Accounting Policies of Sambhv Steel Tubes Ltd. Company

Mar 31, 2025

2.2 Summary of Material Accounting Policies

a) Revenue from contract with customer

The Company manufactures and sells a range of steel and other products.

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

Sale of Goods

The control of the products is said to have been transferred to the customer when the products are delivered to the customer,
the customer has significant risks and rewards of the ownership of the product or when the customer has accepted the product.

Revenue is stated net of goods and service tax and net of returns, chargebacks, rebates, estimated additional discounts and
expected sales returns and other similar allowances. These are calculated on the basis of historical experience and the specific
terms in the individual contracts. Revenue is only recognised to the extent that is highly probable that significant reversal will
not accrue.

In determining the transaction price, the Company considers the effects of variable consideration, the existence of
significant financing components, non-cash consideration, and consideration payable to the customer (if any). The Company
estimates variable consideration at contract inception until it is highly probable that a significant revenue reversal in the
amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is
subsequently resolved.

Contract balances
Contract assets

A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company
performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a
contract asset is recognised for the earned consideration that is conditional.

Upon completion of the contractual services and acceptance by the customer, the amount recognised as contract assets is
reclassified to trade receivables.

Contract assets are subject to impairment assessment. Refer to accounting policies on impairment of financial assets in section
of Financial instruments - initial recognition and subsequent measurement.

Trade receivables

A receivable is recognised if an amount of consideration that is unconditional (i.e., only the passage of time is required before
payment of the consideration is due). Refer to accounting policies of financial assets in section of Financial instruments - initial
recognition and subsequent measurement.

Contract liabilities

A contract liability is recognised if a payment is received or a payment is due (whichever is earlier) from a customer before the
Company transfers the related goods or services. Contract liabilities are recognised as revenue when the Company performs
under the contract (i.e., transfers control of the related goods or services to the customer).

Assets and liabilities arising from rights of return
Right of return assets

A right-of-return asset is recognised for the right to recover the goods expected to be returned by customers. The asset is
measured at the former carrying amount of the inventory, less any expected costs to recover the goods and any potential
decreases in value. The Company updates the measurement of the asset recorded for any revisions to its expected level of
returns, as well as any additional decreases in the value of the returned products.

Refund liabilities

A refund liability is recognised for the obligation to refund some or all of the consideration received (or receivable) from the
customer. The Company''s refund liabilities arise from customers'' right of return and volume rebates. The Company updates
its estimates of refund liabilities (and the corresponding change in the transaction price) at the end of each reporting period.

b) Other Income
Dividend Income:

Dividend income is recognised when the right to receive payment is established, which is generally when shareholders
approve the same.

Interest Income:

Interest is recognised using the effective interest rate (EIR) method, as income for the period in which it occurs. EIR is the rate
that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument to the
gross carrying amount of the financial asset or to the amortised cost of a financial liability.

c) Government Grants:

Government grants are recognised where there is reasonable assurance that the grant will be received, ultimate collection
of the grant/subsidy is reasonably certain and all attached conditions will be complied with. When the grant relates to an
expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to
compensate, are expensed. When the grant relates to an asset, it is recognised as income in equal amounts over the expected
useful life of the related asset.

d) Export Incentives :

Export incentives under various schemes notified by the government are recognised on accrual basis when no significant
uncertainties as to the amount of consideration that would be derived and as to its ultimate collection exist.

e) Investment in Subsidiary

A subsidiary is an entity that is controlled by another entity. An associate is an entity over which the Company has significant
influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but
is not control or joint control over those policies. The Company''s investments in its subsidiary and associates are accounted at
cost less impairment.

f) Property, Plant and Equipment (PPE)

Property, plant and equipment are stated at cost, net of recoverable taxes, trade discount and rebates less accumulated
depreciation and impairment losses, if any. Such cost includes purchase price, borrowing cost and any cost directly attributable
to bringing the assets 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.

Subsequent costs are included in the asset''s carrying amount 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 entity and the cost can be measured reliably.

Subsequent expenditures are capitalised only when they increase the future economic benefits embodied in the specific
asset to which they relate. Such assets are classified to the appropriate categories of property, plant and equipment when

completed and ready for intended use. Depreciation of these assets, on the same basis as other assets, commences when the
assets are ready for their intended use.

In the carrying amount of an item of property, plant and equipment, the cost of replacing the part of such an item is
recognised when that cost is incurred if the recognition criteria are met. The carrying amount of those parts that are replaced
is derecognised in accordance with the derecognition principles.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected
to arise from the continued use of the asset.

Any gains or losses arising from derecognition of a property, plant and equipment are measured as the difference between the
net disposal proceeds and the carrying amount of the property, plant and equipment and are recognised in the Statement of
Profit and Loss when the asset is derecognised.

Spare parts procured along with the plant & machinery or subsequently which meet the recognition criteria, are capitalised
and added in the carrying amount of such item. The carrying amount of those spare parts that are replaced is derecognised
when no future economic benefits are expected from their use or upon disposal. Other machinery spares are treated as ''stores
& spares'' forming part of the inventory.

Depreciation

Depreciation is recognised on the cost of assets less their residual values. Depreciation is provided based on useful life of the
assets. The management has evaluated that the useful life is in conformity with the useful life as prescribed in Schedule II of the
Companies Act and such useful life has been considered by applying the straight-line method. Each part of an item of Property,
Plant & Equipment with a cost that is significant in relation to the total cost of the item is depreciated separately based on its''
useful life.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items
(major components) of property, plant and equipment.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial
year end and, if expectations differ from previous estimates, the changes are accounted for as change in an accounting estimate.

