NOTE 3: SIGNIFICANT ACCOUNTING POLICIES:

3.1. USE OF ESTIMATES AND JUDGEMENT

The preparation of these financial statements in conformity with the recognition and measurement
principles of Ind AS requires the management of the Company to make estimates and judgements
that effect the reported balances of assets and liabilities, disclosure relating to contingent liabilities as
at the date of the financial statements and the reported amounts of income and expense for the
periods presented. Although these estimates are based on the management's best knowledge of
current events and actions, uncertainty about these assumptions and estimates could result in the
outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future
period.

3.2. REVENUE RECOGNITION:

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the
company and the revenue can be reliably measured.

Sale of goods:

Revenue from domestic sale of goods is recognized when all the significant risks and rewards of
ownership of the goods have been passed to the buyer, usually on delivery of the goods. The
Company collects goods and service tax (GST) on behalf of the government and, therefore, these
are not economic benefits flowing to the Company. Hence, they are excluded from revenue.

Income from services:

Revenue from hotel operations and from maintenance contracts are recognized pro-rata over the
period of the contract as and when services are rendered. The company collects goods and service
tax (GST) on behalf of the government and, therefore, it is not an economic benefit flowing to the
Company. Hence, it is excluded from revenue. Revenue from channel marketing business are
recognized on accrual basis as and when it is billed to the customer and matching expenses are also
accounted for accordingly.

Interest:

Interest income is recognized on a time proportion basis taking into account the amount outstanding
and the applicable interest rate.

3.3. PROPERTY, PLANT & EQUIPMENT:

Measurement and Recognition:

An item of Property, plant and equipment are stated at cost less accumulated depreciation. The cost

of an item of Property, plant and equipment comprises of its purchase price including import duties
and any directly attributable cost of bringing the asset to its working condition for its intended use.
Expenditure for addition, improvement and renewal are capitalized and all other expenditure on
existing fixed assets, including day to day repair and maintenance expenditure and cost of replacing
parts, are charged to the statement of Profit and Loss for the period during which the expenses are
incurred.

Intangible Assets:

Intangible assets purchased are measured at cost as of the date of acquisition, as applicable, less
accumulated amortization. The company capitalizes software where it is reasonably estimated that
the software has an enduring useful life. Software is depreciated over an estimated useful life of six
years. Any subsequent amount incurred in up-gradation or improvement of the software is charged
to profit and loss account as an expense.

Capital work-in-progress and Capital advances:

Capital work-in-progress comprises of the cost of assets that are not yet ready for their intended use
at the reporting date. Cost of material and other expenses incurred on such material are shown as
Capital work-in-progress for capitalization. Advances given towards acquisition of fixed assets
outstanding at each balance sheet date are disclosed as other Non-Current Assets.

Depreciation:

Depreciation other than on land and capital work-in- progress is charged on Straight-line method as
per the useful life prescribed in Schedule II of the Companies Act, 2013 on all fixed assets. The
estimated useful lives are estimated based on technical evaluation. The estimated useful lives and
residual value are reviewed at the end of each reporting period, with the effect of any change in
estimate accounted for on prospective basis.

Depreciation on the amount of addition/deletion made to fixed assets due to up-
gradation/impairment/sale is provided at the rate applied to the existing assets on pro-rata basis.

Impairment of tangible and intangible assets:

The company assesses at each reporting date whether there is an indication that an asset may be
impaired. If any such indication exists, the company estimates the asset's recoverable amount. An
asset's recoverable amount is the higher of an asset's net selling price and its value in use. The
recoverable amount is determined for an individual asset, unless the asset does not generate cash
inflows that are largely independent of those from other assets or groups of assets.

Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered
impaired and is written down to its recoverable amount. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset. In determining net
selling price, recent market transactions are taken into account, if available. If no such transactions
can be identified, an appropriate valuation model is used. Impairment losses of continuing operations,
including impairment on inventories, are recognized in the Statement of Profit and Loss, except for
previously revalued tangible fixed assets, where the revaluation was taken to revaluation reserve. In
this case, the impairment is also recognized in the revaluation reserve up to the amount of any
previous revaluation.

