Accounting Policies of Northern Spirits Ltd. Company

Mar 31, 2025

This note provides a list of the significant accounting policies adopted in the preparation of these financial
statements. These policies have been consistently applied to all the years presented, unless otherwise stated.

i) Compliance with Ind AS

These interim condensed financial statements have been prepared in accordance with recognition
and measurement principles laid down in IND AS 34 ''Interim Financial Reporting'', and applicable
Indian Accounting Standards ("IND-AS") issued by the Institute of Chartered Accountants of India
(ICAI) and other recognised accounting practices and policies in India.

These financial statements comply in all material aspects with Indian Accounting Standards (Ind AS)
notified under Section 133 of the Companies Act, 2013 (the ''Act'') [Companies (Indian Accounting
Standards) Rules, 2015] and other relevant provisions of the Act.

ii) Historical cost convention

These financial statements have been prepared on a historical cost basis, except where fair value
measurement is required by the relevant Ind AS.

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 (Division II) to the Act. Based on the
nature of products 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 twelve months for
the purpose of current/non-current classification of assets and liabilities.

The determination of whether an arrangement is, or contains, a lease is based on the substance of the
arrangement at the inception date, whether fulfilment of the arrangement is dependent on the use of a
specific asset or assets or the arrangement conveys a right to use the asset, even if that is not explicitly
specified in an arrangement.

Operating lease

An operating lease is a lease other than a finance lease. Lease in which a significant portion of the risks and
rewards of ownership are retained by lessor are classified as operating leases. The rental payments under
operating lease are recognized as expense in the statement of profit and loss on a straight-line basis over the
lease term unless the payments are structured to increase in line with expected general inflation to
compensate for the expected inflationary cost increases.

Transactions in foreign currencies are initially recorded by the Company at rates prevailing at the date of the
transaction. Subsequently, monetary items are translated at closing exchange rates of balance sheet date
and the resulting exchange difference recognized in profit or loss. Differences arising on settlement of
monetary items are also recognized in profit or loss. Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated using the exchange rates at the dates of the transaction.
The Company has not availed the exemption available in IND AS 101, to continue capitalization of foreign
currency fluctuation on long term foreign currency monetary liabilities outstanding on transition date.

Property, plant and equipment

Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at
historical cost less depreciation, and impairment loss, if any except that on adoption of Ind AS, the Company
had measured Property, plant and equipment at deemed cost, using the net carrying value as per previous
GAAP as at 31^st March, 2025. Historical cost includes expenditure that is directly attributable to the
acquisition of the assets.

Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to the
Company and the cost of the item can be measured reliably. The carrying amount of any component
accounted for as a separate asset is derecognized when replaced. All expenses in the nature of repairs and
maintenance are charged to Statement of profit and loss during the reporting period in which they are
incurred.

The cost of property, plant and equipment which are not ready for their intended use at the balance sheet
date, are disclosed as capital work-in-progress.

Depreciation methods, estimated useful lives and residual value

Depreciation is calculated using the Written Down Value method (WDV) as per the Companies Act 2013 as
below:

Intangible assets

On adoption of Ind AS, the Company has measured Intangible assets at deemed cost, using the net carrying
value as per previous GAAP as at 31^st March, 2025.

Computer Software

Computer software acquired or developed is carried at cost less accumulated amortization and impairment
losses, if any. Costs associated with maintaining software programs are recognized as an expense as incurred.
Development costs that are directly attributable to the design and testing of customised computer software
applications are recognized as intangible assets under development or intangible assets when ready for
intended use, when the following criteria are met:

a. It is technically feasible to complete the software so that it will be available for use,

b. there is an ability to use or sell the software,

c. it can be demonstrated that the software will generate probable future economic benefits,

d. adequate technical, financial and other resources to complete the development and to use the
software are available, and

e. the expenditure attributable to the software during its development can be reliably measured.

Directly attributable costs that are capitalized as part of the customized computer software applications
include employee costs and other directly attributable costs and are amortized from the point at which the
software asset is available for use.

Amortization method

The Company amortizes intangible assets using the written down value method over their estimated useful
lives as follows:

• Computer software - 5 years.

