Accounting Policies of Shri Kanha Stainless Ltd. Company

Mar 31, 2025

2. Summary of significant accounting policies

a. Basis of Preparation

The financial statements have been prepared in accordance with generally accepted accounting
principles in India (Indian GAAP) under the historical cost convention on an accrual basis in compliance
with all material aspects of the Accounting Standards (AS) notified under section 133 of the Companies
Act 2013, read together with Rule 7 of the Companies (Accounts) Rules 2014. The accounting policies
adopted in the preparation of financial statements have been consistently applied except where a
newly issued accounting standard is initially adopted or a revision to an existing accounting standard
requires a change in the accounting policy until now (hitherto) in use with those of previous year.

All assets and liabilities have been classified as current or non-current as per the Company’s normal
operating cycle, and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the
nature of business and the time between the acquisition of assets for processing and their realization in
cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the
purpose of current or non-current classification of assets and liabilities.

b. Use of estimates

The preparation of financial statements requires the management to make judgments, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and
disclosure of contingent liabilities, at the end of the reporting period. 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. Property, Plant and Equipment
Tangible assets

Tangible assets, capital work in progress is stated at historical cost, less accumulated depreciation,
revaluation and impairment losses, if any. Cost comprises the purchase price, borrowing costs, if
capitalization criteria are met and any cost attributable to bringing the assets to its working condition
for its intended use which includes taxes, freight, and installation and allocated incidental expenditure
during construction/ acquisition and exclusive Input tax credit (IGST/CGST and SGST) or other tax
credit available to the Company.

When parts of an item of tangible assets have different useful lives, they are accounted for as separate
items (major components) of property, plant and equipment.

Subsequent expenditure relating to tangible assets is capitalized only if such expenditure results in an
increase in the future benefits from such asset beyond its previously assessed standard of performance.

list i \%

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 on derecognition is recognized in

the Statement of Profit and Loss.

Intangible assets

An intangible asset is recognized when it is probable that the future economic benefits attributable to
the asset will flow to the enterprise and where its cost can be reliably measured. Intangible assets are
stated at cost of acquisition less accumulated amortization and impairment losses, if any. Cost
comprises the purchase price and any cost attributable to bringing the assets to its working condition
for its intended use which includes taxes, freight, and installation and allocated incidental expenditure
during development / acquisition and exclusive of Input tax credit (IGST/CGST and SGST) or other tax
credit available to the Company.

Subsequent expenditure relating to intangible assets is capitalized only if such expenditure results in an
increase in the future benefits from such asset beyond its previously assessed standard of performance.

Gains or losses arising from the retirement or disposal of an intangible asset are determined as the
difference between the net disposal proceeds and the carrying amount of the asset and recognized as
income or expense in the Statement of Profit and Loss.

d. Depreciation on property, plant and equipment

Based on management’s evaluation, useful life prescribed in Schedule II of the Companies Act, 2013
represent actual useful life of property, plant and equipment.

The depreciation charge for each year is recognized in the Statement of Profit and Loss, unless it is
included in the carrying amount of any other asset.

The Company has adopted Schedule II to the Companies Act, 2013 which requires identification and
determination of separate useful life for each major component of the property, plant and equipment,
if they have useful life that is materially different from that of the remaining asset. (Component
Accounting).

Leasehold improvements are depreciated over their estimated useful life, or the remaining period of
lease from the date of capitalization, whichever is shorter.

Depreciation on addition to tangible assets is provided on pro-rata basis from the date the assets are
ready for intended use. Depreciation on sale/discard from tangible assets is provided for up to the date
of sale, deduction or discard of tangible assets as the case may be.

The useful life, residual value and the depreciation method are reviewed at least at each year end. If
the expectations differ from previous estimates, the changes are accounted for prospectively as a
change in accounting estimate.

e. Impairment of Assets

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of
impairment based on internal/external factors. An impairment loss is recognized wherever the carrying
amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the
assets'' net selling price and value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value at the weighted average cost of capital.

After impairment, depreciation/amortization is provided on the revised carrying amount of the asset
over its remaining useful life.

f. Borrowing Costs

Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the
arrangement of borrowings and exchange differences arising from foreign currency borrowings to the
extent they are regarded as an adjustment to the interest cost.

Borrowing costs that are directly attributable to the acquisition, construction or production of an asset
that takes a substantial period of time to get ready for its intended use or sale are capitalized until
such time as the assets are substantially ready for their intended use or sale. All other borrowing costs
are recognized as expenditure in the period in which they are incurred.

g. Foreign currency translation
Initial recognition:

Foreign currency transactions are recorded in the reporting currency by applying the exchange rate
between the reporting currency and the foreign currency at the date of the transaction.

