Accounting Policies of RMC Switchgears Ltd. Company

Mar 31, 2025

j) Corporate Information

RMC Switchgears Limited is a public company domiciled in India. The company is primarily
engaged in the business of "Switchgear Engineering'', "ECI contracts for power distribution/
transmission sector¹.

ii) Basis of Accounting

The financial statements have been prepared to comply in all material respects with the
Generally AcceptedAccounting Principles (GAAP) in India under the historical cost convention on
an accrual basis pursuant to Section 133 of the Companies Act, 2013 ("the Act") read with the
Accounting Standards issued by the National Advisory Committee on Accounting Standards
(NACAS) and The Institute of Chartered Accountants of India (ICAI). Accounting policies have
been consistently applied by the company except where a newly issued Accounting Standard is
initially adopted or a revision to an existing Standard required a change in accounting policy
hitherto in use.

The preparation of financial statementsin conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities at the date of the financial statements and the results of
operations during 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.
The company''s financial statements are presented in Indian Rupees, which is its functional
currency and all values are rounded to the nearest lakhs, except when otherwise indicated.

Classification of assets and liabilities into Current / Non-current.

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 revised Schedule III to the Act.

iii) Changes in Accounting Policies

The Company has reclassified/regrouped/rearranged the previous year figures,
wherevernecessary, to make them comparable with revised schedule III to the act applicable for
current year''s figures & groups.

iv) Assets and Depreciation

a) Property Plant & Equipment are stated at cost including attributable cost (net of GST
Creditavailed) of bringing the assets to its working condition for the intended use.

b) Depreciation on the assets has been provided as under:

1) Depreciation has been provided on the basis of useful lives of the tangible assets as
prescribed in Schedule II to the Companies Act, 2013byusing Straight-line method (SLM) of
depreciation.

2) Depreciation on intangible assets is provided in accordance with AS-26 over the period of 5
years.

3) Premium paid on Leasehold Landis amortized over the Lease term which is of 99 years.

4) Impairment of Tangible & Intangible Assets

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

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

v) Valuation of Inventory

Inventory of raw material, stores, spares, semi-finished goods and finished goods are valued at
lower of cost and net realizable value. Cost is determined on the basis of FIFO/Weighted
Average Method. Inventory of rejected material is valued at cost or net realizable value
whichever is lower. Work in process generally includes cost of direct material, labour cost and
other manufacturing overheads. Goods-in-Transit is valued at cost.

(vi) Income Tax

Current tax is the amount of tax payable on the taxable income for the year as determined in
accordance with the provisions of the Income Tax Act, 1961 (the "Income Tax Act").The Company
has opted to exercise the option permitted under section 115BAA of the Income-tax Act, 1961 as
introduced by the Taxation Laws (Amendment) Ordinance, 2019, for the financial year 2024-25.
Accordingly, the Company has recognised provision for income tax and computed deferred tax
based on the rate i.e. @ 25.17 % (Tax Rate 22% Plus Surcharge Plus cess) prescribed in the said
section.

Deferred tax is recognised on timing differences, being the differences between the taxable
income and the accounting income that originate in one period and are capable of reversal in
one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantively enacted as at the reporting date. Deferred tax assets are recognised for
timing differences of items other than unabsorbed depreciation and carry forward losses only to
the extent that reasonable certainty exists that sufficient future taxable income will be available
against which these can be realised. However, if there are unabsorbed depreciation and carry
forward of losses, deferred tax assets are recognised only if there is virtual certainty that there
will be sufficient future taxable income available to realise the assets. Deferred tax assets and
liabilities are offset if such items relate to taxes on income levied by the same governing tax laws

and the Company has a legally enforceable right for such set-off. Deferred tax assets are
reviewed at each balance sheet date for theirreliability.

vil) Liquidated Damages:

Liquidated damages are provided based on contractual terms when thedelivery/commissioning
dates of an individual project have exceeded or are likely to exceed the delivery/commissioning
dates as per the respective contract. This expenditure is expected to be incurred over the
respective contractual terms upto closure of the contract.

viii) Foreign Currency:

a) Transactions in Foreign Currency entered into by the Company are accounted at the Exchange
Rates prevailing the date of the transaction. Foreign Currency monetary items ofthecompany,
outstanding on the Balance Sheet date are restated at the year-end rates. Non- monetary items
of the company are carried at historical costs.

b) Exchange Difference arising on settlement / restatement of short term foreign currencymonetary
assets & liabilities of the company are recognized as expense in the statement ofProfit& Loss or
capitalized if such differences pertain to creation of Fixed Assets.

