Accounting Policies of Macfos Ltd. Company

Mar 31, 2025

2. SIGNIFICANT ACCOUNTING POLICIES
A) Basis of preparation and Measurement

These Standalone financial statements have been prepared in accordance with the generally accepted
accounting principles in India under the historical cost convention on accrual basis. Pursuant to section
133 of the Companies Act, 2013 read with rule 7 of Companies (Accounts) Rules, 2014, till die standards
of accounting or any addendum thereto are prescribed by Central Government in consultation and
recommendation of the National Financial Reporting Authority, the existing Accounting Standards
notified under the Companies Act, 1956 shall continue to apply. Consequently, these Standalone
financial statements have been prepared to comply in all material aspects with the Accounting Standards
notified under section 211(30 of the Companies Act, 1956 [Companies (Accounting Standards) Rules,
2006, as amended] and other relevant provisions of the Companies Act, 2013.

All assets and liabilities have been classified as current or non-current as per the Company’s normal
operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the
nature of products and the time between the acquisition of assets for processing and their realisation in

cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose
of current or non-current classification of assets and liabilities.

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

B. Basis of Measurement

The company has prepared the Standalone financial statements on accrual basis and under historical
cost convention, except for certain financial assets and liabilities which are measured at fair value.

The company has prepared the Standalone financial statements on a going concern basis. The
accounting policies are applied consistently to all the year presented in the financial statements except
where a newly issued accounting standard is initially adopted or a revision to an existing accounting
standard requires change in accounting policy hitherto in use.

The Functional and presentation currency of the company is Indian Rupees (“INR”) which is the
currency of the primary economic environment in which the Company operates. All amounts in the
Standalone financial statements have been rounded off to the nearest lacs unless otherwise indicated.
Figures in brackets indicate negative values.

C. Revenue recognition: -
Sale of&ppds

The Company recognizes revenues on the sale of products, net of discounts and sales incentives, when
the products are delivered to the customer or when released to the carrier responsible for transporting
them to the customer in the following manner:

• Domestic sales are recognised at the time of dispatch from the point of sale;

• Export sales are recognised on the date when shipped on board as per terms of sale and are initially
recorded at the relevant exchange rate prevailing on the date of the transaction

The Company recognises income (including rent, interest, etc.) on accrual basis. However, where the
ultimate collection of the same lacks reasonable certainty, revenue recognition is post-pone to the extent
of uncertainty.

Interest income is recognized on the time basis determined by the amount outstanding and the rate
applicable and where no significant uncertainty as to measurability or collectability exists.

D. Depreciation and amortisation

Company provides depreciation on a pro rata basis on the written down value method over the useful
lives of the assets.

Useful Life of Assets is determined by the Management as those prescribed by Schedule II Part ‘C’ of the
Companies act, 2013. The Management believes that these estimated useful lives are realistic and reflect
fair approximation of the period over which the assets are likely to be used.

Depreciation on property*, plant and equipment purchased during the year is provided on pro rata basis.
Depreciation on assets sold, discarded or demolished during the year is being provided at their rates up-
to the date such assets are sold, discarded or demolished.

E. Property, Plant & Equipment

Property, Plant and Equipment are stated at cost of acquisition or construction less accumulated
depreciation/ amortization and accumulated impairment, if any.

Cost includes purchase price, taxes and duties, labour cost and directly attributable overhead
expenditure for self-constructed assets incurred up to the date the asset is ready for its intended use.
Borrowing cost incurred for qualifying assets is capitalized up to the date the asset is ready for intended
use, based on borrowings incurred specifically for financing the asset or the weighted average rate of all
other borrowings, if no specific borrowings have been incurred for the asset.

Cost also includes the cost of replacing part of the plant and equipment, if the recognition criteria are
met. When significant parts of plant and equipment are required to be replaced at intervals, the
Company depreciates them separately based on their specific useful lives. Likewise, when a major
inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a
replacement if the recognition criteria are satisfied. All other repair and maintenance costs are
recognised in the Statement of Profit and Loss as incurred.

The residual values, useful lives and methods of depreciation of property, plant and equipment are
reviewed at regular intervals and adjusted prospectively, if appropriate.

Intangible assets are non-physical assets such as patent, license agreement, copyright, software.
Intangible Assets must be amortized over their useful life, if possible, sum assets, such as Brand Name
have indefinite life and cannot be capitalize or amortized, other intangible assets such as license
agreement have useful life determined in the license agreement, item with a defined useful life must be
amortized. Intangible assets purchased are measured at cost or fair value as on the date of acquisition
less accumulated amortisation and accumulated impairment, if any.

