Accounting Policies of Danish Power Ltd. Company

Mar 31, 2025

1. Significant Accounting Policies

(i) Basis of Preparation

(a) Basis of Accounting

The Standalone Financial Statements are
prepared and presented in accordance with
Generally Accepted Accounting Principles
in India (Indian GAAP). The Company has
prepared these financial statements to comply
with all material respects with the accounting
standards notified under section 133 of the
Companies Act, 2013, read together with Rule
7 of the Companies (Accounts) Rules, 2014 and
relevant amendment rules issued thereafter.
The financial statements have been prepared on
an accrual basis and under the historical cost
convention. The accounting policies adopted
in the preparation of financial statements are
consistent with those of previous year.

(b) Current v/s Non Current Bifurcation

The Company presents assets and liabilities
in statement of financial position based on
current/non-current classification.

An asset is classified as current when it is:

- Expected to be realised or intended
to be sold or consumed in normal
operating cycle,

- Held primarily for the purpose of trading,

- Expected to be realised 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 classified as current when it is:

- Expected to be settled in normal
operating cycle,

- Held primarily for the purpose of trading,

- Due to be settled within twelve
monthsafter the reporting period, or

- There is no unconditional right to defer the
settlement of the liability for a t least twelve
months after the reporting period. All other
liabilities are classified as non-current.

The operating cycle is the time between the
acquisition of assets for processing and their
realisation in cash or cash equivalents.

(c) Use of Estimates

The preparation of financial statements are
in conformity with Indian GAAP requires the
management to make judgments, estimates
and assumptions that affect the reported
amount of Assets, Liabilities and Disclosure
of Contingent Liabilities on the date of the
Financial Statements and the reported
amount of revenue and expenses during the
reported period. Although these estimates are
based on the management’s best knowledge
of current events and actions, uncertainty
about these assumptions and estimates could
result in the outcomes requiring a material
adjustment to the carrying amounts of assets,
liabilities, revenue and expenses in future
periods. 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 notes to accounts.

(ii) Valuation of Inventories

(a) Raw materials, components, stores and
spares are valued at lower of cost and NRV.
However, materials and other items held
for use in the production of inventories are
not written down below cost if the finished
products in which they will be incorporated
are expected to be sold at or above cost.
Cost of raw materials, components, stores
and spares includes excise duty and other
costs incurred in bringing the inventories
to their present location and condition is
determined on FIFO Basis.

(b) Work-in-progress and finished goods are
valued at lower of cost and net realisable value.
Cost includes direct materials and labour
and a portion of manufacturing overheads
based on normal operating capacity and is
determined on FIFO basis.

(c) Net realisable value is the estimated selling
price in the ordinary course of business, less
estimated costs of completion and estimated
costs necessary to make the sale.

(d) Direct expenses are included in proportion to
Raw Material Consumed.

(iii) Cash Flow Statement

(a) Cash flows are reported using the indirect
method as prescribed in Accounting
Standard 3 "Cash Flow Statement", where
by net profit after tax is adjusted for the
effects of transactions of a non-cash nature,
any deferrals or accruals of past or future
operating cash receipts or payments and
item of income or expense associated with
investing or financial cash flows. The cash
flows from operating, investing and financing
activities of the Company are segregated.

(iv) Extraordinary, Exceptional, Prior Period

Items and Changes in Accounting Policies

(a) Income or expenses that arise from events
or transactions that are clearly distinct from
the ordinary activities of the Company are
classified as extraordinary items. Similarly,
any external event beyond the control of the
Company, significantly impacting income or
expense, is also treated as extraordinary item.

(b) On certain occasions, the size, type or
incidence of an item of income or expense,
pertaining to the ordinary activities of the
Company, is such that its disclosure improves
an understanding of the performance of
the Company. Such income or expense is
classified as an exceptional item.

(v) Revenue Recognition

(a) The revenue is recognised when the significant
risks and rewards of ownership of goods have
been transferred to the buyer except exports.

