Accounting Policies of Sonam Ltd. Company

Mar 31, 2026

2 Significant Accounting Policies

The Company has consistently applied the following accounting policies to all periods presented in the
financial statements.

2.1 Basis of preparation

These financial statements are prepared to comply in all material aspects with Indian Accounting
Standards (Ind AS) notified under section 133 of the Companies Act, 2013 (the Act) read with
Companies (Indian Accounting Standards) Rules, 2015; and other relevant provisions of Companies
Act, 2013 and the rules made thereunder.The financial statements are prepared on accrual basis of
accounting under historical cost convention in accordance with generally accepted accounting
principles in India and the relevant provislons of the Companies Act, 2013 including Indian
Accounting Standards. notified thereunder, except for certain financial assets liabilities measured at fair
value.

².² Basis of measurement_

The financial statements have been prepared under the historical cost convention on accrual basis.
Further, fiancial Assets and Liabilities are remeasured at fair value at each reporting date, whenever
applicable.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, regardless of whether that
price is directly observable or estimated using another valuation technique. In estimating the fair value of
an asset or a liability, the Company take into account the characteristics of the asset or liability if market
participants would take those characteristics into account when pricing the asset or liability at the
measurement date. In addition, for financial reporting purposes, fair value measurements are categorised
into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are
observable and the significance of the inputs to the fair value measurement in its entirety, which are
described as follows:

- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the

- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the
asset or liability, either directly or indirectly; and

- Level 3 inputs are unobservable inputs for the asset or liability.

2.3 Use of Estimates

The preparation and presentation of financial statements requires the management to make
estimates, judgements and assumptions that affect the amounts of assets and liabilities reported
as on the date of financial statements and the reported amount of revenues and expenses during
the reporting period. Accounting estimates could change from period to period. Actual results could
differ from these estimates. Appropriate changes in estimates are made as and when the
Management becomes aware of the changes in the circumstances surrounding the estimates.
Changes in estimates are reflected in the financial statements in the period in which the changes
are made and if material, their effects are disclosed in the notes to the financial statements.
Information about significant areas of estimation, uncertainty and critical judgements in applying
accounting policies that may have significant impact on the amounts recognized in the financial
statements are as below:

* Useful lives of property, plant & equipment

* Measurement of defined benefit obligations

* Provisions & contingencies.

2.4 Functional and presentation currency

These financial statements are presented in Indian National Rupee (''INR''), which is the Company''s
functional currency. All amounts have been rounded to the nearest Lakhs, unless otherwise indicated.

2.5 Classification of Assets and Liabilities as Current and Non-Current

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

- Expected to be realised/settled (liabilites) or intended to be sold or consumed in normal operating
cycle.

- Held primarily for the purpose of trading

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

- Cash and cash equivalent unless restricted from being exchanged or used to settle a liability for at least
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.

All other assets/liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as non-current assets/liabilities.

The operating cycle is the time between the acquisition of the assets for processing and their realisation
in cash and cash equivalents.

2.6 Property, Plant and Equipment

On transition to Ind AS, the Company has elected to continue with the carrying value (i.e. historical
cost net of recoverable taxes, less accumulated depreciation and impairment loss, if any) of all of its
property, plant & equipment recognized as at 1st April, 2020 measured as per the previous GAAP and
use that carrying value as the deemed cost of the property, plant & equipment, except for Land &
Buildings. Land & Buildings are recognized at fair value based on periodic valuations by external
independent valuer, less subsequent depreciation for buildings.Increase in the carrying amounts arising
on revaluation of land and buildings are recognised, net of tax, in other comprehensive income and
accumulated in reserves in shareholders'' equity, to the extent that the increase reverses a
decrease on account of revaluation previously recognised in profit or loss.The cost of Property, Plant
& Equipment comprises its purchase price or construction cost, any costs directly attributable to
bringing the asset into its present location and the condition necessary for it to be capable of operating
in the manner intended by the management, and also taking into account the initial estimate of any
decommissioning obligation, if any, and Borrowing Costs for the assets that necessarily take a
substantial period of time to get ready for their intended use. 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 Company and the cost of the
item can be measured reliably.The estimated useful lives of assets are in accordance with the Schedule II
of the Companles Act, 2013.

Gains or losses arising from de-recognition / disposal of a Property, Plant and Equipment 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 / disposed off.

