DEE Development Engineers Ltd Management Discussions

*As certified by VSD & Associates, Chartered Accountants, through their certificate dated September 28, 2023.

For information about Non-GAAP financial measures as set forth in the table above, see "Other Financial Information - Non-GAAP measures Reconciliation of Non-GAAP measures " on page 338.

The results of our operations and our financial conditions are affected by numerous factors and uncertainties, many of which may be beyond our control, including as discussed in "Our Business" and "Risk Factors", beginning on pages 186 and 27. Set forth below is a discussion of certain factors that we believe may be expected to have a significant effect on our financial condition and results of operations:

Dependence on our customers operating in the oil and gas and power sectors and demand for engineering and manufacturing services of specialised process piping

As per the D&B Report, Indias crude oil demand is expected to increase from 4.7 million barrels per day in FY 2021 to 6.7 million barrels per day in FY 2030. Further, the annual consumption volume for petroleum products is expected to rise from 223 MTPA in FY 2023 to nearly 335 MTPA in FY 2030 (Source: D&B Report). To meet this demand, the petroleum refining capacity is also expected to scale up to similar volumes and is expected to reach 450 MTPA by Fiscal 2030. As per the D&B Report, currently capital expenditure projects worth approximately 339,000 crore are under implementation in the petroleum refinery industry, at various levels of execution, of which nearly 50% is expected to be operational by the end of CY 2023 with the remaining spread over the next three years until FY 2026. Beyond FY 2026, the capital expenditure visibility in the industry is pegged at approximately 688,000 crore (Source: D&B Report). Capital expenditure projects worth approximately 427,000 crore are under implementation in the power industry, at various levels of execution, of which nearly 83% is expected to be operational by the end of FY 2024 with the remaining spread until FY 2026. Beyond FY 2026 the capital expenditure visibility in the industry is pegged at approximately 525,000 crore (Source: D&B Report). Due to our market leadership position, customer relationships, expertise, infrastructure and skilled manpower, we are well positioned to capitalize on these market opportunities.Factors adversely affecting any of these industries in general, or any of our customers, could have a cascading adverse effect on our business. Such factors include fluctuations in the oil and gas prices, failure by our customers to successfully market their products or services or to compete effectively, loss of market share, economic conditions of the market to which they cater, or regulatory issues faced by these industries. As of June 30, 2023, we had an order book of 164.42 million, from our customers operating in sectors other than the oil and gas and power sectors, which constitutes 2.80% of our revenue from contracts with customers for Fiscal 2023.

Projects in the oil and gas and power sectors are typically awarded through a competitive bidding process. The growth of our business depends on our ability to obtain projects through such competitive bidding processes and our inability to bid effectively for such projects could impact our revenue from contracts with customers. For further details, see "Risk Factors - Some of our projects are awarded to us through a competitive bidding process. Our inability to effectively bid for such projects in the future could impact our operations and financial conditions." There have been instances where our long-standing relationship with some of our customers has won us orders directly without having to participate in a bidding process.

Out of our revenue from contracts with customers, in accordance with Ind AS 108. for Fiscal 2023, 2022 and 2021, our piping division contributed 5,291.23 million, 3,706.96 million and 4,180.82 million respectively, which constitutes 88.85%, 80.43% and 84.42% of our revenue from contracts with customers for the respective periods. As per the D&B Report, the market for process piping solutions is expected to reach 38.4 thousand crore in India increasing at CAGR of nearly 6% between FY 2022 and FY 2030. The key driver of growth for our products is the current and proposed capital expenditure in the oil and gas sector and power sector. Our engineering and manufacturing services are dependent on the capital expenditure plans of our customers. Any factors impacting the business of our customers may result in the cancellation, downsizing or deferring the capital expenditure plans of our customers operating in the oil and gas and power (including nuclear) industries, which in turn could have a a material adverse effect on our revenue from contracts with customers.

Failure to meet high quality standards and stringent performance requirements of our customers.

Our products and engineering processes are measured against, high quality standards and stringent specifications of our customers, due to the critical industries they find applications in. Most of our orders are awarded to us through a competitive bidding process, where we compete on various factors including our technical capabilities. Depending on the terms under which we supply products or services, if we supply products or services that do not comply with the specifications provided by our customers, our customers may hold us responsible for (i) some or all of the repair or replacement costs of defective products or services; and (ii) all losses incurred due to injury, illness or death to third party or violation of laws due to defective products or services, and the costs of claims, suits and actions in relation to such losses. We cannot assure you that we will be able to meet such technical specifications and quality standards imposed by our customers, at all times. The failure by us or to achieve or maintain compliance with these requirements or quality standards may disrupt our ability to supply products to our customers until compliance with such quality standards is achieved. Such instances could adversely affect our reputation and business and, to the extent not covered by insurance, our results of operations, financial condition and cash flows.

Our contracts require us to indemnify our customers from any liabilities and expenses incurred due to defects and damages found in the products or in connection with performance of engineering service and supplies. Customers can enforce such indemnities against us, unless such defect, damage, or delay is caused due to the customers wilful misconduct, fraud, gross negligence or wilful misrepresentation. Under our agreements with our customers, we are liable to pay liquidated damages for any delay in the supply of products. These liquidated damages typically range from 0.1% to 1.5% of the total contract or purchase order value, per week of delay, and are typically capped at 5% to 30% of the total contract or purchase order value. We are also liable to pay liquidated damages for any delay in providing documents to our customers in connection with the work which we undertake. There have been instances in the past where we were not able to meet the scheduled timelines of delivery and consequently, we had to pay liquidated damages to certain customers.

Our contracts also require us to provide warranty against the products and engineering services which we have provided, which requires us to repair or replace the goods or services furnished, which fail to comply to the specifications prescribed by our customers, during the warranty/ defect liability period. Accordingly, our customers require us to undertake or provide performance bank guarantees for such quality and delivery related obligations which can be enforced against us in case of defective or damaged products or delay in delivery of the products or services supplied by us. The performance bank guarantees which we are required to furnish to our customers typically range from 5% to 20% of the total contract value of the order.

If we default on any of the existing terms, delivery timelines, specifications or quality standards prescribed by our customers, it may result in the cancellation of existing and future orders, recalls, liquidated damages, invocation of performance bank guarantees or warranty, indemnity and liability claims. Further, such delays in the execution of orders results in the cost overruns and affects our payment milestones subsequently impacting our revenue. Such instances could adversely affect our reputation and business and, to the extent not covered by insurance, our results of operations, financial condition and cash flows.

Capacity utilisation of our Manufacturing Facilities and expansion of our installed capacities

Our Company currently is ranked as one of the leading process pipe solution providers in the world, in terms of technical capability to address complex process piping requirement arising from multiple industrial segments. (Source: D&B Report). At present, we are the largest player in process piping solutions in India, in terms of installed capacity. (Source: D&B Report). We have six strategically located Manufacturing Facilities at Palwal in Haryana, Anjar in Gujarat, Barmer in Rajasthan and Bangkok in Thailand, with three Manufacturing Facilities located at Palwal, Haryana. We also operate a temporary Manufacturing Facility in Barmer, Rajasthan which is a dedicated facility set up to cater to the piping and erection requirements of the HPCL Rajasthan Refinery Limited. Our wholly owned subsidiary, DFIPL, also operates a heavy fabrication facility at Anjar, Gujarat.

* As certified by V.K. Wadhawan, Chartered Engineer, by certificate dated August 25, 2023.

Underutilisation of our manufacturing capacities over extended periods, or significant underutilisation in the short-term, could materially and adversely impact our business, growth prospects and future financial performance.

We are in the process of enhancing our manufacturing capabilities by setting up the Numaligarh Facility with a capacity of 6,000 MT per annum; and the New Anjar Facility, which will increase the total capacity of our Anjar facilities (excluding our heavy fabrication capacity) from 3,000MT per annum to 15,000 MT per annum. We have leased 10,167.30 square meters of land and have acquired 176,849.00 square meters of land, towards setting up of the Numaligarh Facility and the New Anjar Facility, respectively. Our Numaligarh Facility will be situated at close geographical proximity to the expansion projects of the Numaligarh refinery and other refineries in the north-east region of India. We intend to use lean manufacturing practices at these facilities together with increased automation, which is expected to augment our efficiency. We also intend to avail government subsidies which are available for setting up these manufacturing facilities.

Our revenues and, consequently, our profits are dependent on, inter alia, our ability to optimise and maximise our capacity utilisation which has helped us meet the demands of our customers and deliver our products in an efficient, reliable and timely manner. The proposed expansion at our New Anjar Facility will enable us to significantly benefit from the reduction of manpower and logistics cost due to consolidation, following lean manufacturing concepts and automation of our manufacturing processes. Further, the setting up of the Numaligarh Facility will enable us to establish our presence in a new geographical area and acquire new customers including through proximity to the export markets of Bangladesh and Myanmar. Accordingly, our prospects and growth in revenue would inter alia be dependent on the effective installation, commencement and utilisation of the proposed expanded capacity. Any delays in executing the expansions of the New Anjar Facility or setting up of the Numaligarh Facility or any under-utilisation of our installed capacities or any inability to optimise the utilisation of the proposed expansions could have an adverse impact on our revenue from contracts with customers and profitability. Additionally, since we are dependent on our Manufacturing Facilities, any disruptions due to natural or man-made disasters, workforce disruptions, regulatory approval delays, fire, failure of machinery, or any significant social, political or economic disturbances would significantly impact our revenue from contracts with customers and financial condition.

