Accounting Policies of Zodiac Energy Ltd. Company

Mar 31, 2025

2. Material Accounting Policies:

2.1 Statement of Compliance

The Standalone financial statements have been prepared in accordance with the
accounting principles generally accepted in India including Indian Accounting Standards
(Ind AS) prescribed under the section 133 of the Companies Act, 2013 read with Rule 3
of the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to
time) and presentation and disclosures requirement of Division II of revised Schedule III
of the Companies Act 2013, (Ind AS Compliant Schedule III), as applicable to standalone
financial statement.

Accordingly, the Company has prepared these Standalone financial statements which
comprise the Balance Sheet as at March 31, 2025, the Statement of Profit and Loss, the
Statement of Cash Flows and the Statement of Changes in Equity for the year ended as
on that date, and accounting policies and other explanatory information (together
hereinafter referred to as “Standalone financial statements" or “financial statements").

In addition, the financial statements are presented in INR and all values are rounded to
the nearest lacs, except when otherwise indicated.

2.2 Basis of Preparation and Presentation

The standalone financial statements of the Company have been prepared in
accordance with the historical cost basis except for certain assets and liabilities
(financial instruments and share based payment) are measured at fair valued, as
explained in the accounting policies below.

Fair value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement
date, regardless of whether that price is directly observable or estimated using
another valuation technique. In estimating the fair value of an asset or a liability, the

Company takes into account the characteristics of the asset or liability if market
participants would take those characteristics into account when pricing the asset or
liability at the measurement date.

In addition, for financial reporting purposes, fair value measurements are categorised
into Level 1, 2, or 3 based on the degree to which the inputs to the fair value
measurements are observable and the significance of the inputs to the fair value
measurement in its entirety, which are described as follows:

(a) Level 1 - Quoted prices (unadjusted) in active markets for identical assets or
liabilities;

(b) Level 2 - Valuation techniques for which the lowest level input that is significant to
the fair value measurement is directly or indirectly observable

(c) Level 3 — Valuation techniques for which the lowest level input that is significant to
the fair value measurement is unobservable.

The Company''s standalone financial statements are reported in Indian Rupees (^),
which is also the Company''s functional currency, and all values are rounded to the
nearest lacs (''000,00), except when otherwise indicated.

Current and Non-Current Classification

The Company presents assets and liabilities in the balance sheet based on current /
non-current classification. An asset is classified as current when it satisfies any of
the following criteria:

(a) It is expected to be realized in, or is intended for sale or consumption in, the
Company''s normal operating cycle.

(b) It is held primarily for the purpose of being traded;

(c) It is expected to be realized within 12 months after the reporting date; or

(d) It is cash or cash equivalent unless it is restricted from being exchanged or used to
settle a liability for at least 12 months after the reporting date.

All other assets are classified as non-current.

A liability is classified as current when it satisfies any of the following criteria:

(a) It is expected to be settled in the Company''s normal operating cycle;

(b) It is held primarily for the purpose of being traded;

(c) It is due to be settled within 12 months after the reporting date; or the Company
does not have an unconditional right to defer settlement of the liability for at least
12 months after the reporting date. Terms of a liability that could, at the option of
the counterparty, result in its settlement by the issue of equity instruments do not
affect its classification.

All other liabilities are classified as noncurrent. 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 its operating cycle as 12 months.

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

2.3 Use of Estimates

The preparation of the financial statements is in conformity with Ind AS which requires
management to make estimates, judgments and assumptions.

These estimates, judgments and assumptions affect the application of accounting
policies and the reported amounts of assets and liabilities, the disclosures of contingent
assets and liabilities at the date of the financial statements and reported amounts of
revenues and expenses during the year.

Accounting estimates could change from period to period. Actual results could differ
from those estimates. Appropriate changes in estimates are made as management
becomes aware of changes in circumstances surrounding the estimates. Changes in
estimates are reflected in the financial statements in the period in which changes are
made and, if material, their effects are disclosed in the notes to the financial statements.

Application of accounting policies that require critical accounting estimates involving
complex and subjective judgments and the use of assumptions in these financial
statements are:

• Useful lives of Property, plant and equipment

• Provisions and contingencies

• Income tax and deferred tax

• Measurement of defined employee benefit obligations

2.4 Revenue Recognition
Revenue from Operation:

Revenue from contracts with customers is recognized on transfer of control of
promised goods or services to a customer at an amount that reflects the consideration
to which the Company is expected to be entitled to in exchange for those goods or
services.

Revenue towards satisfaction of a performance obligation is measured at the amount
of transaction price (net of variable consideration) allocated to that performance
obligation. The transaction price of goods sold and services rendered is net of variable
consideration on account of various discounts and schemes offered by the Company as
part of the contract.

This variable consideration is estimated based on the expected value of outflow.
Revenue (net of variable consideration) is recognized only to the extent that it is highly
probable that the amount will not be subject to significant reversal when uncertainty
relating to its recognition is resolved.

Sale of Product:-

Revenue from sale of products is recognized when the control on the goods have been
transferred to the customer. The performance obligation in case of sale of product is
satisfied at a point in time i.e., after the inspection approval obtained in respect of
installed Solar Power plant.

Rendering of Services:-

Revenue from services is recognized over time by measuring progress towards
satisfaction of performance obligation for the services rendered. The Company uses
output method for measurement of revenue from rendering of services based on time
elapsed and / or parts delivered.

Interest Income:-

Interest income is recognised using effective interest method. The effective interest rate
is the rate that exactly discounts estimated future cash receipts through expected life
of the financial asset to the gross carrying amount of the financial asset. When
calculating the effective interest rate, the company estimates the expected cash flows
by considering all the contractual terms of the financial instrument but does not
consider the expected credit losses.

Sale of Electricity:-

Revenue from the sale of electricity generated from renewable energy sources is
recognized at the point of transfer of control, which is when electricity is delivered to the
grid and accepted by the DISCOM as per the terms of the Power Purchase Agreement
(PPA). Revenue is measured at the transaction price, which is based on the tariff agreed
with the DISCOM.

