Accounting Policies of Gensol Engineering Ltd. Company

Mar 31, 2024

Note - 3 Material Accounting Policies Information

3.1 Statement of Compliance with Ind AS

The Standalone Financial Statements of the Company are prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 and the subsequent amendments from time to time, notified under Section 133 of the Companies Act, 2013 (the "Act") and other relevant provisions of the Act.

The Company has adopted all the relevant Ind AS and the adoption was carried out in accordance with Ind AS 101, "First Time Adoption of Indian Accounting Standards". Accordingly, these Standalone Financial Statements for the year ended March 31, 2024 are the Company''s First Ind AS Standalone Financial Statements.

For all periods upto and including the year ended March 31, 2023, the Company prepared its Standalone Financial Statements in accordance with Accounting Principles generally accepted in India including Accounting Standards notified under Section 133 of the Act read with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP). Reconciliation and description of the effect of the transition have been summarised in Note No. 46.

The transition to Ind AS has resulted in changes in the presentation of the Financial Statements,

disclosures in the notes thereto and accounting policies and principles.

In accordance with the amendments to the Ind AS effective April 1, 2023, the Company is disclosing material accounting policies information in its financial statements, instead of significant accounting policies as required previously. This change aligns the Company''s disclosure practices with the updated Ind AS framework and all other amendments do not have material impact on the financial statements.

The material accounting policy information related to preparation of the standalone financial statements have been discussed in the respective notes.

3.2 Basis of Preparation

The Standalone Financial Statements have been prepared on going concern basis on the historical cost convention using accrual system of accounting except for certain assets and liabilities such as Debentures, Gratuity and Investments which are measured at fair value/amortised cost/net present value at the end of each reporting period, as explained in the accounting policies.

The Standalone Financial Statements are presented in Indian Rupees (t) and all values are rounded off to the nearest two decimal Crores except otherwise indicated and amount less then ”H50,000/-” have been presented as ”0.00”

3.3 Property, Plant and Equipment

(a) Property, Plant and Equipment

(i) Recognition and Measurement

Items of property, plant and equipment are measured at cost, less accumulated depreciation, and accumulated impairment losses, if any, except freehold land which is carried at historical cost.

Cost of an item of property, plant and equipment comprises its purchase price (after deducting trade discounts and rebates), including import duties and nonrefundable purchase taxes, any directly attributable cost of bringing the item to its working condition for its intended use and estimated costs of dismantling and removing the item and restoring the site on which it is located.

The cost of a self-constructed item of property, plant and equipment is determined using the same primciples as for an acquired asset, except that any

internal profits are eliminated at arriving at such costs. Interest cost is recognised as a component of the carrying amount of the self constructed item of the PPE in accordance with Ind AS 23 Borrowing costs.

Part of an item of property plant and equipment with a cost that is significant in relation to the total cost of the item shall be depreciatied separately. Significant items of PPE having the same useful life and depreciation method are grouped together in determining the depreciation charge.

(ii) Transition to Ind AS

On transition to Ind AS, in accordance with para D7AA of Ind AS 101 First Time Adoption to Ind AS the Company has elected to continue with the carrying value of all its property, plant and equipment recognised as at April 1, 2022 (transition date), measured as per the previous GAAP, and used that carrying value as the deemed cost of such property, plant and equipment.

(iii) Subsequent Expenditure

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

(iv) Derecognition

An item of Property, Plant and Equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of assets.

Any gain or loss on disposal or retirement of an item of property, plant and equipment is determined as the difference between the net sales / disposal proceeds and the carrying amount of the asset and is recognised in the Statement of Profit and Loss.

(v) Depreciation / Amortization

Depreciation on PPE commences when the assets are ready for their intended use. Depreciation is calculated on cost of items of property, plant and equipment (other than freehold land and properties under construction) less their estimated residual values over their estimated useful lives using the Staright Line Method. Depreciation is generally recognised in the Statement of Profit and Loss.

Useful lives have been determined in accordance with Schedule II to the Companies Act, 2013 which are as under :

The residual values are not more than 5% of the original cost of the asset.