2.7 Intangible assets

Intangible Assets (Other than Goodwill) acquired separately are stated at cost less accumulated
amortization and impairment loss, if any. Intangible assets are amortized on straight line method basis
over the estimated useful life. Estimated useful life of the Software and designing rights is considered as 3
years.

Amortisation methods, useful lives and residual values are reviewed in each financial year end and
changes, if any, are accounted for prospectively.

An intangible asset is de-recognised on disposal, or when no future economic benefits are expected from
use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the
difference between the net disposal proceeds and the carrying amount of the asset are recognised in the
statement of profit and loss when the asset is derecognised.

2.8 Depreciation / Amortization on tangible assets

Depreciation on tangible assets is provided on Straight Line Method (SLM) at the rates arrived on
the basis of useful life / remaining useful life and in the manner as prescribed in, Part C, Schedule II of
the Companies Act, 2013.

2.9 Impairment of Assets

At each balance sheet date, the company reviews the carrying amounts of its assets to determine
whether there is any indication that those assets suffered any impairment loss. If any such
indication exists or when annual impairment testing for an asset is required, the recoverable
amount of the asset is estimated in order to determine the extent of impairment loss. An impairment
loss, if any, is recognised in the Statement of Profit and Loss to the extent, asset''s carrying
amount exceeds its recoverable amount. The recoverable amount is
higher of an asset''s fair value less cost of disposal and value in use.

3 Borrowing Cost

Borrowing costs directly attributable to the acquisition, construction of qualifying assets are capitalised as
part of the cost of such assets till the period the said assets are substantially ready for their intended use.

The loan origination costs directly attributable to the acquisition of borrowings (e.g. loan processing fee,
upfront fee) are amortised on the basis of the Effective Interest Rate (EIR) method over the term of the
loan.

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. All other
borrowing costs are recognised in the statement of profit and loss in the period in which they are
incurred.

3.10 Foreign currency transactions

Transactions in foreign currencies are recorded by the Company entities at their respective functional
currency at the exchange rates prevailing at the date of the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currency are translated to the functional currency
at the exchange rates prevailing at the reporting date.

Exchange differences arising on settlement or translation of monetary items are recognised in the
statement of profit and loss except exchange differences on foreign currency borrowings included in the
borrowing cost when they are regarded as an adjustment to interest costs on those foreign currency
borrowings.

Non-monetary items that are measured at historical cost in a foreign currency are translated using the
exchange rates at the date of initial transactions. Non-monetary items measure at fair value in a foreign
currency are translated using the exchange rates at the date when the fair value is determined.

3.11 Employee benefits

Short term employee benefits

Short-term employee benefits are expensed in the year in which the related services are provided. A
liability is recognised for the amount expected to be paid if the Company has a present legal or
constructive obligation to pay this amount as a result of past service provided by the employee and the
obligation can be estimated reliably.

Defined contribution plans

Employee benefits in the form of Provident Fund (with Government Authorities) and Employees'' pension
Scheme are defined as contribution plan and charged as expenses during the period in which the
employees perform the services.

3.12 Revenue Recognition

The Company recognises revenue from sale of goods when;

i) the Company has transferred to the buyer the significant risks and rewards of ownership of the goods;

ii) the amount of revenue can be measured reliably;

iii) it is probable that the economic benefits associated with the transaction will flow to the Company;
and

iv) the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Revenue (other than sale of goods) is recognised to the extent that it is probable that the economic
benefits will flow to the company and the revenue can be reliably measured. Claim on insurance
companies, dividend, interest and others, where quantum of accrual cannot be ascertained with
reasonable certainty, are accounted for on acceptance basis.

Revenue represents net value of goods and services provided to customers after deducting for certain
incentives including, but not limited to discounts, volume rebates, incentive programs etc.

Interest income are recognised on an accrual basis using the effective interest method.

3.13 Financial Instruments

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

Financial Assets

Initial Recognition and Measurement

A financial asset is recognized in the balance sheet when the Company becomes party to the contractual
provisions of the instrument. At initial recognition, the company measures a financial asset taking
into account transactions cost that are directly attributable to the acquisition or issue of the financial
asset.

Subsequent Measurement

a. Financial Assets measured at Amortised Cost (AC)

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 terms 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.

b. Financial Assets measured at Fair Value through Other Comprehensive Income (FVTOCI)

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
terms 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.

c. Financial Assets measured at Fair Value Through Profit or Loss (FVTPL)

Financial Assets which is not classified in any of the above categories are measured at FVTPL.

