(p) Provisions and Contingent Liability

a) Recognition

Provisions for legal claims, service warranties and volume discounts are recognised when the
Company has a present legal or constructive obligation as a result of past events, it is probable that
an outflow of resources will be required to settle the obligation and the amount can be reliably
estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in
settlement is determined by considering the class of obligations as a whole. A provision is recognised
even if the likelihood of an outflow with respect to any one item included in the same class of
obligations may be small.

Provisions are measured at the present value of management's best estimate of the expenditure
required to settle the present obligation at the end of the reporting period. Provisions (excluding
retirement benefits and compensated absences) are not discounted to its present value and are
determined based on best estimate required to settle the obligation at the balance sheet date. These
are reviewed at each balance sheet date adjusted to reflect the current best estimates. Contingent
liabilities are not recognised in the financial statements. A contingent asset is neither recognised nor
disclosed in the financial statements.

A disclosure for a contingent liability is made where there is a possible obligation that arises from past
events and the existence of which will be confirmed only by the occurrence or non-occurrence of one
or more uncertain future events not wholly within the control of the Company or a present obligation
that arises from the past events where it is either not probable that an outflow of resources will be
required to settle the obligation or a reliable estimate of the amount cannot be made.

b) Product warranty expenses

The estimated liability for product warranties is accounted when products are sold. These estimates
are established using historical information on the nature, frequency and average cost of warranty
claims and management estimates regarding possible future incidence based on corrective actions
on product failures.

(q) Employee Benefits
Defined contribution plans

Superannuation: The Company has defined contribution plans for post-employment benefits in the
form of superannuation fund for certain class of employees, which is administered through Life Insurance
Corporation (LIC). The Company has no further obligation beyond its contribution.

Provident Fund: The Company has defined contribution plan for post-employment benefits in the form
of provident fund for all employees, which is administered by the Regional Provident Fund Commissioner.
The Company has no further obligation beyond its monthly contributions.

Defined benefit plans

Gratuity: The Company has a defined benefit plan for post-employment benefit in the form of gratuity for
all employees, which is partially administered through Life Insurance Corporation (LIC). Liability for above
defined benefit plan is provided on the basis of actuarial valuation, as at the Balance Sheet date, carried
out by an independent actuary. The Company's liability is actuarially determined (using the Projected Unit
Credit method) at the end of each year.

Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding
amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding
amounts included in net interest on the net defined benefit liability), are recognized immediately in the
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 the Statement of profit and loss in subsequent periods.

Past service costs are recognized in the Statement of Profit and Loss on the earlier of:

- The date of the plan amendment or curtailment, and

- The date that the Company recognizes related restructuring costs

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The
Company recognizes the following changes in the net defined benefit obligation as an expense in the
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 compensated absences, which are expected to be availed or encashed within 12 months
from the end of the year end are treated as short term employee benefits.

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

In respect of encashment of leave, the Defined Benefit Obligation is calculated taking into account all type
of the decrement and qualifying salary projected up to the assumed date of encashment.

(r) Segment reporting

Information reported to the chief operating decision maker (CODM) for the purposes of resource allocation
and assessment of segment performance focuses on the types of goods or services delivered or provided.

Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker.

The board of directors of the Company assesses the financial performance and position of the Company
and makes strategic decisions. The board of directors of the Company have been identified as being
the chief operating decision maker. Chief financial officer of the Company assists board of directors in
their decision-making process. The Company is in the business of manufacture and sale automobile
components, which in the context of Indian Accounting Standard 108 'Segment Information' represents
single reportable business segment.

(s) Earnings Per Share:

Basic Earnings Per Share is calculated by dividing the net profit or loss for the period attributable to equity
Shareholders by the weighted average number of Equity Shares outstanding during the period.

For the purpose of calculating Diluted Earnings Per Share, the net profit or loss for the period attributable
to equity shareholders and the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive Potential Equity Shares.

3. Critical estimates and judgements

The preparation of financial statements requires the use of accounting estimates which, by definition, will
seldom equal the actual results. Management also needs to exercise judgement in applying the Company's
accounting policies.

This note provides an overview of the areas that involved a higher degree of judgement or complexity, and
of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be
different than those originally assessed. Detailed information about each of these estimates and judgements
included in relevant notes together with information about the basis of calculation of each different line item
in the financial statements.