Relationship with our customers and dependence on certain customers

We have, through the three and a half decades of business operations, established long-term relationships with customers across industries which we cater to. Our ability to manage and sustain customer relationships is critical to our business. We believe that our ability to address the various and stringent client requirements over long periods enables us to obtain additional business from existing clients as well as new clients in an industry marked by high entry barriers. We believe our customer relationships are led primarily by our ability to develop processes, meet stringent quality and technical specifications and manufacture customers products in a timely and cost effective manner. As result, we have a history of high customer retention and have been manufacturing products for certain customers such as Reliance Industries Limited, Mitsubishi Heavy Industries and Toshiba JSW Power Systems Private Limited for more than a decade. We believe that such long-term association with our customers offers us significant competitive advantages such as revenue visibility, industry goodwill and a deep understanding of the requirements of our customers.

We expect that we will continue to be reliant on our major customers for the foreseeable future. Accordingly, any failure to retain these customers and/or negotiate and execute contracts with such customers on terms that are commercially viable, could adversely affect our business, financial condition and results of operations. In addition, any defaults or delays in payments by a major customer or insolvency or financial distress of any major customer may have an adverse effect on business, financial condition and results of operations. Our reliance on a select group of customers may also constrain our ability to negotiate our arrangements, which may have an impact on our profit margins and financial performance.

Introduction and significant shift in technologies and processes being implemented by our customers

We believe our engineering capabilities, have enabled us to consistently offer quality, complex, precision manufactured specialized process piping solutions, allowing us to diversify our business and add new products. We have embraced technological advancement and introduced automation in our facilities for the manufacture, design and fabrication of pipes. We have a strong focus on automation, and a robust history of setting up advanced equipment and technology, as well as carrying out improved processes before other players in the market. For details, see "Our Business - Our Strengths - Largest player in process piping solutions in India, in terms of installed capacity, providing specialized process piping solutions with strategically located state-of-the-art Manufacturing Facilities" on page 189. Our automation capabilities enable us to combine operations and eliminate multiple operators in the production process in order to increase productivity, while controlling costs and maintaining consistent product quality. Accordingly, we are equipped to manage any changes in technology or processes which may be implemented by our customers. However, in case there are any other new technological developments discovered that significantly decreases the cost of production, in order to compete effectively, we may be required to replace our existing machines with the new ones and thereby incur additional capital expenditure, which would have a material adverse effect on our financial condition and results of operations.

Although we seek to identify trends and introduce new methods of engineering and equipment, we recognise that customer preferences cannot be predicted with certainty and can change rapidly, and that there is no certainty that such methods will be commercially viable or effective or accepted by our customers. Our failure to successfully adopt such technologies in a cost effective and a timely manner could increase our costs and lead to us being less competitive in terms of our prices or quality of products we sell which could significantly affect our results of operations and financial performance. Further, as our business is currently concentrated to a select number of significant customers, we may experience reduction in cash flows and liquidity if we lose one or more of our major customers or if the amount of business from them is significantly reduced for any reason.

Market conditions affecting the piping industry in India.

The demand for our products and engineering services is directly related to the general economic conditions which drives the consumption and the usage of our products. The sales of our products may be affected by a general change in economic or industry conditions including the trends in the global and domestic economies, global and local political and regulatory measures and developments, such as tax incentives or other subsidies, environmental policies, government initiatives, global and local fiscal and monetary dynamics, such as rises or falls in interest rates (resulting in greater or lesser ability by customers to borrow money), foreign exchange rates, availability of raw material and resources such as manpower and energy, general levels of GDP growth in a country or region, inflation rates, global and local economic or fiscal crises, global and local economic or fiscal instability and trade agreements. In addition, the manufacturing and engineering industry tends to be affected directly by trends in the general economy and it is sensitive to general economic conditions and factors such as inflation, employment and disposable income levels, interest rate levels, demographic trends, technological changes, increasing environmental, health and safety regulations, government policies, and adverse climatic conditions which may negatively affect the demand for our products and services.. As per the D&B Report, the demand for process piping solution is directly tied to the capital expenditure pattern taking place in the industrial segment. Construction of any nature involving creation or expansion of an industrial facility will almost always result in demand for process piping hardware and services (Source: D&B Report). Given this direct corelation, capital expenditure spending serves as a proxy demand indicator for process piping solutions (Source: D&B Report). Set out below is the year-on-year change global capital expenditure spending as compared to turnover in the process piping industry:

There may also be a number of secondary effects of an economic downturn, such as the insolvency of suppliers or customers, delays in deliveries by suppliers, payment delays and/or stagnant demand by customers, recession in some of the economies, disruption in banking and financial systems, economic instability, unfavourable government policies, rising inflation, lowering spending power, customer confidence, trade war, trade restrictions, pandemics, currency revaluations, change in credit ratings and political uncertainty. Cuts in federal or central, state and local government investment as well as consequent impairment in infrastructural facilities and growth can also drag down global and national growth rates. Given our wide presence, our revenue stream is diversified both geographically as well as across customers. Further, our plans envisage expanding our operations. We expect to continue to incur substantial expenditure in connection with such planned expansion, which would require us to successfully attract additional business from our existing and new customers. Accordingly, our successful expansion in any market is subject to business, economic and competitive uncertainties and contingencies, many of which are beyond our control.

Strength of our order book

As of June 30, 2023, we had an order book of 5,787.38 million, which constitutes 97.19% of our revenue from contracts with customers for Fiscal 2023.

Investors should not consider our order book as an accurate indicator of our future performance or future revenue. The successful conversion of orders into revenue and getting new orders will depend on the demand from our customers, which is beyond our control and is subject to uncertainty as well as changes in Government policies and priorities. Going forward, our order book may be affected by delays, cancellations, renegotiations of the contracts as well as the long gestation period in concluding such contracts, if any.

Raw Material and labour cost

Purchase of raw material forms the highest component of our expenses. The primary raw material which we utilize at our Manufacturing Facilities is steel. Steel prices fluctuate based on a number of factors, such as, the availability and cost of raw material inputs, fluctuations in domestic and international demand and supply of steel and steel products, international production and capacity, fluctuation in the volume of steel imports, transportation costs, protective trade measures and various social and political factors, in the economies in which the steel producers sell their products and are sensitive to the trends of particular industries, such as, the construction and machinery industries. The chart below sets out the movement of domestic steel prices from March 2019 until March 2023:

* Our revenues from contracts with customers includes revenues from contracts where our responsibility includes procurement of raw materials (especially pipes) as well as contracts wherein bulk of raw materials (such as pipes) are provided by our customers.

Our cash flows may be adversely affected due to any gap in time between the date of procurement of those raw materials and the date on which we can reset the component prices for our customers so as to account for the increase in the prices of such raw materials. In addition, we may not be able to pass all of our raw material price increases to our customers. Our ability to adjust pricing terms with customers varies based on our specific customer relationships, market practice with respect to the particular raw material or component and other factors such as raw material content and whether medium-term price fluctuations have been factored into our component prices at the time of price finalisation.

Employee benefit expense comprise our third largest expense after raw material costs. In Fiscal 2023, Fiscal 2022 and Fiscal

2021, our employee benefit expense was 1,109.47 million, 792.98 million and 739.63 million respectively which represented 18.63%, 17.20% and 14.94% of our revenue from contracts with customers for the respective periods. We seek to improve our operational efficiency by reducing our employee benefit expenses as a percentage of our total income, notwithstanding that we are continuing to expand our business and manufacturing facilities. We also incur significant expenses towards fabrication and job charges. In Fiscal 2023, Fiscal 2022 and Fiscal 2021, expense towards fabrication and job charges was 521.25 million, 362.01 million and 306.77 million respectively which represented 8.75%, 7.85% and 6.19% of our revenue from contracts with customers for the respective periods.

Success of our newly introduced Pilot Plant Business

As part of our growth strategy, we have recently expanded our business by entering into a new business vertical of design, engineering, fabrication and manufacturing of pilot plants which acts as a pre-commercial production system to evaluate the feasibility of certain processes before the start of full-scale production. We believe that our engineering capabilities, expertise in design, fabrication and technical knowhow will enable us to successfully execute projects in this sector. New business initiatives require strategic planning and efficient use of resources. Delays in any part of the process, or our inability to obtain necessary regulatory approvals for our pilot plant manufacturing business or failure of the pilot plants which we manufacture, could adversely affect our business. Further, if we discontinue our pilot plant business, the resources utilized towards establishment of this business may not be recoverable. This may adversely affect our business, results of operation and revenues.

Due to our limited experience in undertaking these types of projects or offering the service of manufacturing pilot plants for customers, our entry into this new business segment may not be successful, which could hamper our growth and damage our reputation and this may impose additional strain on our resources and consume additional time and attention of our senior management. We may be unable to compete effectively for projects in this segment or execute the awarded projects efficiently. We may not be the supplier of first choice and may not command goodwill and trust of customers, as compared to other established players. Wemay present comparatively higher investment risks due to our limited operating history in the new business which we have ventured into. There can be no assurance that our limited operating history shall not adversely impact our rate of growth and our ability to succeed in realizing our growth strategy.

