3.15 The operating losses suffered by the Company for reasons beyond control of the Company, including due to nonperformance of commitments and obligations by the lenders of the Company, consequently led to financial stress being faced by the Company The unilateral recall of borrowings by the lenders and followed by lock downs to contain the spread of pandemic of Covid-19, resulted in an alleged claim of an unpaid principal and overdue interest.

Provision for upto date interest, as calculated/estimated by the Management on secured loans and short term borrowings being Rs. 26433 97 Lakhs (Including Rs. 22850.78 Lakhs, previous year) and Rs. 153285.32 Lakhs (Including Rs 126851 35 Lakhs, previous year) respectively has not been made in the books of account and

disputing the liability of me Company in us borrowings, it had filed a counter claim against the lenders, which'is for

an amount larger than the amount claimed by the lenders and the matter is pending adjudication before the Hon'ble Debt Recovery Tribunal. Chandigarh.

The Company will account the effects of payment of restructured liabilities on approval of resolution plan or otherwise on failure of insolvency proceedings and during liquidation of the Company.

j. Financial instrument by category

a) Investment in equity shares of subsidiaries are measured in accordance with Ind AS 27 in its Separate financial statements as issued by “Ministry of Corporate Affairs'. Government of India

b) For amortised cost instruments, carrying value represents the best estimate of fair value except investment in other Instruments.

ii. Risk management

The Company's activities expose it to market risk, liquidity risk and credit risk. The Company's Board of Directors has overall responsibility for the establishment and oversight of the Company's risk management framework This note explains the sources of nsk which the entity is exposed to and how the entity manages the risk

(A) Credit risk

Credit risk is the risk that a counterparty fails to discharge its obligation to the Company. The Company's exposure to credit risk is influenced mainly by cash and cash equivalents, trade receivables and financial assets measured at amortised cost The Company continuously monitors defaults of customers and other counterparties and incorporates this information into its credit risk controls. Credit risk related to cash and cash equivalents and bank deposits is managed by only accepting highly rated banks and diversifying bank deposits. Other financial assets measured at amortized cost includes loans to employees, security deposits and others. Credit risk related to these other financial assets is managed by monitoring the recoverability of such amounts continuously, while at the same time internal control system in place ensures the amounts are within defined limits.

Credit risk management: The Company assesses and manages credit risk of financial assets based on following categories arrived on the basis of assumptions, inputs and factors specific to the class of financial assets.

a) Low credil risk

b) Moderate credit risk

c) High credit risk

Credit risk exposures: The Company's trade receivables, wherever they are substantially exceeding the credit period, may have a loss of credit inbuilt in the outstanding amount. The Company will recognise loss of credit outstanding, if any. on outcome of its efforts for recovery.

(B) 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. Due to the nature of the business, the Company maintains adequate liquidity for meeting its obligations by monitoring the Company's liquidity position and cash and cash equivalents on the basis of expected cash flows from the operations.

(C) Market risk

Market risk is the risk of changes in the market prices on account of foreign exchange rates, interest rates and Commodity prices, which shall affect the Company's income or the value of its holdings of its financial instruments The objective of market risk management is to manage and control market risk exposure within acceptable parameters, while optimising the returns.

a) Currency risk

The Company undertakes transactions denominated in foreign currency (mainly US Dollar and GBP), wnich are subject to the risk of exchange rate fluctuations. Financial assets and liabilities denominated in foreign currency, except the Company’s net investments in foreign operations (with a functional currency other thsn Indian Rupee), are subject to reinstatement risks

b) Interest rate risk

i) Assets: The company's fixed deposits, are carried at fixed rale Therefore, not subject to interest rate risk as defined in tnd AS 107 issued by "Ministry of Corporate Affairs, Government of India" since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

ii) Liabilities: The Company had borrowings from banking institutions, majority whereof are

assigned to an Asset Reconstruction Company (ARC). The outstanding of banks and ARC is since classified as Non-Performing Loans and the Company has not recognised interest as an expenses thereon The lability on account of interest rate will be accounted on approval and implementation of the debt settlement and repayment plan, including inter-alia. amount on account of interest rate risk.

3.17 The Company is registered as a Medium Enterprise under MSME Act with the Ministry of Micro , Small and Medium Enterprises. Goverenment of India, vide Udyam Registration number UDYAM-CH-01-0000261 dated 1B July. 2020