Organic Recycling Systems Ltd. కంపెనీ అకౌంటింగ్ విధానాలు

Mar 31, 2025

3 SUMMARY OF SIGNIFICANT ACCOUNTING

POLICIES

a. Presentation and disclosure

The Company has prepared the Financial Statements
along with the relevant notes in accordance with the
requirements of Schedule III of the Act.

b. Use of estimates

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

c. Cash and Cash Equivalent

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

d. Statement of Cash Flow

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 operating, investing and financing activities of
the Company are segregated based on the available
information.

e. Property, Plant and Equipment

Property, Plant and Equipment are stated at
cost of acquisition, installation or construction
including other direct expenses incurred to bring
the assets to its working condition for its intended
use less accumulated depreciation, amortization,
impairment, discardation and compensation.

Gains or losses arising from derecognition of
Property, plant and equipment are measured as the

difference between the net disposal proceeds and
the carrying amount of the asset and are recognized
in the statement of profit and loss when the asset is
derecognized.

f. Intangible assets

Intangible assets are stated at cost of acquisition
less accumulated amortisation and impairment
loss, if any. Intangible assets are recognized only
if it is probable that the expected future economic
benefits that are attributable to the assets will flow
to the enterprise and the cost of the assets can be
measured reliably.

Technology Development:

Expenditure incurred during research is charged to
revenue when no intangible asset arises from such
research.

Development expenditure is capitalised to the extent
that it is expected that such asset will generate future
economic benefits; adequate technical, financial
and other resources required to complete the
development and to use or sell the asset are available,
and the expenditure attributable to the asset during
its development can be measured reliably. The
Company filed patents for ''DRYAD'' Technology and
''Integrated Process for Pre-treatment and Anaerobic
Digestion of Waste'' (referred to as MARUT Drum and
allied equipment) in June 2014 and was granted
the patents on June 16, 2022, and July 10, 2023,
respectively.

g. Depreciation & Amortisation

Depreciation on Property, Plant & Equipment is
provided on the written down value method at
the calculated rates on the basis of the useful life
specified in Part C and in the manner prescribed
under Schedule II of the Companies Act, 2013, as
under:

the written down value of assets which have retired
from active use.

Intangible assets in the nature of software''s are
amortised on a Straight Line Method over their
useful lives of 3 years.

Internally generated intangible assets recognised
during the year are amortised on a Straight Line
Method over their estimated useful life of 10 years, in
accordance with the requirements of the applicable
accounting standards.

However, in respect of two specific intangible assets,
based on technical evaluation and management''s
assessment of the future economic benefits, the
useful life has been estimated to be 20 years, and
the amortisation is accordingly provided over such
period on a Straight Line Method.

The Company has amortized the Technology
Development cost over its estimated life over 10
years.

The estimated useful lives of intangible assets and
the amortisation period are reviewed at the end of
each financial period and the amortization method
is revised to reflect the changed pattern, if any.

h. Intangible Assets under Development

Intangible assets under development are stated
at cost, net of accumulated impairment losses, if
any. The cost comprises of salary cost incurred in
the development of Activated Carbon to Mesh
Membrane development for water /gas purification
application, Micro Algae application for waste water
treatment, Cashew apple to Vinegar/Bioethanol,
Emission control device for Emission control
application, Lithium Metal recovery from Industrial
waste water, Biogenic CO2 Methanation Technology,
MSW torrefaction, Biogenic CO2 To Mixed Alcohol
(C1-C4) conversion, RDF/Biomass to renewable
Dimethyl ether (r-DME), Paddy straw and other
Agri-residue pretreatment using Bio- enzymatic
Technologies, Bio methanation catalyst, Bio grinder,
and AI-based Digester Health Monitoring/Prediction
Software.

i. Revenue Recognition

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

Revenue from Construction Contract

a. For Engineering, Procurement and Construction
(''EPC'') and construction contracts, contract
prices are either fixed or subject to price
escalation clauses.

b. Revenues are recognised on a percentage of

completion method measured on the basis of
stage of completion which is as per joint surveys
and work certified by the customers.

c. Profit is recognised in proportion to the
value of work done (measured by the stage
of completion) when the outcome of the
contract can be estimated reliably. When the
total contract cost is estimated to exceed
total revenues from the contract, the loss is
recognized immediately.

d. Amounts due in respect of price escalation
claims and/ or variation in contract work are
recognised as revenue only if the contract
allows for such claims or variations and/or there
is evidence that the customer has accepted it
and are capable of being reliably measured.

