Accounting Policies of CPS Shapers Ltd. Company

Mar 31, 2025

2 Significant Accounting policies

a) Basis of preparation of financial statements

These financial statements have been prepared and presented under the historical cost convention on the accrual basis of
accounting and comply with the Accounting Standards specified to in section 133 of the Companies Act 2013, read with
rule 7 of the Companies (Account) Rules, 2014, the relevant provisions of the Companies Act, 2013, pronouncements of
the Institute of Chartered Accountants of India and other accounting principles generally accepted in India, to the extent
applicable. The financial statements are presented as per schedule III to Companies Act, 2013

b) Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires the
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent liabilities on the date of the financial statements and the results of operations during the
reporting periods. Although these estimates are based upon management’s knowledge of current events and actions,
actual results could differ from those estimates and revisions, if any, are recognised in the current and future periods.

c) Revenue Recognition

The Company follows the accrual method of accounting and all claims, receivable and liabilities are provided on that
basis. All revenue is recogniszed on accrual basis except non-recruting income is accounted otherwise.

Sale of goods

Sales are recognised, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the
buyer. Sales excludes Goods & Service Tax

Revenue from sale of services is recognized net of goods and service tax and as and when the services are rendered.

Interest incomes/expenses are recognised using the time proportion method based on the rates implict in the
trabscation

d) Fixed Assets

Property, plant and equipment are carried at cost less accumulated depreciation / amortisation and impairment losses,
if any. 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), any directly
attributable expenditure on making the asset ready for its intended use, other incidental expenses.

The cost of an item of PPE is recognized as an asset if, and only, if it is probable that economic benefits associated with
the item will flow to the company in future periods and the cost of the item can be measured reliably. Expenditure
incurred after the PPE have been put into operations, such as repairs and maintenance expenses are charged to the
Profit and Loss Statement during the period in which they are incurred.

If significant parts of an iem of PPE have different useful lives, then they are accounted for as separate items (major
components) of PPE.

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

Capital Work-in-progress

Capital Work-in-progress comprises of property, plant and equipment that are not ready for their intended use at the end
of reporting period and are carried at cost comprising direct costs, related incidental expenses, other directly attributable
costs and borrowing costs.

Intangible asset are recognised as per Accounting Standard 26 Intangible Asset.

An intangible asset is recognised if and only if

(a) it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise; and

(b) the cost of the asset can be measured reliably.

Intangible Assets are stated at acquisition cost, net of accumulated amortization and accumulated impairment losses, if
any.

e) Depreciation

i. Property, Plant & Equipment

Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual
value.

Depreciation is provided on useful life of the assets as prescribed in Schedule II to the Companies Act, 2013.
Depreciable amount for assets is the cost of PPE less its estimated residual value.

The useful life of an asset is the period over which a PPE is expected to be available for use by an entity, or the number
of production or similar units expected to be obtained from the asset by the entity. Depreciation on additions is
provided on a pro-rata basis from the date of installation or acquisition and in case of projects from the date of
commencement of commercial production.

The Company has used following useful lives of the Property, Plant and Equipment to provide depreciation.

ii. Intangible Assets

Intangible Assets are stated at acquisition cost, net of accumulated amortization and accumulated impairment losses, if
any. Intangible Assets are amortized on straight line basis over a period of five years being the estimated useful life.

f) Inventories

Inventories are valued at the lower of cost and the net realisable value after providing for obsolescence and other losses,
where considered necessary. Cost is generally determined on weighted average basis except for inventory segregated for
a specific order / project, in which case it is valued at their specific costs of purchase. Cost includes all charges in
bringing the goods to the point of sale, including octroi and other levies, transit insurance and receiving charges.

Cost of raw materials and stores and spares includes cost of purchase and other costs incurred in bringing the
inventories to their present location and condition. The aforesaid items are valued at net realizable value if the finished
products in which they are to be incorporated are expected to be sold at a loss.

Cost of finished goods and work-in-progress include all costs of purchases, conversion costs and other costs incurred in
bringing the inventories to their present location and condition. The Net realizable value is the estimated selling price in
the ordinary course of business less the estimated costs of completion and estimated costs necessary to make the sale.

g) Foreign currency transactions
Initial recognition:

Transactions in foreign currencies entered into by the Company are accounted at the exchange rates prevailing on the
date of the transaction or at rates that closely approximate the rate at the date of the transaction.