The depreciation for each year is recognised in the Statement of Profit & Loss unless it is included in the carrying amount of
another asset.

For transition to Ind AS, The Company has elected to continue with the carrying value for all of its property, plant and
equipment as recognised in the financial statements on transition to Ind AS, measured as per the previous GAAP and use that
as its deemed cost as at the date of transition.

g) Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets
with finite life are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated
intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in profit or
loss in the period in which the expenditure is incurred.

Intangible assets are amortized on a straight line basis over the estimated useful economic life.

The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the
end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic
benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as
changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the Statement
of Profit and Loss unless such expenditure forms part of carrying value of another asset.

Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the asset
is derecognised.

Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible
asset when the Company can demonstrate technical and commercial feasibility of making the asset available for use or sale.

Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated
amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the
asset is available for use. It is amortised over the period of expected future benefit. Amortisation expense is recognised in the
Statement of Profit and Loss unless such expenditure forms part of carrying value of another asset.

h) Capital Work-in-progress

Expenditure incurred on assets under construction (including a project) is carried at cost under Capital Work-in-Progress. Such
costs comprise purchase price of asset including import duties and non-refundable taxes after deducting trade discounts and
rebates and costs that are 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.

Cost directly attributable to projects under construction, net of income earned during such period, include costs of employee
benefits, expenditure in relation to survey and investigation activities of the projects, cost of site preparation, initial delivery
and handling charges, installation and assembly costs, professional fees, expenditure on maintenance and upgradation,
among others of common public facilities, depreciation on assets used in construction of project, interest during construction
and other costs if attributable to construction of projects. Such costs are accumulated under ''Capital Work-in-Progress'' and
subsequently allocated on systematic basis over major assets, other than land and infrastructure facilities, on commissioning
of projects.

Capital expenditure incurred for creation of facilities, over which the Company does not have control but the creation of
which is essential principally for construction of the project is capitalised and carried under ''Capital work-in-progress'' and
subsequently allocated on systematic basis over major assets, other than land and infrastructure facilities, on commissioning
of projects, keeping in view the ''attributability'' and the ''Unit of Measure'' concepts in Ind AS 16- ''Property, Plant & Equipment''.
Expenditure of such nature incurred after completion of the project, is charged to Statement of Profit and Loss.

i) Leases

The Company determines whether an arrangement contains a lease by assessing whether the fulfilment of a transaction is
dependent on the use of a specific asset and whether the transaction conveys the right to control the use of that asset to the
Company in return for payment.

Company as a lessee

The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases
of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the
right to use the underlying assets.

Right-of-use assets

The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is
available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses. The cost
of the right-of-use asset shall comprise: the amount of the initial measurement of the lease liability, any lease payments made
at or before the commencement date, less any lease incentives received; any initial direct costs incurred by the lessee; and an
estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which
it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease, unless those
costs are incurred to produce inventories. The lessee incurs the obligation for those costs either at the commencement date
or as a consequence of having used the underlying asset during a particular period. Right-of-use assets are depreciated on a
straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.

In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain re- measurements
of the lease liability.

Lease Liabilities

At the commencement date of the lease, the lease payments included in the measurement of the lease liability comprise the
following payments for the right to use the underlying asset during the lease term that are not paid at the commencement
date: fixed payments (including in-substance fixed payments), less any lease incentives receivable; variable lease payments
that depend on an index or a rate, initially measured using the index or rate as at the commencement date; amounts expected
to be payable by the lessee under residual value guarantees; the exercise price of a purchase option if the lessee is reasonably
certain to exercise that option; and payments of penalties for terminating the lease, if the lease term reflects the lessee
exercising an option to terminate the lease.

In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement
date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease
liabilities is increased to reflect the accretion of interest and reduced for the lease payments made.

In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change
in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such
lease payments) or a change in the assessment of an option to purchase the underlying asset.

After the commencement date the carrying amount of lease liabilities is remeasured to reflect changes in the lease payments.
The amount of remeasurement of the lease liability is recognised as an adjustment to the carrying amount of the right-of-use
of the asset and any remaining amount of remeasurement in profit or loss.

Variable rents that do not depend on an index or rate are not included in the measurement of the lease liability and the right-
of-use asset. The related payments are recognised as an expense in the period in which the event or condition that triggers
those payments occurs.

Short-term leases and leases of low-value assets

The Company has elected to apply the exemption from lease recognition to short term leases (i.e., those leases that have a
lease term of 12 months or less from the commencement date and do not contain a purchase option) and leases for which the
underlying assets is of low value lease payments on short-term leases and leases of low-value assets are recognised as expense
on a straight-line basis over the lease term.

Company as a lessor

Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset is
classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms. Initial direct
costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and
recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period
in which they are earned.

Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Company
to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the Company''s net investment in
the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net
investment outstanding in respect of the lease.

j) Inventories

Inventories are valued at the lower of cost and net realisable value.

Costs incurred in bringing each product to its present location and condition are accounted for as follows:

Q Raw materials: cost includes cost of purchase and other costs incurred in bringing the inventories to their present location
and condition. Cost is determined on first in first out (FIFO) basis.

Q Finished goods and work in progress: cost includes cost of direct materials and labour and a proportion of manufacturing
overheads and other cost incurred in bringing inventories to their present location and condition based on the normal
operating capacity but excluding borrowing costs. Cost is determined on FIFO

Q Stores and Spares is value at FIFO

Q Scrap is valued at estimated realisable value.

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

k) Impairment of non-financial 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 or cash-generating units (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. 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.

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

The Company assesses whether climate risks, including physical risks and transition risks could have a significant impact. If so,
these risks are included in the cash-flow forecasts in assessing value-in-use amounts.