Revenue from Supply Contracts-Sale of
goods

Revenue from supply contract is recognized when
the substantial risk and rewards of ownership is
transferred to the buyer.

Service income

Service income is recognised on the basis of
completion of service method.

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.

j. Investments

Investments, which are readily realizable and
intended to be held for not more than one year from
the date on which such investments are made, are
classified as current investments. Current investments
are carried in the financial statements at lower of
cost and fair value determined on an individual
investment basis. All other investments are classified
as long term investments. Long term investments
are carried at cost. Provision for diminution in the
value of long-term investments is made only if such
a decline is other than temporary in the opinion of
the management. The cost comprises purchase price
and directly attributable acquisition charges such as
brokerage, fees and duties.

k. Inventories

Inventories comprising finished goods, are carried at
the lower of cost and net realisable value and work-
in-progress are valued at cost.

Raw materials are valued at cost using Weighted
average method. 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.

Cost of inventories comprise of all cost of purchase,
cost of conversion and other cost incurred in
bringing them to their respective present location
and condition.

Net realizable value is the estimated selling price in
the ordinary course of business, less estimated costs
of completion and estimated costs necessary to
make the sale.

l. Retirement and other employee benefits

Short Term Employee Benefits:

Short term employee benefits expected to be paid
in exchange for the services rendered by employees
are recognised undiscounted during the period
employee renders services.

Post-Employment Benefits:

Company''s contribution for the period paid/

payable to defined contribution retirement benefit
schemes are charged to statement of Profit and Loss.
Company''s liability towards defined benefit plan
viz. gratuity is determined using the Projected Unit
Credit Method as per actuarial valuation carried out
at the balance sheet date. The benefit is unfunded.
Actuarial gains and losses for both defined benefit
plans are recognized in full in the period in which
they occur in the statement of profit and loss.

m. Borrowing Cost

Borrowing costs attributable to acquisition and
construction of qualifying assets are capitalized as a
part of the cost of such assets up to the date when
such assets are ready for its intended use. Other
borrowing costs are charged to the statement of
Profit and Loss in the year in which they are incurred.

n. Earnings Per Share

Basic earning per share is calculated by dividing the
net profit or loss for the year attributable to equity
shareholders by the weighted average number of
equity shares outstanding during the year. For the
purpose of calculating diluted earnings per share, the
net profit or loss for the year attributable to equity
shareholders and the weighted average number of
shares outstanding during the year is adjusted for
the effects of all dilutive potential equity shares.

o. Income taxes

Tax expense comprises current and deferred tax.
Current income-tax is measured at the amount
expected to be paid to the tax authorities in
accordance with the Income-tax Act, 1961 enacted
in India and tax laws prevailing in the respective tax
jurisdictions where the Company operates. The tax
rates and tax laws used to compute the amount are
those that are enacted or substantively enacted, at
the reporting date.

Deferred income taxes reflect the impact of timing
differences between taxable income and accounting
income originating during the current year and
reversal of timing differences for the earlier years.
Deferred tax is measured using the tax rates and
the tax laws enacted or substantively enacted at the
reporting date. Deferred income tax relating to items
recognized directly in equity is recognized in equity
and not in the statement of profit and loss.

Deferred tax liabilities are recognized for all taxable
timing differences. Deferred tax assets are recognized
for deductible timing differences only to the extent
that there is reasonable certainty that sufficient
future taxable income will be available against which
such deferred tax assets can be realized. In situations
where the Company has unabsorbed depreciation
or carry forward tax losses, all deferred tax assets are
recognized only if there is virtual certainty supported
by convincing evidence that they can be realized
against future taxable profits.

At each reporting date, the Company re-assesses
unrecognized deferred tax assets. It recognizes
unrecognized deferred tax asset to the extent that
it has become reasonably certain or virtually certain,
as the case may be, that sufficient future taxable
income will be available against which such deferred
tax assets can be realized.

