Accounting Policies of Emmvee Photovoltaic Power Ltd. Company

Mar 31, 2024

The accounting policies set out below have been applied consistently to the periods presented in these financial
statements.

a) Basis of accounting and preparation of financial statements

These financial statements are prepared in accordance with Generally Accepted Accounting Principles in India under
the historical cost convention on the accrual basis except for certain financial instruments which are measured at fair
values. The Accounting Standards (AS) are prescribed under Section 133 of the Act read with Rule 3 of the
Companies (Accounting Standards) Rules, 2015 and Companies (Accounting Standards) Amendment Rules, 2016.
The financial statements are presented in Indian rupees.

b) Use of estimates

The preparation of the financial statements in conformity with AS requires management to make estimates,
judgments, and assumptions. These estimates, judgments and assumptions affect the application of accounting policies
and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the
financial statements and reported amounts of revenues and expenses during the year. Examples of such estimates
include estimates of useful life of assets, provision for slow moving and obsolete stock, provision for doubtful debts
and provision for warranty etc. Accounting estimates could change from period to period. Actual results could differ
from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in
circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in
which changes are made and, if material, their effects are disclosed in the notes to the financial statements.

c) Current-non-current classification

All assets and liabilities are classified into current and non-current.

Assets

An asset is classified as current when it satisfies any of the following criteria:

a. it is expected to.be realised in, or is intended for sale or consumption in, the Company’s normal operating cycle;

b. it is held primarily for the purpose of being traded.

c. it is expected to be realised within 12 months after the reporting date; or

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

Current assets include the current portion of non-current financial assets.

All other assets are classified as non-current.

Liabilities

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

a. it is expected to be settled in the Company’s normal operating cycle;

b. it is held primarily for the purpose of being traded;

c. it is due to be settled within 12 months after the reporting date; or

d. the Company does not have an unconditional right to defer settlement of the liability for at least 12 months after
the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the
issue of equity instruments do not affect its classification.

Current liabilities include current portion of non-current financial liabilities.

All other liabilities are classified as non-current.

Operating cycle

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

d) Property, Plant and equipment and depreciation

Property, plant and equipment are stated at the cost of acquisition or construction, less accumulated depreciation. All
costs incurred in bringing the assets to its working condition for intended use have been capitalised. Any expenditure
on account of change in liabilities, price adjustments, change in duties or change in estimates on account of
dismantling or restoration of an asset will be included in the cost of such asset. Subsequent expenditures related to an
item of Property, plant and equipment are added to its book value only if they increase the future benefits from the
existing asset beyond its previously assessed standard of performance.

Advances paid towards the acquisition of Property, plant and equipment, outstanding at each balance sheet date are
shown under capital advances. The cost of the Property, plant and equipment not ready for its intended use on such
date, is disclosed under capital work-in- progress.

Freehold land is not depreciated. Leasehold improvements are amortized over the lease period.

Depreciation methods, useful lives and residual values are reviewed periodically, including at each financial year
end.

Based on technical evaluation, the management believes that the useful lives as given above best represent the period
over which management expects to use these assets. Hence, the useful lives for these assets is different from the
useful lives as prescribed under Part C of Schedule II of the Companies Act 2013.

A Property, Plant and equipment is eliminated from the financial statements on disposal or when no further benefit is
expected from its use and disposal. Further, depreciation for assets purchased/ sold during the year is proportionately
charged.

Management is of the view that wherever it is not practicable to identify the component of an asset as a separate
depreciable asset, have been identified and depreciated considering the useful life of the asset or the component
whichever is shorter. Accordingly, same rate of depreciation has been applied for charging the depreciation as
referred above.

e) Intangible assets and amortisation

Intangible assets consist of computer software and trade-marks which are recorded at the acquisition costs. Intangible
assets are amortised over their estimated useful lives, from the date that they are available for use based on the
expected pattern of consumption of economic benefits of the asset. Accordingly, at present, these are being amortised
on straight line basis. Pursuant to this policy, the rates determined by Management based on the estimated useful
lives of the assets are as set out below.

Category of assets Life over which asset will be depreciated

Computer software 3 Years

Trademarks Remaining life as per the agreement.

f) Inventories

Inventories are carried at the lower of cost and net realisable value.

Cost comprises purchase price and all incidental expenses incurred in bringing the inventory to its present location
and condition.

