2.17 Accounting of provisions, contingent liabilities and contingent assets

Provisions are recognized, when there is a present legal or constructive obligation as a result of past events,
where it is probable that there will be outflow of resources to settle the obligation and when a reliable estimate
of the amount of the obligation can be made. Where a provision is measured using the cash flows estimated
to settle the present obligation, its carrying amount is the present value of those cash flows. Where the effect
is material the provision is discounted to net present value using an appropriate current market-based pre-tax
discount rate and the unwinding of the discount is included in finance costs.

Contingent liabilities are recognized only when there is a possible obligation arising from past events, due to
occurrence or non-occurrence of one or more uncertain future events, not wholly within the control of the
Company, or where any present obligation cannot be measured in terms of future outflow of resources, or
where a reliable estimate of the obligation cannot be made. The company does not recognize a contingent
liability but disclose its existence in financial statements.

Contingent assets are not disclosed in the financial statements unless an inflow of economic benefits is highly
probable.

3.01 Dividend to equity shareholders

Dividend to equity shareholders is recognized as a liability and deducted from shareholders equity, in the period
in which the dividends are approved by the equity shareholders in the general meeting.

3.02 Earnings per share (EPS)

Basic EPS is computed by dividing the profit or loss attributable to the equity shareholders of the Company
by the weighted average number of Ordinary shared outstanding during the year. Diluted EPS is computed by
adjusting the profit or loss attributable to the ordinary equity shareholders and the weighted average number
of ordinary equity shares, for the effects of all dilutive potential Ordinary shares.

3.03 Exceptional Items

Exceptional items are transactions which due to their size or incidence are separately disclosed to enable a full
understanding of company financial performance.

3.04 Current and Non-Current classification

The Company presents assets and liabilities in the balance sheet based on current/non-current classification. An
asset is treated as current when it is:

(i) Expected to be realised or intended to be sold or consumed in normal operating cycle,

(ii) Held primarily for the purpose of trading,

(iii) Expected to be realised within twelve months after the reporting period, or

(iv) Cash or cash equivalents 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:

(i) It is expected to be settled in normal operating cycle,

(ii) It is held primarily for the purpose of trading,

(iii) It is due to be settled within twelve months after the reporting period, or

(iv) There is no unconditional right to defer the settlement of the liability for at least twelve months after the
reporting period.

The Company classifies all other liabilities as non-current.

Deferred tax assets and liabilities and advance against current tax 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 Company has identified twelve months as its operating cycle."

3.05 Cash flow statement

Cash flow are reported using indirect method, where by profit before tax is adjusted for the effects transaction
of non-cash nature and any deferrals or accruals of past or future cash receipt or payments.

4. Critical accounting judgments and key sources of estimation uncertainty

The preparation of the financial statements in conformity with the Ind AS requires management to make
judgments, estimates and assumptions that affect the application of accounting policies and the reported
amounts of assets, liabilities and disclosures as at date of the financial statements and the reported amounts
of the revenues and expenses for the years presented. The estimates and associated assumptions are based on
historical experience and other factors that are considered to be relevant. Actual results may differ from these
estimated under different assumptions and conditions.

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

A Critical Judgments

In the process of applying the Company's accounting policies, management has made the following
judgments, which have the most significant effect on the amounts recognized in the financial statements:

B Discount rate used to determine the carrying amount of the Company's defined
benefit obligation

In determining the appropriate discount rate for plans operated in India, the management considers the
interest rate of government bonds in currencies consistent with the currencies of the post-employment
benefit obligation.

C Contingencies and commitments

In the normal course of business, contingent liabilities may arise from litigations and other claims against
the company. Where the potential liabilities have a low probability of crystallizing or are very difficult
to quantify reliable, we treat them as contingent liabilities. Such liabilities are disclosed in the notes but
are not provided for in the financial statements. Although there can be no assurance regarding the final
outcome of the legal proceedings, we do not expect them to have a materially adverse impact on our
financial position or profitability.

D Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of
the reporting period that have a significant risk of causing a material adjustment to the carrying amounts
of assets and liabilities within the next financial year are discussed below:

(i) Useful life of property, plant and equipment

As described in Note 2, the company reviews the estimated useful lives and residual values of property,
plant and equipment at the end of each reporting period. During the current financial year, the
management determined that there were no changes to the useful lives and residual values of the
property, plant and equipment.

(ii) Allowances for doubtful debts

The company makes allowances for doubtful debts based on an assessment of the recoverability of trade
and other receivables. The identification of doubtful debts requires use of judgment and estimates.
Where the expectation is different from the original estimate, such difference will impact the carrying
value of the trade and other receivables and doubtful debts expenses in the period in which such estimate
has been changed.

(iii) Allowances for inventories

Management reviews the inventory age listing on a periodic basis. This review involves comparison of
the carrying value of the aged inventory items with the respective net realizable value. The purpose is to
ascertain whether an allowance is required to be made in the financial statements for any obsolete and
slow- moving items. Management is satisfied that adequate allowance for obsolete and slow-moving
inventories has been made in the financial statements.

(iv) Liability for sales return

In making judgment for liability for sales return, the management considered the detailed criteria for
the recognition of revenue from the sale of goods set out in Ind AS 115 and in particular, whether
the company has transferred to the buyer the significant risk and rewards of ownership of the goods.
Following the detailed quantification of the Company's liability towards sales return, the management
is satisfied that significant risk and rewards have been transferred and that recognition of the revenue
in the current year is appropriate, in conjunction with the recognition of an appropriate liability for sales
return. Accruals for estimated product returns, which are based on historical experience of actual sales
returns and adjustment on account of current market scenario is considered by Company to be reliable
estimate of future sales returns.

14. SHARE CAPITAL (Contd.)

B. Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of 5/- per share. Each holder of equity shares
is entitled to one vote per share.

In the event of liquidation of the company, the holders of equity shares will be entitled to receive the assets of
the company, in proportion to the number of equity shares held by the shareholders.

B. Defined benefit plan

The company offer it employees defined benefit plan in form of gratuity scheme.( a lump sum amount). The gratuity
scheme covers all regular employees. In case of gratuity scheme company contributes funds to gratuity trust which is
irrevocable, and if company did not make contribution in trust then such unpaid contribution is shown under provision
in financial statement. Commitments are actuarially determined at year end. The actuarial valuation is done based on
" Projected Unit Credit " method. These plan typically expose the company to actuarial risk such as ; investment risk,
interest rate risk, longevity risk and salary risk.

Investment risk:

The present value of defined benefit liability is calculated using discount rate which is determined by using reference
to market yields at the end of reporting period on government bonds. If return on planned assets is below this rate it
will create plan deficit.

Interest risk:

A decrease in bond interest rate will increase the plan liability; however this will partially offset by an increase in plan
assets.

Longevity risk:

The present value of defined benefit plan is calculated by reference to the best estimate of the mortality of plan
participants. An increase in life expectancy of plan participants will increase the plan's liability.

Salary risk:

The present value of defined benefit plan is calculated by reference to the future salary of plan participants. As such
an increase in the salary of plan participants will increase the plan's liability.

43. FINANCIAL RISK MANAGEMENT OBJECTIVE & POLICIES

The company's principal financial liabilities , other then derivatives , comprise borrowings, trade payable , other
payable, security deposits, unpaid dividend. The company's principal financial assets includes investments, trade
and other receivables, cash & cash equivalents that derived directly from its operation. The company's financial
risk management is an integral part of how to plan and execute its business strategies.

The company is exposed to various business risk such as market risk, credit risk, and liquidity risk.

