Royal Arc Electrodes Ltd. కంపెనీ అకౌంటింగ్ విధానాలు

Mar 31, 2025

1) Basis of Accounting

The financial statements have been prepared in conformity with the generally accepted accounting principles to comply in all
material respects with the notified Accounting Standards (AS) under Companies Act, 2013 and the relevant provisions of the
Companies Act 2013(“the Act"). The financial statements have been prepared under the historical cost convention, on an accrual
basis. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous
year.

2) Use of estimates

The preparation of financial statements requires management to moke estimates and assumptions that affect the reported amount
of assets and liabilities on the date of the financial statements and the reported amount of revenue and expenses during the
reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known /
materialized.

3) Revenue recognition

I) Revenue from sales Is recognized as and when the goods ore dispatched to the customers and invoice is prepared,
il) Other income Is recognized on accrual basis and when there is reasonable certainty of its collection."

4) Fixed Assets and Depreciation

I) All tangible & intangible fixed assets are stated at historical cost of acquisition or construction (less input tax credit received /
receivable ) including all incidental cost of acquisition, less accumulated depreciation / amortization.

ii) Depreciation is provided under straight-line method so as to write-off the cost of the assets over its useful life as prescribed in
Schedule li of the Companies Act,2013

iii) Projects under commissioning and other Capital Work-in-progress are carried at costcomprising direct cost, related
incidental expenses and attributable interest

iv) Pre-operative expenses including trial run expenses (net of revenue) are capitalized

5) Intangible Assets

Expenditure on regulatory approval for Licenses for Sale of Goods In foreign countries is recognized as an intangible asset and the
same is amortized over a period of five years . Expenditure on software development Is recognized as an intangible asset and same
is amortized over a period of five years.

6) Investments

Long Term Investments are carried at cost. Provision is made for any diminution in value of investments, if the diminution is other than
temporary.

7) Inventory Valuation

i) Work in progress is valued at cost on FIFO basis.

ii) Finished goods are valued at lower of cost or net realizable value

Cost of Inventory comprises of cost of conversion and other cost Incurred to bring the Inventory to present location and condition.

8) Foreign currency transactions

Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing at the time of the transaction.
Monetary items in foreign currencies at the balance sheet date are translated at rates as at the balance sheet date. Any income or
expense on account of exchange difference either on settlement or on translation is recognized in profit & loss account except in
cases where they relate to acquisition of Fixed Assets, in which case they are adjusted to carrying cost of Fixed Assets.

9) Retirement benefits

The Company accounts for retirement benefits in compliance with the revised AS-15 as per following details :

a) Gratuity

Liability on account of gratuity, which is a defined plan, is provided for on the basis of actuarial valuation carried out by an
independent actuary as at the balance sheet date. The contribution towards gratuity liability is funded to an approved
gratuity fund.

b) Provident Fund

Contribution to provident Fund, which is a defined contribution plan, is made as per the provisions of Provident Fund Act. 1952
and charged to revenue account

c) Leave Encashment

Encashment of leave is accrued in year of retirement of an employee. Hence, not provided on the basis of actuarial Valuation.

10) Borrowing Cost

Borrowing costs that are directly attributable to the acquisition, construction of a qualifying asset i.e. asset acquired or constructed
for expansion of capacity during the year are capitalized as pre-operative expenditure to be ultimately capitalized as part of the Cost
of the Asset.

11) Impairment

Impairment is ascertained at each balance sheet date in respect of Cash Generating units. An impairment loss is recognized
whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the net
realizable value and value in use. in assessing value in use, the estimated future cash flows are discounted to their present value
based on an appropriate discount factor.

12) Tax on Income

Current Tax Is the amount of tax payable for the year as determined In accordance with the provision of the income Tax Act, 1961.
Deferred tax is recognised on timing differences between taxable profit and book profit using tax rates enacted or substantively
enacted as at the balance sheet date. Deferred tax asset is recognized and carried forward only to the extent that there is reasonable
certainty that the asset will be realized in future.