Accounting Policies of Garuda Construction and Engineering Ltd. Company

Mar 31, 2025

2 Significant Accounting Policies

(a) Basis of Preparation

The financial Statements have been prepared to comply in all material respects with the Indian Accounting Standards notified
under Section 133 of Companies Act, 2013 (the Act) read with Companies (Indian Accounting Standards (Ind AS) Rules, 2015 and
other relevant provisions of the Act and rules framed thereunder.

The financial statements have been prepared under the historical cost convention and on accrual basis, except for certain
financial assets and liabilities measured at fair value as explained in accounting policies below.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date, regardless of whether that price is directly observable or estimated using another
valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of
the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the
measurement date.

The financial statements are presented in '' lakhs, except when otherwise indicated.

(b) Current and Non-Current Classification

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.

(c) Property, Plant and Equipment

i) All property, plant and equipment are stated at original cost of acquisition/installation (net of input credits availed) less
accumulated depreciation and impairment loss, if any, except freehold land which is carried at cost. Cost includes cost of
acquisition, construction and installation, taxes, duties, freight and other incidental expenses that are directly attributable to
bringing the asset to its working condition for the intended use and estimated cost for decommissioning of an asset.

ii) Subsequent expenditure is capitalised only if it is probable that the future economic benefit associated with the expenditure
will flow to the Company.

iii) Property, plant and equipment is derecognised from financial statements, either on disposal or when no future economic
benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the property (calculated as the
difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and
loss in the period in which the property, plant and equipment is derecognised.

iv) Depreciation on property, plant and equipment is provided on written down value method based on the useful life specified in
Schedule II of the Companies Act, 2013.

(d) Inventories

Inventories of raw materials and stores and spare parts are valued at the lower of weighted average cost and the net realisable
value after providing for obsolescence and other losses, where considered necessary.

Work-in-progress and finished goods are valued at lower of cost and net realisable value where cost is worked out on weighted
average basis. Cost includes all charges in bringing the goods to the point of sale, including octroi and other levies, transit
insurance and receiving charges alongwith appropriate proportion of overheads and, where applicable, excise duty.

Net realizable value represents the estimated selling price for inventories less estimated costs of completion and costs necessary
to make the sale.

(e) Fair Value Measurement

The Company''s accounting policies and disclosures require the measurement of fair values for financial instruments.

The Company has an established control framework with respect to the measurement of fair values. The management regularly
reviews significant unobservable inputs and valuation adjustments.

All financial assets and financial liabilities for which fair value is measured or disclosed in the financial statements are categorised
within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value
measurement as a whole:

• Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities;

• Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly
or indirectly observable, or

• Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable.

The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the
change has occurred.

(f) Financial Instruments

I Financial Assets

i) Classification

The Company classifies its financial assets either at Fair Value through Profit or Loss (FVTPL), Fair Value through Other
Comprehensive Income (FVTOCI) or at amortised Cost, based on the Company''s business model for managing the
financial assets and their contractual cash flows.

ii) Initial Recognition and Measurement

The Company at initial recognition measures a financial asset at its fair value plus transaction costs that are directly
attributable to it''s acquisition. However, transaction costs relating to financial assets designated at fair value through
profit or loss (FVTPL) are expensed in the statement of profit and loss for the year.

iii) Subsequent Measurement

For the purpose of subsequent measurement, the financial asset are classified in four categories:

a) Debt instrument at amortised cost

b) Debt instrument at fair value through other comprehensive Income

c) Debt instrument at fair value through profit or loss

d) Equity investments

Debt Instruments

• Amortised Cost:

Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal
and interest are measured at amortised cost. A gain or loss on such instruments is recognised in profit or loss when the
asset is derecognised or impaired. Interest income from these financial assets is calculated using the effective interest
rate method and is included under the head "Finance income".

• Fair Value Through Other Comprehensive Income (FVTOCI):

Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets'' cash
flows represent solely payments of principal and interest, are measured at fair value through other comprehensive
income (FVTOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment
gains or losses, interest revenue and foreign exchange gains and losses which are recognised in the statement of profit
and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified
from equity to statement of profit and loss. Interest income from these financial assets is calculated using the effective
interest rate method and is included under the head "Finance income".

