Kronox Lab Sciences Ltd. कंपली की लेखा नीति

Mar 31, 2025

A. Reporting Entity

KRONOX LAB SCIENCES LIMITED was

incorporated on November 18, 2008, as a private limited company under the Companies Act, 1956. (as amended in 2013). The company''s registered office is located at Block No. 353, Village Ekalbara, Padra, Vadodara, GJ 391440. The Company successfully completed its Initial Public Offering (IPO), and as a result, its equity shares were listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) on June 10, 2024.The Company is engaged in the manufacturing of high-purity fine inorganic chemicals, phosphate, and metallic chemicals. It commenced its business operations in 2008. The Company conducts its activities across three locations (Unit-1, Unit-2, Unit-3 and Unit-4) in Ekalbara village, Padra.

The financial statements are approved for issue by the Company''s Board of Directors on May 22,2025.

B. NOTES FORMING PART OF ACCOUNTS:

SIGNIFICANT ACCOUNTING POLICIES:

Summary of Significant Accounting Policies

1. Basis of preparation and presentation of Financial Statements:

Compliance with Ind As:

The Financial Statements of the Company for the year ended March 31, 2025, have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended, and the relevant provisions of the Companies Act, 2013, including the presentation requirements of Division II of Schedule III (Ind AS-compliant Schedule III), as applicable.

A. Basis of preparation and presentation of Financial Statements:

The Financial Statements have been prepared under the historical cost convention on an accrual basis of accounting considering the applicable provisions of Companies Act 2013, except for the following items:

-certain financial assets and liabilities (including derivative instruments) that are measured at fair value; and

-net defined benefit (asset) / liability which will be measured at year end on March 31, 2025, after actuarial report has been obtained.

B. Current and non-current classification of Assets and Liabilities:

The Assets and Liabilities have been classified and disclosed as current or non-current in accordance with the Company''s normal operating cycle and the criteria set out in Schedule III to the Companies Act, 2013. Based on the nature of its products and the time between the acquisition of assets for processing and their realization in cash or cash equivalents, the Company has determined its operating cycle to be twelve months for the purpose of current and non-current classification of assets and liabilities.

C. Functional and presentation currency:

The functional and presentation currency in these Financial Statements is Indian Rupees (INR) and all values are rounded to nearest lacs (INR 00,000), except when otherwise stated.

D. Use of judgements, estimates and assumptions:

The preparation of Financial Statements in conformity with Ind AS requires management to make estimates, judgments, and assumptions that affect the reported amounts of revenue, expenses, current assets, non-current assets, current liabilities, non-current liabilities, and the disclosure of contingent liabilities as of the date of preparation of the Financial Statements. Such estimates are made on a reasonable and prudent basis, considering all available information. However, due to the inherent uncertainties associated with these judgments, estimates, and assumptions, actual results may differ from those estimated. Information about significant estimates and judgments is included in the relevant notes. Any revision to accounting estimates is recognized prospectively in the current and future periods.

Judgements:

Information about the judgments made in applying accounting policies that have the most significant effect on the amounts recognized in the Financial Statements is provided below:

• Classification of financial assets: This includes the assessment of the business model within which the assets are held and an evaluation of whether the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.

2. Revenue Recognition:

Revenue from contract with customers is recognised when the Company satisfies the performance obligation by transfer of control of promised product or service to

customers in an amount that reflects the consideration which the Company expects to receive in exchange for those products or services. Revenue excludes taxes collected from customers.

A. Sale of products

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, irrespective of when the payment is made. Revenue is measured at the fair value of the consideration received or receivable, taking into account the contractually defined payment terms and excluding any taxes or duties collected on behalf of the government.

The performance obligation in case of sale of product is satisfied at a point in time i.e. when the material is shipped to the customer or on delivery to the customer, as per the terms of the contract and, there are no unfulfilled obligations.

