Accounting Policies of Arrowhead Seperation Engineering Ltd. Company

Mar 31, 2025

1.0 Corporate Information

ARROWHEAD SEPERATION ENGINEERING LIMITED is a Limited Company, incorporated under the
provisions of Companies Act, 2013 and having CIN U74210MH1991PLC062643. The Company is mainly engaged the
primary objective for the formation of the Company is to carry on the business of designing, manufacturing, erection,
commissioning trading and consultancy of chemical and process equipment by means of technology available
indigenously or otherwise. The Registered office of the Company is situated at SURVEY NO 40 VILLAGE
MUNDHEGAON TAL IGATPURI, NASIK, Maharashtra, India, 422403.

1.1 Basis of preparation of financial statements

a. Accounting Convention: -

These financial statements of the Company have been prepared in accordance with Generally Accepted
Accounting Principles in India (“Indian GAAP”). Indian GAAP comprises mandatory accounting standards as
prescribed under Section 133 of the Companies Act, 2013 (“the Act”) read with the Rule 7 of the Companies
(Accounts) Rules, 2014. The financial statements have been prepared on an accrual basis and under the
Historical Cost Convention and the Companies (Accounting Standards) Amendment Rules 2016 and the
relevant provisions of the Companies Act, 2013.

b. Functional and Presentation Currency

The functional and presentation currency of the company is Indian rupees. This financial statement is presented
in Indian rupees.

All amounts disclosed in the financial statements and notes are rounded off to lakhs the nearest INR rupee in
compliance with Schedule III of the Act, unless otherwise stated.

Due to rounding off, the numbers presented throughout the document may not add up precisely to the totals and
percentages may not precisely reflect the absolute figures.

c. Use of Estimates and Judgments

The preparation of financial statement in conformity with accounting standard requires the Management to
make estimates, judgments, and assumptions. These estimates, judgments and assumptions affects the
application of accounting policies and the reported amounts of assets and liabilities, the disclosure of contingent
assets and liabilities at the date of financial statement and reported amounts of revenue and expenses during the
period. Accounting estimates could change form period to period. Actual result could differ from those
estimates. As soon as the Management is aware of the changes, appropriate changes in estimates are made. The
effect of such changes are reflected in the period in which such changes are made and, if material, their effect
are disclosed in the notes to financial statement.

Estimates and underlying assumptions are reviewed at each balance sheet date. Revisions to accounting
estimates are recognised in the period in which the estimate is revised and in future periods affected.

d. Current and Non - Current Classification

An asset or a liability is classified as Current when it satisfies any of the following criteria:

i. It is expected to be realized / settled, or is intended for sales or consumptions, in the Company''s Normal
Operating Cycle;

ii. It is held primarily for the purpose of being traded.

iii. It is expected to be realized / due to be settled within twelve months after the end of reporting date;

iv. The Company does not have an unconditional right to defer the settlement of the liability for at least
twelve months after the reporting date.

All other assets and liabilities are classified as Non - Current.

For the purpose of Current / Non - Current classification of assets and liabilities, the Company has ascertained its
operating cycle as twelve months. This is based on the nature of services and the time between the acquisition of
the assets or liabilities for processing and their realization in Cash and Cash Equivalents.

1.1 Basis of Preparation

a) Property, Plant & Equipment and Intangible Assets:-

i. The company has adopted Cost Model to measure the gross carrying amount of Property Plant &
Equipment.

ii. Tangible Property Plant & Equipment are stated at cost of acquisition less accumulated depreciation.
Cost includes the purchase price and all other attributable costs incurred for bringing the asset to its
working condition for intended use.

iii. Intangible assets are stated at the consideration paid for acquisition and customization thereof less
accumulated amortization.

iv. Cost of fixed assets not ready for use before the balance sheet date is disclosed as Capital Work in
Progress.

v. Cost of Intangible Assets not ready for use before the balance sheet date is disclosed as Intangible
Assets under Development.

b) Depreciation / Amortisation : -

Depreciation has been provided under Written down Method at the rates prescribed under schedule III of
the Companies Act, 2013 on single shift and Pro Rata Basis to result in a more appropriate preparation or
presentation of the financial statements.

In respect of assets added/sold during the year, pro-rata depreciation has been provided at the rates
prescribed under Schedule II.

Intangible assets being Software are amortized over a period of its useful life on a straight line basis,
commencing from date the assets is available to the company for its use.

c) Impairment of Assets:-

An asset is treated as impaired when the carrying cost of an asset exceeds its recoverable value. An
impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as
impaired. The impairment loss recognised in prior period is reversed if there has been a change in the
estimate of the recoverable amount.

d) Investments:-

• Long term investments are stated at cost. Provision for diminution in the value of long-term investment
is made only if such decline is other than temporary.

