Accounting Policies of Smarten Power Systems Ltd. Company

Mar 31, 2025

1 (b) Significant accounting policies

1.1 Basis of accounting and preparation of Standalone financial statements

These Standalone financial statements have been prepared in accordance with the generally
accepted accounting principles in India under the historical cost convention on accrual basis.
Consequently, these Standalone financial statements have been prepared to complying all
material aspects with the Accounting standards notified under section 211(3C) of the companies
Act, 1956 which as per clarification issued by ministry of corporate affairs continue to apply under
section 133 of the Companies Act 2013 (which has superseded section 211(3C) of the Companies
Act 1956 w.e.f. 12 September 2013) [Companies(Accounting Standards) Rules, 2006, as amended]
and other relevant proyisions of the Companies Act, 2013.

The Ministry of Corporate Affairs (MCA) has notified the Companies (Accounting Standards)
Amendment Rules, 2016 vide its notification dated 30 March 2016. The said notification is applicable
to accounting period commencing on or after the date of notification i.e. 1 April 2016.

The Standalone financial statement are presented in Indian rupees rounded off to the nearest Rs.
in Lakhs.

1.2 Operating Cycle:

Based on the nature of products / activities of the Company and the normal time between
acquisition of assets and their realisation in cash or cash equivalents, the Company has determined
its operating cycle as 12 months for the purpose of classification of its assets and liabilities as
current and non-current.

1.3 Use of estimates

The preparation of the Standalone financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions considered in the
reported amounts of assets, liabilities, income, expenses and disclosure of contingent liabilities on
the date of the Standalone financial statements and the results of operations during the year. The
Management believes that the estimates used in preparation of the Standalone financial statements
are prudent and reasonable. Differences between the actual results and the estimates are
recognised in the periods in which the results are ss/ materialise. Any revision to accounting
estimates is recognised in accordance with the requirements of the respective accounting standard.

1.4 Inventories

Inventories are valued at the lower of cost and net realisable value and adjusted for obsolescence,
if any. Cost is determined on a weighted average basis and includes all applicable costs incurred in
bringing goods to their present location and condition. Cost of work-in-progress and finished goods
include all applicable manufacturing overheads.

1.5 Tangible Assets - Property, Plant and Equipment and Intangible Assets

Property, plant and equipment are stated at cost of acquisition or construction less accumulated
depreciation and impairment, if any Cost is inclusive of inward freight, duties and taxes and
incidental expenses related to acquisition. In respect of major projects involving construction,
related pre-operational expenses form part of the value of assets capitalised. Expenses capitalised
also include applicable borrowing costs for qualifying assets, if any. All upgradation/enhancements
are charged off as revenue expenditure unless they bring similar significant additional benefits. An
item of property, plant and equipment is derecognized upon disposal or when no future economic
benefits are expected to arise from the continued use of asset. Any gain or loss arising on the
disposal or retirement of an item of property, plant and equipment is determined as the difference
between the sales proceeds and the carrying amount of the asset and is recognised in the Statement
of Standalone Profit and Loss. Subsequent expenditures related to an item of Tangible Asset are
added to its book value only if they increase the future benefits from the existing asset beyond its
previously assessed standard of performance.

Intangible fixed assets

Intangible assets are stated at their cost of acquisition, less accumulated amortization and
accumulated impairment losses thereon, if any. Cost includes all cost incurred to bring the assets
to its present location and condition. An intangible asset is recognized where it is probable that
future economic benefits attributable to the asset will flow to the enterprise and where its cost can
be reliably measured.

1.6 Depreciation and amortisation

Tangible & Intangible assets are depreciated on the written down value method on a pro-rata basis
from the date the assets are ready for intended use. Depreciation and Amortization on sale/discard
of fixed assets is provided for up to the date of sale, deduction or discard of fixed assets as the
case may be.

Depreciation isprovided based on useful life of the assets as prescribed in Schedule ll to the
Companies Act, 2013.

All assets costing Rs. 5,000 or less individually are depreciated at the rate of 100%.

1.7 Impairment of Assets

At each Standalone Balance sheet date, the company assesses whether there is any indication that
an asset may be impaired. If any such indication exists, the company estimates the recoverable
amount. If the carrying amount of the asset exceeds its recoverable amount an impairment loss is
recognized in the statement of Standalone Profit and loss to the extent the carrying amount exceeds
the recoverable amount. An impairment loss is reversed if there has been a change in the estimates
used to determine the recoverable amount. An impairment loss is reversed only to the extent that
the asset''s carrying amount does not exceed the carrying amount that would have been determined
(net of depreciation or amortization). if no impairment loss had been recognized.

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

1.8 Revenue recognition

Sale of goods

Revenue from Sale of Goods is recognised upon delivery of goods to Customer when the significant
risk and rewards of ownership of goods have been transferred to the customer. In specific cases,
Company recognised the revenue whenever delivery of the material are hold on specific request of
the customer . Sales are exclusive of all kind of indirect tax such as GST.

Income from services

Income from service contracts is recognised upon rendering of the services at the agreed rates.
Income from maintenance contracts is recognised pro-rata over the period of the contracts. Income
from installation and commissioning services is recognised on a percentage of completion method
upon rendering of the services.

