Accounting Policies of Digilogic Systems Ltd. Company

Mar 31, 2025

A. CORPORATE INFORMATION;

Our company was originally formed as a Partnership firm in the name and style of "M/S. DIGILOGIC SYSTEMS" under the provisions of The Partnership Act
1932 vide FRN 1739 and partnership deed dated 8th of May 2007 and converted to a Private Limited Company In the name and style of "DIGILOGIC
SYSTEMS PRIVATE LIMITED" under the provisions of the Companies Act 1956 on 9th December 2011 and received certificate of incorporation (CIN:
U72200TG2011PTC077933) from the Registrar of Companies; Hyderabad to engage in the design, development, manufacture, assembly, integration, testing,
servicing, overhaul, upgrade, import, export, and supply of systems, platforms, subsystems, and components including but not limited to Automated Test
Equipment (ATE), Checkout Systems, RF Simulators, System Evaluators, System Engineering & Deployments, Data Acquisition Systems, Static Test Beds,
Maintenance, Repair & Overhaul Services (MRO).

Subsequently, our Company was converted into a public limited company pursuant to a special resolution passed by our Shareholders at an Extra-ordinary
General Meeting held on June 18, 2025, and the name of Company was converted to "DIGILOGIC SYSTEMS LIMITED" and a fresh certificate of incorporation
(CIN: U62099TG2011PLC077933) consequent upon conversion dated July 1, 2025, was Issued by the Central Processing Centre, Registrar of Companies.

B. Basis of preparation of financial statements

Financial statements are prepared under the historical cost convention, on accrual basis by using Going Concern assumptions of accounting in accordance
with the accounting principles generally accepted in India and in compliance with the provisions of Companies Act 2013, and comply with the mandatory
accounting standards specified under Section 133 of the Companies Act, 2013 (''Act'') read with Rule 7 of the Companies (Accounts) Rules, 2014 and rules
made thereunder.

The financial statements of the company have been prepared and presented In accordance with the Generally Accepted Accounting Principles (GAAP) which
comprises the Accounting Standards notified u/s 133 of the Companies Act, 2013. The accounting policies have been framed, keeping In view the
fundamental accounting assumptions of Going Concern, Consistency and Accrual, as also basic considerations of Prudence, Substance over form, and
Materiality. These have been applied consistently, except where a newly issued accounting standard is initially adopted or a revision in the existing
accounting standards require a revision in the accounting policy so far in use. The need for such a revision is evaluated on an ongoing basis.

The Financial Statements have been prepared on a going concern basis, in as much as the management intends neither to liquidate the company nor to
cease operations. Accordingly, assets, liabilities, Income and expenses are recorded on a Going Concern basis. Based on the nature of products and services,
and the time between the acquisition of assets and realization into cash or cash equivalents, the company has ascertained its operating cycle as 12 months
for the purposes of current and non-current classification of assets and liabilities.

The financial statements of the Company are presented in Indian Rupees ("I NR"), which Is the Company''s functional currency. In accordance with the option
provided under Schedule III to the Companies Act, 2013, the figures for both the current and previous financial years have been rounded off to the nearest
lakhs (00,000), except where otherwise stated. In the previous year''s audited financial statements, figures were rounded off to the nearest thousand
rupees (000).

C. Use of estimates

The preparation of financial statements requires the management of the Company to make estimates and assumptions that effect the reported balances of
assets and liabilities as at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Difference
between the actual results and estimates are recognized In the period in which results are known/ materialized.

D. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The following significant accounting policies are adopted in the preparation and presentation of these financial statements:

1 Inventories

Inventories consist of Raw materials. Stores & spares; Work-in-Progress and finished goods. Raw materials; Stores & spares and Finished Goods are
valued at the lower of Cost or Net realizable value, and the cost formula used for valuation is weighted average basis. Valuation of Work-in-Progress
includes costs that are directly related to production such as labour costs, design & development costs and a systematic allocation of fixed, variable
production overheads that are incurred in converting materials Into finished goods.

2 Cash and Cash Equivalents

Cash comprises of cash on hand and demand deposits with banks and Cash equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), The company considers all highly liquid financial instruments, which are readily convertible into known
amounts of cash which are subject to insignificant risk of changes in value.

3 Property, Plant & Equipment

Property Plant & Equipment (PPE) are stated at cost, less accumulated depreciation and impairment losses If any. Costs comprise all expenses
incurred to bring the assets to its present location and condition. Borrowing cost directly attributable to the acquisition / construction is included in
^a’ the cost of fixed assets. Cost of Property plant & equipment are recognized only If it is probable that future economic benefits associated with the
asset will flow to the entity and cost can be reliably measured.