B. Interest Income:

Interest income is recognised using the effective interest rate method. The "effective interest rate" is the rate that precisely discounts the expected future cash inflows or outflows over the life of the financial instrument to:

-the gross carrying amount of the financial asset;

-the amortized cost of the financial liability.

However, interest income on fixed deposits with banks is recognised based on the interest rate fixed by the bank on such deposits.

Revenue from export benefits arising from, duty drawback scheme, Remission of duties and taxes on exported product scheme are recognized on export of goods in accordance with their respective underlying scheme at fair value of consideration received or receivable.

3. Property, Plant and Equipment:

Property, plant and equipment are stated in the balance sheet at cost less accumulated depreciation and impairment, if any. Costs directly attributable to acquisition are capitalized until the property, plant and equipment are ready for use, as intended by the Management. The Company depreciates property, plant and equipment over their estimated useful lives using the Written Down Value method. Other Indirect Expenses incurred relating to project, net of income earned during the project development stage prior to its intended use, are considered as pre-operative expenses and disclosed under Capital Work-in-Progress.

Subsequent Costs:

The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The cost of the day-to-day servicing of the property, plant and equipment are recognised in the statement of profit and loss as incurred.

An item of property, plant and equipment is derecognised upon the disposal or when no future benefits are expected from its use or disposal. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised net within other income / expenses in the statement of profit and loss.

Depreciation:

The depreciable amount of an asset is determined after deducting its residual value from its cost. When the residual value of an asset equals or exceeds the asset''s carrying amount, no depreciation charge is recognised until the residual value decreases below the asset''s carrying amount. Depreciation begins when the asset is available for use, i.e., when it is in the location and condition necessary for it to operate in the intended manner. Depreciation ceases at the earlier of the date the asset is classified as held for sale in accordance with Ind AS 105 or the date the asset is derecognised.

Depreciation on Property, Plant and Equipment is provided on the written down value method over the estimated useful life of the assets as prescribed under Schedule II to the Companies Act, 2013.

The Company assesses at each balance sheet date whether there is any indication that an asset or cash generating unit (CGU) may be impaired. Intangible assets with indefinite useful lives are reviewed for impairment annually, or more frequently if events or circumstances indicate that impairment may be necessary. If any such indication exists, the Company estimates the recoverable amount of the asset. The recoverable amount is the higher of an asset''s or CGU''s fair value less costs of disposal or its value in use. If the carrying amount of the asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing the 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 the fair value less costs of disposal, recent market transactions are considered.

An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount. Impairment losses are recognised in the statement of profit and loss. If, at the balance sheet date, there is an indication that a previously recognised impairment loss no longer exists, the impairment loss is reversed only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, had no impairment loss been recognised.

3. Leases:

At inception of a contract, the Company assesses whether the contract is, or contains, a lease. 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 determine

whether a contract conveys the right to control the use of an identified asset, the Company evaluates whether:

- the contract involves the use of an identified asset, which may be specified explicitly or implicitly and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified.

- the Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and

- the Company has the right to direct the use of the asset when it possesses the decision-making rights that are most relevant to determining how and for what purpose the asset is used. In rare cases where the decisions about how and for what purpose the asset is used is predetermined, the Company has the right to direct the use of the asset if either of the following conditions is met:

# The Company has the right to operate the asset; or

# The Company designed the asset in a way that predetermines how and for what purpose it will be used.

At the inception of a contract, or upon reassessment, if the contract contains a lease component, the Company allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices.

Company as a lessee:

The Company recognises a right-of-use asset and a corresponding lease liability at the lease commencement date. The right-of-use asset 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 on a straight-line basis from the commencement date to the earlier of the end of its useful life or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. In addition, the right-of-use asset is periodically reduced by any 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. These payments are 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 rates as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

- Fixed payments, including in-substance fixed payments.

- Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date.

- 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 that option, and lease payments for an optional renewal period if the Company is reasonably certain to exercise an extension option.

