity ratio = [(Net Profits after taxes - Preference Dividend/(Average Shareholder's Equity)]

(v) Inventory Turnover ratio= [(cost of goods sold)/(Average Inventory)]

(vi) Trade Receivable Turnover Ratio = [(Revenue from Operation)/(Average Trade receivable)]

(vii) Trade Payable Turnover Ratio = [ (Purchases)/(Average Trade payable)]

(viii) Net Capital Turnover Ratio = [( Net Annual Sales )/( Average Working Capital)]

(ix) Net Profit ratio = [ (Net Profit after taxes)/ (Revenue from Operation)]

(x) Return on Capital Employed = [( Earning Before Interest and taxes (EBIT))/( Capital employed)]

(xi) Return on Investment = [(Income generated from invested funds in bank FDs and mutual funds)/ (Average invested
funds in bank FDs and mutual funds)]

(xii) Capital Employed = Tangible Net worth Total Debt Deferred Tax Liability

(xiii) Working capital = (Current assets - Current liabilities )

Reason for variance in excess of /- 25%

A) Decrease in Debt equity ratio is due to decrease in borrowings during the year and increase in equity due to
current year profits.

B) Increase in the ratio due to higher interest income on average investment in fixed deposit

Note 52 - Ultimate Beneficiary
For the year ended March 31,2026

In the Financial Year 2025-26, the company (‘Funding party') has loaned to VarrocCorp Holding B.V., The Netherlands
(‘Intermediary'), which is a wholly owned subsidiary. The Intermediary has utilised the money received for further
investments and grant of loans to its subsidiaries (‘Ultimate beneficiaries'). Details of such loans and further investments
and loans are as follows:

The Company has complied with the relevant provisions of the Foreign Exchange Management Act, 1999 (42 of 1999)
and the Companies Act for the above transactions and the transactions are not violative of the Prevention of Money¬
Laundering Act, 2002 (15 of 2003)

The Company has not advanced or loaned or invested funds, apart from those disclosed above, to any other person(s)
or entity(ies), including foreign entities (intermediaries) with the understanding that the intermediary shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of
the company (ultimate beneficiaries) or

(b) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries

The Company has not received any fund from any person(s) or entity(ies), including foreign entities (funding party) with
the understanding (whether recorded in writing or otherwise) that the Company shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of
the funding party (ultimate beneficiaries) or

(b) provide any guarantee, security or the like on behalf of the ultimate beneficiaries
For the year ended March 31,2025

In the Financial Year 2024-25, the company ('Funding party') has loaned to VarrocCorp Holding B.V., The Netherlands
('Intermediary'), which is a wholly owned subsidiary. and to Varroc European Holding B.V.,The Netherlands The Intermediary
has utilised the money received for further investments and grant of loans to its subsidiaries ('Ultimate beneficiaries').
Details of such loans and further investments and loans are as follows:

The Company has complied with the relevant provisions of the Foreign Exchange Management Act, 1999 (42 of 1999)
and the Companies Act for the above transactions and the transactions are not violative of the Prevention of Money¬
Laundering Act, 2002 (15 of 2003)

The Company has not advanced or loaned or invested funds, apart from those disclosed above, to any other person(s)
or entity(ies), including foreign entities (intermediaries) with the understanding that the intermediary shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of
the company (ultimate beneficiaries) or

(b) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries

The Company has not received any fund from any person(s) or entity(ies), including foreign entities (funding party) with
the understanding (whether recorded in writing or otherwise) that the Company shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of
the funding party (ultimate beneficiaries) or

(b) provide any guarantee, security or the like on behalf of the ultimate beneficiaries,

Note 53 - Audit Trail

The Company uses SAP ECC R6 as the accounting software for maintaining its books of account which has a feature of
recording audit trail (edit log) facility in respect of the application and the same has operated throughout the year for all
relevant transactions.

Normal/Regular users are not granted direct database or super user level access. However, changes to the database by
a super user specifically does not carry the feature of a concurrent real time audit trail.

Further no instance of audit trail feature being tampered with was noted in respect of above accounting software where
the audit trail has been enabled. Additionally, the audit trail of prior year has been preserved by the Company as per the
statutory requirements for record retention to the extent it was enabled and recorded in the respective year.

The Company has used a software for payroll processing which is operated by third-party software service provider.
Management has obtained the Service Organization Controls (SOC) report, basis which it has concluded that the software
has a feature of recording audit trail (edit log) facility at the application layer, and the same has operated throughout
the year for all relevant transactions except that, audit trail feature is not enabled for direct changes to data when using
certain access rights. Further, there was no instance of audit trail feature being tampered with.

Additionally, the audit trail of prior year has been preserved by the Company as per the statutory requirements for record
retention to the extent it was enabled and recorded in the respective year.