Subsequent expenditures related to an Item of property plant & equipment are added to its book value only if they increase the future economic
benefits from the existing asset beyond its previously assessed standard of performance.

The expenditure incurred on property plant and equipment which are In the process of construction or completion such as construction of building,
k etc. that are not ready for intended use at the reporting date are presented as Capital Work in Progress (CWIP). Upon completion or commissioning
'' of such assets and when they are ready to use, the total expenditure incurred for construction/completion is ceased to be classified under CWIP
and sent to PPE.

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the
c. 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 sale proceeds and the carrying amount of the asset and is recognized in statement of profit and loss

4 Intangible Assets

Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the
cost of the asset can be measured reliably. Intangible assets are stated at cost of acquisition net of recoverable taxes less accumulated amortisation/
depletion. 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.

5 Impairment Loss

At each balance sheet date, the Company reviews the carrying amount of its Property, Plant & Equipment to determine whether there is any indication
that those assets suffered an impairment loss. If any such indication exists, the recoverable amount of the assets Is estimated in order to determine the
extent of impairment loss. An Impairment loss Is recognized wherever the carrying amount of an asset exceeds Its recoverable amount. Recoverable
amount Is the higher of an asset''s net selling price and value in use. In assessing value in use, the estimated future cash flows expected from the
continuing use of the assets and from its disposal are discounted to their present value using a pre-tax discount rate that reflects the current market
assessments of time value of money and the risks specific to the assets

6 Depredation / Amortisation

Depreciation on Property Plant & Equipment Is charged so as to write-off the cost of the assets over its useful life and depreciation rates as per schedule
II of the Companies Act 2013 using the WDV method of Depreciation. Depredation on additions to / deletions from fixed assets made during the period Is
provided on pro-rata basis from / up to the date of such addition / deletion as the case may be. In case of impairment, depreciation Is provided on
revised carrying amount over Its remaining useful life. Amortisation of Intangible assets is calculated on Straight Line method based on estimated useful
life.

7 Investments

Investments that are readily realizable and intended to be held for not more than a year from the date on which such investments are made, are
classified as current investments. All other investments are classified as non-current investments. On initial recognition, all Investments are measured at
cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties.

Current investments are carried in the financial statements at lower of cost and fair value determined on an individual Investment basis. Long-term
investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary In the value of the
investments. On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement
of profit and loss

8 Leases

Where the company Is a lessee, Leases, where the lessor effectively retains substantially all the risks and the benefits of ownership of the leased assets
are classified as operating leases. Operating lease payments are recognized as an expense In the statement of profit and loss on a straight-line basis over
the lease term.

9 Revenue Recognition

The company follows generally accepted accounting principles for recognizing revenue from operations i.e., on an accrual basis when it is earned and no
significant uncertainty exists as to its ultimate collection

a. Sale of Products:

Revenue from products are recognized when the property In goods are transferred to the buyer i.e., when the significant risks and rewards of
ownership have been transferred, continuing managerial involvement usually associated with ownership and effective control have been ceased,
the amount of revenue can be measured reliably, and the costs incurred or to be Incurred In respect of the transaction can be measured reliably.

b. Sale of Services:

The Company recognizes revenue from sale of services when the significant terms of the arrangement are enforceable, services have been delivered
and the collectability is reasonably assured. Revenue from maintenance contracts is recognized proportionately over the period of the contract using
the proportionate completion method. In case the services are performed through an indeterminate number of repetitive acts over a specified
period of time, revenue Is recognized on a straight-line basis over the specified period, viz., monthly / quarterly / half-yearly / yearly etc., as per the
terms of the contracts agreed with respective customers from time to time. Revenues in excess of billing are recognised as "Unbilled revenues"
wherever the recognition criteria is met as per the terms of contracts agreed with the customers.

Interest income Is recognized on time proportion basis, when it is accrued and due for payment. The capital gains on sale of investment if any are
_ recognized on completion of transaction. No notional profits/losses are recognized on such investments.

10 Employee Benefit Expenses

a. Short Term Employee Benefits:

Short term employee benefits are recognized as an expense at the undiscounted amount in the statement of Profit and loss for the year which
includes benefits like salary, wages, bonus, other expenses incurred while rendering their services. These benefits are recognized as expenses in the
period in which the employee renders the related service. These benefits Include compensated absences such as paid annual leave and
performance Incentives.

b. Post Employment Benefits:

Retirement benefit in the form of provident fund and gratuity are defined contribution and defined benefit plans respectively. The Company
recognizes contribution payable to the provident fund scheme as an expenditure, when an employee renders the related service. The company
identifies all of its permanent employees who are aged not less than 18 years and not more than 58 years as eligible employees for the payment of
gratuity and has obliged to pay the gratuity benefit, upon termination, retirement or death of any such eligible employee, as per the applicable
provisions of the Payment of Gratuity Act, 1972 and rules made thereunder amended from time to time. The company has obtained qualifying
insurance policies with respect to meeting the gratuity claims of employees and recognizes the amount of provision required to be made towards
Gratuity as an expenditure each year in the P&L. The net difference between the accrued provision is net off from the insurance fund value and the
surplus/(deficit) if any is disclosed in the balance sheet of the company as the net asset or liability for the reporting period.