Subsequent recognition:

Foreign currency monetary items are reported using the closing rate. Non-monetary items which are
earned in terms of historical cost denominated in a foreign currency are reported using the exchange
rate at the date of the transaction; non-monetary items which are carried at fair value or other
similar valuation denominated in a foreign currency are reported using the exchange rates that
existed when such values were determined.

Exchange differences:

Exchange differences arising on the settlement of monetary items or on reporting the Company’s
monetary items at rates different from those at which they were initially recorded during the year or

^rT⁰!??K ^{m previous financial} statements, are recognized as income or as expenses in the year in
which they occur. ⁷

h. 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.

Revenue from sale of goods is recognized when the significant risks and rewards of ownership of the
goods are transferred to the buyer and are recorded net of trade discounts, rebates, Sales Tax, Value
Added Tax, Goods and Service Tax and gross of Excise Duty.

Revenue from services

Revenue from services is recognized pro-rata over the period of the contract as and when services are
rendered and the collectability is reasonably assured. The revenue is recognized net of Goods and
service tax.

Interest Income

Interest Income is recognized on a time proportion basis taking into account the amount outstanding
and applicable interest rate.

Dividend Income

Dividend is recognized when the Company’s right to receive dividend is established.

i. Retirement and other employee benefits
Defined contribution plan

Provident Fund: Contribution towards provident fund is made to the regulatory authorities, where the
Company has no further obligations. Such benefits are classified as Defined Contribution Schemes as
the Company does not carry any further obligations, apart from the contributions made on a monthly
basis which are charged to the Statement of Profit and Loss.

Employee''s State Insurance Scheme: Contribution towards employees'' state insurance scheme is made
to the regulatory authorities, where the Company has no further obligations. Such benefits are
classified as Defined Contribution Schemes as the Company does not carry any further obligations,
apart from the contributions made on a monthly basis which are charged to the statement of profit and
loss.

Defined Benefit Plan- Gratuity

The Company provides for retirement benefits in the form of Gratuity. Benefits payable to eligible
employees of the company with respect to gratuity, a defined benefit plan is accounted for on the
basis of an actuarial valuation as at the Balance Sheet date. In accordance with the Payment of
Gratuity Act, 1972, the plan provides for lump sum payments to vested employees on retirement,
death while in service or on termination of employment an amount equivalent to 15 days basic salary
for each completed year of service. Vesting occurs upon completion of five years of service. The
present value of such obligation is determined by the projected unit credit method and adjusted for
past service cost and fair value of plan assets as at the balance sheet date through which the
obligations are to be settled. The resultant actuarial gain or loss on change in present value of the
defined benefit obligation or change in return of the plan assets is recognized as an income or expense
in the Statement of Profit and Loss.

j. Cash and cash equivalents

Cash and cash equivalents include cash in hand, demand deposits with banks, other short term highly
liquid investments with original maturities of three months or less.

k. Income taxes

Tax expense for the period comprises of current tax and deferred tax.

Provision for current tax is made on the basis of estimated taxable income for the current accounting
year in accordance with the Income-tax Act, 1961.

Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set
off the recognized amounts, and there is an intention to settle the asset and the liability on a net
basis.

The deferred tax for timing differences between the book and tax profits for the year is accounted for,
using the tax rates and laws that have been substantively enacted as of the reporting date.

Deferred tax charge or credit reflects the tax effects of timing differences between accounting income
and taxable income for the period. The deferred tax charge or credit and the corresponding deferred
tax liabilities or assets are recognized using the tax rates that have been enacted or substantively
enacted by the balance sheet date. Deferred tax assets are recognized only to the extent there is
reasonable certainty that the assets can be realized in future; however, where there is unabsorbed
depreciation or carry forward of losses, deferred tax assets are recognized only if there is a virtual
certainty of realization of such assets. Deferred tax assets are reviewed at each balance sheet date and
are written-down or written up to reflect the amount that is reasonably/virtually certain (as the case
may be) to be realized.

At each reporting date, the Company reassesses the unrecognized deferred tax assets, if any.

l. Leases

As a Lessee:

Finance leases, which effectively transfers to the Company substantially all the risks and benefits
incidental to ownership of the leased item, are capitalized at the inception of the lease term at the
lower of the fair value of the leased property and present value of minimum lease payments. Lease
payments are apportioned between the finance charges and reduction of the lease liability so as to
achieve a constant rate of interest on the remaining balance of the liability. Finance charges are

recognized as finance costs in the Statement of Profit and Loss. Lease management fees. Legal charges

and other initial direct costs of lease are capitalized.

A leased asset is depreciated on a straight-line basis over the useful life of the asset assessed by the
management (or the useful life envisaged in Schedule II to the Companies Act, 2013, whichever is
lower). However, if there is no reasonable certainty that the Company will obtain the ownership by the

end of the lease term, the capitalized asset is depreciated on a straight-line basis over the shorter of
the estimated useful life of the asset (the lease term or the useful life envisaged in Schedule II to the
Companies Act, 2013).

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.