Deferred tax assets and deferred tax liabilities are
offset, if a legally enforceable right exists to set-off
current tax assets against current tax liabilities and
the deferred tax assets and deferred taxes relate
to the same taxable entity and the same taxation
authority.

p. Impairment of Assets

At each Balance Sheet date, the company assesses
as to whether there is any indication that an asset is
impaired. If any such indication exists, the company
estimates the recoverable amount of the asset.
If such recoverable amount of the asset or the
recoverable amount of the cash generating unit
to which the asset belongs is less than its carrying
amount, the carrying amount is reduced to its
recoverable amount. The reduction is treated as an
impairment loss and is recognized in the Statement
of Profit and Loss. If at the balance sheet date
there is an indication that if a previously assessed
impairment loss no longer exists, the recoverable
amount is reassessed and the asset is reflected at the
recoverable amount. However, as per the assessment
made by the company as on the balance sheet date,
there is no such indication of any impairment of any
asset during the year under report and therefore
there is no effect of impairment loss in the financial
statement for the year under report.

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Mar 31, 2024

1 Nature of Operation

Organic Recycling Systems Limited (“the Company”) is a technology development company focused on pioneering in developing solutions focused on the Municipal Solid Waste (MSW) space. The Company is involved in the Construction, Development and Maintenance of Waste-to-Energy projects, particularly in the Municipal Solid Waste sector, through various Special Purpose Vehicles (“SPVs”). Further, the company has also started monetizing its technology through entering into EPC contracts with developers of MSW projects. The Company was incorporated as a private limited company and became a Limited Company in September, 2022.

The Company operates through bidding for waste management projects and has been awarded contracts by various Municipal Corporations. Some of this contract are executed through SPV.

2 Basis of accounting and preparation of financial statements

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statements to comply with the Accounting Standards notified under Section 133 of the Companies Act, 2013 read with the Companies (Accounting Standards) Rules, 2021 and presentation requirements of Division I of Schedule III to the Companies Act, 2013. The financial statements have been prepared on going concern basis under the historical cost convention on accrual basis. The accounting policies adopted in the preparation of the financial statements are consistent with those of previous year unless otherwise specified.

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 product 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 up to twelve months for the purpose of current/non-current classification of assets and liabilities.

Current-Non current classification

All assets and liabilities are classified into current and non-current as follows:

Assets:

An asset is classified as current when it satisfies

any of the following criteria:

a. It is expected to be realised in, or is intended for sale or consumption in, the company’s normal operating cycle;

b. It is held primarily for the purpose of being traded;

c. It is expected to be realised within 12 months after the reporting date; or

d. It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.

Current assets include the current portion of non-current financial assets. All other assets are classified as non-current.

Liabilities:

A liability is classified as current when it satisfies

any of the following criteria:

a. It is expected to be settled in the company’s normal operating cycle;

b. It is held primarily for the purpose of being traded;

c. It is due to be settled within 12 months after the reporting date; or

d. The Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

Current liabilities include current portion of non-current financial liabilities. All other liabilities are classified as non-current.

3 Summary of significant accounting policiesa. Presentation and disclosure

The Company has prepared the Financial Statements along with the relevant notes in accordance with the requirements of Schedule III of the Act.

b. Use of estimates

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

c. Cash and Cash Equivalent

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

d. Statement of Cash Flow

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 operating, investing and financing activities of the Company are segregated based on the available information.

e. Property, Plant and Equipment

Property, Plant and Equipment are stated at cost of acquisition, installation or construction including other direct expenses incurred to bring the assets to its working condition for its intended use less accumulated depreciation, amortization, impairment, discardation and compensation.

Gains or losses arising from derecognition of Property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.

f. Intangible assets

Intangible assets are stated at cost of acquisition less accumulated amortisation and impairment loss, if any. Intangible assets

are recognized only if it is probable that the expected future economic benefits that are attributable to the assets will flow to the enterprise and the cost of the assets can be measured reliably.

Technology Development:

Expenditure incurred during research is charged to revenue when no intangible asset arises from such research.

Development expenditure is capitalised to the extent that it is expected that such asset will generate future economic benefits; adequate technical, financial and other resources required to complete the development and to use or sell the asset are available, and the expenditure attributable to the asset during its development can be measured reliably. The Company filed patents for ‘DRYAD’ Technology and ‘Integrated Process for Pre-treatment and Anaerobic Digestion of Waste’ (referred to as MARUT Drum and allied equipment) in June 2014 and was granted the patents on June 16, 2022, and July 10, 2023, respectively.

g. Depreciation & Amortisation

Depreciation on Property, Plant & Equipment is provided on the written down value method at the calculated rates on the basis of the useful life specified in Part C and in the manner prescribed under Schedule II of the Companies Act, 2013, as under:

Property, Plant & Equipment	Useful Life
Office Equipments	5 Years
Furniture''s & Fixtures	10 Years
Computers	3 Years
Vehicles	8 Years
Plant & Machinery	15 Years

During the year, depreciation is provided at 100% on the written down value of assets which have retired from active use.