The company's senior management overseas the management of these risk. The company has system based
approach to risk management, established policies and procedures, and internal financial controls with object
to ensure early identification , evaluation and management of key financial risk. Accordingly the company's risk
management frame work has objective of ensuring that such risk are managed with acceptable & approved
parameters in disciplined and consistent manner and in compliance with applicable regulation. The board of
directors reviews policies for managing each of these risk which are summarised below.

Market risk

Market risk is risk that the fair value of future cash flows of financial instrument will fluctuate because of changes
in market prices. The company's activities expose it primarily to the financial risk of changes in foreign currency
exchange rates. The company enter into derivative financial instruments to manage its exposure to foreign
currency risk including forward foreign exchange contracts to hedge the exchange rate risk arising on import
and exports.

Foreign Currency Risk

The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange
rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilising forward
foreign exchange contracts. The Carrying amounts of the company's foreign currency denominated monetary
assets and monetary liabilities at the end of the reporting are as follows:

Foreign currency sensitivity analysis

The Company is mainly exposed to these currencies: USD and EUR

The following table details the company's sensitivity to a 5% increase and decrease in the Rupee against the
relevant foreign currencies. 5% is the sensitivity rate used when reporting foreign currency risk internally to
key management personnel and represents management's assessment of the reasonably possible change in
foreign exchange rates. This is mainly attributable to the exposure outstanding on receivables and payables in the
company at the end of the reporting period. The sensitivity analysis includes only outstanding foreign currency
denominated monetary items and adjusts their translation at the period end for a 5% charge in foreign currency
rate. A positive number below indicates an increase in the profit or equity share where the Rupee Strengthens 5%
against the relevant currency. For a 5% weakening of the Rupee against the relevant currency, there would be a
comparable impact on the profit or equity, and the balanced below would be negative.

The company in accordance with its risk management policies and procedures, enter into foreign currency
forward contracts to manage its exposure in foreign exchange rate variations. The counter party is generally a
bank. These contracts are for a period between one month and 11 month. The above sensitivity does not include
the impact of foreign currency forward contracts which largely mitigate the risk.

Derivative instruments:

The company uses foreign currency forward contracts to hedge its risks associated with foreign currency
fluctuations relating to accounts receivable and accounts payable. The uses of foreign currency forward contracts
is governed by the Company's strategy approved by the Board of Directors, which provide principles on the use
of such forward contracts consistent with the Company's Risk Management Policy. The Company does not use
forward contracts for speculative purposes.

The line item in the Balance Sheet that includes the above hedging instruments are "other financial assets and
other financial liabilities".

Equity risk

There is no material equity risk relating to the company's equity investments which are detailed in note 6
"Investments".

Interest risk

There is no material interest risk relating to the company's financial liabilities which are detailed in note 17, 18
and 19.

Credit risk management

Credit risk refers to the risk that a counter party will default on its contractual obligation resulting in financial loss
to the company. The company uses its own trading records to evaluate the credit worthiness of its customers. The
Company's exposure are continuously monitored and the aggregate value of transactions concluded, are spread
amongst approved counter parties (refer note 11 - Trade receivable).

Liquidity risk management

Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has established an
appropriate liquidity risk management framework for the management of the Company's short-term, medium-
term and long-term funding and liquidity management requirements. The Company manages liquidity risk by
maintaining adequate reserves, bank facilities and reserves borrowing facilities, by continuously monitoring
forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

Liquidity risk table

The following table detail the Company's remaining contractual maturity for its non-derivative financial liabilities
with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of
financial liabilities based on the earliest date on which the company can be required to pay.

44. CAPITAL MANAGEMENT

The Company's capital management objectives are:

The Board policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and
to sustain future development of the business. The Board of Directors monitors the return on capital employed.

The Company manages capital risk by maintaining sound/optimal capital structure through monitoring of financial
ratios, such as debt to equity ratio and net borrowings to equity ratio on a monthly basis and implements capital
structure improvement plan when necessary.