Derecognition of financial assets

A financial asset is primarily derecognised when:

- The rights to receive cash flows from the asset have expired, or

- The company has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a ''pass¬
through'' arrangement; and either (a) the company has transferred substantially all the risks and rewards
of the asset, or (b) the company has neither transferred nor retained substantially all the risks and
rewards of the asset, but has transferred control of the asset

Derivatives

Fair value of financial derivatives is estimated as the present value of future cash flows, calculated by
reference to quoted price curves and exchange rates as of the balance sheet date. Options are valued
using appropriate option pricing models and credit spreads are applied where deemed to be significant.

3.14 Inventories

Inventories of Raw Materials, Semi-Finished Goods, Finished Goods and Waste & Scrap are stated at cost
or net realizable value, whichever is lower. Cost comprises all cost of purchase, cost of conversion and
other costs which are being incurred in bringing the inventories to their present location and
condition. Method used is FIFO. Cost formula used is ''Average cost''. Due allowance is estimated
and made for defective and obsolete items, wherever necessary, based on the past experience of the
Company

3.15 Trade Receivables

Trade receivables are amounts due from customers for sale of goods or services performed in the
ordinary course of business. Trade receivables are initially recognized at its transaction
amount which is considered to be its fair value and are classified as current assets as it is expected to be
received within the normal operating cycle of the business.

3.16 Cash & Cash Equivalents

Cash and cash equivalents in the cash flow statement comprise cash at bank and in hand, and fixed
deposits, that are readily convertible to know amounts of cash and which are subject to an insignificant
risk of change in value.

Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the
effects of transactions of non-cash nature, any deferrals or accruals of past or future operating
cash receipts or payments and ltem of income or expenses associated with investing or financing
cash flows. Cash flows from operating, investing and financing activities of the Company are
segregated, accordingly.

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Mar 31, 2025

2. Significant accounting policies:

(i) Basis of preparation:

These financial statements are prepared to comply in all material aspects with Indian
Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 (the
Act) read with Companies (Indian Accounting Standards) Rules, 2015; and other relevant
provisions of Companies Act, 2013 and the rules made thereunder.

The financial statements are prepared on accrual basis of accounting under historical cost
convention in accordance with generally accepted accounting principles in India and the
relevant provisions of the Companies Act, 2013 including Indian Accounting Standards
notified thereunder, except for certain financial assets liabilities measured at fair value.

(ii) Use of Estimates:

The preparation and presentation of financial statements requires the management to make
estimates, judgements and assumptions that affect the amounts of assets and liabilities
reported as on the date of financial statements and the reported amount of revenues and
expenses during the reporting period. Accounting estimates could change from period to
period. Actual results could differ from these estimates. Appropriate changes in estimates are
made as and when the Management becomes aware of the changes in the circumstances
surrounding the estimates. Changes in estimates are reflected in the financial statements in
the period in which the changes are made and if material, their effects are disclosed in the
notes to the financial statements.

Information about significant areas of estimation, uncertainty and critical judgements in
applying accounting policies that may have significant impact on the amounts recognized in
the financial statements are as below:

* Useful lives of property, plant & equipment

* Measurement of defined benefit obligations

* Provisions & contingencies.

(iii) Property, Plant & Equipment:

On transition to Ind AS, the Company has elected to continue with the carrying value (i.e.
historical cost net of recoverable taxes, less accumulated depreciation and impairment loss,
if any) of all of its property, plant & equipment recognized as at 1st April, 2020 measured as
per the previous GAAP and use that carrying value as the deemed cost of the property, plant
& equipment, except for Land & Buildings. Land & Buildings are recognized at fair value
based on periodic valuations by external independent valuer, less subsequent depreciation
for buildings.

Increase in the carrying amounts arising on revaluation of land and buildings are recognised,
net of tax, in other comprehensive income and accumulated in reserves in shareholders’
equity, to the extent that the increase reverses a decrease on account of revaluation
previously recognised in profit or loss.

The cost of Property, Plant & Equipment comprises its purchase price or construction cost,
any costs directly attributable to bringing the asset into its present location and the condition
necessary for it to be capable of operating in the manner intended by the management, and
also taking into account the initial estimate of any decommissioning obligation, if any, and
Borrowing Costs for the assets that necessarily take a substantial period of time to get ready
for their intended use. 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 Company and the cost of the item can be
measured reliably.

The estimated useful lives of assets are in accordance with the Schedule II of the Companies
Act, 2013.

Gains or losses arising from de-recognition / disposal of a Property, Plant and Equipment 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 /
disposed off.