• Fair Value Through Profit or Loss:

Assets that do not meet the criteria for amortised cost or fair value through other comprehensive income (FVTOCI) are
measured at fair value through profit or loss. Gain and losses on fair value of such instruments are recognised in
statement of profit and loss. Interest income from these financial assets is included in other income.

iv) Impairment of Financial Assets

The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at
amortised cost and FVOCI debt instruments. The impairment methodology applied depends on whether there has been a
significant increase in credit risk.

v) De-recognition of Financial Assets

A financial asset is derecognised only when:

• The rights to receive cash flows from the financial asset have expired

• The Company has transferred substantially all the risks and rewards of the financial asset or

• The Company has neither transferred nor retained substantially all the risks and rewards of the financial asset, but has
transferred control of the financial asset.

II Financial Liabilities

i) Classification

The Company classifies all financial liabilities at amortised cost or fair value through profit or loss.

ii) Initial Recognition and Measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and
borrowings, deposits or as payables, as appropriate. All financial liabilities are recognised initially at fair value and, in the
case of loans and borrowings and payables, net of directly attributable transaction costs.

iii) Subsequent Measurement

The measurement of financial liabilities depends on their classification, as described below:

a Financial Liabilities at Fair Value Through Profit or Loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities
designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for
trading if they are incurred for the purpose of repurchasing in the near term. Gains or losses on liabilities held for trading
are recognised in the profit or loss.

b Loans, Borrowings and Deposits

After initial recognition, loans, borrowings and deposits are subsequently measured at amortised cost using the effective
interest rate (EIR) method. Gains and losses are recognised in the statement of profit and loss when the liabilities are
derecognised as well as through the EIR amortization process. The EIR amortisation is included in finance costs in the
statement of profit and loss.

c Trade and Other Payables

These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year
which are unpaid. For trade and other payables maturing within one year from the balance sheet date, the carrying
amounts approximate fair value due to the short-term maturity of these instruments.

iv) De-Recognition of Financial Liabilities

A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. When an
existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the
original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in
the statement of profit or loss.

(g) Cash and Cash Equivalents

(i) Cash and cash equivalents in the balance sheet comprise cash at bank and on hand and short-term deposit with original
maturity upto three months, which are subject to insignificant risk of changes in value.

(ii) For the purpose of presentation in the statement of cash flows, cash and cash equivalents consists of cash and short-term
deposit, as defined above, net of outstanding bank overdraft as they are considered as an integral part of Company''s cash
management.

(h) Revenue Recognition

Pursuant to adoption of Ind AS 115, Revenue from contracts with customers are recognised when the control over the goods
or services promised in the contract are transferred to the customer. The amount of revenue recognised depicts the transfer
of promised goods and services to customers for an amount that reflects the consideration to which the Company is entitled
to in exchange for the goods and services.

i) Revenue from Engineering and Construction Services

Revenue from Engineering and Construction Services, where the performance obligations are satisfied over time and where
there is no uncertainty as to measurement or collectability of consideration, is recognized as per the percentage-of-
completion method. The percentage-ofcompletion of a contract is determined by the proportion that contract costs incurred
for work performed upto the reporting date bear to the estimated total contract costs. When there is uncertainty as to
measurement or ultimate collectability, revenue recognition is postponed until such uncertainty is resolved.

Transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring
good or service to a customer excluding amounts collected on behalf of a third party and is adjusted for variable
considerations.

Contract revenue earned in excess of certification are classified as contract assets (which we refer as unbilled work-in¬
progress) while certification in excess of contract revenue are classified as contract liabilities (which we refer to as due to
customer). Advance payments received from contractee for which no services are rendered are presented as ''Advance from
contractee''.

Variations in contract work, claims and incentive payments are included in contract revenue only to the extent that it is highly
probable that a significant reversal in the amount of cumulative revenue recognised will not occur and are
capable of being reliably measured.

