Accounting Policies of HP Telecom India Ltd. Company

Mar 31, 2026

2.1 Basis of Preparation of Financial Statements:

The Financial Statements of the Company have been prepared in accordance with the generally accepted accounting
principles in India (Indian GAAP). The Company has prepared these Financial Statements to comply in all material
respects with the accounting standards notified under section 133 of the Companies Act 2013 read together with the
Companies (Accounting Standards) Rules, 2021 and presentation requirements of Division I of Schedule III to the
Companies Act, 2013.

These Financial Statements have been prepared on a going concern basis, under the historical cost convention, and
on an accrual basis of accounting. The accounting policies adopted in the preparation of these Financial Statements
are consistent with those followed in the previous year.

The financial statements are presented in Indian Rupees (?), which is the Company''s functional and presentation
currency.

2.2 Use of Estimates:

The preparation of financial statements in conformity with Generally Accepted Accounting Principles in India (Indian
GAAP) requires the management to make judgments, estimates, and assumptions that affect the reported amounts of
revenues, expenses, assets, and liabilities, and the disclosure of contingent liabilities at the end of the reporting period.

Although these estimates are based upon management''s best knowledge of current events and actions, actual results
could differ from these estimates. Differences between the actual results and the estimates are recognized in the
period in which the results are known or materialized. Revisions to accounting estimates are recognized prospectively
in the current and future periods.

Significant estimates used by the management in the preparation of these financial statements include, but are not
limited to, the determination of useful lives of property, plant and equipment, valuation of inventories (including
provision for obsolescence), provision for doubtful debts, provision for taxation (including deferred taxes), and
provisions for contingencies.

2.3 Current versus non-current classification

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

• expected to be realized or intended to be sold or consumed in normal operating cycle;

• held primarily for the purpose of trading;

• expected to be realized within twelve months after the reporting period; or

• 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 are classified as non-current.

A liability is current when it is:

• expected to be settled in normal operating cycle;

• held primarily for the purpose of trading;

• due to be settled within twelve months after the reporting period; or

• there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting
period.

The Company classifies all other liabilities as non-current.

Deferred tax assets and deferred tax liabilities are classified as non-current assets and non-current liabilities
respectively.

The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash
equivalents. The Company has identified twelve months as its operating cycle.

2.4 Cash and cash equivalents:

Cash and cash equivalents in the balance sheet and cash flow statement comprise cash at banks and in hand, debit
balance of cash credit accounts and credit cards, and short-term deposits with an original maturity of three months or
less, which are subject to an insignificant risk of changes in value.

2.5 Cash Flow Statement:

The Company prepares its Cash Flow Statement in accordance with Accounting Standard (AS) 3 “Cash Flow
Statements” as notified under the Companies (Accounts) Rules, 2014. The Cash Flow Statement presents cash flows
from operating, investing and financing activities, classified and reported using the indirect method for operating
activities, whereby net profit is adjusted for effects of non-cash transactions, deferrals or accruals of past or future
operating cash receipts or payments. Cash flows from investing and financing activities are reported separately. Cash
and cash equivalents include cash on hand, demand deposits, and short-term, highly liquid investments maturing
within three months of acquisition.

2.6 Inventories:

Inventories, predominantly consisting of Stock-in-Trade (telecommunications equipment, mobile handsets, consumer
electronics, and related accessories), are valued at the lower of Cost and Net Realizable Value (NRV).

Cost is determined using the First-In-First-Out (FIFO) method, with specific identification used for high-value, serialized
items. Total cost includes the purchase price and all direct inbound expenses, net of any trade discounts.

Because tech products age quickly, management regularly reviews stock and makes provisions for slow-moving,
defective, or technologically obsolete items.

Inventories are presented as "Stock-in-Trade" under "Current Assets" on the Balance Sheet, with any goods-in-transit
disclosed separately.

2.7 Revenue Recognition:

(I) Sale of Products:

Revenue from the sale of products is recognized when the significant risks and rewards of ownership of the goods
have been transferred to the buyer, and the Company retains no effective control of the goods transferred to a
degree usually associated with ownership. This generally coincides with the dispatch or delivery of goods to the
customers, in accordance with the agreed terms of sale.

Revenue is recognized only when there is no significant uncertainty regarding the amount of consideration that will
be derived from the sale of the goods and regarding its ultimate collection.

