Eleganz Interiors Ltd. कंपली की लेखा नीति

Mar 31, 2025

1. SIGNIFICANT ACCOUNTING POLICIES

A) Basis of Preparation of Financial Statements:

The financial statements of the Company have been prepared in accordance with the generally
accepted accounting principles in India (Indian GAAP). The Company has prepared these financial
statements to comply in all material respects with the accounting standards notified under section
133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules
2014 and Companies (Accounting Standards) Amendment Rules, 2016. The financial statements have
been prepared on going concern basis under the historical cost convention on an accrual basis. The
accounting policies adopted in the preparation of financial statements are consistent with those of
previous year.

All the assets and liabilities have been classified as current or non-current as per the Companies
normal operating cycle and other criteria set out in the schedule III of 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 equivalent, the Company has ascertained its operating cycle to be 12
months for the purpose of current, non-current classification of assets and liabilities.

B) Use of Accounting Estimates:

The preparation of the financial statements in conformity with Indian GAAP requires management to
make judgements, estimates and assumptions that affect the reported amount of assets and liabilities
and disclosure of contingent liabilities on the date of the financial statements and reported amounts
of income and expenses for the year. 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 future periods.

C) Operating cycle for current and non-current classification

All assets and liabilities are classified into current and non-current.

i) 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 realized 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.

ii) 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.

iii) Operating cycle:

Operating cycle is the time between the acquisition of assets for processing and their realization in
cash or cash equivalents. The company has taken Operating cycle to be twelve months.

D) Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the
company and the revenue can be reliably measured. The following specific recognition criteria must
also be met before revenue is recognized:

i) Sale of goods

Revenue from sale of goods is recognized when all the significant risks and rewards of ownership
of the goods have been passed to the buyer, usually on delivery of the goods. The Company collects
Goods and Service Tax (GST) on behalf of the government and, therefore, these are not economic
benefits flowing to the Company. Hence, they are excluded from revenue. Sales are recognised net
of any discount, returns and rejections.

ii) Sale of services

Revenues from services are recognized on pro-rata over the period of the contract as and when
services are rendered/on project completion basis. The Company collects GST on behalf of the
government and, therefore, it is not an economic benefit flowing to the company. Hence, it is
excluded from revenue.

iii) 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.

iv) Dividend

Dividend income is recognized when the Company''s right to receive dividend is established by the
reporting date.

v) Others income

All other income will be recognised on accrual basis.

E) Property, plant and equipment:

Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated
impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalization criteria
are met, directly attributable cost of bringing the asset to its working condition for the intended use
and initial estimate of decommissioning, restoring and similar liabilities. Any trade discounts and
rebates are deducted in arriving at the purchase price. Such cost includes the cost of replacing part of
the plant and equipment. When significant parts of plant and equipment are required to be replaced
at intervals, the Company depreciates them separately based on their specific useful lives. Likewise,
when a major inspection is performed, its cost is recognised in the carrying amount of the plant and
equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance
costs are recognised in profit or loss as incurred.

Capital Work in Progress are stated at cost, net of accumulated depreciation and accumulated
impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalization criteria
are met and directly attributable cost.

The Company identifies and determines cost of each component/ part of the asset separately, if the
component/ part has a cost which is significant to the total cost of the asset and has useful life that is
materially different from that of the remaining asset.

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 carried at cost less accumulated amortization and accumulated impairment
losses, if any. Internally generated intangible assets, excluding capitalized development costs, are not
capitalized and expenditure is reflected in the Statement of profit and loss in the year in which the
expenditure is incurred.

Gains or losses arising from derecognition of an intangible asset 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.

Fixed assets are stated at cost, including any attributable cost for bringing the asset to its working
condition for its intended use, net of taxes and duties less accumulated depreciation and impairment
loss and includes financing cost for period up to the date of readiness of use. There has been no
revaluation of fixed assets during the year.

Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated
amortization /depletion. All costs, including finance costs, exchange differences and expenses
incidental to acquisition and installation attributable to the intangible assets are capitalized.

G) Depreciation and Amortization:

Depreciation on Property, plant and equipment is calculated on a written down basis using the rates
arrived at based on the useful lives and residual value as prescribed in Schedule II of the Act except
for Asset purchased for site for which the useful life has been estimated 3 years as per management
estimate, supported by technical advice. Details of the same is given in the following table:

The residual values, useful lives and methods of depreciation of property, plant and equipment are
reviewed at each financial year end and adjusted prospectively, if appropriate. The amortization
period and the amortization method are reviewed at least at each financial year end.

