3. Material Accounting policies:

a) Significant accounting estimates, assumptions, and judgements:

The preparation of Company's financial statements requires management to make accounting
estimates, assumptions and judgements that affect the reported amounts of revenues, expenses,
assets and liabilities and the accompanying disclosures of contingencies at the end of the
reporting period, Uncertainty about these assumptions and estimates could result in outcomes
that require a material adjustment to the of assets or liabilities in future

periods.

Estimates and Assumptions:

The key assumptions concerning the future and other key sources of estimation of uncertainty at
the reporting date, that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year, are described below, The
assumptions and estimates made by the company are based on parameters avarlabie/prevaiiing
when the financial statements were prepared. Existing circumstances and assumptions about
future developments, however, may change due to market change or circumstances arising that
?re beyond the control of the Company, Such changes are reflected in the assumptions when
they occur.

I« Impairment of non-current assets:

Impairment exists when the carrying value of an asset or cash generating unit exceeds its
recoverable amount, which is the higher of its fair value less costs of disposal and its value
in use. The fair value less costs of disposal is calculated based on available data from
binding sales transactions, conducted at arm's length, for similar assets or observable
market prices less incremental costs for disposing of the asset, The value in use calculation
is based on a Discounted Cash Flow ("DCF") model. The value in use is sensitive to the
discount rate (generally weighted average cost of capital) used for the DCF model as well
as the expected future cash-inflows and the growth rate used for exploration purposes.

If. Defined Benefit Plans:

The present value of the gratuity obligation is determined using actuarial valuation, An
actuarial valuation involves making various assumptions that may differ from actual
developments in the future. These include the determination of the discount rate, rate of
increment in salaries and mortality rates. Due to complexities involved in the valuation and
its long-term nature, a defined benefit obligation is highly sensitive to changes in these
assumptions. All the assumptions are reviewed at each reporting da re.

iii. Fair Value measurement of financial Instruments:

When the fair values of financial assets and financial liabilities on reporting date cannot be
measured based on quoted prices in active markets, their fair value is measured using
valuation techniques i.e.„ the DCF model. The inputs to these models are taken from
observable markets.

iv. Contingencies:

Management judgement is required for estimating the possible inflow/outflow of
resources, if any, in respect of contingencies/claims/litigaticms against the company/by the
company as it is not possible to predict the outcome of pending matters with accuracy,

v. Property, Plant and Equipment:

Based on evaluations done by the technical assessment team, the management has
adopted the useful .life arid residual value of its Property, Plant and Equipment.
Management believes that the assigned useful lives and residual value are reasonable,

vi. Income Taxes:

Management judgment is required for the calculation of provision for income taxes and
deferred tax assets/l labilities. The Company reviews at each balance sheet date the
carrying amount of deferred tax assets/liabilitics, The factors used in estimates may differ
from actual outcome which could lead to significant adjustment to the amounts reported
in the financial statementS-

vii. Lifetime Expected Credit Loss on Trade Receivables and Other Receivables:

Trade and Other Receivables do not carry any interest and are stated at their transaction
value as reduced by lifetime expected credit losses ("LTECL"). Management has evaluated
LTECL for different class of its debtors as follows:

h) Current Vs Won-current classifications

The Company presents assets and liabilities in the balance sheet based on current/ non-current
classification.

An asset is treated as current when it satisfies any of the following criteria:

i. Expected to be realised or intended to be sold or consumed in normal operating cycle;

ii. Held primarily for the purpose of trading;

iii. Expected to be realised within twelve months after the reporting period, or

iv. Cash or cash equivalent unless restricted from being exchanged or used to settle a liability

for at least twelve months after the reporting period. '

All other assets are classified as non-current assets.

A liability is classified as current when it satisfies any of the following criteria:

i. Expected to settle the liability In normal operating cycle;

ii. Held primarily for the purpose of trading;

iii. Due to be settled within twelve months after the reporting period, or

iv. There is no unconditional right to defer the settlement of the liability for at least twelve
months after the reporting period

All other liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

' The operating cycle is the time between the acquisition of assets for processing and their
realisation in cash and cash equivalents. However, a period of 12 months is considered as
ultimate operating cycle.

c) Property, Plant, and Equipment:

Property, Plant and Equipment are stated at cost net of input credits, less accumulated
depreciation, and impairment losses, if any, Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for its intended use. Borrowing
costs relating to acquisition of property, plant and equipment which take substantial period of
time to get ready for its intended use are also included to the extent they relate to the period till
such assets are ready to be put to use-

The company adopted cost model as its accounting policy in recognition of the property, Plant
and Equipment and recognises the transaction value as the cost.

Subsequent expenditure is capitalised to the asset's carrying a mount only when it is probable that
future economic benefits associated with the expenditure will flow to the company and the cost
of the item can be measured reliably; All other repairs and maintenance costs are expensed when
incurred.

Capital work in progress includes cost of property, plant, and equipment under installation/under
development as at the balance sheet date.

An item of Property, Plant and Equipment Is derecognised upon disposal or when no future
economic benefits are expected from Its use. Any gain or loss arising from derecognition of the
asset (calculated as the difference between the net disposal proceeds and the carrying amount of
the asset) is recognised in the Statement of Profit and Loss, Property, Plant and Equipment which
are found to be not usable or retired from active use or when no further benefits are expected
from their use are removed from the books of account and the carrying value if any is charged to
Statement of Profit and Loss.

