Forge Auto International Ltd. కంపెనీ అకౌంటింగ్ విధానాలు

2 Significant accounting policies

2.1 Basis of accounting and preparation of financial statements

The financial statements have been prepared and presented under the historical cost convention on accrual basis of
accounting in accordance with generally accepted accounting principles in India (Indian GAAP). The company has
prepared these financial statements in compliance with all material aspects of the Accounting Standards (AS) notified
under section 133 of the Companies Act, 2013 read together with Rule 7 of the Companies (Accounts) Rules 2014 and
Companies (Accounting Standards) Amendment Rules 2016. The accounting policies adopted in the preparation of
financial statements are consistent with those of previous year.

2.2 Use of estimates

The preparation of financial statements in conformity with Indian GAAP requires management to make Judgments,
estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and disclosure of
contingent liabilities at the date of reporting period. Although these estimates are based upon management''s best
knowledge of current events and actions, uncertainty about the actions and estimates could result in the outcome
requiring a material adjustment to the carrying amounts of assets or liabilities in the future periods.

2.3 Current and Non-current classification

All 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 the Schedule III to the Companies Act, 2013. Based on the nature of business and the time
between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has
ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and
liabilities.

2.4 Property, Plant and Equipment

2.4.1 Property, Plant and Equipment

Property, Plant and Equipment are stated at cost, less accumulated depreciation and impairment losses, if any. Cost
comprises the purchase price, borrowing costs, if capitalization criteria are met and any cost attributable to bringing the
assets to its working condition for its intended use which includes taxes, freight, and installation And allocated
incidental expenditure during acquisition and exclusive of CENVAT credit or other tax credit available to the Company.
When parts of an item of Property, Plant and Equipment have different useful lives, they are accounted for as separate
items (major components) of fixed asset. Subsequent expenditure relating to fixed assets is capitalized only if such
expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of
performance.

2.4.2 Intangible fixed assets

An intangible asset is recognized when it is probable that the future economic benefits attributable to the asset will Flow
to the enterprise and where its cost can be reliably measured. Intangible assets are stated at cost of acquisition less
accumulated amortization and impairment losses, if any. Cost comprises the purchase price and any cost attributable to
bringing the assets to its working condition for its intended use which includes taxes, freight, and installation and
allocated incidental expenditure during acquisition and exclusive of CENVAT credit or other tax credit available to the
Company.

Subsequent expenditure relating to intangible fixed assets is capitalized only if such expenditure results in an increase in
the future benefits from such asset beyond its previously assessed standard of performance.

2.4.3 Depreciation on property, plant and equipment

Based on management''s evaluation, useful life prescribed in Schedule II of the Companies Act, 2013 represent actual
useful life of fixed assets. The Company uses written down value method and has used following useful lives to provide
depreciation of different class of its fixed assets.

The Company has adopted Schedule II to the Companies Act, 2013 which requires identification and determination of
separate useful life for each major component of the property, plant and equipment, if they have useful life that is
materially different from that of the remaining asset.

Depreciation / amortization on additions to fixed assets are provided on pro-rata basis from the date the assets are
ready for intended use. Depreciation on sale/discard from fixed assets is provided for upto the date of sale, deduction or
discard of fixed assets as the case may be.

2.4.4 Impairment of tangible and intangible assets

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 assets'' 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.

2.5 Revenue Recognition

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

Income from Services: Revenue from professional and VFX services is recognized as per the terms of the service
contract executed with the customer.

Interest: Interest income is recognized on a time proportion basis taking into account the amount outstanding and the
applicable interest rate. Interest income is included under the head other income in the statement of profit and loss.

2.6 Foreign Currency Transaction
Initial Recognition

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

Conversion

Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of
historical cost denominated in a foreign currency are reported using the weighted average exchange rate of the month
of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed when the values were determined.

Exchange Differences

Exchange differences arising on the settlement of monetary items or on reporting Company''s monetary items at rates
different from those at which they were initially recorded during the year, or reported in previous financial statements,
are recognized as income or as expenses in the year in which they arise.