In the event of early termination of lease agreement, the Company derecognises the ROU asset and the corresponding lease liability to reflect the partial or full termination of the

lease. Any resulting gain or loss is recognised in the Statement of Profit and Loss.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is change in future lease payments resulting from a change in an index or rate, or a change in the Company''s estimate of the amount expected to be payable under a residual value guarantee, or a change in the Company''s assessment of whether it is reasonably certain to exercise a purchase, extension, or termination option.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in statement of profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.

Short-term leases and leases of low-value assets:

The Company has elected not to recognise right-of-use assets and lease liability for the short-term leases that have lease term of 12 months of less and leases of low-value assets. The Company recognises these lease payments as an operating expense on a straight-line basis over lease term.

4. Financial Assets:

A. Fair Value Assessment:

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of asset and liability that market participants would take into consideration. Fair value for measurement and / or disclosure purposes in these Financial Statements is determined based on this approach, except for transactions falling within the scope of Ind AS 2,

17 and 36. Generally, at initial recognition, the transaction price is the best evidence of fair value.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant who would use the asset in its highest and best use. The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All financial assets and financial liabilities for which fair value is measured or disclosed in the Financial Statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole.

B. Subsequent Measurement:

For the purpose of subsequent measurement, financial assets are classified in three categories:

• Financial assets measured at amortized cost

• Financial assets at fair value through OCI

• Financial assets at fair value through profit or loss

C. Financial Assets measured at amortized cost:

Financial assets are measured at amortized cost if the financial asset is held within a

business model whose objective 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. These financials assets are amortized using the effective interest rate (‘EIR'') method, less impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition, and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the Statement of Profit and Loss. Losses arising from impairment are recognised in the Statement of Profit and Loss.

D. Trade Receivables:

Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business and reflects Company''s unconditional right to receive consideration. Trade receivables are recognised initially at the transaction price as they do not contain significant financing components. Subsequently, trade receivables are measured at amortized cost, less any allowance for expected credit losses as per the requirements of Ind AS 109.

E. Financial Assets at fair value through OCI (‘FVTOCI’):

Financial assets are measured at fair value through other comprehensive income (FVTOCI) if they are held within a business model whose objective is achieved by both collecting contractual cash flows and selling 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. At initial recognition, the Company may make an irrevocable election (on an instrument-by-instrument basis) to designate investments in equity instruments, other than those held for trading, at FVTOCI. Changes in fair value are recognised in the other comprehensive income (‘OCI''). However,

interest income, impairment losses and reversals, and foreign exchange gains or losses are recognised in the Statement of Profit and Loss.

Investments:

The investments held not with the intention of earning contractual cash flows; instead, they represent a type of membership deposit is accounted at cost and are carried at their actual investment amount.

Financial Assets at fair value through profit or loss(TVTPL'')

Any financial asset that does not meet the criteria for classification as measured at amortized cost or at fair value through other comprehensive income (FVTOCI) is classified as financial assets at fair value through profit or loss (FVTPL). Further, financial assets at FVTPL include financial assets held for trading and financial assets designated upon initial recognition as measured at FVTPL. Financial assets are classified as held for trading if they are acquired principally for the purpose of selling or repurchasing in the near term. Financial assets measured at FVTPL are remeasured at fair value at each reporting date, with all changes in fair value recognised in the Statement of Profit and Loss.

F. Derecognition:

The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when the financial asset is transferred and substantially all the risks and rewards of ownership are transferred to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the financial asset, it recognises its retained interest in the financial asset and an associated liability for any amount it may be required to pay.

For trade receivable, the Company applies the simplified approach of Ind AS 109, which requires measurement of loss allowance at an amount equal to lifetime expected credit losses. Impairment loss on trade receivables is recognised using expected credit loss model, which involves use of a provision matrix constructed on the basis of historical credit loss experience as permitted under Ind AS 109 and is adjusted for forward looking information. For all other financial assets, ECLs are measured at 12-month ECL unless there has been a significant increase in credit risk since initial recognition, in which case lifetime ECL is applied. The amount of ECLs (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognised is recognised as an impairment gain or loss in Statement of Profit and Loss.