Depreciation method, useful lives and residual values are reviewed at each financial year-end and adjusted, if appropriate. Based on technical evaluation and consequent advice, the management believes that its estimates of useful lives best represent the period over which management expects to use these assets. The useful lives of the Company''s Plant and Equipments are considered on the basis of continuous process plant.

Depreciation on additions (disposals) is provided on a pro rata basis i.e. from (upto) the date on which asset is ready for use (disposed of) except low value items not exceeding H5,000/- which are fully depreciated at the time of addition.

Depreciation on subsequent expenditure on PPE arising on account of capital improvement or other factors is provided for prospectively over the remaining useful life.

Right-of-use assets are depreciated on a straight-line basis over the lease term or useful life of the underlying asset, whichever is less, following with the principles of Ind AS 116 "Leases”.

The Company has changed the method of depreciation to Straight Line Method (SLM) from Written Down Value (WDV) from April 1, 2022. The impact of the said change, H 50,85,942/-, has been given in the opening Balance sheet (1st April 2022) by way of adjustment to the accumulated depreciation and opening retained earnings.

(b) Capital work-in-progress

Projects under commissioning and other Capital work-in-progress are carried at cost comprising of direct and indirect costs, related incidental expenses and attributable interest. It also includes the cost of Property, Plant And Equipments that are not ready to use at the balance sheet date. Depreciation on Capital work-in-progress commences when the construction and installation are complete and the assets are ready for their intended use.

(c) Intangible Assets

(i) Initial Recognition and Classification

Intangible assets including those acquired by the Company are initially measured at cost. Such intangible assets are subsequently measured at cost less accumulated amortisation and any accumulated impairment losses.

(ii) Subsequent Expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditures are recognised in profit or loss as incurred.

(iii) Transition to Ind AS

On transition to Ind AS, in accordance with para D7AA of Ind AS 101 First Time Adoption to Ind AS, the Company has elected to continue with the carrying value of all its property, plant and equipment recognised as at April 1, 2022 (transition date), measured as per the previous GAAP, and used that carrying value as the deemed cost of intangible asset.

(iv) Amortization

Amortization is calculated to write off the cost of intangible assets less their estimated residual values over the estimated useful lives using the stright line method and is included in Depreciation and Amortisation expense in the Statement of Profit and Loss. The Amortization method, useful lives and residual values are reviewed at the end of each financial year and adjusted, if appropriate.

(v) Derecognition

An item of intangible asset is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of assets.

Any gain or loss on disposal or retirement of an item of intangible asset is determined as the difference between the net sales / disposal proceeds and the carrying amount of the asset and is recognised in the Statement of Profit and Loss.

(vi) Intangible Assets under Development

Intangible assets not ready for the intended use on the date of the Balance Sheet are disclosed as "Intangible Assets under Development".

(d) Impairment

The Company''s all tangible assets (PPE including capital work-in-progress), intangible assets, right-of-use assets and non-financial assets are reviewed at each reporting date to determine whether there is any significant indication that those assets have suffered an impairment loss. If any such indication exists, then the asset''s recoverable amount is estimated in order to determine the extent of the impairment loss (if any).

Recoverable amount of an asset is the higher of its fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

An impairment loss is recognised if the carrying amount of an asset exceeds its estimated recoverable amount. In that case, the carrying amount of the asset is reduced to its recoverable amount and impairment loss is recognised in the Statement of Profit and Loss.

In respect of assets for which impairment loss has been recognised in prior periods, the Company reviews at each reporting date whether there is any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Such a reversal is made only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

3.4 Borrowing Costs

Borrowing costs are interest and other costs incurred in connection with the borrowing of funds. Borrowing

costs directly attributable to the acquisition or construction of qualifying asset that necessarily takes a substantial period of time to get ready for its intended use are capitalised as part of the cost of the respective asset until such time the assets are substantially ready for their intended use. All other borrowing costs are recognised as an expense in the period in which they are incurred and reported in finance costs.