A) Financial Assets:

a) Recognition and measurement

Financial assets are recognized when the Company becomes a party to the contractual provisions
of the instrument. On initial recognition, a financial asset is recognized at fair value. Financial
assets are subsequently classified and measured at amortized cost. Financial assets are not
reclassified subsequent to their recognition, except if and in the period the Company changes its
business model for managing financial assets.

i) Trade Receivables

Trade receivables are initially recognized at fair value. Subsequently, these assets are held
at amortized cost, using the Effective Interest Rate (EIR) method net of any Expected Credit
Losses (ECL). The EIR is the rate that discounts estimated future cash income through the
expected life of financial instrument.

ii) Loans

On initial recognition, Loans are measured at fair value. Since the objective is to hold these
financial assets to collect contractual cash flows that are solely payments of principal and
interest, these assets are subsequently measured at amortized cost using the EIR method
less impairment, if any.

iii) Other financial assets

On initial recognition, other financial assets are measured at fair value, and subsequently,
measured at the amortized cost, less impairment if any. Loss arising from impairment, if any
is recognized in the Statement of Profit and Loss.

b) Derecognition

The Company derecognizes a financial asset when the contractual rights to the cash flows from
the financial asset expire, or it transfers the contractual rights to receive the cash flows from the
asset.

B) Financial Liabilities:

a) Recognition and measurement

Financial liabilities are recognized when the Company becomes a party to the contractual
provisions of the instrument. On initial recognition, financial liabilities are measured at fair value
and subsequently measured at amortized cost.

Trade and other payables

In case of trade and other payables, they are initially recognized at fair value and subsequently,
these liabilities are held at amortized cost, using the effective interest rate method.

Trade and other payables represent liabilities for goods and services provided to the Company
prior to the end of financial year which are unpaid. The amounts are unsecured and are usually
paid as per credit period. Trade and other payables are presented as current liabilities unless
payment is not due within 12 months after the reporting period.

b) Derecognition

A financial liability is derecognized when the obligation specified in the contract is discharged,
cancelled or expires.

The Company did not have any financial instruments recognized at fair value through Profit and
Loss/ fair value through Other Comprehensive Income anytime during the year or during the
comparative year.

c) 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.
The legally enforceable right must not be contingent on future events and must be enforceable
in the normal course of business and in the event of default, insolvency or bankruptcy of the
Company or the counterparty.

C) Critical estimates and judgments

The preparation of financial statements requires the use of accounting estimates which, by definition, will
seldom equal the actual result. This note provides an overview of the areas that involved a higher degree of
judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and
assumptions turning out to be different than those originally assessed. Detailed information about each of
these estimates and judgements is included in relevant notes together with information about the basis of
calculation for each affected line item in the financial statements.

The areas involving critical estimates and judgements are:

• Estimation of provisions and contingent liabilities - Note 23

Estimates and judgements are continually evaluated. They are based on historical experience and other
factors, including expectations of future events that may have a financial impact on the Company and that
are believed to be reasonable under the circumstances.

Inventories which comprise finished goods and stock-in-trade are carried at the lower of cost or net realizable
value. Cost of inventories comprises all costs of purchase, cost of conversion and other costs incurred in
bringing the inventories to their present location and condition. In determining the cost of inventories,
weighted average cost method is used. Costs of purchased inventory are determined after deducting rebates
and discounts. Net realizable value is the estimated selling price in the ordinary course of business, less the
estimated costs of completion and the estimated costs necessary to make the sale. The comparison of cost
and net realizable value is made on an item-by-item basis. Adequate allowance is made for obsolete and
slow-moving items.

Cash and cash equivalents includes cash on hand and balances with banks that are readily convertible to
known amounts of cash 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 which are subject to an insignificant
risk of changes in value.

Revenue comprises revenue from contracts with customers for sale of goods and income from promotership
margin receivable. Revenue from sale of goods is inclusive of excise duties and is net of returns, trade
allowances, rebates, value added taxes, Goods and Services Tax (GST) and such amounts collected on behalf
of third parties.

Revenue is recognized as and when performance obligations are satisfied by transferring goods or services
to the customer, as below:

Revenue from sale of products:

Revenue is recognized on transfer of control, being on dispatch of goods or upon delivery to customer, in
accordance with the terms of sale.

Revenue from promotership margin:

Revenue is recognized on transfer of service in accordance with the terms of agreement.

Interest income is recognized on a time proportion basis taking into account the amount outstanding and
the applicable interest rate. Interest income is netted off from interest cost under the head "Interest Cost
(Net)" in the statement of profit and loss.

Short term employee benefits are recognized as an expense in the Statement of Profit and Loss of the year
in which the related services are rendered.

Payment to defined contribution plan is recognized as expense when employees have rendered services.

The liability for gratuity, a defined benefit plan is determined using the projected unit credit method, on the
basis of actuarial valuations carried out by third party actuaries at each balance sheet date. Re-

Measurements comprising actuarial gains and losses arising from experience adjustments and changes in
actuarial assumptions are charged / credited to Other Comprehensive Income in period in which they arise.
Other costs are accounted for in Statement of Profit and Loss.