11 Foreign Currency Transactions

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies at the year end are restated at a closing rate on the date of the balance sheet.

Any exchange difference on account of settlement of foreign currency transaction and restatement of monetary assets and liabilities denominated in
foreign currency is recognized in the statement of Profit & loss in the period in which they arise.

12 Borrowing Costs

Borrowing cost includes interest and amortization of ancillary costs incurred in connection with the arrangement of borrowings. 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 period they occur.

13 Accounting for Taxes on Income

Tax expense comprises of current and deferred tax. 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
substantively enacted, at the reporting date

Deferred Income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year
a. and reversal of timing differences for the earlier years. Deferred tax Is measured using the tax rates and the tax laws enacted or substantively
enacted at the reporting date.

Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to
the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be
realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if
there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.

The carrying amount of deferred tax assets are reviewed at each reporting date. The company writes down the carrying amount of a deferred tax asset
to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against
which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the
case may be, that sufficient future taxable Income will be available

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Mar 31, 2024

D. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The following significant accounting policies are adopted in the preparation and presentation of these financial statements:

1 Inventories

Inventories consist of Raw materials. Stores & spares; Work-in-Progress and finished goods. Raw materials; Stores & spares and Finished Goods are
valued at the lower of Cost or Net realizable value, and the cost formula used for valuation is weighted average basis. Valuation of Work-in-Progress
includes costs that are directly related to production such as labour costs, design & development costs and a systematic allocation of fixed, variable
production overheads that are incurred in converting materials Into finished goods.

2 Cash and Cash Equivalents

Cash comprises of cash on hand and demand deposits with banks and Cash equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), The company considers all highly liquid financial instruments, which are readily convertible into known
amounts of cash which are subject to Insignificant risk of changes in value.

3 Property, Plant & Equipment

Property Plant & Equipment (PPE) are stated at cost, less accumulated depreciation and impairment losses If any. Costs comprise all expenses
incurred to bring the assets to its present location and condition. Borrowing cost directly attributable to the acquisition / construction is included in
a. the cost of fixed assets. Cost of Property plant & equipment are recognized only If it is probable that future economic benefits associated with the
asset will flow to the entity and cost can be reliably measured.

Subsequent expenditures related to an Item of property plant & equipment are added to its book value only if they increase the future economic
benefits from the existing asset beyond its previously assessed standard of performance.

The expenditure incurred on property plant and equipment which are In the process of construction or completion such as construction of building,
b. etc. that are not ready for intended use at the reporting date are presented as Capital Work in Progress (CWIP). Upon completion or commissioning
* of such assets and when they are ready to use, the total expenditure incurred for construction/completion is ceased to be classified under CWIP
and sent to PPE.

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the
c. 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 sale proceeds and the carrying amount of the asset and is recognized in statement of profit and loss

4 Intangible Assets

Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the
cost of the asset can be measured reliably. Intangible assets are stated at cost of acquisition net of recoverable taxes less accumulated amortisation/
depletion. 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.

5 Impairment Loss

At each balance sheet date, the Company reviews the carrying amount of its Property, Plant & Equipment to determine whether there is any indication
that those assets suffered an impairment loss. If any such indication exists, the recoverable amount of the assets Is estimated in order to determine the
extent of impairment loss. An Impairment loss Is recognized wherever the carrying amount of an asset exceeds Its recoverable amount. Recoverable
amount Is the higher of an asset''s net selling price and value in use. In assessing value in use, the estimated future cash flows expected from the
continuing use of the assets and from its disposal are discounted to their present value using a pre-tax discount rate that reflects the current market
assessments of time value of money and the risks specific to the assets

6 Depredation / Amortisation

Depreciation on Property Plant & Equipment Is charged so as to write-off the cost of the assets over its useful life and depreciation rates as per schedule
II of the Companies Act 2013 using the WDV method of Depreciation. Depredation on additions to / deletions from fixed assets made during the period Is
provided on pro-rata basis from / up to the date of such addition / deletion as the case may be. In case of impairment, depreciation Is provided on
revised carrying amount over Its remaining useful life. Amortisation of Intangible assets is calculated on Straight Line method based on estimated useful
life.