Revenue from sales is measured at the fair value of the consideration received or receivable. Sale of products is
presented net of sales returns, trade discounts, and volume rebates. These deductions include accrued dealer
obligations, such as volume incentives and promotional schemes, as well as price protection discounts. Price
protection discounts are recognized when the Original Equipment Manufacturer (“OEM”) announces a price drop
and are calculated based on eligible unsold channel inventory.

The Company operates as a principal in its distribution network, assuming inventory risk and primary responsibility
for fulfilling customer orders. Consequently, revenue from the sale of goods is presented on a gross basis.

Sales revenue is recognized excluding Goods and Services Tax (GST) or other indirect taxes recovered from
customers, as these are collected on behalf of the government and do not represent economic benefits flowing to
the Company.

(II) Sevices: Service revenues, like commission income and rent income is recognized as services are performed.

(III) Interest Income: Interest income is recognized on a time proportion basis taking into account the amount
outstanding and the rate applicable.

(IV) Other Income: Any other items of income are accounted for on an accrual basis, in accordance with the terms of
the relevant agreements or underlying transactions, ensuring they are recorded in the period to which they relate.

2.8 Property, Plant and Equipment and Intangible Assets:

i. Property, Plant and Equipment are stated at cost net of recoverable taxes and less accumulated depreciation and
impairment loss, if any. All costs including financing costs, up to the date of commissioning and attributable to the
Property, Plant and Equipment are capitalised.

ii. Intangible assets are stated at cost of acquisition, less accumulated amortisation.

2.9 Depreciation and Amortization:

i. Depreciation on Property, Plant and Equipment are provided on "Written Down value Method" in accordance with
requirements of Schedule II to the Companies Act, 2013.

ii. Amortization Intangible assets are amortized on "Written Down value Method" over their respective individual
estimated useful life.

2.10 Investments:

Current Investments are carried at the lower of cost or quoted / fair value, computed category-wise. Long-term
investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such
decline is other than temporary. Investments that are readily realisable and intended to be held for not more than 12
months from the date of acquisition are classified as current investment. All other investments are classified as non¬
current investments. On disposal of an investment, the difference between its carrying amount and net disposal
proceeds is charged or credited to the statement of profit and loss.

2.11 Employee Benefits:

All employee benefits payable wholly within twelve months of rendering the service are classified as short-term
employee benefits. The undiscounted amount of short-term employee benefits, such as salaries, wages, performance
incentives, and compensated absences, expected to be paid in exchange for the services rendered by employees are
recognized as an expense in the Statement of Profit and Loss during the period in which the employee renders the
related service.

As the number of employees on the direct payroll of the Company has remained below the statutory threshold
prescribed under the Code on Social Security, 2020, the provisions relating to the payment of gratuity are currently not
applicable to the Company. Consequently, no provision for gratuity liability has been recognized in the financial
statements.

A significant portion of the Company''s operational manpower requirement is fulfilled through outsourced service
contracts with third-party agencies. Personnel deployed under these arrangements are the direct employees of the
respective third-party service providers. The responsibility for all statutory compliances related to such personnel,
including contributions towards Provident Fund, ESIC, and other applicable labour laws, rests with the third-party
providers. The Company, acting in its capacity as the principal employer, annually obtains declarations and
confirmations from these providers to ensure timely statutory compliances are being maintained. The charges paid to
such third parties are recognized as an expense in the Statement of Profit and Loss.

2.12 Borrowing Cost:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the
cost of such assets. A qualifying asset is one that takes necessarily substantial period of time to get ready for intended
use.

All other borrowing costs are charged to the Statement of Profit and Loss.

2.13 Earnings Per Share:

Basic earnings per share is computed by dividing the net profit or loss for the period attributable to equity shareholders
by the weighted average number of equity shares outstanding during the period.

Diluted earnings per share is computed by taking into account the aggregate of the weighted average number of equity
shares outstanding during the period and the weighted average number of equity shares which would be issued on
conversion of all the dilutive potential equity shares into equity shares.

2.14 Income Taxes:

Tax expense for the year comprises current tax and deferred tax.

(a) Current Tax:

Current tax is determined as the amount of tax payable in respect of taxable income for the year, computed in
accordance with the provisions of the Income-tax Act, 1961. The Company has opted for the concessional tax regime
under Section 115BAA of the Income-tax Act, 1961. Accordingly, the current tax provision has been recognized based
on the applicable concessional rates prescribed under this regime. Consequently, the provisions of Minimum Alternate
Tax (MAT) under Section 115JB of the Act do not apply to the Company.

