Accounting Policies of Garodia Chemicals Ltd. Company

Mar 31, 2024

2B. Significant accounting policies

A. Current versus non-current classification

The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.
An asset/ liability is treated as current when it is:

a) Expected to be realized/ settled or intended to be sold or consumed in normal operating cycle

b) Held primarily for the purpose of trading

c) Expected to be realized/ settled within twelve months after the reporting period, or

d) Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months
after the reporting period

All other assets/ liabilities are classified as non-current.

The operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash
equivalents. The Company has identified twelve months as its operating cycle. Deferred tax assets and liabilities are
classified as non-current assets and liabilities.

B. Fair value measurement

The Company''s accounting policies and disclosures require the measurement of fair values for, both financial and non¬
financial assets and liabilities. The Company has an established control framework with respect to the measurement of fair
values. The management regularly reviews significant unobservable inputs and valuation adjustments. If third party
information, such as broker quotes or pricing services, is used to measure fair values, then the management assesses the
evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of Ind AS,
including the level in the fair value hierarchy in which such valuations should be classified.

When measuring the fair value of a financial asset or a financial liability, the Company uses observable market data as far as
possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation
techniques as follows.

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly
(i.e., as prices) or indirectly (i.e., derived from prices).

• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then
the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level
input that is significant to the entire measurement.

The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during
which the change has occurred.

C. Property, Plant and Equipment

An item of property, plant and equipment that qualifies as an asset is measured on initial recognition at cost. Following
initial recognition, items of property, plant and equipment are carried at its cost less accumulated depreciation and
accumulated impairment losses.

The Company identifies and determines cost of each part of an item of property, plant and equipment separately, if the
part has a cost which is significant to the total cost of that item of property, plant and equipment and has useful life that is
materially different from that of the remaining item.

The cost of an item of property, plant and equipment comprises of its purchase price including import duties and other
nonrefundable purchase taxes or levies, directly attributable cost of bringing the asset to its working condition for its
intended use and the initial estimate of decommissioning, restoration and similar liabilities, if any. Any trade discounts and
rebates are deducted in arriving at the purchase price. Cost includes cost of replacing a part of a plant and equipment if the
recognition criteria are met. Expenses directly attributable to new plant and equipment during its construction period are

capitalized if the recognition criteria are met. Expenditure related to plans, designs and drawings of buildings or plant and
machinery is capitalized under relevant heads of property, plant, and equipment if the recognition criteria are met.

Capital work in progress and Capital advances:

Cost of assets not ready for intended use, as on the balance sheet date, is shown as capital work in progress. Advances
given towards acquisition of fixed assets outstanding at each balance sheet date are disclosed as Other Non-Current Assets.

Depreciation/ Amortization:

a) Depreciation on tangible assets is provided on straight line basis considering the useful lives prescribed in Schedule II to
the Act on a pro-rata basis.

b) Leasehold improvements are amortized based on primary lease period or their useful lives prescribed under Schedule -
II, whichever is lower.

c) The asset''s useful lives are reviewed and adjusted, if appropriate, at the end of each reporting period.

d) An asset''s carrying amount is written down immediately to its recoverable amount if the asset''s carrying amount is
greater than its estimated recoverable amount.

e) 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.

Derecognition:

The carrying amount of an item of property, plant and equipment is derecognized on disposal or when no future economic
benefits are expected from its use or disposal. The gain or loss arising from the Derecognition of an item of property, plant
and equipment is measured as the difference between the net disposal proceeds and the carrying amount of the item and
is recognized in the Statement of Profit and Loss when the item is derecognized.

D. Intangible assets

Measurement at recognition:

Intangible assets acquired separately are measured on initial recognition at cost. Intangible assets arising on acquisition of
business are measured at fair value as at date of acquisition. Internally generated intangibles including research cost are
not capitalized and the related expenditure is recognized in the Statement of Profit and Loss in the period in which the
expenditure is incurred. Following initial recognition, intangible assets are carried at cost less accumulated amortization
and accumulated impairment loss, if any. Assets acquired but not ready for use are classified under Capital work-in¬
progress or intangible assets under development.

Amortization:

Intangible Assets with finite lives are amortized on a Straight-Line basis over the estimated useful economic life. The
amortization expense on intangible assets with finite lives is recognized in the Statement of Profit and Loss.

Intangible assets with indefinite useful lives, are not amortized, but are tested for impairment annually. The assessment of
indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change
in useful life from indefinite to finite is made on a prospective basis. The impairment loss on intangible assets with
indefinite life is recognized in the Statement of Profit & Loss.

