Accounting Policies of L.K. Mehta Polymers Ltd. Company

Mar 31, 2025

2 Significant Accounting Policies

2.1 Basis of Preparation

These financial statements are prepared in accordance with Indian Generally Accepted Principles (GAAP) under the historical
cost convention on the accrual basis. GAAP comprises mandatory accounting standards as prescribed under Section 133 of the
Companies Act, 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2014 the provisions of the Act (to the
extent notified).

2.2 Use of estimates and judgments

The preparation of the financial statements in conformity with Accounting Standards requires the 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 period. The application of accounting policies
that require critical accounting estimates involving complex and subjective judgments and the use of assumptions in these
financial statements have been disclosed in Note 3 ‘Critical Judgements and Estimates. Accounting estimates could change
from period to period.

Actual results could differ from those estimates. Appropriate changes in estimates are made as the 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.

2.3 Basis of classifications of current and non current

All the assets and liabilities have been classified as current or non-current in the balance sheet,

An asset has been classified as current if (a) it is expected to be realized in, or is intended for sale or consumption in, the
Company’s normal operating cycle; or (b) it is held primarily for the purpose of being traded; or (c) it is expected to be realized
within twelve 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 twelve months after the reporting date. All other assets have been classified as non-current.

A liability has been classified as current when (a) it is expected to be settled in the Company’s normal operating cycle; or (b) it
is held primarily for the purpose of being traded; or (c) it is due to be settled within twelve months after the reporting date; or (d)
the Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the
reporting date. All other liabilities have been classified as non-current.

Deferred tax assets and liabilities are classified as no-current assets/ liabilities.

2.4 Revenue Recognition
SALES

A. In case of sale of goods performance obligation is satisfied when control is transferred to customer and recoverability of
amount is probable. Transaction price is same as invoice value excluding taxes. Revenue is recognized as and when
performance obligation is satisfied.

B. In case of sale of service performance obligation is satisfied when work is executed, customer approves the work
performed and recoverability of amount is probable. Transaction price is same as invoice value excluding taxes. Revenue
is recognized as and when performance obligation is satisfied.

C. Revenue is adjusted for variable consideration such as discounts, rebates, refunds, credits, price concessions, incentives,
or other similar items in supply and service when they are highly probable to be provided. The amount of revenue excludes
any amount collected on behalf of third parties.

D. Goods and Service Tax (GST) is not received by the company on its own account. Rather it is tax collected on value added
to the goods/ services by the seller on behalf of the Government. Accordingly, it is excluded from revenue. However such
tax expenses are included in cost where Company is not availing tax credit of the same.

INTEREST AND DIVIDEND INCOME

Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Company
and the amount of income can be measured reliably. Interest income is accrued on, time basis, by reference to the principal
outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts
through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.

Dividend income from investments is recognized when the shareholder’s right to receive payment has been established
(provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured
reliably).

2.5 Borrowing costs:

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that
necessarily take a substantial period of time to get ready for their intended use, are added to the carrying cost of those assets,
until such time as the assets are substantially ready for their intended use.

All other borrowing costs are recognized in the Statement of Profit and Loss in the period in which they are incurred.

The Company determines the amount of borrowing costs eligible for capitalization as the actual borrowing costs incurred on
that borrowing during the period less any interest income earned on temporary investment of specific borrowings pending
their expenditure on qualifying assets, to the extent that an entity borrows funds specifically for the purpose of obtaining a
qualifying asset. In case if the Company borrows generally and uses the funds for obtaining a qualifying asset, borrowing costs
eligible for capitalization are determined by applying a capitalization rate to the expenditures on that asset.

2.6 Foreign Currency Transactions:

a) Transactions in foreign currencies are recorded on initial recognition at the exchange rates prevailing on the date of the
transaction .

b) Monetary items (i.e. receivables, payables, loans etc) denominated in foreign currencies at the year’s end are restated at
year end rates. In case of monetary items which are covered by forward exchange contracts, the difference between the
year’s end rate and rate on the date of the contract is recognized as exchange difference and the premium paid on forward
contracts is recognized over the life of the contract.

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

d) Any income or expenses on account of exchange difference either on settlement or on translation is recognized as revenue
except in cases where they relate to acquisition of fixed assets in which case they are adjusted to the carrying cost of such
assets.

2.7 Retirement and other employee benefits:

The Company participates in various employee benefit plans. These benefit plans are classified as either defined contribution
plans or defined benefit plans. Under a defined contribution plan, the company''s only obligation is to pay a fixed amount with
no obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits. The related
actuarial and investment risks fall on the employee.

Under a defined benefit plan, it is the Company''s obligation to provide agreed benefits to the employees. The related actuarial
& investment risks fall on the Company.