5. Financial Liabilities:

A. Initial recognition and measurement:

All financial liabilities are classified at initial recognition as either measured at amortized cost or at fair value through profit or loss, as appropriate. Financial liabilities measured at amortized cost are initially recognised at fair value, net of directly attributable transaction costs. Any difference between the proceeds (net of transaction costs) and the fair value at initial recognition is recognised in the Statement of Profit and Loss.

B. Subsequent Measurement:

The subsequent measurement of financial liabilities depends upon the classification as described below: -

i) Financial liabilities classified as Amortized cost:

Financial liabilities that are not held for trading and are not designated at fair value through profit or loss (FVTPL) are measured at amortized cost at the end of

each reporting period. Amortized cost is calculated by taking into account any discount or premium on acquisition, and fees or costs that are an integral part of the effective interest rate (EIR). Interest expense that is not capitalized as part of the cost of assets is recognised as finance cost in the Statement of Profit and Loss.

ii) Financial liabilities classified as fair value through profit and loss (FVTPL):

Financial liabilities classified as FVTPL includes financial liabilities held for trading and those designated as FVTPL upon initial recognition. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. Designation of financial liabilities at FVTPL upon initial recognition is made only if the criteria specified in Ind AS 109 are met.

Export benefits are accounted for in the year of export, based on eligibility and when there is reasonable certainty of receipt.

C. Trade Payables:

Trade payables represent amounts due for goods and services received by the Company before the end of the financial year that remain unpaid as of the reporting date. These payables are generally unsecured and are classified as current liabilities unless the payment is contractually due more than 12 months after the reporting date. They are initially recognised at fair value, which typically reflects the transaction price, and are subsequently measured at amortized cost using the effective interest rate method.

D. Derecognition:

A financial liability is derecognised when the obligation under the liability is discharged, canceled, or expired. When an existing financial liability is replaced by another from the same lender on substantially different

terms, or when 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 in the respective carrying amounts is recognised in the Statement of Profit and Loss.

E. Offsetting of Financial Instruments:

Financial assets and financial liabilities are offset, and the net amount is reported in the balance sheet, only if there is a currently enforceable legal right to offset the recognised amounts and if there is an intention to settle on a net basis, i.e., to realise the assets and settle the liabilities simultaneously.

6. Inventories:

Inventories, which include raw materials, work-in-progress, finished goods, and packing materials, are measured at the lower of cost and net realizable value. In determining cost of raw materials and packing materials, stock-in-trade, stores and spares, FIFO method is used. Cost of inventory includes cost of purchases and other costs incurred in bringing the inventories to its present location and condition.

Cost of work-in-progress and finished goods includes cost of Raw Materials, Packing Materials, an appropriate share of fixed and variable production overheads and other costs incurred in bringing the inventories to their present location.

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

The factors that the Company considers in determining the allowance for slow moving, obsolete and other non-saleable inventory include estimated shelf life, planned product discontinuances, price changes, ageing of inventory and introduction of competitive new products, to the extent each of these factors

impact the Company''s business and markets.

7. Cash Flows and Cash and Cash Equivalents:

The Statement of Cash Flows is prepared using the indirect method as prescribed in the relevant Ind AS. For the purpose of presentation in the Statement of Cash Flows, cash and cash equivalents include cash on hand, cheques and drafts on hand, deposits held with banks, and other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.

8. Provisions and Contingent Liabilities and Contingent Assets:

The Company recognises a provision when there is a present obligation arising from a past event that requires an outflow of resources, and a reliable estimate can be made of the amount of the obligation.

A contingent liability is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company, or a present obligation that arises from past events but not recognised because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability. Contingent liabilities are disclosed after careful evaluation by the management, considering both the facts and legal aspects of the matter involved.