• Current investments are stated at lower of cost or market value. The determination of carrying amount
of such investment is done on the basis of specific identification.

e) Government Grants and Subsidies:-

The Company is entitled to receive any subsidy from the Government authorities or any other authorities in
respect of manufacturing or other facilities are dealt as follows:

• Grants in the nature of subsidies which are non - refundable are credited to the respective accounts to
which the grants relate, on accrual basis, where there is reasonable assurance that the Company will
comply with all the necessary conditions attached to them.

• Grants in the nature of Subsidy which are Refundable are shown as Liabilities in the Balance Sheet at
the Reporting date.

f) Retirement Benefits:-

a) Short Term Employee Benefits:

All employee benefits payable within twelve months of rendering the service are classified as short term
benefits. Such benefits include salaries, wages, bonus, short term compensated absences, awards, ex-gratia,
performance pay etc. and the same are recognised in the period in which the employee renders the related
service.

b) Employment Benefits:

Short Term Employee Benefits:

All employee benefits payable within twelve months of rendering the service are classified as short term
benefits. Such benefits include salaries, wages, bonus, short term compensated absences, awards, ex-gratia,
performance pay etc. and the same are recognised in the period in which the employee renders the related
service.

a) Provident Fund/ESIC :

The company has not exceed minimum criteria for eligibility to contribute into Defined Contribution
Plans & Defined Contribution Plans for post-employment benefit in the form.

g) Valuation of Inventory : -

Inventories of the raw material, work-in-progress, finished goods, packing material, stores and spares,
components, consumables and stock in trade are carried at lower of cost and net realizable value. However,
raw material and other items held for use in production of inventories are not written down below cost if

the finished goods in which they will be incorporated are expected to be sold at or above cost. The
comparison of cost and net realizable value is made on an item by item basis.

Cost of inventories included the cost incurred in bringing the each product to its present location and
conditions are accounted as follows:

a) Raw Material:- Cost included the purchase price and other direct or indirect costs incurred to bring the
inventories into their present location and conditions. Cost is determined on First in First out basis (FIFO).

b) Finished Goods and Work-in-Progress:- Work in progress are valued at cost which includes raw
materials and cost incurred till the stage of production of process. Finished Goods are valued at cost or Net
realizable value whichever is lower. Cost included cost of direct materials and the labor cost and a
proportion of manufacturing overhead based on the normal operating capacity, but excluding the borrowing
costs. Cost is determined on “First in First out basis (FIFO) ”.

c) Stock in Trade:- Cost included the purchase price and other direct or indirect costs incurred in bringing
the inventories to their present location and conditions. Cost is determined on “WeightedAverage Basis”.

All other inventories of stores and spares, consumables, project material at site are valued at cost. The stock
of waste or scrap is valued at net realizable value.

“Net Realizable Value” is the estimated selling price in the ordinary course of business, less estimated costs
of completion and estimated cost necessary to make the sales of the products.

h) Revenue Recognition :-

Revenue is recognized when it is probable that economic benefit associated with the transaction flows to
the Company in ordinary course of its activities and the amount of revenue can be measured reliably,
regardless of when the payment is being made. Revenue is measured at the fair value of consideration
received or receivable, taking into the account contractually defined terms of payments, net of its returns,
trade discounts and volume rebates allowed.

Revenue includes only the gross inflows of economic benefits, including the excise duty, received and
receivable by the Company, on its own account. Amount collected on behalf of third parties such as sales
tax, value added tax and goods and service tax (GST) are excluded from the Revenue.

Sale of goods is recognized at the point of dispatch of goods to customers, sales are exclusive of Sales tax,
Vat, GST and Freight Charges if any. The revenue and expenditure are accounted on a going concern basis.

Interest Income is Recognized on a time proportion basis taking into account the amount outstanding and
the rate applicable i.e. on the basis of matching concept..

Dividend from investments in shares / units is recognized when the company.

Other items of Income are accounted as and when the right to receive arises.

i) Accounting for effects of changes in foreign exchange rates :-

Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing at the
time of the transactions.

Any income or expenses on account of exchange difference either on settlement or on Balance sheet
Valuation is recognized in the profit and loss account except in cases where they relate to acquisition of
fixed assets in which case they are adjusted to the carrying cost of such assets.

Foreign currency transactions accounts are given in the notes of accounts.