(iv) Depreciation / Amortization on tangible assets:

Depreciation on tangible assets is provided on Straight Line Method (SLM) at the rates
arrived on the basis of useful life / remaining useful life and in the manner as prescribed in,
Part C, Schedule II of the Companies Act, 2013.

Details of useful life of an asset and its residual value estimated by the management: -

(v) Impairment of Assets

At each balance sheet date, the company reviews the carrying amounts of its assets to
determine whether there is any indication that those assets suffered any impairment loss. If
any such indication exists or when annual impairment testing for an asset is required, the
recoverable amount of the asset is estimated in order to determine the extent of impairment
loss. An impairment loss, if any, is recognised in the Statement of Profit and Loss to the
extent, asset''s carrying amount exceeds its recoverable amount. The recoverable amount is
higher of an asset''s fair value less cost of disposal and value in use.

(vi) 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.

Financial Assets

Initial Recognition and Measurement

A financial asset is recognized in the balance sheet when the Company becomes party to the
contractual provisions of the instrument. At initial recognition, the company measures a
financial asset taking into account transactions cost that are directly attributable to the
acquisition or issue of the financial asset.

Subsequent Measurement

a. Financial Assets measured at Amortised Cost (AC)

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
terms 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.

b. Financial Assets measured at Fair Value through Other Comprehensive Income
(FVTOCI)

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 terms 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.

c. Financial Assets measured at Fair Value Through Profit or Loss (FVTPL)

Financial Assets which is not classified in any of the above categories are measured at
FVTPL.

There are no any financial assets measured at fair value through other comprehensive
income.

Inventories

Inventories of Raw Materials, Semi-Finished Goods, Finished Goods and Waste & Scrap are
stated at cost or net realizable value, whichever is lower. Cost comprises all cost of purchase,
cost of conversion and other costs which are being incurred in bringing the inventories to
their present location and condition. Method used is FIFO. Cost formula used is ‘Average
cost’. Due allowance is estimated and made for defective and obsolete items, wherever
necessary, based on the past experience of the Company
Trade Receivables

Trade receivables are amounts due from customers for sale of goods or services performed
in the ordinary course of business. Trade receivables are initially recognized at its
transaction amount which is considered to be its fair value and are classified as current assets
as it is expected to be received within the normal operating cycle of the business.

Cash and Cash Equivalents

Cash and cash equivalents in the cash flow statement comprise cash at bank and in hand, and
fixed deposits, that are readily convertible to know amounts of cash and which are subject to
an insignificant risk of change in value.

Cash flows are reported using the indirect method, whereby profit before tax is adjusted for
the effects of transactions of non-cash nature, any deferrals or accruals of past or future
operating cash receipts or payments and item of income or expenses associated with
investing or financing cash flows. Cash flows from operating, investing and financing
activities of the Company are segregated, accordingly.

Current Investments

Unquoted investments being investments in Equity Instruments of Unlisted Equity Shares
(held for sale) are measured at fair value through Other Comprehensive Income.

Financial Liabilities
Borrowings

Borrowings are initially recorded at fair value and subsequently measured at amortized costs
using effective interest method. Transact ion costs are charged to statement of profit and loss
as financial expenses over the term of borrowing.

Trade Payables

Trade payables are amounts due to vendors for purchase of goods or services acquired in the
ordinary course of business and are classified as current liabilities to the extent it is expected
to be paid within the normal operating cycle of the business.

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Mar 31, 2024

1. Corporate Information:

"SONAM LIMITED "(For merly Known as SONAM CLOCK LIMITED (CIN U33302GJ2001PLC039689) having its manufacturing facilities at Morbi, Gujarat, is presently engaged in Manufacturing & trading of Horological items, Clocks, Clock Movements and related items. The company has been migrated from Emerge Platform of National Stock Exchange of India Ltd. (NSE) to Main Board of National Stock Exchange w.e.f. 7th April, 2022.

2. Significant accounting policies:

(i) Basis of preparation:

These financial statements are prepared to comply in all material aspects with Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 (the Act) read with Companies (Indian Accounting Standards) Rules, 2015; and other relevant provisions of Companies Act, 2013 and the rules made thereunder.

The financial statements are prepared on accrual basis of accounting under historical cost convention in accordance with generally accepted accounting principles in India and the relevant provisions of the Companies Act, 2013 including Indian Accounting Standards notified thereunder, except for certain financial assets liabilities measured at fair value.