Reliance on sales outside India and foreign exchange rate risk

In Fiscal 2023, we exported our products to 27 countries including Canada, Italy and Iraq. During Fiscal 2023, Fiscal 2022 and Fiscal 2021, the cost of raw material imported as a percentage of overall raw material purchase cost was 54.19%, 38.09% and 71.38%, respectively. Accordingly, we have currency exposures relating to buying and selling in currencies other than in Indian Rupees, particularly the U.S.$. The changes in the relevant exchange rates could also affect sales, operating results and assets and liabilities reported in Indian Rupees as part of our financial statements. While the exports act as a natural hedge for our raw material imports, the resulting net foreign exchange position is still affected by fluctuations in exchange rates among the U.S.$ and the Indian Rupee. Additionally, due to these fluctuations in foreign currency in Fiscal 2023 our gain/ (loss) on foreign exchange (net) was 47.10 million, (3.51) million in Fiscal 2022 and 66.27 million in Fiscal 2021. These gains and losses were related to instances where the market exchange rate at the time of transaction was in our favour or against us as compared to the rates we had applied when the transactions were accounted or hedged.

Competition

Although the piping industry provides for significant entry barriers, competition in our business is based on pricing, relationship with customers, technical competence, history of supplying quality goods along with timely delivery and history of handling changes in the engineering requirements. The success of our business depends upon our ability to anticipate and identify changes in customer preferences, offering products and services that customers require and, on our ability to develop and manufacture our products in a timely and cost-effective manner. We constantly seek to develop our innovation capabilities to distinguish ourselves from our competitors to enable us to introduce new products and services and different variant of our existing products, based on customer preferences and demand.

We face competition from companies such as ISGEC Heavy Engineering Limited in certain segments and from the pipe fabrication division of L&T Heavy Engineering in certain areas of our operations, in India as well as other international companies such as Seonghwa Industrial Co. Limited, SUNG IL (SIM) Co Ltd, US Pipe Fabrication and McDermott which either operate in the same line of business as us or offer similar products and services (Source: D&B Report). Few of our competitors may win market share from us by providing lower cost solutions to our customers, with or without adversely affecting their profit margins or by offering technologically advanced products or services.

Even if our offerings address industry and customer needs, our competitors may be more responsive to these needs and more successful at selling their products. If we are unable to provide our customers with superior products and services at competitive prices or successfully market those services to current and prospective customers, we could lose customers, market share or be compelled to reduce our prices. Our competitors actions, including expanding their manufacturing capacity, expansion of their operations to newer geographies or product segments in which we compete, or the entry of new competitors into one or more of our markets could cause us to lower prices in an effort to maintain our sales volume.

SIGNIFICANT ACCOUNTING POLICIES

Set forth below is a summary of our most significant accounting policies adopted in preparation of the Restated Consolidated Summary Statements.

a. Basis of preparation of Restated Consolidated Summary Statements

The Restated Consolidated Summary Statements of the Group comprise of the Restated Consolidated Statement of Assets and Liabilities as at 31 March 2023, 31 March 2022 and 31 March 2021, the related Restated Consolidated Statement of Profit and Loss (including Other Comprehensive Income), the Restated Consolidated Statement of Cash Flows and the Restated Consolidated Statement of Changes in Equity for years ended 31 March 2023, 31 March 2022 and 31 March 2021, and the Significant Accounting Policies and explanatory notes (collectively, the ‘Restated Ind AS Consolidated Summary Statements).

These Restated Ind AS Consolidated Summary Statements have been prepared by the Management of the Holding Company in accordance with the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended from time to time, issued by the Securities and Exchange Board of India (‘SEBI) on 11 September 2018, in pursuance of the Securities and Exchange Board of India Act, 1992 ("ICDR Regulations") for the purpose of inclusion in the Draft Red Herring Prospectus (‘DRHP) in connection with its proposed initial public offering of its equity shares, prepared by the Holding Company in terms of the requirements of:

a) Section 26 of Part I of Chapter III of the Companies Act, 2013 ("the Act");

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

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

These Restated Consolidated Summary Statements have been compiled by the Management from:

Audited consolidated financials statements of the Group as at and for years ended March 31, 2023, March 31, 2022 and March 31, 2021 prepared in accordance with the Indian Accounting Standards (referred to as "Ind AS") as prescribed under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules 2015, as amended and other accounting principles generally accepted in India, which have been approved by the Board of Directors at their meeting held on September 22, 2023, September 24, 2022 and September 30, 2021.

The accounting policies have been consistently applied by the Group in preparation of the Restated Consolidated Summary Statements and are consistent with those adopted in the preparation of Statutory restated consolidated summary statements for the year ended March 31, 2023. These Restated Consolidated Summary Statements have been prepared for the Group as a going concern on the basis of relevant Ind AS that are effective as at March 31, 2023.

The Restated Consolidated Summary Statements have been prepared on the historical cost basis, except for the following assets and liabilities which have been measured at fair value:

- Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments);

- Defined benefits plan - plan assets measured at fair value;

The Restated Consolidated Summary Statements are presented in Indian Rupees "INR" or "Rs." and all values are stated as INR or Rs. millions, except when otherwise indicated.

b. Basis of consolidation

The Restated Consolidated Summary Statements comprises the summary statements of the Holding Company, its subsidiaries and jointly controlled entity. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:

Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee) Exposure, or rights, to variable returns from its involvement with the investee, and The ability to use its power over the investee to affect its returns Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

• The contractual arrangement with the other vote holders of the investee

• Rights arising from other contractual arrangements

• The Groups voting rights and potential voting rights

• The size of the groups holding of voting rights relative to the size and dispersion of the holdings of the other voting rights holders

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the Restated Consolidated Summary Statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

Restated Consolidated Summary Statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances. If a member of the group uses accounting policies other than those adopted in the Restated Consolidated Summary Statements for like transactions and events in similar circumstances, appropriate adjustments are made to that group members financial statements in preparing the Restated Consolidated Summary Statements to ensure conformity with the groups accounting policies.

The restated consolidated summary statements of all entities used for the purpose of consolidation are drawn up to the same reporting date as that of the Parent Company i.e. year ended on March 31, 2023, March 31, 2022 and March 31, 2021.

(i) Subsidiaries

(a) Combine like items of assets, liabilities, equity, income, expenses and cash flows of the parent with those of its subsidiaries. For this purpose, income and expenses of the subsidiary are based on the amounts of the assets and liabilities recognised in the Restated Consolidated Summary Statements at the acquisition date.

(b) Offset (eliminate) the carrying amount of the parents investment in each subsidiary and the parents portion of equity of each subsidiary. Business combinations policy explains how to account for any related goodwill.

(c) Eliminate in full intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between entities of the group (profits or losses resulting from intragroup transactions that are recognised in assets, such as inventory and fixed assets, are eliminated in full). Intragroup losses may indicate an impairment that requires recognition in the Restated Consolidated Summary Statements. Ind AS 12 Income Taxes applies to temporary differences that arise from the elimination of profits and losses resulting from intragroup transactions.

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Groups accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:

• Derecognises the assets (including goodwill) and liabilities of the subsidiary

• Derecognises the carrying amount of any non-controlling interests

• Derecognises the cumulative translation differences recorded in equity

• Recognises the fair value of the consideration received

• Recognises the fair value of any investment retained

• Recognises any surplus or deficit in profit or loss

• Reclassifies the parents share of components previously recognised in OCI to profit or loss or

retained earnings, as appropriate, as would be required if the Group had directly disposed of the

related assets or liabilities

(ii) Investment in jointly controlled entity

A jointly controlled entity is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the jointly controlled entity. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. The considerations made in determining whether significant influence or joint control are similar to those necessary to determine control over the subsidiaries.

The Groups investments in its jointly controlled entity are accounted for using the equity method. Under the equity method, the investment in a jointly controlled entity is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Groups share of net assets of the jointly controlled entity since the acquisition date. Goodwill relating to the jointly controlled entity is included in the carrying amount of the investment and is not tested for impairment individually.

The statement of profit and loss reflects the Groups share of the results of operations of the jointly controlled entity. Any change in OCI of those investees is presented as part of the Groups OCI. In addition, when there has been a change recognised directly in the equity of the jointly controlled entity, the Group recognises its share of any changes, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting from transactions between the Group and the jointly controlled entity are eliminated to the extent of the interest in the jointly controlled entity.

If Groups share of losses of a jointly controlled entity equals or exceeds its interest in the jointly controlled entity (which includes any long term interest that, in substance, form part of the Groups net investment in the jointly controlled entity), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the jointly controlled entity. If the jointly controlled entity subsequently reports profits, the Group resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised.

The aggregate of the Groups share of profit or loss of an associate and a jointly controlled entity is shown on the face of the Restated Consolidated Statement of Profit and Loss.

The Summary Statements of the jointly controlled entity are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring the accounting policies in line with those of the Group. After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss on its investment in its jointly controlled entity. At each reporting date, the Group determines whether there is objective evidence that the investment in the jointly controlled entity is impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable amount of the jointly controlled entity and its carrying value, and then recognises the loss as ‘Share of profit of a jointly controlled entity in the statement of profit or loss.