Note 54 - Exceptional Items

Exceptional items in the standalone financial statements include following:

a. Impact of new labour codes (refer note 26)

On November 21,2025, the Government of India notified the four Labour Codes - the Code on Wages, 2019, the Industrial
Relations Code, 2020, the Code on Social Security, 2020 and the Occupational Safety, Health and Working Conditions
Code, 2020 consolidating 29 existing labour laws. The Company has assessed and disclosed the incremental impact
of these changes on the basis of the best information available and guidance provided by the Institute of Chartered
Accountants of India. Considering the materiality and regulatory-driven, non-recurring nature of this impact, the Company
has presented such incremental impact under "Exceptional Items" in the financial statements for the year ended March
31, 2026. The incremental impact on provisions for employee benefits expenses of H 217.93 million (gross of tax) towards
gratuity and compensated absences primarily arises due to change in wage definition. The Company continues to monitor
the finalisation of Central/State Rules and clarifications from the Government on other aspects of the Labour Code and
would provide appropriate accounting effect as and when such clarifications are issued/rules are notified.

b. Voluntary Separation Scheme (VSS)

The Company announced a Voluntary Separation Scheme (‘VSS') for all eligible permanent workmen at specific
plants of the Company. In this regard, the Company accepted separation of 338 employees and the separation cost
of H 663.44 million (gross of tax) associated with the VSS has been recognised as an exceptional item during the year
ended March 31,2026.

c. Merger related costs

Pursuant to provisions of Section 230-232 of the Companies Act, 2013, the Board of Directors of the Company on May
17, 2024 had approved the scheme of amalgamation of Varroc Polymers Limited (‘VPL') (a wholly owned subsidiary of
the Company) with Varroc Engineering Limited (‘VEL') with appointed date of April 01,2024 (‘the Scheme'). National
Company Law Tribunal (‘NCLT') approved the above scheme vide its order dated January 10, 2025 and the merger
became effective on February 01,2025 on filing of the NCLT order with the Registrar of Companies. The merger has
been accounted as business combination of entities under common control as per Appendix C to Ind AS 103- Business
Combinations. Exceptional items for the year ended March 31,2025 includes an amount of H 196.02 million pertaining
to estimated expenses directly attributable to the merger of VPL with the Company. Further, exceptional item for the
year ended March 31,2026 also includes write back of excess accrual of aforesaid expenses of H 10 million.

Note 55- Arbitration Proceedings

(a) The Company had received a settlement offer during the current year from Beste Motor Co. Ltd. and TYC Brother
Industrial Co. Ltd. ("TYC Parties") alleging breach of Transition Management Agreement (‘TMA' or ‘agreement')
in respect of certain income amounting to H 209.89 million recognised by the Company under ‘Revenue from
operations' during the current year, as received from Chongqing Varroc TYC Auto Lamps Co., Ltd. (erstwhile joint

venture). Subsequently, the Company also received Statement of Claim under the arbitration proceedings originally
initiated by TYC Parties in August 2022, on the aforesaid matter and on certain additional claims/breaches under the
aforesaid TMA, which are to be quantified against which the Company has filed Statement of defence in March 2026.
The Company believes that it has a strong case and will take appropriate actions as necessary to protect its interests,
and accordingly no provision has been considered in respect of this matter in standalone financial statements.

(b) On July 7, 2025, the Company, together with its Wholly Owned Subsidiary, VarrocCorp Holding B.V., Netherlands,
received an intimation from ICC International Court of Arbitration (‘ICC') with respect to a Request for Arbitration
initiated by OPmobility Lighting Holding, France (Erstwhile PO Lighting Systems). The request pertains to certain alleged
breaches of covenants under the Securities Purchase Agreement executed between the parties on April 29, 2022,
and subsequently amended on October 5, 2022, May 12, 2023, and June 15, 2023. Claims in respect of some of the
breaches have been quantified at US$ 66.41 mn plus legal costs while for others no quantification has been provided.
The Company is evaluating the matter and exploring legal and contractual remedies. It intends to contest the claims
and take appropriate steps to protect its interests. Based on a legal opinion obtained, the Company believes that it
has grounds to defend against the said allegations and accordingly no provision has been considered in respect of
this matter in standalone financial statements.

Note 56 - Other Statutory Information

(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the
Company for holding any Benami property.

(ii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the
statutory period.

(iii) The Company does not have any transactions with companies struck off.

(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

(v) The Company does not have any such transaction which is not recorded in the books of accounts that has been
surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as,
search or survey or any other relevant provisions of the Income Tax Act, 1961).

(vi) The Company has not been declared as wilful defaulter by any bank or financial institution or any other lender.

(vii) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with
Companies (Restriction in number of Layers) Rules, 2017.