Contingent asset is neither recognised nor disclosed in the Financial Statements.

9. Foreign Currency Transactions:

Transactions in foreign currencies are translated into the Company''s functional currency at the exchange rates prevailing on the dates of the transactions. Monetary assets

and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate as of the reporting date. Non-monetary assets and liabilities measured at fair value in a foreign currency are translated at the exchange rate on the date when the fair value was determined. Non-monetary items measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Foreign exchange differences arising on translation are generally recognized in the Statement of Profit and Loss.

10. Dividend:

Final dividend on shares is recognized as a liability on the date of approval by the shareholders, while interim dividend is recognized as a liability on the date of declaration by the Company''s Board of Directors.

11.. Employee Benefits:

A. Long-term Benefits:

Defined Contribution Plan:

As the provisions of the Employees'' Provident Fund and Miscellaneous Provisions Act and the Employees'' State Insurance Act are applicable to the Company, the Company''s contributions payable under these schemes are recognized as an expense in the Statement of Profit and Loss in the period during which the employee renders the related services.

Defined Benefit Plans:

The Company operates an unfunded defined benefit plan for its employees in the form of gratuity. The cost of providing benefits under this plan is determined based on actuarial valuation carried out at each reporting date using the projected unit credit method. Actuarial gains and losses arising from remeasurements of the defined benefit obligation are recognized in full in the Statement of Profit and Loss in the period in

which they occur.

B. Short term Benefits:

All employee benefits that are payable wholly within twelve months after the end of the period in which the employees render the related service are classified as short-term employee benefits. These benefits, including salaries, leave encashment, incentives, allowances, and bonuses, are recognized at their undiscounted amounts in the period in which the related service is rendered.

12. Borrowing Cost:

Borrowing costs that are directly attributable to the acquisition, construction, or production of a qualifying asset, one 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 that asset. All other borrowing costs are recognized as an expense in the period in which they are incurred. Borrowing costs include interest, exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost, and other costs incurred in connection with the borrowing of funds.

13. Income Taxes:

Income tax expense represents the total of current tax payable and deferred tax. Tax is recognised in the Statement of Profit and Loss, unless it pertains to items recognised directly in equity or other comprehensive income.

A. Current Tax:

Current tax comprises the expected tax payable or receivable on taxable income or loss for the year, along with any adjustments to tax payable or receivable for previous years. The amount of current tax reflects the best estimate of the tax expected to be paid or received, considering any uncertainties related to income taxes. Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the tax authorities. The tax rates and laws used to

compute these amounts are those that are enacted or substantively enacted at the reporting date in the country where the Company operates and generates taxable income. Current tax assets and liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to settle the asset and liability on a net basis or simultaneously.

B. Deferred Tax:

Deferred tax is recognised using the balance sheet method, based on temporary differences between the tax base of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax liabilities are recognised for all taxable temporary differences, except for the following:

- When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination, and at the time of the transaction, it does not affect either the accounting profit or taxable profit or loss.

-Taxable temporary differences arising on the initial recognition of goodwill.

-Temporary differences related to investments in subsidiaries, associates, and joint arrangements, to the extent that the Company can control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future. Deferred tax assets are recognized for all deductible temporary differences, unused tax credits, and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax credits, and unused tax losses (including unabsorbed depreciation) can be utilized, except in the following cases:

- When the deferred tax asset relates to a

deductible temporary difference arising from the initial recognition of an asset or liability in a transaction that is not a business combination, and at the time of the transaction, it does not affect either the accounting profit or taxable profit or loss.

The carrying amount of deferred tax assets is reviewed at each reporting date and is reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it becomes probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

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

Deferred tax relating to items recognized outside profit or loss is also recognized outside profit or loss. Deferred tax is recognized in correlation with the underlying transaction reflected in other comprehensive income (OCI).

