Rajputana Stainless Ltd. కంపెనీ అకౌంటింగ్ విధానాలు

Note : 1 : MATERIAL ACCOUNTING POLICIES

A. Property, Plant and Equipment:

An item of property, plant and equipment that qualifies as an asset is measured on initial recognition at cost. Following
initial recognition, Property, Plant and Equipment (PPE) are carried at cost, as reduced by accumulated depreciation
and impairment losses, if any. The Company identifies and determines cost of each part of an item of property, plant and
equipment separately, if the part has a cost which is significant to the total cost of that item of property, plant and equipment
and has useful life that is materially different from that of the remaining item. Cost comprises of purchase price / cost of
construction, including non-refundable taxes or levies and any expenses attributable to bring the PPE to its working condition
for its intended use. Project pre-operative expenses and expenditure incurred during construction period are capitalized to
various eligible PPE. Borrowing costs directly attributable to acquisition or construction of qualifying PPE are capitalised.

Spare parts, stand-by equipment and servicing equipment that meet the definition of property, plant and equipment are
capitalized at cost and depreciated over their useful life. Costs in the nature of repairs and maintenance are recognized in the
Statement of Profit and Loss as and when incurred. 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.

Depreciation is recognised so as to write off the cost of PPE (other than freehold land and properties under construction)
less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and
depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted
for on a prospective basis.

Depreciation on additions/deletion during the year is provided on pro-rata basis. The management believes that these
estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.

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

B. Intangible Assets

Intangible assets with finite useful lives which are acquired separately or developed in house are carried at cost less
accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their
estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period,
with the effect of any changes in estimate being accounted for on a prospective basis.

An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal.
Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal
proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is derecognised.

C. Impairment of Property, Plant and Equipment and Intangible assets

The Company assesses, at each Balance Sheet date, whether there is any indication that an asset may be 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 & Loss. If at the Balance Sheet date, there is an indication that a previously assessed impairment loss is no
longer exists, the recoverable amount is reassessed, and the asset is reflected at the recoverable amount.

D. Financial Assets

I. Initial recognition and measurement

All Financial Assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value
through profit or loss, transaction cost that are attributable to the acquisition of the Financial Asset. However, trade
receivables that do not contain a significant financing component are measured at transaction price. Transaction costs
directly attributable to the acquisition of financial assets measured at fair value through profit or loss are recognized
immediately in the Statement of Profit and Loss.

II. Subsequent measurement:

For subsequent measurement, the Company classifies a financial asset in accordance with the below criteria:

(1) The Company''s business model for managing the financial asset and

(2) The contractual cash flow characteristics of the financial asset.

a) Financial assets measured at amortized cost

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

• Company''s business model objective for managing the financial asset is to hold financial assets in order
to collect contractual cash flows, and

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

This category applies to cash and bank balances, trade receivables, loans and other financial assets of
company. Such financial assets are subsequently measured at amortized cost using the effective interest
method, except when the effect of applying it is immaterial. The amortized cost of a financial asset is also
adjusted for loss allowance, if any.

b) Financial assets measured at FVTOCI

A financial asset is measured at FVTOCI (fair value through other comprehensive income) if both of the
following conditions are met:

• The Company''s business model objective for managing the financial asset is achieved both by collecting
contractual cash flows and selling the financial assets, and

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

All investments in equity instruments classified under financial assets are initially measured at Fair Value, the
Company may, on initial recognition, irrevocably elect to measure the same either at FVTOCI or FVTPL (Fair
value through profit or loss). The Company makes such election on an instrument-by-instrument basis. Fair
value changes on an equity instrument are recognised as other income in the Statement of Profit and Loss
unless the Company has elected to measure such instrument at FVTOCI.

c) Financial assets measured at FVTPL

A financial asset is measured at FVTPL unless it is measured at amortized cost or at FVTOCI. This is a residual
category applied to all other investments of the Company excluding investments in subsidiaries, joint ventures
and associate companies, which are recorded at cost and tested for impairment in case of any such indication
of impairment. Such financial assets are subsequently measured at fair value at each reporting date. Fair value
changes are recognized in the Statement of Profit and Loss. Dividend income on the investments in equity
instruments are recognised as ''other income'' in the Statement of Profit and Loss.