(ii) Use of Estimates:

The preparation and presentation of financial statements requires the management to make estimates, judgements and assumptions that affect the amounts of assets and liabilities reported as on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Accounting estimates could change from period to period. Actual results could differ from these estimates. Appropriate changes in estimates are made as and when the Management becomes aware of the changes in the circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which the changes are made and if material, their effects are disclosed in the notes to the financial statements.

Information about significant areas of estimation, uncertainty and critical judgements in applying accounting policies that may have significant impact on the amounts recognized in the financial statements are as below:

* Useful lives of property, plant & equipment

* Measurement of defined benefit obligations

* Provisions & contingencies.

(iii) Property, Plant & Equipment:

On transition to Ind AS, the Company has elected to continue with the carrying value (i.e. historical cost net of recoverable taxes, less accumulated depreciation and impairment loss, if any) of all of its property, plant & equipment recognized as at 1st April, 2020 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant & equipment, except for Land & Buildings. Land & Buildings are recognized at fair value based on periodic valuations by external independent valuer, less subsequent depreciation for buildings.

Increase in the carrying amounts arising on revaluation of land and buildings are recognised, net of tax, in other comprehensive income and accumulated in reserves in shareholders’ equity, to the extent that the increase reverses a decrease on account of revaluation previously recognised in profit or loss.

The cost of Property, Plant & Equipment comprises its purchase price or construction cost, any costs directly attributable to bringing the asset into its present location and the condition necessary for it to be capable of operating in the manner intended by the management, and also taking into account the initial estimate of any decommissioning obligation, if any, and Borrowing Costs for the assets that necessarily take a substantial period of time to get ready for their intended use. 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 Company and the cost of the item can be measured reliably.

The estimated useful lives of assets are in accordance with the Schedule II of the Companies Act, 2013.

Gains or losses arising from de-recognition / disposal of a Property, Plant and Equipment 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 / disposed off.

(iv) Depreciation / Amortization on tangible assets:

Depreciation on tangible assets is provided on Straight Line Method (SLM) at the rates arrived on the basis of useful life / remaining useful life and in the manner as prescribed in, Part C, Schedule II of the Companies Act, 2013.

Details of useful life of an asset and its residual value estimated by the management: -

Type of Asset	Useful Life as per management''s estimate from April 1, 2014
Factory Building	30 Years
Plant & Machinery	15 Years
Electric Fittings	10 Years
Vehicles (Scooters & Mopeds)	10 Years
Vehicles (Motor Cars & Motor Buses)	8 Years
Office Equipments	5 Years
Furniture & Fixtures	10 Years
Computers	3 Years

In none of the case, residual value of an asset is more than five per cent of original cost of the asset.

(v) Impairment of Assets

At each balance sheet date, the company reviews the carrying amounts of its assets to determine whether there is any indication that those assets suffered any impairment loss. If any such indication exists or when annual impairment testing for an asset is required, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss. An impairment loss, if any, is recognised in the Statement of Profit and Loss to the extent, asset''s carrying amount exceeds its recoverable amount. The recoverable amount is higher of an asset''s fair value less cost of disposal and value in use.

(vi) 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.

Financial Assets

Initial Recognition and Measurement

A financial asset is recognized in the balance sheet when the Company becomes party to the contractual provisions of the instrument. At initial recognition, the company measures a financial asset taking into account transactions cost that are directly attributable to the acquisition or issue of the financial asset.

Subsequent Measurement

a. Financial Assets measured at Amortised Cost (AC)

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 terms 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.

b. Financial Assets measured at Fair Value through Other Comprehensive Income (FVTOCI)

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 terms 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.

c. Financial Assets measured at Fair Value Through Profit or Loss (FVTPL)

Financial Assets which is not classified in any of the above categories are measured at FVTPL.

There are no any financial assets measured at fair value through other comprehensive income.

Inventories

Inventories of Raw Materials, Semi-Finished Goods, Finished Goods and Waste & Scrap are stated at cost or net realizable value, whichever is lower. Cost comprises all cost of purchase, cost of conversion and other costs which are being incurred in bringing the inventories to their present location and condition. Method used is FIFO. Cost formula used is ‘Average cost’. Due allowance is estimated and made for defective and obsolete items, wherever necessary, based on the past experience of the Company Trade Receivables

Trade receivables are amounts due from customers for sale of goods or services performed in the ordinary course of business. Trade receivables are initially recognized at its transaction amount which is considered to be its fair value and are classified as current assets as it is expected to be received within the normal operating cycle of the business.