In cases where actual billing is received with a time lag, revenue is accrued based on meter
readings and the applicable tariff rates, and adjusted upon receipt of actual invoices.

All other incomes are recognised and accounted for on accrual basis.

2.5 Property, Plant and Equipment

a) Measurement

(i) Property, plant and equipment

The cost of property, plant and equipment comprises its purchase price net of any
trade discounts and rebates, any import duties and other taxes (other than those
subsequently recoverable from the tax authorities), costs relating to trial run, any
directly attributable expenditure on making the asset ready for its intended use,
including relevant borrowing costs for qualifying assets if recognition criteria are met
and any expected costs of decommissioning.

Assets in the course of construction are capitalised in the assets under Capital work
in progress net of accumulated impairment loss if any. At the point when an asset is
operating at management''s intended use, the cost of construction is transferred to
the appropriate category of property, plant and equipment and depreciation
commences.

Costs associated with the commissioning of an asset and present value of any
obligatory decommissioning costs are capitalised in the asset when recognition
criteria for provision are satisfied. Revenue (net of cost) generated from production
during the trial period is capitalised.

Depreciable amount for assets is the cost of an asset, or other amount substituted
for cost, less its estimated residual value. Depreciation is recognised so as to write off
the cost of assets (other than freehold land and properties under construction) less
their residual values over their useful lives, using straight-line method as per the
useful life prescribed in Schedule II to the Companies Act, 2013.

The effects of any revision are recognized in the profit & loss when the changes are
arises.

00 Intangible Assets

An intangible asset is recognised, only where it is probable that future economic
benefits attributable to the asset will accrue to the enterprise and the cost can be
measured reliably.

Intangible assets acquired separately are measured on initial recognition at cost.
Intangible assets arising on acquisition of business are measured at fair value as at
date of acquisition.

Internally generated intangibles including research cost are not capitalized and the
related expenditure is recognized in the Statement of Profit and Loss in the period
in which the expenditure is incurred.

Intangible assets with finite lives are amortised over the useful economic life and
assessed for impairment whenever there is an indication that the intangible asset
may be impaired.

b) Subsequent expenditure

Subsequent expenditure relating to property, plant and equipment that has already
been recognized is added to the carrying amount of the asset 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. All other repair and maintenance
expenses are recognized in the Statement of Profit or Loss when incurred.

c) Disposal

An item of property, plant and equipment is derecognised upon disposal or when no
future economic benefits are expected to arise from the continued use of the asset.
Any gain or loss arising on the disposal or retirement of an item of property, plant and
equipment is determined as the difference between the sales proceeds and the
carrying amount of the asset and is recognised in Statement of Profit and Loss.

On disposal of an item of property, plant and equipment, the difference between the
disposal proceeds and its carrying amount is recognized in the Statement of Profit or
Loss.

2.6 Financial Instrument: -

Financial assets and financial liabilities are recognised when an entity becomes a party to
the contractual provisions of the instrument. Financial assets and financial liabilities are
initially measured at fair value except trade receivables which are recognised at
transaction price. Transaction costs that are directly attributable to the acquisition or
issue of financial assets and financial liabilities (other than financial assets and financial
liabilities at fair value through Statement of Profit and Loss (FVTPL)) are added to or
deducted from the fair value of the financial assets or financial liabilities, as appropriate,
on initial recognition. Transaction costs directly attributable to the acquisition of financial
assets or financial liabilities at fair value through profit and loss are recognised
immediately in the statement of profit and loss.

Recognition and Initial Recognition: -

The company recognizes financial assets and financial liabilities when it becomes a party
to the contractual provisions of the instrument.

All financial assets and liabilities are recognized at fair value net of directly attributable
transaction cost on initial recognition.

Subsequent measurement: -

Non derivative financial instrument

Financial assets carried at amortized cost:

A financial asset is subsequently measured at amortized cost if it is held within a
business model whose objective is to hold the asset in order to collect contractual cash
flows and the contractual terms of the financial asset give rise on specified dates to cash
flows that are solely payments of principal and interest on the principal amount
outstanding.

Financial assets at fair value through other comprehensive income:

A financial asset is subsequently measured at fair value through other comprehensive
income if it is held within a business model whose objective is achieved by both
collecting contractual cash flows and selling financial assets and the contractual terms of
the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.

Financial assets at fair value through profit or loss:

A financial asset which is not classified in any of the above categories are subsequently
measured at fair valued through profit or loss. Fair value changes are recognised as
other income in the Statement of Profit or Loss.

Financial liabilities at Fair Value through Profit or Loss:-

(a) A financial liability may be designated as at FVTPL upon initial recognition if:
such designation eliminates or significantly reduces a measurement or recognition
inconsistency that would otherwise arise;

(b) The financial liability whose performance is evaluated on a fair value basis, in
accordance with the Company''s documented risk management; Financial liabilities at
FVTPL are stated at fair value, with any gains or losses arising on measurement
recognised in the Statement of Profit and Loss. The net gain or loss recognised in
profit or loss incorporates any interest paid on the financial liability.

Financial liabilities at amortised cost:

Financial liabilities that are not held for trading and are not designated as at FVTPL
are measured at amortised cost at the end of subsequent accounting periods. The
carrying amounts of financial liabilities that are subsequently measured at
amortised cost are determined based on the effective interest method. Interest
expense that is not capitalised as part of costs of an asset is included in the ''Finance
costs'' line item.

The effective interest method of calculating the amortised cost of a financial liability
and of allocating interest expense over the relevant period.

The effective interest rate is the rate that exactly discounts estimated future cash
payments (including all fees and points paid or received that form an integral part
of the effective interest rate, transaction costs and other premiums or discounts)
through the expected life of the financial liability, or (where appropriate) a shorter
period, to the net carrying amount on initial recognition.

Trade and other payables are recognised at the transaction cost, which is its fair
value, and subsequently measured at amortised cost.

Equity instruments:

An equity instrument is a contract that evidences residual interest in the assets of
the company after deducting all of its liabilities. Incremental costs directly
attributable to the issuance of equity instruments are recognised as a deduction

from equity instrument net of any tax effects.

