Accounting Policies of Omfurn India Ltd. Company

Mar 31, 2025

Note 1: Corporate Information

Omfurn India Limited (âthe companyâ) is a Public Limited Company, limited by shares, domiciled in India, and
incorporated under the Companies Act 1956. The Company was converted into a public limited company with effect
from 15^th June 2017 and subsequently got listed on the National Stock Exchange (NSE).

The company is mainly engaged in the business of manufacturing and supplying of furnitureâs like Executive office
furniture, international school furniture, Modular office furniture and Kitchen, Bedroom Furniture, wooden doors &
frames, etc. in terms of customized, system based or Turnkey projects throughout India. The Company also specializes
in the design and execution of turnkey interior projects by bringing together under the same roof all the resources
necessary to meet the needs of any fit-out project.

Note 2: Basis of preparation and measurement and Material Accounting policies and notes to accounts

2.1 Basis of Accounting and preparation of Financial Statements

a. The financial statements of the Company have been prepared in accordance with the Generally Accepted
Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the
relevant provisions of Companies Act, 2013.

b. The financial statements have been prepared on accrual basis under the historical cost convention. The
accounting policies adopted in the preparation of the financial statements are consistent with those followed
in the previous year.

c. All the assets and liabilities have been classified as current or non-current as per the Companyâs normal
operating cycle and other criteria set out in 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 realization in cash and
cash equivalent, the Company has ascertained its operating cycle to be 12 months for the purpose of
current - noncurrent classification of assets and liabilities.

2.2 Use of Estimates

The preparation of financial statements is in conformity with Generally Accepted Accounting Principles that
requires the Management to make estimates and assumptions considered in the reported amount of assets
and liabilities (including contingent liabilities) and the 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
recognized in the periods in which the results are known/materialized.

2.3 Property Plant & Equipment and Depreciation thereon

a. Property Plant & Equipment are stated at cost net of recoverable taxes, trade discounts and rebates and
include amounts added on revaluation, less accumulated depreciation, and impairment loss, if any.

b. The cost of Property Plant & Equipment comprises its purchase price, borrowing cost and any cost directly
attributable to bringing the asset to its working condition for its intended use, net charges on foreign exchange
contracts and adjustments arising from exchange rate variations attributable to the assets.

c. Subsequent expenditures related to an item of Property Plant & Equipment are added to its book value
only if they increase the future benefits from the existing asset beyond its previously ascertained standard
of performance.

d. Assets are reclassified wherever necessary and the effect of the same has been given in the profit and loss
account

e. The company has applied the estimated useful life as specified in Schedule II and calculated depreciation
based on rates worked as per applicable accounting standard and guidance note issued by ICAI as under:

2.4 Intangible Assets and Amortization thereon

a) Items of Intangible Assets are recognized and measured at cost less accumulated amortization and
impairment losses, if any. The cost of intangible assets comprises of its purchase price, including import
duties and nonrefundable purchase taxes, after deducting trade discounts and rebates; and any costs
directly attributable to bringing the assets to the location and condition necessary for it to be capable of
operating in the manner intended by management.

b) Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated
with the expenditure will flow to the Company and the cost of the expenditure can be measured reliably.

c) Intangible assets are amortized over their estimated useful life using straight line method.

d) Software is amortized over a period of five years. Amortization method, useful lives and residual values are
reviewed at the end of each financial year and adjusted if appropriate.

2.5 Impairment of Assets

An asset is considered as impaired in accordance with AS-28 in Impairment of Assets when at balance sheet
date there are indications of impairment and the carrying amount of asset, or where applicable the cash generating
unit to which the asset belongs, exceeds its recoverable amount (i.e., the higher of assetsâ net selling price and
value in use). The carrying amount is reduced to the recoverable amount and reduction is recognized as an
impairment loss in the Statement of Profit & Loss. Assessment is also done at each balance sheet date as to
whether there is any indication that an impairment loss recognized for an asset in prior accounting periods may
no longer exist or may have decreased.

2.6 Borrowing Costs

Borrowing costs include interest, amortization of ancillary costs incurred and exchange differences arising from
foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in
connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets
are charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to, and
utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction /
development of the qualifying asset upto the date of capitalisation of such asset is added to the cost of the
assets. Capitalisation of borrowing costs is suspended and charged to the Statement of Profit and Loss during
extended periods when active development activity on the qualifying assets is interrupted.