3.4. INVENTORY VALUATION:

Raw materials, components, stores, stock-in-trade and packing materials are valued at cost or net
realizable value whichever is less. However, material and other items held for use in the production of
inventories are not written down below the cost if the finished goods in which they will be incorporated
are expected to be sold at or above cost. Cost of raw materials, components, stores, stock in trade is
determined on a moving weighted average basis. Cost of inventory comprises all costs of purchase,
duties, taxes (Other than those subsequently recoverable from tax authorities) and all other costs
incurred in bringing the inventory to their present location and condition.

Semi-finished goods are valued at estimated cost. Finished goods are valued at cost or net realizable
value whichever is less.

The cost of Semi-finished goods and finished goods include cost of conversion and other cost incurred
in bringing the inventories to their present condition and location.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated
costs of completion and estimated costs necessary to make the sale.

3.5. VALUATION OF INVESTMENT:

The Company has elected to recognize its investments in Joint Venture at cost in accordance with
the option available in Ind AS 27 ‘Separate Financial Statements'. The details of such investments are
given in Note 5. Investments, which are readily realizable and intended to be held for not more than
one year from the date on which such investments are made, are classified under Current Assets and
valued at lower of cost and fair value determined on an individual investment basis. All other
investments are classified as Non-Current Assets and are carried at cost.

3.6. FOREIGN CURRENCY TRANSACTIONS:

i. INDIA OPERATIONS:

a. Initial Recognition:

The Functional Currency of the Company is Indian rupee.

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign
currency amount the exchange rate between the reporting currency and the foreign currency at the
date of the realization. Foreign Currency transactions are recorded at the exchange rate prevailing
on the date of the transaction.

b. Exchange Differences:

The Exchange difference between the rate prevailing on the date of transaction and on the date of
settlement is recognized as income or expenses as the case may be.

Monetary assets and liabilities related to foreign currency remaining unsettled at the end of the year
are translated at the exchange rate prevailing on the date on which transaction is recorded.
Exchange differences arising on the settlement of monetary items or on restatement of monetary
items at rates different from those at which they were initially recorded or reported in previous financial
statements, are recognized as income or as expense in the year in which they arise.

c. Forward Exchange Contract:

In respect of forward exchange contracts, if any, entered into by the Company, the difference
between the contracted rate and the rate at date of transaction is recognized as gain or loss over
the period of contract except for difference in respect if liabilities incurred for acquiring fixed assets
from a country outside India in which case such difference is adjusted in the carrying amount of the
respective fixed assets. Exchange difference on such contracts are recognized in the statement of
profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation
or renewal of forward exchange contract is recognized as income or as expenses for the year.

3.7. FEE FOR TECHNICAL SERVICES:

Fee for technical services is charged to the profit and loss account over the period of the agreement
for technical services.

3.8. EMPLOYEE BENEFITS:

a. Defined Contribution Plan:

The company has defined contribution plan for post-employment benefits in the form of provident
fund for all employees which are administrated by Regional Provident Fund Commissioner. Provident
Fund and Family Pension Scheme are classified as defined contribution plan as the company has no
further obligation beyond making the contribution. The Company's contribution to defined
contribution plans are charged to Profit and Loss Statement of the year when the contribution to the
respective funds are due. There are no other obligations other than the contribution payable to the
respective funds.

b. Defined benefits plan:

Company's liability toward Gratuity under the Payment of Gratuity Act, 1972 is defined obligation and
provided for on the basis of actuarial valuation made at the end of each financial year by an
independent actuary.

c. Compensated Absences:

Company's liability toward Earned Leave Encashment due at the time of separation are provided for
on the basis of actuarial valuation made at the end of each financial year by an independent
actuary.