Income tax expense is the tax payable on the current period''s taxable income based on the applicable income
tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and
to unused tax losses, if any.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at
the end of the reporting period. Management periodically evaluates positions taken in tax returns with
respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions
where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the financial statements. However,
deferred tax liabilities are not recognized if they arise from initial recognition of goodwill.

Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted
by the end of the reporting period and are expected to apply when the related deferred income tax asset is
realized, or the deferred income tax liability is settled.

Deferred tax assets are recognized for all deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilize those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets and liabilities. Current tax assets and tax liabilities are offset where the entity has a legally enforceable
right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability
simultaneously.

Current and deferred tax is recognized in Statement of profit and loss, except to the extent that it relates to
items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized
in other comprehensive income or directly in equity, respectively.

Deferred tax on Minimum Alternative Tax (''MAT'') credit is recognized as an asset only when and to the extent
there is reasonable certainty that the Company will pay normal income-tax during the specified period. The
Company reviews the same at each balance sheet date and writes down the carrying amount of deferred tax
relating to MAT credit entitlement to the extent there is no longer reasonable certainty that the Company
will pay normal income-tax during the specified period.

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

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Mar 31, 2024

B. Significant accounting policies

This note provides a list of the significant accounting policies adopted in the preparation of these financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.

1. Basis of preparation of financial statements

i) Compliance with Ind AS

These interim condensed financial statements have been prepared in accordance with recognition and measurement principles laid down in IND AS 34 ‘Interim Financial Reporting’, and applicable Indian Accounting Standards (“IND-AS”) issued by the Institute of Chartered Accountants of India (ICAI) and other recognised accounting practices and policies in India.

These financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the ''Act'') [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.

ii) Historical cost convention

These financial statements have been prepared on a historical cost basis, except where fair value measurement is required by the relevant Ind AS.

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 (Division II) to the Act. Based on the nature of products 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 twelve months for the purpose of current/non-current classification of assets and liabilities.

2. Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date, whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that is not explicitly specified in an arrangement.

Operating lease

An operating lease is a lease other than a finance lease. Lease in which a significant portion of the risks and rewards of ownership are retained by lessor are classified as operating leases. The rental payments under operating lease are recognized as expense in the statement of profit and loss on a straight-line basis over the lease term unless the payments are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases.

3. Foreign Currency Transaction

Transactions in foreign currencies are initially recorded by the Company at rates prevailing at the date of the transaction. Subsequently, monetary items are translated at closing exchange rates of balance sheet date and the resulting exchange difference recognized in profit or loss. Differences arising on settlement of monetary items are also recognized in profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the transaction. The Company has not availed the exemption available in IND AS 101, to continue capitalization of foreign currency fluctuation on long term foreign currency monetary liabilities outstanding on transition date.

4. Property, plant and equipment and Intangible assets Property, plant and equipment

Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost less depreciation, and impairment loss, if any except that on adoption of Ind AS, the Company had measured Property, plant and equipment at deemed cost, using the net carrying value as per previous GAAP as at March 31, 2015. Historical cost includes expenditure that is directly attributable to the acquisition of the assets.

Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All expenses in the nature of repairs and maintenance are charged to Statement of profit and loss during the reporting period in which they are incurred.

The cost of property, plant and equipment which are not ready for their intended use at the balance sheet date, are disclosed as capital work-in-progress.

Depreciation methods, estimated useful lives and residual value

Depreciation is calculated using the Written Down Value method (WDV) as per the Companies Act 2013 as below:

Intangible assets

On adoption of Ind AS, the Company has measured Intangible assets at deemed cost, using the net carrying value as per previous GAAP as at March 31,2015.

Computer Software

Computer software acquired or developed is carried at cost less accumulated amortization and impairment losses, if any. Costs associated with maintaining software programs are recognized as an expense as incurred. Development costs that are directly attributable to the design and testing of customised computer software applications are recognized as intangible assets under development or intangible assets when ready for intended use, when the following criteria are met:

a. It is technically feasible to complete the software so that it will be available for use,

b. there is an ability to use or sell the software,

c. it can be demonstrated that the software will generate probable future economic benefits,

d. adequate technical, financial and other resources to complete the development and to use the software are available, and

e. the expenditure attributable to the software during its development can be reliably measured.

Directly attributable costs that are capitalized as part of the customized computer software applications include employee costs and other directly attributable costs and are amortized from the point at which the software asset is available for use.