Amortisation is provided on a WDV basis over estimated useful lives of the intangible assets. The
amortisation period for intangible assets with finite useful lives is reviewed at least at each year-end.
Changes in expected useful lives are treated as changes in accounting estimate.

G. Impairment

At each Balance Sheet date, the Company assesses whether there is any indication that the property,
plant and equipment with finite lives may be impaired. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of the impairment, if any. Where it is
not possible to estimate the recoverable amount of individual asset, the Company estimates the
recoverable amount of the cash-generating unit to which the asset belongs.

As of March 31*, 2025 none of the property, plant and equipment was considered impaired.

Inventories are valued at the lower of cost and net realizable value. Costs are ascertained on FIFO basis.
The Value of Closing Stock as on 31st March, 2025 computed and provided as per computerized
inventory management system maintained by the management.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated
cost of completion and the estimated costs necessary to make the sale.

I. Investments

According to As-13 Accounting for Investments, Current Investments are valued at cost or Market
value whichever is lower and Long Term Investments are valued at cost less other than temporary
diminution in value, if any.

J. Earnings per share

Basic Earnings Per Share is calculated by dividing the net profit or loss for the period attributable to
equity shareholders by the weighted average number of equity shares outstanding during the period.
Earnings considered in ascertaining the Company’s earnings per share is the net profit for the period.
The weighted average number of equity shares outstanding during the year and all years presented is
adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have
changed the number of equity shares outstanding, without a corresponding change in resources.

K. Taxes on Income

The accounting treatment for the Income Tax in respect of the Company’s income is based on the
Accounting Standard on ‘Accounting for Taxes on Income’ (AS-22). The provision made for Income Tax
in Accounts comprises both. Income tax expenses for the Period comprises of current tax and deferred
tax. Current tax provision is determined on the basis of taxable income computed as per the provision
of the income tax Act 1961.

Deferred tax assets and liabilities are recognised for the future tax consequences of temporary
differences between the carrying values of assets and liabilities and their respective tax bases, unutilised
business loss and depreciation carry-forwards and tax credits. Such deferred tax assets and liabilities
are computed separately for each taxable entity.

Deferred tax assets and liabilities are measured based on the tax rates that are expected to apply in the
period when the asset is realised or the liability is settled, based on the tax rates and tax laws that have
been enacted or substantively enacted by the balance sheet date.

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Mar 31, 2024

Significant Accounting Policies: -

(a)Basis of preparation of Standalone Financial Statements

These Standalone financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. Pursuant to section 133 of the Companies Act, 2013 read with rule 7 of Companies (Accounts) Rules, 2014, till the standards of accounting or any addendum thereto are prescribed by Central Government in consultation and recommendation of the National Financial Reporting Authority, the existing Accounting Standards notified under the Companies Act, 1956 shall continue to apply. Consequently, these financial statements have been prepared to comply in all material aspects with the Accounting Standards notified under section 2n(3C) of the Companies Act, 1956 [Companies (Accounting Standards) Rules, 2006, as amended] and other relevant provisions of the Companies Act, 2013.

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

W 1

(b) Basis of Measurement

The Financial Statements have been prepared on accrual basis and under historical cost convention, except for certain financial assets and liabilities which are measured at fair value.

The financial statements have been prepared on a going concern basis. The accounting policies are applied consistently to all the year presented in the financial statements except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires change in accounting policy hitherto in use.

The Functional and presentation currency of the company is Indian Rupees (“INR”) which is the currency of the primary economic environment in which the Company operates.

(c) Use of estimates. iudgments’& assumptions

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgements, estimates and assumptions that affect the reported amount of assets and liabilities as at the Balance sheet date, reported amount of revenue and expenditure for the period and disclosures of contingent liabilities as at the Balance sheet date. The judgements, estimates and assumptions used in the accompanying financial statements are based upon the Management’s evaluation of the relevant facts and circumstances as at the date of the financial statements. Actual results could differ from these judgements, estimates and assumptions. Estimates and underlying assumptions are reviewed on a Periodic basis. Revisions to accounting estimates, if any, are recognized in the period in which the estimates are revised and in any future years affected.

Summary of Significant Accounting Policies

(a) Revenue recognition

The Company recognizes revenues on the sale of products, when the products are delivered to the dealer /customer or when delivered to the carrier for sales, which is when risks and rewards of ownership pass to the dealer / customer. Sale of products is presented Net of GST.

The Company recognizes income (including interest etc.) on accrual basis. However, where the ultimate collection of the same lacks reasonable certainty, revenue recognition is postponed to the extent of uncertainty.