Impairment:

An impairment loss is recognized whenever the carrying amount of an asset or its cash generating unit (CGU) exceeds its
recoverable amount. The recoverable amount of an asset is the greater of its fair value less cost to sell and value in use. To
calculate value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market rates and the risk specific to the asset. For an asset that does not generate largely independent
cash inflows, the recoverable amount is determined for the CGU to which the asset belongs. Fair value less cost to sell is the
best estimate of the amount obtainable from the sale of an asset in an arm''s length transaction between knowledgeable,
willing parties, less the cost of disposal.

Impairment losses, if any, are recognized in the Statement of Profit and Loss and included in depreciation and amortization
expense. Impairment losses, on assets other than goodwill are reversed in the Statement of Profit and Loss only to the
extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined if no
impairment loss had previously been recognized.

E. Financial Instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity. Financial instruments also include derivative contracts such as foreign currency foreign
exchange forward contracts.

Financial instruments also cover contracts to buy or sell a non-financial item that can be settled net in cash or another
financial instrument, or by exchanging financial instruments, as if the contracts were financial instruments, with the
exception of contracts that were entered into and continue to be held for the purpose of the receipt or delivery of a non¬
financial item in accordance with the entity''s expected purchase, sale or usage requirements.

Derivatives are currently recognized at fair value on the date on which the derivative contract is entered into and are
subsequently re-measured to their fair value at the end of each reporting period.

Classification

A Financial instrument is any contract that gives rise to a financial asset of one entity and financial liability or equity
instruments of another entity.

Financial assets, other than equity, are classified into, financial assets at fair value through other comprehensive income
(FVOCI) or fair value through profit and loss account (FVTPL) or at amortised cost. Financial assets that are equity
instruments are classified as FVTPL or FVOCI. Financial liabilities are classified as amortised cost category and FVTPL.

Business Model assessment and Solely payments of principal and interest (SPPI) test:

Classification and measurement of financial assets depends on the business model and results of SPPI test. The Company
determines the business model at a level that reflects how groups of financial assets are managed together to achieve a
business objective. This assessment includes judgement reflecting all relevant evidence including-

• How the performance of the business model and the financial assets held within that business model are evaluated and
reported to the entity''s key management personnel

• The risks that affect the performance of the business model (and the financial assets held within that business model)
and the way those risks are managed

• How managers of the business are compensated (for example, whether the compensation is based on the fair value of
the assets managed or on the contractual cash flows collected)

• The expected frequency, value and timing of sales are also important aspects of the Company''s assessment.

If cash flows after initial recognition are realised in a way that is different from the Company''s original expectations, the
Company does not change the classification of the remaining financial assets held in that business model, but incorporates
such information when assessing newly originated or newly purchased financial assets going forward.

Initial recognition and measurement

The classification of financial instruments at initial recognition depends on their contractual terms and the business model
for managing the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to
the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at

FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial
recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are
recognised immediately in the Statement of profit or loss.

Financial assets and financial liabilities, except for loans, debt securities and deposits are recognised on the trade date i.e.
when a Company becomes a party to the contractual provisions of the instruments. Loans, debt securities and deposits are
recognised when the funds are transferred to the customer''s account. Trade receivables are measured at the transaction
price.

Subsequent measurement

• Financial assets at amortised cost

Financial assets having contractual terms that give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal outstanding and that are held within a business model whose objective is to hold such assets
in order to collect such contractual cash flows are classified in this category. Subsequently these are measured at amortised
cost using effective interest method less any impairment losses.

• Equity Instruments at FVOCI

These include financial assets that are equity instruments as defined in Ind AS 32 "Financial Instruments: Presentation" and
are not held for trading and where the Company''s management has elected to irrevocably designated the same as Equity
instruments at FVOCI upon initial recognition. Subsequently, these are measured at fair value and changes therein are
recognised directly in other comprehensive income, net of applicable income taxes.

Gains and losses on these equity instruments are never recycled to profit or loss.

Dividends from these equity investments are recognised in the statement of profit and loss when the right to receive the
payment has been established. Fair value through Profit and loss account financial assets are measured at FVTPL unless it is
measured at amortised cost or at FVOCI on initial recognition. The transaction costs directly attributable to the acquisition
of financial assets at fair value through profit or loss are immediately recognised in profit or loss.

• Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all its
liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.

• Other Financial Liabilities

These are measured at amortized cost using effective interest rate.

• Derecognition of Financial assets and Financial liabilities:

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expires or it
transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.

