Arihant Institute Ltd. కంపెనీ అకౌంటింగ్ విధానాలు

Mar 31, 2025

A. SIGNIFICANT ACCOUNTING POLICIES:

a) Basis of Preparation of Financial Statement

i) The Financial Statements of the company have been prepared and presented in accordance
with the Generally Accepted Accounting Principles in India (Indian GAAP) under the historical
cost convention on an accrual basis. The company has prepared these financial statements
to comply in all material respects with the Accounting Standards notified under the
Companies (Accounting Standard) Rules, 2006 (as amended) and the relevant provisions of
the Companies Act, 2013.The accounting policies adopted in the preparation of the financial
statements are consistent with those of previous year.

ii) Use of Estimates

The preparation of the financial statements in conformity with Indian GAAP requires the
management to make judgment, estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent liabilities on the date of
Financial Statements and reported amounts of revenues and expenses for the year.
Although these estimates are based on Management''s best knowledge of current events and
actions, uncertainty about these assumptions and estimates could result in the outcomes
different from the estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision to
accounting estimates is recognized prospectively in the current and future periods.

iii) Current & Non-Current Classification

All the assets and liabilities have been classified as current or non-current as per the
company''s normal operating cycle and other criteria set out in Schedule III to the Companies
Act, 2013. Based on the nature of activities and time between the activities performed and
their subsequent realization in cash or cash equivalents, the company has ascertained its
operating cycle as 12 months for the purpose of current/non-current classification of assets
and liabilities.

b) Valuation of Inventories (Stock-in-trade)

Inventories (Stock-In-Trade) are valued at lower of Cost or Net Realizable Value by following
FIFO Method.

c) Cash Flow Statement

i) Cash & Cash Equivalents (for purpose of cash flow statement)

Cash comprises cash on hand and demand deposit with banks. Cash Equivalents are short¬
term balances, highly liquid investments that are readily convertible into known amounts of
cash and which are subject to insignificant risk of changes in value.

ii) 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 or future cash receipts or payments. The cash flows from
regular revenue generating, financing and investing activities of the company are
segregated.

d) Prior Period and Exceptional items

i) All identifiable items of income and expenditure pertaining to prior period are accounted
through "Prior Period items". There are no Prior Period items to be reported in the financial
year.

ii) Exceptional items are generally non-recurring items of income and expense within profit or
loss from ordinary activities, which are of such size, nature or incidence that their disclosure
is relevant to explain the performance of the Company for the year. There is no Exceptional
Items to be reported in the financial year.

e) Property, Plant & Equipment

i) Recognition and Measurement

An item of Property, Plant and Equipment that qualifies for recognition as an Assets is
initially measured at cost of acquisition or construction less accumulated depreciation
and/or accumulated impairment loss, if any.

The cost of an item of property, plant and equipment comprises its purchase price, including
import duties and other non-refundable taxes or levies and any directly attributable cost of
bringing the asset to its working condition for its intended use; any trade discounts and
rebates are deducted in arriving at the purchase price. Borrowing costs directly attributable
to the construction of a qualifying asset are capitalized as part of the cost. Cost of assets not
ready for intended use, as on the Balance Sheet date, is shown as capital work in progress.
Advances given towards acquisition of fixed assets outstanding at each Balance Sheet date
are disclosed as Other Non-Current Assets. Carrying value of fixed assets is tested for
impairment as at the reporting date.

ii) Subsequent measurement

Subsequent costs are included in assets carrying amount or recognized as a separate asset
only when it is probable that future economic benefits associated with the item will flow to
the Company and the cost of the item can be measured reliably. The carrying amount of any
component accounted for as a separate asset is derecognized when replaced. All other
repairs and maintenance costs are charged to the Statement of Profit and Loss as incurred.

iii) De-recognition

An item of property, plant and equipment is derecognized upon disposal or when no future
benefits are expected from its use or disposal. Gains and losses on disposal of an item of
property, plant and equipment are determined by comparing the proceeds from disposal
with the carrying amount of property, plant and equipment, and are recognized in the
statement of profit and loss.