Assets costing five thousand rupees or less are fully depreciated in the year of purchase. Ý

Depreciation on Property, Plant and Equipment is provided based on the useful lives of the assets
as estimated by the Management, which are in line with Schedule II to the Companies Act, 2013

d) Impairment of nan-financial assets:

i. The carrying amounts of assets are reviewed at each balance sheet date if there is any
indication of impairment based on internal/external factors. An impairment loss is
recognized wherever the carrying amount of an asset exceeds its recoverable amount. The
recoverable amount Is the greater of the asset's net selling price and value in use. in
assessing value in use, the estimated future cash flows are discounted to their present value
at the weighted average cost of capital. After impairment, depreciation is provided on the
revised carrying amount of the asset over its remaining useful life.

ii. Reversal of impairment losses recognised in prior years is recorded when there is an
indication that the impairment tosses recognised for the asset no longer exists or have
decreased. The reversal is limited so that the carrying amount of the asset does not exceed
its recoverable amount, nor exceed the carrying amount that would have been determined,
net of depreciation, had no impairment loss been recognised for the asset in prior years,
e} leases:

The determination of whether an agreement is (or contains) a lease is based on the substance of
the arrangement at the inception of the lease. The arrangement is, or contains, a lease if
fulfillment of the arrangement is dependent on the use of a specific asset or assets and the
arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified
in an arrangement.

Classification on inception of lease:

a. Operating lease:

Leases where the lessor effectively retains substantially all the risks and benefits of
ownership of the leased item, are classified as operating leases.

b. Finance Lease:

A lease is classified as a financial lease where the lessor transfers substantially all the risks
and rewards incidental to the ownership of the leased item.

Accounting of Operating leases:

a. Where the Company is the lessee:

At the date of commencement of the lease, the Company recognises a right-of-use asset
("ROU") and a corresponding lease liability for all lease arrangements in which it is a lessee,
except for Cancellable leases and short- term leases having a lease term up to 36
months. For remaining leases, the Company recognises the lease payments as an operating
. expense on a straight-line basis over the period of the lease. In case the escalation in

operating lease payments is in line with the expected general inflation rate then the lease
payments are charged to statement of profit and loss instead of straight-line method.

b. where the Company is the lessor:

Lease income is recognised in the Statement of Profit and Loss on a straight-lino basis over
the lease term. Initial direct costs such as legal costs, brokerage costs, etc., are added to the
carrying amount of the teased asset and recognised as an expense over the lease term.

f) Inventories:

'* Raw Materials, Stores and Spares and Consumables are stated at lower of Cost and Wet
realizable value. However, materials and other items held for use in the production of
inventories are not written down below cost in which they will be incorporated and
expected to be sold at or above cost. Cost is determined on FIFO basis.

li. Work-in-progress and finished goods are state dat the lower of cost and net realizable value.

iir. Cost includes direct materials, labour and a proportion of manufacturing overheads based
on actual production, Cost is determined on FIFO basis.

iv. 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.

g) Revenue recognition:

Revenue from contracts with customers includes Sale of Goods and Services and is recognised
when control of goods or services are transferred to the customer at an amount that reflects the
consideration entitled in exchange for those goods or services,

Revenue is measured at the fair value of consideration received or receivable and is recognized
when the control in all respects, over the Goods or Services is transferred to and accepted by the
customer and the company has not retained any significant risks of ownership and future
obligations with respect to such Goods or Services. Specifically, the following basis is adopted for
various sources of income:

f. Sale of goods: Revenue is recognised when the significant risks and rewards of ownership of
the goods have passed to the buyer and is disclosed net off discounts, taxes collected and
returns.

it. Income from Services: Revenue is recognized as and when the Services are rendered as per
the terms of the individual Service Contract.

iii. Interest: interest Income is recognise don a Disproportion basis taking into account the
amount outstanding and the rate applicable.

tv. Other Sundry incomes: Insurance claims, conversion escalations arc accounted for on
accrual basis.

h) Borrowing Costs:

Borrowing costs directly attributable to the acquisition, construction or production of an asset
that necessarily takes a substantial period of time to gel ready for Us intended use or sale are
i capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period
in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in
connection with the borrowing of funds. Borrowing cost also includes exchange differences to
the extent regarded as an adjustment to the borrowing costs,

i) Retirement and other employee benefits;

« Employer's contribution to Provident Fund/Employee State Insurance, which is in the nature
of defined contribution scheme, is expensed off when the contributions to the respective
funds are due. There are no other obligations other than the contribution payable to the
fund.

ii. The company operates a gratuity plan which is in the nature of defined benefit obligation.
The company s liability is provided based on independent actuarial valuation on projected
unit credit method made at the end of each financial year as per the requirements of ind AS
19 on "Employee Benefits".

ii]. Gratuity liability is considered as post-employment benefit expense as per Ind AS 19.
Accordingly, re-measurement gains and losses arising from experience adjustments and
changes in actuarial assumptions are recognised in the period in which they occur, directly
in other comprehensive income. They are included in the retained earnings in the statement
of changes in equity and in the balance sheet.

iv. Accumulated leaves, which are expected to be utilised within the next twelve months, are
treated as short-term employee benefits. The Company measures the expected cost of such
absences as the additional amount that it expects to pay as a result of the unused
entitlement that has accumulated at the reporting date.

The Company treats accumulated leaves expected to be carried forward beyond twelve
months, as long-term employee benefit for measurement purposes. Such long-term
compensated absences are provided for based on the actuarial valuation using the
projected unit credit method at the year-end. Actuarial gains/losses are immediately taken
to the statement of profit and foss and are not deferred,

j) Earnings Per Share:

Basic earnings per share are calculated by dividing the profit for the period attributable to equity
shareholders by the weighted average number of equity shares outstanding during the period.

For the purpose of calculating diluted earnings per share, the profit for the period attributable tu
equity shareholders and the weighted average number of shares outstanding during the period
are adjusted for the effects of all dilutive potential equity shares.