Accounting Policies of Rosmerta Digital Services Ltd. Company

Mar 31, 2024

3. Significant accounting policies

D. Revenue from contracts with customers

Revenue from contracts with customers is recognised when control of the goods or services are transferred
to the customer at an amount that reflects the consideration to which the Company expects to be entitled in
exchange for those goods or services.

For performance obligation satisfied over time, the revenue recognition is done by measuring the progress
towards complete satisfaction of performance obligation. The progress is measured in tenns of a proportion
of actual cost incurred to-date, to the total estimated cost attributable to the performance obligation.

The Company transfers control of a good or service over time and therefore satisfies a perfonnance
obligation and recognises revenue over a period of time if one of the following criteria is met:

(a) the customer simultaneously consumes the benefit of the Company’s performance or.

(b) the customer controls the asset as it is being created/enhanced by the Company’s performance or

(c) there is no alternative use of the asset and the Company has either explicit or implicit right of payment
considering legal precedents,

In all other cases, perfonnance obligation is considered as satisfied at a point in time.

The revenue is recognised to the extent of transaction price allocated to the perfonnance obligation
satisfied. Transaction price is the amount of consideration to which the Company expects to be entitled in
exchange for transferring goods or services to a customer excluding amounts collected on behalf of a third
party. The Company includes variable consideration as part of transaction price when there is a basis to
reasonably estimate the amount of the variable consideration and when it is probable that a significant
reversal of cumulative revenue recognised will not occur when the uncertainty associated with the variable
consideration is resolved. Variable consideration is estimated using the expected value method or most
likely amount as appropriate in a given circumstance. Payment terms agreed with a customer are as per
business practice and the financing component, if significant, is separated from the transaction price and

accounted as interest income. Costs to obtain a contract which are incurred regardless of whether the
contract was obtained are charged-off in profit or loss immediately in the period in which such costs are
incurred. Incremental costs of obtaining a contract, if any, and costs incurred to fulfil a contract are
amortised over the period of execution of the contract in proportion to the progress measured in terms of a
proportion of actual cost incurred to-date, to the total estimated cost attributable to the performance
obligation.

Revenue from operations
Sale of products

Revenue from sale of goods is recognised at the point in time when control of the products being sold is
transferred to our customer and when there are no longer any unfulfilled obligations. The Performance
Obligations in our contracts are fulfilled at the time of dispatch, delivery or upon formal customer
acceptance depending on customer terms.

Revenue is measured on the basis of contracted price, after deduction of any trade discounts, volume rebates
and any taxes or duties collected on behalf of the Government such as goods and services tax, etc.
Accumulated experience is used to estimate the provision for such discounts and rebates. Revenue is only
recognised to the extent that it is highly probable a significant reversal will not occur.

Sale of Services

Income from services rendered is recognised based on agreements/arrangements with the customers as
the service is performed and there are no unfulfilled obligations. Revenue from Services relating to
Registration of Vehicles is recognised when the Registration number is delivered to the customer and on
approval is received from the Customer.

E. Other income

Other income is comprised primarily of interest income and lease, Interest income is recognized using the
effective interest method.

F. Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability
or equity instrument of another entity.

i. Financial asset

a) Initial recognition and measurement

All financial assets are initially recognized at fair value. Transaction costs will be considered as part of the
cost of acquisition that are directly attributable to the acquisition or issue of financial assets, which are
measured through Fair Value through Profit and Loss (FVTPL). Purchase and sale of financial assets are
recognised using trade date accounting.

Fair value Measurement

The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The fair value measurement is based on
the presumption that the transaction to sell the asset or transfer the liability takes place either:

? In the principal market for the asset or liability, or

? In the absence of a principal market, in the most advantageous market for the asset or liability accessible
to the Company.

The classification of financial assets at initial recognition depends on the financial asset’s contractual cash
flow characteristics and the Company’s business model for managing them. All financial assets are recognised
initially at fair value plus transaction costs that are attributable to the acquisition of the financial assets in the
case of financial assets not recorded at fair value through profit or loss, however transaction costs directly
attributable to the acquisition of financial assets at fair value through profit and loss are immediately
recognised in the statement of profit and loss. Purchases or sales of financial assets that require delivery of
assets within a time frame established by regulation or convention in the market place (regular way trades) are
recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.

b) Subsequent measurement

> Financial assets measured at amortised cost

A financial asset is measured at amortised cost if it is held within a business model whose objective is to
hold the asset in order to collect contractual cash flows and the

Contractual tenns of the Financial Asset give rise on specified dates to cash flows that are solely payments
of principal and interest on the principal amount outstanding.

