Accounting Policies of Royal Sense Ltd. Company

Mar 31, 2025

2 SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of preparation

The financial statements have been prepared to comply
in all material respects with the notified accounting
standards by Companies Accounting Standards Rules,
2006 as amended from time to time and the relevant
provisions of the Companies Act, 2013 ("The Act"). The
financial statements have been prepared in accordance
with revised Schedule III requirements including
previous year comparatives. The financial statements
have been prepared under historical cost convention
on an accrual basis in accordance with accounting
principles generally accepted in India. The accounting
policies have been consistently applied by the company
and are consistent with those used in previous year.

The preparation of financial statements is in conformity
with general accepted accounting principles which
require the management of the Company to make
estimates and assumptions that affect the reported
balances of assets and liabilities and disclosures
relating to the contingent liabilities as at the date of the
financial statements and reported amounts of income
and expenses during the year. Actual results could
differ from those estimates.

(b) Functional and presentation currency

Items included in the financial statements of
Company are measured using the currency of
the primary economic environment in which the
Company operates ("the functional currency"). Indian
rupee is the functional currency of the Company.

Transactions in foreign currencies are recorded at the
exchange rate prevailing on the date of transaction.
Foreign currency denominated monetary assets and
liabilities are re-measured into the functional currency
at the exchange rate prevailing on the balance sheet date.
Exchange differences are recognized in the Statement
of Profit and Loss.

(c) Property, plant and equipment

Property, Plant and Equipment are stated at cost,
net of accumulated depreciation and accumulated
impairment losses, if any and capital work in progress
is stated at cost. The cost comprises purchase price,
borrowing costs if capitalization criteria are met,
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. Such cost includes the cost of
replacing part of the plant and equipment. 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.

Subsequent expenditure related to an item of property,
plant and equipment is added to its book value only
if it increases the future benefits from the existing
asset beyond its previously assessed standard of
performance. 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 & Loss
for the period in which such expenses are incurred.

Likewise, when a major inspection is performed, its cost
is recognized in the carrying amount of the plant and
equipment as a replacement if the recognition criteria
are satisfied.

Leasehold improvement represent expenses incurred
towards civil works, interior furnishings, etc. of the
leasehold premises.

Cost of assets not ready for intended use, as on the
balance sheet date, is shown as capital work in progress.
Items of stores and spares that meet the definition of
property, plant and equipment are capitalized at cost
and depreciated over their useful life. Otherwise, such

items are charged to the Statement of Profit and Loss.
The company identifies and determines cost of
each component/ part of the asset separately, if the
component/ part has a cost which is significant to
the total cost of the asset and has useful life that is
materially different from that of the remaining asset.
Gains or losses arising from derecognition of property
plant and equipments 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.

(d) Depreciation on property plant and equipment

The Depreciation has been provided on the basis of useful
life as prescribed in Schedule II of Companies Act, 2013.
Residual value of assets is considered at 5% of the
original cost of the assets.

(e) Impairment of property, plant and equipment

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 or cash-generating
unit''s (CGU) 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 or CGU exceeds its recoverable amount, the
asset is considered impaired and is written down to
its recoverable amount. In assessing value in use, the
estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects
current market assessments of the time value of money
and the risks specific to the asset. In determining net
selling price, recent market transactions are taken
into account, if available. If no such transactions can be
identified, an appropriate valuation model is used.

The Company bases its impairment calculation on
detailed budgets and forecast calculations which are
prepared separately for each of the Company''s cash¬
generating units to which the individual assets are
allocated. These budgets and forecast calculations are
generally covering a period of five years. For longer
periods, a long term growth rate is calculated and
applied to project future cash flows after the fifth year.
Impairment losses of continuing operations, including
impairment on inventories, are recognized in the
statement of profit and loss.

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 exists, the
company estimates the asset''s or cash-generating
unit''s recoverable amount. A previously recognized
impairment 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 a revaluation increase.

(f) Current versus non-current classification

The Company presents assets and liabilities in
the balance sheet based on current/ non-current
classification. An asset is treated as current when it is:

- Expected to be realized or intended to be sold or
consumed in normal operating cycle

- Held primarily for the purpose of trading

- Expected to be realized within twelve months after
the reporting period, or

- Cash or cash equivalent unless restricted from
being exchanged or used to settle a liability for at
least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when:

- It is expected to be settled in normal operating cycle

- It is held primarily for the purpose of trading

- It is due to be settled within twelve months after the
reporting period, or

- There is no unconditional right to defer the
settlement of the liability for at least twelve months
after the reporting period.

The Company classifies all other liabilities as non¬
current.

Deferred tax assets and liabilities are classified as non¬
current assets and liabilities.

The operating cycle is the time between the acquisition
of assets for processing and their realization in cash
and cash equivalents. The Company has identified
twelve months as its operating cycle.

