Accounting Policies of Solve Plastic Products Ltd. Company

Mar 31, 2025

Note 2: Significant Accounting Policies

2.1. Basis of Preparation and Accounting Convention

2.1.1.Statement of Compliance

The financial statements have been prepared as a going concern in accordance with the Generally
Accepted Accounting Principles in India ("Indian GAAP"), comprising the Accounting Standards ("AS")
specified under section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Account)
Rules, 2014, and the relevant provisions of the Companies Act, 2013.

2.1.2. Accounting Convention and Basis

The financial statements are prepared under the historical cost convention on an accrual basis, unless
otherwise stated, and comply in all material aspects with the requirements of the Companies Act, 2013,
including Schedule III. Historical cost is generally based on the fair value of the consideration given in
exchange of goods/services.

2.1.3. Current/Non-Current Classification:

All assets and liabilities have been classified as current or non-current according to the Company''s
operating cycle and other criteria as set out in the Act. Based on the nature of products and the time
between the acquisition of assets for processing and their realization in cash and cash equivalents, the
company has ascertained its operating cycle as twelve months for the purpose of current, non-current
classification of assets and liabilities.

2.1.4. Going Concern

The board of directors have considered the financial position of the Company as at March 31, 2025, and
the projected cash flows and financial performance of the Company for at least twelve months from the
date of approval of these financial statements as well as planned cost and cash improvement actions
and believe that the plan for sustained profitability remains on course.

The board of directors have taken actions to ensure that appropriate long-term cash resources are in
place at the date of signing the accounts to fund the Company''s operations.

2.1.1. Use of Estimates and Judgements

The preparation of financial statements in conformity with Indian GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent liabilities at the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Although such estimates are based on a reasonable and prudent
basis considering all available information, actual results could differ from these estimates and any
revisions are recognized in the period in which the results are known.

2.1.2. Functional Currency & Presentation:

The financial statements are presented in Indian Rupees (INR), which is the Company''s functional and
presentation currency.

2.1.3. Rounding:

All amounts disclosed in the financial statements and notes are presented in Indian Rupees rounded off
to the nearest lakh, unless otherwise stated. Previous year figures have been regrouped/reclassified
wherever necessary to confirm to the current year''s presentation.

2.2. Revenue Recognition

2.2.1. Revenue from the sale of goods (uPVC Pipes, Electrical Conduits) is recognised when the significant
risks and rewards of ownership have been transferred to the buyer, which generally occurs upon dispatch
of goods to the customer / delivery as per contractual terms, and when no significant uncertainty exists
regarding the amount of consideration and its ultimate collection. Revenue is measured at the fair value
of the consideration received or receivable, net of returns, discounts, rebates, and applicable taxes (like
GST).

2.2.2.Other operating revenues (e.g., sale of scrap) are recognised when the right to receive the revenue is
established and no significant uncertainty exists regarding collection. Interest income is recognised on a
time proportion basis. Dividend income is recognised when the right to receive payment is established.
Lease rent income is recognised on a straight-line basis over the lease term. Insurance claims and Duty
Drawback are recognised on an accrual basis when there is reasonable certainty of receipt. Profit/loss on
the sale of assets is recognised on the date of disposal. Discount received is accounted for on accrual
basis.

2.3. Property, Plant and Equipment (PPE)

2.3.1. Property, Plant and Equipment (PPE) are stated at their original cost of acquisition or construction,
including taxes, duties (net of refundable taxes like GST Input Credit), freight, borrowing costs attributable
to qualifying assets, and other incidental expenses related to acquisition and installation, less
accumulated depreciation and impairment losses, if any.

2.3.2.Subsequent Expenditure: Costs incurred subsequent to the initial acquisition are capitalized only
when it is probable that they will result in future economic benefits to the Company. All other repairs and
maintenance are charged to the Profit and Loss Statement during the period in which they are incurred.

2.3.3. As a policy of the Company, items having a cost and incidental expenses of less than Rs. 5,000/- are
not capitalized but charged to the Statement of Profit & Loss, as an expense. Property, Plant & Equipment
having WDV below Rs. 5,000/- are reviewed at each year-end for impairment and to assess their
continued usefulness and economic benefit. If it is determined that the asset no longer provides future
economic benefits, it is written off; otherwise, it continues to be depreciated in line with the Company''s
depreciation policy.

2.1. Intangible Assets

Intangible assets (like Software, Website, Leasehold Premium) acquired separately are measured on
initial recognition at cost. Subsequently, they are carried at cost less accumulated amortization and
accumulated impairment losses, if any. Intangible assets with finite lives are amortized on a straight-line
basis over their estimated useful lives. Amortization expense is recognized in the Statement of Profit and
Loss. Estimated useful lives are reviewed at each reporting date.