Intangible assets in the nature of software’s are amortised on a Straight Line Method over their useful lives of 3 years.

Intangible asset internally generated in the current year is amortised on a Straight Line Method over its useful life of 10 years.

The Company has amortized the Technology Development cost over its estimated life over 10 years

The estimated useful lives of intangible assets and the amortisation period are reviewed at the end of each financial period and the amortization method is revised to reflect the changed pattern, if any.

h. Intangible Assets under Development

Intangible assets under development are stated at cost, net of accumulated impairment losses, if any. The cost comprises of salary cost and professional fees incurred in development of In-vessel composting, Activated Carbon to Mesh Membrane development for Water/Gas purification application, Bio grinder, Sanjeevak Carbonisation System & emission control device.

i. Revenue Recognition

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

Revenue from Construction Contract

a. For Engineering, Procurement and Construction (‘EPC’) and construction contracts, contract prices are either fixed or subject to price escalation clauses.

b. Revenues are recognised on a percentage of completion method measured on the basis of stage of completion which is as per joint surveys and work certified by the customers.

c. Profit is recognised in proportion to the value of work done (measured by the stage of completion) when the outcome of the contract can be estimated reliably. When the total contract cost is estimated to exceed total revenues from the contract, the loss is recognized immediately.

d. Amounts due in respect of price escalation claims and/ or variation in contract work are recognised as revenue only if the contract allows for such claims or variations and/or there is evidence that the customer has accepted it and are capable of being reliably measured.

Revenue from Supply Contracts-Sale of goods

Revenue from supply contract is recognized when the substantial risk and rewards of ownership is transferred to the buyer.

Service income

Service income is recognised on the basis of completion of service method.

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.

j. Investments

Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis. All other investments are classified as long term investments. Long term investments are carried at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties.

k. Inventories

Inventories comprising finished goods, are carried at the lower of cost and net realisable value and work-in-progress are valued at cost.

Raw materials are valued at cost using Weighted average method. 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.

Cost of inventories comprise of all cost of purchase, cost of conversion and other cost incurred in bringing them to their respective present location and condition.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

l. Retirement and other employee benefits

Short Term Employee Benefits:

Short term employee benefits expected to be paid in exchange for the services rendered by employees are recognised undiscounted during the period employee renders services.

Post-Employment Benefits:

Company’s contribution for the period paid/ payable to defined contribution retirement benefit schemes are charged to statement of Profit and Loss. Company’s liability towards defined benefit plan viz. gratuity is determined using the Projected Unit Credit Method as per actuarial valuation carried out at the balance sheet date. The benefit is unfunded. Actuarial gains and losses for both defined benefit plans are recognized in full in the period in which they occur in the statement of profit and loss.

m. Borrowing Cost

Borrowing costs attributable to acquisition and construction of qualifying assets are capitalized as a part of the cost of such assets up to the date when such assets are ready for its intended use. Other borrowing costs are charged to the statement of Profit and Loss in the year in which they are incurred.

n. Earnings Per Share

Basic earning per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year is adjusted for the effects of all dilutive potential equity shares.

o. Income taxes

Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the Company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.

Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss.

Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.

At each reporting date, the Company reassesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax asset to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and deferred taxes relate to the same taxable entity and the same taxation authority.

p. Impairment of Assets

At each Balance Sheet date, the company assesses as to whether there is any indication that an asset is impaired. If any such indication exists, the company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Statement of Profit and Loss. If at the balance sheet date there is an indication

that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount. However, as per the assessment made by the company as on the balance sheet date, there is no such indication of any impairment of any asset during the year under report and therefore there is no effect of impairment loss in the financial statement for the year under report.

q. Provisions and Contingencies

A provision is recognised when the Company has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made of the amount of obligation. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the reporting date. These are reviewed at each reporting date and adjusted to reflect the current best estimates.

Where the Company expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of profit and loss net of any reimbursement.

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or nonoccurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.

r. LeasesWhere the Company is lessee

Leases, where the lessor effectively retains substantially all the risks and benefits of

ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.

Leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Assets taken on finance lease are initially capitalised at fair value of the asset or present value of the minimum lease payments at the inception of the lease, whichever is lower. Lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to periods during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Where the Company is the lessor

Leases in which the Company does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Assets subject to operating leases are included in property, plant and equipment. Lease income on an operating lease is recognized in the statement of profit and loss on a straight-line basis over the lease term. Costs, including depreciation, are recognized as an expense in the statement of profit and loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognized immediately in the Statement of Profit and Loss.

s. Events occurring after the Balance Sheet date:

Events occurring after the balance sheet date are those significant events, both favourable and unfavourable, that occur between the balance sheet and the date on which the Standalone financial statements are approved by the Board of Directors. Adjustments to assets and liabilities are required for events occurring after the balance sheet date that provide additional information materially affecting the determination of the amounts relating to conditions existing at the balance sheet date. To that extent Assets and Liabilities are adjusted for events occurring after the balance sheet date which indicate that the fundamental accounting assumption of going concern is not appropriate.

t. Foreign Currency Transactions

Transactions in foreign currency are recorded at the exchange rate prevailing on the date of transaction. Net exchange gain or loss resulting in respect of foreign exchange transactions settled during the year is recognised in the statement of profit and loss.

Foreign currency denominated monetary items at year end are translated at exchange rates as on the reporting date and the resulting

net gain or loss is recognised in the statement of profit and loss. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction.

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Mar 31, 2023

1    Nature of Operation

Organic Recycling Systems Limited ("the Company") is a technology development company focused on pioneering in developing solutions focused on the Muncipal Solid Waste (MSW) space. The Company is involved in the Construction, Development and Maintenance of Waste-to-Energy projects, particularly in the Municipal Solid Waste sector, through various Special Purpose Vehicles ("SPVs"). Further, the company has also started monetizing its technology through entering into EPC contracts with developers of MSW projects. The Company was incorporated as a private limited company and became a Limited Company in September, 2022.

The Company operates through bidding for waste management projects and has been awarded contracts by various Municipal Corporations. Some of this contract are executed through SPV.

2    Basis of accounting and preparation of financial statements

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statements to comply with the Accounting Standards notified under Section 133 of the Companies Act, 2013 read with the Companies (Accounting Standards) Rules, 2021 and presentation requirements of Division I of Schedule III to the Companies Act, 2013. The financial statements have been prepared on going concern basis under the historical cost convention on accrual basis. The accounting policies adopted in the preparation of the financial statements are consistent with those of previous year unless otherwise specified.

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 product 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 up to twelve months for the purpose of current/non- current classification of assets and liabilities.

Current-Non current classification

All assets and liabilities are classified into current and non-current as follows:

Assets:

An asset is classified as current when it satisfies any of the following criteria:

a. It is expected to be realised in, or is intended for sale or consumption in, the company’s normal operating cycle;

b. lt is held primarily for the purpose of being traded;

c. It is expected to be realised within 12 months after the reporting date; or

d. It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.

Current assets include the current portion of non-current financial assets. All other assets are classified as non-current.

Liabilities:

A liability is classified as current when it satisfies any of the following criteria:

a.    It is expected to be settled in the company’s normal operating cycle;

b.    It is held primarily for the purpose of being traded;

c.    It is due to be settled within 12 months after the reporting date; or

d.    The Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

Cunent liabilities include current portion of non-cunent financial liabilities. All other liabilities are classified as non-current.

3    Summary of significant accounting policies

a.    Presentation and disclosure

The Company has prepared the Financial Statements along with the relevant notes in accordance with the requirements of Schedule III of the Act.

b.    Use of estimates

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and disclosure that affect the reported amounts of revenues, expenses, assets and liabilities and disclosure of contingent liabilities, at the end of the reporting period. Although, these estimates arc based on the management’s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in current and future periods.

c.    Cash and Cash Equivalent

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

d.    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 operating, investing and financing activities of the Company are segregated based on the available information.

e.    Property, Plant and Equipment

Property, Plant and Equipment are stated at cost of acquisition, installation or construction including other direct expenses incurred to bring the assets to its working condition for its intended use less accumulated depreciation,amortization, impairment, discardation and compensation.

Gains or losses arising from derecognition of Property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.

f.    Intangible assets

Intangible assets are stated at cost of acquisition less accumulated amortisation and impairment loss, if any. Intangible assets are recognized only if it is probable that the expected future economic benefits that are attributable to the assets will flow to the enterprise and the cost of the assets can be measured reliably.

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Expenditure incurred during research is charged to revenue when no intangible asset arises from such research.