Derecognition:

The company derecognizes a financial asset when the contractual rights to the cash
flows from the financial asset expire or it transfers the financial asset and the
transfer qualifies for derecognition under Ind AS 109. A financial liability is
derecognized when obligation specified in the contract is discharged or cancelled or
expired.

An exchange of debt instruments with substantially different terms is accounted for
as an extinguishment of the original financial liability and the recognition of a new
financial liability. Similarly, a substantial modification of the terms of an existing
financial liability or a part of it is also accounted for as an extinguishment of the
original financial liability and the recognition of a new financial liability.

Off-setting:

Financial assets and liabilities are offset and the net amount is presented in the
balance sheet when the company currently has a legally enforceable right to offset
the recognised amount and intends either to settle on a net basis or to realize the
asset and settle the liability simultaneously.

Modification:

A modification of a financial asset or liabilities occurs when the contractual terms
governing the cash flows of a financial asset or liabilities are renegotiated or
otherwise modified between initial recognition and maturity of the financial
instruments. Any gain/ loss on modification is charged to statement of profit and
loss.

2.7 Income Tax: -

Income tax expense comprises Current Tax and deferred tax. It is recognized in the
statement of profit and loss except to the extent that it relates to items recognized
directly in equity or in other comprehensive income(Refer note 27).

Current Tax:

The Company had elected to exercise option available under section 115BAA of the
Income Tax Act, 1961.

Current income tax assets and liabilities are measured at the amount expected to
be recovered from or paid to the taxation authorities. Current income tax is
measured at the amount expected to be paid to the tax authorities in accordance
with the Income-Tax Act, 1961 enacted in India. The tax rates and tax laws used to
compute the amount are those that are enacted or substantially enacted, at the
reporting date.

Current income tax relating to items recognised outside the statement of profit and
loss is recognised outside the statement of profit and loss (either in other

comprehensive income or in equity). Current tax items are recognised in correlation
to the underlying transaction either in OCI or directly in equity.

Management periodically evaluates positions taken in the tax returns with respect
to situations in which applicable tax regulations are subject to interpretation and
establishes provisions where appropriate.

Deferred Tax:

Deferred tax is recognised in profit or loss, except when it relates to items that are
recognised in other comprehensive income or directly in equity, in which case, the
deferred tax is also recognised in other comprehensive income or directly in equity,
respectively.

Deferred tax liabilities are recognised for all taxable temporary differences, except
to the extent that the deferred tax liability arises from initial recognition of goodwill;
or initial recognition of an asset or liability in a transaction which is not a business
combination and at the time of transaction, affects neither accounting profit nor
taxable profit or loss.

Deferred tax assets are recognised for all deductible temporary differences, carry
forward of unused tax losses and carry forward of unused tax credits to the extent
that it is probable that taxable profit will be available against which those temporary
differences, losses and tax credit can be utilized, except when deferred tax asset on
deductible temporary differences arise from the initial recognition of an asset or
liability in a transaction that is not a business combination and at the time of the
transaction, affects neither accounting profit nor taxable profit or loss.

Deferred tax assets and liabilities are measured at the tax rates that are expected
to apply to the period when the asset is realized or the liability is settled, based on
the tax rules and tax laws that have been enacted or substantively enacted by the
end of the reporting period.

Deferred tax assets and deferred tax liabilities are of-set, where company has a
legally enforceable right to set o the recognized amounts and where it intends
either to settle on a net basis, or to realize the asset and settle the liability
simultaneously.

Deferred tax assets are reviewed at each reporting date and are reduced to the
extent that it is no longer probable that the related tax benefit will be realized.

2.8 Impairment: -
Financial Asset

The Company assesses at each reporting date whether there is any objective evidence
that a financial asset or a group of financial assets is impaired. A financial asset or a
group of financial assets is deemed to be impaired if, there is objective evidence of
impairment as a result of one or more events that has occurred after the initial
recognition of the asset (an incurred ''loss event'') and that loss event has an impact
on the estimated future cash flows of the financial asset or the group of financial

assets that can be reliably estimated.

Non-Financial Assets

The carrying value of assets/cash generating units at each Balance Sheet date are
reviewed for impairment. If, any such indication exists, the Company estimates their
recoverable amount and impairment is recognised if, the carrying amount of these
assets/cash generating units exceeds their recoverable amount. The recoverable
amount is greater of fair value less cost of disposal and their value in use. When there
is indication that an impairment loss recognised for an asset in earlier accounting
periods no longer exists or may have decreased, such reversal of impairment loss is
recognised in the Statement of Profit and Loss.

2.9 Leases: -

The Company assesses at contract inception whether a contract is, or contains, a lease.
That is, if the contract conveys the right to control the use of an identified asset for a
period of time in exchange for consideration. The Company''s lease asset classes
primarily consist of leases for land, office and godown.

Company as lessee :

The Company recognizes a right-of-use (ROU) asset and a lease liability at the lease
commencement date. To assess whether a contract conveys the right to control the
use of an identified asset, the Company assesses whether:

• The contract involves the use of an identified asset;

• The Company has substantially all of the economic benefits from use of the
asset through the period of the lease; and

• The Company has the right to direct the use of the asset.

At the date of commencement of the lease, the Company recognizes a right-of-use
(ROU) asset and a corresponding lease liability for all lease arrangements in which it is
a lessee, except for leases with a term of 12 months or less (short-term leases) and low
value leases. For these short-term or low- value leases, the Company recognizes the
lease payments as an operating expense through profit & loss account on a straight¬
line basis over the term of the lease.

The ROU assets are initially recognized at cost, which comprises the initial amount of
the lease liability adjusted for any lease payments made at or prior to the
commencement date of the lease plus any initial direct costs less any lease incentives.
They are subsequently measured at cost less accumulated amortisation and
impairment losses.

ROU assets are depreciated from the commencement date on a straight-line basis over
the shorter of the lease term and useful life of the underlying asset.

The lease liability is initially measured at amortized cost at the present value of the
future lease payments. The lease payments are discounted using the interest rate
implicit in the lease or, if not readily determinable, using the incremental borrowing
rates in the country of domicile of these leases.