Cash and Cash Equivalents

Cash and cash equivalents in the cash flow statement comprise cash at bank and in hand, and fixed deposits, that are readily convertible to know amounts of cash and which are subject to an insignificant risk of change in value.

Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. Cash flows from operating, investing and financing activities of the Company are segregated, accordingly.

Financial Liabilities Borrowings

Borrowings are initially recorded at fair value and subsequently measured at amortized costs using effective interest method. Transact ion costs are charged to statement of profit and loss as financial expenses over the term of borrowing.

Trade Payables

Trade payables are amounts due to vendors for purchase of goods or services acquired in the ordinary course of business and are classified as current liabilities to the extent it is expected to be paid within the normal operating cycle of the business.

/ii) Provisions, contingent liabilities and contingent assets :

A provision is recognised when the company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on best estimates required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably.

Contingent liabilities are disclosed by way of notes to the accounts.

Contingent assets are not recognized.

(viii) Revenue Recognition:

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

Sales of Goods:

Sales are recognized when significant risks and rewards of ownership of goods have been passed to the buyer. Sales are being accounted for net of duties and taxes.

Interest:

Revenue is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

Other Operating Revenue / Other Income:

Other Income being, DEPB licence income, discount and rate difference income, insurance claim income, etc. are being recognized on accrual basis in the year in which right to receive the same is established

(ix) Retirement Benefits and other employee benefits:

Defined Contribution Plans:

Defined contribution to provident fund is charged to the profit and loss account on accrual basis.

Defined Benefit Plans:

Provision for gratuity liability is provided based on actuarial valuation made at the end of the financial year.

Leave encashment expenditure is charged to profit and loss account at the time of leave encashed and paid, if any. Bonus expenditure is charged to profit and loss account on accrual basis.

(x) Foreign Currency Transactions:

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of transaction.

Foreign currency current assets and current liabilities outstanding at the balance sheet date are translated at the exchange rate prevailing on that date and the net gain or loss is recognized in the profit and loss account.

Foreign currency translation differences relating to liabilities incurred for purchasing of tangible assets from foreign countries are recognized in the profit and loss account. All other foreign currency gain or losses are recognized in the profit and loss account.

(xi) Borrowing Cost:

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. Costs incurred in raising funds are amortised equally over the period for which the funds are acquired. All other borrowing costs are charged to statement of profit and loss.

(xii) Taxes on Income

Tax expenses comprise Current Tax and deferred tax charge or credit.

Current Tax: Provision for current tax is made based on tax liability computed after considering tax allowances and exemptions, in accordance with the provisions of The Income Tax Act, 1961.

Deferred Tax: Deferred tax assets and liability is recognized, on timing differences, being the differences between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets arising mainly on account of brought forward losses, unabsorbed depreciation and minimum alternate tax under tax laws, are recognised, only if there is a virtual certainty of its realisation, supported by convincing evidence. At each Balance Sheet date, the carrying amounts of deferred tax assets are reviewed to reassure realisation. The deferred tax asset

and deferred tax liability is calculated by applying tax rate and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

(xiii) Earnings per share:

Basic earnings per share are calculated by dividing the net profit / (loss) for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period are adjusted for any bonus shares issued during the year, if any, and also after the balance sheet date but before the date the financial statements are approved by the board of directors.

(xiv) Segment Reporting:

The Chief Operational Decision Maker (CODM) monitors the operating results of its business segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on the profit or loss and is measure consistently with the profit or loss in the financial statements. Operating segments are reported in a manner consistent with the internal reporting provided to CODM. In accordance with Ind AS 108- “Operating Segments", the Company has identified its business segment as "Manufacturing & Trading of Horological items, Clocks, Clock Movements and related items". There are no other primary reportable segments. The major and material activities of the company are restricted to only one geographical segment i.e. India, hence the secondary segment disclosures are also not applicable.

(xv) De-recognition:

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.

(xvi) 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 realise the asset and settle the liability simultaneously.

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Mar 31, 2023

1. Corporate Information:

”SONAM CLOCK LIMITED” (CIN U33302GJ2001PLC039689) having its manufacturing facilities at Morbi, Gujarat, is presently engaged in Manufacturing & trading of Horological items, Clocks, Clock Movements and related items. The company has been migrated from Emerge Platform of National Stock Exchange of India Ltd. (NSE) to Main Board of National Stock Exchange w.e.f. 7th April, 2022.