Development expenditure is capitalised to the extent that it is expected that such asset will generate future economic benefits; adequate technical, financial and other resources required to complete the development and to use or sell the asset are available, and the expenditure attributable to the asset during its development can be measured reliably. The Company has filed its patent for 'DRYAD' Technology in June 2014. The company has received the patent on June 16, 2022.

g.    Depreciation & Amortisation

Depreciation on Property, Plant & Equipment is provided on the written down value method at the calculated rates on the basis of the useful life specified in Part C and in the manner prescribed under Schedule II of the Companies Act, 2013, as under:

Property. Plant & Equipment	Useful Life
Office Equipments	5 years
Furnitures & Fixtures	10 years
Computers	3 years
Vehicles	8 Years

During the year, depreciation is provided at 100% on the written down value of assets which have retired from active use.

Intangible assets in the nature of softwares are amortised on a Straight Line Method over their useful lives of 3 years.

The Company has amortized the Technology Development cost over its estimated life over 10 years

The estimated useful lives of intangible assets and the amortisation period are reviewed at the end of each financial period and the amortization method is revised to reflect the changed pattern, if any.

h.    Intangible Assets under Development

Intangible assets under development arc stated at cost, net of accumulated impairment losses, if any. The cost comprises of salary cost and professional fees incurred in development of In-vessel composting. Activated Carbon to Mesh Membrane development for Water/Gas purification application, Lithium Metal recovery from Industrial waste water, Micro Algae application for waste water treatment, C02 Methanation Technology and Cashew Apple Juice (CAJ) to Ethanol/Vinegar.

i.    Revenue Recognition

Revenue is recognized based on the nature of activity to the extent it is probable that the economic benefits will flow to the Company and revenue can be reliably measured. Revenue from Construction Contract

a.    For Engineering, Procurement and Construction ('EPC) and construction contracts, contract prices are cither fixed or subject to price escalation clauses.

b.    Revenues are recognised on a percentage of completion method measured on the basis of stage of completion which is as per joint surveys and work certified by the customers.

c.    Profit is recognised in proportion to the value of work done (measured by the stage of completion) when the outcome of the contract can be estimated reliably. When the total contract cost is estimated to exceed total revenues from the contract, the loss is recognized immediately.

d.    Amounts due in respect of price escalation claims and/ or variation in contract work are recognised as revenue only if the contract allows for such claims or variations and/or there is evidence that the customer has accepted it and are capable of being reliably measured.

Service income

Service income is recognised on the basis of completion of service method.

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.

j.    Investments

Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis. All other investments are classified as long term investments. Long term investments are carried at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management.The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties.

k.    Retirement and other employee benefits

Short Term Employee Benefits:

Short term employee benefits expected to be paid in exchange for the services rendered by employees are recognised undiscounted during the period employee renders services.

Post-Employment Benefits:

Company’s contribution for the period paid/payable to defined contribution retirement benefit schemes are charged to statement of Profit and Loss. Company's liability towards defined benefit plan viz. gratuity is determined using the Projected Unit Credit Method as per actuarial valuation carried out at the balance sheet date. The benefit is unfunded. Actuarial gains and losses for both defined benefit plans are recognized in full in the period in which they occur in the statement of profit and loss.

l.    Borrowing Cost

Borrowing costs attributable to acquisition and construction of qualifying assets are capitalized as a part of the cost of such assets up to the date when such assets are ready for its intended use. Other borrowing costs are charged to the statement of Profit and Loss in the year in which they arc incurred.

m.    Earnings Per Share

Basic earning per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year is adjusted for the effects of all dilutive potential equity shares.

n.    Income taxes

Tax expense comprises current and defeTTed tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the Company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.

Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss.

Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets arc recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.

At each reporting date, the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax asset to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and deferred taxes relate to the same taxable entity and the same taxation authority.

o.    Impairment of Assets

At each Balance Sheet date, the company assesses as to whether there is any indication that an asset is impaired. If any such indication exists, the company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Statement of Profit and Loss. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount. However, as per the assessment made by the company as on the balance sheet date, there is no such indication of any impairment of any asset during the year under report and therefore there is no effect of impairment loss in the financial statement for the year under report.

p.    Provisions and Contingencies

A provision is recognised when the Company has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made of the amount of obligation. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the reporting date. These are reviewed at each reporting date and adjusted to reflect the current best estimates.

Where the Company expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of profit and loss net of any reimbursement.

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.