A contingent liability is:
(a) a possible obligation that arises from past events and whose existence will be confirmed only by the
occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the
entity; or

(b) a present obligation that arises from past events but is not recognised because:

@ it is not probable that an outflow of resources embodying economic benefits will be required to
settle the obligation; or
(ii) the amount of the obligation cannot be measured with sufficient reliability.

Contingent liabilities are disclosed in the financial statements by way of notes to accounts, unless the possibility
of an outflow of resources embodying economic benefit is remote.

Provision for Warranty

Provisions for expected cost of warranty obligations are recognized based on our management's best estimate of
the expenditure required to settle the obligation, which takes into account the empirical data on the nature
frequency and average cost of warranty claims and regarding possible future incidences.

Provision for Rejection

Provision for rejection on sales is recognized once the products are sold. Materials are rejected due to various
reasons and are either re processed and replaced to the customers depending on the type of rejections. These
rejections get fulfilled within a period of 3 months and the provisions represent the value of management’s best
estimate of possible rejections within the next one quarter.

Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable.
Sale of Goods

Revenue from the sale of goods is recognized when a promise in a customer contract (performance obligation)
has been satisfied by transferring control over the promised goods to the customer.

The amount of revenue to be recognized (transaction price) is based on the consideration expected to be received

in exchange for goods, excluding amounts collected on behalf of third parties such as GST or other taxes directly
linked to sales.

Rendering of Services

Revenue from services is recognized when the services are rendered in accordance with the specific terms of
contract and when collectability of the resulting receivable is reasonably assured.

Other Operating revenues

Other operating revenues comprise income from ancillary activities incidental to our operations and are
recognized when the right to receive the income is established as per the terms of the contract.

Dividend and Interest Income

Dividend income from investments is recognized when our right to receive payment has been established,
provided that it is probable that the economic benefits will flow to us and the amount of income can be measured
reliably.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest
rate applicable, provided that it is probable that the economic benefits will flow to us and the amount of income

can be measured reliably.

Borrowing Cost

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