Commodity Hedging: - The realized gain or loss in respect of commodity hedging contracts, the principal
period of which has expired during the year, is recognized in profit and loss account. In respect of
contracts, that are outstanding as on date of Balance sheet are valued at prevailing market price and the
resultant loss, if any, is provided.

j) Borrowing Cost

Borrowing Cost includes the interest, commitments charges on bank borrowings, amortization of ancillary
costs incurred in connection with the arrangement of borrowings.

Borrowing costs that are directly attributable to the acquisition or construction of qualifying property,
plants and equipments are capitalized as a part of cost of that property, plants and equipments. The amount
of borrowing costs eligible for capitalization is determined in accordance with the Accounting Standards -
16 “Borrowing Costs”. Other Borrowing Costs are recognized as expenses in the period in which they are
incurred.

In accordance with the Accounting Standard - 16, exchange differences arising from foreign currency
borrowings to the extent that they are regarded as adjustments to interest costs are recognized as Borrowing
Costs and are capitalized as a part of cost of such property, plants and equipments if they are directly
attributable to their acquisition or charged to the Standalone Statement or Profit and Loss.

k) Related Party Disclosure :-

The Disclosures of Transaction with the related parties as defined in the related parties as defined in the
Accounting Standard are given in notes of accounts.

l) Accounting for Leases :-

A lease is classified at the inception date as finance lease or an operating lease. A lease that transfers
substantially all the risk and rewards incidental to the ownership to the Company is classified as a finance
lease.

The Company as a lessee:

a) Operating Lease:- Rental payable under the operating lease are charged to the Standalone Statement of
Profit and Loss on a Straight line basis over the term of the relevant lease.

b) Finance Lease: - Finance lease are capitalized at the commencement of the lease, at the lower of the fair
value of the property or the present value of the minimum lease payments. The corresponding liability to
the lessor is included in the Balance Sheet as a finance lease obligation. Lease payments are apportioned
between finance charges and the reduction of the lease obligation so as to achieve a constant rate of interest
on the remaining balance of the liability. Finance charges are charged directly against the income over the
period of the lease.

The Company has not provided any of its assets on the basis of operating lease or finance lease to others.

m) Cash flow:-

Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects
of transactions of a non-cash nature and any deferrals of past or future cash receipts and payments. The
cash flows from regular operating, investing and financing activities of the company are segregated.

n) Earnings Per Share :-

The Company reports the basic and diluted Earnings per Share (EPS) in accordance with Accounting
Standard 20, “Earnings per Share”. Basic EPS is computed by dividing the Net Profit or Loss attributable to
the Equity Shareholders for the year by the weighted average number of equity shares outstanding during
the year. Diluted EPS is computed by dividing the Net Profit or Loss attributable to the Equity
Shareholders for the year by the weighted average number of Equity Shares outstanding during the year as
adjusted for the effects of all potential Equity Shares, except where the results are Anti - Dilutive.

The weighted average number of Equity Shares outstanding during the period is adjusted for events such a
Bonus Issue, Bonus elements in right issue, share splits, and reverse share split (consolidation of shares)
that have changed the number of Equity Shares outstanding, without a corresponding change in resources.

o) Taxes on Income :-

1. Current Tax: -

Provision for current tax is made after taken into consideration benefits admissible under the
provisions of the Income Tax Act, 1961.

2. Deferred Taxes: -

Deferred Income Tax is provided using the liability method on all temporary difference at the balance
sheet date between the tax basis of assets and liabilities and their carrying amount for financial
reporting purposes.

I. Deferred Tax Assets are recognized for all deductible temporary differences to the extent that
it is probable that taxable profit will be available in the future against which this items can be
utilized.

II. Deferred Tax Assets and liabilities are measured at the tax rates that are expected to apply to
the period when the assets is realized or the liability is settled, based on tax rates ( and the
tax) that have been enacted or enacted subsequent to the balance sheet date.

p) Discontinuing Operations :-

During the year the company has not discontinued any of its operations.

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Mar 31, 2024

a) Basis of preparation of financial statements

These financial statements have been prepared to comply with the Generally Accepted Accounting Principles (Indian GAAP), including
Accounting Standards notified under the relevant provisions of the Companies Act, 2013. The financial statements have been prepared on
accrual basis under the historical cost convention. The accounting policies not specifically referred, are consistently applied from the past
accounting periods.

b) Use of estimates

The preparation of financial statements in conformity with the Generally Accepted Accounting Policies requires the management to make
estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses and disclosures of contingent assets and
liabilities. The estimates and assumptions used in the accompanying financial statements are based upon managements’ evaluation of the
relevant facts and circumstances as on the date of the financial statements. Actual results may differ from the estimates and assumptions used
in preparing the accompanying financial statements. Any differences of actual results to such estimates are recognized in the period in which
the results are known/ materialized.