Lease liability and ROU assets have been separately presented in the Balance Sheet and
lease payments have been classified as financing cash flows ( Refer Note 17).

The Company as a lessor

Leases for which the Company is a lessor is classified as a finance or operating lease.
Contracts in which all the risks and rewards of the lease are substantially transferred
to the lessee are classified as a finance lease. All other leases are classified as operating
leases.

Leases, for which the Company is an intermediate lessor, it accounts for the head-lease
and sub- lease as two separate contracts. The sub-lease is classified as a finance lease
or an operating lease by reference to the ROU asset arising from the head-lease.

The company has measured the ROU asset arising from the leaseback at the proportion
of the previous carrying amount of the asset that relates to the ROU retained by the
company. Accordingly, the company has recognised gain that relates to the rights
transferred to lessor.

Amounts due from lessees under finance leases are recognised as receivables at the
amount of the Company''s net investment in the leases. Finance lease income is
allocated to accounting periods so as to reflect a constant periodic rate of return on
the Company''s net investment outstanding in respect of the leases.

Rental income from operating leases is recognised on a straight-line basis over the lease
term. (Refer note 7)

Short-term Leases and Low-value Assets

The Company applies the short-term lease recognition exemption to its short term leases
(i.e., those leases that have a lease term of 12 months or less from the commencement
date and do not contain a purchase option) and lease of low value assets.

2.10 Borrowing Cost:-

Borrowing cost includes interest and other costs that company has incurred in
connection with the borrowing of funds.

Borrowing costs directly attributable to the acquisition, construction or production
of an asset that necessarily takes a substantial period of time to get ready for its
intended use or sale are capitalized as part of the cost of the respective asset.

All other borrowing costs are expensed in the year they occur.

2.11 Employee Benefits:-

Short term employee benefits

A liability is recognised for benefits accruing to employees in respect of wages, salaries
and annual leaves in the period the related service is rendered at the undiscounted
amount of the benefits expected to be paid in exchange for that service. Liabilities
recognised in respect of short-term employee benefits are measured at the
undiscounted amount of the benefits expected to be paid in exchange for the related
service.

Defined Contribution Plans:

Contributions to Provident Fund which is defined contribution scheme, are made to
a government administered Provident Fund and are charged to the Statement of
Profit and Loss as incurred. The Company has no further obligations beyond its
contributions to these funds.

Defined Benet Plans- Gratuity:

The liability or asset recognized in the balance sheet in respect of defined benefit
gratuity plans is the present value of the defined benefit obligation at the end of the
reporting period less the fair value of plan assets (if any). The defined benefit obligation
is calculated annually by an independent actuary using the projected unit credit
method.

• Remeasurements of the net defined benefit liability (actuarial gains and losses) are
recognized in other comprehensive income and are not reclassified to profit or loss
in subsequent periods.

• The Company recognizes the following changes in the net defined benefit obligation
in the statement of profit and loss:

• Service costs (including current service cost, past service cost, and gains and losses
on curtailments and settlements); and

• Net interest on the net defined benefit liability.

Other Long-term Employee Benefits

Compensated absences and other long-term employee benefits are provided for
based on actuarial valuation using the projected unit credit method at the end of the
reporting period. The actuarial gains/losses are recognized immediately in the
statement of profit and loss and are not deferred.

Termination Benefits

Termination benefits are recognized as an expense at the earlier of when the Company
can no longer withdraw the offer of those benefits and when the Company recognizes
costs for a restructuring that involves the payment of termination benefits.(Refer note
31.)

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Mar 31, 2024

1. Corporate Information

Zodiac Energy Limited (‘the Company’) is engaged in the business of installation of Solar Power Generation Plant/Items. The Company is a public company domiciled in India and is incorporated under the provisions of Companies Act applicable in India. Its equity shares are listed on National Stock Exchange (NSE) and on Bombay Stock Exchange (BSE) (ZODIAC | 543416 |

INE761Y01019). The registered office of the company is located at U.G.F- 4,5,6, Milestone I Building, Near Khodiyar Restaurant, Near Drive In Cinema, Thaltej, Ahmedabad, Gujarat 380054.

2. Material Accounting Policies:

2.1 Basis of preparation of Financial Statements

The financial statements comply in all material aspect with Indian Accounting Standards (Ind AS) noticed under section 133 of the Companies Act, 2013 read with Rule 3 of the companies (Indian Accounting Standards) Rules, 2015 as amended from time to time on the historical cost basis.

In addition, the financial statements are presented in INR and all values are rounded to the nearest lacs, except when otherwise indicated.

2.2 Use of Estimates

The preparation of the financial statements in conformity with Ind AS requires management to make estimates, judgments and assumptions.

These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the year.

Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.

Application of accounting policies that require critical accounting estimates involving complex and subjective judgments and the use of assumptions in these financial statements are:

Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable consideration) allocated to that performance obligation. The transaction price of goods sold and services rendered is net of variable consideration on account of various discounts and schemes offered by the Company as part of the contract.

This variable consideration is estimated based on the expected value of outflow. Revenue (net of variable consideration) is recognized only to the extent that it is highly probable that the amount will not be subject to significant reversal when uncertainty relating to its recognition is resolved.

Sale of Product:-

Revenue from sale of products is recognized when the control on the goods have been transferred to the customer. The performance obligation in case of sale of product is satisfied at a point in time i.e., after the inspection approval obtained in respect of installed Solar Power plant.

Rendering of Services:-

Revenue from services is recognized over time by measuring progress towards satisfaction of performance obligation for the services rendered. The Company uses output method for measurement of revenue from rendering of services based on time elapsed and / or parts delivered.

Interest Income:-

Interest income is recognised using effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through expected life of the financial asset to the gross carrying amount of the financial asset. When calculating the effective interest rate, the company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses.

All other incomes are recognised and accounted for on accrual basis.

2.4 Property, Plant and Equipment

a) Measurement

(i) Property, plant and equipment

Property, plant and equipment are initially recognized at cost and subsequently carried at cost less accumulated depreciation and accumulated impairment losses.

The cost comprises the purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for its intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.