2.2. Depreciation and Amortisation:

Depreciation on tangible assets is provided on the Written Down Value (WDV) method based on the
useful lives estimated by the management, which are generally in accordance with the useful lives
prescribed under Schedule II of the Companies Act, 2013. For Extruder machinery used in continuous
process, depreciation is calculated based on rates applicable for continuous process machinery as per
Schedule II. Depreciation on assets acquired under finance leases (if any) is provided over the useful life
of the asset. Leasehold Premium (Intangible Asset) is amortized over the period of the lease. Other
intangible assets are amortized over their estimated useful lives.

2.3. Impairment of Assets

The carrying amounts of assets are reviewed at each balance sheet date to determine if there is any
indication of impairment. If any such indication exists, the asset''s recoverable amount (higher of net
selling price and value in use) is estimated. An impairment loss is recognised in the Statement of Profit
and Loss whenever the carrying amount of an asset exceeds its recoverable amount. Previously
recognised impairment losses may be reversed if there has been a change in the estimates used to
determine the recoverable amount.

2.4. Leases

Leases where the lessor effectively retains substantially all the risks and rewards of ownership are
classified as operating leases. Operating lease payments (net of any incentives received from the lessor)
are 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.
Leases where the Company assumes substantially all the risks and rewards of ownership are classified as
finance leases. Assets acquired under finance leases are capitalized at the lower of the fair value of the
asset or the present value of minimum lease payments at the inception of the lease.

2.5. Investments

Investments intended to be held for more than one year are classified as long-term investments and are
carried at cost. Provision for diminution, other than temporary, in the value of long-term investments is
made. Investments intended to be held for not more than one year are classified as current investments
and are stated at the lower of cost and fair value. Cost includes acquisition charges. On disposal, the
difference between carrying amount and net proceeds is recognised in the Statement of Profit and Loss.

2.6. Inventories

Inventories are valued at the lower of cost and Net Realisable Value (NRV), determined as follows:

a) Method of Valuation: Cost is ascertained using the FIFO method.

b) Components of Cost:

a. Raw Materials (e.g., PVC resins, additives, chemicals) and Stores & Spares: Cost includes purchase price, import
duties and other non-refundable taxes, freight inwards, and other expenditure directly attributable to acquisition.

b. Work-in-Progress (Pipes/Conduits at intermediate stages): Cost includes the cost of raw materials, direct labour, and
a systematic allocation of production overheads appropriate to the stage of completion.

c. Finished Goods (uPVC Pipes, Rigid PVC Electrical Conduits): Cost includes the cost of raw materials, direct labour,
allocated production overheads, and other costs incurred in bringing the inventories to their present location and
condition.

d. By-Products / Scrap (e.g., PVC Scrap): Valued at Net Realisable Value.

c) Net Realisable Value (NRV): NRV is the estimated selling price in the ordinary course of business, less the estimated
costs of completion (if applicable) and the estimated costs necessary to make the sale.

d) Obsolescence: Due provision is made for obsolete and slow-moving inventory based on management''s assessment
of usability, potential future demand, and estimated realizable value.

2.4. Intangible Assets

Intangible assets (like Software, Website, Leasehold Premium) acquired separately are measured on
initial recognition at cost. Subsequently, they are carried at cost less accumulated amortization and
accumulated impairment losses, if any. Intangible assets with finite lives are amortized on a straight-line
basis over their estimated useful lives. Amortization expense is recognized in the Statement of Profit and
Loss. Estimated useful lives are reviewed at each reporting date.

2.5. Depreciation and Amortisation:

Depreciation on tangible assets is provided on the Written Down Value (WDV) method based on the
useful lives estimated by the management, which are generally in accordance with the useful lives
prescribed under Schedule II of the Companies Act, 2013. For Extruder machinery used in continuous
process, depreciation is calculated based on rates applicable for continuous process machinery as per
Schedule II. Depreciation on assets acquired under finance leases (if any) is provided over the useful life
of the asset. Leasehold Premium (Intangible Asset) is amortized over the period of the lease. Other
intangible assets are amortized over their estimated useful lives.

2.6. Impairment of Assets

The carrying amounts of assets are reviewed at each balance sheet date to determine if there is any
indication of impairment. If any such indication exists, the asset''s recoverable amount (higher of net
selling price and value in use) is estimated. An impairment loss is recognised in the Statement of Profit
and Loss whenever the carrying amount of an asset exceeds its recoverable amount. Previously
recognised impairment losses may be reversed if there has been a change in the estimates used to
determine the recoverable amount.

2.7. Leases

Leases where the lessor effectively retains substantially all the risks and rewards of ownership are
classified as operating leases. Operating lease payments (net of any incentives received from the lessor)
are 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.
Leases where the Company assumes substantially all the risks and rewards of ownership are classified as
finance leases. Assets acquired under finance leases are capitalized at the lower of the fair value of the
asset or the present value of minimum lease payments at the inception of the lease.

2.8. Investments

Investments intended to be held for more than one year are classified as long-term investments and are
carried at cost. Provision for diminution, other than temporary, in the value of long-term investments is
made. Investments intended to be held for not more than one year are classified as current investments
and are stated at the lower of cost and fair value. Cost includes acquisition charges. On disposal, the
difference between carrying amount and net proceeds is recognised in the Statement of Profit and Loss.

2.9. Inventories

Inventories are valued at the lower of cost and Net Realisable Value (NRV), determined as follows:

a) Method of Valuation: Cost is ascertained using the FIFO method.

b) Components of Cost:

a. Raw Materials (e.g., PVC resins, additives, chemicals) and Stores & Spares: Cost includes purchase price, import
duties and other non-refundable taxes, freight inwards, and other expenditure directly attributable to acquisition.

b. Work-in-Progress (Pipes/Conduits at intermediate stages): Cost includes the cost of raw materials, direct labour, and
a systematic allocation of production overheads appropriate to the stage of completion.

c. Finished Goods (uPVC Pipes, Rigid PVC Electrical Conduits): Cost includes the cost of raw materials, direct labour,
allocated production overheads, and other costs incurred in bringing the inventories to their present location and
condition.

d. By-Products / Scrap (e.g., PVC Scrap): Valued at Net Realisable Value.

c) Net Realisable Value (NRV): NRV is the estimated selling price in the ordinary course of business, less the estimated
costs of completion (if applicable) and the estimated costs necessary to make the sale.

d) Obsolescence: Due provision is made for obsolete and slow-moving inventory based on management''s assessment
of usability, potential future demand, and estimated realizable value.

2.10. Foreign Currency Transactions:

Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the
date of the transaction. Monetary assets and liabilities denominated in foreign currencies outstanding at
the reporting date are translated at the exchange rates prevailing on that date. Exchange differences
arising on settlement of monetary items or on translation of monetary items are recognised as income or
expense in the Statement of Profit and Loss in the period in which they arise. Non-monetary items carried
at historical cost are reported using the exchange rate at the date of the transaction.

2.11. Borrowing Costs

Borrowing costs that are directly attributable to the acquisition, construction, or production of a qualifying
asset (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 that asset until such time as the asset is substantially ready for
its intended use or sale. All other borrowing costs are recognised as an expense in the Statement of Profit
and Loss in the period in which they are incurred.

2.12. Employee Benefits

a. Short-term employee benefits: Benefits (other than termination benefits) that are expected to be
settled wholly within twelve months after the end of the annual reporting period in which the employees
render the related service are classified as short-term employee benefits and include salaries, wages,
bonuses, and compensated absences (such as leave encashment) and are recognised as an expense at
the undiscounted amount in the Statement of Profit and Loss for the year in which the related service is
rendered. Leave encashment, being settled annually, is also treated as a short-term employee benefit
and liability provided for leave accumulated since the last settlement date and measured at the
undiscounted amount payable.

b. Post-employment benefits:

i. Defined Contribution Plans: Contributions payable to recognised Provident Fund (pf) and Employees''
State Insurance (ESI) schemes, which are defined contribution plans, are recognised as an expense in the
Statement of Profit and Loss as incurred when the employees have rendered service entitling them to the
contributions. The Company has no further obligations beyond making these contributions.

ii. Defined Benefit Plan (Gratuity): The Company operates a partially funded gratuity plan through a
Group Gratuity scheme with Life Insurance Corporation of India (LIC). The liability recognised in the
Balance Sheet for gratuity is the present value of the Defined Benefit Obligation (DBO) at the reporting
date, as determined using actuarial valuations using the Projected Unit Credit (PUC) method, less the fair
value of plan assets (fund balance with LIC). Actuarial gains and losses arising from experience
adjustments and changes in actuarial assumptions are recognised immediately in the Statement of
Profit and Loss.

2.13. Taxes on Income

Income tax expense comprises current tax (amount of tax for the period determined in accordance with
the Income Tax Act, 1961) and deferred tax (tax effect of timing differences between taxable income and
accounting income). Deferred tax assets and liabilities are recognised for the future tax consequences
attributable to timing differences, measured using the tax rates and tax laws that have been enacted or
substantively enacted by the reporting date. Deferred Tax Assets (DTA) are recognised and carried
forward only to the extent that there is virtual certainty that sufficient future taxable income will be
available against which such DTA can be realised. DTA on carry forward of unabsorbed depreciation or
tax losses is recognised only if there is virtual certainty of realisation. Minimum Alternate Tax (MAT) credit
is recognised as an asset when there is convincing evidence that the Company will pay normal income
tax during the specified period, measured at the amount expected to be realised.

2.14. Segment Reporting

The Company identifies primary segments based on business activities. Based on management''s assessment
considering the nature of products, production processes, customer types, and regulatory environment, the Company
operates primarily in a single reportable business segment - "Plastic Products" (manufacturing uPVC pipes and
electrical conduits). As such, separate segment reporting as per AS 17 is not applicable. While the Company has
domestic and export sales, geographical segments are currently not considered reportable based on AS 17 thresholds
for revenue, results, and assets.

2.15. Earnings Per Share (EPS)

Basic earnings per share is computed by dividing the net profit or loss attributable to equity shareholders for the period
by the weighted average number of equity shares outstanding during the period. Diluted EPS is calculated similarly,
adjusting for the effects of all dilutive potential equity shares, if any.