> Financial assets measured at Fair Value Through Other Comprehensive Income (FVTOCIi

A financial asset is measured at FVTOCI if it is held within a business model whose objective is achieved
by both collecting contractual cash flows and selling financial assets and the contractual tenns of the
financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on
the principal amount outstanding.

For Equity investments the Company has elected to recognize changes in the fair value of certain investments
in equity securities in other comprehensive income. These changes are accumulated within the FVOCI equity
investments reserve within equity.

> Financial Assets measured at Fair Value Through Profit or Loss (FVTPL i

A financial asset which is not classified in any of the above categories is measured at FVTPL.

c) Impairment of financial assets

In accordance with Ind AS 109, the Company uses ‘Expected Credit Loss'' (ECL) model, for evaluating
impairment of financial assets other than those measured at FVTPL.

Expected credit losses are measured through a loss allowance at an amount equal to:

• The 12-months expected credit losses (expected credit losses that result from those default events on the
financial instrument that are possible within 12 months after the reporting date); or

• Full lifetime expected credit losses (expected credit losses that result from all possible default events over
the life of the financial instrument)

Outstanding customer receivables are regularly monitored. The Company periodically assesses the financial
reliability of customers, taking into account the financial condition, current economic trends, and analysis of
historical data and ageing of accounts receivable. The Company creates allowance for unsecured
receivables based on historical credit loss experience, industry practice and business environment in which
the entity operates and is adjusted for forward looking information. Subsequently when the Company is
satisfied that no recovery of such losses is possible, the financial asset is considered irrecoverable and the
amount charged to the allowance account is then written off against the carrying amount of the impaired
financial asset.

For Trade Receivables the Company applies ‘simplified approach'' which requires expected lifetime losses
to be recognised from initial recognition of the receivables.

For other assets, the Company uses 12 month ECL to provide for impairment loss where there is no
significant increase in credit risk. If there is significant increase in credit risk full lifetime ECL is used.

ii. Financial Liabilities

a) Financial liabilities: initial recognition and measurement

All financial liabilities are recognized at fair value and in case of borrowings, net of directly attributable
cost. Fees of recurring nature are directly recognised in the Statement of Profit and Loss as finance cost.

b) Financial liabilities: subsequent measurement

Financial liabilities are carried at amortized cost using the Effective interest rate (EIR) method.

For trade and other payables maturing within one year from the balance sheet date, the carrying amounts
approximate fair value due to the short maturity of these instruments.

c) Loans and borrowings

This is the category most relevant to the Company. After initial recognition, interest-bearing loans and
borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are
recognised in statement of profit and loss when the liabilities are derecognised as well as through the EIR
amortization process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or
costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement
of profit and loss.

iii. De-recognition of financial instruments

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial
asset expire or it transfers the financial asset and the transfer qualifies for de-recognition under Ind AS 109.
A financial liability (or a part of a financial liability) is derecognized from the Company’s balance sheet
when the obligation specified in the contract is discharged or cancelled or expires.

iv. Offsetting

Financial assets and financial liabilities are offset and the net amount is presented in the balance sheet when,
and only when, the Company has a legally enforceable right to set off the amount and it intends, either to
settle them on a net basis or to realize the asset and settle the liability simultaneously.

G. Income taxes

Tax expenses comprise of current and deferred tax.

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. The tax rates and tax laws used to compute the amount are those that
are enacted or substantively enacted, at the reporting date.

Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss
(either in other comprehensive income or in equity). Current tax items are recognised in correlation to the
underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken
in the tax returns with respect to situations in which applicable tax regulations are subject to inteipretation and
establishes provisions where appropriate.

Deferred Tax:

Deferred tax is recognised on temporary difference between the carrying amount of assets and liabilities in
the Ind AS Financial Statements and the corresponding tax based used in computation of taxable profit.

Deferred tax assets are recognised to the extent it is probable that taxable profit will be available against
which the deductible temporary differences, and the carry forward of unused tax losses can be utilized.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in
which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or
substantively enacted by the end of the reporting period. The carrying amount of deferred tax liabilities and
assets are reviewed at the end of each reporting period.

H. Borrowing costs:

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying
asset are capitalized as a part of the cost of assets during the period of time that is required to complete and
prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial
period of time to get ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for capitalization.

Borrowing cost consist of interest (calculated using effective rate of interest method) and other cost that an
entity incurred in connection with the borrowing cost.

Other borrowing costs are expensed in the period in which they are incurred.