Excess of net sale proceeds of items produced over the cost of testing, if any, shall not be recognised in the profit or loss but deducted from the directly attributable costs considered as part of cost of an item of property, plant, and equipment.

(ii) Intangible Assets

An intangible asset is recognised, only where it is probable that future economic benefits attributable to the asset will accrue to the enterprise and the cost can be measured reliably.

Intangible assets acquired separately are measured on initial recognition at cost. Intangible assets arising on acquisition of business are measured at fair value as at date of acquisition.

Internally generated intangibles including research cost are not capitalized and the related expenditure is recognized in the Statement of Profit and Loss in the period in which the expenditure is incurred.

b) Depreciation and Amortization

(i) Tangible Assets

Depreciation on property, plant and equipment is calculated using the Straight- line method to allocate their depreciable amounts over their estimated useful lives as prescribed in Schedule II to the Companies Act, 2013.

The residual values estimated useful lives and depreciation method of property, plant and equipment are reviewed, and adjusted as appropriate, at each balance sheet date. The effects of any revision are recognized in profit or loss when the changes arise.

(ii) Intangible Assets

The useful lives of intangible assets are assessed as either finite or indefinite. Finite-life intangible assets are amortized on a straight-line basis over the period of their expected useful lives. Intangible assets acquired / purchased during the year are amortized on a Pro-rata basis from the date on which such assets are ready to use.

The residual value, useful live and method of amortization of intangible assets are reviewed at each financial year end and adjusted prospectively, if appropriate.

c) Subsequent expenditure

Subsequent expenditure relating to property, plant and equipment that has already been recognized is added to the carrying amount of the asset 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. All other repair and maintenance expenses are recognized in the Statement of Profit or Loss when incurred.

d) Disposal

On disposal of an item of property, plant and equipment, the difference between the disposal proceeds and its carrying amount is recognized in the Statement of Profit or Loss.

2.5 Financial Instrument: -

Initial Recognition: -

The company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument.

All financial assets and liabilities are recognized at fair value net of directly attributable transaction cost on initial recognition.

Subsequent measurement: -Non derivative financial instrument

Financial assets carried at amortized cost:

A financial asset is subsequently measured at amortized cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at fair value through other comprehensive income:

A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at fair value through profit or loss:

A financial asset which is not classified in any of the above categories are subsequently measured at fair valued through profit or loss. Fair value changes are recognised as other income in the Statement of Profit or Loss.

Financial liabilities at Fair Value through Profit or Loss:-

(a) A financial liability may be designated as at FVTPL upon initial recognition if:

such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise;

(b) The financial liability whose performance is evaluated on a fair value basis, in accordance with the Company’s documented risk management; Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on measurement recognised in the Statement of Profit and Loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability.

Financial liabilities at amortised cost:

Financial liabilities that are not held for trading and are not designated as at FVTPL are measured at amortised cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortised cost are determined based on the effective interest method. Interest expense that is not capitalised as part of costs of an asset is included in the ‘Finance costs’ line item.

The effective interest method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period.

The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

Trade and other payables are recognised at the transaction cost, which is its fair value, and subsequently measured at amortised cost.

Equity instruments:

An equity instrument is a contract that evidences residual interest in the assets of the company after deducting all of its liabilities. Incremental costs directly attributable to the issuance of equity instruments are recognised as a deduction from equity instrument net of any tax effects.

Derecognition:

The company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial liability is derecognized when obligation specified in the contract is discharged or cancelled or expired.

An exchange of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability or a part of it is also accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability.

Off-setting:

Financial assets and liabilities are offset and the net amount is presented in the balance sheet when the company currently has a legally enforceable right to offset the recognised amount and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

Modification:

A modification of a financial asset or liabilities occurs when the contractual terms governing the cash flows of a financial asset or liabilities are renegotiated or otherwise modified between initial recognition and maturity of the financial instruments. Any gain/ loss on modification is charged to statement of profit and loss.

2.6 Fair Value Measurement: -

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place either:

- In the principal market for the asset or liability, or

- In the absence of a principal market, in the most advantageous market for the asset or liability

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefit by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels:

Level 1- Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

2.7 Income Tax: -

Income tax expense comprises current tax and deferred tax.

Current Tax:

The Company had elected to exercise option available under section 115BAA of the Income Tax Act, 1961.

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-Tax Act, 1961 enacted in India. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted, at the reporting date.

Current income tax relating to items recognised outside the statement of profit and loss is recognised outside the statement of profit and loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.

Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred Tax:

Deferred tax is recognised in profit or loss, except when it relates to items that are recognised in other comprehensive income or directly in equity, in which case, the deferred tax is also recognised in other comprehensive income or directly in equity, respectively.

Deferred tax liabilities are recognised for all taxable temporary differences, except to the extent that the deferred tax liability arises from initial recognition of goodwill; or initial recognition of an asset or liability in a transaction which is not a business combination and at the time of transaction, affects neither accounting profit nor taxable profit or loss.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax losses and carry forward of unused tax credits to the extent that it is probable that taxable profit will be available against which those temporary differences, losses and tax credit can be utilized, except when deferred tax asset on deductible temporary differences arise from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit or loss.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on the tax rules and tax laws that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and deferred tax liabilities are of-set, where company has a legally enforceable right to set o the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

2.8 Impairment: -

Financial Asset

The Company assesses at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred loss event) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated.

Non-Financial Assets

The carrying value of assets/cash generating units at each Balance Sheet date are reviewed for impairment. If, any such indication exists, the Company estimates their recoverable amount and impairment is recognised if, the carrying amount of these assets/cash generating units exceeds their recoverable amount. The recoverable amount is greater of fair value less cost of disposal and their value in use. When there is indication that an impairment loss recognised for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss.

2.9 Leases: -

Company as lessee

The Company’s lease asset classes primarily consist of leases for office and godown. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:

(i) The contract involves the use of an identified asset;

(ii) The Company has substantially all of the economic benefits from use of the asset through the period of the lease; and

(iii) The Company has the right to direct the use of the asset.

At the date of commencement of the lease, the Company recognizes a right-of-use (ROU) asset and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of 12 months or less (short-term leases) and low value leases. For these short-term and low-value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.