(iv) Depreciation Methods and Estimated useful lives

Properties, Plant & Equipment are stated at cost less accumulated depreciation thereon. The
Company provides depreciation on pro-rata basis using straight line method from the date
on which asset is acquired/ ready for intended use. Depreciation has been provided as per
Schedule II of the Companies Act, 2013 considering useful life of the asset.

f) Intangible Assets and amortization:

i) Recognition and Measurement

Intangible assets with finite useful lives that are acquired separately are measured on initial
recognition at cost. An intangible asset is recognized when the asset is identifiable, is within
the control of the company, it is probable that the future economic benefits that are
attributable to the asset will flow to the company and cost of the asset can be reliably
measured. Intangible assets with indefinite life are stated at cost. Intangible Assets are
carried at acquisition cost less deductions for accumulated amortization and impairment
losses, if any. Costs associated with maintaining software/intangible assets are recognized as
an expense as and when incurred.

ii) Amortization methods and periods

The Company amortizes Computer Software using straight-line method over the period of 3
years and Technical Know How wherein there is agreement, over the period of the
agreement, other than that, it is amortized over the period of 5 Years.

Gains and losses on disposals are determined by comparing proceeds with carrying amount.
These are included in the Statement of Profit and Loss.

The amortization of an intangible asset with a finite useful life reflects the manner in which
the economic benefit is expected to be generated

g) Revenue Recognition

Revenue is recognized when consideration can be reasonably measured and there exists
reasonable certainty about amount to be realized.

i) Sales of Goods are recognized when the significant risk and rewards of ownership of the
goods have been passed to the customer and net of Value added tax and return.

ii) Other Incomes are recognized on receipt of confirmation regarding acceptance of claim from
the counterpart or when it is a part of oral expressed understanding.

iii) Interest Income is recognized on time proportion basis taking into account the amount
outstanding amount and the rate applicable.

h) Foreign Currency Transactions

i) Initial Recognition and measurement

Foreign currency transaction is recorded, on initial recognition in the reporting currency by
applying to the foreign currency amount at the exchange rate between the reporting
currency and the foreign currency at the date of the transaction.

ii) Subsequent Measurement

Foreign currency receivables, payables and investments (monetary items) are subsequently
measured as stated below:

At the year- end, monetary items denominated in foreign currencies, other than those
covered by forward contracts are converted into rupee equivalents at the year- end
exchange rates

iii) Exchange Differences

All exchange differences arising on settlement and conversion of foreign currency
transaction are included in the Statement of Profit and loss.

i) Investments

i) Investments that are readily realizable and intended to be held for not more than a year are
classified as current investments. Current investments are carried at lower of cost and
quoted/fair value, computed category-wise. All other investments are classified as long¬
term investments.

ii) Long-term investments are stated at cost. Provisions for diminution in the value of long-term
investments are made only if such a decline is other than temporary in nature in the opinion
of the management.

j) Employee Benefits

a) Short-term

All employee benefits payable wholly within twelve months of rendering the service are
classified as short-term employee benefits. Benefits such as salaries, wages etc. and the
expected cost of ex-gratia are recognized in the period in which the employee renders the
related service. A liability is recognized for the amount expected to be paid when there is a
present legal or constructive obligation to pay this amount as a result of past service
provided by the employee and the obligation can be estimated reliably.

b) Long Term

The company wants to start both defined contribution and defined benefit plans, of which
some have assets in approved funds. These plans are financed by the Company in the case of
defined contribution plans.

c) Defined Contribution Plans

These are the plans in which the Company pays pre-defined amounts to separate funds and
does not have any legal or informal obligation to pay additional sums. These comprise of
contribution to Employees Provident Fund. The Company''s payments to the defined

contribution plans are reported as expenses during the period under which an employee
performs the services that the payment covers.

d) Defined Benefit Plans

Expenses for defined benefit gratuity payment plans are calculated as at the balance sheet
date in the manner that distributes expenses over the employees working life. These
commitments are valued at the present value of the expected future payments, with
consideration for calculated future salary increase, using a discounted rate corresponding to
the interest rate estimated by the Management / actuary having regard to the interest rate
on Government Bonds with a remaining term i.e., almost equivalent to the average balance
working period of employees.

e) Leave Encashment

The company is providing for Leave Encashment on the basis of unveiled leave by the
employees.

k) Borrowings and borrowing costs

Borrowing costs consist of interest and transactions costs incurred in connection with the
borrowing of funds. Borrowing costs also include exchange differences to the extent
regarded as an adjustment to the borrowing costs.

