2.16 Provisions and Contingencies

Provisions are recognised when the Company has a present obligation (legal or constructive)
as a result of a past event, it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable estimate can be made of the
amount of the obligation. When the Company expects some or all of a provision to be
reimbursed, for example, under an insurance contract, the reimbursement is recognised as a
separate asset, but only when the reimbursement is virtually certain.

The expense relating to a provision is presented in the statement of profit and loss net of any
reimbursement. If the effect of the time value of money is material, provisions are discounted
using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability.
When discounting is used, the increase in the provision due to the passage of time is
recognised as a finance cost.

A provision for onerous contracts is recognised when the expected benefits to be derived by
the Company from a contract are lower than the unavoidable cost of meeting its obligations
under the contract. The provision is measured at the present value of the lower of the expected
cost of terminating the contract and the expected net cost of continuing with the contract.
Before a provision is established, the Company recognises any impairment loss on the assets
associated with that contract.

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 Company or a present obligation that is not recognized 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 recognized
because it cannot be measured reliably. The Company does not recognize a contingent liability
but discloses its existence in the standalone financial statements.

Provisions and contingent liability are reviewed at each balance sheet.

2.17 Borrowing costs

Borrowing costs consist of interest and other costs that an entity incurs in connection with the
borrowing of funds including interest expense calculated using the effective interest method,
finance charges in respect of assets acquired on finance lease. Borrowing cost also includes
exchange differences to the extent regarded as an adjustment to the borrowing costs.

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 until such time as the assets are substantially ready
for the intended use or sale. All other borrowing costs are expensed in the year in which they
occur.

2.18 Related party transactions

The transactions with related parties are made on terms equivalent to those that prevail in
arm's length transactions. Outstanding balances at the period-end are unsecured and
settlement occurs in cash or credit as per the terms of the arrangement. Impairment
assessment is undertaken each financial year through examining the financial position of the
related party and the market in which the related party operates.

2.19 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 Subsequent measurement of financial assets: All recognised
financial assets are subsequently measured in their entirety at either amortized cost or fair
value, depending on the classification financial assets.

Following are the categories of financial instrument:

a) Financial assets at amortized cost.

b) Financial assets at fair value through other comprehensive income (FVTOCI)

c) Financial assets at fair value through profit or loss (FVTPL)

a) Financial assets at amortized cost

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

b) Financial assets at fair value through other comprehensive income (FVTOCI) "

Debt financial assets measured at FVOCI:

Debt instruments are subsequently measured at fair value through other comprehensive
income if it is held within a business model whose objective is achieved by both collecting
contractual cash flows and selling financial assets and the contractual terms of the financial
asset give rise on specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.

Equity Instruments designated at FVOCI:

On initial recognition, the Company makes an irrevocable election on an instrument-by¬
instrument basis to present the subsequent changes in fair value in other comprehensive
income pertaining to investments in equity instruments, other than equity investment which
are held for trading. Subsequently, they are measured at fair value with gains and losses
arising from changes in fair value recognised in other comprehensive income and
accumulated in the 'Reserve for equity instruments through other comprehensive income'.
The cumulative gain or loss is not reclassified to profit or loss on disposal of the investments.

c) Financial assets at fair value through profit or loss (FVTPL)

Investments in equity instruments are classified as at FVTPL, unless the Company irrevocably
elects on initial recognition to present subsequent changes in fair value in other
comprehensive income for investments in equity instruments which are not held for trading.
Other financial assets such as unquoted Mutual funds are measured at fair value through
profit or loss unless it is measured at amortized cost or at fair value through other
comprehensive income on initial recognition.

Derecognition

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

a) the rights to receive cash flows from the asset have expired, or

b) the Company has transferred its rights to receive cash flows from the asset, and

i) the Company has transferred substantially all the risks and rewards of the
asset, or

ii) the Company has neither transferred nor retained substantially all the risks
and rewards of the asset but has transferred control of the asset.

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

Impairment of financial assets

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

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

b) Financial assets that are debt instruments and are measured at FVTOCI.

c) Financial guarantee contracts which are not measured as at FVTPL.

"The Company follows 'simplified approach' for recognition of impairment loss allowance on
trade receivables. The application of simplified approach does not require the Company 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 Company
determines 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 Company 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:

i) 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 entity is required to use the
remaining contractual term of the financial instrument.

ii) 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. This amount is reflected under the head
'other expenses' in the Statement of Profit and Loss. In the balance sheet, ECL is presented as
an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet.
The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the
Company does not reduce impairment allowance from the gross carrying amount.

Offsetting:

Financial assets and financial liabilities are offset and the net amount is reported in the
standalone balance sheet if there is a currently enforceable legal right to offset the recognised
amounts and there is an intention to settle on a net basis, to realize the assets and settle the
liabilities simultaneously.

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, 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 Company's financial liabilities include trade and other
payables, loans and borrowings.

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 designated
upon initial recognition as at fair value through 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/ losses are not subsequently transferred
to P&L. However, the Company may transfer the cumulative gain or loss within equity. All
other changes in the fair value of such liability are recognised in the statement of profit or loss.
The Company has not designated any financial liability as at fair value through profit and
loss.

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 the fair value of such liability are recognised in the statement of profit or loss.

Loans and borrowings

"This is the category most relevant to the Company. After initial recognition, interest-bearing
loans and borrowings are subsequently measured at amortized cost using the EIR method.
Gains and losses are recognised in profit or loss when the liabilities are derecognized as well
as through the EIR amortization process. Amortized cost is calculated by taking into account
any discount or premium on acquisition and fees or costs that are an integral part of the EIR.
The EIR amortization is included as finance costs in the statement of profit and loss.

This category generally applies to borrowings."

De-recognition

"A financial liability is derecognized 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 de-recognition of the original
liability and the recognition of a new liability. The difference in the respective carrying
amounts is recognised in the statement of profit and loss.

"Financial guarantee contracts issued by the Company are those contracts that require a
payment to be made to reimburse the holder for a loss it incurs because the specified debtor
fails to make a payment when due in accordance with the terms of a debt instrument. Financial
guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction
costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability
is measured at the higher of the amount of loss allowance determined as per impairment
requirements of Ind AS 109 and the amount recognised less cumulative amortization.

Reclassification of financial assets

The Company determines classification of financial assets and liabilities on initial recognition.

After initial recognition, no reclassification is made for financial assets which are equity
instruments and financial liabilities. For financial assets which are debt instruments, a
reclassification is made only if there is a change in the business model for managing those
assets. Changes to the business model are expected to be infrequent. The Company's senior
management determines change in the business model as a result of external or internal
changes which are significant to the Company's operations. Such changes are evident to
external parties. A change in the business model occurs when the Company either begins or
ceases to perform an activity that is significant to its operations. If the Company reclassifies
financial assets, it applies the reclassification prospectively from the reclassification date
which is the first day of the immediately next reporting period following the change in
business model. The Company does not restate any previously recognised gains, losses
(including impairment gains or losses) or interest.

For Gorantla & Co.,

Chartered Accountants For and on behalf of the Board of Directors of

Firm's Registration No. 016943S ACS Technologies Limited

Sri Ranga Gorantla

Partner Ashok Kumar Buddharaju Anitha Alokam

Chairman and Managing Director

Membership No: 222450 Director

UDIN: 25222450BMIVEL3194 DIN: 03389822 DIN: 07309591

A. Prabhakara Rao Shilpi Gunjan

Place: Hyderabad Chief Financial Officer Company Secretary

Date: 28/05/ 2025 ACS: A64964