14. Segment Reporting:

The Company is exclusively engaged in the business of manufacturing chemicals. Accordingly, in line with the requirements of Ind AS, the Company operates in a single primary business segment.

15. Earnings Per Share:

Basic earnings per share (EPS) is calculated by dividing the profit attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus issues and stock splits, and excluding treasury shares. The weighted average number of equity shares is adjusted for any events, other than the conversion of potential equity shares, that have changed the number of equity shares outstanding without a corresponding change in resources.

Diluted EPS is calculated by adjusting the figures used in the determination of basic EPS to reflect:

- The after-tax effect of interest and other financing costs associated with dilutive potential equity shares; and

- The weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.

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Mar 31, 2024

SIGNIFICANT ACCOUNTING POLICIES:

Summary of Significant Accounting Policies

1. Basis of preparation and presentation of financial statements:

Compliance with Ind As:

The financial statements of company has been prepared in accordance with Indian Accounting standards (Ind AS), under the historical cost conversion on the accrual basis unless specifically stated otherwise.

The Ind AS are prescribed under section 133 of the Companies Act, 2013 read with companies (Indian accounting standards) Rules, 2015, as amended and other provisions of the Act.

A. Basis of preparation:

The financial statements of the company as at 31st March, 2024 are prepared in accordance with recognition and measurement principles of Indian Accounting Standards.

B. Basis of measurement:

The Financial Statements have been prepared on historical cost basis considering the applicable provisions of Companies Act 2013. The exceptions to the same are:

-certain financial assets and liabilities (including derivative instruments) that are measured at fair value; and

-net defined benefit (asset) / liability will be measured at year end on 31st March, 2024 after actuarial report has been obtained.

C. Current and non-current classification of

assets and liabilities:

The Assets and Liabilities and the Statement of Profit & Loss, including

related notes, are prepared and

presented as per the requirements of Schedule III (Division II) to the Companies Act, 2013. All assets and liabilities have

been classified and disclosed as current or non-current as per the Company''s normal operating cycle and other criteria set out in Schedule III. Based on the nature of products and the time between the acquisition of assets for processing and their realization into cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current and non-current classification of assets and liabilities.

D. Functional and presentation currency:

The functional and presentation currency in these Financial Statements is INR and all values are rounded to nearest lacs (INR 00,000), unless otherwise stated.

E. Use of judgements, estimates and assumptions:

The preparation of financial statements in conformity with Ind AS requires the Management to make estimates, judgments and assumptions that affect the reported amounts of revenue, expenses, current assets, non-current assets, current liabilities, noncurrent liabilities and the disclosure of the contingent liabilities on the date of the preparation of Financial Statements. Such estimates are on a reasonable and prudent basis considering all available information, however due to uncertainties about these judgements, estimates and assumptions, the actual results could differ from those estimates. Information about each of these estimates and judgements is included in relevant notes. Any revision to accounting estimates is

recognized prospectively in current and future periods.

Judgements:

Information about judgements made in applying accounting policies that have the most significant effects on the amounts recognized in the Financial Statements is included in the following:

Classification of financial assets: assessment of business model within which the assets are held and assessment of whether the contractual terms of the financial assets are solely payments of principal and interest on the principal amount outstanding.

2. Property, Plant and Equipment:

Property, plant and equipment are stated at cost, less accumulated depreciation and impairment, if any. Costs directly attributable to acquisition are capitalized until the property, plant and equipment are ready for use, as intended by the Management. The Company depreciates property, plant and equipment over their estimated useful lives using the Written down value method. Other Indirect Expenses incurred relating to project, net of income earned during the project development stage prior to its intended use, are considered as pre-operative expenses and disclosed under Capital Work-in-Progress.

An item of PPE is derecognised on disposal or when no future economic benefits are expected from use. Any profit

or loss arising on the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds and the carrying amount of the asset and is recognized in Statement of Profit and Loss.