The method of determining cost is as follows:

> Raw materials and packing materials: at weighted average cost method.

> Work-in-progress: at cost including costs of conversion;

> Manufactured finished goods: at cost including costs of conversion.

Production overheads used for valuation of finished goods are allocated on the basis of normal production.

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

The net realisable value of work-in-progress is determined with reference to the selling prices of related finished
products. Raw materials and other supplies held for use in the production of finished products are not written down
below cost except in cases where material prices have declined and it is estimated that the cost of the finished
products will exceed their net realisable value.

The comparison of cost and net realisable value of inventory is made on an item by item basis.

Necessary adjustments/provisions are made in respect of non-moving, slow moving and damaged items of inventory.

g) Employee benefits

Short-term employee benefits

Employee benefits payable wholly within twelve months of receiving employee services are classified as short-term
employee benefits. These benefits include salaries and wages, bonus and ex-gratia. The undiscounted amount of
short-term employee benefits to be paid in exchange for employee services is recognised as an expense as the related
service is rendered by employees.

Post-employment benefits

Gratuity is a defined benefit scheme and is accrued based on an actuarial valuation at the balance sheet date, carried
out by an independent actuary. The Company’s gratuity scheme is administered by Life Insurance Corporation of
India. A funded defined plan for the qualifying employees. Actuarial gain/ losses are charged to the Statement of
profit and loss.

Compensated absences are a long term employee benefit is accrued based on an actuarial valuation at the balance
sheet date, carried out by an independent actuary. The liability for leave benefits is unfunded.

Contributions to provident fund are provided at pre-determined rates and deposited with the appropriate authorities.

h) Revenue recognition

Revenue from sale of goods in the course of ordinary activities is recognised when property in the goods or all
significant risks and rewards of their ownership are transferred to the customer and no significant uncertainty exists
regarding the amount of the consideration that will be derived from the sale of the goods and regarding its collection.
Revenue from services provided is recognized in accordance with the terms of the contracts entered in to with the
customers, as and when the related services are rendered, and no significant uncertainty exists regarding the
collection of the consideration.

Revenue from fixed price contracts is recognised on the percentage of completion method, measured by reference to
the percentage of cost incurred upto the reporting date to estimated total cost for each contract. The estimates of the
contract revenue and costs are reviewed periodically by the Management and any effect of change in estimate is
recognized in the period such changes are determined. Unbilled revenue represents cost and earnings in excess of
billings while unearned revenue represents the billing in excess of cost and earnings. Provision for foreseeable losses
is made in the year in which such losses are foreseen.

The amount recognised as revenue is exclusive of applicable taxes and is net of returns, trade discounts and quantity
discounts.

Export incentives are recognized in the Statement of profit and loss when the right to receive credit as per the terms
of the entitlement is established in respect of exports made.

Interest income from bank deposits are recognised on a time proportionate basis taking into account the amount
outstanding. In case there is uncertainty in the receipt of interest due to any reason including when there is doubt of
recovery, interest is accounted only when there is certainty of its recovery or upon receipt.

i) Foreign exchange transactions

Foreign exchange transactions are recorded using the exchange rates prevailing on the dates of the respective
transactions. Exchange differences arising on foreign exchange transactions settled during the year are recognised in
the Statement of profit and loss of the year.

Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the
closing exchange rate on that date; the resultant exchange differences are recognised in the Statement of profit and
loss, except in case of exchange differences relating to long-term monetary items which are dealt with in the
following manner:

Non-monetary items which are carried in terms of historical costs denominated in a foreign currency are reported
using the exchange rate at the date of the transactions.

Forward exchange contracts and other similar instruments that are not in respect of forecasted transactions are
accounted for using the guidance in Accounting Standard (''AS'') 11, ''The effects of changes in foreign exchange
rates''. For such forward exchange contracts and other similar instruments covered by AS 11, based on the nature and
purpose of the contract, either the contracts are recorded based on the forward rate/fair value at the reporting date, or
based on the spot exchange rate on the reporting date. For contracts recorded at the spot exchange rates, the premium
or discount at the inception is amortised as income or expense over the life of the contract.

j) Warranties

Company provides performance warranty on PV Modules for 25 years. The Warranty costs are estimated by the
Management on the basis of technical evaluation and past experience. Provision is made for estimated liability in
respect of warranty costs in the year of recognition of revenue.