Accounting Policies of Kahan Packaging Ltd. Company

Mar 31, 2025

2. (1) (a) Basis of Preparation:

The financial statements of the company have been prepared and presented in accordance with the
Generally Accepted Accounting Principles (GAAP). GAAP comprises the Accounting Standards
notified u/s S.133 read with S.469 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, inasmuch as the management
neither intends 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 in 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

Based on the total income of the company, the amounts presented in the Financial Statements are
uniformly rounded off to the nearest Lakhs except for earnings per share and ratios.

The company reports its transactions in Indian Rupees.

2.1 (b) Use of Estimates:

The preparation of financial statements required the management to make estimates and
assumptions that affect the reported balance of assets and liabilities, revenues and expenses
and disclosures relating to contingent liabilities. The Management believes that the estimates
used in the preparation of financial statements are prudent and reasonable. Future results
could differ from these estimates. Any revision of accounting estimates is recognized
prospectively in the current and future periods.

2.1 (c) Property, Plant & Equipment:

i. All Property, Plant & equipment are carried at cost. The cost comprises of acquisition cost
and any attributable cost of bringing the asset to the condition for its intended use.

ii. Depreciation on Fixed Assets is provided based on the useful life of the asset in the manner
prescribed in Schedule II to the Companies Act, 2013 as per SLM Method. Depreciation on
addition to asset or on sale/Discernment of Asset is calculated Pro rata from the month of
such addition or up to the month of such sale/ discernment, as the case may be.

iii. Carrying amount of cash generating units/assets are reviewed at balance sheet date to
determine whether there is any impairment. If any such indication exists the recoverable
amount is estimated as the higher of net realizable price and value in use. Impairment loss, if
any, is recognized whenever carrying amount exceeds the recoverable amount.

2.1(d). Intangible Assets:

All Intangible Assets are measured at cost and amortized so as to reflect the pattern in which
the assets economic benefits are consumed.

Preoperative Expenses capitalized are amortized over useful life of ten years equally
commencing from the year in which the commercial production commenced.

2.1(e). Investments:

Long term investments are stated at cost. Provision, if any, is made for permanent diminution in the
value of investments. Current investments are stated at cost or fair value whichever is lower.

2.1(f). Inventories:

Raw materials, packing material are valued at lower of cost or net realizable value

Work in process and finished goods are valued at lower of cost and net realizable value. Raw
Materials, Work-in process and finished goods include cost of raw material, labour, conversion costs
and other costs incurred in bringing the inventories to their present location and condition.

Cost of inventories is computed on a first in first out basis.

2.1(g). Revenue Recognition:

Revenue is recognized to the extent that is probable that the economic benefits will flow to the
Company and the revenue can be reliably measured.

Revenue from sale of goods is recognized when the significant risk and rewards are transferred as per
the terms of sale. Revenues are recorded at invoice value.

Income in respect of interest, insurance claims, export benefits etc is recognized to the extent the
company is reasonably certain of its ultimate realization

2.1(h). Borrowing Costs:

Borrowing costs that are attributable to the acquisition, construction or production of a qualifying
asset are capitalized as part of cost of such asset till such time as the asset is ready for its intended
use. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready
for its intended use. All other borrowing costs are recognized as an expense in the period in which
they are incurred.

2.1(i). Income Tax:

Current tax is determined as the amount of tax payable in respect of taxable income for the year.
Deferred tax is recognized, subject to consideration of prudence, on timing difference, being the

difference between taxable incomes and accounting income that originate in one period and are
capable of reversal in one or more year. Deferred tax assets arising on account of unabsorbed
depreciation or carry forward of tax losses are recognized only to the extent that there is virtual
certainty supported by convincing evidence that sufficient future tax income will be available against
which such deferred tax assets can be realized.