CORPORATE INFORMATION

Sealmatic India Limited was originally incorporated as Seal Matic India Private Limited on 2nd December, 2009 under the Companies Act, 1956 and it is existing under the purview of the Companies Act, 2013. The name of the company was changed from Seal Matic India Private Limited to Sealmatic India Private Limited on 12th March, 2021 under the Companies Act, 2013. Subsequently, the Company was converted into a public limited company and the name of Company was changed to 'Sealmatic India Limited' and a fresh certificate of incorporation consequent upon conversion to public limited company was issued by the Registrar of Companies, Mumbai, Maharashtra, on 3rd November 2022. The shares of the Company got listed on BSE Limited (BSE) on 1st March, 2023. The CIN of the Company is U26900MH2009PLC197524

The principal activity of the Company is to carry on the business of manufacturing of all kind of mechanical seals, seal supply systems, pumps, valves, motors and high precision mechanical engineering spares and assemblies for various machineries which are mainly used in Oil and Gas Industry.

1 SIGNIFICANT ACCOUNTING POLICIES

a) BASIS OF PREPARATION OF FINANCIAL STATEMENTS:

The financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis. GAAP comprises mandatory Accounting Standards as prescribed under Section 133 of the Companies Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules, 2014 and the provisions of the Act (to the extent notified). Accounting policies have been consistently applied by the Company and are consistent with those used in the previous year except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard required a change in the accounting policy hitherto in use. As per MCA Notification dated 16th February 2015, the companies whose shares are listed on SME exchange are exempted from the compulsory requirement of adoption of Ind AS. As the company is covered under exempted from the compulsory requirement of adoption of Ind AS, the company has not adopted Ind AS.

Presentation currency and functional currency is Indian Rupees. All figures appearing in the Financial Statements are rounded off to the nearest lakhs, except where otherwise stated. Where the figure in Rupees is less than Rs.500/- ( Five Hundred), the same is presented in Financial Statements as '0.00' (Zero). These Financial Statements are approved for issue by the Board of Directors on 26th May, 2025.

b) USE OF ESTIMATES:

The preparation of the Company's financial statements requires management to make judgements, estimates and asumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods Difference between the actual results and estimates are recognized in the period in which actual the results are known or materialized.

c) METHOD OF ACCOUNTING:

The Company follows mercantile system of accounting for recognising income & expenditure on accrual basis to the extent measurable and where there is a certainty or ultimate realization in respect of incomes. Accounting policies not specifically referred to otherwise, are consistent and in consonance with the generally accepted accounting policies.

d) REVENUE RECOGNITION:

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

i) Sales of goods is recognised on shipment or despatch to customers. Sales exclude amount recovered towards GST.

ii) Export Sale is accounted on the prevailing rate of exchange (Custom rate) at the time of export.

iii) Export benefits available under the Export Import policy of the Government of India are accounted for in the year of export, to the extent measurable.

iv) Interest income is recognized on a time proportion basis taking into account the amount outstanding and the interest rate applicable. However, where the ultimate collection of the same is uncertain, revenue recognition is postponed to the extent of uncertainty.

v) Grants and subsidies from the government are recognised when there is reasonable assurance of the receipt thereof on the fulfillment of the applicable conditions.

vi) All other income is accounted on accrual basis.

e) PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION:

i) Property, Plant and Equipment:

Property, Plant and Equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs, if capitalization criteria are met and directly attributable to cost of bringing the asset to its working condition for the intended use.

Where the grant or subsidy relates towards specific property plant and equipment, its value is deducted from gross value of the asset concerned in arriving at the carrying amount of the related asset.

Subsequent expenditure related to an item of Property, Plant and Equipment is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing property, plant and equipment 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 such expenses are incurred.

Property, plant and equipment are derecognized from financial statements, either on disposal or when no economic benefits are expected from its / their use. Disposal gain or losses arising from derecognized of Property, Plant and Equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.

ii) Depreciation :

The Company provided depreciation on Property, Plant and Equipment on Straight Line Method over the useful life of assets as prescribed under schedule II of Companies Act, 2013 or as estimated by the management, taking into account the nature of the asset on technical advice and estimated usage of the asset and past history of the replacement. The following useful lives are considered:

The useful lives and residual values are reviewed by the management at each financial year-end and revised, if appropriate. In case of a revision, the unamortised depreciable amount is charged over the revised remaining useful life.

f) INTANGIBLE ASSETS AND AMORTISATION :

i) Intangible Assets that are acquired by the Company are stated at acquisition cost, After initial recognition, an intangible asset is carried at its cost less accumulated amortization and accumulated impairment losses, if any. intangible assets are amortised on a straight line basis over their estimated useful lives. Gains or losses arising from the retirement or disposal of an intangible asset are determined as the difference between the net disposal proceeds and the carrying amount of the asset and recognized as income or expense in the Statement of Profit and Loss. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. The amortisation rates used are :

ii) Research and Development Costs:

All revenue expenditure pertains to research are charged to the profit and loss account in the year in which they are incurred and development expenditure of capital nature is capitalised and depreciated/amortised as per the Company's policy.