Borrowing costs that are attributable to the acquisition or construction of qualifying assets
(i.e., an asset that necessarily takes a substantial period of time to get ready for its intended
use) are capitalized as a part of the cost of such assets. All other borrowing costs are charged
to the statement of profit and loss.

Investment income earned on the temporary investment of funds for specific borrowings
pending their expenditure on qualifying assets is deducted from the borrowing costs eligible
for capitalization.

L) Related Party transactions

Disclosure of transactions with related parties, as required by Accounting Standard 18
"Related Party Disclosure" as specified in the Companies (Accounting Standard) Rules, (as
amended), has been set out in a separate statement annexed to this note. Related parties as
defined under paragraph 3 of the Accounting Standard 18 have been identified on the basis
of representation made by the management and information available with the company.

m) Lease

Lease arrangement where risk and rewards incidental to ownership of an asset substantially
vest with the lesser are recognized as Operating Leases. The Company''s significant Leasing
arrangement is in respect of operating leases for immovable property which includes
Factory, etc. The aggregate lease rentals payable/receivables are recognized as
expenditure/income in the statement of profit and loss as per the respective lease
agreements. Initial direct costs incurred specifically to earn revenues from an operating
lease are recognized as an expense in the statement of profit and loss in the period in which
they are incurred.

n) Earnings per Share

The company reports basic and diluted earnings per share (EPS) in accordance with the
Accounting Standard 20 as specified in the Companies (Accounting Standard) Rules, (as
amended). The Basic EPS has been computed by dividing the income available to equity
shareholders by the weighted average number of Equity shares outstanding during the
accounting year. There are no dilutive potential equity shares so Diluted EPS is same as Basis
EPS.

0) Provision for Tax

Tax expenses comprises of current tax and deferred tax.

1) Current Tax

Provision for taxation has been made in accordance with the direct tax laws prevailing for
the relevant assessment years.

ii) Deferred Tax

In accordance with the Accounting Standard 22- Accounting for Taxes on Income, as
specified in the Companies (Accounting Standard) Rules (as amended), the deferred tax for
timing differences between the book profit and tax profits for the year is accounted for by
using the tax rates and Laws that have been enacted or substantively enacted as of the
Balance Sheet Date.

Deferred tax assets arising from timing differences are recognized to the extent there is
reasonable certainty that sufficient future taxable income will be available against which
such deferred tax assets can be realized.

Net outstanding balance in Deferred Tax account is recognized as deferred tax liability /asset.
The deferred tax account is used solely for reversing timing difference as and when
crystallized.

Following are the major components of Deferred Tax Assets/ Deferred Tax Liabilities

a) Depreciation

b) Unabsorbed Loss

c) Preliminary Expenses

p) Impairment of Fixed Assets

D. The carrying amount of assets, other than inventories, is reviewed at each balance sheet
date to determine whether there is any indication of impairment. If any such indication
exists, the assets recoverable amount is estimated. The recoverable amount is the greater of
the asset''s net selling price and its value in the uses which is determined based on the
estimated future cash flow discounted to their present values. If there is no reason to
believe that as asset''s value in use materially exceeds its net selling price, the asset''s
recoverable amount may be taken to be its net selling price.

ii) The impairment loss is recognized whenever the carrying amount of an asset or its cash
generation unit exceeds its recoverable amount. All impairment losses are recognized in the
statement of Profit and Loss.

iii) An impairment loss is reversed if there has been a change in the estimates used to
determine the recoverable amount and is recognized in the Statement of Profit and Loss,

unless the asset is carried at revalued amount in accordance with AS 10 Accounting for Fixed
Assets.

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Mar 31, 2024

A. SIGNIFICANT ACCOUNTING POLICIES:

a) Basis of Preparation of Financial Statement

i) The Financial Statements of the company have been prepared and
presented in accordance with the Generally Accepted Accounting Principles
in India (Indian GAAP) under the historical cost convention on an accrual
basis. The company has prepared these financial statements to comply in all
material respects with the Accounting Standards notified under the
Companies (Accounting Standard) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 2013.The accounting policies
adopted in the preparation of the financial statements are consistent with
those of previous year.

ii) Use of Estimates

The preparation of the financial statements in conformity with Indian GAAP
requires the management to make judgment, estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of
contingent liabilities on the date of Financial Statements and reported
amounts of revenues and expenses for the year. Although these estimates are
based on Management’s best knowledge of current events and actions,
uncertainty about these assumptions and estimates could result in the
outcomes different from the estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Any
revision to accounting estimates is recognized prospectively in the current
and future periods.