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Mar 31, 2024

i) Corporate Information

RMC Switchgears Limited is a public company domiciled in India. Having CIN L25111RJ1994PLC008698 & its registered office & works situated at 7 km from chaksu kotkhawada road village Badodiya Tehsil chaksu Tonk Road Jaipur. The company is primarily engaged in the business of ''Switchgear Engineering'', '' EPC contracts for power distribution/ transmission sector''.

ii) Basis of Accounting

The financial statements have been prepared to comply in all material respects with the Generally Accepted Accounting Principles (GAAP) in India under the historical cost convention on an accrual basis pursuant to Section 133 of the Companies Act, 2013 ("the Act”) read with the Accounting Standards issued by the National Advisory Committee on Accounting Standards (NACAS) and The Institute of Chartered Accountants of India (ICAI). Accounting policies have been consistently applied by the company except where a newly issued Accounting Standard is initially adopted or a revision to an existing Standard required a change in accounting policy hitherto in use.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during 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. The company''s financial statements are presented in Indian Rupees, which is its functional currency and all values are rounded to the nearest lakhs, except when otherwise indicated.

Classification of assets and liabilities into Current / Noncurrent.

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 revised Schedule III to the Act.

iii) Changes in Accounting Policies

The Company has reclassified/regrouped/rearranged the previous year figures, wherever necessary, to make them comparable with revised schedule III to the act applicable for current year''s figures & groups.

iv) Assets and Depreciation

a) Property Plant & Equipment are stated at cost

including attributable cost (net of GST Credit availed) of bringing the assets to its working condition for the intended use.

b) Depreciation on the assets has been provided as under:

1) Depreciation has been provided on the basis of useful lives of the tangible assets as prescribed in Schedule II to the Companies Act, 2013 by using Straight-line method (SLM) of depreciation.

2) Depreciation on intangible assets is provided in accordance with AS-26 over the period of 5 years.

3) Premium paid on Leasehold Landis amortized over the Lease term which is of 99 years.

4) Impairment of Tangible & Intangible Assets

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

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

v) Valuation of Inventory

Inventory of raw material, stores, spares, semi-finished goods and finished goods are valued at lower of cost and net realizable value. Cost is determined on the basis of FIFO/Weighted Average Method. Inventory of rejected material is valued at cost or net realizable value whichever is lower. Work in process generally includes cost of direct material, labour cost and other manufacturing overheads. Goods-in-Transit is valued at cost.

(vi) Income Tax

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961 (the "Income Tax Act"). The Company has opted to exercise the option permitted under section 115BAA of the Income-tax Act, 1961 as introduced by the Taxation Laws (Amendment) Ordinance, 2019, for the financial year 2023-24. Accordingly, the Company has recognised provision for income tax and computed deferred tax based on the rate i.e. @ 25.17 % (Tax Rate 22% Plus Surcharge Plus cess) prescribed in the said section.

Deferred tax is recognised on timing differences, being

the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax assets are recognised for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. However, if there are unabsorbed depreciation and carry forward of losses, deferred tax assets are recognised only if there is virtual certainty that there will be sufficient future taxable income available to realise the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set-off. Deferred tax assets are reviewed at each balance sheet date for their realisability.

vii) Liquidated Damages:

Liquidated damages are provided based on contractual terms when thedelivery/commissioning dates of an individual project have exceeded or are likely to exceed the delivery/commissioning dates as per the respective contract. This expenditure is expected to be incurred over the respective contractual terms upto closure of the contract.

viii) Foreign Currency:

a) Transactions in Foreign Currency entered into by the Company are accounted at the Exchange Rates prevailing the date of the transaction. Foreign Currency monetary items ofthecompany, outstanding on the Balance Sheet date are restated at the year-end rates. Non- monetary items of the company are carried at historical costs.

b) Exchange Difference arising on settlement /

restatement of short term foreign currency

monetary assets & liabilities of the company are recognized as expense in the statement ofProfit & Loss or capitalized if such differences pertain to creation of Fixed Assets.

ix) Revenue Recognition:

a) Sales Revenue is recognized when the risk

and rewards of ownership are passed on to the customers, which is generally on dispatch.

b) Revenue from turnkey contracts is recognized based on the stage of completion determined with reference to the costs incurred on contracts and their estimated total costs. Provision for

foreseeable losses/ construction contingencies on turnkey contracts is made on the basis of technical assessments of costs to be incurred and revenue to be accounted for.

c) Price Escalation and other claims or variations in the contract work are included in contract revenue only when:

i) Negotiations have reached to an advanced stage such that it is probable that customer will accept the claim: and

ii) The amount that is probable will be accepted by the customer and can be measured reliably.

x) Use of Estimates:

The preparation of financial statements requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as of the date of financial statements and the reported amount of revenue and expenses of the year. Actual results could differ from these estimates. The difference between the actual results and estimates are recognized in the period in which the results are known/materialized.