Intangible assets are amortised over the useful life of the asset on a straight-line method.

H) Impairment of Assets

The Company assesses at each reporting date whether there is an indication that an asset may be
impaired. If any indication exists, the Company estimates the asset''s recoverable amount. The
recoverable amount of the tangible & intangible assets is estimated as the higher of its net selling
price and its 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. In determining net selling price, recent market
transactions are taken into account.

An impairment loss is recognized whenever the carrying amount of a tangible & intangible asset or a
cash generating unit exceeds its recoverable amount. Impairment loss is recognized in the statement
of profit and loss. If at the balance sheet date there is an indication that a previously assessed

impairment loss no longer exists, the recoverable amount is reassessed, and the asset is reflected at
the recoverable amount subject to a maximum of depreciable historical cost.

I) 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. All other
investments are classified as long-term investments.

On initial recognition, all investments are measured at cost. The cost comprises purchase price and
directly attributable acquisition charges such as brokerage, fees and duties. If an investment is
acquired, or partly acquired, by the issue of shares or other securities, the acquisition cost is the fair
value of the securities issued. If an investment is acquired in exchange for another asset, the
acquisition is determined by reference to the fair value of the asset given up or by reference to the
fair value of the investment acquired, whichever is more clearly evident.

Current investments are carried in the financial statements at lower of cost and fair value determined
on an individual investment basis. Long term investments are carried at cost. However, provision for
diminution in value is made to recognize a decline other than temporary in the value of the
investments.

On disposal of an investment, the difference between its carrying amount and net disposal proceeds
is charged or credited to the statement of profit and loss.

J) Inventories

Inventories which comprise raw materials, work-in-progress, finished goods, stock-in-trade, stores
and spares, and loose tools are carried at the lower of cost and net realisable value.

Raw materials, stock-in-trade and stores and spares are valued at lower of cost and net realizable
value. 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 raw materials, stock-in-trade, stores and spares and loose tools is determined on FIFO.

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.

The FIFO method is being followed for arriving at cost. 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.

K) Foreign exchange transaction

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.

Exchange differences arising on long-term foreign currency monetary items related to acquisition of a
fixed asset are capitalized and depreciated over the remaining useful life of the asset.

Exchange differences arising on other long-term foreign currency monetary items are accumulated in
the ''Foreign Currency Monetary Item Translation Difference Account'' and amortized over the
remaining life of the concerned monetary item.

All other exchange differences are recognized as income or as expenses in the period in which they
arise.

L) Retirement Benefits

Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has
no obligation, other than the contribution payable to the provident fund. The Company recognizes
contribution payable to the provident fund scheme as expenditure, 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.

Gratuity liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation
on Projected Unit Credit Method made at the end of the financial year. 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.

Gratuity liability is a defined benefit obligation and is provided for on payment basis.

Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short¬
term employee benefit. The Company measures the expected cost of such absences as the additional
amount that it expects to pay as a result of the unused entitlement that has accumulated at the
reporting date.

Company does not provide any long-term leave benefits, accumulated leaves over and above 12
months gets elapse.

The Company recognizes termination benefit as a liability and an expense when the Company has a
present obligation as a result of past event, it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation and a reliable estimate can be made of the
amount of the obligation. If the termination benefits fall due more than 12 months after the balance
sheet date, they are measured at present value of future cash flows using the discount rate
determined by reference to market yields at the balance sheet date on government bonds.

Expenses on training, recruitment are charged to revenue in the year of incurrence.

M) Income taxes

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 carried 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.

N) 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.

O) 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.

P) Borrowing costs

Borrowing cost includes interest and amortization of ancillary costs incurred in connection with the
arrangement of borrowings.

Borrowing costs directly attributable to the acquisition, construction or production of an asset that
necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized
as part of the cost of the respective asset. All other borrowing costs are expensed in the period they
occur.

Q) Leases

i) Where 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.

ii) 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.

R) Earnings Per Share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to
equity shareholders (after deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period.

Partly paid equity shares are treated as a fraction of an equity share to the extent that they are entitled
to participate in dividends relative to a fully paid equity share during the reporting period. The
weighted average number of equity shares outstanding during the period is adjusted for events such
as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of
shares) that have changed the number of equity shares outstanding, without a corresponding change
in resources.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period
attributable to equity shareholders and the weighted average number of shares outstanding during
the period are adjusted for the effects of all dilutive potential equity shares.

