2 Statement of Material Accounting Policies:

a) Basis of Preparation of Accounts

The financial statements have been prepared on a historical cost basis, except for certain financial
instruments which are measured at fair value at the end of each reporting period, as explained in the
accounting policies below. Fair value is the price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants at the measurement date.

b) Functional and presentation currency

The financial statements are presented in Indian Rupees which is the functional currency of the Company
and the currency of the primary economic environment in which the Company operates.

c) Use of estimates, judgments and assumptions

The preparation of financial statements in conformity with the Ind AS requires the management to make
judgments, estimates and assumptions that affect the application of accounting policy and reported
amounts of assets and liabilities and the disclosure of contingent assets and liabilities, at the end of the
reporting period and reported amounts of revenues and expenses for the year presented. Actual results
may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised
and future periods are affected.

d) Recognition of Income

i) Interest income

Under Ind AS 109 interest income and expenses are recorded using the effective interest rate (EIR)
method for all interest bearing financial instruments measured at amortised cost. The EIR is the
rate that exactly discounts estimated future cash receipts through the expected life of the financial
instrument or, when appropriate, a shorter period, to the net carrying amount of the financial asset.
The EIR (and therefore, the amortised cost of the asset) is calculated by taking into account any
discount or premium on acquisition, fees and costs that are an integral part of the EIR.

ii) Dividend income

Dividend income on equity shares is recognised when the Company’s right to receive the payment
is established, which is generally when shareholders approve the dividend.

iii) Net gain/(loss) on fair value changes

Financial assets are subsequently measured at fair value through profit or loss (FVTPL) or fair
value through other comprehensive income (FVOCI), as applicable. The Company recognises
gains/losses on fair value change of financial assets measured as FVTPL.

e) Expenditures

Expenses are recognized on accrual basis.

f) Cash and cash equivalents

Cash and cash equivalents in the balance sheet comprise cash on hand and balances with banks in current
accounts.

g) Cash flow statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and
tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past /
future cash receipts or payments. The cash flows from operating, investing and financing activities of the
Company are segregated based on the available information.

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity. Financial assets and financial liabilities are recognised
when the Entity becomes a party to the contractual provisions of the instruments.

i) Financial assets

Initial Recognition - All financial assets are recognised initially at fair value plus, in the case of
financial assets not recorded at fair value through profit or loss, transaction costs that are
attributable to the acquisition of the financial asset. Purchases or sales of financial assets that
require delivery of assets within a time frame established by regulation or convention in the market
place (regular way trades) are recognised on the trade date, i.e., the date that the company commits
to purchase or sell the asset.

Subsequent Measurement - For the purpose of subsequent measurement, financial assets are
classified in three categories:

• At amortised cost

• At fair value through other comprehensive income (FVTOCI).

• At fair value through profit or loss (FVTPL).

1) Financial assets measured at amortised cost

A 'financial asset' is measured at amortised cost if both the following conditions are met:

(a) The financial asset is held within a business model with the objective to hold financial
assets in order to collect contractual cash flows

(b) The contractual terms of the financial asset give rise on specified dates to cash
flows that are solely payments of principal and interest (SPPI) on the principal amount
outstanding.

After initial measurement at fair value plus directly attributable costs, these financial
assets are subsequently measured at amortised cost using the effective interest rate
(EIR) method. Amortised cost is calculated by taking into account any discount or
premium on acquisition and fees or costs that are an integral part of the EIR. The EIR
amortisation is included in finance income in the profit or loss. The losses arising from
impairment are recognised in the Statement of Profit and Loss.

Business model: The business model reflects how the company manages the assets
in order to generate cash flows. That is, whether the company’s objective is solely to
collect the contractual cash flows from the assets or is to collect both the contractual
cash flows and cash flows arising from the sale of assets. If neither of these is
applicable (e.g. financial assets are held for trading purposes), then the financial assets
are classified as part of ‘other’ business model and measured at FVPL.

SPPI Test: Where the business model is to hold assets to collect contractual cash
flows or to collect contractual cash flows and sell, the Company assesses whether the
financial instruments’ cash flows represent solely payments of principal and interest
(the ‘SPPI test’). In making this assessment, the Company considers whether the
contractual cash flows are consistent with a basic lending arrangement i.e., interest
includes only consideration for the time value of money, credit risk, other basic
lending risks and a profit margin that is consistent with a basic lending arrangement.
Where the contractual terms introduce exposure to risk or volatility that are
inconsistent with a basic lending arrangement, the related financial asset is classified
and measured at fair value through profit or loss. The amortised cost, as mentioned
above, is computed using the effective interest rate method.