iii) Current & Non-Current Classification

All the assets and liabilities have been classified as current or non-current as
per the company’s normal operating cycle and other criteria set out in
Schedule III to the Companies Act, 2013. Based on the nature of activities and
time between the activities performed and their subsequent realization in
cash or cash equivalents, the company has ascertained its operating cycle
as 12 months for the purpose of current/non-current classification of assets
and liabilities.

b) Valuation of Inventories (Stock-in-trade)

Inventories (Stock-In-Trade) are valued at lower of Cost or Net Realizable
Value by following FIFO Method.

c) Cash Flow Statement

i) Cash & Cash Equivalents (for purpose of cash flow statement)

Cash comprises cash on hand and demand deposit with banks. Cash
Equivalents are short-term balances, highly liquid investments that are readily
convertible into known amounts of cash and which are subject to insignificant
risk of changes in value.

ii) 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 or future cash receipts
or payments. The cash flows from regular revenue generating, financing and
investing activities of the company are segregated.

d) Prior Period and Exceptional items

i) All identifiable items of income and expenditure pertaining to prior period are
accounted through “Prior Period items”. There are no Prior Period items to be
reported in the financial year.

ii) Exceptional items are generally non-recurring items of income and expense
within profit or loss from ordinary activities, which are of such size, nature or
incidence that their disclosure is relevant to explain the performance of the
Company for the year. There is no Exceptional Items to be reported in the
financial year.

e) Property, Plant & Equipment

i) Recognition and Measurement

An item of Property, Plant and Equipment that qualifies for recognition as an
Assets is initially measured at cost of acquisition or construction less
accumulated depreciation and/or accumulated impairment loss, if any.

The cost of an item of property, plant and equipment comprises its purchase
price, including import duties and other non-refundable taxes or levies and
any directly attributable cost of bringing the asset to its working condition for
its intended use; any trade discounts and rebates are deducted in arriving at
the purchase price. Borrowing costs directly attributable to the construction of
a qualifying asset are capitalized as part of the cost. Cost of assets not ready
for intended use, as on the Balance Sheet date, is shown as capital work in
progress. Advances given towards acquisition of fixed assets outstanding at
each Balance Sheet date are disclosed as Other Non-Current Assets. Carrying
value of fixed assets is tested for impairment as at the reporting date.

ii) Subsequent measurement

Subsequent costs are included in assets carrying amount or recognized as a
separate asset only when it is probable that future economic benefits
associated with the item will flow to the Company and the cost of the item
can be measured reliably. The carrying amount of any component
accounted for as a separate asset is derecognized when replaced. All other
repairs and maintenance costs are charged to the Statement of Profit and
Loss as incurred.

iii) De-recognition

An item of property, plant and equipment is derecognized upon disposal or
when no future benefits are expected from its use or disposal. Gains and
losses on disposal of an item of property, plant and equipment are
determined by comparing the proceeds from disposal with the carrying
amount of property, plant and equipment, and are recognized in the
statement of profit and loss.

(iv) Depreciation Methods and Estimated useful lives

Properties, Plant & Equipment are stated at cost less accumulated
depreciation thereon. The Company provides depreciation on pro-rata basis
using straight line method from the date on which asset is acquired/ ready for
intended use. Depreciation has been provided as per Schedule II of the
Companies Act, 2013 considering useful life of the asset.

Useful life considered for calculation of depreciation for various assets class
other than above mentioned are as under:

f) Intangible Assets and amortization:

i) Recognition and Measurement

Intangible assets with finite useful lives that are acquired separately are
measured on initial recognition at cost. An intangible asset is recognized
when the asset is identifiable, is within the control of the company, it is
probable that the future economic benefits that are attributable to the asset
will flow to the company and cost of the asset can be reliably measured.
Intangible assets with indefinite life are stated at cost. Intangible Assets are
carried at acquisition cost less deductions for accumulated amortization and
impairment losses, if any. Costs associated with maintaining
software/intangible assets are recognized as an expense as and when
incurred.

ii) Amortization methods and periods

The Company amortizes Computer Software using straight-line method over
the period of 3 years and Technical Know How wherein there is agreement,
over the period of the agreement, other than that, it is amortized over the
period of 5 Years.