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Mar 31, 2024

1. SIGNIFICANT ACCOUNTING POLICIES

A) Basis of Preparation of Financial Statements:

The financial statements of the Company have been prepared in accordance with the generally
accepted accounting principles in India (Indian GAAP). The Company has prepared these financial
statements to comply in all material respects with the accounting standards notified under section
133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules
2014 and Companies (Accounting Standards) Amendment Rules, 2016. The financial statements have
been prepared on going concern basis under the historical cost convention on an accrual basis. The
accounting policies adopted in the preparation of financial statements are consistent with those of
previous year.

All the assets and liabilities have been classified as current or non-current as per the Companies
normal operating cycle and other criteria set out in the schedule III of 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 equivalent, the Company has ascertained its operating cycle to be 12
months for the purpose of current, non-current classification of assets and liabilities.

B) Use of Accounting Estimates:

The preparation of the financial statements in conformity with Indian GAAP requires management to
make judgements, estimates and assumptions that affect the reported amount of assets and liabilities
and disclosure of contingent liabilities on the date of the financial statements and reported amounts
of income and expenses for the year. 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 future periods. __

C) Operating cycle for current and non-current classification

All assets and liabilities are classified into current and non-current.

i) 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 realized 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.

ii) 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.

iii) Operating cycle:

Operating cycle is the time between the acquisition of assets for processing and their
realization in cash or cash equivalents. The company has taken Operating cycle to be twelve
months.

D) Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the
company and the revenue can be reliably measured. The following specific recognition criteria must
also be met before revenue is recognized:

i) Sale of goods

Revenue from sale of goods is recognized when all the significant risks and rewards of
ownership of the goods have been passed to the buyer, usually on delivery of the goods. The
Company collects Goods and Service Tax (GST) on behalf of the government and, therefore,
these are not economic benefits flowing to the Company. Hence, they are excluded from
revenue. Sales are recognised net of any discount, returns and rejections.

ii) Sale of services

Revenues from services are recognized on pro-rata over the period of the contract as and
when services are rendered/on project completion basis. The Company collects GST on

----

behalf of the government and, therefore, it is not an economic benefit flowing to the
company. Hence, it is excluded from revenue.

iii) 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.

iv) Dividend

Dividend income is recognized when the Company''s right to receive dividend is established
by the reporting date.

v) Others income

All other income will be recognised on accrual basis.

E) Property, plant and equipment:

Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated
impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalization criteria
are met, directly attributable cost of bringing the asset to its working condition for the intended use
and initial estimate of decommissioning, restoring and similar liabilities. Any trade discounts and
rebates are deducted in arriving at the purchase price. Such cost includes the cost of replacing part of
the plant and equipment. When significant parts of plant and equipment are required to be replaced
at intervals, the Company depreciates them separately based on their specific useful lives. Likewise,
when a major inspection is performed, its cost is recognised in the carrying amount of the plant and
equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance
costs are recognised in profit or loss as incurred.

Capital Work in Progress are stated at cost, net of accumulated depreciation and accumulated
impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalization criteria
are met and directly attributable cost

The Company identifies and determines cost of each component/ part of the asset separately, if the
component/ part has a cost which is significant to the total cost of the asset and has useful life that is
materially different from that of the remaining asset.

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 carried at cost less accumulated amortization and accumulated impairment
losses, if any. Internally generated intangible assets, excluding capitalized development costs, are not
capitalized and expenditure is reflected in the Statement of profit and loss in the year in which the
expenditure is incurred.

Gains or losses arising from derecognition of an intangible asset 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.

Fixed assets are stated at cost, including any attributable cost for bringing the asset to its working
condition for its intended use, net of taxes and duties less accumulated depreciation and impairment
loss and includes financing cost for period up to the date of readiness of use. There has been no
revaluation of fixed assets during the year.

Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated
amortization /depletion. All costs, including finance costs, exchange differences and expenses
incidental to acquisition and installation attributable to the intangible assets are capitalized.

G) Depreciation and Amortization:

Depreciation on Property, plant and equipment is calculated on a written down basis using the rates
arrived at based on the useful lives and residual value as prescribed in Schedule II of the Act except
for Asset purchased for site for which the useful life has been estimated 3 years as per management
estimate, supported by technical advice. Details of the same is given in the following table:

The residual values, useful lives and methods of depreciation of property, plant and equipment are
reviewed at each financial year end and adjusted prospectively, if appropriate. The amortization
period and the amortization method are reviewed at least at each financial year end.