2) Financial Instruments at fair value through profit and loss

The Company classifies financial assets which are held for trading under FVTPL category.

They are valued at fair value as on the balance sheet date.

All investments into mutual funds and non-convertible debentures are measured at fair

value and are classified under this category.

Initial recognition - Financial liabilities are classified and measured at amortized cost.
All financial liabilities are recognized initially at fair value and, in the case of loans and
borrowings and payables, net of directly attributable transaction costs. The company’s financial
liabilities include trade and other payables, loans and borrowings including bank overdrafts.

Subsequent Measurement - Financial liabilities are subsequently carried at amortized cost using
the effective interest method.

i) Impairment of financial assets

The company assesses at each reporting date whether a financial asset (or a group of financial assets) held
at amortised cost for impairment based on evidence or information that is available without undue cost
or effort.

j) Derecognition of financial assets and financial liabilities

i) Financial assets

The Company derecognizes a financial asset when the contractual cash flows from the asset
expire or it transfers its rights to receive contractual cash flows from the financial asset in a
transaction in which substantially all the risks and rewards of ownership are transferred.
Any interest in transferred financial assets that is created or retained by the Company is recognized
as a separate asset or liability.

ii) Financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged, cancelled
or expires. Where an existing financial liability is replaced by another from the same lender on
substantially different terms, or the terms of an existing liability are substantially modified, such an
exchange or modification is treated as de recognition of the original liability and the recognition of
a new liability. The difference between the carrying value of the original financial liability and the
consideration paid is recognised in profit or loss.

Offsetting

The company has not offset financial assets and financial liabilities.

k) Determination of Fair Value

Fair value is the price at the measurement date, at which an asset can be sold or paid to transfer a liability,
in an orderly transaction between market participants at the measurement date.

The fair values of financial instruments measured at amortised cost are measured and disclosed in the
said financial statements.

The Company uses valuation techniques that are appropriate in the circumstances and for which
sufficient data is available to measure fair value, maximising the use of relevant observable inputs and
minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorised within the fair value hierarchy described as follows:

i) Level 1 financial instruments: Those where the inputs used in the valuation are unadjusted quoted
prices from active markets for identical assets or liabilities that the Company has access to at the
measurement date. The Company considers markets as active only if there are sufficient trading
activities with regards to the volume and liquidity of the identical assets or liabilities and when
there are binding and exercisable price quotes available on the balance sheet date.

ii) Level 2 financial instruments: Those where the inputs that are used for valuation and are
significant, are derived from directly or indirectly observable market data available over the entire
period of the instrument’s life. Such inputs include quoted prices for similar assets or liabilities in
active markets, quoted prices for identical instruments in inactive markets and observable inputs
other than quoted prices such as interest rates and yield curves, implied volatilities, and credit
spreads. In addition, adjustments may be required for the condition or location of the asset or the
extent to which it relates to items that are comparable to the valued instrument. However, if such
adjustments are based on unobservable inputs which are significant to the entire measurement, the
Company will classify the instruments as Level 3.

iii) Level 3 financial instruments: Those that include one or more unobservable input where there
is little market activity for the asset/liability at the measurement date that is significant to the
measurement as a whole.

l) Property, Plant and equipment (PPE)

An item is recognised as an asset, if and only if, it is probable that the future economic benefits associated
with the item will flow to the Company and its cost can be measured reliably. PPE are initially recognised
at cost. The initial cost of PPE comprises its purchase price (including non-refundable duties and taxes
but excluding any trade discounts and rebates), and any directly attributable cost of bringing the asset to
its working condition and location for its intended use. Subsequent to initial recognition, PPE are stated
at cost less accumulated depreciation and any impairment losses. When significant parts of property,
plant and equipment are required to be replaced in regular intervals, the Company recognises such
parts as separate component of assets. When an item of PPE is replaced, then its carrying amount is
de-recognised from the balance sheet and cost of the new item of PPE is recognised.

The expenditures that are incurred after the item of PPE has been put to use, such as repairs and
maintenance, are normally charged to the statement of profit and loss in the period in which such costs
are incurred. However, in situations where the said expenditure can be measured reliably, and is probable
that future economic benefits associated with it will flow to the Company, it is included in the asset’s
carrying value or as a separate asset, as appropriate.

