Compensated leave absences:

Compensated leave absences are encashed by employees at year end and no carry forward of leave is permitted
as per the leave policy. All leave remaining to be encashed at year end are fully provided.

Foreign Currency Transactions

Our foreign operations are an integral part of our activities. In preparing our financial statements, transactions in
currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange
prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in
foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items that are measured in
terms of historical cost in a foreign currency are not retranslated.

Exchange differences on monetary items are recognized in profit or loss in the period in which they arise except
for:

. exchange differences on translation or settlement of long term foreign currency monetary items in respect
of loans borrowed, which are not hedged, before April 1, 2016 at rates different from those at which they
were initially recorded or reported in the previous financial statements, insofar as it relates to acquisition
of depreciable assets, are adjusted to the cost of the assets and depreciated over remaining useful life of
such assets. Where the borrowing is after April 1, 2016, such exchange difference is recognized in
Statement of Profit and loss. In other cases, where it has been hedged the same has been restated and
adjusted against cash flow hedge of the respective derivative instruments; and;

. exchange difference on translation of derivative instruments designated as cash flow hedge.
Foreign Operations

In our Consolidated Financial Statements, all assets, liabilities and transactions of the consolidated entities with a
functional currency other than the Indian Rupee are translated into Indian Rupees upon consolidation. While the
functional currency of Craftsman Marine has remained unchanged during the reporting and comparative period,
there was a change in the functional currency of Craftsman Automation Singapore from Japanese Yen (JPY) to
Singapore Dollar (S$). We have initiated the process of winding up the subsidiary in Singapore. The subsidiary
‘was non-operational as on December 31, 2020.

On consolidation, assets and liabilities have been translated into Indian Rupees at the closing rate at the reporting
date. Income and expenses have been translated into Indian Rupees at the average rate over the reporting period.
Exchange differences are charged or credited to other comprehensive income and recognized in the currency
translation reserve in equity. On disposal of a foreign operation, the related cumulative translation differences
recognized in equity are reclassified to our statement of profit and loss and are recognized as part of the gain or
loss on disposal.

Income Taxes

Income tax expense represents the sum of the tax currently payable and deferred tax. Current and deferred tax are
recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income
or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income
or directly in equity respectively.

Current Tax

Current tax is determined on taxable profits for the year chargeable to tax in accordance with the applicable tax
rates and the provisions of the Income Tax Act of the respective jurisdiction including other applicable tax laws
that have been enacted or substantively enacted.

Minimum Alternate Tax

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefit, in the
form of adjustment to future tax liability, is considered as an asset in the Balance Sheet. The carrying amount of
MAT is reviewed at each reporting date and the asset would be written down to the extent our right of adjustment
would lapse.

302