(a) Buildings include certain amounts capitalised towards ''Interiors'', for which the management has estimated a useful life of 10 years, as the cost of this
component is significant in relation to the total cost of the asset and its useful life differs from that of the remaining building structure, which Is
depreciated over 30 years.

(b) Leasehold Improvements are depreciated over an estimated useful life of 3 years or actual lease term whichever is lower.

(c) Software & Licenses include one endpoint security license which has a useful life of 3 years and is amortised on that basis

7 Investments

Investments that are readily realizable and intended to be held for not more than a year from the date on which such investments are made, are
classified as current investments. All other investments are classified as non-current investments. On initial recognition, all Investments are measured at
cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties.

Current investments are carried in the financial statements at lower of cost and fair value determined on an individual Investment basis. Long-term
investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary In the value of the
investments. On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement
of profit and loss

8 Leases

Where the company Is a lessee, Leases, where the lessor effectively retains substantially all the risks and the benefits of ownership of the leased assets
are classified as operating leases. Operating lease payments are recognized as an expense In the statement of profit and loss on a straight-line basis over
the lease term.

9 Revenue Recognition

The company follows generally accepted accounting principles for recognizing revenue from operations i.e., on an accrual basis when it is earned and no
significant uncertainty exists as to its ultimate collection

a. Sale of Products:

Revenue from products are recognized when the property In goods are transferred to the buyer i.e., when the significant risks and rewards of
ownership have been transferred, continuing managerial involvement usually associated with ownership and effective control have been ceased,
the amount of revenue can be measured reliably, and the costs incurred or to be Incurred In respect of the transaction can be measured reliably.

b. Sale of Services:

The Company recognizes revenue from sale of services when the significant terms of the arrangement are enforceable, services have been delivered
and the collectability is reasonably assured. Revenue from maintenance contracts is recognized proportionately over the period of the contract using
the proportionate completion method. In case the services are performed through an indeterminate number of repetitive acts over a specified
period of time, revenue Is recognized on a straight-line basis over the specified period, viz., monthly / quarterly / half-yearly / yearly etc., as per the
terms of the contracts agreed with respective customers from time to time. Revenues in excess of billing are recognised as "Unbilled revenues"
wherever the recognition criteria is met as per the terms of contracts agreed with the customers.

Interest income Is recognized on time proportion basis, when it is accrued and due for payment. The capital gains on sale of investment if any are
recognized on completion of transaction. No notional profits/losses are recognized on such investments.

10 Employee Benefit Expenses

a. Short Term Employee Benefits:

Short term employee benefits are recognized as an expense at the undiscounted amount in the statement of Profit and loss for the year which
includes benefits like salary, wages, bonus, other expenses incurred while rendering their services. These benefits are recognized as expenses in the
period in which the employee renders the related service. These benefits Include compensated absences such as paid annual leave and
performance Incentives.

b. Post Employment Benefits:

Retirement benefit in the form of provident fund and gratuity are defined contribution and defined benefit plans respectively. The Company
recognizes contribution payable to the provident fund scheme as an expenditure, when an employee renders the related service. The company
identifies all of its permanent employees who are aged not less than 18 years and not more than 58 years as eligible employees for the payment of
gratuity and has obliged to pay the gratuity benefit, upon termination, retirement or death of any such eligible employee, as per the applicable
provisions of the Payment of Gratuity Act, 1972 and rules made thereunder amended from time to time. The company has obtained qualifying
insurance policies with respect to meeting the gratuity claims of employees and recognizes the amount of provision required to be made towards
Gratuity as an expenditure each year in the P&L. The net difference between the accrued provision is net off from the insurance fund value and the
surplus/(deficit) if any is disclosed in the balance sheet of the company as the net asset or liability for the reporting period.

11 Foreign Currency Transactions

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies at the year end are restated at a closing rate on the date of the balance sheet.

Any exchange difference on account of settlement of foreign currency transaction and restatement of monetary assets and liabilities denominated in
foreign currency is recognized in the statement of Profit & loss in the period in which they arise.

12 Borrowing Costs

Borrowing cost includes interest and amortization of ancillary costs incurred in connection with the arrangement of borrowings. 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 period they occur.

13 Accounting for Taxes on Income

Tax expense comprises of current and deferred tax. 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
substantively enacted, at the reporting date

Deferred Income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year
a. and reversal of timing differences for the earlier years. Deferred tax Is measured using the tax rates and the tax laws enacted or substantively
enacted at the reporting date.

Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to
the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be
realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if
there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.

The carrying amount of deferred tax assets are reviewed at each reporting date. The company write-down the carrying amount of a deferred tax asset
to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against
which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the
case may be, that sufficient future taxable Income will be available