Changes in the expected useful life are accounted for by changing the amortisation period or
methodology, as appropriate, and treated as changes in accounting estimates.

The residual values, useful lives and methods of depreciation of property, plant and equipment are
reviewed at each financial year end and adjusted prospectively, if appropriate.

Property and equipment is derecognised on disposal or when no future economic benefits are expected
from its use. Any gain or loss arising on derecognition of the asset (calculated as the difference between
the net disposal proceeds and the carrying amount of the asset) is recognised in other operating income
in the Statement of profit and loss in the year in which the asset is derecognised.

The date of disposal of an item of property, plant and equipment is the date the recipient obtains control
of that item in accordance with the requirements for determining when a performance obligation is
satisfied in Ind AS 115.

m) Investment Property

Properties that are held for long-term rental yields and / or for capital appreciation are classified
as investment properties. Investment properties are stated at cost of acquisition or construction less
accumulated depreciation and impairment, if any.

An item of investment property is derecognised upon disposal or when no future economic benefits are
expected to arise from the continued use of asset. Any gain or loss arising on the disposal or retirement
of an item of investment property is determined as the difference between the sales proceeds and the
carrying amount of the property and is recognized in the Statement of Profit and Loss.

Income received from investment property is recognised in the Statement of Profit and Loss on a straight
line basis over the term of the lease.

n) Impairment of non-financial assets

At each balance sheet date, the Company assesses whether there is any indication that any property,
plant and equipment and intangible assets with finite lives may be impaired. If any such impairment
exists the recoverable amount of an asset is estimated to determine the extent of impairment, if any.
Where it is not possible to estimate the recoverable amount of an individual asset, the Company
estimates the recoverable amount of the cash-generating unit to which the asset belongs. Intangible
assets not yet available for use, are tested for impairment annually at each balance sheet date, or earlier,
if there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. 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 for
which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset
(or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the
asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized
immediately in the Statement of Profit and Loss.

o) Taxes

Income tax expense comprises of current and deferred income tax. Current / Deferred tax is recognized
in the Statement of Profit and Loss except to the extent it relates to an item which is recognized directly

in equity or in other comprehensive income in which case the related income tax is also recognised
accordingly. Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable
right to set off current tax assets against current tax liabilities; and the deferred tax assets and the deferred
tax liabilities relate to income taxes levied by the same taxation authority.

i) Current taxes

Current income tax expense includes income tax payable by the company on its taxable profits for
the period. Advance tax and provision for income tax are provided after offsetting advance tax paid
and provision for tax arising in the same tax jurisdiction and where the relevant tax paying units
intends to settle the asset and liabilities on net basis.

ii) Deferred taxes

Deferred tax assets and liabilities are recognized for the future tax consequences of temporary
differences between the carrying values of assets and liabilities and their respective tax bases, and
unutilized business loss and depreciation carry-forwards and tax credits. Deferred tax assets are
recognized to the extent that it is probable that future taxable income will be available against which
the deductible temporary differences, unused tax losses, depreciation carry-forwards and unused tax
credits could be utilized. Deferred tax assets and liabilities are measured based on the tax rates that
are expected to apply in the period when the asset is realized or the liability is settled, based on tax
rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current
tax assets against current tax liabilities and when they relate to income taxes levied by the same
taxation. The carrying amount of deferred tax assets are reviewed at each reporting date and reduced
to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or
part of the deferred tax asset to be utilised.

Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the
extent that it becomes probable that future taxable profit will allow the deferred tax asset to be
recovered.

iii) Minimum Alternate Tax

Minimum Alternate Tax (MAT) paid in a year is charged to the statement of Profit and Loss
as current tax. The Company recognizes MAT credit available as an Asset only to the extent that
there is convincing evidence that the company will pay normal income tax during the specified
period , that is the period for which MAT credit is allowed to be carried forward. In the year in
which the Company recognize the MAT credit as an asset in accordance with the Guidance Note on
accounting for credit available in respect of Minimum Alternative Tax under the Income Tax Act,
1961 the said asset is created by way of Credit to the Statement of Profit and Loss shown as “MAT
Credit Entitlement”. In the year in which the company uses “MAT Credit Entitlement” against the
normal tax liability, it reverses the same in Statement of Profit and Loss and reduces the amount
shown as the said asset to the extent of utilisation.

The company reviews the MAT Credit Entitlement asset as each reporting date and writes down the
asset to the extent the company does not have convincing evidence that it will pay normal tax during
the specified period