Subsequent Costs:

The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The cost of the day-to-day servicing the property, plant and equipment are recognised in the statement of profit and loss as incurred.

Disposal:

An item of property, plant and equipment is derecognised upon the disposal or when no future benefits are expected from its use or disposal. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised net within other income / expenses in the statement of profit and loss.

Depreciation:

The depreciable amount of an asset is determined after deducting its residual value. Where the residual value of an asset

increases to an amount equal to or greater than the asset''s carrying amount, no depreciation charge is recognised till the asset''s residual value decreases below the asset''s carrying amount. Depreciation of an asset begins when it is available for use, i.e., when it is in the location and condition necessary for it to be capable of operating in the intended manner. Depreciation of an asset ceases at the earlier of the date that the asset is classified as held for sale in accordance with Ind AS 105 and the date that the asset is derecognised.

Depreciation on Property, Plant and Equipment is provided on the reducing balance method over the estimated useful life of the assets as prescribed under Schedule II to the Companies Act, 2013.

The management has estimated the useful life of the Tangible Assets as mentioned below:

The Company assesses at each balance sheet date whether there is any indication that an asset or cash generating unit (CGU) may be impaired. Indefinite life intangibles are subject to a review for impairment annually or more frequently if events or circumstances indicate that it is necessary. If any such indication exists, the Company estimates the recoverable amount of the asset. The recoverable amount is the higher of an asset''s or CGU''s fair value less costs of disposal or its value in use. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing the 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 the fair value less costs of disposal, recent market transactions are considered.

An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount, Impairment losses are recognised 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, an impairment loss is reversed only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

3. Investments and Deposits:

The total investments are carried at their

actual amount of investment. Further, these investments are not held with a view earn contractual cash flow instead there are a type of membership deposit made. Hence, they do not classify as Financial Assets in accordance with IND AS.

4. Leases:

At inception of a contract, the Company

assesses whether a contract is, or contains, a lease. 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:

- the contract involves the use of an identified asset - this may be specified explicitly or implicitly and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a sustentive substitution right, then the asset is not identified.

- the Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and

- the Company has the right to direct the use of the asset. The Company has this right when it has the decision-making rights that are most relevant to changing

how and for what purpose the asset is used. In rare cases where the decision about how and for what purpose the asset is used is predetermined, the Company has the right to direct the use of the asset if either:

#the Company has the right to operate the asset; or

#the Company designed the asset in a way that predetermines how and for what purpose it will be used.

At inception or on reassessment 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 stand-alone prices.

Company as a lessee:

The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset 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 earlier of the end of the useful life of

the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets redetermined on the same basis as those of property 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 rates as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

- fixed payments, including in-substance fixed payments.

- variable lease payments that depend on an index or a rate, initially measured using the index or rate as

at the commencement date.

- 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. In case of early

termination of lease agreement, company will derecognise ROU asset and lease liability to reflect the partial or full termination of the lease and recognise gain or loss in P&L Account on such termination.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is change in future lease payments arising from a change in an index or rate, if there is change in the Company''s estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in statement of profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.

Short-term leases and leases of low-value assets:

The Company has elected not to recognise right-of-use assets and lease liability for the short-term leases that have lease term of 12 months of less and leases of low-value assets. The Company recognises the lease payments as an operating expense on a straight-line basis over lease term.

A. Fair Value Assessment:

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of asset and liability if market participants would take those into consideration. Fair value for measurement and / or disclosure purposes in these Financial Statements is determined in such basis except for transactions in the scope of Ind AS 2, 17 and 36. Normally at initial recognition, the transaction price is the best evidence of fair value.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Company uses valuation techniques those are appropriate in the

circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All financial assets and financial liabilities for which fair value is measured or disclosed in the Financial Statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole.