2. Significant accounting policies:

(i) Basis of preparation:

These financial statements are prepared to comply in all material aspects with Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 (the Act) read with Companies (Indian Accounting Standards) Rules, 2015; and other relevant provisions of Companies Act, 2013 and the rules made thereunder.

The financial statements are prepared on accrual basis of accounting under historical cost convention in accordance with generally accepted accounting principles in India and the relevant provisions of the Companies Act, 2013 including Indian Accounting Standards notified thereunder, except for certain financial assets liabilities measured at fair value.

(ii) Use of Estimates:

The preparation and presentation of financial statements requires the management to make estimates, judgements and assumptions that affect the amounts of assets and liabilities reported as on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Accounting estimates could change from period to period. Actual results could differ from these estimates. Appropriate changes in estimates are made as and when the Management becomes aware of the changes in the circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which the changes are made and if material, their effects are disclosed in the notes to the financial statements.

Information about significant areas of estimation, uncertainty and critical judgements in applying accounting policies that may have significant impact on the amounts recognized in the financial statements are as below:

* Useful lives of property, plant & equipment

* Measurement of defined benefit obligations

* Provisions & contingencies.

(iii) Property, Plant & Equipment:

On transition to Ind AS, the Company has elected to continue with the carrying value (i.e. historical cost net of recoverable taxes, less accumulated depreciation and impairment loss, if any) of all of its property, plant & equipment recognized as at 1st April, 2020 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant & equipment, except for Land & Buildings. Land & Buildings are recognized at fair value based on periodic valuations by external independent valuer, less subsequent depreciation for buildings.

Increase in the carrying amounts arising on revaluation of land and buildings are recognised, net of tax, in other comprehensive income and accumulated in reserves in shareholders’ equity, to the extent that the increase reverses a decrease on account of revaluation previously recognised in profit or loss.

The cost of an Property, Plant & Equipment comprises its purchase price or construction cost, any costs directly attributable to bringing the asset into its present location and the condition necessary for it to be capable of operating in the manner intended by the management, and also taking into account the initial estimate of any decommissioning obligation, if any, and Borrowing Costs for the assets that necessarily take a substantial period of time to get ready for their intended use. 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 Company and the cost of the item can be measured reliably.

The estimated useful lives of assets are in accordance with the Schedule II of the Companies Act, 2013.

Gains or losses arising from de-recognition / disposal of a Property, Plant and Equipment 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 / disposed off.

(iv) Depreciation / Amortization on tangible assets:

Depreciation on tangible assets is provided on Straight Line Method (SLM) at the rates arrived on the basis of useful life / remaining useful life and in the manner as prescribed in, Part C, Schedule II of the Companies Act, 2013.

Details of useful life of an asset and its residual value estimated by the management:-

Type of Asset	Useful Life as per management''s estimate from April 1, 2014
Factory Building	30 Years
Plant & Machinery	15 Years
Electric Fittings	10 Years
Vehicles (Scooters & Mopeds)	10 Years
Vehicles (Motor Cars & Motor Buses)	8 Years
Office Equipments	5 Years
Furniture & Fixtures	10 Years
Computers	3 Years

In none of the case, residual value of an asset is more than five per cent of original cost of the asset.

(v) Impairment of Assets

At each balance sheet date, the company reviews the carrying amounts of its assets to determine whether there is any indication that those assets suffered any impairment loss. If any such indication exists or when annual impairment testing for an asset is required, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss. An impairment loss, if any, is recognised in the Statement of Profit and Loss to the extent, asset''s carrying amount exceeds its recoverable amount. The recoverable amount is higher of an asset''s fair value less cost of disposal and value in use.

(vi) 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.

Financial Assets

Initial Recognition and Measurement

A financial asset is recognized in the balance sheet when the Company becomes party to the contractual provisions of the instrument. At initial recognition, the company measures a financial asset taking into account transactions cost that are directly attributable to the acquisition or issue of the financial asset.

Subsequent Measurement

a. Financial Assets measured at Amortised Cost (AC)

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 terms 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.

b. Financial Assets measured at Fair Value through Other Comprehensive Income (FVTOCI)

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 terms 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.

c. Financial Assets measured at Fair Value Through Profit or Loss (FVTPL)

Financial Assets which is not classified in any of the above categories are measured at FVTPL.

There are no any financial assets measured at fair value through other comprehensive income.