Development activities involve a plan or design for the production of new or substantially improved products and process. Development expenditures are capitalised only if development expenditures costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete the development and to use or sell the asset. The expenditures capitalised include the cost or materials and other costs directly attributable to preparing the asset for its intended use. Other development expenditures are charged to the profit and loss account as incurred. Amortization of the asset begins when development is completed, and the asset is available for use. It is amortized on a straight-line basis over the period of expected future benefit i.e., the

-V -V estimated useful life. Amortization is recognized in the Statement of Profit and Loss.

g) IMPAIRMENT OF ASSETS:

An Asset is treated as impaired when the carrying cost of an assets exceeds its recoverable value. An impairment loss is charged for when the asset is identified as impaired. This impairment loss recognized in prior accounting year will be reversed if there has been change in the estimate of recoverable amount.

h) LEASES:

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the Lessor are recognised as operating leases. Lease rentals under operating leases are recognised in the statement of Profit and Loss on a straight line basis.

i) BORROWING COSTS:

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are 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 the Company 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.

j) ACCOUNTING FOR GOVERNMENT GRANTS:

Grants and subsidies from the government are recognised when there is reasonable assurance that the grant/subsidy will be received and all attaching conditions will be complied with. When the grant or subsidy received is revenue in nature, it is recognised as income over the periods necessary to match them on a systematic basis to the cost, which it is intended to compensate or adjusted against the specific expenses.

Where the grant or subsidy relates towards specific fixed asset, its value is deducted from the gross value of the concerned asset in arriving at the carrying amount of the related asset.

k) EMPLOYEE BENEFITS:

I) Short Term Employee Benefit:

All Employees' benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits and are recognised on an undiscounted basis and charged to the statement of profit and loss. Benefit such as salaries and wages including non-monetary benefits, bonus etc that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service.

II) Post-Employment Benefit Plans:

A) Defined Contribution plans Provident Fund:

Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has no obligation, other than the contribution payable to the provident fund. The Company makes contribution to statutory provident fund in accordance with the Employees Provident Fund & Miscellaneous Provisions Act, 1952. The contribution paid or payable is recognized as an expense in the period in which services are rendered by the employee.

B) Defined Benefit plans:

Gratuity:

The Company's is having gratuity plan wherein every eligible employee is entitled to the benefit equivalent to fifteen days salary drawn for each completed year of service. The same is payable on termination of service or retirement whichever is earlier. The benefit vest after five years of continuous service and is governed as per the payment of Gratuity Act,1972.

The cost of providing benefits is determined using the projected unit credit method and the Gratuity Liability is computed as per actuarial valuation. The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as reduced by the fair value of plan assets. The Company has created a Trust with respect to establishment of Funded Group Gratuity (cash accumulation) Scheme through Life Insurance Corporation of India. Contribution is made to such fund based on the actuarial valuation.

III) Other Long term employee benefits obligations:

Compensated absence liability is actuarially determined by an independent actuary using the Projected Unit Credit method at the end of year. The employees of the Company are entitled to compensated absences. The employees can carry forward a portion of the unutilized accrued compensated absence and utilize it in future periods or receive cash compensation for the unutilized accrued compensated absence. The Company records an obligation for compensated absences in the period in which the employee renders the services. The Company measures the expected cost of compensated absence as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the balance sheet date. Accumulated compensated absences which are expected to be availed or encashed beyond 12 months from the end of the period are treated as other long term employee benefits for measurement purpose.

l) TRANSACTIONS IN FOREIGN EXCHANGE :

Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of

the transactions (Custom rate). Monetary items denominated in foreign currencies and

outstanding at the balance Sheet date are translated at the exchange rate ruling at the year

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end. Exchange differences arising on foreign currencies transactions are recognized as income

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or expense in the period in which they arise.

m) INVENTORIES :

Inventories are valued at lower of cost or net realizable value. Cost incurred in bringing the

inventories to its present location and condition are accounted for as follows:

n) TAXATION :

Income tax expense comprises of current tax and deferred tax. It is recognised in the statement of profit or loss.

Current tax is determined estimate amount of tax payable in respect of taxable income for the year.The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.

Deferred tax is recognised on timing difference, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Where there is unabsorbed depreciation or carried forward losses, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets.

Unrecognized deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will be available against which they can be used.

o) PROVISIONS AND CONTINGENT LIABILITIES :

The Company recognizes a provision when there is a present obligation (legal or constructive) as a result of a past event and It is probable that an outflow of resources embodying economics benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Contingent liabilities are disclosed when there is a possible obligations that arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.

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Contingent assets are neither recognizes nor disclosed in the financial statements.

p) EARNINGS PER SHARE

Basic Earnings per Share is calculated by dividing the net profit for the year attributable to equity shareholders by weighted average number of equity shares outstanding during the period.

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

q) CASH AND CASH EQUIVALENTS :

Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.