B. Subsequent Measurement:

For purposes of subsequent measurement financial assets are classified in three categories:

• Financial assets measured at amortized cost

• Financial assets at fair value through OCI

• Financial assets at fair value through profit or loss

C. Financial Assets measured at amortized cost:

Financial assets are measured at amortized cost if the financials asset is held within a business model whose objective 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. These financials assets are

amortized using the effective interest rate (‘EIR'') method, less impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the Statement of Profit and Loss. The losses arising from impairment are recognized in the Statement of Profit and Loss.

D. Trade Receivables:

Unconditional receivables are recognised as financial assets when the entity becomes a party to the contract and, as a consequence, has a legal right to received or a legal obligation to pay cash. However, trade receivables that do not contain a significant financing component are measured at transaction price.

E. Financial Assets at fair value through OCI(‘FVTOCI’):

Financial assets are measured at fair value through other comprehensive income if the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling 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. At initial recognition, an irrevocable election is made (on an instrument-by-instrument basis) to designate investments in equity instruments other than held for trading purpose at FVTOCI. Fair value changes are recognized in the other comprehensive

income (‘OCI''). However, the Company recognizes interest income, impairment losses and reversals and foreign exchange gain or loss in the Statement of Profit and Loss.

F. Financial Assets at fair value through profit or loss(‘FVTPL’):

Any financial asset that does not meet the criteria for classification as at amortized cost or as financial assets at fair value through other comprehensive income is classified as financial assets at fair value through profit or loss. Further, financial assets at fair value through profit or loss also include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Financial assets at fair value through profit or loss are fair valued at each reporting date with all the changes recognized in the Statement of Profit and Loss.

G. Derecognition:

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the financial asset, the Company recognizes its retained interest in the asset and an associated liability for amounts it may have to pay.

H. Impairment of Financial Assets:

The Company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit or loss. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, ECLs are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of ECLs (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized is recognized as an impairment gain or loss in profit or loss.

6. Financial Liabilities:

The company’s financial liabilities include trade payable.

A. Initial recognition and measurement:

All financial liabilities at initial recognition are classified as financial liabilities at amortized cost or financial liabilities at fair value through profit or loss, as appropriate. All financial liabilities classified at amortized cost are recognized initially at fair value net of directly attributable transaction costs. Any difference between the proceeds (net of

transaction costs) and the fair value at initial recognition is recognized in the Statement of Profit and Loss (if any).

B. Subsequent Measurement:

The subsequent measurement of financial liabilities depends upon the classification as described below: -

i) Financial liabilities classified as Amortized cost:

Financial Liabilities that are not held for trading and are not designated as at FVTPL are measured at amortized cost at the end of subsequent accounting periods. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. Interest expense that is not capitalized as part of costs of assets is included as Finance costs in the Statement of Profit and Loss.

ii) Financial liabilities classified as fair value through profit and loss (FVTPL):

Financial liabilities classified as FVTPL includes financial liabilities held for trading and financial liabilities designated upon initial recognition as FVTPL. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. Financial liabilities designated upon initial recognition at FVTPL only if the criteria in Ind AS 109 is satisfied.

Exports benefits are accounted for in the year of exports based on the eligibility and

when there is certainty of receiving the same.

C. Trade Payables:

Unconditional payables are recognised as financial liabilities when the entity becomes a party to the contract and, as a consequence, has a legal right to received or a legal obligation to pay cash. However, trade payables that do not contain a significant financing component are measured at transaction price.

D. Derecognition:

A financial liability is derecognized when the obligation under the liability is discharged / cancelled / expired. 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 de recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the Statement of Profit and Loss.

E. Offsetting of Financial Instruments:

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.

7. Cash Flows and Cash and Cash Equivalents:

Statement of cash flows is prepared in accordance with the indirect method prescribed in the relevant IND AS. For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, cheques and drafts on hand, deposits held with Banks, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and book overdrafts. However, Book overdrafts are to be shown within borrowings in current liabilities in the balance sheet for the purpose of presentation.