2.7 Borrowing costs

Borrowing costs include interest, amortization of ancillary costs incurred in connection with the borrowing of fund to
the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over
the tenure of the loan.

2.8 Earnings per share

Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax effect of
extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted
earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax effect of extraordinary
items, if any) as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential
equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and
the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential
equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease
the net profit per share from continuing ordinary operations.

Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been
issued at a later date. The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been
actually issued at fair value (i.e. average market value of the outstanding shares). Dilutive potential equity shares are
determined independently for each period presented. The number of equity shares and potentially dilutive equity
shares are adjusted for share splits / reverse share splits and bonus shares, as appropriate.

1. SIGNIFICANT ACCOUNTING POLICIES:

Basis of preparation of financial statements

The Statement of Assets and Liabilities of the Company as on March 31, 2025 and the Statement of
Profit and Loss and Statements of Cash Flows for the period ended on March 31, 2025 and the
annexure thereto (collectively, the "Financial Statements") have been prepared by the management.

The financial statements of the company have been prepared and presented in accordance with the
Generally Accepted Accounting Principles (GAAP). GAAP comprises the Accounting Standards notified
u/s S.133 read with S.469 of the Companies Act, 2013. The accounting policies have been framed,
keeping in view the fundamental accounting assumptions of Going Concern, Consistency and Accrual,
as also basic considerations of Prudence, Substance over form, and Materiality. These have been
applied consistently, except where a newly issued accounting standard is initially adopted or a
revision in the existing accounting standards require a revision in the accounting policy so far in use.
The need for such a revision is evaluated on an ongoing basis.

The Financial Statements have been prepared on a going concern basis, in as much as the
management neither intends to liquidate the company nor to cease operations. Accordingly, assets,
liabilities, income and expenses are recorded on a Going Concern basis. Based on the nature of
products and services, and the time between the acquisition of assets and realization in cash or cash
equivalents, the company has ascertained its operating cycle as 12 months for the purposes of
current and non-current classification of assets and liabilities.

Change in Accounting Policy

The preparation of financial statements require estimates and assumptions to be made that affect the
reported balances of assets as on the date of the financial statements and the reported amount of
revenues and expenses during the reporting period. Accounting estimates could change from period
to period. Actual results could differ from these estimates. Appropriate changes in estimates are
made as and when the Management becomes aware of the changes in the circumstances surrounding
the estimates. Changes in estimates are reflected in the financial statements in the period in which
the changes are made and if material, their effects are disclosed in the notes to the financial
statements.

The following significant accounting policies are adopted in the preparation and presentation of
these financial statements:

1. REVENUE RECOGNITION

Revenue is recognized on transfer of property in goods or on transfer of significant risks and
rewards of ownership to the buyer, for a consideration, without the seller retaining any effective
control over the goods

Sales are accounted on dispatch of goods (which generally coincides with the transfer of
ownership) and are exclusive of GST.

Other items of income including Interest, Discount etc. are accounted on accrual basis (depending
on certainty of realization) and disclosed under the head "Other Income".

2. PROPERTY, PLANT & EQUIPMENTS.

Property, Plants and Equipment''s are stated at their cost of acquisition or revalued amount ( from
the period when revaluation was done) less accumulated depreciation. The cost of acquisition
includes freight, installation cost, duties, taxes and other incidental expenses, identifiable with the
asset, incurred during the installation / construction stage in order to bring the assets to their
working condition for intended use, including borrowing costs capitalized, if any, but are net of
Input Tax Credits (CENVAT, GST ITC and VAT) availed for the relevant element in the Cost.

3. DEPRECIATION

Depreciation on assets is being provided on the Straight Line Method on the basis of useful lives
specified in Part C of Schedule II to the Companies Act, 2013. Normal Depreciation is normally
debited to the Statement of Profit and Loss whereas the Depreciation on Revaluation Portion is
adjusted against the respective Revaluation Reserve.