Inventories

Inventories of Raw Materials, Semi-Finished Goods, Finished Goods and Waste & Scrap are stated at cost or net realizable value, whichever is lower. Cost comprises all cost of purchase, cost of conversion and other costs which are being incurred in bringing the inventories to their present location and condition. Method used is FIFO. Cost formula used is ‘Average cost’. Due allowance is estimated and made for defective and obsolete items, wherever necessary, based on the past experience of the Company Trade Receivables

Trade receivables are amounts due from customers for sale of goods or services performed in the ordinary course of business. Trade receivables are initially recognized at its transaction amount which is considered to be its fair value and are classified as current assets as it is expected to be received within the normal operating cycle of the business. Cash and Cash Equivalents

Cash and cash equivalents in the cash flow statement comprise cash at bank and in hand, and fixed deposits, that are readily convertible to know amounts of cash and which are subject to an insignificant risk of change in value.

Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. Cash flows from operating, investing and financing activities of the Company are segregated, accordingly.

Financial Liabilities Borrowings

Borrowings are initially recorded at fair value and subsequently measured at amortized costs using effective interest method. Transact ion costs are charged to statement of profit and loss as financial expenses over the term of borrowing.

Trade Payables

Trade payables are amounts due to vendors for purchase of goods or services acquired in the ordinary course of business and are classified as current liabilities to the extent it is expected to be paid within the normal operating cycle of the business.

(vii) Provisions, contingent liabilities and contingent assets :

A provision is recognised when the company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on best estimates required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably.

Contingent liabilities are disclosed by way of notes to the accounts.

Contingent assets are not recognized.

(viii) Revenue Recognition:

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

Sales of Goods:

Sales are recognized when significant risks and rewards of ownership of goods have been passed to the buyer. Sales are being accounted for net of duties and taxes.

Interest:

Revenue is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

Other Operating Revenue / Other Income:

Other Income being, DEPB licence income, discount and rate difference income, insurance claim income, etc. are being recognized on accrual basis in the year in which right to receive the same is established

(ix) Retirement Benefits and other employee benefits:

Defined Contribution Plans:

Defined contribution to provident fund is charged to the profit and loss account on accrual basis.

Defined Benefit Plans:

Provision for gratuity liability is provided based on actuarial valuation made at the end of the financial year.

Leave encashment expenditure is charged to profit and loss account at the time of leave encashed and paid, if any. Bonus expenditure is charged to profit and loss account on accrual basis.

(x) Foreign Currency Transactions:

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of transaction.

Foreign currency current assets and current liabilities outstanding at the balance sheet date are translated at the exchange rate prevailing on that date and the net gain or loss is recognized in the profit and loss account.

Foreign currency translation differences relating to liabilities incurred for purchasing of tangible assets from foreign countries are recognized in the profit and loss account. All other foreign currency gain or losses are recognized in the profit and loss account.

(xi) Borrowing Cost:

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. Costs incurred in raising funds are amortised equally over the period for which the funds are acquired. All other borrowing costs are charged to statement of profit and loss.

(xii) Taxes on Income

Tax expenses comprise Current Tax and deferred tax charge or credit.

Current Tax: Provision for current tax is made based on tax liability computed after considering tax allowances and exemptions, in accordance with the provisions of The Income Tax Act, 1961.

Deferred Tax: Deferred tax assets and liability is recognized, on timing differences, being the differences between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets arising mainly on account of brought forward losses, unabsorbed depreciation and minimum alternate tax under tax laws, are recognised, only if there is a virtual certainty of its realisation, supported by convincing evidence. At each Balance Sheet date, the carrying amounts of deferred tax assets are reviewed to reassure realisation. The deferred tax asset and deferred tax liability is calculated by applying tax rate and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

(xiii) Earnings per share:

Basic earnings per share are calculated by dividing the net profit / (loss) for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period are adjusted for any bonus shares issued during the year, if any, and also after the balance sheet date but before the date the financial statements are approved by the board of directors.

(xiv) Segment Reporting:

The Chief Operational Decision Maker (CODM) monitors the operating results of its business segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on the profit or loss and is measure consistently with the profit or loss in the financial statements. Operating segments are reported in a manner consistent with the internal reporting provided to CODM.

In accordance with Ind AS 108- “Operating Segments", the Company has identified its business segment as "Manufacturing & Trading of Horological items, Clocks, Clock

Movements and related items". There are no other primary reportable segments. The major and material activities of the company are restricted to only one geographical segment i.e. India, hence the secondary segment disclosures are also not applicable.

(xv) De-recognition:

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.

(xvi) 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 realise the asset and settle the liability simultaneously.