2.7 Investments

Investments that are readily realizable 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 valued
at cost and provision for diminution in value thereof is made, wherever such diminution is other than temporary.

2.8 Inventories

a. Cost of Inventory comprises of Cost of Purchase, Cost of Conversion and proportionate manufacturing
overheads incurred in bringing the inventories to their present location and condition.

b. Items of Inventories are valued at lower of cost and net realizable value

2.9 Employee Benefits

a. All employee benefits payable wholly within 12 months of rendering of services are classified as short-term
employee benefits. These comprise of salaries, wages and short-term compensated absences, etc. and
the expected costs of ex-gratia are recognized in the period in which the employee renders the related
services.

b. Post-employment benefits defined contribution plans:

Payments made to a defined contribution plan such as Provident Fund maintained with the Regional
Provident Fund Office and superannuation fund are charged to as an expense in the Statement of Profit
and Loss Account as they fall due.

c. Defined Benefit plans Gratuity Fund:

The scheme is a non-contributory defined benefit arrangement providing gratuity benefits expressed in
terms of final monthly salary and the period of past service. The scheme is funded with the Life Insurance
Corporation of India.

2.10Revenue Recognition

a. Revenue from operations is recognised to the extent that it is probable that the economic benefits will flow
to the company and its revenue can be reliably measured. Revenue is measured on accrual basis at the

fair value of the consideration received or receivable, considering contractually defined terms of payment
and excluding taxes or duties collected on behalf of the Central or the State government.

b. Supply of Goods

Revenue is recognized when significant risks and rewards of ownership of the goods have passed to the
buyer. Net Turnover from operations represents amount of turnover after deduction of discounts and Goods
and Services tax.

c. Sale of services

Revenue from Sale of services is recognised on accrual basis as and when the service provision is
completed. It is recognized net of discounts and Goods and Services Tax.

d. Interest Income

Interest income is recognised on a proportionate basis considering the amount outstanding and the rate
applicable.

e. Government Grants

Government grants and subsidies are recognised when there is reasonable assurance that the Company
will comply with the conditions attached to them and the grants/ subsidy will be received.

Government grants whose primary condition is that the Company should purchase, construct, or otherwise
acquire capital assets are presented by deducting them from the carrying value of the assets. The grant is
recognised as income over the life of a depreciable asset by way of a reduced depreciation charge.

Grants related to revenue are recognised in the Statement of Profit and Loss on a systematic basis to
match them with related costs.

2.11 Insurance Claims

Insurance claims are accounted for based on claims admitted / expected to be admitted and to the extent that
there is no uncertainty in receiving the claims.

2.12Goods and Services Tax Input Tax Credit

The Company has claimed input tax credit in terms of Chapter V of the CGST Act, 2017 and the Rules made
there under in respect of inputs, input services and capital goods used for the purposes of the business. To the
extent of ineligible credits, the same are added to their respective heads of expenses/ capital goods.

2.13Cash and Cash Equivalents

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances
(with an original maturity of three 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.

2.14Foreign Currency Transactions

a. The Companyâs financial statements are prepared in Indian Rupees which is the Companyâs functional
currency.

b. The Transactions in foreign currency are recorded in the functional currency at the original rates of exchange
in force at the time the transactions are effected. At the year end, monetary items, including those of foreign
operations integral in nature, denominated in foreign currency are reported using the closing rates of
exchange. Exchange differences arising thereon and on realization/ payment of foreign exchange are
accounted for in the relevant year as income or expense.

c. During the year under review there are no foreign exchange outgoing / incoming earnings.

2.15Micro, Small & Medium Enterprises Development Act, 2006

Based on the information available with the company, suppliers have been identified, who are registered under
the Micro, Small and Medium Enterprises Development Act 2006 (MSMED) to whom the company owes and
the same has been categorized as per requirements as at 31 March 2025. The information has been determined
to the extent such parties have been identified based on information available within the company and the same
has been relied upon by the auditors.

2.16Segment Information

The Companyâs business activity falls within a single primary business segment viz. manufacturing and supply
of furniture items. Also, the company is operating in Indian market; hence there is no reportable geographic /
secondary segment.

Accordingly, no disclosure is required under AS-17.

Reasons for variation in ratio by 25% or more as compared to preceding year

a. For Debt Service coverage ratio

Debt Service coverage ratio is used to analyze the Companyâs ability to pay-off current interest and instalments. It is
calculated by dividing earnings available for debt service by debt service.

Variance in this ratio is due to trimming of Earnings before Interest, Tax, Depreciation and decrease in debt interest
and repayments compared to previous year.

b. For Trade Payable Turnover Ratio

Trade Payable Turnover Ratio measures the efficiency at which the Company is managing the payables. The ratio
shows how well a Company uses and manages the credit extended to it by its vendors. It is calculated by dividing
turnover by average trade payables.

Change is due to an increase in trade payables during the year.

c. Net Profit Ratio:

Net Profit Ratio is the percentage of profit on total turnover of the Company during the year.

The company has earned better profit due to decrease in various costs thereby improving the percentage of profit
against turnover.

d. For Return on capital employed:

There is variance in the Capital Employed ratio as the profit has been significantly increased during the current year
as compared with previous year.

e. For Return on Investments:

Return on Investments is the percentage of return on funds invested in the business by its owners.

The company has earned better returns on its investments in the current year as compared to previous years due to
higher profit during the year.

2.19 Earnings per share

a. Basic earnings per share are calculated in accordance with Accounting Standard (AS-20) - Earning per
share. The Basic Earnings per share is arrived 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. The
numbers of equity shares are adjusted retrospectively for all the periods presented for bonus shares issued
during the reporting period.

ANNUAL REPORT 2024-25

Ageing for Trade Receivables outstanding as at 31st March 2024 is as follows
	Particulars
Particulars	Undisputed- Consider Good	Undisputed- Consider Good	Undisputed- Consider Good	Disputed- Considered Doubtful	Total
Less than 6 months	1,124.44	-	-	-	1,124.44
6 months - 1 years	183.51	-	-	-	183.51
1-2 years	608.70	-	-	-	608.70
2-3 years	109.07	-	-	-	109.07
More than 3 years	210.13	-	-	-	210.13
Total	2,235.85	NIL	NIL	NIL	2,235.85

2.24 Defined benefit plan (Gratuity)

The scheme is a non-contributory defined benefit arrangement providing gratuity benefits expressed in terms of final
monthly salary and the period of past service. The scheme is funded by the Life Insurance Corporation of India. The
following table shows the amounts recognized in the Balance Sheet.

The assumptions used in accounting for the defined benefit plan are set out below:

Particulars	31st Mar 2025	31st Mar 2024
Expected return on planned assets	6.85%	7.21%
Rate of discounting	6.85%	7.21%
Rate of salary Increase	5.00%	5.00%
Rate of Employer turnover	2.00%	2.00%

Reconciliation of Defined Benefit obligation (DBO)

Particulars	31st Mar 2025	31st Mar 2024
Present value of obligations as at beginning of year	136.16	111.21
Interest Cost	9.82	8.32
Current Service Cost	11.00	9.04
Benefit paid from the Fund	(7.41)	(6.36)
Actuarial (Gain)/Losses on Obligation	14.79	13.95
Present Value of Benefit Obligation at the End of the period	164.37	136.16

Reconciliation of planned Assets

* Particulars	31st Mar 2025	31st Mar 2024
Fair Value of Plan Assets at the beginning of year	109.96	61.54
Expected return on Plan assets	7.93	4.60
Contributions by the employer	26.20	49.67
Benefit paid from the Fund	(7.41)	(6.36)
Actuarial (Gain)/Losses on Obligation	0.21	0.50
Fair Value of Plan Assets at the End of the period	136.90	109.96

Amount Recognized in the Balance Sheet

Particulars	31st Mar 2025	31st Mar 2024
Present Value of Benefit Obligation at the end of the Period	(164.37)	(136.16)
Fair Value of Plan Assets at the end of the period	136.90	109.96
Funded status	(27.48)	(26.20)
Present Value of Benefit Obligation at the End of the period	(27.48)	(26.20)

2.25 Further Public Offer

In the financial year 2017-18, Company had raised funds from Initial Public Offer (IPO) aggregating to 4,16,76,000
by issuing 18,12,000 equity shares at 23/- per share.

Further during the year under review, the Company has offered 4,17,600 Convertible Equity Share Warrants carrying
on an entitlement to an equivalent to subscribe to an equal number of Equity Shares having face value of Rs. 10/-
each in one or more tranches, to proposed allottees (promoter and promoter group) on a preferential basis at Rs. 97/
- per Warrant including premium of Rs. 87/- each. 25% of the total consideration will be payable at the time of
issuance of the warrants and remaining 75% of the total consideration shall be payable upon conversion of Warrants
within 18 months from the date of allotment.

Further during the year 2023-24, the Company came out with a âFollow - On Public Offeringâ (FPO) of 36,00,000
equity shares of face value of Rs. 10/- each at a price of Rs. 75/- per equity share aggregating to Rs. 27,00,00,000/
-. The Public issue was open for subscription from 20-03-24 till 22-03-2024.

Mar 31, 2024

Note 2: Basis of preparation and measurement and Material Accounting policies and notes to accounts

2.1 Basis of Accounting and preparation of Financial Statements

a. The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the relevant provisions of Companies Act, 2013.

b. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

c. All the assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and other criteria set out in 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 realization in cash and cash equivalent, the Company has ascertained its operating cycle to be 12 months for the purpose of current - noncurrent classification of assets and liabilities.

2.2 Use of Estimates

The preparation of financial statements is in conformity with Generally Accepted Accounting Principles that requires the Management to make estimates and assumptions considered in the reported amount of assets and liabilities (including contingent liabilities) and the 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 recognized in the periods in which the results are known/materialized.

2.3 Property Plant & Equipment and Depreciation thereon

a. Property Plant & Equipment are stated at cost net of recoverable taxes, trade discounts and rebates and include amounts added on revaluation, less accumulated depreciation, and impairment loss, if any.

b. The cost of Property Plant & Equipment comprises its purchase price, borrowing cost and any cost directly attributable to bringing the asset to its working condition for its intended use, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the assets.

c. Subsequent expenditures related to an item of Property Plant & Equipment are added to its book value only if they increase the future benefits from the existing asset beyond its previously ascertained standard of performance.

d. The company has applied the estimated useful life as specified in Schedule II and calculated depreciation based on rates worked as per applicable accounting standard and guidance note issued by ICAI as under:

2.4 Intangible Assets and Amortization thereon

a) Items of Intangible Assets are recognized and measured at cost less accumulated amortization and impairment losses, if any. The cost of intangible assets comprises of its purchase price, including import duties and nonrefundable purchase taxes, after deducting trade discounts and rebates; and any costs directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by management.

b) Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company and the cost of the expenditure can be measured reliably.

c) Intangible assets are amortized over their estimated useful life using straight line method.

d) Software is amortized over a period of five years. Amortization method, useful lives and residual values are reviewed at the end of each financial year and adjusted if appropriate.

2.5 Impairment of Assets

An asset is considered as impaired in accordance with AS-28 in Impairment of Assets when at balance sheet date there are indications of impairment and the carrying amount of asset, or where applicable the cash generating unit to which the asset belongs, exceeds its recoverable amount (i.e., the higher of assetsâ net selling price and value in use). The carrying amount is reduced to the recoverable amount and reduction is recognized as an impairment loss in the Statement of Profit & Loss. Assessment is also done at each balance sheet date as to whether there is any indication that an impairment loss recognized for an asset in prior accounting periods may no longer exist or may have decreased.

2.6 Borrowing Costs

Borrowing costs include interest, amortisation of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to, and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset upto the date of capitalisation of such asset is added to the cost of the assets. Capitalisation of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted.

2.7 Investments

Investments that are readily realizable 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 valued

at cost and provision for diminution in value thereof is made, wherever such diminution is other than temporary.

2.8 Inventories

a. Cost of Inventory comprises of Cost of Purchase, Cost of Conversion and proportionate manufacturing overheads incurred in bringing the inventories to their present location and condition.

b. Items of Inventories are valued at lower of cost and net realizable value

2.9 Employee Benefits

a. All employee benefits payable wholly within 12 months of rendering of services are classified as short-term employee benefits. These comprise of salaries, wages and short-term compensated absences, etc. and the expected costs of ex-gratia are recognized in the period in which the employee renders the related services.

b. Post-employment benefits defined contribution plans:

Payments made to a defined contribution plan such as Provident Fund maintained with the Regional Provident Fund Office and superannuation fund are charged to as an expense in the Statement of Profit and Loss Account as they fall due.

c. Defined Benefit plans Gratuity Fund:

The scheme is a non-contributory defined benefit arrangement providing gratuity benefits expressed in terms of final monthly salary and the period of past service. The scheme is funded with the Life Insurance Corporation of India.