(g) Borrowing costs

Borrowing costs includes interest and amortization
of ancillary costs incurred in connection with the
arrangement of borrowings.

Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily
takes a substantial period of time to get ready for its
intended use or sale are capitalized as part of the cost
of the respective asset. All other borrowing costs are
expensed in the period in which they are incurred.

(h) Revenue recognition

Revenue is recognized to the extent it can be reliably
measured and is probable that the economic benefits
will flow to the company.

(i) Employee benefits

Short term employee benefits:

Employee benefits such as salaries, wages, short term
compensated absences, expected cost of bonus, ex-
gratia and performance-linked rewards falling due
wholly within twelve months of rendering the service
are classified as short term employee benefits and are
expensed in the period in which the employee renders
the related service.

Defined Benefit Plans:

Gratuity and Leave encashment are defined benefit
plan payable at the end of the employment and is
provided for on the basis of actuarial valuation at
each year-end using the projected unit credit method.
Actuarial gain and loss for defined benefit plan is
recognized in full in the period in which it occur in the
statement of profit and loss.

Defined Contribution Plans:

Defined contribution plans are those plans in which the
company pays fixed contribution into separate entities
and will have no legal or constructive obligation to pay
further amounts. Provident Fund and Employee State
Insurance are Defined Contribution Plans in which
company pays a fixed contribution and will have no
further obligation beyond the monthly contributions and
are recognised as an expenses in Statement of Profit &
Loss.

(j) Taxes

Current income tax

- Current income tax assets and liabilities are measured
at the amount expected to be recovered from or paid to
the taxation authorities. The Company determines the
tax as per the provisions of Income Tax Act 1961 and
other rules specified thereunder.

on temporary differences between the tax bases of
assets and liabilities and their carrying amounts for
financial reporting purposes at the reporting date.

- Deferred tax liabilities are recognized for all taxable
temporary differences, except:

(i) When the deferred tax liability arises from the initial
recognition of goodwill or an asset or liability in a
transaction that is not a business combination and,
at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss.

(ii) Deferred tax assets are recognized for all deductible
temporary differences, the carry forward of unused
tax credits and any unused tax losses. Deferred
tax assets are recognized to the extent that it is
probable that taxable profit will be available against
which the deductible temporary differences, and
the carry forward of unused tax credits and unused
tax losses can be utilized, except when the deferred
tax asset relating to the deductible temporary
difference arises from the initial recognition of
an asset or liability in a transaction that is not
a business combination and, at the time of the
transaction, affects neither the accounting profit nor
taxable profit or loss.

(iii) The carrying amount of deferred tax assets is
reviewed at each reporting date and reduced to the
extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of
the deferred tax asset to be utilized. Unrecognized
deferred tax assets are re-assessed at each
reporting date and are recognized to the extent that
it has become probable that future taxable profits
will allow the deferred tax asset to be recovered.

(iv) Deferred tax assets and liabilities are measured at
the tax rates that are expected to apply in the year
when the asset is realized or the liability is settled,
based on tax rates (and tax laws) that have been
enacted or substantively enacted at the reporting
date.

(v) Deferred tax relating to items recognized outside
profit or loss is recognized outside profit or loss
(either in other comprehensive income or in equity).
Deferred tax items are recognized in correlation to
the underlying transaction either in OCI or directly
in equity .

(vi) 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 taxes relate to the same taxable entity
and the same taxation authority.

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Mar 31, 2024

2. MATERIAL ACCOUNTING POLICIES

A. Basis for preparation of financial statements

The financial statements are prepared under the historical cost convention on the Accrual Concept and Going Concern assumption of accountancy in accordance with the accounting principles generally accepted in India and comply with the accounting standards as prescribed by Companies (Accounting Standard) Rules, 2006 and with the relevant provisions of the Companies Act, 2013 and rules made there under.

Accounting policies set out below have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

B. Summary of material accounting policies

i. Current versus non-current classification

The Company presents assets and liabilities in the Balance Sheet based on Current/ Non-Current classification.

An asset is treated as Current when it is

- Expected to be realised or intended to be sold or consumed in normal operating cycle;

- Held primarily for the purpose of trading;

- Expected to be realised within twelve months after the reporting period, or

- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is treated as current when:

- It is expected to be settled in normal operating cycle.

- It is held primarily for the purpose of trading;

- It is due to be settled within twelve months after the reporting period, or

- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

The Company classifies all other liabilities as non-current.

Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.

ii. Operating cycle

Operating cycle is the time gap between the acquisition of assets for processing and their realization in cash or cash equivalents. The Company has identified twelve months as its operating cycle for the purpose of current and non-current classification of assets and liabilities.

iii. Use of estimates

The preparation of the financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported 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 recognised in the periods in which the results are known/materialized.

iv. Inventories

The inventory are valued at lower of cost or net realizable

value. Cost includes all charges in bringing the goods to the point of sale, including octroi and other levies. transit insurance and receiving charges. Finished goods include appropriate proportion of overheads.

v. Cash and cash equivalents

Cash and cash equivalents in the balance sheet comprise of cash at bank and in hand and short term investments with an original maturity of three months or less. Earmarked balances with bank, margin money or security against borrowings, guarantees and other commitments if any shall be treated separately from cash and cash equivalent.

vi. Cash flow statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of noncash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

vii. Property, plant and equipment

Property, Plant and Equipment are stated at cost less accumulated depreciation and impairment losses, if any. Cost comprises of all expenses incurred to bring the assets to its present location and condition. Borrowing cost directly attributable to the acquisition/ Construction are included in the cost of fixed assets. Adjustments arising from exchange rate variations attributable to the fixed assets are capitalized.

In case of new projects / expansion of existing projects, expenditure incurred during construction / preoperative period including interest and finance charge on specific / general purpose loans, prior to commencement of commercial production are capitalized. The same are allocated to the respective on completion of construction / erection of the capital project / fixed assets.

Subsequent expenditures related to an item of tangible asset are added to its book value only if they increase the future economic benefits from the existing asset beyond its previously assessed standard of performance.

Capital assets (including expenditure incurred during the construction period) under erection / installation are stated in the Balance Sheet as "Capital Work in Progress".

Depreciation

All fixed assets, except capital work in progress, are depreciated on Straight Line Method. Depreciation is provided based on useful life of the assets as prescribed

in Schedule II to the Companies Act, 2013. Depreciation on additions to / deletions from fixed assets made during the period is provided on pro-rata basis from / up to the date of such addition /deletion as the case may be.

Intangible assets

Separately acquired intangible assets- Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any.

Internally generated intangible assets- Internally generated intangibles, excluding capitalized development cost, are not capitalized and the related expenditure is reflected in statement of Profit and Loss in the period in which the expenditure is incurred. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.

viii. Revenue recognition Sale of goods

Sales are recognised, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the delivery of goods to customers. Sales exclude Goods and services Tax(GST). The company follows the mercantile system of accounting and recognizes the income and expenditures on accrual basis except in case of significant uncertainties.

Sale of investments

The capital gain on sale of investments if any are recognized on completion of transaction. No notional profit/loss are recognized on such investments. Interest income is recognized on time proportion basis, when it is accrued and due for payment.

ix. Other Income

Dividend or other income from mutual fund investments is recognised on declaration of dividend or on redemption, as the case may be. Profit on sale of investments is recorded on transfer of title from the Company and is determined as the difference between the redemption price and carrying value of the investment.

x. Foreign currency transactions and translations Initial recognition

Transactions in foreign currencies entered into by the Company are accounted at the exchange rates prevailing on the date of the transaction or at rates

that closely approximate the rate at the date of the transaction.

Measurement of foreign currency monetary items at the Balance Sheet date Foreign currency monetary items (other than derivative contracts) of the Company outstanding at the Balance Sheet date are restated at the year-end rates.

Exchange differences arising out of these translations are charged to the Statement of Profit and Loss.

xi. Investments

Investments are classified into current and long-term investments. Investments that are readily realizable and intended to be held for not more than a year from the date of acquisition are classified as current investments. All other investments are classified as long-term investments. However, that part of longterm investments expected to be realized within twelve months from Balance Sheet date is also presented under "Current Assets" under "Current portion of longterm investments" in consonance with the current / non-current classification of revised Schedule III to the Companies Act, 2013.

Current investments are stated at the lower of cost and fair value. The comparison of cost and fair value is done separately in respect of each category of investments. Long-term investments are stated at cost. A provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management. On disposal of an investment, the difference between its carrying amount and net disposal proceeds is recognized in the statement of Profit and Loss. Current investments are carried at the lower of cost and fair value. Long term investments (including their current maturities) are stated at cost less amount written off, where there is a diminution in value, other than temporary.

xii. Taxes on income

Income tax expenses for the year comprises of current tax and deferred tax. Current tax provision is determined on the basis of taxable income computed as per the provisions of the Income Tax Act. Deferred tax is recognized for all timing differences that are capable of reversal in one or more subsequent periods subject to conditions of prudence and by applying tax rates that have been substantively enacted by the balance sheet date.

xiii. Impairment of assets

At each balance sheet date, the Company reviews the carrying amount of its fixed assets to determine whether there is any indication that those assets suffered an impairment loss. If any such indication exists, the recoverable amount of the assets is estimated in order to determine the extent of impairment loss. Recoverable amount is the higher of an asset''s net selling price and value in use. In assessing value in use, the estimated future cash flows expected from the continuing use of the assets and from its disposal are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of time value of money and the risks specific to the assets.