The ROU assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated amortisation and impairment losses.

ROU assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.

The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases.

Lease liability and ROU assets have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.

The Company as a lessor

Leases for which the Company is a lessor is classified as a finance or operating lease. Contracts in which all the risks and rewards of the lease are substantially transferred to the lessee are classified as a finance lease. All other leases are classified as operating leases.

Leases, for which the Company is an intermediate lessor, it accounts for the head-lease and sublease as two separate contracts. The sub-lease is classified as a finance lease or an operating lease by reference to the ROU asset arising from the head-lease.

The company has measured the ROU asset arising from the leaseback at the proportion of the previous carrying amount of the asset that relates to the ROU retained by the company. Accordingly, the company has recognised gain that relates to the rights transferred to lessor.

Amounts due from lessees under finance leases are recognised as receivables at the amount of the Company''s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Company''s net investment outstanding in respect of the leases.

Rental income from operating leases is recognised on a straight-line basis over the lease term.

2.10 Borrowing Cost:-

Borrowing cost includes interest and other costs that company has incurred in connection with the borrowing of funds.

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset.

All other borrowing costs are expensed in the year they occur.

2.11 Employee Benefits:-

Short term employee benefits for salary and wages including accumulated leave that are expected to be settled wholly within 12 months after the end of the reporting period in which employees render the related service are recognized as an expense in the statement of profit and loss.

Defined Contribution Plans:

Contributions to Provident Fund which is defined contribution scheme, are made to a government administered Provident Fund and are charged to the Statement of Profit and Loss as incurred. The Company has no further obligations beyond its contributions to these funds.

Defined Benet Plans:

Gratuity and compensated absences are paid per month on the basis of employee''s gross salary.

2.12 Provisions, Contingent Liabilities and Contingent Assets:-

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The expense relating to a provision is presented in the statement of profit and loss. Contingent liabilities are not recognised but disclosed unless the probability of an outflow of resources is remote. Contingent assets are disclosed where inflow of economic benefits is probable. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

2.13 Cash and Cash Equivalent-

Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purpose of statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company''s cash management.

2.14 Earnings per Share:-

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

For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

2.15 Inventories:-

Inventories are valued at lower of cost and net realizable value. Cost is determined as follows:

Cost of Raw materials is determined on First In First Out (FIFO) basis.

Costs includes all non-refundable duties and taxes and all other charges incurred in bringing the inventory to their present location and condition. Net realizable value is the estimated selling price less estimated cost necessary to make the sale.

2.16 Foreign Currency Transaction:-

Initial recognition:

On initial recognition, transactions in foreign currencies entered into by the Company are recorded in the functional currency (i.e. Indian Rupees), by applying to the foreign currency amount, the spot exchange rate between the functional currency and the foreign currency at the date of the transaction. Exchange differences arising on foreign exchange transactions settled during the period are recognized in the Statement of Profit and Loss.

Measurement of foreign currency items at reporting date:

Foreign currency monetary items of the Company are translated at the closing exchange rates and are recognised in Statement of Profit and Loss in the period in which they arise.

2.17 Cash Flow Statement-

Cash flows are reported using indirect method whereby profit for the period is adjusted for the effects of the transactions of non-cash nature, any deferrals or accruals of past or future operating cash receipts and payments and items of income or expenses associated with investing and financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.

2.18 Events after reporting date:-

Where events occurring after the Balance Sheet date provide evidence of conditions that existed at the end of the reporting period, the impact of such events is adjusted within the financial statements. Otherwise, events after the Balance Sheet date of material size or nature are only disclosed.

2.19 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; or

- It is held primarily for the purpose of trading; or

- It is 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.

All other liabilities are classified as non-current.

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

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

2.20 Recent Pronouncements:-

Ministry of Corporate Affairs (“MCA”) notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended March 31, 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.

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Mar 31, 2023

1. Corporate Information:

Zodiac Energy Limited (‘the Company'') is engaged in the business of installation of Solar Power Generation Plant/Items. The Company is a public company domiciled in India and is incorporated under the provisions of Companies Act applicable in India. Its shares are listed on National Stock Exchange (NSE) and on Bombay Stock Exchange (BSE) (ZODIAC | 543416 | INE761Y01019). The registered office of the company is located at U.G.F-4,5,6, milestone building, near khodiyar restaurant, near drive in cinema, thaltej, Ahmedabad Gujarat 380054.

2. Significant Accounting Policies:

2.1 Basis of preparation of Financial Statements

The financial statements comply in all material aspect with Indian Accounting Standards (Ind AS) noticed under section 133 of the Companies Act, 2013 read with Rule 3 of the companies (Indian Accounting Standards) Rules, 2015 as amended from time to time on the historical cost basis.

In addition, the financial statements are presented in INR and all values are rounded to the nearest lacs, except when otherwise indicated.

2.2 Use of Estimates

The preparation of the financial statements in conformity with Ind AS requires management to make estimates, judgments and assumptions.

These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the year.

Accounting estimates could change from period to period. Actual results could diff-er from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their eff-ects are disclosed in the notes to the financial statements.

Application of accounting policies that require critical accounting estimates involving complex and subjective judgments and the use of assumptions in these financial statements are:

• Useful lives of Property, plant and equipment

• Provisions and contingencies

• Income tax and deferred tax

• Measurement of defined employee benefit obligations

2.3 Revenue Recognition

Revenue from Operation:-

Revenue from contracts with customers is recognized on transfer of control of promised goods or services to a customer at an amount that reflects the consideration to which the Company is expected to be entitled to in exchange for those goods or services.

Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable consideration) allocated to that performance obligation. The transaction price of goods sold and services rendered is net of variable consideration on account of various discounts and schemes offered by the Company as part of the contract.

This variable consideration is estimated based on the expected value of outflow. Revenue (net of variable consideration) is recognized only to the extent that it is highly probable that the amount will not be subject to significant reversal when uncertainty relating to its recognition is resolved.

Sale of Product-

Revenue from sale of products is recognized when the control on the goods have been transferred to the customer. The performance obligation in case of sale of product is satisfied at a point in time i.e., after the inspection approval obtained in respect of installed Solar Power plant.