A financial liability is derecognised when the obligation under the liability is discharged, cancelled, or expires.

• Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses on a financial asset that is at amortized cost or fair
value through OCI. Loss allowance in respect of financial assets is measured at an amount equal to life time expected credit
losses and is calculated as the difference between their carrying amount and the present value of the expected future cash
flows discounted at the original effective interest rate.

• Reclassification of Financial assets

The company does not re-classify its financial assets subsequent to their initial recognition, apart from the exceptional
circumstances when the company changes its business model for managing such financial assets. The company does not re¬
classify its financial liabilities.

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Mar 31, 2015

A) Basis of Accounting:

The Company follows the accrual system of accounting except gratuity and leave encashment i) benefits to employees.

ii) The financial statements are based on historical cost convention.

b) Fixed Assets :

i) Fixed Assets are stated at cost less accumulated depreciation.

ii) Capitalization of construction period expenses :

Direct expenses as well as clearly identifiable indirect expenses, incurred on project during the period of construction are capitalized proportionately to respective assets.

c) Depreciation

Depreciation is provided on the fixed assets on straight line method in the manner specified in schedule II to the Companies Act, 2013.

d) Inventories :

Inventories are valued at lower of the cost and net realizable value.

e) Investments :

Investments are stated at cost.

f) Revenue Recognition:

i) Revenue from sale of goods and steam is recognized when the substantial risk and rewards of ownership are transferred to the buyer under the terms of the contract.

ii) Other items of income are accounted as and when right to receive arises.

g) Provision for Taxation :

Provision for tax is made on both current and deferred taxed. Current tax is provided on the taxable income using the applicable tax rates and tax laws. Deferred tax liabilities arising on account of timing difference and which are capable of reversals in subsequent period are provided using tax rates and tax laws that have been enacted or subsequently enacted.

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Mar 31, 2014

A) Basis of Accounting:

The Company follows the accrual system of accounting except gratuity and leave encashment

i) benefits to employees.

ii) The financial statements are based on historical cost convention.

b) Fixed Assets :

i) Fixed Assets are stated at cost less accumulated depreciation.

ii) Capitalisation of construction period expenses :

Direct expenses as well as clearly identifiable indirect expenses, incurred on project during the period of construction are capitalised proportionately to respective assets.

c) Depreciation

Depreciation is provided on the fixed assets at the rates and in the manner specified in schedule XIV to the Companies Act, 1956 on straight line method.

d) Inventories :

Inventories are valued at lower of the cost and net realisable value. The cost has been determined as under:

e) Investments :

Investments are stated at cost.

f) Revenue Recognition:

i) Revenue from sale of goods and steam is recognized when the substantial risk and rewards of ownership are transferred to the buyer under the terms of the contract.

ii) Interest income is accured at applicable rate.

iii) Other items of income are accounted as and when right to receive arises.

g) Foreign Currency Transactions :

i) Foreign currency transactions are recorded at the exchange rate prevailing at the time of transactions.

ii) Current assets and Current liabilites are converted at the prevailing year end rate.

iii) Exchange Flutuation on account of acquisition of Fixed Assets is adjusted to carrying cost of Fixed Assets. Other fluctuation difference is adjusted In the profit and loss account.

h) Provision for Taxation :

Provision for tax is made on both current and deferred taxed. Current tax is provided on the taxable income using the applicable tax rates and tax laws. Deferred tax liabilites arising on account of timing difference and which are capable of reversals in subsequent period are provided using tax rates and tax laws tha have been enacted or subsequently enacted.

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Mar 31, 2012

A) Basis of Accounting:

i) The Company follows the accrual system of accounting except gratuity and leave encashment benefits to employees.

ii) The financial statements are based on historical cost convention.

b) Fixed Assets :

i) Fixed Assets are stated at cost less accumulated depreciation.

ii) Capitalisation of construction period expenses :

Direct expenses as well as clearly identifiable indirect expenses, incurred on project during the period of construction are capitalised proportionately to respective assets.

c) Depreciation

Depreciation is provided on the fixed assets at the rates and in the manner specified in schedule XIV to the Companies Act, 1956 on straight line method.

d) Inventories:

Inventories are valued at lower of the cost and net realisable value. The cost has been determined as under:

i) Raw Materials - at cost-( FIFO basis.)

ii) Finished Products and Stock-in-process - at Raw Material cost adding proportionate ’conversion cost.

iii) Traded goods at cost-( FIFO basis).

e) INVESTMENTS:

Investments are stated at cost.

f) SALES:

Sales comprise of value of sale of goods excluding Sales tax but including excise duty.

g) FOREIGN CURRENCY TRANSACTIONS :

i) Foreign currency transactions are recorded at the exchange rate prevailing at the time of transactions.

ii) Current assets and Current liabilites are converted at the prevailing year end rate

iii) Exchange Flutuation on account of acquisition of Fixed Assets is adjusted to carrying cost of Fixed Assets. Other fluctuation difference is adjusted In the profit and loss account.

h) Provision for Taxation :

Provision for tax is made on both current and deferred taxed. Current tax is provided on the taxable income using the applicable tax rates and tax laws. Deferred tax liabilities arising on account of timing difference and which are capable of reversals in subsequent period are provided using tax rates and tax laws tha have been enacted or subsequently enacted.

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Mar 31, 2011

A) BASIS OF ACCOUNTING:

I) The Company follows the accrual system of accounting except gratuity and leave encashment benefits to employees.

ii) The financial statements are based on historical cost convention.

B) FIXED ASSETS:

I) Fixed Assets are stated at cost less accumulated depreciation.

Capitalisation of construction period expenses :

Direct expenses as well as clearly identifiable indirect expenses, incurred on project during the period of construction are capitalised proportionately to respective assets.

C) DEPRECIATION :

Depreciation is provided on the fixed assets at the rates and in the manner specified in schedule XIV to the Companies Act, 1956 on straight line method.

D) INVENTORIES:

Inventories are valued at lower of the cost and net realisable value. The cost has been determined as under:

I) Raw Materials - at cost-( FIFO basis.)

II) Finished Products and Stock-in-process - at Raw Material cost adding proportionate 'conversion cost.

III) Traded goods at cost-( FIFO basis).

E) INVESTMENTS:

Investments are stated at cost.

F) SALES:

Sales comprise of value of sale of goods excluding Sales tax but including excise duty.

G) FOREIGN CURRENCY TRANSACTIONS :

I) Foreign currency transactions are recorded at the exchange rate prevailing at the time of transactions.

II) Current assets and Current liabilities are converted at the prevailing year end rate.

III) Exchange Fluctuation on account of acquisition of Fixed Assets is adjusted to carrying cost of Fixed Assets. Other fluctuation difference is adjusted In the profit and loss account.

H) Provision for Taxation:

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Mar 31, 2010

A) Basis of Accounting:

I) The Company follows the accrual system of accounting except gratuity and leave encashment benefits to employees.

ii) The financial statements are based on historical cost convention.

B) FIXED ASSETS:

I) Fixed Assets are stated at cost less accumulated depreciation.

II) Capitalisation of construction period expenses :

Direct expenses as well as clearly identifiable indirect expenses, incurred on project during the period of construction are capitalised proportionately to respective assets.

C) DEPRECIATION:

Depreciation is provided on the fixed assets at the rates and in the manner specified in schedule XIV to the Companies Act, 1956 on straight line method.

D) INVENTORIES:

Inventories are valued at lower of the cost and net realisable value. The cost has been determined as under:

I) Raw Materials - at cost-( FIFO basis.)

II) Finished Products and Stock-in-process - at Raw Material cost adding proportionate 'conversion cost.

III) Traded goods at cost-( FIFO basis). ¦'

E) INVESTMENTS:

Investments are stated at cost.

F) SALES:

Sales comprise of value of sale of goods excluding Sales tax but including excise duty.

G) FOREIGN CURRENCY TRANSACTIONS :

I) Foreign currency transactions are recorded at the exchange rate prevailing at the time of transactions.

II) Current assets and Current liabilities are converted at the prevailing year end rate.

III) Exchange Fluctuation on account of acquisition of Fixed Assets is adjusted to carrying cost of Fixed Assets. Other fluctuation difference is adjusted In the profit and loss account.

H) Provision for Taxation :

1) Provision for tax is made on both current and deferred taxed. Current tax is provided on the taxable income using the applicable tax rates and tax laws. Deferred tax liabilities arising qp account of timing difference and which are capable of reversals in subsequent period are provided using tax rates and tax laws tha have been enacted or subsequently enacted.

2) As per the agreement for Assignment of Debt executed on 13th July, 2007 between IDBI (Assignor) and Aaskha Holding Pvt Ltd (Assignee). IDBI has transferred it's rights of the amount receivable from the company to the assignee, Consequently the amount payable as per Books of Accounts of the company to the IDBI, have been transferred in the name of the assignee i.e. Aaskha Holdings Pvt Ltd.