The areas involving critical estimates or judgements are:

Ý Estimation of useful life of asset (Refer note 2.1.(e),(f))

Ý Estimation of provision and for contingent liabilities (Refer note .2.1.(p))

Ý Estimation of provision for warranty obligation (Refer note 2.1.(p.b.))

Ý Accounting for arrangements in the nature of lease (Refer note 2.1.(n))

Ý Estimation of defined benefit obligation (Refer note 2.1.q)

Ý Estimation of expected credit Losses on trade receivables (Refer Note 2.1.j )

3.2. Recent Pronouncements

Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards under
Companies (Indian Accounting Standards) Rules as issued from time to time. As on March 31, 2025, MCA
has not amended the Companies (Indian Accounting Standards) Amendment Rules, 2023 and hence
reporting under this section is not applicable.

Capital reserve

Represents reserve on amalgamation of Divgi TorqTransfer Systems Private Limited (formerly Divgi Warner Private
Limited) with the Company with effect from 1 April 2016 as per scheme of amalgamation approved by the National
Company Law Tribunal Mumbai Bench.

The amount of Rs. 7.37 million arising out of the difference between the book value of the net assets of the
Transferor Company taken over, the fair valuation of assets of the Transferee Company as mentioned in a) above and
cancellation of intercompany investments between the Transferor Company and the Transferee Company has been
recorded as Capital Reserve in the Balance Sheet.

Securities premium

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

36 Leases

i) Operating lease: Company as lessee

The Company has significant operating lease arrangements for premises. These lease arrangements range
for a period between 1 to 5 years, which are cancellable leases. Most of the leases are renewable for further
period on mutually agreeable terms and also include escalation clauses.

41 Financial risk management

The Company's principal financial liabilities, other than derivatives, comprise trade and other payables
and borrowings. The main purpose of these financial liabilities is to finance the Company's operations. The
Company's principal financial assets include loans, trade and other receivables and cash and cash equivalents
that derive directly from its operations.

"Risk is inherent in the Company's activities but it is managed through a process of on going identification,
measurement and monitoring, subject to risk limits and other controls. This process of risk management is critical
to the Company's continuing profitability and each individual within the Company is accountable for the risk
exposures relating to his or her responsibilities. The Company is exposed to market risk, credit risk and liquidity risk.
The Company's Board of Directors is ultimately responsible for the overall risk management approach and for
approving the risk strategies and principles. No significant changes were made in the risk management objectives
and policies during the years ended March 31,2025, years ended and March 31,2024. The management of the
Company reviews and agrees policies for managing each of these risks which are summarised below:

I Market risk

Market risk is the risk that the value of an asset will fluctuate as a result of changes in market variables such
as interest rates, foreign exchange rates and equity prices, whether those changes are caused by factors
specific to the individual investment or its issuer or factors affecting all investments traded in the market.

Market risk is managed on the basis of pre-determined asset allocations across various asset categories,
diversification of assets in terms of geographical distribution and industry concentration, a continuous
appraisal of market conditions and trends and management's estimate of long and short term changes in
fair value.

41 Financial risk management (Contd.)

i 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. The Company is not currently exposed significantly to
such risk.

ii Foreign currency risk

Foreign exchange risk arises when future commercial transactions and relevant assets and liabilities
are denominated in a currency that is not the Company's functional currency. Foreign exchange risk is
the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates.

Foreign exchange risk is managed on the basis of limits determined by management and a continuous
assessment of current and expected exchange rate movements.

41 Financial risk management (Contd.)

II Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer
contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities
(primarily trade receivables and contract assets) and from its financing activities, including deposits with
banks, foreign exchange transactions and other financial instruments.

Trade receivables

Customer credit risk is managed by each business unit subject to the Company's established policy,
procedures and control relating to customer credit risk management. An impairment analysis is performed
at each reporting date on an individual basis for major clients. In addition, a large number of minor
receivables are grouped into homogenous group and assessed for impairment collectively. The calculation
is based on losses as per historical data. The maximum exposure to credit risk at the reporting date is the
carrying value of each class of financial assets disclosed in note 9 . The charge of impairment to Statement
of profit and loss is disclosed in note 9 above.

Financial instruments and bank deposits

Credit risk from balances with banks, loans and other financial assets are managed by the Company's
treasury department in accordance with the Company's policy. Investments of surplus funds are
made only with approved counterparties having a good market reputation and within credit
limits assigned to each counterparty. The limits are set to minimise the concentration of risks
and therefore mitigate financial loss through counterparty's potential failure to make payments.
The Company's maximum exposure to credit risk for bank balances and deposits as at March 31, 2025,
March 31,2024 is the carrying amounts as disclosed in the financial statements.

III Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the
availability of funding through an adequate amount of committed credit facilities to meet obligations
when due and to close out market positions. Due to the dynamic nature of the underlying businesses,
Company treasury maintains flexibility in funding by maintaining availability under committed credit lines.
The management monitors rolling forecasts of the Company's liquidity position (comprising the undrawn
borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. This is
generally carried out at operating segments level in the Company in accordance with practice and limits
set by the Company. In addition, the Company's liquidity management policy involves projecting future
cash flows and considering the level of liquid assets necessary to meet these and monitoring balance
sheet liquidity ratios against internal requirements.

Explanations to items included in computing the above ratios:

1. Current Ratio: Current Asset over Current Liabilities

2. Debt-Equity Ratio: Debt (includes Borrowings and Current & Non-Current Lease Liabilities) over total share
holders equity (including Reserves & Surplus) and excluding preference share capital

3. Debt Service Coverage Ratio: EBITDA (includes other income) over Principal Interest

4. Return on Equity Ratio: Profit After Tax over average Equity (including Reserves & Surplus)

5. Inventory turnover ratio: Revenue from operations over average Inventory

6. Trade Receivables turnover ratio: Revenue from operations over average Trade Receivable

7. Trade payables turnover ratio: Revenue from operations over average Trade Payable

8. Net working capital turnover ratio: Revenue from operations over average working capital [average
working capital = Inventory Receivables - Payables]

9. Net profit ratio: Profit After Tax over Total Income

10. Return on Capital employed: Profit Before Interest & Tax over Capital employed (Capital employed includes
total share holders equity, borrowings, short term and long term lease liabilities)

11. Return on investment: Interest income on fixed deposit Mutual fund investment gain over average
investments (investments includes investments in mutual funds, margin money and other bank
deposits)

12. Return on Invested Capital: Profit Before Interest, Tax and Interest Income over Capital employed (Capital
employed includes total share holders equity, borrowings, short term and long term lease liabilities less
cash & cash equivalents and bank balances).

43 Capital Management

The Company's objective for capital management is to maximise long term shareholder value, safeguard business
continuity and support the growth of the Company. The Company determines the capital requirement based
on annual operating plans and long- term and other strategic investment plans. The funding requirements are
met through equity and operating cash flows generated. No changes were made in the objectives, policies or
processes during the years ended March 31,2025 and March 31,2024 Capital represents equity attributable to
equity holders of the Company.

45 Other Statutory Information

Below disclosures are not given since there are no such transactions

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

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

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

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

(e) There is no Scheme of Arrangement approved by the Competent Authority in terms of Sections 230 to 237
of the Companies Act, 2013.

(f) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including
foreign entities (Intermediaries) with the understanding that the Intermediary shall:

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by
or on behalf of the Company (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries

45 Other Statutory Information (Contd.)

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

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by
or on behalf of the Funding Party (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries

(h) The Company has complied with the the number of layers prescribed under of Section 2(87) of the Act
read with the Companies (Restriction on number of Layers) Rules, 2017.

(i) The Company has not been declared willful defaulter by any bank or financial Institution or other lender.

46 The Company uses an accounting software for maintaining its books of accounts which have the feature of
recording an Audit Trail (Edit Log) facility and the same has operated through out the year for all relevant
transaction recorded in the software. Further no instance of audit trail feature being tempered with was noted
in respect of accounting software. Additionally, the audit trail has been preserved by the Company as per the
statutory requirements for record retention.

Net IPO proceeds which were un-utilised as at March 31, 2025 were temporarily invested in deposits with
scheduled commercial banks and in monitoring agency account.

For B. K. Khare & Co. For and on behalf of the Board of Directors of

Firm Registration Number: 105102W Divgi TorqTransfer Systems Limited

Chartered Accountants (Formerly known as Divgi TorqTransfer Systems Private Limited)

Amit Mahadik Praveen P Kadle Jitendra B Divgi

Partner Chairman Managing Director

Membership Number: 125657 DIN: 00016814 DIN: 00471531

Date: May 30, 2025 Date: May 30, 2025 Date: May 30, 2025

Place: Pune Place: Pune Place: Pune

Sudhir Mirjankar Sanika Nirgude

Chief Financial Officer Company Secretary and

Compliance Officer
(ACS - A71466)

Date: May 30, 2025 Date: May 30, 2025

Place: Pune Place: Pune