Amortization method

The Company amortizes intangible assets using the written down value method over their estimated useful lives as follows:

• Computer software - 5 years.

6. Financial Instruments

A) Financial Assets:

a) Recognition and measurement

Financial assets are recognized when the Company becomes a party to the contractual provisions of the instrument. On initial recognition, a financial asset is recognized at fair value. Financial assets are subsequently classified and measured at amortized cost. Financial assets are not reclassified subsequent to their recognition, except if and in the period the Company changes its business model for managing financial assets.

i) Trade Receivables

Trade receivables are initially recognized at fair value. Subsequently, these assets are held at amortized cost, using the Effective Interest Rate (EIR) method net of any Expected Credit Losses (ECL). The EIR is the rate that discounts estimated future cash income through the expected life of financial instrument.

ii) Loans

On initial recognition, Loans are measured at fair value. Since the objective is to hold these financial assets to collect contractual cash flows that are solely payments of principal and interest, these assets are subsequently measured at amortized cost using the EIR method less impairment, if any.

iii) Other financial assets

On initial recognition, other financial assets are measured at fair value, and subsequently, measured at the amortized cost, less impairment if any. Loss arising from impairment, if any is recognized in the Statement of Profit and Loss.

b) Derecognition

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the contractual rights to receive the cash flows from the asset.

B) Financial Liabilities:

a) Recognition and measurement

Financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. On initial recognition, financial liabilities are measured at fair value and subsequently measured at amortized cost.

Trade and other payables

In case of trade and other payables, they are initially recognized at fair value and subsequently, these liabilities are held at amortized cost, using the effective interest rate method.

Trade and other payables represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid as per credit period. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period.

b) Derecognition

A financial liability is derecognized when the obligation specified in the contract is discharged, cancelled or expires.

The Company did not have any financial instruments recognized at fair value through Profit and Loss/ fair value through Other Comprehensive Income anytime during the year or during the comparative year.

c) 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. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.

7. Inventories

Inventories which comprise finished goods and stock-in-trade are carried at the lower of cost or net realizable value. Cost of inventories comprises all costs of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. In determining the cost of inventories, weighted average cost method is used. Costs of purchased inventory are determined after deducting rebates and discounts. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. The comparison of cost and net realizable value is made on an item-by-item basis. Adequate allowance is made for obsolete and slow-moving items.

8. Cash and cash equivalents

Cash and cash equivalents includes cash on hand and balances with banks that are readily convertible to known amounts of cash 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 which are subject to an insignificant risk of changes in value.

9. Revenue recognition

Revenue comprises revenue from contracts with customers for sale of goods and income from promotership margin receivable. Revenue from sale of goods is inclusive of excise duties and is net of returns, trade allowances, rebates, value added taxes, Goods and Services Tax (GST) and such amounts collected on behalf of third parties.

Revenue is recognized as and when performance obligations are satisfied by transferring goods or services to the customer, as below:

Revenue from sale of products:

Revenue is recognized on transfer of control, being on dispatch of goods or upon delivery to customer, in accordance with the terms of sale.

Revenue from promotership margin:

Revenue is recognized on transfer of service in accordance with the terms of agreement.

10. Other Income

Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Interest income is netted off from interest cost under the head "Interest Cost (Net)" in the statement of profit and loss.

11. Employee Benefits

Short term employee benefits are recognized as an expense in the Statement of Profit and Loss of the year in which the related services are rendered.

Payment to defined contribution plan is recognized as expense when employees have rendered services.

The liability for gratuity, a defined benefit plan is determined using the projected unit credit method, on the basis of actuarial valuations carried out by third party actuaries at each balance sheet date. ReMeasurements comprising actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged / credited to Other Comprehensive Income in period in which they arise. Other costs are accounted for in Statement of Profit and Loss.

12. Income tax

Income tax expense is the tax payable on the current period''s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses, if any.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognized if they arise from initial recognition of goodwill.

Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realized, or the deferred income tax liability is settled.

Deferred tax assets are recognized for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

Current and deferred tax is recognized in Statement of profit and loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.

Deferred tax on Minimum Alternative Tax (''MAT'') credit is recognized as an asset only when and to the extent there is reasonable certainty that the Company will pay normal income-tax during the specified period. The Company reviews the same at each balance sheet date and writes down the carrying amount of deferred tax relating to MAT credit entitlement to the extent there is no longer reasonable certainty that the Company will pay normal income-tax during the specified period.

13. Earnings per share (EPS)

Basic earnings per share are calculated 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, as per Ind AS 33 on Earnings per share. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.