(b) Export sales has been recognised at the time of
removal of goods from factory at invoice value
(whether FOB or CIF) on the basis of exchange
rates declared by Custom Department in the
shipping bills.

(c) Revenue in respect of price-variation clauses
is recognized on reasonable certainty of its
ultimate collection.

(d) Interest income is recognised on accrual
basis at applicable interest rate on time
proportion basis.

(e) Other items of revenue are recognized in
accordance with the Accounting Standard
AS-9, "Revenue Recognition" Accordingly,
wherever there is uncertainty in the
ascertainment/realization of income, the
same is not accounted for.

(f) Export Incentives under various schemes are
accounted in the year of receipt.

(vi) Property, Plant and Equipment

(a) Property, Plant & Equipment are stated at
cost net of recoverable taxes, trade discounts
and rebates and include amounts added on
revaluation, less accumulated depreciation
and impairment loss, if any. The cost of
property, plant & equipment comprises its
purchase value and any directly attributable
cost of bringing the asset to its working
condition for its intended use, net charges on
foreign exchange contracts and adjustments
arising from exchange rate variations
attributable to the assets in accordance with
AS- 10 “Property, Plant and Equipment”.

(d) Subsequent expenditures related to an item of
Property, Plant and Equipment are added to its
book value if they increase the future benefits
from the existing asset beyond its previously
assessed standard of performance. In respect of
additions or extensions forming an integral part
of existing assets depreciation is provided as
aforesaid over the useful life of respective assets.

(c) Significant component of assets having a
life shorter than the main assets, if any is
depreciated over the shorter life.

(d) Projects under which assets are not ready
for their intended use are disclosed under
Capital Work-in-progress. Property, Plant and
Equipment under construction or installation,
included in capital work-in-progress are
not depreciated.

(e) All expenditure actually incurred for supply
and installation of plant & machinery and
other capital assets, pre-operative expenses,
including interest during construction
are accumulated and shown as capital
work-in-progress until the completion of
expansion programme.

(f) The Property, Plant and Equipment''s
individually valued below H. 5,000 are treated
as expenditure.

(g) The gain and loss arising on the disposal or
retirement of an item of property plant and
equipment is determined as the difference
between the sale proceeds and the carrying
amount of the asset and is recognised in the
statement of profit and loss on the date of
disposal or retirement.

(vii) Intangible Assets

(a) Intangible assets are stated at cost of
acquisition net of recoverable taxes less
accumulated amortisation/ depletion in
pursuance of provisions of AS-26 "Intangible
Assets". All costs, including financing costs
till commencement of commercial production,
net charges on foreign exchange contracts
and adjustments arising from exchange rate
variations attributable to the intangible assets
are capitalised. Amortisation on Intangible
assets is calculated on Written down value
method at useful life of three years.

(viii) Foreign Currency Transactions

(a) Initial Recognition :-

Foreign currency transaction is recorded
at Exchange rate prevailing on the date
of transaction.

(b) Conversion :-

The foreign currency monetary items
consisting of amount received in advance,
trade receivable, payable and balance in bank
a/c at the end of the year have been restated at
the rate prevailing at the balance sheet date.

(c) Exchange difference :-

The exchange difference arising on the
settlement of monetary items at rates
different from those at which they were
initially recorded during the year or reported
in previous financial statement are recognised
as income or expense when they arise as
per AS-11 on "Accounting for the effects
in Foreign Exchange rates" , except to the

extent of exchange differences which are
regarded as adjustment to interest cost on
foreign currency borrowing that are directly
attributable to the acquisition or construction
of qualifying assets which are capitalized as
cost of assets (as per AS 16 Borrowing Cost).

(ix) Government Grants

(a) In case of depreciable assets, the cost of asset
is shown at gross value and grant thereon is
treated as Capital Grants which are amortized
over the period and in the proportion in which
depreciation is charged. Grant is recognised at
the time of submitting claim to the authority.

(b) Export incentive under "Duty Drawback
Scheme" is accounted in the year of export
at FOB value. The Company is eligible for
Rodtep Scheme. Income under RODTEP
scheme is accounted on allotment basis.
Other Government Grants are recognised on
the basis certainty of ultimate collection.