III. Foreign exchange gains and losses

The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated
at the spot rate at the end of each reporting period. For foreign currency denominated financial assets measured at
amortised cost and FVTPL, the exchange differences are recognised in profit or loss except for those which are
designated as hedging instruments in a hedging relationship.

IV. Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is
derecognized (i.e. removed from Company''s Balance Sheet) when any of the following occurs:

a. The contractual rights to cash flows from the financial asset expires;

b. Company transfers its contractual rights to receive cash flows of the financial asset and has substantially transferred
all the risks and rewards of ownership of the financial asset;

c. Company retains the contractual rights to receive cash flows but assumes a contractual obligation to pay the cash
flows without material delay to one or more recipients under a ''pass-through'' arrangement (thereby substantially
transferring all the risks and rewards of ownership of the financial asset);

d. Company neither transfers nor retains substantially all risk and rewards of ownership and does not retain control
over the financial asset.

I n cases where the Company has neither transferred nor retained substantially all of the risks and rewards of the
financial asset, but retains control of the financial asset, Company continues to recognize such financial asset to the
extent of its continuing involvement in the financial asset. In that case, Company also recognizes an associated liability.
The financial asset and the associated liability are measured on a basis that reflects the rights and obligations that
Company has retained. On derecognition of a financial asset, the difference between the asset''s carrying amount and
the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in
other comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have
otherwise been recognised in profit or loss on disposal of that financial asset.

V. Impairment of financial assets

The Company assesses, at each balance sheet date, whether a financial asset or a group of financial asset is impaired.
Ind AS 109 requires expected credit losses to be measured through a loss allowance. Company recognizes lifetime
expected losses for all contract assets and all trade receivables that do not constitute a financing transaction. For all

other financial assets, expected credit losses are measured at an amount equal to 12 month expected credit losses or
at an amount equal to lifetime expected losses, if the credit risk on the financial asset has increased significantly since
initial recognition, except when the effect of applying it is immaterial.

E. Financial liabilities and equity instruments

Debt and equity instruments issued by Company are classified as either financial liabilities or as equity in accordance with the
substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

I. Equity instruments:

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by a Company entity are recognised at the proceeds received, net of direct issue
costs. Repurchase of Company''s own equity instruments is recognised and deducted directly in equity. No gain or loss
is recognised in profit or loss on the purchase, sale, issue or cancellation of Company''s own equity instruments.

II. Financial Liabilities:

a. Initial Recognition and Measurement

Financial liabilities are recognised when Company becomes a party to the contractual provisions of the instrument.
Financial liabilities are initially measured at fair value.

b. Subsequent measurement

Financial liabilities are subsequently measured at amortised cost using the effective interest rate method, except
when the effect of applying it is immaterial. Financial liabilities carried at fair value through profit or loss are measured
at fair value with all changes in fair value recognised in the Statement of Profit and Loss.

c. Foreign exchange gains and losses

Financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of
each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of
the instruments and are recognised in profit or loss. The fair value of financial liabilities denominated in a foreign
currency is determined in that foreign currency and translated at the closing rate at the end of the reporting period.
For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value
gains or losses and is recognised in Statement of Profit and Loss.

d. Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms,
or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the
Derecognition of the original liability and the recognition of a new liability. The difference between the carrying
amount of the financial liability derecognized and the consideration paid is recognized in the Statement of Profit
and Loss.

III. Derivative financial instruments and hedge accounting

The Company uses certain derivative financial instruments to reduce business risks which arise from its exposure to
foreign exchange. The instruments are confined principally to forward foreign exchange contracts. The instruments are
employed as hedges of transactions included in the financial statements or for highly probable forecast transactions
contractual commitments.

Derivatives are initially accounted for and measured at fair value on the date the derivative contract is entered into and
are subsequently remeasured to their fair value at the end of each reporting period.

The Company adopts hedge accounting for forward foreign exchange wherever possible. At the inception of each
hedge, there is a formal, documented designation of the hedging relationship. This documentation includes, inter alia,
items such as identification of the hedged item and transaction and nature of the risk being hedged. At inception, each
hedge is expected to be highly effective in achieving an offset of changes in fair value or cash flows attributable to the
hedged risk. The effectiveness of hedge instruments to reduce the risk associated with the exposure being hedged
is assessed and measured at the inception and on an ongoing basis. The ineffective portion of designated hedges is
recognised immediately in the statement of profit and loss.