Intangible assets are amortised over the useful life of the asset on a straight-line method.

H) Impairment of Assets

The Company assesses at each reporting date whether there is an indication that an asset may be
impaired. If any indication exists, the Company estimates the asset''s recoverable amount. The
recoverable amount of the tangible & intangible assets is estimated as the higher of its net selling
price and its 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. In determining net selling price, recent market
transactions are taken into account.

An impairment loss is recognized whenever the carrying amount of a tangible & intangible asset or a
cash generating unit exceeds its recoverable amount. Impairment loss is recognized in the statement
of profit and loss. If at the balance sheet date there is an indication that a previously assessed
impairment loss no longer exists, the recoverable amount is reassessed, and the asset is reflected at
the recoverable amount subject to a maximum of depreciable historical cost.

_

I) 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. All other
investments are classified as long-term investments.

On initial recognition, all investments are measured at cost. The cost comprises purchase price and
directly attributable acquisition charges such as brokerage, fees and duties. If an investment is
acquired, or partly acquired, by the issue of shares or other securities, the acquisition cost is the fair
value of the securities issued. If an investment is acquired in exchange for another asset, the
acquisition is determined by reference to the fair value of the asset given up or by reference to the
fair value of the investment acquired, whichever is more clearly evident.

Current investments are carried in the financial statements at lower of cost and fair value determined
on an individual investment basis. Long term investments are carried at cost. However, provision for
diminution in value is made to recognize a decline other than temporary in the value of the
investments.

On disposal of an investment, the difference between its carrying amount and net disposal proceeds
is charged or credited to the statement of profit and loss.

J) Inventories

Inventories which comprise raw materials, work-in-progress, finished goods, stock-in-trade, stores
and spares, and loose tools are carried at the lower of cost and net realisable value.

Raw materials, stock-in-trade and stores and spares are valued at lower of cost and net realizable
value. 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 raw materials, stock-in-trade, stores and spares and loose tools is determined on FIFO.

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.

The FIFO method is being followed for arriving at cost. 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.

1C) Foreign exchange transaction

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.

Exchange differences arising on long-term foreign currency monetary items related to acquisition of a
fixed asset are capitalized and depreciated over the remaining useful life of the asset.

Exchange differences arising on other long-term foreign currency monetary items are accumulated in
the ''Foreign Currency Monetary Item Translation Difference Account'' and amortized over the
remaining life of the concerned monetary item.

All other exchange differences are recognized as income or as expenses in the period in which they
arise.

L) Retirement Benefits

Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has
no obligation, other than the contribution payable to the provident fund. The Company recognizes
contribution payable to the provident fund scheme as expenditure, 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.

Gratuity liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation
on Projected Unit Credit Method made at the end of the financial year. 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.

Gratuity liability is a defined benefit obligation and is provided for on payment basis.

Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short¬
term employee benefit. The Company measures the expected cost of such absences as the additional
amount that it expects to pay as a result of the unused entitlement that has accumulated at the
reporting date.

Company does not provide any long-term leave benefits, accumulated leaves over and above 12
months gets elapse.

The Company recognizes termination benefit as a liability and an expense when the Company has a
present obligation as a result of past event, it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation and a reliable estimate can be made of the
amount of the obligation. If the termination benefits fall due more than 12 months after the balance
sheet date, they are measured at present value of future cash flows using the discount rate
determined by reference to market yields at the balance sheet date on government bonds.

Expenses on training, recruitment are charged to revenue in the year of incurrence.

M) Income taxes

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.

N) 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.

O) 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.

P) Borrowing costs

Borrowing cost includes interest and amortization of ancillary costs incurred in connection with the
arrangement of borrowings.

Borrowing costs directly attributable to the acquisition, construction or production of an asset that
necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized
as part of the cost of the respective asset. All other borrowing costs are expensed in the period they
occur.

Q) Leases

i) Where 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,
ii) 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.

R) Earnings Per Share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to
equity shareholders (after deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period.

Partly paid equity shares are treated as a fraction of an equity share to the extent that they are entitled
to participate in dividends relative to a fully paid equity share during the reporting period. The
weighted average number of equity shares outstanding during the period is adjusted for events such
as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of
shares) that have changed the number of equity shares outstanding, without a corresponding change
in resources.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period
attributable to equity shareholders and the weighted average number of shares outstanding during
the period are adjusted for the effects of all dilutive potential equity shares.