Upon loss of significant influence over the joint control over the jointly controlled entity, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the jointly controlled entity upon loss of significant influence or joint control and the fair value of the retained investment less cost to sell is recognised in profit or loss.

The Group discontinue the use of equity method from the date the investment is classified as held for sale in accordance with Ind AS 105 - Non-current Assets Held for Sale and Discontinued Operations and measures the interest in associate and jointly controlled entity held for sale at the lower of its carrying amount and fair value less cost to sell.

c. Goodwill

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

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Groups cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquire are assigned to those units.

A cash generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised in profit or loss. An impairment loss recognised for goodwill is not reversed in subsequent periods.

Where goodwill has been allocated to a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted through goodwill during the measurement period, or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date. These adjustments are called as measurement period adjustments. The measurement period does not exceed one year from the acquisition date.

d. Use of Estimates

The preparation of Restated Consolidated Summary Statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of income and expenses of the period, reported balances of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Examples of such estimates include provisions for doubtful debts and advances, future obligations under employee retirement benefit plans, useful lives of fixed assets, contingencies, etc. Although these estimates are based upon managements best knowledge of current events and actions, actual results could differ from these estimates. Difference between actual result and estimates are recognised in the period in which the results are known/materialise.

e. Current vs Non Current Classification

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

An asset is treated as current when it is:

- Expected to be realised or intended to be sold or consumed in normal operating cycle

- Held primarily for the purpose of trading

- Expected to be realised within twelve months after the reporting period, or

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

All other assets are classified as non-current.

A liability is current when:

- It is expected to be settled in normal operating cycle

- It is held primarily for the purpose of trading

- It is due to be settled within twelve months after the reporting period, or

- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. The Group classifies all other liabilities as non-current.

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

The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Group has identified twelve months as its operating cycle.

f. Foreign currencies

The Group financial statements are presented in INR, which is also the Groups functional currency. Items included in the financial statements of each of the Groups entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency). For each entity the Group determines the functional currency and items included in the financial statements of each entity are measured using that functional currency. For the purpose of consolidation into the financial statement of ultimate parent Group, these financial statements are presented in INR, being the functional and presentation currency of ultimate parent Group. The Group uses the direct method of consolidation and on disposal of a foreign operation the gain or loss that is reclassified to profit or loss reflects the amount that arises from using this method.

On consolidation, the assets and liabilities of foreign operations are translated into INR at the rate of exchange prevailing at the reporting date and their statements of profit or loss are translated at exchange rates prevailing at the dates of the transactions. For practical reasons, the group uses an average rate to translate income and expense items, if the average rate approximates the exchange rates at the dates of the transactions. The exchange differences arising on translation for consolidation are recognised in OCI. On disposal of a foreign operation, the component of OCI relating to that particular foreign operation is recognised in profit or loss.

Transaction and balances

Transactions in foreign currencies are initially recorded by the Groups entities at their respective functional currency spot rates at the date the transaction first qualifies for recognition. However, for practical reasons, the Group uses an average rate if the average approximates the actual rate at the date of the transaction. The exchange differences arising on translation for consolidation are recognised in OCI. On disposal of a foreign operation, the component of OCI relating to that particular foreign operation is recognised in profit or loss.

Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.

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

Exchange differences arising on settlement or translation of monetary items are recognised in profit or loss in the period in which they arise with the exception of exchange differences on gain or loss arising on translation of non-monetary items measured at fair value which is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognized in OCI or profit or loss are also recognized in OCI or profit or loss, respectively).

g. Revenue from contract or services with customer

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government. The Group has concluded that it is the principal in all of its revenue arrangements because it typically controls the goods or services before transferring them to the customer.

Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services.

The Group collects Goods and service tax (GST) on behalf of the government and therefore, these are not economic benefits flowing to the Group. Hence, they are excluded from revenue.

The specific recognition criteria described below must also be met before revenue is recognised.

Sale of Goods

Revenue from sale of goods is recognised at the point in time when control of the goods is transferred to the customer, generally on delivery of the equipment. 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.

In determining the transaction price for the sale of equipment, the Group considers the effects of variable consideration, the existence of significant financing components, noncash consideration, and consideration payable to the customer (if any).

Variable consideration

If the consideration in a contract includes a variable amount, the Group estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved.

Rendering of Services

Revenue from errection service and job work is recognised as per the contractual terms and as and when services are rendered. The Group collects Goods and service tax (GST) on behalf of the government and, therefore, it is not an economic benefit flowing to the Group. Hence, it is excluded from revenue.

Interest Income

For all debt instruments measured either at amortised cost or at fair value through other comprehensive income, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortised cost of a financial liability. When calculating the effective interest rate, the group estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses.

Rental income arising from operating leases on investment properties is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss due to its operating nature.

Sale of Electricity

Revenue from sales of electricity is billed on the basis of recording of supply of electricity through installed meters. Revenue from sales of electricity is accounted for on the basis of billing to customers based on billing cycles followed by the group.

h. Contract balances

Contract assets

A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the group performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional.

Trade receivables

A receivable represents the Groups right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies of financial assets in section (w) Financial instruments initial recognition and subsequent measurement.

Contract liabilities

A contract liability is the obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the

Group transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Group performs under the contract

i. Government Grants

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

When the Group receives grants of non-monetary assets, the asset and the grant are recorded at fair value amounts and released to profit or loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset i.e., by equal annual instalments. When loans or similar assistance are provided by governments or related institutions, with an interest rate below the current applicable market rate, the effect of this favourable interest is regarded as a government grant. The loan or assistance is initially recognised and measured at fair value and the government grant is measured as the difference between the initial carrying value of the loan and the proceeds received. The loan is subsequently measured as per the accounting policy applicable to financial liabilities.

j. Taxation

Current income tax

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the Group operates and generates taxable income.

Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred tax

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

Deferred tax liabilities are recognised for all taxable temporary differences, except when the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except when the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

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

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

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.

Deferred tax includes Minimum Alternate Tax (MAT) and recognises MAT credit available as an asset only to the extent that there is convincing evidence that the Group will pay normal income tax during the specified period i.e. the period for which MAT credit is allowed to be carried forward. The Group reviews the "MAT credit entitlement" asset at each reporting date and writes down the asset to the extent the Group does not have any convincing evidence that it will pay normal tax during the specified period.

For operations carried out under tax holiday period (80IA benefit of Income Tax Act, 1961), deferred tax asset or liabilities if any, have been established for the tax consequences of those temporary differences between the carrying values of assets and liabilities and their respective tax bases that reverse after the tax holiday period ends.

k. Property, Plant and Equipment

Capital work in progress is stated at cost, net of accumulated impairment loss, if any. All the property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for long- term construction projects if the recognition criteria are met. When significant parts of plant and equipment are required to be replaced at intervals, the Group depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.

The group, based on technical assessment made by technical expert and management estimate, depreciates plant and machineries of piping division over estimated useful lives of 15 to 25 years which are different from the useful life prescribed in Schedule II to the Companies Act, 2013. The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.

In case of other assets, depreciation has been provided on straight line method on the economic useful life prescribed by Schedule II to the Companies Act2013. Depreciation on addition to or on disposal of Fixed Asset is calculated on pro rata basis. Addition, to Fixed Assets costing less than or equal to Rs. 5,000 are depreciated fully in the year of purchase.

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

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

l. Intangible Assets

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses.. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses.

Amortisation of intangible assets is allocated on systematic basis over the best estimate of their useful life and accordingly softwares are amortised on straight line basis over the period of six years or license period whichever is lower.

Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit or loss when the asset is derecognised. The Group has no intangible assets with an indefinite life.

m. Borrowing Cost

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.

n. Leases

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

Group as lessee

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

(a) Right-of-use asset

If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of-use assets are also subject to impairment. Refer to the accounting policies in section (2.n) Impairment of non-financial assets.

(b) Lease Liabilities

At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating the lease, if the lease term reflects the Group exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.

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

(c) Short-term leases and leases of low-value assets

The Group applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (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). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.

Group as a lessor

Leases in which the Group does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.

Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Group to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the Groups net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.

o. Inventories

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

p. Impairment of non-financial assets

The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the assets recoverable amount. An assets recoverable amount is the higher of an assets or cash-generating units (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.

q. Provisions

A provision is recognised when Group has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. If the effect of time value of money is material, provisions are discounted using a pre-tax rate that reflects when appropriate, the risks specific to the liability.

r. Retirement and Other Employee Benefits

(i) Retirement benefit in the form of provident fund is a defined contribution scheme. The Group has no obligation, other than the contribution payable to the provident fund. The Group recognizes contribution payable to the provident fund scheme as an expense, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognized as an asset to the extent that the pre-payment will lead to, for example, a reduction in future payment or a cash refund.

(ii) Gratuity is a defined benefit plan and provision is being made on the basis of actuarial valuation carried out by an independent actuary at the year end using projected unit credit method, and is contributed to the Gratuity fund managed by the Life Insurance Corporation of India.

Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.