In case of those assets which were fully depreciated following the provisions of the Companies Act,
2013 and where such assets are in usable condition, the residual values of the said respective
assets are considered at the maximum rate of 5%.

4. INVENTORY

Inventories are valued at cost of net realizable price which ever is lower. The cost formula used
for valution of Inventoreis are below:-

• Raw Materials & Store & Spares have been valued ''at Cost'' on FIFO basis.

• Semi-Finished goods have been valued at Raw Material cost increased by a proportion of
overheads in consonance with the stage of completion as certified by the management.

• Finished products are valued at lower of cost or net realizable value.

• Stock of Scrap is value at its net realizable value.

5. EMPLOYEE BENEFITS

• Employee Benefits comprise short term as well as long term defined benefit as well as defined
contribution plans.

• Contributions to Provident Fund and Employee State Insurance are defined contributions. The
Company''s Contributions are charged to the Statement of Profit and Loss of the year when the
contributions to the respective funds are due. There are no further obligations beyond the
periodic contributions.

• Retirement Benefits in form are Gratuity are defined benefit obligations and are provided for
on the basis of actuarial valuation using projected unit credit method as at the balance sheet
date. Actuarial gain / losses are immediately taken to the Statement of Profit and Loss and are
not deferred.

• Leave Encashment, though a defined benefit obligation, falls under short-term compensated
absences in terms of the policy of the Company and is provided for based on the leave
standing to the credit of the employees as at the end of the year.

6. FOREIGN EXCHANGE TRANSACTIONS

Transactions in foreign currency, to the extent not covered by forwards contracts, are recorded in
Indian Rupees at the exchange rate prevailing on the date of the transactions. Exchange gains or
losses on settlement, if any, are treated as income or expenditure respectively in the Statement of
Profit and Loss. Liabilities in foreign currency as well as receivables in foreign currency as on the
date of the Balance Sheet have been restated into Indian rupees at the rates of exchange
prevailing as on the date of Balance Sheet.

7. IMPAIRMENT

The Management periodically assesses, using external and internal sources, whether there is an
indication that an asset may be impaired. An impairment loss is recognized wherever the carrying
value of an asset exceeds its recoverable amount. The recoverable amount is higher of the asset''s
net selling price and value in use, which means the present value of future cash flows expected to
arise from the continuing use of the asset and its eventual disposal. An impairment loss for an
asset is reversed if, and only if, the reversal can be related objectively to an event occurring after
the impairment loss was recognized. The carrying amount of an asset is increased to its revised
recoverable amount, provided that this amount does not exceed the carrying amount that would
have been determined (net of any accumulated amortization or depreciation) had no impairment
loss been recognized for the asset in prior years.

8. LEASE ACCOUNTING

Leases are classified as operating leases where the lesser effectively retains substantially all the
risks and benefits of the ownership of the leased assets. Operating lease payments are recognized
as an expense in the Statement of Profit and Loss on accrual basis.

9. BORROWING COSTS

According to AS-16, the borrowing costs directly attributable to the acquisition of qualifying assets
are to be capitalized for the period until the asset is ready for its intended use. A qualifying asset
being, an asset that necessarily takes a substantial period of time to get ready for its intended use.
Other borrowing costs are to be recognized as an expense in the period in which they are
incurred.

10. TAXES ON INCOME

Provision for taxation for the year under report includes provision for current tax as well as
deferred tax.

Provision for Current tax is made, based on tax estimated to be payable as computed under the
various provisions of the Income Tax Act, 1961.

Deferred tax is recognized, subject to prudence, on timing differences between taxable income
and accounting income that originate during the year and are capable of being reversed in one or
more subsequent periods. Deferred tax assets are recognized only to the extent that there is a
reasonable certainty that future taxable income will be available against which such deferred tax
assets can be realized. Deferred Tax Liabilities / Assets are quantified using the tax rates and tax
laws enacted or substantively enacted as on the balance sheet date.