Rendering of Services:-

Revenue from services is recognized over time by measuring progress towards satisfaction of performance obligation for the services rendered. The Company uses output method for measurement of revenue from rendering of services based on time elapsed and / or parts delivered.

Interest Income:-

Interest income is recognised using effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through expected life of the financial asset to the gross carrying amount of the financial asset. When calculating the effective interest rate, the company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses.

All other incomes are recognised and accounted for on accrual basis.

2.4 Property, Plant and Equipment

(a) Measurement

(i) Property, plant and equipment

Property, plant and equipment are initially recognized at cost and subsequently carried at cost less accumulated depreciation and accumulated impairment losses.

The cost comprises the purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for its intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.

Excess of net sale proceeds of items produced over the cost of testing, if any, shall not be recognised in the profit or loss but deducted from the directly attributable costs considered as part of cost of an item of property, plant, and equipment.

(ii) Intangible Assets

An intangible asset is recognised, only where it is probable that future economic benefits attributable to the asset will accrue to the enterprise and the cost can be measured reliably.

Intangible assets acquired separately are measured on initial recognition at cost. Intangible assets arising on acquisition of business are measured at fair value as at date of acquisition.

Internally generated intangibles including research cost are not capitalized and the related expenditure is recognized in the Statement of Profit and Loss in the period in which the expenditure is incurred.

(b) Depreciation and Amortization

(i) Tangible Assets

Depreciation on property, plant and equipment is calculated using the Straight-line method to allocate their depreciable amounts over their estimated useful lives as prescribed in Schedule II to the Companies Act, 2013.

The residual values, estimated useful lives and depreciation method of property, plant and equipment are reviewed, and adjusted as appropriate, at each balance sheet date. The effects of any revision are recognized in profit or loss when the changes arise.

(ii) Intangible Assets

The useful lives of intangible assets are assessed as either finite or indefinite. Finite-life intangible assets are amortized on a straight-line basis over the period of their expected useful lives. Intangible assets acquired / purchased during the year are amortized on a Pro-rata basis from the date on which such assets are ready to use.

The residual value, useful live and method of amortization of intangible assets are reviewed at each financial year end and adjusted prospectively, if appropriate.

(c) Subsequent expenditure

Subsequent expenditure relating to property, plant and equipment that has already been recognized is added to the carrying amount of the asset 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. All other repair and maintenance expenses are recognized in the Statement of Profit or Loss when incurred.

(d) Disposal

On disposal of an item of property, plant and equipment, the difference between the disposal proceeds and its carrying amount is recognized in the Statement of Profit or Loss.

2.5 Financial Instrument:-

Initial Recognition:-

The company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument.

All financial assets and liabilities are recognized at fair value net of directly attributable transaction cost on initial recognition.

Subsequent measurement:-Non derivative financial instrument

Financial assets carried at amortized cost:

A financial asset is subsequently measured at amortized cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at fair value through other comprehensive income:

A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at fair value through profit or loss:

A financial asset which is not classified in any of the above categories are subsequently measured at fair valued through profit or loss. Fair value changes are recognised as other income in the Statement of Profit or Loss.

(a) such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise;

(b) The financial liability whose performance is evaluated on a fair value basis, in accordance with the Company''s documented risk management; Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on measurement recognised in the Statement of Profit and Loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability.

Financial liabilities at amortised cost:

Financial liabilities that are not held for trading and are not designated as at FVTPL are measured at amortised cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortised cost are determined based on the effective interest method. Interest expense that is not capitalised as part of costs of an asset is included in the ‘Finance costs'' line item.

The effective interest method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period.

The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

Trade and other payables are recognised at the transaction cost, which is its fair value, and subsequently measured at amortised cost.

Equity instruments:

An equity instrument is a contract that evidences residual interest in the assets of the company after deducting all of its liabilities. Incremental costs directly attributable to the issuance of equity instruments are recognised as a deduction from equity instrument net of any tax effects.

Derecognition:

The company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial liability is derecognized when obligation specified in the contract is discharged or cancelled or expired.

An exchange of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability or a part of it is also accounted for as an extinguishment of the

Of-setting:

Financial assets and liabilities are offset and the net amount is presented in the balance sheet when the company currently has a legally enforceable right to offset the recognised amount and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

Modification:

A modification of a financial asset or liabilities occurs when the contractual terms governing the cash flows of a financial asset or liabilities are renegotiated or otherwise modified between initial recognition and maturity of the financial instruments. Any gain/ loss on modification is charged to statement of profit and loss.

2.6 Fair Value Measurement:

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place either:

- In the principal market for the asset or liability, or

- In the absence of a principal market, in the most advantageous market for the asset or liability

A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefit by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels:

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities

Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

2.7 Income Taxi-

Income tax expense comprises current tax and deferred tax.

Current Tax:

The Company had elected to exercise option available under section 115BAA of the Income Tax Act, 1961.

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-Tax Act, 1961 enacted in India. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted, at the reporting date.

Current income tax relating to items recognised outside the statement of profit and loss is recognised outside the statement of profit and loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred Tax:

Deferred tax is recognised in profit or loss, except when it relates to items that are recognised in other comprehensive income or directly in equity, in which case, the deferred tax is also recognised in other comprehensive income or directly in equity, respectively.

Deferred tax liabilities are recognised for all taxable temporary differences, except to the extent that the deferred tax liability arises from initial recognition of goodwill; or initial recognition of an asset or liability in a transaction which is not a business combination and at the time of transaction, affects neither accounting profit nor taxable profit or loss.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax losses and carry forward of unused tax credits to the extent that it is probable that taxable profit will be available against which those temporary differences, losses and tax credit can be utilized, except when deferred tax asset on deductible temporary differences arise from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit or loss.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on the tax rules and tax laws that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and deferred tax liabilities are offset, where company has a legally enforceable right to set of the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

2.8 Impairment-

Financial Asset

The Company assesses at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ‘loss event'') and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated.