Past service costs are recognised in profit or loss on the earlier of:

• The date of the plan amendment or curtailment, and

• The date that the Group recognises related restructuring costs

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Group recognises the following changes in the net defined benefit obligation as an expense in the consolidated statement of profit and loss:

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

• Net interest expense or income

Compensated Absences

Accumulated leave which is expected to be utilized within the next 12 months, is treated as short-term employee benefit. The Group measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.

The Group treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long- term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end. Actuarial gains/losses are immediately taken to statement of Profit and Loss in the period in which they occur. The Group presents the entire leave as a current liability in the balance sheet, since it does not have an unconditional right to defer its settlement for 12 months after the reporting date.

Financial instruments

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

Financial assets

Initial recognition and measurement

All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset.

Subsequent measurement

For purposes of subsequent measurement, financial assets are classified in four categories:

• Debt instruments at amortised cost

• Debt instruments at fair value through other comprehensive income (FVTOCI)

• Debt instruments, derivatives and equity instruments at fair value through profit or loss (FVTPL)

• Equity instruments measured at fair value through other comprehensive income (FVTOCI)

Debt instruments at amortised cost

A ‘debt instrument is measured at the amortised 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.

After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss.

Debt instrument at FVTOCI

A ‘debt instrument is classified as at the FVTOCI if both of the following criteria are met:

a) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and

b) The assets contractual cash flows represent SPPI.

Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the other comprehensive income (OCI).

Debt instrument at FVTPL

FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.

In addition, the Group may elect to designate a debt instrument, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as ‘accounting mismatch). The Group has not designated any debt instrument as at FVTPL.

Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the P&L.

Equity investments

All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading and contingent consideration recognised by an acquirer in a business combination to which Ind AS103 applies are classified as at FVTPL. For all other equity instruments, the Group may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value. The Group makes such election on an instrument-by- instrument basis. The classification is made on initial recognition and is irrevocable.

If the Group decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to statement of profit and loss, even on sale of investment. However, the Group may transfer the cumulative gain or loss within equity.

Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the statement of profit and loss.

Derecognition

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

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

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

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

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

Impairment of financial assets

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

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

The application of simplified approach does not require the Group to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.

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

Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.

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

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

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

ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in the statement of profit and loss (P&L). This amount is reflected under the head ‘other expenses in the Profit and Loss.

Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, trade and other payables. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Groups financial liabilities include trade and other payables, loans and borrowings including cash credit and financial guarantee contracts.

Subsequent measurement

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

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

Gains or losses on liabilities held for trading are recognised in the profit or loss.

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

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 or loss.

s. Derivative financial instruments

The Group uses derivative financial instruments, such as forward currency contracts to hedge its foreign currency 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 profit or loss.

t. Fair Value measurement The Group measures financial instruments, such as, derivatives 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 Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

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

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

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 Group 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.

The Groups management determines the policies and procedures for recurring fair value measurement, such as derivative instruments and unquoted financial assets measured at fair value.

At each reporting date, the management analyses the movements in the values of assets and liabilities which are required to be remeasured or re-assessed as per the Groups accounting policies. The management also compares the change in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable.

For the purpose of fair value disclosures, the Group 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.

u. Contingent liability

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases, where there is a liability that cannot be recognised because it cannot be measured reliably. The Group does not recognise a contingent liability but discloses its existence in the financial statements unless the probability of outflow of resources is remote.

Provisions and contingent liabilities are reviewed at each balance sheet date.

v. Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Board of Directors identified as chief operating decision- maker (CODM). The CODM is responsible for allocating resources and assessing performance of the operating segments. Segments are organised based on type of services delivered or provided. Segment revenue arising from third party customers is reported on the same basis as revenue in the group Ind AS financial statements. Segment results represent profits before unallocated corporate expenses and taxes.

"Unallocated Corporate Expenses" include expenses that relate to costs attributable to the Group as a whole and are not attributable to segments.

w. 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 as they are considered an integral part of the Groups cash management.

x. Dividend Distributions

The Group recognises a liability to make cash to equity holders of the parent when the distribution is authorised and the distribution is no longer at the discretion of the Group. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.

y. Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss (after Tax) for the year attributable to equity shareholders of holding Co. by the weighted average number of equity shares outstanding during the year.

Diluted earnings per share are calculated by dividing the net profit or loss (after Tax) for the year attributable to equity shareholders of holding Co. by the weighted average number of equity shares which would be issued on the conversion of all the dilutive potential equity shares into equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the period, unless they have been issued at a later date.

NEW AND AMENDED STANDARD

The Ministry of Corporate Affairs has notified Companies (Indian Accounting Standard) Amendment Rules 2022 dated March 23, 2022, to amend the following Ind AS which are effective from April 01, 2022.

(i) Onerous Contracts Costs of Fulfilling a Contract Amendments to Ind AS 37

An onerous contract is a contract under which the unavoidable cost of meeting the obligations under the contract (i.e., the costs that the Group cannot avoid because it has the contract) exceed the economic benefits expected to be received under it.

The amendments specify that when assessing whether a contract is onerous or loss-making, an entity needs to include costs that relate directly to a contract to provide goods or services including both incremental costs (e.g., the costs of direct labour and materials) and an allocation of costs directly related to contract activities (e.g., depreciation of equipment used to fulfil the contract and costs of contract management and supervision). General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract.

The amendments are applicable for annual reporting periods beginning on or after the 1 April 2022. This amendment had no impact on the Restated Consolidated Summary Statements of the Group.

(ii) Reference to the Conceptual Framework Amendments to Ind AS 103

The amendments replaced the reference to the ICAIs "Framework for the Preparation and Presentation of Financial Statements under Indian Accounting Standards" with the reference to the "Conceptual Framework for Financial Reporting under Indian Accounting Standard" without significantly changing its requirements.

The amendments also added an exception to the recognition principle of Ind AS 103 Business Combinations to avoid the issue of potential ‘day 2 gains or losses arising for liabilities and contingent liabilities that would be within the scope of Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets or Appendix C, Levies, of Ind AS 37, if incurred separately. The exception requires entities to apply the criteria in Ind AS 37 or Appendix C, Levies, of Ind AS 37, respectively, instead of the Conceptual Framework, to determine whether a present obligation exists at the acquisition date.

The amendments also add a new paragraph to IFRS 3 to clarify that contingent assets do not qualify for recognition at the acquisition date.

In accordance with the transitional provisions, the Group applies the amendments prospectively, i.e., to business combinations occurring after the beginning of the annual reporting period in which it first applies the amendments (the date of initial application).

These amendments had no impact on the Restated Consolidated Summary Statements of the Group as there were no contingent assets, liabilities or contingent liabilities within the scope of these amendments that arose during the period.

(iii) Property, Plant and Equipment: Proceeds before Intended Use Amendments to Ind AS 16

The amendments modified paragraph 17(e) of Ind AS 16 to clarify that excess of net sale proceeds of items produced over the cost of testing, if any, shall not be recognised in the profit or loss but deducted from the directly attributable costs considered as part of cost of an item of property, plant, and equipment.

The amendments are effective for annual reporting periods beginning on or after 1 April 2022. These amendments had no impact on the Restated Consolidated Summary Statements of the Group as there were no sales of such items produced by property, plant and equipment made available for use on or after the beginning of the earliest period presented.

(iv) Ind AS 101 First-time Adoption of Indian Accounting Standards Subsidiary as a first-time adopter

The amendment permits a subsidiary that elects to apply the exemption in paragraph D16(a) of Ind AS 101 to measure cumulative translation differences for all foreign operations in its financial statements using the amounts reported by the parent, based on the parents date of transition to Ind AS, if no adjustments were made for consolidation procedures and for the effects of the business combination in which the parent acquired the subsidiary. This amendment is also available to an associate or jointly controlled entity that uses exemption in paragraph D16(a) of Ind AS 101.

The amendments are effective for annual reporting periods beginning on or after 1 April 2022 but do not apply to the Group as it is not a first-time adopter.

(v)Ind AS 109 Financial Instruments Fees in the 10 per cent test for derecognition of financial liabilities

The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the others behalf.

In accordance with the transitional provisions, the Group applies the amendment to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period in which the entity first applies the amendment (the date of initial application). These amendments had no impact on the Restated Consolidated Summary Statements of the Group as there were no modifications of the Groups financial instruments during the year.

(vi) Ind AS 41 Agriculture Taxation in fair value measurements

The amendment removes the requirement in paragraph 22 of Ind AS 41 that entities exclude cash flows for taxation when measuring the fair value of assets within the scope of Ind AS 41.

The amendments are effective for annual reporting periods beginning on or after 1 April 2022. The amendments had no impact on the Restated Consolidated

Summary Statements of the Group as it did not have assets in scope of IAS 41 as at the reporting date.

STANDARDS ISSUED BUT NOT YET EFFECTIVE

The Ministry of Corporate Affairs has notified Companies (Indian Accounting Standards) Amendment Rules, 2023 dated 31 March 2023 to amend the following Ind AS which are effective from 01 April 2023.

(i) Definition of Accounting Estimates - Amendments to Ind AS 8

The amendments clarify the distinction between changes in accounting estimates and changes in accounting policies and the correction of errors. It has also been clarified how entities use measurement techniques and inputs to develop accounting estimates.