(x) Investments

(a) Current Investments :-

Current Investments are carried at Cost
or NRV whicheveris less, determined by
category of investment.

(b) Non-Current Investments :-

Long-term investments are stated at cost less
provision for diminution other than temporary,
if any, in value of such investments.

(xi) Employee benefits

(a) Short-term Employee Benefits :-

All employee benefits payable wholly within
twelve months of rendering the service are
classified as short-term employee benefits
and they are recognised in the period in which
the employee renders the related services.

The Company recognises the undiscounted
amount of short term employee benefits
expected to be paid in exchange for services
rendered as a liability after deducting any
amount already paid.

(b) Long-Term Employee Benefits

Defined Contribution Plan: Eligible employee
receive the benefit from the provident fund
and employee state insurance which are
state-defined benefit plan. Both the eligible
employee and the Company make monthly
contribution to the provident fund plan
equal to a specified percentage of the covered
employee’s salary.

Defined Benefit Plan and Other Long Term
Benefits: The employee’s Gratuity Fund
Scheme managed by LIC of India is a defined
benefit plan covering eligible employees as
decided by management and Employee''s Leave
encashment fund is managed by Company
itself covering all employees. Retirement
benefits in the form of gratuity and leave
encashment is determined on the basis of an
actuarial valuation using the projected unit
credit method as at Balance Sheet date.

(xii) Borrowings Cost

(a) Borrowing costs directly attributable to the
acquisition or construction of qualifying
Property Plant & Equipment & Intangible
assets as defined in Accounting Standard -
16 “Borrowing Costs” are capitalized as the
cost of the assets. A qualifying asset is one
that takes necessarily substantial period of
time to get ready for its intended use. All other
borrowing cost is charged to revenue.

Capitalization of interest on borrowings
related to construction or development project
is ceased when substantially all the activities
that are necessary to make the assets
ready for their intended use are complete
or when delays occur outside of the normal
course of business.

(xiii) Related Party Disclosures

(a) All the Related party transactions have been
disclosed through note no 27 to accounts.

(xiv) Earning Per Share

(a) Earnings per equity share are calculated by
dividing the net profit or loss for the period
attributable to equity shareholders (after
deducting attributable taxes) by the weighted

average number of equity shares outstanding
during the period. Previous Year Earning per
share has been restated as per the Bonus
issue of Current Financial year as per AS-20

(b) Diluted earnings per equity share have been
computed using the weighted average number
of equity shares and dilutive potential equity
shares outstanding as at end of the year,
unless anti-dilutive. Previous Year Earning
per share has been restated as per the Bonus
issue of Current Financial year as per AS-20

(c) Earning per Share have been disclosed
through note no 26 to accounts.

(xv) Taxes on Income

(a) Provision for tax is made both for current and
deferred taxes. Provision for current income
tax is made on the current tax rates based on
assessable income.

(b) Deferred tax assets and liabilities are measured
using the tax rates and tax laws that been
enacted or substantially enacted at the balance
sheet date on timing difference between
accounting income and taxable income that
originate in one year and are capable of being
reversal in one or more subsequent year.

(c) At each balance sheet date the Company re¬
assesses unrecognized deferred tax assets. It
recognizes unrecognized deferred tax assets
to the extent that it has become reasonably
certain or virtually certain, as the case may
be that sufficient future taxable income will
be available against which such deferred tax
assets can be realized.

(d) Deferred tax assets and deferred tax liabilities
are offset, if a legally enforceable right exists
to set off current tax assets against current
tax liabilities and the deferred tax assets
and deferred tax liabilities relate to the same
taxable entity and the same taxation authority.

(xvi) Impairment of Assets

(a) If the carrying amount of Property, Plant &
Equipment exceeds the recoverable amount
on the reporting date, the carrying amount
is reduced to the recoverable amount. The
recoverable amount is measured as the

higher of the net selling price and the value
in use determined by the present value of
future cash flows.