The amortization of an intangible asset with a finite useful life reflects the
manner in which the economic benefit is expected to be generated

g) Revenue Recognition

Revenue is recognized when consideration can be reasonably measured
and there exists reasonable certainty about amount to be realized.

i) Sales of Goods are recognized when the significant risk and rewards of
ownership of the goods have been passed to the customer and net of Value
added tax and return.

ii) Other Incomes are recognized on receipt of confirmation regarding
acceptance of claim from the counterpart or when it is a part of oral
expressed understanding.

iii) Interest Income is recognized on time proportion basis taking into account the
amount outstanding amount and the rate applicable.

h) Foreign Currency Transactions

i) Initial Recognition and measurement

Foreign currency transaction is recorded, on initial recognition in the reporting
currency by applying to the foreign currency amount at the exchange rate
between the reporting currency and the foreign currency at the date of the
transaction.

ii) Subsequent Measurement

Foreign currency receivables, payables and investments (monetary items) are
subsequently measured as stated below:

At the year- end, monetary items denominated in foreign currencies, other
than those covered by forward contracts are converted into rupee
equivalents at the year- end exchange rates

iii) Exchange Differences

All exchange differences arising on settlement and conversion of foreign
currency transaction are included in the Statement of Profit and loss.

i) Investments

i) Investments that are readily realizable and intended to be held for not more
than a year are classified as current investments. Current investments are
carried at lower of cost and quoted/fair value, computed category-wise. All
other investments are classified as long-term investments.

ii) Long-term investments are stated at cost. Provisions for diminution in the value
of long-term investments are made only if such a decline is other than
temporary in nature in the opinion of the management.

j) Employee Benefits

a) Short-term

All employee benefits payable wholly within twelve months of rendering the
service are classified as short-term employee benefits. Benefits such as
salaries, wages etc. and the expected cost of ex-gratia are recognized in the
period in which the employee renders the related service. A liability is
recognized for the amount expected to be paid when there is a present legal
or constructive obligation to pay this amount as a result of past service
provided by the employee and the obligation can be estimated reliably.

b) Long Term

The company wants to start both defined contribution and defined benefit
plans, of which some have assets in approved funds. These plans are
financed by the Company in the case of defined contribution plans.

c) Defined Contribution Plans

These are the plans in which the Company pays pre-defined amounts to

separate funds and does not have any legal or informal obligation to pay
additional sums. These comprise of contribution to Employees Provident Fund.
The Company’s payments to the defined contribution plans are reported as
expenses during the period under which an employee performs the services
that the payment covers.

d) Defined Benefit Plans

Expenses for defined benefit gratuity payment plans are calculated as at the
balance sheet date in the manner that distributes expenses over the
employees working life. These commitments are valued at the present value
of the expected future payments, with consideration for calculated future
salary increase, using a discounted rate corresponding to the interest rate
estimated by the Management / actuary having regard to the interest rate
on Government Bonds with a remaining term i.e., almost equivalent to the
average balance working period of employees.

e) Leave Encashment

The company is providing for Leave Encashment on the basis of unveiled
leave by the employees.

k) Borrowings and borrowing costs

Borrowing costs consist of interest and transactions costs incurred in
connection with the borrowing of funds. Borrowing costs also include
exchange differences to the extent regarded as an adjustment to the
borrowing costs.

Borrowing costs that are attributable to the acquisition or construction of
qualifying assets (i.e., an asset that necessarily takes a substantial period of
time to get ready for its intended use) are capitalized as a part of the cost of
such assets. All other borrowing costs are charged to the statement of profit
and loss.

Investment income earned on the temporary investment of funds for specific
borrowings pending their expenditure on qualifying assets is deducted from
the borrowing costs eligible for capitalization.