Measurement at the balance sheet date:

Foreign currency monetary items (other than derivative contracts) of the Company, outstanding at the balance sheet date
are restated at the year-end rates. Non-monetary items of the Company are carried at historical cost. Revenue and
expenses are translated at the average exchange rates prevailing during the year.

Treatment of exchange differences:

Exchange differences arising on settlement / restatement of foreign currency monetary assets and liabilities of the
Company are recognised as income or expense in the Statement of Profit and Loss.

h) Employee 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, leave encashment, incentives etc. and the same are recognised in the period in which the
employee renders the related service. The undiscounted amount of short-term employee benefits to be paid in exchange
for employee services is recognized as an expense as the related service is rendered by employees.

Defined contribution plans

Contributions to defined contribution schemes such as Employees State Insurance and Provident Fund, etc are charged
as an expense based on the amount of contribution required to be made as and when services are rendered by the
employees. These contributions are made to the fund administered and managed by Government of India. The company
has no other obligations to the plans beyond its monthly compensations.

Defined benefit plans

For defined benefit plans in the form of gratuity (unfunded), the cost of providing benefits is determined using the
Projected Unit Credit method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and
losses are recognised in the Statement of Profit and Loss in the period in which they occur. Past service cost is
recognised immediately to the extent that the benefits are already vested and otherwise is amortised on a straight-line
basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the
Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service
cost.

i) T axation

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the
applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form
of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company
will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is highly probable
that future economic benefit associated with it will flow to the Company.

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

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Mar 31, 2024

1 Background and Principal activities

CPS Shapers Limited (Formerly Known as CPS Shapers Private Limited) was incorporated on 1 June, 2012 and having its registered office at 201-204, 2nd Floor Swamini Industrial Estate, No 3, Opp Varun Industries, Nanai Nagar, Waliv, Vasai East Thane, Maharashtra-401208. The Company is primarily engaged in the business manufacturing of compressed garments. The Company has been converted from Private limited Company to Public Limited Company vide necessary resolution passed by shareholders and the name of company is this day changed to CPS Shapers Limited pursuant to issuance of Fresh Certificate of Incorporation on 20.06.2023. Now, the CIN is U18109MH2012PLC231749.

The Company is now Public Limited Company. The Company came out with its Initial Public Offer (IPO) on 29th August, 2023 and IPO closed on 31st August, 2023. The Company is listed on the Small and Medium Enterprise ("SME") platform of National Stock Exchange (NSE).

2 Significant Accounting policies

a) Basis of preparation of financial statements

These financial statements have been prepared and presented under the historical cost convention on the accrual basis of accounting and comply with the Accounting Standards specified to in section 133 of the Companies Act 2013, read with rule 7 of the Companies (Account) Rules, 2014, the relevant provisions of the Companies Act, 2013, pronouncements of the Institute of Chartered Accountants of India and other accounting principles generally accepted in India, to the extent applicable. The financial statements are presented as per schedule III to Companies Act, 2013

b) Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of the financial statements and the results of operations during the reporting periods. Although these estimates are based upon management’s knowledge of current events and actions, actual results could differ from those estimates and revisions, if any, are recognised in the current and future periods.

c) Revenue Recognition

The Company follows the accrual method of accounting and all claims, receivable and liabilities are provided on that basis. All revenue is recogniszed on accrual basis except non-recruting income is accounted otherwise.

Sale of goods

Sales are recognised, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer. Sales excludes Goods & Service Tax

Revenue from sale of services is recognized net of goods and service tax and as and when the services are rendered.

Interest incomes/expenses are recognised using the time proportion method based on the rates implict in the trabscation

d) Fixed Assets

Property, plant and equipment are carried at cost less accumulated depreciation / amortisation and impairment losses, if any. 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 subsequendy recoverable from the tax authorities), any directiy attributable expenditure on making the asset ready for its intended use, other incidental expenses.

The cost of an item of PPE is recognized as an asset if, and only, if it is probable that economic benefits associated ¦with the item will flow to the company in future periods and the cost of the item can be measured reliably. Expenditure incurred after the PPE have been put into operations, such as repairs and maintenance expenses are charged to the Profit and Loss Statement during the period in which they are incurred.

If significant parts of an iem of PPE have different useful lives, then they are accounted for as separate items (major components) of PPE.

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

Capital Work-in-progress

Capital Work-in-progress comprises of property, plant and equipment that are not ready for their intended use at the end of reporting period and are carried at cost comprising direct costs, related incidental expenses, other directly attributable costs and borrowing costs.