3.5 Operating Cycle

Based on the nature of products / activities of the Company and the normal time between purchase of raw materials / rendering of services and their realisation in cash or cash equivalents, the Company has determined its operation cycle within 12 months for the purpose of classification of its assets and liabilities as current and non-current.

3.6 Current versus Non-Current Classification

The Company presents assets and liabilities in the Balance Sheet based on current/ non-current classification.

An asset / liability is treated as current when it is :-

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

- Held primarily for the purpose of trading.

- Expected to be realised / settled 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.

- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

All other assets and liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities respectively.

3.7 Inventories

Items of inventories (including materials and components) are measured at lower of cost and net realisable value after providing for obsolescence, wherever considered necessary. The cost of inventories comprises of all costs of purchase, costs of conversion and other costs including manufacturing overheads incurred in bringing the inventories to their present location and condition.

Net realisable value is the estimated selling price in the ordinary course of business, less cost of completion and applicable selling expenses.

Excess/ shortages, if any, arising on physical verification are absorbed in the respective consumption accounts.

3.8 Cash and Cash Equivalents

Cash and cash equivalents include cash and cheques in hand, bank balances, demand deposits with banks and other short term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Investments having a short maturity of say three months or less from the date of acquisition, qualifies as a cash equivalent.

3.9 Statement of Cash Flow

Cash flows are reported using the indirect method whereby the profit before tax is adjusted for the effect of the transactions of a non cash nature, any deferrals or accruals of past and future operating cash receipts or payments and items of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.

---

Mar 31, 2023

Summary of significant accounting policies

a. Basis of Preparation of Financial Statements & Use of Estimates

The Financial Statements of the Company have been prepared in accordance with the generally accepted accounting
principles in India (Indian GAAP). The Company has prepared these Financial Statements to comply in all material respects
with the accounting standards notified under Section 133 of the Companies Act, 2013, read together with paragraph 7 of
the Companies (Accounts) Rules, 2014.

The Financial Statements have been prepared on an accrual basis under the historical cost convention. The accounting
policies have been consistently applied by the Company and are consistent with those used in the previous year.

The preparation of the financial statements in conformity with Indian GAAP requires the management to make estimates
and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the
reported income and expenses during the year. The Management believes that the estimates used in preparation of the
financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences
between the actual results and the estimates are recognised In the years in which the results are known / materialize.

b. Current & Non- Current Classification

All the assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle as
12 months and other criteria set out in Revised Schedule III to the Companies Act, 2013. Based on the nature of activities
and time between the activities performed and their subsequent realisation in cash or cash equivalents, the company has
ascertained its operating cycle as 12 months for the purpose of current / non-current classification of assets and liabilities.

c. Cash and Cash Equivalents

Cash comprises cash on hand and demand deposit with banks. Cash equivalents are short-term balances (with an original
Maturity of twelve months or less from the date of acquisition), highly liquid investments that are readily convertible into
known amounts of cash and which are subject to insignificant risk of changes in value.

d. Cash Flow Statement

The Cash Flow Statement has been prepared in accordance with the indirect method prescribed under Accounting
Standard - 3 of the Companies (Accounting Standards) Rules, 2006 (as amended), whereby profit / (loss) before
extraordinary Items and 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 spprppatprt haspri nn the availahlp information

e. Property, Plant And Equipments and intangible assets

Property, Plant And Equipments and Intangible assets are stated at cost of acquisition or construction less accumulated
depreciation / amortisation and impairment losses, if any. The cost comprises of the purchase price and any attributable
cost of bringing the assets to its working condition for Its intended use.

f. Capital Work In Progress:

Capital work in progress includes the cost of Property, Plant And Equipments that are not ready to use at the balance
sheet date and advances paid to acquire Property, Plant And Equipments before the balance sheet date.

g. Inventory:

Inventories Including materials and components are are valued at the lower of cost and net realisable value. Net
realisable value Is the estimated selling price in the ordinary course of business less estimated cost of completion and
selling expenses.

h. Investment

Investments that are readily realisable and intended to be held for not more than a year are classified as current
Investments. All other Investments are classified as long term Investments.

