HD Fire Protect Ltd. కంపెనీ అకౌంటింగ్ విధానాలు

1.1 Classification of Assets and Liabilities into Current/Non-Current: ''

The Company has ascertained its operating cycle as twelve months for the purpose of Current/ Non-Current
classification of its Assets and Liabilities.

For the purpose of Balance Sheet, an asset is classified as current if:

a) It is expected to be realised, or is intended to be sold or consumed, in the normal operating cycle; or

b) It is held primarily for the purpose of trading; or

c) It is expected to realise the asset within twelve months after the reporting period; or

d) The asset is a cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at
least twelve months after the reporting period.

a) It is expected to be settled in the normal operating cycle; or

b) It is held primarily for the purpose of trading; or

c) It is due to be settled within twelve months after the reporting period; or

d) The Company does not have an unconditional right to defer the settlement of the liability for at least twelve
months after the reporting period. Terms of a liability that could result in its settlement by the issue of equity
instruments at the option of the counterparty does not affect this classification.

All other liabilities are classified as non-current.

1.2 Property, Plant and Equipment (PPE);

The initial cost of PPE comprises its purchase price, including import duties and non-refundable purchase taxes and
any directly attributable costs of bringing an asset to working condition and location for its intended use, including
relevant borrowing costs and any expected costs of decommissioning. Following initial recognition, items of PPE are
carried at its cost less accumulated depreciation and accumulated impairment losses, if any. Gross carrying amount
of all PPE are measured using cost model. Expenditure incurred after the PPE have been put into operation, such as
repairs and maintenance, are charged to the Statement of Profit and Loss in the period in which the costs are
incurred. PPE are eliminated from financial statement either on disposal or when retired from active use. Capital
work-in-progress comprises of cost incurred on property, plant and equipment under construction / acquisition that
are not yet ready for their intended use at the Balance Sheet Date.

If significant parts of an item of PPE have different useful lives, then they are accounted for as separate items (major
components) of PPE. Material items such as spare parts, stand-by equipment and service equipment are classified as
PPE when they meet the definition of PPE as specified in Ind AS 16 - Property, Plant and Equipment.

1.3 Expenditure during construction period:

a) Expenditure / Income during construction period (including financing cost related to borrowed funds for
construction or acquisition of qualifying PPE) is included under Capital Work-in-Progress and the same is allocated to
the respective PPE on the completion of their construction.

Advances given towards acquisition or construction of PPE outstanding at each reporting date are disclosed as
Capital Advances under "Other non-current Assets".

b) Property, plant and equipment are eliminated from financial statement either on disposal or when retired from
active use. Profit/Losses arising in case of retirement of property, plant and equipment and gains or losses arising
from disposal of property, plant and equipment are recognized in the statement of profit and loss in the year of
occurrence.

1.4 Depreciation:

a) Depreciation on the property, plant and equipment (other than freehold land and capital work in progress) is
provided on a Written Down method (WDV) over their useful lives which is in consonance of useful life mentioned in
Schedule II to the Act.

b) The useful lives of the property, plant and equipment are in accordance with Schedule II and are as follows:

c) In case of assets purchased, sold or discarded during the year, depreciation on such assets is calculated on pro¬
rata basis from the date of such addition or as the case may be, up to the date on which such asset has been sold or
discarded.

d) Depreciation methods, useful lives and residual values are reviewed at each financial year end and adjusted
prospectively.

e) Leasehold lands are amortized over the period of lease or useful life whichever is lower. Buildings constructed on
leasehold land are depreciated over its useful life which matches with the useful life mentioned in Schedule II.

1.5 Intangible Assets and Amortisation:

a) Intangible assets are recognized only if it is probable that the future economic benefits attributable to asset will
flow to the Company and the cost of asset can be measured reliably. Intangible assets are stated at cost of
acquisition/development less accumulated amortization and accumulated impairment loss if any.

b) Cost of an intangible asset includes purchase price including non - refundable taxes and duties, borrowing cost
directly attributable to the qualifying asset and any directly attributable expenditure on making the asset ready for
its intended use.

d) Amortisation methods and useful lives are reviewed at each financial year end and adjusted prospectively.

e) In case of assets purchased during the year, amortization on such assets is calculated on pro-rata basis from the
date of such addition.

1.6 Impairment of Non-Financial Assets:

At the end of each reporting period, the Company reviews the carrying amounts of non-financial assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When
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. When a reasonable and consistent basis of allocation
can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are
allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can
be identified.

Recoverable amount is the higher of fair value less costs of disposal 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.

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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 Statement of Profit and Loss, unless the relevant asset is carried at a revalued amount, in
which case the impairment loss is treated as a revaluation decrease.

When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is
increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset
(or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in the Statement
of Profit and Loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the
impairment loss is treated as a revaluation increase.

1.7 Inventories:

The inventories are valued at lower of cost and net realizable value after providing for cost of obsolescence
wherever considered necessary. However, materials and other items held for use in the production of inventories
are not written down below cost if the finished products in which they will be incorporated are expected to be sold
at or above cost.

The cost comprises of costs of purchase, duties and taxes (other than those subsequently recoverable), conversion
cost and other costs incurred in bringing the inventories to their present location and condition. The cost of raw
materials including Stock in Trade is computed on weighted average basis.

In case of work in progress and finished goods, the costs of conversion include costs directly related to the units of
production and systematic allocation of fixed and variable production overheads. The cost of Work in Progress and
Finished Goods is computed on Weighted average basis.

1.8 Borrowing Costs:

Borrowing costs that are directly attributable to the acquisition, construction or development of a qualifying asset
are capitalized as part of the cost of the respective asset till such time the asset is ready for its intended use. A
qualifying asset is an asset which necessarily takes a substantial period of time (12 months or more) to get ready for
its intended use. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist
of interest, amortization of discounts, hedge related cost incurred in connection with foreign currency borrowings
and exchange difference arising from foreign currency borrowings to the extent they are treated as an adjustment to
the borrowing cost and other costs that an entity incurs in connection with the borrowing of funds.

1.9 Government Grants and Subsidies:

Government grants and subsidies are recognized when there is reasonable assurance that the Company will comply
with the conditions attached thereto and that the grants will be received. Grants/Subsidy related to specific PPE are
recognized in statement of Profit and Loss as other Income on systematic basis over the useful use of assets.
Grants/Subsidy related to revenue are credited to Profit/Loss and presented as other income.