xi) Borrowing Costs

Borrowing costs attributable to the acquisition, construction or production of qualifying assets are added to the cost of those assets as Pre-operative Expenses. All other borrowing costs are recognized in Statement of Profit and Loss in the period in which they are incurred. Interest Capitalised during the year is NIL (Previous year '' 398031/-)

xii) Employees Benefits:

a) Defined Contribution Plans:

Employees'' own and Employer''s contribution to Provident Funds are contributed by company monthly at a determined rate. These contributions are remitted to theEmployees'' Provident Fund Organization, India and is charged to Profit and LossAccount on accrual basis.

b) Defined Benefits Plans:

Gratuity: The company provides for gratuity, a defined benefit retirement plan, for its employees. The plan provides for lump sum payments to the eligible employees at retirement, death, while in employment, or on termination of employment or otherwise as per the provisions the Payment of Gratuity Act, 1972. The company accounts for liability of future gratuity benefits based on an external actuarial valuation on projected unit credit method carried out annually for assessing liability as at the balance sheet date.

xiii) Segment Reporting :

a) Primary Segment:

Company is engaged in ''Switch Gear Engineering''and ''Construction contracts for power distribution / transmission sector'' which relate to one primary segment i.e. Power.

b) Secondary Segment:

The Company operates predominantly within the geographical limits of India and accordingly secondary segments have not been considered.

xiv) Deferred Revenue Expenditure:

Deferred Revenue Expenditure incurred is being written off over the period of 5 years in installment, beginning from 202021.

xv) Earnings per Share

Basic earnings per share are calculated by dividing the net profit/ loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

The Board of Directors in their meeting held on Tuesday, 17^th October, 2023, has approved the allotment of 34,36,100 Bonus Equity Shares of '' 10/- each in the ratio of 1:2 i.e. 1 New Equity Shares of '' 10/- each for every 2 existing Equity Shares of '' 10/- each to the eligible Shareholders whose names appeared in the Register of Members/list of beneficial owners as on 13^th October, 2023, being the record date fixed for this purpose. Post-bonus issue, the paid-up capital has increased to '' 1030.83 Lacs from 17^th October, 2023 onwards. Accordingly, the basic and diluted earning per share have been adjusted for previous year also for the bonus shares in accordance with AS-20-Earnings per Share.

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Mar 31, 2023

i) Corporate Information

RMC Switchgears Limited is a public company domiciled in India. The company is primarily engaged in the business of ''Switchgear Engineering'', ''ECI contracts for power distribution/ transmission sector''.

ii) Basis of Accounting

The financial statements have been prepared to comply in all material respects with the Generally Accepted Accounting Principles in India under the historical cost convention on an accrual basis pursuant to Section 133 of the Companies Act, 2013 ("the Act") read with the Accounting Standards issued by the National Advisory Committee on Accounting Standards (NACAS) and The Institute of Chartered Accountants of India (ICAI). Accounting policies have been consistently applied by the company except where a newly issued Accounting Standard is initially adopted or a revision to an existing Standard required a change in accounting policy hitherto in use.

The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during 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. The company''s financial statements are presented in Indian Rupees, which is its functional currency and all values are rounded to the nearest lakhs, except when otherwise indicated.

Classification of assets and liabilities into Current / Non-current.

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 revised Schedule III to the Act.

iii) Changes in Accounting policies

The Company has reclassified/regrouped/rearranged the previous year figures, wherever necessary, to make them comparable with revised schedule III to the act applicable for current year''s figures & groups.

iv) Assets and Depreciation

a) Property Plant & Equipment are stated at cost including attributable cost (net of cenvat/vat credit /GST Credit availed) of bringing the assets to its working condition for the intended use.

b) Depreciation on the assets has been provided as under:

1) Depreciation has been provided on the basis of useful lives of the tangible assets as prescribed in Schedule II to the Companies Act, 2013 by using Straight-line method (SLM) of depreciation.

2) Depreciation on intangible assets is provided in accordance with AS-26 over the period of 5 years.

3) Premium paid on Leasehold Landis amortized over the Lease term which is of 99 years.

4) Impairment of Tangible & Intangible Assets

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

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

v) valuation of Inventory

Inventory of raw material, stores, spares, semi-finished goods and finished goods are valued at lower of cost and net realizable value. Cost is determined on the basis of FIFO/Weighted Average Method. Inventory of rejected material is valued at cost or net realizable value whichever is lower. Work in process generally includes cost of direct material, labour cost and other manufacturing overheads. Goods-in-Transit is valued at cost.

(vi) Income Tax

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961 (the "Income Tax Act").