Long-term investments are stated at cost. Provision for diminution in the value of long-term investments is made only if
such a decline is other than temporary in the opinion of the management.

Current investments are carried at the lower of cost and fair value, computed category wise._

i. Depreciation and amortization

i) Depreciation on Property, Plant And Equipments is calculated on written down value method (WDV) using the rates
arrived at based on the Useful Life as specified in Schedule II of the Companies Act, 2013.

ii) Company has changed method of depreciaiton from written down value method (WDV) to straight line method (SIM)
from April 1, 2022!mpact has been given in financial statement for Rs. 50,85,942 by decrease in depreciation fund.

Type of Assets Useful life (In Years)

Mobile 5

Furniture and Fixtures 10

Computer 3

Compter Software 5

Server and Network 6

Vehicles other than commercial vehicles 8

commercial vehicles 5

Electric Vehicles 8

Office Equipment 5

ii) Depreciation on assets acquired / disposed off during the year is provided on pro-rata basis with reference to the date
of addition/ disposal.

j. Leases

Assets acquired under lease where the Company has substantially transfer all the risks and rewards incidental to
ownership are classified as finance lease. Such assets are capitalised at the inception of the lease at the lower of the fair
value or the present value of minimum lease payments and a liability is created for an equivalent amount. Each lease
rental paid Is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on
the outstanding liability for each period.

Assets acquired on leases where a significant portion of the risks and rewards incidental to ownership is retained by the
lessor are classified as Operating Lease. Lease rentals are charged to the Statement of Profitand Loss on straight line basis.
The Company''s significant leasing arrangements are in respect of operating leases for premises. The leasing arrangements
which are not cancellable range between 11 months and five years generally, and are usually renewable by mutual
consent on agreed terms. The aggregate lease rentals payable are charged as rent Including lease rentals.

k. Revenue recognition

i) Revenue (income) Is recognized when no significant uncertainty as to the measurability or collectability exists.

Revenues from services are recognised immediately when the service is provided. Sale of Goods is recognised when the
significant risks and rewards of ownership of the goods have passed to the buyer.

ii) Interest income is accounted for on an accrual basis.

l. Borrowing costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the
cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended
use. All other borrowing costs are recognised In the Statement of Profit and Loss in the period they occur.

m. Impairment of assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is
charged to the Statement of Expenses in the period in which an asset is identified as impaired. The impairment loss, if any,
recognized in prior accounting periods is reversed if there has been a change In the estimate of recoverable amount.

n. Foreign exchange transactions

I) Transactions denominated in foreign currencies are normally recorded at the exchange rates prevailing at the time of
the transaction.

ii) Monetary items denominated in foreign currencies at the balance sheet date are restated at the rates prevailing on that
date. All exchange differences arising on settlement and conversion of foreign currency transaction are included in the
Statement of Profit and Loss.

iii) Non monetary foreign currency items are carried at cost.

o. Employee Benefits

(i) Short Term Employee Benefits

Short term employee benefits are recognised as an expense on accrual basis. Short term Project related employee
benefits are recognized as an expenses at the undiscounted amount in the statement of profit and loss of the year in
which the related service is rendered.

(il) Post Employee Benefits

a) Defined Benefit Plan:

Gratuity being a defined benefit scheme is accrued based on actuarial valuations, carried out by an independent actuary
as at the balance sheet date using the projected unit credit method.

Actuarial gain and losses in respect of post employment and other long term benefits are recognised as per actuarial
assumptions in the Statement of Profit and Loss in the period in which they arise.

b) Defined Contribution Plan :

Provision is made for compensated absence based on actuarial valuation, carried out by an independent actuary as at the
balance sheet date.

Company''s contribution to Provident Fund, Employees'' State insurance Fund and labour welfare fund which are defined
contribution plans determined under the relevant schemes and/or statute are charged to the Statement of Profit and Loss
when incurred. There are no other obligations other than the contribution payable to the respective funds.

Termination benefits, if any, are recognized as an expense as and when incurred.