Duty drawback income is recognized on accrual basis.

1.9 Foreign currency transactions

Foreign currency transactions are recorded at the rates of exchange prevailing on the dates of the
transactions. Monetary foreign currency assets and liabilities are translated into rupees at the rates
of exchange prevailing on the Standalone Balance sheet date. Exchange differences arising on
settlement/ restatement of foreign currency monetary assets and liabilities are recognised as
income or expense in the Statement of Standalone Profit and Loss.

Non monetary foreign currency items are carried at cost.

Any income or expense on account of exchange difference either on settlement or on translation is
recognized in the Standalone Profit and Loss Statement, except in case of long term liabilities where
they relate to acquisition of Fixed Assets, in which case they are adjusted to the carrying cost of
such assets.

2.0 Investments

Investments are classified as current investments and long term investments. Current investments
are carried individually, at the lower of cost and fair value. Long-term investments are carried
individually at cost less provision for diminution, other than temporary, in the value of such
investments.

2.1 Other Income

Interest income is accounted on accrual basis. Dividend income is accounted for when the right to
receive it is established.

2.2 Employee benefits

Liability for employee benefits, both short term and long term, for present and past services which
are due as per the terms of employment are recorded in accordance with Accounting Standard (AS)
15, "Employee Benefits".

Short term employee benefits

All employee benefits payable wholly within twelve months of rendering the service are classified
as short term employee benefits. Benefits such as salanes, wages and bonus etc. are recognized in
the Statement of Standalone Profit & loss in the period in which the employee renders the related
service.

i) Defined contribution plan

Provident fund and employees'' state insurance schemes:

All employees of the Company are entitled to receive benefits under the Provident Fund, which is a
defined contribution plan Both the employee and the employer make monthly contributions to the
plan at a predetermined rate (presently 12 %) of the employee basic salary (subject to a maximum
basic salary of Rs.15,000/- per month per employee, as per the provisions of The Employees
Provident Fund & Miscellaneous Provisions Act, 1957). These contributions are made to the fund
administered and managed by the government of lndia. In addition, some employees of the Company
are covered under the employees state insurance scheme, which is also a defined contribution
scheme recognized and administered by the government of India.

The company''s contributions to both these schemes are expensed off in the Statment of Standalone
Profit and Loss, The Company has no further obligations under these plans beyond its monthly
contributions.

ii) Defined benefit plan
Gratuity

The Company provides for retirement benefits in the form of Gratuity. Benefits payable to eligible
employees of the company with respect to gratuity, a defined benefit plan is accounted for on the
basis of Management estimate as at the Standalone Balance sheet date. In accordance with the
Payment of Gratuity Act, 1972, the plan provides for lump sum payments to vested employees on
retirement, death while in service or on termination of employment in an amount equivalent to 15
days basic salary for each completed year of Service. vesting occurs upon completion of five years
of service or death of employee whichever is earlier. The present value of such obligation is
determined by the projected unit credit method and adjusted for past service cost and fair value of
plan assets as at the Standalone Balance sheet date through which the obligations are to be settled.
The resultant actuarial gain or loss on change in present value of the defined benefit obligation or
change in return of the plan assets is recognized as an income or expense in the statement of
Standalone Profit and loss. The expected return on plan assets is based on the assumed rate of
return of such assets.

Leave Encashment

Benefits under the Company''s leave encashment scheme constitute other employee benefits. The
liability in respect of leave encashment is provided on the basis of Management Estimate at the end
of the year using the Projected Unit Credit Method.

Actual gain and losses are recognized immediately in the Statement of Standalone Profit and Loss.

2.3 Leases

Assets acquired under leases where the Company has substantially all the risks and rewards of
ownership are classified as finance leases. Such assets are capitalized at the inception of the lease
at the lower of the fair value or the present value of minimum lease payments and a liability is
created for an equivalent amount. Each lease rental paid is allocated between the liability and the
interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability for each
period.

Assets acquired under leases where a significant portion of the risks and rewards of ownership are
retained by the lessor are classified as operating leases. Lease rentals are charged to the Statement
of Standalone Profit and Loss on accrual basis.

2.4 Taxes on income

Provision for current taxation is ascertained on the basis of assessable Standalone Profits
computed in accordance with the applicable tax rates and the provisions of the Income- tax Act,
1961 and other applicable tax laws.

Deferred tax is recognised, subject to the consideration of prudence on timing differences, being
the difference between taxable incomes and accounting income that originate in one period and are
capable of reversal in one or more subsequent periods. Deferred tax assets are recognized on
unabsorbed depreciation and carry forward of losses based on virtual certainty supported by
convincing evidence that sufficient future taxable income will be available against which such
deferred tax asset can be realized. Deferred tax assets are reviewed at each Standalone Balance
sheet date for their realisability.

2.5 Research and development expenses

Revenue expenses incurred on research and development is charged off to the Statement of
Standalone Profit and Loss in the year in which these expenses are incurred.
Capital expenditure incurred on research and development is included in fixed assets and
depreciated at applicable rates.