L) Related Party transactions

Disclosure of transactions with related parties, as required by Accounting
Standard 18 “Related Party Disclosure” as specified in the Companies
(Accounting Standard) Rules, (as amended), has been set out in a separate
statement annexed to this note. Related parties as defined under paragraph
3 of the Accounting Standard 18 have been identified on the basis of
representation made by the management and information available with the
company.

m) Lease

Lease arrangement where risk and rewards incidental to ownership of an
asset substantially vest with the lesser are recognized as Operating Leases.
The Company’s significant Leasing arrangement is in respect of operating
leases for immovable property which includes Factory, etc. The aggregate
lease rentals payable/receivables are recognized as expenditure/income in
the statement of profit and loss as per the respective lease agreements. Initial
direct costs incurred specifically to earn revenues from an operating lease
are recognized as an expense in the statement of profit and loss in the period
in which they are incurred.

n) Earnings per Share

The company reports basic and diluted earnings per share (EPS) in
accordance with the Accounting Standard 20 as specified in the Companies
(Accounting Standard) Rules, (as amended). The Basic EPS has been
computed by dividing the income available to equity shareholders by the
weighted average number of Equity shares outstanding during the
accounting year. There are no dilutive potential equity shares so Diluted EPS is
same as Basis EPS.

0) Provision for Tax

Tax expenses comprises of current tax and deferred tax.

1) Current Tax

Provision for taxation has been made in accordance with the direct tax laws
prevailing for the relevant assessment years.

ii) Deferred Tax

In accordance with the Accounting Standard 22- Accounting for Taxes on
Income, as specified in the Companies (Accounting Standard) Rules (as
amended), the deferred tax for timing differences between the book profit
and tax profits for the year is accounted for by using the tax rates and Laws

that have been enacted or substantively enacted as of the Balance Sheet
Date.

Deferred tax assets arising from timing differences are recognized to the
extent there is reasonable certainty that sufficient future taxable income will
be available against which such deferred tax assets can be realized.

Net outstanding balance in Deferred Tax account is recognized as deferred
tax liability /asset. The deferred tax account is used solely for reversing
timing difference as and when crystallized.

Following are the major components of Deferred Tax Assets/ Deferred Tax
Liabilities

a) Depreciation

b) Unabsorbed Loss

c) Preliminary Expenses

p) Impairment of Fixed Assets

D. The carrying amount of assets, other than inventories, is reviewed at each
balance sheet date to determine whether there is any indication of
impairment. If any such indication exists, the assets recoverable amount is
estimated. The recoverable amount is the greater of the asset’s net selling
price and its value in the uses which is determined based on the estimated
future cash flow discounted to their present values. If there is no reason to
believe that as asset’s value in use materially exceeds its net selling price, the
asset’s recoverable amount may be taken to be its net selling price.

ii) The impairment loss is recognized whenever the carrying amount of an asset
or its cash generation unit exceeds its recoverable amount. All impairment
losses are recognized in the statement of Profit and Loss.

iii) An impairment loss is reversed if there has been a change in the estimates
used to determine the recoverable amount and is recognized in the
Statement of Profit and Loss, unless the asset is carried at revalued amount in
accordance with AS 10 Accounting for Fixed Assets.

---

Mar 31, 2023

A. SIGNIFICANT ACCOUNTING POLICIES:

a) Basis of Preparation of Financial Statement

i) The Financial Statements of the company have been prepared and presented in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) under the historical cost convention on an accrual basis. The company has prepared these financial statements to comply in all material respects with the Accounting Standards notified under the Companies (Accounting Standard) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 2013.The accounting policies adopted in the preparation of the financial statements are consistent with those of previous year.

ii) Use of Estimates

The preparation of the financial statements in conformity with Indian GAAP requires the management to make judgment, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities on the date of Financial Statements and reported amounts of revenues and expenses for the year. Although these estimates are based on Management’s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes different from the estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision to accounting estimates is recognized prospectively in the current and future periods.

iii) Current & Non-Current Classification

All the assets and liabilities have been classified as current or non-current as per the company’s normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013. Based on the nature of activities and time between the activities performed and their subsequent realization in cash or cash equivalents, the company has ascertained its operating cycle as 12 months for the purpose of current/non-current classification of assets and liabilities.

b) Valuation of Inventories (Stock-in-trade)

Inventories (Stock-In-Trade) are valued at lower of Cost or Net Realizable Value by following FIFO Method.

c) Cash Flow Statement

i) Cash & Cash Equivalents (for purpose of cash flow statement)

Cash comprises cash on hand and demand deposit with banks. Cash Equivalents are short-term balances, highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

ii) 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 or future cash receipts or payments. The cash flows from regular revenue generating, financing and investing activities of the company are segregated.

d) Prior Period and Exceptional items

i) All identifiable items of income and expenditure pertaining to prior period are accounted through “Prior Period items”. There are no Prior Period items to be reported in the financial year.

ii) Exceptional items are generally non-recurring items of income and expense within profit or loss from ordinary activities, which are of such size, nature or incidence that their disclosure is relevant to explain the performance of the Company for the year. There is no Exceptional Items to be reported in the financial year.

e) Property, Plant & Equipment

i) Recognition and Measurement

An item of Property, Plant and Equipment that qualifies for recognition as an Assets is initially measured at cost of acquisition or construction less accumulated depreciation and/or accumulated impairment loss, if any.

The cost of an item of property, plant and equipment comprises its purchase price, including import duties and other non-refundable taxes or levies and

any directly attributable cost of bringing the asset to its working condition for its intended use; any trade discounts and rebates are deducted in arriving at the purchase price. Borrowing costs directly attributable to the construction of a qualifying asset are capitalized as part of the cost. Cost of assets not ready for intended use, as on the Balance Sheet date, is shown as capital work in progress. Advances given towards acquisition of fixed assets outstanding at each Balance Sheet date are disclosed as Other Non-Current Assets. Carrying value of fixed assets is tested for impairment as at the reporting date.

ii) Subsequent measurement

Subsequent costs are included in assets carrying amount or recognized as a separate asset only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance costs are charged to the Statement of Profit and Loss as incurred.

iii) De-recognition

An item of property, plant and equipment is derecognized upon disposal or

when no future benefits are expected from its use or disposal. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognized in the statement of profit and loss.

(iv) Depreciation Methods and Estimated useful lives

Properties, Plant & Equipment are stated at cost less accumulated depreciation thereon. The Company provides depreciation on pro-rata basis using straight line method from the date on which asset is acquired/ ready for intended use. Depreciation has been provided as per Schedule II of the Companies Act, 2013 considering useful life of the asset.

Useful life considered for calculation of depreciation for various assets class other than above mentioned are as under:

f) Intangible Assets and amortization:

i) Recognition and Measurement

Intangible assets with finite useful lives that are acquired separately are measured on initial recognition at cost. An intangible asset is recognized when the asset is identifiable, is within the control of the company, it is probable that the future economic benefits that are attributable to the asset will flow to the company and cost of the asset can be reliably measured. Intangible assets with indefinite life are stated at cost. Intangible Assets are carried at acquisition cost less deductions for accumulated amortization and impairment losses, if any. Costs associated with maintaining software/intangible assets are recognized as an expense as ^and when incurred.

ii) Amortization methods and periods

The Company amortizes Computer Software using straight-line method over the period of 3 years and Technical Know How wherein there is agreement, over the period of the agreement, other than that, it is amortized over the period of 5 Years.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the Statement of Profit and Loss.

The amortization of an intangible asset with a finite useful life reflects the manner in which the economic benefit is expected to be generated

g) Revenue Recognition

Revenue is recognized when consideration can be reasonably measured and there exists reasonable certainty about amount to be realized.

i) Sales of Goods are recognized when the significant risk and rewards of ownership of the goods have been passed to the customer and net of Value added tax and return.

ii) Other Incomes are recognized on receipt of confirmation regarding acceptance of claim from the counterpart or when it is a part of oral expressed understanding.

iii) Interest Income is recognized on time proportion basis taking into account the amount outstanding amount and the rate applicable.

h) Foreign Currency Transactions

i) Initial Recognition and measurement

Foreign currency transaction is recorded, on initial recognition in the reporting currency by applying to the foreign currency amount at the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

ii) Subsequent Measurement

Foreign currency receivables, payables and investments (monetary items) are subsequently measured as stated below:

At the year- end, monetary items denominated in foreign currencies, other than those covered by forward contracts are converted into rupee equivalents at the year- end exchange rates

iii) Exchange Differences

All exchange differences arising on settlement and conversion of foreign currency transaction are included in the Statement of Profit and loss.

i) Investments

i) Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. Current investments are carried at lower of cost and quoted/fair value, computed category-wise. All other investments are classified as long-term investments.

ii) Long-term investments are stated at cost. Provisions for diminution in the value of long-term investments are made only if such a decline is other than temporary in nature in the opinion of the management.

j) Employee Benefits

a) Short-term

All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages etc. and the expected cost of ex-gratia are recognized in the period in which the employee renders the related service. A liability is recognized for the amount expected to be paid when there is a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

b) Long Term

The company wants to start both defined contribution and defined benefit plans, of which some have assets in approved funds. These plans are financed by the Company in the case of defined contribution plans.