Defined Contribution plan

Company’s contributions paid/ payable during the year to Provident Fund, Employee state insurance are recognized in the
statement of Profit and Loss Account.

The company is depositing P.F. & ESI contribution only for eligible employees within statutory limits. The employees whose
income is above the statutory limits have opted not to subscribe and accordingly, the company is not required to make the
contribution.

2.8 TAXATION:

Tax expense comprises of current tax, deferred tax and Dividend Tax which are described as follows -:

(a) Current Tax

Current tax is measured at the amount expected to be paid to the tax authorities, using the applicable tax rates. Current tax is
calculated using tax rates that have been enacted or substantively enacted by the end of reporting period. Current Tax is generally
charged to profit & loss except when they relate to items which are recognized in other comprehensive income or equity.

(b) Deferred Tax

Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the Balance sheet and the
corresponding tax bases used in the computation of taxable profit and are accounted for using the liability method. Deferred
tax liabilities are generally recognized for all taxable temporary differences, and deferred tax assets are generally recognized
for all deductible temporary differences, carry forward tax losses and allowances to the extent that it is probable that in future
taxable profits will be available to set off such deductible temporary differences. Deferred tax assets and liabilities are
measured at the applicable tax rates. Deferred tax assets and deferred tax liabilities are off set, and presented as net. The
carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available against which the temporary differences can be utilized.

2.9 Property, Plant and Equipment

PROPERTY, PLANT & EQUIPMENT is recognized when it is probable that future economic benefits associated with the
items will flow to the company and the cost of the item can be measured reliably.

PROPERTY, PLANT & EQUIPMENTS are stated at cost net of Cenvat less accumulated depreciation and impairment losses,
if any. Cost of acquisition is inclusive of freight, duties, attributable overheads, taxes and incidental/preoperative expenses
and interest on loans attributable to the acquisition of assets upto the date of commissioning of assets.

Assets in the course of construction are capitalized in the assets under construction account. At the point when the asset is
operating at management’s intended use, the cost of construction is transferred to the appropriate category of the PROPERTY,
PLANT & EQUIPMENT and depreciation commences.

Free hold land is carried at historical cost.

Leasehold land is not amortized as all leasehold land is on 99 years lease with local authority.

All other items of property plant and equipment are stated at historical cost. Historical cost includes expenditure that is directly
attributable to the acquisition of items.

Subsequent costs are included in assets carrying amount or recognized as a separate asset, as the case may be, only when it is
probable that future economic benefits with the PROPERTY, PLANT & EQUIPMENT will flow to the entity and cost of the
item will be measured reliably.

Carrying amount of component is recognized as a separate asset. Such component is derecognized when replaced.

Items of stores and spares that meet the definition of property, plant and equipment are capitalized at cost. Otherwise, such
items are classified as inventories.

Repairs and maintenance are charged to profit and loss account as and when they are incurred.

An items of PROPERTY, PLANT & EQUIPMENT is derecognized upon disposal or when no future economic benefits are
expected to arise from the continued use of asset. Any gain or loss arising on the disposal or retirement of an item of
PROPERTY, PLANT & EQUIPMENT is determined as the difference between the sales proceeds and the carrying amount of
the asset and is recognized in statement of profit & loss.

Depreciation

Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value.
Depreciation is recognized so as to write off the cost of assets (other than freehold land and properties under construction) less
their residual values over their useful lives, using straight line method as per the useful life prescribed in Schedule II to the
Companies Act, 2013.

2.10 Intangible Assets

Identifiable intangible assets are recognized a) when the Company controls the asset, b) it is probable that future economic
benefits attributed to the asset will flow to the Company and c) the cost of the asset can be reliably measured.

“Intangible Assets are capitalized at the amounts paid to acquire the respective license for use and are amortized over the
period of license. The assets useful lives are reviewed at each financial year end. Software is amortized over an estimated
useful life of 3 years and Trade Marks are amortized over 10 years.”

2.11 Capital Work in Progress

Capital work in progress are stated at cost and inclusive of preoperative expenses, project development expenses etc.

2.12 Impairment of Assets:

The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on
internal/external factors.

An impairment loss is recognized in the Statement of Profit and Loss whenever the carrying amount of an asset or a cash
generating unit exceeds its recoverable amount. The recoverable amount of the assets (or where applicable, that of the cash

generating unit to which the asset belongs) is estimated as the higher of its net selling price and its value in use. A previously
recognized impairment loss is increased or reversed depending on changes in circumstances.

However the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging
usual depreciation if there was no impairment.

2.13 INVENTORIES

Inventories, are valued at lower of cost (determined on FIFO Method) and net realisable value. The bases for determining cost
for different categories of inventory are as under: