Accounting Policies of Purple United Sales Ltd. Company

Mar 31, 2025

(1) Use of estimates

The preparation of Financial Statements in
conformity with Indian GAAP requires management
to make judgments, estimates and assumptions that
affect the reported amounts of assets and liabilities
and the disclosure of contingent liabilities, at the
end of the reporting period and reported amount of
income and expenses during the period. Examples
of such estimates include provision for doubtful
debt, future obligation under employee retirement
benefit plans, provision for diminishing in the
value of inventory in hand and useful lives of fixed
tangible assets and intangibles assets. Although
these estimates are based on management''s best
knowledge of current events and actions, uncertainty
about these assumptions and estimates could result
in the outcomes requiring a material adjustment to
the carrying amounts of assets or liabilities in future
periods.

(2) Property, plant and equipment

Property, plant and equipment are stated at cost,
net of accumulated depreciation and accumulated
impairment losses, if any. The cost comprises the
purchase price and any directly attributable cost of
bringing the asset to its working condition for the
intended use. Any trade discounts and rebates are
deducted in arriving at the purchase price.

The cost of the property, plant and equipment not
ready for their intended use before Balance Sheet
date are disclosed under capital work in progress.

Subsequent costs are included in the carrying
amount of the assets or recognised as a separate
asset, as appropriate, only when it is probable that
future economic benefits associated with the item
will flow to the company and cost of the item can be
measured reliably. The carry amount of the replaced
part is derecognised.” All other expenses on existing
property, plant and equipment, including day-to¬
day repair and maintenance expenditure and cost
of replacing parts, are charged to the Statement of
Profit and Loss for the period during which such
expenses are incurred.

Gains or losses arising from derecognition of
property, plant and equipment are measured as the
difference between the net disposal proceeds and

the carrying amount of the asset and are recognized
in the Statement of Profit and Loss when the asset is
derecognized.

(3) (a) Depreciation on property, plant and equipment

Depreciation on property, plant and equipment is
calculated on a straight-line basis using the rates
arrived at based on the useful lives estimated by the
management. The Company has used the following
lives to provide depreciation on its property, plant
and equipment.

The above mentioned lives of assets are same as
prescribed under Companies Act 2013.

(b) Intangible assets

Intangible assets are amortized on a straight line
basis over the estimated useful economic life.
Intangible assets not yet available for use are tested
for impairment annually, either individually or at the
cash generating unit level. All other intangible assets
are assessed for impairment whenever there is an
indication that the intangible assets may be impaired.

The amortization period and the amortization
method are reviewed at-least at each financial
year end. If the expected useful life of the asset
is significantly different from previous estimates,
the amortization period is changed accordingly. If
there has been a significant change in the expected
pattern of economic benefits from the asset, the
amortization method is changed to reflect the
change pattern. Such changes are accounted for
in accordance with Accounting Standard 5 “Net
Profit or Loss for the Period, Prior Period Items and
Changes in Accounting Policies”.

Gains or losses arising from derecognition of an
intangible asset are measured as the difference
between the net disposal proceeds and the carrying
amount of the asset and are recognized in the
Statement of Profit and Loss when the asset is
derecognized.

(4) Impairment of property, plant and equipment and
intangible assets

The Company assesses at each reporting date
whether there is an indication that an asset may be

impaired. If any indication exists, or when annual
impairment testing for an asset is required, the
Company estimates the asset''s recoverable amount.
An asset''s recoverable amount is the higher of an
asset''s net selling price and its value in use. The
recoverable amount is determined for an individual
asset, unless the asset does not generate cash
inflows that are largely independent of those from
other assets or groups of assets. Where the carrying
amount of an asset exceeds its recoverable amount,
the asset is considered impaired and is written down
to its recoverable amount.

Impairment losses of continuing operations,
including impairment on inventories, are recognized
in the Statement of Profit and Loss, except for
previously revalued tangible property, plant and
equipment, where the revaluation was taken to
revaluation reserve. In this case, the impairment is
also recognized in the revaluation reserve upto the
amount of any previous revaluation.

After impairment, depreciation is provided on
the revised carrying amount of the asset over its
remaining useful life.

An assessment is made at each reporting date as
to whether there is any indication that previously
recognized impairment losses, may no longer exist
or may have decreased. If such indication exist, the
Company estimates the asset''s or cash generating
unit''s recoverable amount. A previously recognized
loss is reversed only if there has been a change in
the assumptions used to determine the asset''s
recoverable amount since the last impairment
loss was recognized. The reversal is limited so that
the carrying amount of the asset does not exceed
its recoverable amount, nor exceed the carrying
amount that would have been determined, net
of depreciation, had no impairment loss been
recognized for the asset in prior years. Such reversal
is recognized in the Statement of Profit and Loss
unless the asset is carried at a revalued amount,
in which case the reversal is treated as revaluation
increase.

(5) Leases

Where the Company is the lessee

Finance lease is a lease that transfers substantially
all the risks and rewards incident to ownership of an
asset.

An operating lease is a lease other than a finance
lease.

Assets aquired on leases where the lessor effectively
retains substantially all the risks and benefits

of ownership of the leased item, are classified
as operating leases. Operating lease payments
lease payments under an operating lease should
be recognised as an expense in the statement of
profit and loss on a straight line basis over the
lease term unless another systematic basis is more
representative of the time pattern of the user''s
benefit.

The company have adopted the alternative
systematic basis as it provides a more accurate
representation of the time pattern of benefits
derived from leased assets.

(6) Inventories

Traded goods are valued at lower of cost & net
realizable value. Cost of inventories comprises of
purchase & other costs incurred in bringing the
inventories to their present location and condition.
Cost is determined on weighted average basis. Net
realizable value is the estimated selling price in the
ordinary course of business, less estimated costs of
completion and estimated necessary costs to make
the sale.The provision for inventory obsolescence is
assessed regularly based on estimated shelf life of
products/expiry dates, as the case may be.

(7) Investments

Investments, which are readily realizable and
intended to be held for not more than one year
from the date on which such investments are made,
are classified as current investments. All other
investments are classified as long-term investments.

On initial recognition, all investments are measured at
cost. The cost comprises purchase price and directly
attributable acquisition charges such as brokerage,
fees and duties. If an investment is acquired, or partly
acquired, by the issue of shares or other securities,
the acquisition cost is the fair value of the securities
issued. If an investment is acquired in exchange
for another asset, the acquisition is determined by
reference to the fair value of the asset given up
or by reference to the fair value of the investment
acquired, whichever is more clearly evident.

Current investments are carried in the financial
statements at lower of cost and fair value determined
on an individual investment basis. Long-term
investments are carried at cost. However, provision
for diminution in value is made to recognize a decline
other than temporary in the value of the investments.

On disposal of an investment, the difference between
its carrying amount and net disposal proceeds is
charged or credited to the Statement of Profit and
Loss.

(8) Revenue recognition

Revenue is recognized to the extent that it is
probable that the economic benefits will flow to the
Company and the revenue can be reliably measured.
The following specific recognition criteria must also
be met before revenue is recognized:

i) Sale of traded goods

Sale of traded goods represents revenue from the
sale of products net of returns, allowances (if any)
and trade discounts. The sale is recorded when the
products are delivered and all significant risks and
rewards of ownership of the goods have passed to
the customers. It is the company''s policy to sell its
products to the end customers with a right of return
within specified period on case to case basis. The
Company collects Goods and Service Tax on behalf
of the government and therefore, these are not
economic benefits flowing to the Company. Hence,
they are excluded from revenue.

ii) Interest income

Revenue is recognized on a time proportion basis
taking into account the amount outstanding and the
applicable interest rate. Interest income is included
under the head “"Other Income”” in the Statement of
Profit and Loss.

(9) Foreign currency transactions
Initial recognition

Foreign currency transactions are recorded in the
reporting currency, by applying to the foreign
currency amount the exchange rate between
the reporting currency and the foreign currency
approximately at the date of the transaction.

Conversion

Foreign currency monetary items are reported using
the closing rate. Non-monetary items which are
carried in terms of historical cost denominated in
a foreign currency are reported using the exchange
rate at the date of the transaction and non-monetary
items which are carried at fair value or other similar
valuation denominated in a foreign currency are
reported using the exchange rates that existed when
the values were determined.

Exchange differences

Exchange differences arising on settlement or
conversion of monetary items are recognized as
income or expenses in the year in which they arise.

(10) Retirement and other employee benefits

Retirement benefit in the form of Provident Fund is
a defined contribution scheme and the contributions
are charged to the Statement of Profit and Loss
for the year when the contributions are due. The
Company has no obligation for the same as its
employee strength anytime during the year is less
than minimum threshold limit.

The Company operates defined benefit plans for
its employees for gratuity. The cost of providing
benefits under the gratuity plan is determined on the
basis of actuarial valuation carried out on projected
unit credit method as at the period end. Acturial
valuation is carried out for plan using the projected
unit credit method. Actuarial gains and losses for
defined benefit plan are recognized in full in the
period in which they occur in the Statement of Profit
and Loss.

Actuarial gains/losses are immediately taken to
Statement of Profit and Loss and are not deferred.

(11) Taxes

(a) Current tax

Current income-tax is measured at the amount
expected to be paid to the tax authorities in
accordance with the Income-tax Act, 1961 enacted
in India and tax laws prevailing in the respective tax
jurisdictions where the Company operates. The tax
rates and tax laws used to compute the amount are
those that are enacted or substantively enacted, at
the reporting date.

(b) Deferred tax

Deferred income taxes reflect the impact of timing
differences between taxable income and accounting
income originating during the current year and
reversal of timing differences for the earlier years.
Deferred tax is measured using the tax rates and
the tax laws enacted or substantively enacted at the
reporting date.

Deferred tax liabilities are recognized for all
taxable timing differences. Deferred tax assets are
recognized for deductible timing differences only
to the extent that there is reasonable certainty that
sufficient future taxable income will be available
against which such deferred tax can be realized.
In situations where the Company has unabsorbed
depreciation or carry forward tax losses, all deferred
tax assets are recognized only if there is virtual
certainty supported by convincing evidence that
they can be realized against future taxable profits.

The company has computed its tax liability for the
year in accordance with the provisions of Section
115JB of the Income Tax Act, 1961 (Minimum
Alternate Tax).

At each reporting date, the Company re-assesses
unrecognized deferred tax assets. It recognizes
unrecognized deferred tax asset to the extent that
it has become reasonably certain or virtually certain,
as the case may be, that sufficient future taxable
income will be available against which such deferred
tax assets can be realized.

The carrying amount of deferred tax assets are
reviewed at each reporting date. The Company
writes-down the carrying amount of deferred tax
asset to the extent that it is no longer reasonably
certain or virtually certain, as the case may be, that
sufficient future taxable income will be available
against which deferred tax asset can be realized.
Any such write-down is reversed to the extent that
it becomes reasonably certain or virtually certain,
as the case may be, that sufficient future taxable
income will be available.

Deferred tax assets and deferred tax liabilities are
offset, if a legally enforceable right exists to set-off
current tax assets against current tax liabilities and
the deferred tax assets and deferred taxes relate
to the same taxable entity and the same taxation
authority.

(12) Earnings per share

Basic earnings per share are calculated by dividing
the net profit or loss for the period attributable to
equity shareholders (after deducting preference
dividends and attributable taxes) by the weighted
average number of equity shares outstanding during
the period. The weighted average number of equity
shares outstanding during the period is adjusted
for events such as bonus issue, bonus element in
a rights issue, share split, and reverse share split
(consolidation of shares) that have changed the
number of equity shares outstanding, without a
corresponding change in resources.

For the purpose of calculating diluted earning per
share, the net profit and loss for the year attributable
to equity shareholders and weighted average number
of shares outstanding during the year are adjusted
for the effects of all dilutive potential equity shares.