Non-Financial Assets

The carrying value of assets/cash generating units at each Balance Sheet date are reviewed for impairment. If, any such indication exists, the Company estimates their recoverable amount and impairment is recognised if, the carrying amount of these assets/cash generating units exceeds their recoverable amount. The recoverable amount is greater of fair value less cost of disposal and their value in use. When there is indication that an impairment loss recognised for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss.

2.9 Leases:

Company as lessee

The Company''s lease asset classes primarily consist of leases for office and godown. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:

(i) The contract involves the use of an identified asset;

(ii) The Company has substantially all of the economic benefits from use of the asset through the period of the lease; and

(iii) The Company has the right to direct the use of the asset.

At the date of commencement of the lease, the Company recognizes a right-of-use (ROU) asset and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of 12 months or less (short-term leases) and low value leases. For these short-term and low-value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.

The ROU assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated amortisation and impairment losses.

ROU assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.

The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases.

Lease liability and ROU assets have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.

The Company as a lessor

Leases for which the Company is a lessor is classified as a finance or operating lease. Contracts in which all the risks and rewards of the lease are substantially transferred to the lessee are classified as a finance lease. All other leases are classified as operating leases.

Leases, for which the Company is an intermediate lessor, it accounts for the head-lease and sub-lease as two separate contracts. The sub-lease is classified as a finance lease or an operating lease by reference to the ROU asset arising from the head-lease.

The company has measured the ROU asset arising from the leaseback at the proportion of the previous carrying amount of the asset that relates to the ROU retained by the company. Accordingly, the company has recognised gain that relates to the rights transferred to lessor.

Amounts due from lessees under finance leases are recognised as receivables at the amount of the Company''s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Company''s net investment outstanding in respect of the leases.

Rental income from operating leases is recognised on a straight-line basis over the lease term.

2.10 Borrowing Cost:-

Borrowing cost includes interest and other costs that company has incurred in connection with the borrowing of funds.

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset.

2.11 Employee Benefits:-

Short term employee benefits for salary and wages including accumulated leave that are expected to be settled wholly within 12 months after the end of the reporting period in which employees render the related service are recognized as an expense in the statement of profit and loss.

Defined Contribution Plans:

Contributions to Provident Fund which is defined contribution scheme, are made to a government administered Provident Fund and are charged to the Statement of Profit and Loss as incurred. The Company has no further obligations beyond its contributions to these funds.

Defined Benet Plans:

Gratuity and compensated absences are paid per month on the basis of employee''s gross salary.

2.12 Provisions, Contingent Liabilities and Contingent Assets:

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The expense relating to a provision is presented in the statement of profit and loss. Contingent liabilities are not recognised but disclosed unless the probability of an outflow of resources is remote. Contingent assets are disclosed where inflow of economic benefits is probable. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

2.13 Cash and Cash Equivalent

Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purpose of statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company''s cash management.

2.14 Earnings per Share

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

For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

2.15 Inventories

Inventories are valued at lower of cost and net realizable value. Cost is determined as follows:

Cost of Raw materials is determined on First In First Out (FIFO) basis.

Costs includes all non-refundable duties and taxes and all other charges incurred in bringing the inventory to their present location and condition. Net realizable value is the estimated selling price less estimated cost necessary to make the sale.

2.16 Foreign Currency Transaction

Initial recognition:

On initial recognition, transactions in foreign currencies entered into by the Company are recorded in the functional currency (i.e. Indian Rupees), by applying to the foreign currency amount, the spot exchange rate between the functional currency and the foreign currency at the date of the transaction. Exchange di-fferences arising on foreign exchange transactions settled during the period are recognized in the Statement of Profit and Loss.

Measurement of foreign currency items at reporting date:

Foreign currency monetary items of the Company are translated at the closing exchange rates and are recognised in Statement of Profit and Loss in the period in which they arise.

2.17 Cash Flow Statement

Cash flows are reported using indirect method whereby profit for the period is adjusted for the e-ffects of the transactions of non-cash nature, any deferrals or accruals of past or future operating cash receipts and payments and items of income or expenses associated with investing and financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.

2.18 Events after reporting date:

Where events occurring after the Balance Sheet date provide evidence of conditions that existed at the end of the reporting period, the impact of such events is adjusted within the financial statements. Otherwise, events after the Balance Sheet date of material size or nature are only disclosed.

2.19 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.

A liability is current when:

- It is expected to be settled in normal operating cycle; or

- It is held primarily for the purpose of trading; or

- It is 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.

All other liabilities are classified as non-current.

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

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

2.20 Recent Pronouncements:

On March 31, 2023, the Ministry of Corporate Affairs (MCA) has notified Companies (Indian Accounting Standards) Amendment Rules, 2023. This notification has resulted into following amendments in the existing Accounting Standards which are applicable from April 1, 2023.

a) Ind AS 101 - First time adoption of Ind AS - modification relating to recognition of deferred tax asset by a first-time adopter associated with (a) right to use assets and related liabilities and (b) decommissioning, restoration and similar liabilities and corresponding amounts recognised as cost of the related assets.

b) Ind AS 102 - Share-based Payment - modification relating to adjustment after vesting date to the fair value of equity instruments granted.

c) Ind AS 107 - Financial Instruments Disclosures - modification relating to disclosure of material accounting policies including information about basis of measurement of financial instruments.

d) Ind AS 109 - Financial Instruments - modification relating to reassessment of embedded derivatives.

e) Ind AS 1 - Presentation of Financials Statements - modification relating to disclosure of ‘material accounting policy information'' in place of ‘significant accounting policies''.

f) Ind AS 8 - Accounting Policies, Change in Accounting Estimates and Errors -modification of definition of ‘accounting estimate'' and application of changes in accounting estimates.

g) Ind AS 12 - Income Taxes - modification relating to recognition of deferred tax liabilities and deferred tax assets.

h) Ind AS 34 - Interim Financial Reporting - modification in interim financial reporting relating to disclosure of ‘material accounting policy information'' in place of ‘significant accounting policies''.

The Company is evaluating the amendments and the expected impact, if any, on the Company''s financial statements on application of the amendments for annual reporting periods beginning on or after April 01, 2023.