The Company uses net debt to equity ratio as a capital management index and calculates the ratio as Net debt
divided by total equity. Net debt and total equity are based on the amounts stated in the standalone financial
statements.

46. Investors' Protection Fund : A sum of 2.47 Lakhs relating to Financial Year 2016-17 is transferred to the credit
of Investors' Protection Fund and there is no due and outstanding for transfer to the credit of the Investors'
Protection Fund as on 31.03.2024 (Previous Year 0.97 Lakhs).

47. The company has decided to apply for compounding under section 441 of the Companies Act, 2013 of matter
arose out of the inspection by MCA. Since the matter is not finalized by the Competent Authority, its impact on
the account could not be ascertained. Once the same is decided by the competent authority, the same shall be
accounted for in the year in which it is determined.

48. Previous year's figures have been regrouped and / or reclassified wherever necessary to conform to this year's
classification.

49. Additional regulatory information as required by Schedule III to the Companies Act, 2013

a) Relationship with Struck off Companies

The company do not have any transactions with companies struck off under section 248 of the Companies
Act, 2013 or section 560 of Companies Act, 1956.

b) Wilful Defaulter

The company is not declared wilful defaulter by any bank or financial institution or other lenders.

c) Details of Benami Property Held:

No proceedings have been initiated during the period or are pending against the Company as at March 31,
2025 for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (as amended
in 2016) and rules made thereunder.

d) Compliance with number of layers of companies :

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

e) Revaluation of property, plant & equipments and Right of Use Assets

During the period under consideration the company has not revalued any property, plant & equipments and
Right of Use Assets.

f) Revaluation of Intangible assets

During the period under consideration the company has not revalued any intangible assets.

g) Registration of charges or satisfaction with Registrar of Companies (ROC):

All charges and satisfaction are registered with Register of companies within the statutory period.

h) Utilization of borrowed funds and share premium

(i) No funds (which are material either individually or in the aggregate) have been advanced or loaned
or invested (either from borrowed funds or share premium or any other sources or kind of funds) by
the Company to or in any other person or entity, including foreign entity ("Intermediaries"), with the
understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, 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 provide any guarantee, security or the like on
behalf of the Ultimate Beneficiaries;

(ii) No funds (which are material either individually or in the aggregate) have been received by the Company
from any person or entity, including foreign entity ("Funding Parties"), with the understanding,
whether recorded in writing or otherwise, that the Company shall, whether, 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 provide any guarantee, security or the like on behalf of the
Ultimate Beneficiaries;

i) Title Deeds of Immovable Properties

In case of leasehold land the company is lessee and the lease agreement are duly executed in favor of the
company. In case of free hold land the title deeds are in the name of the company.

j) Undisclosed Income

There were no transactions relating to previously unrecorded income that have been surrendered or
disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (43 of 1961).

k) Crypto/Virtual Currency

The company has not traded or invested in Crypto currency or virtual currency during the financial year.

l) Compliance with scheme of arrangement approved by Competent Authority

There are no Scheme of Arrangements which has been approved by the Competent Authority in terms of
section 230 to 237 of the Companies Act, 2013.

m) Disclosure for quarterly returns or statements of current assets filed by the company with banks
or financial institution

The quarterly returns or statements of current assets filed by the Company with banks or financial institutions
are in agreement with the books of accounts;

As per our report of even date

For M/s GSA & Associates LLP For and on behalf of the board of directors of Akar Auto Industries Limited

Chartered Accountants

(FRN 000257N) N. K. Gupta Sunil Todi

Chairman Managing Director

DIN:00062268 DIN:00061952

Deepa Jain

Partner Pawan Kumar Gupta Radhyeshyam Rathi

Membership No. 119681 Chief Finance Officer Company Secretary

Place: Chh. Sambhaji Nagar, (Aurangabad) Place: Chh. Sambhaji Nagar, (Aurangabad)

Date: 30th May 2025 Date: 30th May 2024

UDIN No.: 25119681BMLIDZ2137