c) Defined Contribution Plans

These are the plans in which the Company pays pre-defined amounts to

separate funds and does not have any legal or informal obligation to pay additional sums. These comprise of contribution to Employees Provident Fund. The Company’s payments to the defined contribution plans are reported as expenses during the period under which an employee performs the services that the payment covers.

d) Defined Benefit Plans

Expenses for defined benefit gratuity payment plans are calculated as at the balance sheet date in the manner that distributes expenses over the employees working life. These commitments are valued at the present value of the expected future payments, with consideration for calculated future salary increase, using a discounted rate corresponding to the interest rate estimated by the Management / actuary having regard to the interest rate on Government Bonds with a remaining term i.e., almost equivalent to the average balance working period of employees.

e) Leave Encashment

The company is providing for Leave Encashment on the basis of unveiled leave by the employees.

k) Borrowings and borrowing costs

Borrowing costs consist of interest and transactions costs incurred in connection with the borrowing of funds. Borrowing costs also include exchange differences to the extent regarded as an adjustment to the borrowing costs.

Borrowing costs that are attributable to the acquisition or construction of qualifying assets (i.e., an asset that necessarily takes a substantial period of time to get ready for its intended use) are capitalized as a part of the cost of such assets. All other borrowing costs are charged to the statement of profit and loss.

Investment income earned on the temporary investment of funds for specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

L) Related Party transactions

Disclosure of transactions with related parties, as required by Accounting Standard 18 “Related Party Disclosure” as specified in the Companies (Accounting Standard) Rules, (as amended), has been set out in a separate statement annexed to this note. Related parties as defined under paragraph 3 of the Accounting Standard 18 have been identified on the basis of representation made by the management and information available with the company.

m) Lease

Lease arrangement where risk and rewards incidental to ownership of an asset substantially vest with the lesser are recognized as Operating Leases. The Company’s significant Leasing arrangement is in respect of operating leases for immovable property which includes Factory, etc. The aggregate lease rentals payable/receivables are recognized as expenditure/income in the statement of profit and loss as per the respective lease agreements. Initial direct costs incurred specifically to earn revenues from an operating lease are recognized as an expense in the statement of profit and loss in the period in which they are incurred.

n) Earnings per Share

The company reports basic and diluted earnings per share (EPS) in accordance with the Accounting Standard 20 as specified in the Companies (Accounting Standard) Rules, (as amended). The Basic EPS has been computed by dividing the income available to equity shareholders by the weighted average number of Equity shares outstanding during the accounting year. There are no dilutive potential equity shares so Diluted EPS is same as Basis EPS.

0) Provision for Tax

Tax expenses comprises of current tax and deferred tax.

1) Current Tax

Provision for taxation has been made in accordance with the direct tax laws prevailing for the relevant assessment years.

ii) Deferred Tax

In accordance with the Accounting Standard 22- Accounting for Taxes on Income, as specified in the Companies (Accounting Standard) Rules (as amended), the deferred tax for timing differences between the book profit and tax profits for the year is accounted for by using the tax rates and Laws that have been enacted or substantively enacted as of the Balance Sheet Date.

Deferred tax assets arising from timing differences are recognized to the extent there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

Net outstanding balance in Deferred Tax account is recognized as deferred tax liability /asset. The deferred tax account is used solely for reversing timing difference as and when crystallized.

Following are the major components of Deferred Tax Assets/ Deferred Tax Liabilities

a) Depreciation

b) Unabsorbed Loss

c) Preliminary Expenses

p) Impairment of Fixed Assets

j) The carrying amount of assets, other than inventories, is reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the assets recoverable amount is estimated. The recoverable amount is the greater of the asset’s net selling price and its value in the uses which is determined based on the estimated future cash flow discounted to their present values. If there is no reason to believe that as asset’s value in use materially exceeds its net selling price, the asset’s recoverable amount may be taken to be its net selling price.

ii) The impairment loss is recognized whenever the carrying amount of an asset or its cash generation unit exceeds its recoverable amount. All impairment losses are recognized in the statement of Profit and Loss.

iii) An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount and is recognized in the Statement of Profit and Loss, unless the asset is carried at revalued amount in accordance with AS 10 Accounting for Fixed Assets.