c) Revenue recognition

Having regard to size, nature and complexity of business and practices followed by others in the same line and level of business, the
management is of opinion that Company is applying accrual basis of accounting for recognition of income and expenditure earned or incurred
respectively, in the normal course of business.

d) Inventories

Inventory consists of Raw material, store and spares and Finished goods is valued at cost. Cost of inventories comprises of all cost of
purchases and other costs incurred in bringing the inventory to their present location and condition. Cost is assigned on First-In-First-Out
(FIFO) basis. Obsolete, defective and unserviceable stocks are provided for, wherever required.

e) Taxes on income

Tax expense comprises of current tax and deferred tax. Current tax is measured at the amount expected to be paid to the tax authorities, using
the applicable tax rates. Deferred tax is provided on timing differences between taxable income and accounting income subject to
consideration of prudence. Deferred tax assets and liabilities are measured using the tax rates and tax law that have been enacted or
substantively enacted by the balance sheet date.

f) Provisions

A provision is recognized when the Company has a present obligation as a result of past event, it is probable that an outflow of resource
embodying economic benefits will be require to settle the obligation and a reliable estimate can be made of the amount of the obligation.
Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the
reporting date. These estimates are reviewed at the end of each reporting date and adjusted to reflect the current best estimates.

g) Earnings per Share

Basic Earnings per Share is computed by dividing the net profit after tax by weighted average number of equity shares outstanding during the
year. Diluted Earnings per Share is computed by dividing net profit after tax by the weighted average number of equity shares considered for
deriving basic earnings per share and also the weighted average number of equity shares that could have been issued upon conversion of all
dilutive potential equity shares.

h) Depreciation and Amortisation

Depreciation is provided on ‘Written Down Value Method’ in accordance with the rates and other conditions laid down in Schedule- II of the
Companies Act, 2013. The calculation of deprecation is made on annual basis including in case of additions or sale of property, plant &
equipment during the year.

i) Property, plant and equipment

Property, plant and equipment are carried at the cost of acquisition or construction less accumulated depreciation. The cost of property, plant
and equipment includes non-refundable taxes, duties, freight and other incidental expenses related to the acquisition and installation of the
respective assets.

j) Employee benefits

Short term benefits such as salary, bonus, leave salary and other benefits are accounted on accrual basis.

Defined contribution plans includes company’s contributions towards state plans for the employees, such as EPF, ESI etc. where
contributions made towards such plans are charged to revenue as and when they become due to the company.

Defined benefit plans includes gratuity, liability of which is provided in the books of account on the basis of actuarial valuation made at the
end of year.

k) Cash and cash equivalents

Cash equivalents represent highly liquid investments with remaining maturities, at the date of purchase/investment, of three months or less.
As of the balance sheet date, the Company had no such investment. Cash and cash equivalents comprise of cash in hand and balance in bank
accounts.

l) Other operational revenue

Other operational revenue represent income earned from the activities incidental to the business and is recognized when the right to
receive the income is established as per the terms of the contract.

m) Foreign Currency Transaction

Transaction denominated in foreign currency are recorded at the exchange rates prevailing on date of transactions Rbi reference rate is used
for recording closing balance gain or loss. All exchange differences are dealt with in the statement of profit & loss.

n) Borrowing cost

As per AS 16, borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that
necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as
the assets are substantially ready for their intended use or sale.

o) Income taxes

Tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with the Income Tax Act, 1961), deferred tax
charge or benefit (reflecting the tax effect of timing differences between accounting income and taxable income for the period) and minimum
alternate tax.

Current tax

Provision for income tax is recognized based on estimated tax liability computed after adjusting for allowances, disallowances and
exemptions in accordance with the Income Tax Act, 1961.

Deferred tax

The deferred tax charge or benefit and the corresponding deferred tax liabilities and assets are recognized using the tax rates that have been
enacted or substantially enacted as at the balance sheet date. Deferred tax assets are recognized only to the extent there is reasonable certainty
that the asset can be realized in future, however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred
tax assets are recognized only if there is a virtual certainty of realization of the assets. Deferred tax assets are reviewed as at each balance
sheet date and written down or written up to reflect the amount that is reasonably/virtually certain to be realized.

Minimum Alternate Tax (MAT)

MAT credit asset is recognized where there is convincing evidence that the asset can be realized in future. MAT credit assets are reviewed at
each balance sheet date and written down or written up to reflect the amount that is reasonably certain to be realized.

p) Segment Reporting

The Company operates in a single primary business segment . Hence, there are no reportable segment as per AS 17 Segment Reporting.