When hedge accounting is applied:

• for fair value hedges of recognised assets and liabilities, changes in fair value of the hedged assets and liabilities
attributable to the risk being hedged, are recognised in the statement of profit and loss and compensate for the
effective portion of symmetrical changes in the fair value of the derivatives.

• for cash flow hedges, the effective portion of the change in the fair value of the derivative is recognised directly
in other comprehensive income and the ineffective portion is recognised in the statement of profit and loss. If the
cash flow hedge of a firm commitment or forecasted transaction results in the recognition of a non-financial asset
or liability, then, at the time the asset or liability is recognised, the associated gains or losses on the derivative that
had previously been recognised in equity are included in the initial measurement of the asset or liability.

• For hedges that do not result in the recognition of a non-financial asset or a liability, amounts deferred in equity are
recognised in the statement of profit and loss in the same period in which the hedged item affects the statement of
profit and loss.

In cases where hedge accounting is not applied, changes in the fair value of derivatives are recognised in the statement
of profit and loss as and when they arise. Hedge accounting is discontinued when the hedging instrument expires or is
sold, terminated, or exercised, or no longer qualifies for hedge accounting. At that time, any cumulative gain or loss on
the hedging instrument recognised in equity is retained in equity until the forecasted transaction occurs. If a hedged
transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to the
statement of profit and loss.

F. Revenue Recognition

I. The company derives revenue mainly from Domestic and Export Sales of stainless products such as long and flat
stainless-steel products comprising of billets, forging ingots, rolled black bar, rolled bright bar, flat & patti and other
ancillary products etc. Revenue is recognized on satisfaction of performance obligation upon transfer of control of
promised products or services to customers in an amount that reflects the consideration the Company expects to
receive in exchange for those products or services. To recognize revenues, we apply the following five step approach:-

1. identify the contract with a customer

2. identify the performance obligations in the contract,

3. determine the transaction price,

4. allocate the transaction price to the performance obligations in the contract, and

5. recognize revenues when a performance obligation is satisfied.

Revenue from sales of products and services are recognised at a time on which the performance obligation is satisfied.
i.e. on delivery of goods / services . In determining whether an entity has right to payment, the entity shall consider
whether it would have an enforceable right to demand or retain payment for performance completed to date if the
contract were to be terminated before completion for reasons other than entity''s failure to perform as per the terms of
the contract.

Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable
consideration) allocated to that performance obligation. The transaction price of goods sold and services rendered is
net of variable consideration on account of various discounts and schemes offered by the Company as part of the
contract.

II. Revenue from sale of power is recognised upon transmission of units of generated power at the grid of the purchasing
electricity company on rates agreed with the beneficiaries, excluding service charge where separately indicated in the
agreement.

III. Export Incentives under various schemes are accounted in the year of export.

IV. I nterest income is recognised on the time proportion basis taking into account the amount outstanding and the rate
applicable.

V. Rental income are recognized on accrual basis in accordance with the terms of agreements.

VI. Insurance and other claims are accounted for as and when admitted by the appropriate authorities in view of uncertainty
involved in ascertainment of final claim.

VII. Other Income are recognized on accrual basis.

G. Inventories

I. Inventories of raw materials, work-in-progress, stores and spares, finished goods and stock-in-trade are stated at cost or
net realisable value, whichever is lower.

II. Cost comprises all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their
present location and condition. Due allowance is estimated and made for defective and obsolete items, wherever
necessary.

III. A cost formula used is ''First-in-First-out''.

IV. Stock of Scraps is valued at net realizable value. Net realizable value is the estimated selling price in the ordinary course
of business, less estimated cost of completion and estimated cost necessary to make sale.

H. Leases

The Company assesses whether a contract contains a lease, at the inception of the contract. A contract is, or contains, a lease
if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To
assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether

I. the contract involves the use of identified asset;

II. the Company has substantially all of the economic benefits from the use of the asset through the period of lease and;

III. the Company has the right to direct the use of the asset.

As a Lessor

At inception or on modification of a contract that contains a lease component, the Company allocates the consideration in
the contract to each lease component on the basis of their relative standalone prices. When the Company acts as a lessor, it
determines at lease inception whether each lease is a finance lease or an operating lease.

As a lessee

The Company recognizes a right-of-use asset ("ROU") and a lease liability at the lease commencement date. The ROU is
initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or
before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the
underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end
of the lease term, unless the lease transfers ownership of the underlying asset to the Company by the end of the lease term or
the cost of the right-of-use asset reflects that the Company will exercise a purchase option. In that case the right-of-use asset
will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property,
plant and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for
certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement
date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company''s
incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate. The Company
determines the incremental borrowing rate by obtaining interest rates from banks.