2.10 Revenue Recognition

a. Revenue from operations is recognised to the extent that it is probable that the economic benefits will flow to the company and its revenue can be reliably measured. Revenue is measured on accrual basis at the

fair value of the consideration received or receivable, considering contractually defined terms of payment and excluding taxes or duties collected on behalf of the Central or the State government.

b. Supply of Goods

Revenue is recognized when significant risks and rewards of ownership of the goods have passed to the buyer. Net Turnover from operations represents amount of turnover after deduction of discounts and Goods and Services tax.

c. Sale of services

Revenue from Sale of services is recognised on accrual basis as and when the service provision is completed. It is recognized net of discounts and Goods and Services Tax.

d. Interest Income

Interest income is recognised on a proportionate basis considering the amount outstanding and the rate applicable.

e. Government Grants

Government grants and subsidies are recognised when there is reasonable assurance that the Company will comply with the conditions attached to them and the grants/ subsidy will be received.

Government grants whose primary condition is that the Company should purchase, construct, or otherwise acquire capital assets are presented by deducting them from the carrying value of the assets. The grant is recognised as income over the life of a depreciable asset by way of a reduced depreciation charge.

Grants related to revenue are recognised in the Statement of Profit and Loss on a systematic basis to match them with related costs.

2.11 Insurance Claims

Insurance claims are accounted for based on claims admitted / expected to be admitted and to the extent that there is no uncertainty in receiving the claims.

2.12 Goods and Services Tax Input Tax Credit

The Company has claimed input tax credit in terms of Chapter V of the CGST Act, 2017 and the Rules made there under in respect of inputs, input services and capital goods used for the purposes of the business. To the extent of ineligible credits, the same are added to their respective heads of expenses/ capital goods.

2.13 Cash and Cash Equivalents

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three 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.

2.14 Foreign Currency Transactions

a. The Companyâs financial statements are prepared in Indian Rupees which is the Companyâs functional currency.

b. The Transactions in foreign currency are recorded in the functional currency at the original rates of exchange in force at the time the transactions are effected. At the year end, monetary items, including those of foreign operations integral in nature, denominated in foreign currency are reported using the closing rates of exchange. Exchange differences arising thereon and on realization/ payment of foreign exchange are accounted for in the relevant year as income or expense.

c. During the year under review there are no foreign exchange earnings. Foreign Currency outgoings are Rs. 90.09 Lakh used for Import Purchase and Repairs/ Purchase of Capital Goods.

2.15 Micro, Small & Medium Enterprises Development Act, 2006

Based on the information available with the company, none of suppliers have been identified, who are registered under the Micro, Small and Medium Enterprises Development Act 2006 (MSMED) to whom the company owes and the same is outstanding for more than 45 days as at 31 March 2024. The information has been determined to the extent such parties have been identified based on information available within the company. This has been relied upon by the auditors.

2.16 Segment Information

The Companyâs business activity falls within a single primary business segment viz. manufacturing and supply of furniture items. Also, the company is operating in Indian market; hence there is no reportable geographic /secondary segment.

Accordingly, no disclosure is required under AS-17.

a. Current Ratio

The current ratio, also known as the working capital ratio, measures the capability of a business to meet its shortterm obligations that are due within a year. The ratio considers the weight of total current assets versus total current liabilities.

There is variance in the ratio as during the current period company has available cash & cash equivalent balance received from issue of equity.

b. For Debt-equity ratio

The debt-to-equity (D/E) ratio indicates how much debt a company is using to finance its assets relative to the value of shareholdersâ equity.

There is variance in this ratio as during the current period, the company has issued new equity shares at premium.

c. For Debt Service coverage ratio

Debt Service coverage ratio is used to analyze the Companyâs ability to pay-off current interest and instalments. It is calculated by dividing earnings available for debt service by debt service.

Variance in this ratio is due to trimming of Earnings before Interest, Tax, Depreciation and Exceptional Items of the Company compared to previous year.

d. For Return on Equity Ratio

Return on Equity (ROE) is a measure of profitability of a Company expressed in percentage. It is calculated by dividing total income by average shareholderâs equity.