The amendments are effective for annual reporting periods beginning on or after 1 April 2023 and apply to changes in accounting policies and changes in accounting estimates that occur on or after the start of that period.

The amendments are not expected to have a material impact on the Groups financial statements.

(ii) Disclosure of Accounting Policies - Amendments to Ind AS 1

The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their ‘significant accounting policies with a requirement to disclose their ‘material accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures.

The amendments to Ind AS 1 are applicable for annual periods beginning on or after 1 April 2023. Consequential amendments have been made in Ind AS 107. The Group is currently revisiting their accounting policy information disclosures to ensure consistency with the amended requirements.

(iii) Deferred Tax related to Assets and Liabilities arising from a Single Transaction - Amendments to Ind AS 12

The amendments narrow the scope of the initial recognition exception under Ind AS 12, so that it no longer applies to transactions that give rise to equal taxable and deductible temporary differences.

The amendments should be applied to transactions that occur on or after the beginning of the earliest comparative period presented. In addition, at the beginning of the earliest comparative period presented, a deferred tax asset (provided that sufficient taxable profit is available) and a deferred tax liability should also be recognised for all deductible and taxable temporary differences associated with leases and decommissioning obligations. Consequential amendments have been made in Ind AS 101. The amendments to Ind AS 12 are applicable for annual periods beginning on or after 1 April 2023.

The Group is currently assessing the impact of the amendments.

KEY COMPONENTS OF OUR STATEMENT OF PROFIT AND LOSS

Set forth below are the key components of our statement of profit and loss from our continuing operations:

Total Income

Our total income comprises (i) revenue from contracts with customers; and (ii) other income.

Revenue from Contracts with Customers

Revenue from contracts with customers comprises (i) sale of finished goods (includes job work); (ii) sale of traded goods; (iii) sale of electricity; (iv) sale of service; (v) erection and design services; and (vi) other operating income, which includes (a) sale of scrap; and (b) export incentive.

Other Income

Other income primarily comprises (i) gain on foreign exchange (net); (ii) liability no longer required written back; (iii) interest income; (iv) miscellaneous income; and (v) authorization of deferred revenue.

Expenses

Our expenses primarily comprise (i) cost of raw materials consumed; (ii) employee benefits expenses; (iii) depreciation and amortisation expenses; (iv) finance costs; (v) purchases of traded goods; (vi) changes in inventories of finished goods, traded goods and work in progress; and (vii) other expenses.

Cost of raw materials consumed

Cost of materials consumed comprises costs from consumption of raw materials.

Purchases of traded goods

Purchases of traded goods comprises expense from purchase of traded goods.

Changes in inventories of finished goods, traded goods and work in progress

Changes in inventories of finished goods, traded goods and work in progress is based on calculating the difference between the closing stock and the opening stock.

Employee Benefits Expense

Employee benefit expense primarily comprises (i) salaries, wages and bonus; (ii) contribution to provident and other funds; (iii) gratuity expense; and (iv) staff welfare expenses.

Depreciation and Amortisation Expenses

Depreciation and amortisation expenses primarily comprise (i) depreciation on tangible assets; (ii) amortisation of intangible assets; and (iii) depreciation on right of use of assets.

Finance Costs

Finance costs primarily comprise (i) interest expense on term loans and working capital loans; (ii) interest on lease liability (iii) other borrowing cost; and (iv) exchange difference regarded as an adjustment to borrowing cost.

Other Expenses

Other expenses comprise expense on (i) consumption of stores and spare parts; (ii) packing material consumed; (iii) fabrication and job charges; (iii) power, fuel and water charges; (iv) radiography and inspection; (v) freight and forwarding (net of recovery); (vi) legal and professional; (vii) repair and maintenance; (viii) office and factory maintenance; (ix) rent; (x) equipment hire charges; (xi) rates and taxes; (xii) insurance; (xiii) auditors remuneration; (xiv) selling commission and other selling expenses; (xv) claims and deductions; (xvi) travelling and conveyance expense; (xvii) bank charges; (xviii) loss on foreign exchange (net); (xix) sundry balances written; (xx) impairment of investments in jointly controlled entities; (xxi) loss on sale/discard of property, plant and equipment (net); (xxii) donation; (xxiii) security and servicing charges; (xxiv) corporate social responsibility expenses; (xxv) directors sitting fees; and (xxvi) miscellaneous.

Tax Expense

Tax expense consists of current tax, deferred tax charge/(credit) and adjustment of tax relating to earlier years.

RESULTS OF OPERATIONS

Total Income

Total income increased by 30.47% from 4,708.39 million in Fiscal 2022 to 6,143.20 million in Fiscal 2023 primarily due to operations resuming post the COVID-19 pandemic, with the manufacturing facilities running at a higher capacity as compared to Fiscal 2022, additions of new facilities, better order book during Fiscal 2023 and writing back of excess liabilities pertaining to one of our customers pursuant to a settlement agreement.

Revenue from Contracts with Customers

Revenue from contracts with customers increased by 29.20% from 4,609.16 million in Fiscal 2022 to 5,954.95 million in Fiscal 2023 primarily due to increase in job work from 910.50 million in Fiscal 2022 to 2,229.86 million in Fiscal 2023, increase in sale of finished goods from 2,806.36 million in Fiscal 2022 to 2,836.19 million in Fiscal 2023 and increase in sale of traded goods from 16.60 million in Fiscal 2022 to 46.74 million in Fiscal 2023. This was partially offset by a decrease in the sale of electricity from 781.54 million in Fiscal 2022 to 737.59 million in Fiscal 2023.

Other income

Other income increased by 89.71% from 99.23 million in Fiscal 2022 to 188.25 million in Fiscal 2023 primarily due to increase in gain/ (loss) on foreign exchange (net) from Nil in Fiscal 2022 to 47.10 million in Fiscal 2023, increase in profit in sale of property, plant and equipment (net) from Nil in Fiscal 2022 to 19.80 million in Fiscal 2023 and an increase in writing back of excess liabilities, pertaining to one of our customers pursuant to a settlement agreement reached with the customer from nil in Fiscal 2022 to 36.20 million in Fiscal 2023. This was partially offset by a decrease in amortization of deferred revenue from 49.01 million in Fiscal 2022 to 21.50 million in Fiscal 2023.

Expenses

Total expenses increased by 29.81% from 4,575.45 million in Fiscal 2022 to 5,939.48 million in Fiscal 2023 primarily due to an increase in the cost of raw materials consumed, increase in employee benefits expense and an increase in depreciation and amortization expenses.

Cost of raw materials consumed

Cost of materials consumed increased by 16.01% from 1,948.97 million in Fiscal 2022 to 2,261.00 million in Fiscal 2023 primarily due to purchase of additional raw material.

Purchases of traded goods

Purchases of traded goods increased by 154.63% from 11.35 million in Fiscal 2022 to 28.90 million in Fiscal 2023 primarily due to purchase of additional traded goods for onward selling to customers.

(Increase) in inventories of finished goods, traded goods and work in progress

Inventories of finished goods, traded goods and work-in-progress increased by 60.13% from (242.10) million in Fiscal 2022 to (387.68) million in Fiscal 2023 primarily due to increase in the quantum of job work undertaken by the Company in Fiscal 2023 as compared to Fiscal 2022, which was complemented by the increase in the number of locations where the Company was undertaking job works from one manufacturing facility (Palwal) in Fiscal 2022 to three manufacturing facilities (Palwal, Anjar and Barmer) in Fiscal 2023.

Employee benefits expense

Employee benefits expenses increased by 39.91% from 792.98 million in Fiscal 2022 to 1,109.47 million in Fiscal 2023 primarily due to increase in salaries, wages and bonus from 744.39 million in Fiscal 2022 to 1,046.39 million in Fiscal 2023 and an increase in staff welfare expenses from 18.37 million in Fiscal 2022 to 28.24 million in Fiscal 2023, which is due to an increase in the number of employees in our Company.

Finance costs

Finance costs increased by 18.02% from 253.37 million in Fiscal 2022 to 299.02 million in Fiscal 2023 primarily due to increase in interest expense on term loans from 43.93 million in Fiscal 2022 to 55.88 million in Fiscal 2023, and an increase in interest expense on working capital loans 185.14 million in Fiscal 2022 to 214.95 million in Fiscal 2023.

Depreciation and amortisation expense

Depreciation and amortisation expenses increased by 5.09% from 358.99 million in Fiscal 2022 to 377.27 million in Fiscal 2023 primarily due to increase in depreciation on tangible assets from 343.17 million in Fiscal 2022 to 352.44 million in Fiscal 2023, and an increase in depreciation on right of use assets from 9.26 million in Fiscal 2022 to 15.83 million in Fiscal 2023, which is due to the addition of building and plant and machinery in our new facilities.

Other expenses

Other expenses increased by 55.07% from 1,451.89 million in Fiscal 2022 to 2,251.50 million in Fiscal 2023 primarily due to an increase in consumption of stores and spare parts from 308.82 million in Fiscal 2022 to 532.33 million in Fiscal 2023, an increase in fabrication and job charges from 362.01 million in Fiscal 2022 to 521.25 million in Fiscal 2023, an increase in power, fuel and water charges from 116.57 million in Fiscal 2022 to 157.26 million in Fiscal 2023, an increase in freight and forwarding (net of recovery) from 61.21 million in Fiscal 2022 to 116.52 million in Fiscal 2023 and an increase in legal and professional from 66.97 million in Fiscal 2022 to 103.29 million in Fiscal 2023.