Lease payments included in the measurement of the lease liability comprises fixed payments, including in-substance fixed
payments, amounts expected to be payable under a residual value guarantee and the exercise price under a purchase
option that the Company is reasonably certain to exercise, lease payments in an optional renewal period if the Company
is reasonably certain to exercise an extension option and penalties for early termination of a lease unless the Company is
reasonably certain not to terminate early.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the ROU or is
recorded in Statement of Profit or Loss if the carrying amount of the ROU has been reduced to zero. the Company remeasures
the lease liability by discounting the revised lease payments using the revised discount rate that reflects the change to an
alternative benchmark interest rate. Lease Liabilities have been presented as separate line and the ''ROU'' has been presented
separately in the Balance Sheet. Lease payments have been classified as financing activities in the Statement of Cash Flows.

Short-term leases and leases of low-value assets

Short-term leases and leases of low value assets The Company has elected not to recognise right-of use assets and lease
liabilities for leases of low value assets and short-term leases. The Company recognises the lease payments associated with
these leases as an expense on a straight-line basis over the lease term.

I. Foreign currency transactions and translation

Transactions in foreign currencies are translated to the functional currency of the Company at exchange rates at the dates of
the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting period are translated into
the functional currency at the exchange rate at that date. Non-monetary items denominated in foreign currencies which are
carried at historical cost are reported using the exchange rate at the date of the transaction; and non-monetary items which
are carried at fair value or any other similar valuation denominated in a foreign currency are reported using the exchange
rates at the date when the fair value was measured.

Exchange differences arising on monetary items on settlement, or restatement as at reporting date, at rates different from
those at which they were initially recorded, are recognized in the statement of profit and loss in the year in which they arise.

J. Borrowing Costs:

Borrowing costs are interest and ancillary costs incurred in connection with the arrangement of borrowings.

General and specific borrowing costs attributable to acquisition and construction of any qualifying asset (one that takes
a substantial period of time to get ready for its designated use or sale) are capitalised until such time as the assets are
substantially ready for their intended use or sale, and included as part of the cost of that asset.

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

All the other borrowing costs are recognised in the Statement of Profit and Loss within Finance costs of the period in which
they are incurred.

K. Employee benefits

I. Short-term obligations

Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12
months after the end of the period in which the employees render the related service are recognised in respect of
employees'' services up to the end of the reporting period and are measured on an undiscounted basis at the amounts
expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations
in the balance sheet.

II. Other long-term employee benefit obligations

Liabilities recognised in respect of other long-term employee benefits are measured at the present value of the estimated
future cash outflows expected to be made by the Company in respect of services provided by employees up to the
reporting date.

a. Defined contribution plans

The Company recognizes contribution payable to the provident fund & Superannuation scheme as an expense,
when an employee renders the related service. If the contribution payable to the scheme for service received before
the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a
liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due
for services received before the balance sheet date, then excess is recognized as an asset to the extent that the
pre-payment will lead to, for example, a reduction in future payment or a cash refund.

b. Defined benefit plans

The Company pays gratuity to the employees who have completed five years of service with the Company at the
time of resignation/superannuation/death.

Retirement benefits in the form of gratuity is defined benefit obligations and is provided for on the basis of an
actuarial valuation, using projected unit credit method as at each balance sheet date.

Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts
included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts
included in net interest on the net defined benefit liability), are recognized immediately in the balance sheet with a

corresponding debit or credit to retained earnings through Profit & Loss Account in the period in which they occur.
Re-measurements are not reclassified to statement of profit and loss in subsequent periods.

The annual premium cost incurred on Key man Insurance Cover is debited as expense in the profit & Loss account.

L. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

I. Current Tax:

I ncome tax expense is recognized in the statement of profit and loss except to the extent that it relates to items
recognized directly in equity, in which case it is recognized in equity. Current tax is the expected tax payable on
the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any
adjustment to tax payable in respect of previous years.

II. Deferred Tax:

Deferred tax is recognized using the balance sheet method, providing for temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred
tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based
on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities
are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes
levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current
tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the
temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent
that it is no longer probable that the related tax benefit will be realized.