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax assets are recognised for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. However, if there are unabsorbed depreciation and carry forward of

losses, deferred tax assets are recognised only if there is virtual certainty that there will be sufficient future taxable income available to realise the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set-off. Deferred tax assets are reviewed at each balance sheet date for their realisability.

vii) Liquidated Damages:

Liquidated damages are provided based on contractual terms when the delivery/commissioning dates of an individual project have exceeded or are likely to exceed the delivery/commissioning dates as per the respective contract. This expenditure is expected to be incurred over the respective contractual terms upto closure of the contract.

viii) Foreign Currency:

a) Transactions in Foreign Currency entered into by the Company are accounted at the Exchange Rates prevailing the date of the transaction. Foreign Currency monetary items of the company, outstanding on the Balance Sheet date are restated at the year-end rates. Non- monetary items of the company are carried at historical costs.

b) Exchange Difference arising on settlement / restatement of short term foreign currency monetary assets & liabilities of the company are recognized as expense in the statement of Profit & Loss or capitalized if such differences pertain to creation of Fixed Assets.

ix) Revenue Recognition:

a) Sales Revenue is recognized when the risk and rewards of ownership are passed on to the customers, which is generally on dispatch.

b) Revenue from turnkey contracts is recognized based on the stage of completion determined with reference to the costs incurred on contracts and their estimated total costs. Provision for foreseeable losses/ construction contingencies on turnkey contracts is made on the basis of technical assessments of costs to be incurred and revenue to be accounted for.

c) Price Escalation and other claims or variations in the contract work are included in contract revenue only when:

i) Negotiations have reached to an advanced stage such that it is probable that customer will accept the claim: and

ii) The amount that is probable will be accepted by the customer and can be measured reliably.

x) use of Estimates:

The preparation of financial statements requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as of the date of financial statements and the reported amount of revenue and expenses of the year. Actual results could differ from these estimates. The difference between the actual results and estimates are recognized in the period in which the results are known/materialized.

xi) Borrowing Costs

Borrowing costs attributable to the acquisition, construction or production of qualifying assets are added to the cost of those assets as Pre-operative Expenses. All other borrowing costs are recognized in Statement of Profit and Loss in the period in which they are incurred. Interest Capitalised during the year is '' 398031/- (Previous year NIL)

xii) Employees Benefits:

a) Defined Contribution Plans:

Employees'' own and Employer''s contribution to Provident Funds are contributed by company monthly at a determined rate. These contributions are remitted to the Employees'' Provident Fund Organization, India and is charged to Profit and Loss Account on accrual basis.

b) Defined Benefits Plans:

Gratuity: The company provides for gratuity, a defined benefit retirement plan, for its employees. The plan provides for lump sum payments to the eligible employees at retirement, death, while in employment, or on termination of employment or otherwise as per the provisions the Payment of Gratuity Act, 1972. The company accounts for liability of future gratuity benefits based on an external actual valuation on projected unit credit method carried out annually for assessing liability as at the balance sheet date.

xiii) Segment Reporting :

a) primary Segment:

Company is engaged in ''Switch Gear Engineering'' and ''Construction contracts for power distribution / transmission sector'' which relate to one primary segment i.e. Power.

b) Secondary Segment:

The Company operates predominantly within the geographical limits of India and accordingly secondary segments have not been considered.

xiv) Deferred Revenue Expenditure:

Deferred Revenue Expenditure incurred is being written off over the period of 5 years in installment, beginning from 2020-21.

xv) Corresponding Figures of previous year have been reclassified/regrouped or rearranged to make them comparable with the current year figures.

xvi) Other statutory information:

1. The Company does not have any benami property, where any proceeding has been initiated or pending against the Company for holding any benami property.

2. The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year. ''

3. The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall: (a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (ultimate beneficiaries) or (b) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.

4. The Company has not received any fund from any person(s) or entity(ies), including foreign entities (funding party) with the understanding (whether recorded in writing or otherwise) that the Company shall: (a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the funding party (ultimate beneficiaries) or (b) provide any guarantee, security or the like on behalf of the ultimate beneficiaries.

5. The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income

during the year in the tax assessments under the Income Tax Act,1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.

6. The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.

7. The Company is not declared willful defaulter by and bank or financial institution or lender during the year.

8. The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

9. Periodical returns or statements of current assets filed by the Company with banks or financial institutions are in agreement with the books of accounts.

10. The Company has used the borrowings from banks and financial institutions for the specific purpose for which it was obtained.

11. The title deeds of all the immovable properties, (other than immovable properties where the Company is the lessee and the lease agreements are duly executed in favour of the Company) disclosed in the financial statements included in property, plant and equipment and capital work-in-progress are held in the name of the Company as at the balance sheet date.

12. The Company does not have any transactions with companies which are struck off.

13. Company is not covered by the Section 135 of the Companies Act, 2013, dealing with the ''Corporate Social Responsibility'' during the FY 2022-23.

The accompanying notes are an integral part of the financial statements