Accounting Policies of LAPL Automotive Ltd. Company

A) Significant Accounting Policies

1) Basis of Accounting: -

a) The company maintains its accounts on accrual basis following the historical cost convention
in accordance with Generally Accepted Accounting Principles (GAAP) in India, and in
compliance with Accounting Standards issued by the Institute of Chartered Accountants of
India (ICAI).

b) The preparation of financial statements requires estimates and assumptions to be made that
affect the reported amount of assets and liabilities on the date of the financial statement
and reported amount of income and expenditure during the period. Difference between the
actual results and estimates are recognized in the year which the results are known/
materialized.

2) Revenue Recognition:

Revenue is recognized to the extent, that it is probable that the economic benefits will flow
to :he Entity and the revenue can be reliably measured.

Revenue from sale of goods & Services

Revenue from sale of goods is recognized when the significant risks and rewards of
ownership of the goods are transferred to the buyer and are recorded net of trade discounts,
rebates, Sales Tax, Value Added Tax, Goods and Service Tax and gross of Excise Duty.
Revenue from services is recognized on rendering of services.

Interest Income

Interest Income is recognized on a time proportion basis taking into account the amount
outstanding and applicable interest rate.

Warranty obligations

In some contracts, the Company provides warranty to the customers. The warrant,
accounted for as a separate performance obligation and a portion of the c - ce

allocated. The performance obligation for the warranty service is satyyieti baser c*\ tme
elapsed

3) Property, Plant and Equipment and Depreciation:-

a) Fixed assets are stated at cost of acquisition or construction i.e. historical cost less
accumulated depreciation/amortization. Cost represents all cost relating to the acquisition
and installation and also finance cost, expenses for bringing the respective assets to
working condition for its intended use and after reducing there from duties & taxes for
which credit receivable /received.

b) Expenditure related to and incurred on implementation of new/ expansion-cum-
modernization projects is included under capital work-in-progress and the same is allocated
to the respective tangible asset on completion of its construction/erection.

c) Depreciation on fixed assets is provided under the Written Down Value (WDV) method at
the rates prescribed under Schedule II of the Companies Act, 2013. During the year, the
Company has changed the method of amortization of intangible assets from WDV method
at 33.33% to Straight Line Method (SLM) over a period of 3 years, in order to reflect a more
appropriate and accurate allocation of the asset cost over its estimated useful life.

4) Borrowing costs:-

Incurred for the Purchase of the Property, Plant and Equipment

Borrowing cost includes interest, amortization of ancillary costs incurred in connection with
the arrangement of borrowings and exchange differences arising from foreign currency
borrowings, if any to the extent they are regarded as an adjustment to the interest cost.
Borrowing costs that are directly attributable to the acquisition, construction or production
of an asset that takes a substantial period of time to get ready for its intended use are
capitalized. All other borrowing costs are recognized as expenditure in the period in which
they are incurred.

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5) Inventories:-

a) Raw material, stores and consumables are valued at the lower of cost c''^r r:''r-•?: *

Cost is ascertained on first in first out basis.

b) Finished goods are valued at the lower of cost or net realizable value. Cost included cost of
materials, conversion cost and related overheads paid or payable on such goods.

6) Employees Benefits:-

Company has recognized all such benefits like salary, wages on accrual basis i.e. in the period
in which the employees renders related services and at actual cost i.e. undiscounted basis.

7) Taxes on Income:-

a) Current tax is amount of tax payable on the taxable income for the year determined in
accordance with the Income Tax Act, 1961.

b) Deferred tax is recognized, on timing differences between accounting income and taxable
income for the year, and quantified using the tax rates and laws enacted or substantively
enacted as on balance sheet date.

c) Deferred tax liability are recognized and carry forward to the extent that there is a virtual
certainty that sufficient future taxable income will be available against which such deferred
tax assets can be realized.

d) Company has done netting off DTA & DTL as both are arising from same Governing tax Law.