There is variance in this ratio as the profit during the current financial year is reduced as compared to previous year, further during the year equity capital of the company has also increased.

e. For Trade Payable Turnover Ratio

Trade Payable Turnover Ratio measures the efficiency at which the Company is managing the payables. The ratio shows how well a Company uses and manages the credit extended to it by its vendors. It is calculated by dividing turnover by average trade payables.

Change is due to an increase in trade payables during the year.

f. For Net Capital Turnover Ratio

Net Capital Turnover Ratio indicates a companyâs effectiveness in using its working capital.

During the year the working capital of the company has increased. The Company has managed to increase its revenue by maintaining the same level of working capital which has thus impacted the Net Capital Turnover Ratio to come in favour of the company.

g. For Return on capital employed

There is variance in the Capital Employed ratio as the capital employed has been significantly increased during the current year as compared with previous year.

h. For Return on Investments

Return on Investments is the percentage of return on funds invested in the business by its owners.

The company has earned better returns on its investments in the current year as compared to previous years, however the amount available for investment has increased significantly but at the end of the year.

2.19 Earnings per share

shareholders by the weighted average number of equity shares outstanding during the period. The numbers of equity shares are adjusted retrospectively for all the periods presented for bonus shares issued during the reporting period.

2.20 Taxes on income

a. Current Tax comprises of expected tax payable or recoverable for the year and any adjustment in respect of previous years. It is measured using tax rates provided under the Income Tax Act, 1961.

b. Deferred Tax is recognized, subject to consideration of prudence, on timing difference between taxable income and accounting income for the period that originate in one period and are capable of reversal in one or more subsequent periods.

(Rs.in Lakh)

2.21 Sundry Debtors, Loans and Advances

Sundry Debtors, Loans and Advances are stated at the value if realised in the ordinary course of business. Irrecoverable amounts, if any are accounted for and/ or provided for as per the decision of the management or upon final settlement with the parties

2.22 Disclosure related to Trade Payables: (Rs. in Lakh)

2.25 Further Public Offer

In the financial year 2017-18, Company had raised funds from Initial Public Offer (IPO) aggregating to 4,16,76,000 by issuing 18,12,000 equity shares at 23/- per share.

Further during the year under review, the Company came out with a âFollow - On Public Offeringâ (FPO) of

36.00. 000 equity shares of face value of Rs. 10/- each at a price of Rs. 75/- per equity share aggregating to Rs.

27.00. 00.000/-. The Public issue was open for subscription from 20-03-2024 till 22-03-2024.

Notes:The net proceeds which were unutilized as at 31^st March, 2024 are kept in Escrow account of Kotak Mahindra Bank and Current account of Union Bank of India.

Mar 31, 2023

Note 2: Basis of preparation and measurement and Significant Accounting policies and notes to accounts

2.1 Basis of Accounting and preparation of Financial Statements

a. The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the relevant provisions of Companies Act, 2013.

b. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

c. All the assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and other criteria set out in 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 realization in cash and cash equivalent, the Company has ascertained its operating cycle to be 12 months for the purpose of current - noncurrent classification of assets and liabilities.

2.2 Use of Estimates

The preparation of financial statements is in conformity with Generally Accepted Accounting Principles that requires the Management to make estimates and assumptions considered in reported amount of assets and liabilities (including contingent liabilities) and the 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 recognized in the periods in which the results are known / materialize.

2.3 Property Plant & Equipment and Depreciation there on

a. Property Plant & Equipment are stated at cost net of recoverable taxes, trade discounts and rebates and include amounts added on revaluation, less accumulated depreciation, and impairment loss, if any.

b. The cost of Property Plant & Equipment comprises its purchase price, borrowing cost and any cost directly attributable to bringing the asset to its working condition for its intended use, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the assets.

c. Subsequent expenditures related to an item of Property Plant & Equipment are added to its book value only if they increase the future benefits from the existing asset beyond its previously ascertained standard of performance.

2.4 Intangible Assets and Amortization there on

a) Items of Intangible Assets are recognized and measured at cost less accumulated amortization and impairment losses, if any. The cost of intangible assets comprises of its purchase price, including import duties and nonrefundable purchase taxes, after deducting trade discounts and rebates; and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

b) Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company and the cost of the expenditure can be measured reliably.

c) Intangible assets are amortized over their estimated useful life using straight line method.