(b) Deferred Tax:

Deferred tax is recognized, subject to the consideration of prudence, on timing differences, being the difference
between taxable income and accounting income that originate in one period and are capable of reversal in one or more
subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been
enacted or substantively enacted by the balance sheet date, reflecting the concessional rate applicable to the
Company under Section 115BAA.

Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized only to the
extent that there is reasonable certainty that sufficient future taxable income will be available against which such
deferred tax assets can be realized. However, in situations where the Company has unabsorbed depreciation or carry¬
forward tax losses, deferred tax assets are recognized only if there is virtual certainty supported by convincing
evidence that they can be realized against future taxable profits.

At each balance sheet date, the Company re-assesses recognized and unrecognized deferred tax assets. The
Company writes down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain
or virtually certain, as the case may be, that sufficient future taxable income will be available against which the deferred
tax asset can be realized. The Company recognizes unrecognized deferred tax assets to the extent that it has become
reasonably certain or virtually certain that sufficient future taxable income will be available.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets
against current tax liabilities, and the deferred tax assets and liabilities relate to the taxes on income levied by the
same governing taxation laws.

2.15 Accounting of Indirect Tax:

The Company is recording sales and purchases on exclusive method and GST are not passed through the Statement
of Profit and Loss of the Company.

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Mar 31, 2025

NOTE 1: COMPANY OVERVIEW

HP Telecom India Limited (Formerly known as HP Telecom India Private Limited) (“the Company”) is a public company incorporated under the provisions of the Companies Act, 1956, and is now governed by the provisions of the Companies Act, 2013. The Company was incorporated on March 26, 2011, and has its registered address at Plot No-97,1st Floor,Om Square, Near Ishwar Farm , BRTS Canal Road, Bhatar, Althan, Surat-395017, Gujarat. The Shares of the Company are listed on Emerge SME Platform of NSE. The Company is engaged in distributing a wide range of telecommunications and technology products across India.

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of Preparation of Financial Statements:

The Financial Statements of the Company have been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP). The Company has prepared these Financial Statements to comply in all material respects with the accounting standards notified under section 133 of the Companies Act 2013 read together with the Companies (Accounting Standards) Rules, 2021 and presentation requirements of Division I of Schedule III to the Companies Act, 2013. The Financial Statements have been prepared on an accrual basis and under the historical cost convention.

These Financial Statements have been prepared on a going concern basis.

2.2 Use of Estimates:

The preparation of Financial Statements in conformity with Indian GAAP requires judgements, estimates and assumptions to be made that affect the reported amount of assets and liabilities, disclosure of contingent liabilities on the date of the Financial Statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known/materialised. The management believes that the estimates used in the preparation of the Financial Statements are prudent and reasonable.

2.3 Current versus non-current classification

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

• expected to be realized or intended to be sold or consumed in normal operating cycle;

• held primarily for the purpose of trading;

• expected to be realized within twelve months after the reporting period; or

• 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 are classified as non-current.

A liability is current when it is:

• expected to be settled in normal operating cycle;

• held primarily for the purpose of trading;

• due to be settled within twelve months after the reporting period; or

• there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

The Company classifies all other liabilities as non-current.

Deferred tax assets and deferred tax liabilities are classified as non-current assets and non-current liabilities respectively.

The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle.

2.4 Cash and cash equivalents:

Cash and cash equivalents in the balance sheet and cash flow statement comprise cash at banks and in hand, debit balance of cash credit accounts and credit cards, and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.

2.5 Cash Flow Statement:

The Company prepares its Cash Flow Statement in accordance with Accounting Standard (AS) 3 “Cash Flow Statements” as notified under the Companies (Accounts) Rules, 2014. The Cash Flow Statement presents cash flows from operating, investing and financing activities, classified and reported using the indirect method for operating activities, whereby net profit is adjusted for effects of non-cash transactions, deferrals or accruals of past or future operating cash receipts or payments. Cash flows from investing and financing activities are reported separately. Cash and cash equivalents include cash on hand, demand deposits, and short-term, highly liquid investments maturing within three months of acquisition.

2.6 Inventories:

Stock in consumables, trade, stores and spares are valued at the lower of the cost or net realizable value.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale as per income computation and disclosure standard. Closing Stock in terms of quantity as well as in terms of value are taken, valued and certified by the management.