Contract modifications are accounted for when additions, deletions or changes are approved either to the contract scope or
contract price. The accounting for modifications of contracts involves assessing whether the services added to an existing
contract are distinct and whether the pricing is at the standalone selling price. Services added that are not distinct are
accounted for on a cumulative catch up basis, while those that are distinct are accounted for prospectively, either as a
separate contract, if the additional services are priced at the standalone selling price, or as a termination of the existing
contract and creation of a new contract if not priced at the standalone selling price.

The Company presents revenues net of indirect taxes in its Statement of Profit and Loss.

Costs to obtain a contract which are incurred regardless of whether the contract was obtained are charged-off in Statement
of Profit and Loss immediately in the period in which such costs are incurred.

ii) Interest Income

Interest income on financial asset is accrued on a time proportion basis by reference to the principal amount outstanding and
the applicable effective interest rate.

(i) Foreign Currency Transactions

i) Foreign currency transactions are recorded in the reporting currency (Indian rupee) by applying to the foreign currency
amount the exchange rate between the reporting currency and the foreign currency on the date of the transaction.

ii) All monetary items denominated in foreign currency are converted into Indian rupees at the year-end exchange rate. The
exchange differences arising on such conversion and on settlement of the transactions are recognised in the statement of
profit and loss. Non-monetary items in terms of historical cost denominated in a foreign currency are reported using the
exchange rate prevailing on the date of the transaction.

(j) Income Taxes

The income tax expenses comprises current and deferred tax. It is recognised in the statement of profit and loss except to the
extent that it relates to items recognised directly in equity or in other comprehensive income.

Current Tax:

The current tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting
period.

Deferred Tax:

Deferred tax is recognised in respect of temporary differences between the carrying amount of assets and liabilities for financial
reporting purposes and the amount used for taxation purposes.

Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent
that is probable that future taxable profits will be available against which they can be used. Deferred tax assets are reviewed at
each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised, such
reductions are reversed when the probability of future taxable profits improves.

Unrecognised deferred tax assets are measured at each reporting date and recognised to the extent that it has become probable
that future taxable profits will be available against which they can be used.

Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, using
tax rates enacted or substantively enacted at the reporting date.

The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company
expects at the reporting date to recover or settle the carrying amount of its assets and liabilities.

(k) Employee Benefits

(i) Short-Term Benefits

Short-term employee benefits are recognized as an expense at the undiscounted amount in the statement of profit and loss
for the year in which the related services are rendered.

(ii) Defined Contribution Plans

Payments to defined contribution retirement benefit schemes are charged to the statement of profit and loss of the year
when the contribution to the respective funds are due. There are no other obligations other than the contribution payable to
the fund.

(iii) Defined Benefit Plans

Defined benefits plans is recognized as an expense in the statement of profit and loss for the year in which the employee has
rendered services. The expense is recognized at the present value of the amount payable determined using actuarial
valuation techniques.

Re-measurement of the net defined benefit liability, which comprises of actuarial gains and losses, are recognised in other
comprehensive income in the period in which they occur.

(iv) Other Long-Term Employee Benefits

Other long-term benefits are recognised as an expense in the statement of profit and loss at the present value of the
amounts payable determined using actuarial valuation techniques in the year in which the employee renders services. Re¬
measurements are recognised in the statement of profit and loss in the period in which they arise.

(l) Impairment of Non-Financial Assets

The carrying amounts of non financial assets are reviewed at each balance sheet date if there is any indication of impairment
based on internal/external factors. An asset is treated as impaired when the carrying amount exceeds its recoverable value. The
recoverable amount is the greater of an asset''s or cash generating unit''s, net selling price and value in use. In assessing value in
use, the estimated future cash flows are discounted to the present value using a pre-tax discount rate that reflects current market
assessment of the time value of money and risks specific to the assets. An impairment loss is charged to the statement of profit
and loss in the year in which an asset is identified as impaired. After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life. The impairment loss recognized in prior accounting periods is reversed by
crediting the statement of profit and loss if there has been a change in the estimate of recoverable amount.

(m) Earnings Per Share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the
period. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity
shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive
potential equity shares except when the results would be anti-dilutive.