Software is amortized over a period of five years. Amortization method, useful lives and residual values are reviewed at the end of each financial year and adjusted if appropriate.

2.5 Impairment of Assets

An asset is considered as impaired in accordance with AS-28 in Impairment of Assets when at balance sheet date there are indications of impairment and the carrying amount of asset, or where applicable the cash generating unit to which the asset belongs, exceeds its recoverable amount (i.e., the higher of assetsâ net selling price and value in use). The carrying amount is reduced to the recoverable amount and reduction is recognized as an impairment loss in the Statement of Profit & Loss. Assessment is also done at each balance sheet date as to whether there is any indication that an impairment loss recognized for an asset in prior accounting periods may no longer exist or may have decreased.

2.6 Borrowing Costs

2.7 Investments

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 valued at cost and provision for diminution in value thereof is made, wherever such diminution is other than temporary.

2.8 Inventories

a. Items of Inventories are valued at lower of cost and net realizable value.

b. Cost of Inventory comprises of Cost of Purchase, Cost of Conversion and proportionate manufacturing overheads incurred in bringing the inventories to their present location and condition.

2.9 Employee Benefits

a. All employee benefits payable wholly within 12 months of rendering of services are classified as short-term employee benefits. These comprise of salaries, wages and short-term compensated absences, etc. and the expected costs of ex-gratia are recognized in the period in which the employee renders the related services.

b. Post-employment benefits defined contribution plans:

Payments made to a defined contribution plan such as Provident Fund maintained with the Regional Provident Fund Office and superannuation fund are charged to as an expense in the Statement of Profit and Loss Account as they fall due.

c. Defined Benefit plans Gratuity Fund:

The scheme is a non-contributory defined benefit arrangement providing gratuity benefits expressed in terms of final monthly salary and the period of past service. The scheme is funded with the Life Insurance Corporation of India.

2.10 Revenue Recognition

a. Revenue from operations is recognised to the extent that it is probable that the economic benefits will flow to the company and its revenue can be reliably measured. Revenue is measured on accrual basis at the

fair value of the consideration received or receivable, considering contractually defined terms of payment and excluding taxes or duties collected on behalf of the Central or the State government.

b. Supply of Goods

Revenue is recognized when significant risks and rewards of ownership of the goods have passed to the buyer. Net Turnover from operations represents amount of turnover after deduction of discounts and Goods and Services tax.

c. Sale of Services

Revenue from Sale of services is recognised on accrual basis as and when the service provision is completed. It is recognized net of discounts and Goods and Services Tax.

d. Interest Income

Interest income is recognised on a proportionate basis considering the amount outstanding and the rate applicable.

e. Government Grants

Government grants and subsidies are recognised when there is reasonable assurance that the Company will comply with the conditions attached to them and the grants/ subsidy will be received.

Government grants whose primary condition is that the Company should purchase, construct, or otherwise acquire capital assets are presented by deducting them from the carrying value of the assets. The grant is recognised as income over the life of a depreciable asset by way of a reduced depreciation charge.

Grants related to revenue are recognised in the Statement of Profit and Loss on a systematic basis to match them with related costs.

2.11 Insurance Claims

Insurance claims are accounted for based on claims admitted / expected to be admitted and to the extent that there is no uncertainty in receiving the claims.

2.12 Goods and Services Tax Input Tax Credit

The Company has claimed input tax credit in terms of Chapter V of the CGST Act, 2017 and the Rules made there under in respect of inputs, input services and capital goods used for the purposes of the business. To the extent of ineligible credits, the same are added to their respective heads of expenses/ capital goods.

2.13 Cash and Cash Equivalents

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three 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.

2.14 Foreign Currency Transactions

a. The Companyâs financial statements are prepared in Indian Rupees which is the Companyâs functional currency.

b. The Transactions in foreign currency are recorded in the functional currency at the original rates of exchange in force at the time the transactions are effected. At the year end, monetary items, including those of foreign operations integral in nature, denominated in foreign currency are reported using the closing rates of exchange. Exchange differences arising thereon and on realization / payment of foreign exchange are accounted for in the relevant year as income or expense.

c. During the year under review there are no foreign exchange earnings. Foreign Currency outgoings are Rs. 131.07 Lakh used for Import Purchase and Repairs / Purchase of Capital Goods.