Restated Profit before tax

Our restated profit before tax increased by 53.24% from 132.94 million in Fiscal 2022 to 203.72 million in Fiscal 2023 primarily due to increase in revenue from contracts with customers.

Tax Expense

Total tax expense (current and deferred) increased by 45.18% from 50.97 million in Fiscal 2022 to 74.00 million in Fiscal

2023 primarily due to increase in total income.

Current tax expense increased by 25.83% from 67.75 million in Fiscal 2022 to 85.25 million in Fiscal 2023 primarily due to an increase in the total income; and

Deferred tax (credit) decreased by 20.94% from (13.80) million in Fiscal 2022 to (10.91) million in Fiscal 2023 primarily due to an increase in the total income.

Restated Profit for the year

Restated Profit for the year increased by 58.25% from 81.97 million in Fiscal 2022 to 129.72 million in Fiscal 2023 primarily due to an increase in total income.

Total Income

Total income decreased by 8.22% from 5,130.26 million in Fiscal 2021 to 4,708.39 million in Fiscal 2022 primarily due to restrictions imposed due to the COVID-19 pandemic, which also resulted in a shutdown of the entire chain of sales and marketing globally. Further procurement, operations, logistics and delivery of final products were negatively impacted due to the COVID-19 pandemic.

Revenue from Contracts with Customers

Revenues from operations decreased by 6.93% from 4,952.17 million in Fiscal 2021 to 4,609.16 million in Fiscal 2022 primarily due to a decrease in the sale of finished goods from 3,485.63 million in Fiscal 2021 to 2,806.36 million in Fiscal 2022. This was partially offset by an increase in the sale of electricity from 660.27 million in Fiscal 2021 to 781.54 million in Fiscal 2022 and an increase in job work from 687.94 million in Fiscal 2021 to 910.50 million in Fiscal 2022.

Other income

Other income decreased by 44.28% from 178.09 million in Fiscal 2021 to 99.23 million in Fiscal 2022 primarily due to a decrease in the gain on foreign exchange (net) from 66.27 million in Fiscal 2021 to Nil in Fiscal 2022 and a decrease in amortization of deferred revenue from 64.28 million in Fiscal 2021 to 49.01 million in Fiscal 2022.

Expenses

Total expenses decreased by 9.25% from 5,041.98 million in Fiscal 2021 to 4,575.45 million in Fiscal 2022 primarily due to an increase in inventories of finished goods, traded goods and work in progress. Such decrease was in line with the decrease in total income.

Cost of raw materials consumed

Cost of materials consumed decreased by 1.80% from 1,984.71 million in Fiscal 2021 to 1,948.97 million in Fiscal 2022 primarily due to lower quantity of raw materials purchased.

Purchases of traded goods

Purchases of traded goods increased by 18.60% from 9.57 million in Fiscal 2021 to 11.35 million in Fiscal 2022 primarily due to purchase of additional traded goods for onward selling to customers.

(Increase) in inventories of finished goods, traded goods and work in progress

Inventories of finished goods, traded goods and work-in-progress increased by 165.43% from 370.04 million in Fiscal 2021 to (242.10) million in Fiscal 2022 primarily due to higher quantum of job works undertaken in Fiscal 2022 as compared to Fiscal 2021 and disruption in the logistics chain due to the Russia Ukraine war.

Employee benefits expense

Employee benefits expenses increased by 7.21% from 739.63 million in Fiscal 2021 to 792.98 million in Fiscal 2022 primarily due to an increase in salaries, wages and bonus from 693.44 million in Fiscal 2021 to 744.39 million in Fiscal

2022.

Finance costs

Finance costs decreased by 6.60% from 271.28 million in Fiscal 2021 to 253.37 million in Fiscal 2022 primarily due to a decrease in the interest expense on term loans 106.81 million in Fiscal 2021 to 43.93 million in Fiscal 2022 and a decrease in other borrowing cost from 27.08 million in Fiscal 2021 to 15.23 million in Fiscal 2022. This was partially offset by an increase in interest on working capital loans from 128.80 million in Fiscal 2021 to 185.14 million in Fiscal 2022

Depreciation and amortisation expense

Depreciation and amortisation expenses increased by 1.02% from 355.37 million in Fiscal 2021 to 358.99 million in Fiscal 2022 primarily due to increase in depreciation on tangible assets from 337.40 million in Fiscal 2021 to 343.17 million in Fiscal 2022. This was partially offset by a decrease in the amortisation of intangible assets from 10.29 million in Fiscal 2021 to 6.56 million in Fiscal 2022.

Other expenses

Other expenses increased by 10.71% from 1,311.38 million in Fiscal 2021 to 1,451.89 million in Fiscal 2022 primarily due to increase in consumption of stores and spare parts from 244.16 million in Fiscal 2021 to 308.82 million in Fiscal 2022, increase in packing material consumed from 119.30 million in Fiscal 2021 to 145.83 million in Fiscal 2022, increase in fabrication and job charges 306.77 million in Fiscal 2021 to 362.01 million in Fiscal 2022. This was partially offset by a decrease in the freight and forwarding (net of recovery) from 100.88 million in Fiscal 2021 to 61.21 million in Fiscal 2022.

Restated Profit before tax

Our restated profit before tax increased by 48.55% from 89.49 million in Fiscal 2021 to 132.94 million in Fiscal 2022 primarily due to increase in closing stock (work-in-progress and finished goods) and decrease in finance cost.

Tax Expense

Total tax expense (current and deferred) increased by 196.97% from (52.56) million in Fiscal 2021 to 50.97 million in Fiscal

2022 primarily due to increase in deferred tax expenses:

Current tax expense decreased by 7.29% from 73.08 million in Fiscal 2021 to 67.75 million in Fiscal 2022 primarily and due to decrease in total income; and

Deferred tax (credit) decreased by 88.90% from (124.37) million in Fiscal 2021 to (13.80) million in Fiscal 2022 primarily due to decrease in deferred tax expenses (credit). Decrease in deferred tax (credit) was owned to change in tax regime, the tax rate in the old regime was 34.94%, while the new tax rate had reduced to 25.17%, further it was also impacted by the loss and depreciation in DEE Fabricom which was carried forward in Fiscal 2022.

Restated Profit for the year

Restated Profit for the year decreased by 42.29% from 142.05 million in Fiscal 2021 to 81.97 million in Fiscal 2022 primarily due to decrease in revenue from contracts with customers.

Capital Requirements

Our principal capital requirements are for payment of capital expenditure and working capital. Our principal source of funding has been and is expected to continue to be, cash generated from our operations, supplemented by borrowings from banks and financial institutions and optimization of operating working capital. For Fiscal 2023, Fiscal 2022 and Fiscal 2021, we met our funding requirements, including satisfaction of debt obligations, capital expenditure, investments, other working capital requirements and other cash outlays, principally with funds generated from operations, optimization of operating working capital with the balance met from external borrowings.

Liquidity

Our liquidity requirements arise principally from our operating activities, capital expenditures for construction of new facilities, expansion of existing facilities, the repayment of borrowings and debt service obligations. Historically, our principal sources of funding have included cash from operations, short-term and long-term borrowings from financial institutions, cash and cash equivalents.

Cash

Fiscal 2023

We generated 139.39 million net cash from operating activities during Fiscal 2023. Restated Profit before tax for Fiscal 2023 was 203.72 million. Adjustments to reconcile profit before tax to operating profit before working capital changes primarily consisted of depreciation and amortization expenses of 377.27 million and finance costs of 299.02 million. This was partially offset by unrealized (gain) on foreign exchange (net) of 64.21 million and liabilities no longer required written back of 36.20 million.

Our adjustments for working capital changes for Fiscal 2023 primarily consisted of an increase in trade payable of 334.62 million, an increase in trade receivables of 212.88 million, an increase in inventories of 471.49 million and a decrease in other liabilities of 25.81 million.

Cash generated from operations in Fiscal 2023 amounted to 198.44million. This was offset by income tax paid of 59.05 million.

Fiscal 2022

We generated 671.47 million net cash from operating activities during Fiscal 2022. Restated Profit before tax for Fiscal 2022 was 132.94 million. Adjustments to reconcile profit before tax to operating profit before working capital changes primarily consisted of depreciation and amortization expenses of 358.99 million and finance cost of 253.37 million. This was partially offset by finance income of 13.48 million.

Our adjustments for working capital changes for Fiscal 2022 primarily consisted of a decrease in trade receivables of 454.82 million, an increase in trade payables of 241.48 million and an increase in inventories of 576.46 million.

Cash generated from operations in Fiscal 2022 amounted to 735.10 million. This was offset by income tax paid of 63.63 million.

Fiscal 2021

We generated 955.42 million net cash from operating activities during Fiscal 2021. Restated Profit before tax for Fiscal 2021 was 89.49 million. Adjustments to reconcile profit before tax to operating profit before working capital changes primarily consisted of depreciation and amortization expenses of 355.37 million and finance costs of 271.28 million. This was partially offset by finance income of 22.31 million.

Our adjustments for working capital changes for Fiscal 2021 primarily consisted of a decrease in inventories of 635.78 million, an increase in trade payables of 65.36 million and a decrease in other liabilities of 289.34 million.

Cash generated from operations in Fiscal 2021 amounted to 1,026.18 million. This was offset by income tax paid of 70.76 million.

Fiscal 2023

Net cash used in investing activities was (519.73) million in Fiscal 2023, primarily on account of purchase of property, plant and equipment, capital work in progress and intangible assets of (586.45) million and investments in bank deposits of (264.34) million. This was partially offset by proceeds from redemption/maturity of bank deposits of 224.62 million.

Fiscal 2022

Net cash used in investing activities was 221.46 million in Fiscal 2022, primarily on account of purchase of property, plant and equipment, capital work in progress of and intangible assets (263.17) million and investments in bank deposits of (133.16) million. This was partially offset by proceeds from redemption/maturity of bank deposits of 86.52 million.

Fiscal 2021

Net cash used in investing activities was 67.73 million in Fiscal 2021, primarily on account of purchase of property, plant and equipment, capital work in progress and intangible assets of 168.63 million and investment in bank deposits of 158.71 million. This was partially offset by proceeds from redemption/ maturity of bank deposits of 168.84 million.

Fiscal 2023

Net cash used in financing activities was 395.13 million in Fiscal 2023, primarily on account of proceeds from long term borrowings of 926.08 million and proceeds from short term borrowings of 551.22 million. This was partially offset by repayment of borrowing of 710.32 million.

Fiscal 2022

Net cash used in financing activities was (497.15) million in Fiscal 2022, primarily on account of repayment of borrowing of

(337.84) million, interest paid of (287.04) million and buy back of Equity Shares of (503.40) million. This was partially offset by proceeds from long term borrowings of 258.44 million and proceeds from short term borrowings of 384.31 million.

Fiscal 2021

Net cash from financing activities was (875.87) million in Fiscal 2021, primarily on account of repayment of short term borrowing of (398.84) million, repayment of long term borrowing of (530.63) million and interest paid of (318.41) million. This was partially offset by proceeds from long term borrowings of 380.51 million.

FINANCIAL INDEBTEDNESS

As of July 31, 2023 we had total borrowings of 3,420.04 million. Our total borrowing to equity ratio was 83.23 as of March 31, 2023. For further information on our indebtedness, see "Financial Indebtedness" on page 342. CARE has assigned our long term bank facilities a rating of BBB+ and our short term bank facilities a rating of A2 on October 10, 2022.

CONTINGENT LIABILITIES AND OFF-BALANCE SHEET ARRANGEMENTS

As of March 31, 2023, March 31, 2022 and March 31, 2021 our contingent liabilities as per Ind AS 37 - Provisions, Contingent Liabilities and Contingent Assets, that have not been provided for, were as follows:

For further information on our contingent liabilities as at March 31, 2021, March 31, 2022 and March 31, 2023 as per Ind AS

37, see "Financial Information" on page 268.

Except as disclosed elsewhere in this Draft Red Herring Prospectus, there are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that we believe are material to investors.

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

CAPITAL EXPENDITURES

In Fiscal 2023, Fiscal 2022 and Fiscal 2021, our capital expenditure towards additions to (property, plant and equipment and capital work-in-progress were 728.63 million, 266.25 million and 178.86 respectively.

RELATED PARTY TRANSACTIONS

We enter into various transactions with related parties in the ordinary course of business. These transactions principally include raw materials purchased, material processing charges, sales made and loans from related parties. For further information relating to our related party transactions, see ""Other Financial Information Related Party Transactions" on page 340.

In Fiscal 2023, Fiscal 2022 and Fiscal 2021, the arithmetical aggregated absolute total of such related party transactions post Company eliminations was 32.50 million, Nil million and 55.51 million, respectively. The percentage of the arithmetical aggregated absolute total of such related party transactions to our revenue from contracts with customers in Fiscal 2023, Fiscal 2022 and Fiscal 2021 was 0.55%, Nil% and 1.12%, respectively.

AUDITORS OBSERVATIONS

For details in relation to auditor qualifications and emphasis of matters, see "Risk Factors - The audit reports of our Company and certain of our Subsidiaries contain an emphasis of matter paragraph and the annexure to Auditors Report under the Companies (Auditors Report) Order, 2020 and Companies (Auditors Report) Order, 2016 of our Company and few of our Subsidiaries, certain adverse remarks or qualifications." on page 40.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks that are related to the normal course of our operations such as interest rate, liquidity risk, foreign exchange risk and reputational risk, which may affect economic growth in India and the value of our financial liabilities, our cash flows and our results of operations.

Credit Risk

Credit risk is the risk of financial loss to the Company, if a customer or the counterparty to a financial instrument fails to meet its contractual obligations. Our credit risk, therefore, principally arises from our Companys trade receivables from customers.

Such credit risk is mainly influenced by the individual characteristics of each customer of our Company. However, our management also considers factors that may influence the credit risk of our customer base, including the risk of default associated with the industry and country in which our customers operate in.

Liquidity Risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. Our Companys approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Companys reputation.

Market Risk

We are exposed to various types of market risks during the normal course of business. Market risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises risks such as price risk, currency risk and interest rate risk. The foreign exchange exposure is partially balanced by purchasing in goods, commodities, raw materials and services in the respective currencies. We evaluate exchange rate exposure arising from foreign currency transactions and we follow established risk management policies, including the use of derivatives like foreign exchange forward contracts to hedge exposure to foreign currency risk. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

The foreign currency exposures not specifically covered by natural hedge and forward exchange contracts as at March 31, 2023, March 31, 2022 and March 31, 2021 are as follows:

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 changes in market interest rates. We are exposed to market risk with respect to changes in interest rates related to our borrowings. Some of our current indebtedness bears interest at floating rates where the interest payments are tied to certain benchmark rates set by the RBI. Interest rates are highly sensitive to many factors beyond our control, including the monetary policies of the RBI, domestic and international economic and political conditions, inflation and other factors. Upward fluctuations in interest rates increase the cost of servicing existing and new debts, which adversely affects our results of operations. We manage our interest rate risk by having an agreed portfolio of fixed and variable rate borrowings. For further information, see "Financial Indebtedness" on page 342.

Inflation Risk

In recent years, India has experienced relatively high rates of inflation. While we believe inflation has not had any material impact on our business and results of operations, inflation generally impacts the overall economy and business environment and hence could affect us.

UNUSUAL OR INFREQUENT EVENTS OR TRANSACTIONS

Except as described in this Draft Red Herring Prospectus, to our knowledge, there have been no unusual or infrequent events or transactions that have in the past or may in the future affect our business operations or future financial performance.

KNOWN TRENDS OR UNCERTAINTIES

Our business has been subject, and we expect it to continue to be subject, to significant economic changes arising from the trends identified above in "Managements Discussion and Analysis of Financial Condition and Results of Operations - Significant Factors Affecting our Results of Operations" and the uncertainties described in "Risk Factors" on pages 347 and 27, respectively. To our knowledge, except as discussed in this Draft Red Herring Prospectus, there are no known trends or uncertainties that have or had or are expected to have a material adverse impact on revenues or income of our Company from continuing operations.

FUTURE RELATIONSHIP BETWEEN COST AND INCOME

Other than as described in "Risk Factors", "Our Business" and "Managements Discussion and Analysis of Financial Condition and Results of Operations" on pages 27, 186 and 344 respectively, to our knowledge, there are no known factors that may adversely affect our business prospects, results of operations and financial condition.

NEW PRODUCTS OR BUSINESS SEGMENTS

Except as set out in this Draft Red Herring Prospectus in the sections "Our Business" on page 186, we have not announced and do not expect to announce in the near future any new products or business segments.

COMPETITIVE CONDITIONS

We operate in a competitive environment and expect to continue to compete with existing and potential competitors. See "Risk Factors", "Industry Overview" and "Our Business" on pages 27, 136 and 186, respectively, for further details on competitive conditions that we face across our various business segments.

SIGNIFICANT DEPENDENCE ON SINGLE OR FEW CUSTOMERS

We have in the past derived a significant portion of our revenue from a limited number of customer and we may continue to derive a significant portion of our revenue from such customers. For further details, see "Risk Factors We derive a significant part of our revenue from some customers, and we do not have long term contracts with a majority of these customers. If one or more of such customers choose not to source their requirements from us or to terminate our contracts or purchase orders, our business, cash flows, financial condition and results of operations may be adversely affected." on page 32.

SEASONALITY/ CYCLICALITY OF BUSINESS

Our business is not seasonal in nature.

MATERIAL DEVELOPMENTS AFTER MARCH 31, 2023 THAT MAY AFFECT OUR FUTURE RESULTS OF OPERATIONS

Except as disclosed below and elsewhere in this Draft Red Herring Prospectus, there have been no significant developments after March 31, 2023, the date of the last financial statements contained in this Draft Red Herring Prospectus, to the date of filing of this Draft Red Herring Prospectus, which materially and adversely affects, or is likely to affect, our trading or profitability, or the value of our assets, or our ability to pay our liabilities within the next 12 months:

NIL