2.7 Revenue Recognition:

i. Sales: Revenue from sale of goods is recognized:

a. When all the significant risks and rewards of ownership are transferred to the buyer and the company retains no effective control of the goods transferred to a degree usually associated with ownership; and

b. No significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of goods.

ii. Sevices: Service revenue is recognized as services are performed.

iii. Interest: Interest income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

2.8 Property, Plant and Equipment and Intangible Assets:

i. Property, Plant and Equipment are stated at cost net of recoverable taxes and less accumulated depreciation and impairment loss, if any. All costs including financing costs, up to the date of commissioning and attributable to the Property, Plant and Equipment are capitalised.

ii. Intangible assets are stated at cost of acquisition, less accumulated amortisation.

2.9 Depreciation and Amortization:

i. Depreciation on Property, Plant and Equipment are provided on "Written Down value Method" in accordance with requirements of Schedule II to the Companies Act, 2013.

ii. Amortization Intangible assets are amortized on "Written Down value Method" over their respective individual estimated useful life.

2.10 Investments:

Current Investments are carried at the lower of cost or quoted / fair value, computed category-wise. Long-term investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such decline is other than temporary. Investments that are readily realisable and intended to be held for not more than 12 months from the date of acquisition are classified as current investment. All other investments are classified as non-current investments. On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss.

2.11 Employee Benefits:

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised as an expense during the period when the employees render the services. These benefits include performance incentive and compensated absences.

The majority of the employees are on an outsourced-manpower contract basis. During the year, there are less than 10 employees under the direct payroll of the Company. Hence, provisions of the Payment of Gratuity Act, 1972, are not applicable, and therefore no provision for gratuity is made.

The entity that supplies the labour handles provident fund and other employee benefit-related compliances of employees on an outsourced-manpower contract basis. Confirmations of timely compliance with the same are taken annually by the management.

2.12 Borrowing Cost:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that takes necessarily substantial period of time to get ready for intended use.

All other borrowing costs are charged to the Statement of Profit and Loss.

2.13 Earnings Per Share:

Basic earnings per share is computed by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

Diluted earnings per share is computed by taking into account the aggregate of the weighted average number of equity shares outstanding during the period and the weighted average number of equity shares which would be issued on conversion of all the dilutive potential equity shares into equity shares.

2.14 Income Taxes:

Tax expense comprises of current tax and deferred tax.

Current tax is measured at the amount expected to be paid to the tax authorities, using the applicable tax rates.

Deferred tax expense or benefit is recognized on timing differences being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the taxes on income levied by the same governing taxation laws.

Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits. In the situations where the Company is entitled to a tax holiday under the Income realized against future taxable profits. In the situations where the Company is entitled to a tax holiday under the Income tax Act, 1961 enacted in India, no deferred tax (asset or liability) is recognized in respect of timing differences which reverse during the tax holiday period, to the extent the Company''s gross total income is subject to the deduction during the tax holiday period. Deferred tax in respect of timing differences which reverse after the tax holiday period is recognized in the year in which the timing differences originate.

At each balance sheet date, the Company re-assessed recognized and unrecognized deferred tax assets. The Company writes- down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which the deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available. The Company recognizes unrecognized deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized.

2.15 Accounting of Indirect Tax:

The Company is recording sales and purchases on exclusive method and GST are not passed through the Statement of Profit and Loss of the Company.

2.16 Provision, Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised but are disclosed in notes. Contingent Assets are neither recognised nor disclosed in the Financial Statements.

The Original Equipment Manufacturer (“OEM”) provides standard assurance-type warranties on all products distributed by the Company, covering product performance and quality under the OEM''s terms and conditions. The Company does not assume any separate or additional warranty obligations beyond those provided by the OEM. Based on historical experience and the contractual allocation of warranty risk to the OEM, management has determined that no liability for warranty claims is expected to arise and, accordingly, no provision for warranties or related claims is required.

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably; the Company does not recognize a contingent liability but discloses its existence in the Financial Statements.

Contingent assets are neither recognized nor disclosed in the Financial Statements.

2.17 Foreign currency transactions:

There were no foreign currency transactions made by the Company during the year.

2.18 Impairment of Assets:

The Company assess at each reporting date as to whether there is any indication that an asset (tangible and intangible) may be impaired. An asset is treated as impaired, when the carrying cost of the asset exceeds its recoverable amount.

Recoverable amount is higher of an asset''s or cash generating unit''s net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.