2.15 Micro, Small & Medium Enterprises Development Act, 2006

Based on the information available with the company, none of suppliers have been identified, who are registered under the Micro, Small and Medium Enterprises Development Act 2006 (MSMED) to whom the company owes and the same is outstanding for more than 45 days as at 31 March 2023. The information has been determined to the extent such parties have been identified based on information available within the company. This has been relied upon by the auditors.

2.16 Segment Information

The Companyâs business activity falls within a single primary business segment viz. manufacturing and supply of furniture items. Also, the company is operating in Indian market; hence there is no reportable geographic / secondary segment.

Accordingly, no disclosure is required under AS-17.

Reasons for variation in ratio by 25% or more as compared to preceding year

Variation in Debt Service coverage, Return on Equity and other profitability ratios is primarily due to increase in Turnover and profitability during the year ended March 31,2023.

a. For Debt-equity ratio

The debt-to-equity (D/E) ratio indicates how much debt a company is using to finance its assets relative to the value of shareholdersâ equity.

There is variance in this ratio as the repayment of debt in current year is more than the fresh loan availed. Also, the earnings attributable to equity shareholders of the company has increased significantly compared to previous year.

b. For Debt Service coverage ratio

Debt Service coverage ratio is used to analyze the Companyâs ability to pay-off current interest and instalments. It is calculated by dividing earnings available for debt service by debt service.

There is a positive variance in favour of the company as the Earnings before Interest, Tax, Depreciation and Exceptional Items of the Company has improved significantly compared to previous year.

c. For Return on Equity Ratio

Return on Equity (ROE) is a measure of profitability of a Company expressed in percentage. It is calculated by dividing total income by average shareholderâs equity.

There is variance in this ratio as the profit has significantly increased during the current year as compared with previous year.

d. For Inventory Turnover Ratio

Inventory Turnover measures the efficiency with which a Company utilizes or manages its inventory. It establishes the relationship between sales and average inventory held during the period. It is calculated by dividing turnover by average inventory.

There is variance in this ratio primarily on account of increase in Sales with similar inventory levels as that of previous years.

e. For Trade Receivable Turnover Ratio

Trade Receivable Turnover Ratio measures the efficiency at which the Company is managing the receivables. The ratio shows how well a Company uses and manages the credit it extends to customers and how quickly that short-term debt is collected or is paid. It is calculated by dividing turnover by average trade receivables.

There is variance in this ratio primarily on account of increase in revenue and decrease in debtorâs collection period.

f. For Trade Payable Turnover Ratio

Trade Payable Turnover Ratio measures the efficiency at which the Company is managing the payables. The ratio shows how well a Company uses and manages the credit extended to it by its vendors. It is calculated by dividing turnover by average trade payables.

There is positive variance in this ratio primarily on account of timely payments to creditors.

g. For Net Capital Turnover Ratio

Net Capital Turnover Ratio indicates a companyâs effectiveness in using its working capital.

The Company has managed to increase its revenue by maintaining same level of working capital which has thus impacted the Net Capital Turnover Ratio to come in favour of the company.

h. For Net profit ratio

The Net Profit Margin is equal to how much Net Profit is generated as a percentage of revenue. It is calculated by dividing net profit by turnover.

There is variance in Net profit ratio as the profit has been significantly increased during the current year as compared with previous year.

i. For Return on capital employed

Return on Capital Employed (ROCE) indicates the ability of a Companyâs management to generate returns for both the debt holders and the equity holders. It measures a Companyâs profitability and the efficiency with which its capital is used. It is calculated by dividing profit before exceptional items, interest and tax by capital employed. Capital Employed = tangible net worth total debt deferred tax liability.

There is variance in Capital Employed ratio as the profit has been significantly increased during the current year as compared with previous year.

j. For Return on Investments

Return on Investments is the percentage of return on funds invested in the business by its owners.

The company has earned better returns on its investments in current year as compared to previous years.

2.19 Earnings per share

a. Basic earnings per share are calculated in accordance with Accounting Standard (AS-20) - Earning per share. The Basic Earnings per share is arrived 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. The numbers of equity shares are adjusted retrospectively for all the periods presented for bonus shares issued during the reporting period.

2.20 Taxes on income

a. Current Tax comprises of expected tax payable or recoverable for the year and any adjustment in respect of previous years. It is measured using tax rates provided under the Income Tax Act, 1961.

2.21 Sundry Debtors, Loans and Advances

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