Intangible asset are recognised as per Accounting Standard 26 Intangible Asset.

An intangible asset is recognised if and only if

(a) it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise; and

(b) the cost of the asset can be measured reliably.

Intangible Assets are stated at acquisition cost, net of accumulated amortization and accumulated impairment losses, if any.

e) Depreciation

i. Property, Plant & Equipment

Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value.

Depreciation is provided on useful life of the assets as prescribed in Schedule II to the Companies Act, 2013. Depreciable amount for assets is the cost of PPE less its estimated residual value.

The useful life of an asset is the period over which a PPE is expected to be available for use by an entity, or the number of production or similar units expected to be obtained from the asset by the entity. Depreciation on additions is provided on a pro-rata basis from the date of installation or acquisition and in case of projects from the date of commencement of commercial production.

The Company has used following useful lives of he Property, Plant and Equipment to provide depreciation.

Major assets class where useful life considered as provided in Schedule II:

No.	Nature of Asset	Estimated Useful life of the Assets
1	Plant & Machinery	15 Years
2	Furniture & Fixtures	10 Years
3	Factory Premises (Owned)	30 Years
4	Office Equipments	5 Years
5	Motor Vehicles	8 Years
6	Electrical Installation & Equipments	10 Years
7	Computer & Data Processing Units	3 Years

ii. Intangible Assets

Intangible Assets ate stated at acquisition cost, net of accumulated amortization and accumulated impairment losses, if any. Intangible Assets are amortized on straight line basis over a period of five years being the estimated useful life.

f) Inventories

Inventories are valued at the lower of cost and the net realisable value after providing for obsolescence and other losses, where considered necessary. Cost is generally determined on weighted average basis except for inventory segregated for a specific order / project, in which case it is valued at their specific costs of purchase. Cost includes all charges in bringing the goods to the point of sale, including octroi and other levies, transit insurance and receiving charges.

Cost of raw materials and stores and spares includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. The aforesaid items are valued at net realizable value if the finished products in which they are to be incorporated are expected to be sold at a loss.

Cost of finished goods and work-in-progress include all costs of purchases, conversion costs and other costs incurred in bringing the inventories to their present location and condition. The Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and estimated costs necessary to make the sale.

g) Foreign currency transactions Initial recognition:

Transactions in foreign currencies entered into by the Company are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.

Measurement at the balance sheet date:

Foreign currency monetary items (other than derivative contracts) of the Company, outstanding at the balance sheet date are restated at the year-end rates. Non-monetary items of the Company are carried at historical cost. Revenue and expenses are translated at the average exchange rates prevailing during the year.

Treatment of exchange differences:

Exchange differences arising on settlement / restatement of foreign currency monetary assets and liabilities of the Company are recognised as income or expense in the Statement of Profit and Loss.

h) Employee 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, leave encashment, incentives etc. and the same are recognised in the period in which the employee renders the related service. The undiscounted amount of short-term employee benefits to be paid in exchange for employee services is recognized as an expense as the related service is rendered by employees.

Defined contribution plans

Contributions to defined contribution schemes such as Employees State Insurance and Provident Fund, etc are charged as an expense based on the amount of contribution required to be made as and when services are rendered by the employees. These contributions are made to the fund administered and managed by Government of India. The company has no other obligations to the plans beyond its monthly compensations.

Defined benefit plans

For defined benefit plans in the form of gratuity (unfunded), the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost.

i) Taxation

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance -with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is highly probable that future economic benefit associated with it will flow to the Company.

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

j) Provisions and contingencies

A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognised in the financial statements.

k) Borrowing costs

Costs in connection with the borrowing of funds to the extent not direcdy related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan.

l) Earnings per Share

Basic earnings per share is computed by dividing the profit/(loss) after tax (including the post tax effect of extra ordinary items, if any) by the weighted average number of equity shares outstanding during the year.

Diluted earnings per share is computed using the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares, if any.

m) Impairment of assets

The carrying values of assets/ cash generating units at each balance sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor.

n) Cash Flow Statements:

Cash flows are reported using the indirect method, whereby profit / (loss) after tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the company are segregated based on the available information.

o) Operating Cycle:

All assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current. As a result, current assets comprise elements that are expected to be realised within 12 months after the reporting date and current liabilities comprise elements that are due for settlement within 12 months after the reporting date.