(b) Depreciation and amortization

For the current year, depreciation is provided on a pro rata basis on the written down value method over the useful lives of the assets.

Useful Life of Assets is determined by the Management as those prescribed by Schedule II Part ‘C’ of the Companies act, 2013.

Depreciation on property, plant and equipment purchased during the year is provided on pro rata basis. Depreciation on assets sold, discarded or demolished during the year is provided at

their rates up to the date such assets are sold, discarded or demolished. ^

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(C) Property. Plant & Equipment

(i) Property, Plant and Equipment are stated at cost of acquisition or construction less accumulated depreciation/amortization and accumulated impairment, if any.

(ii) Cost includes purchase price, taxes and duties, labour cost and directly attributable overhead expenditure for self-constructed assets incurred up to the date the asset is ready for its intended use. Borrowing cost incurred for qualifying assets is capitalized up to the date the asset is ready for intended use, based on borrowings incurred specifically for financing the asset or the weighted average rate of all other borrowings, if no specific borrowings have been incurred for the asset.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at regular intervals and adjusted prospectively, if appropriate.

(d) Intangible Assets

Intangible assets are non-physical Assets such as patent, license agreement, copyright, software. Intangible Assets must be amortized over their useful life, if possible, sum assets, such as Brand Name have indefinite life and cannot be capitalize or amortized, other intangible assets such as license agreement have useful life determined in the license agreement, item with a defined useful life must be amortized. Intangible assets purchased are measured at cost or fair value as on the date of acquisition less accumulated amortization and accumulated impairment, if any.

Amortization is provided on a SLM basis over estimated useful lives of the intangible assets. The amortization period for intangible assets with finite useful lives is reviewed at least at each year-end. Changes in expected useful lives are treated as changes in accounting estimate.

(e) Impairment

At each Balance Sheet date, the Company assesses whether there is any indication that the property, plant and equipment with finite lives may be impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. Where it is not possible to estimate the recoverable amount of individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

As of March 31^st, 2024 none of the property, plant and equipment was considered impaired.

(f) Inventories

Inventories are valued at the lower of cost and net realizable value. Cost includes purchase price, (excluding those subsequently recoverable by the enterprise from the concerned revenue authorities), freight inwards and other expenditure incurred in bringing such inventories to their present location and condition. Costs are ascertained on Weighted Average basis. The Value of Closing Stock as on 31^stMarch, 2024 computed and provided as per computerized inventory management system maintained by the management.

Net realizable value is estimated at selling price in the ordinary course of lmsifiess less estimated cost of completion and selling expenses. ^-"===5^.

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(f) Transactions in Foreign Currencies

On initial recognition, all foreign currency transactions are recorded at foreign exchange rate on the date of transaction. Foreign currency denominated monetary assets and liabilities are remeasured into the functional currency at the exchange rate prevailing on the balance sheet date.

Foreign exchange loss or gain related with Revenue Expenditure are credited or debited to Statement to Profit & Loss Account

(g) Employee benefits ESIC/PF

The eligible employees of the Company are entitled to receive benefits in respect of ESIC/PF, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employees’ salary. The contributions as specified under the law are made to the ESIC/PF fund.

GRATUITY

The gratuity amount has been calculated as per the Actuarial Valuation report submitted by the management up to gi^March, 2024-However, the company is following Non- funded method for gratuity.

(h) Earnings per share

Basic Earnings Per Share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the Company’s earnings per share is the net profit for the period. The weighted average number of equity shares outstanding during the year and all years presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources.

(0 Investments

Company has made investment in Fixed Deposit as security against borrowings. Investment is stated at cost value.

(j) Taxes on Income

The accounting treatment for the Income Tax in respect of the Company’s income is based on the Accounting Standard on ‘Accounting for Taxes on Income’ (AS-22). The provision made for Income Tax in Accounts comprises both. Income tax expenses for the Period comprises of current tax and deffered tax. Current tax provision is determined on the basis of taxable income computed as per the provision of the income tax Act 1961.

Deferred tax assets and liabilities are recognized for the future tax consequences of temporaiy differences between the carrying values of assets and liabilities and their respective tax bases, and unutilized business loss and depreciation carry-forwards and tax credits. Such deferred tax assets and liabilities are computed separately for each taxable entity.

Impact of Tax Rate Changes: The Management has exercised the option permitted under Section 115BAA of the Income Tax Act, 1961 as introduced by the Taxation Laws (Amendment) Ordinance, 2019. Accordingly, the Management has re-measured its Deferred Tax Asset basis the rate prescribed in the said section.