Accounting Policies of Standard Engineering Technology Ltd. Company

Mar 31, 2025

2. Summary of Material accounting policies

2.1 Current and non current classification

The Company presents assets and liabilities in the balance sheet based on current/ non current classification.

All the assets and liabilities have been classified as current or non current as per the Company’s normal operating cycle
and other criteria set out in the Schedule III to the Act and Ind AS 1, Presentation of financial statements.

Current assets/ liabilities include the current portion of non current assets/ liabilities respectively. Deferred tax assets
and liabilities are always disclosed as non- current.

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

An asset is classified as current when it satisfies any of the following criteria:

a. It is expected to be realised in, or is intended for sale or consumption in, the Company’s normal operating cycle;

b. It is held primarily for the purpose of being traded;

c. It is expected to be realised within twelve months after the reporting period; or

d. It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least
twelve months after the reporting period.

All other assets are classified as non current.

A liability is classified as current when it satisfies any of the following criteria:

a. It is expected to be settled in the Company’s normal operating cycle;

b. It is held primarily for the purpose of being traded;

c. It is due to be settled within twelve months after the reporting date; or

d. The Company does not have an unconditional right to defer settlement of the liability for at least twelve months
after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement
by the issue of equity instruments do not affect its classification.

The Company classifies all other liabilities as non current.

2.2 Functional and presentation currency

These financial statements are presented in Indian Rupee (rounded off to nearest lakhs), which is also the functional
currency of the Company.

2.3 Fair value measurement

The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date. 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. The fair value measurement is based on the presumption that the transaction to
sell the asset or transfer the liability takes place either:

in the principal market for the asset or liability, or

in the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible by the company. The fair value of an asset or a
liability is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic
benefits by using the asset in its highest and best use or by selling it to another market participant that would use the
asset in its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable
inputs. All assets and liabilities for which fair value is measured or disclosed in the Ind AS financial statements are
categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the
fair value measurement as a whole:

Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities

Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is
directly or indirectly observable

Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement
is unobservable.

For assets and liabilities that are recognised in the Ind AS financial statements on a recurring basis, the Company
determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on
the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

The Company’s management determines the policies and procedures for both recurring fair value measurement, such as
derivative instruments and unquoted financial assets measured at fair value, and for non-recurring measurement, such
as assets held for sale in discontinued operations. External valuers are involved, wherever considered necessary. For the
purpose of fair value disclosures, the company has determined classes of assets and liabilities on the basis of the nature,

characteristics and risks of the asset or liability and the level of the fair value hierarchy, as explained above. This note
summarizes accounting policy for fair value. Other fair value related disclosures are given in the relevant notes.

2.4 Foreign Currency transactions

Transactions in foreign currencies are initially recorded by the Company at their respective functional currency spot rates
at the date, the transaction first qualifies for recognition. However, for practical reasons, the Company uses an average
rate, if the average rate approximates the actual rate at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates
of exchange at the reporting date. Exchange differences arising on settlement or translation of monetary items are
recognised in the Statement of profit and loss.

Non-monetary items that are measured based on historical cost in a foreign currency are translated at the exchange
rate at the date of the initial transaction.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the
date when the fair value was measured.

The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition
of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or
loss is recognised in other comprehensive income (“OCI”) or profit or loss are also recognised in OCI or profit or loss,
respectively).

2.5 Property Plant & Equipment

Property, Plant and Equipment are stated at cost of acquisition or construction less accumulated depreciation and
impairment loss, if any.

Cost includes expenditure that is directly attributable to the acquisition of the asset i.e., freight, duties and taxes
applicable and other expenses related to acquisition and installation. The cost of self-constructed assets includes the
cost of materials and other costs directly attributable to bringing the asset to a working condition for its intended use.
Borrowing costs that are directly attributable to the construction or production of a qualifying asset are capitalised as
part of the cost of that asset.

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item
if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be
measured reliably. The carrying amount of the replaced part will be derecognised. The costs of repairs and maintenance
are recognised in the Statement of profit and loss as incurred.

Items of stores and spares that meet the definition of Property, plant and equipment are capitalized at cost, otherwise,
such items are classified as inventories.

When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them
separately based on their specific useful lives.

Items of property, plant and equipment acquired through exchange of non-monetary assets are measured at fair value,
unless the exchange transaction lacks commercial substance or the fair value of either the asset received or asset given
up is not reliably measurable, in which case the asset exchanged is recorded at the carrying amount of the asset given
up.

Depreciation is recognised in the Statement of profit and loss on a straight line basis based on the Act (“Schedule II”). For
assets acquired or disposed of during the year, depreciation is provided on pro rata basis. Land is not depreciated.

An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or
when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the
asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included
in the Statement of profit and loss when the asset is derecognised.

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted prospectively,
if appropriate.

Advances paid towards the acquisition of property, plant and equipment outstanding at each reporting date is disclosed
as capital advances under other assets. The cost of property, plant and equipment not ready to use before such date are
disclosed under capital work-in-progress.

Assets not ready for use are not depreciated.

2.6 Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible
assets 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 the
Statement of profit and loss in the period in which the expenditure is incurred.

Intangible assets are amortised over the useful economic life and assessed for impairment, whenever there is an
indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an
intangible asset 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 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.

Computer Software

The computer software is amortised on a straight-line basis over the useful economic life of 6 years, as estimated by
the management.

2.7 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.

a. Financial assets

Initial recognition and measurement

All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair
value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation
or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the
Company commits to purchase or sell the asset.

Subsequent measurement

For purposes of subsequent measurement, financial assets are classified in four categories:

Debt instruments at amortised cost

Debt instruments at fair value through other comprehensive income (FVTOCI)

Debt instruments, derivatives and equity instruments at fair value through profit or loss (FVTPL);

Equity instruments measured at fair value through other comprehensive income (FVTOCI)

Debt instruments at amortised cost

A ‘debt instrument’ is measured at amortised cost, if both of the following conditions are met: (i) The asset is
held within a business model whose objective is to hold assets for collecting contractual cash flows; and (ii)
Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and
interest (SPPI) on the principal amount outstanding.

After initial measurement, such financial assets are subsequently measured at amortised cost using the effective
interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income
in the Statement of profit and loss. The losses arising from impairment are recognised in the Statement of profit
and loss. This category generally applies to trade and other receivables.

Debt instrument at FVTOCI

A ‘debt instrument’ is classified as FVTOCI if both of the following criteria are met: (i) The objective of the business
model is achieved both by collecting contractual cash flows and selling the financial assets; and (ii) The asset’s
contractual cash flows represent SPPI.

Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date
at fair value. Fair value movements are recognised in OCI. However, the Company recognises interest income,
impairment losses and foreign exchange gain or loss in the Statement of profit and loss. On de-recognition of
the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to Statement of
profit and loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the
EIR method.

Debt instrument at FVTPL

FVTPL is a residual category for debt instruments. Any debt instrument which does not meet the criteria for
categorization as at amortised cost or as FVTOCI, is classified as FVTPL. Debt instruments included within the
FVTPL category are measured at fair value with all changes recognised in the Statement of profit and loss.

Equity Instruments

All equity investments in the scope of Ind AS 109 are measured at fair value. Equity instruments which are held
for trading are classified as FVTPL. If the Company decides to classify an equity instrument as FVTOCI, then all
fair value changes on the instrument excluding dividends are recognised in the OCI. There is no recycling of the
amounts from OCI to the Statement of profit and loss, even on sale of investment. Equity instruments included
within the FVTPL category are measured at fair value, with all changes recognised in the Statement of profit
and loss.

Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is
primarily derecognised (i.e., removed from the Company’s balance sheet) when:

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

b. 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.

When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass¬
through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When
it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred
control of the asset, the Company continues to recognise the transferred asset to the extent of the company’s
continuing involvement. In that case, the company also recognises an associated liability. The transferred asset
and the associated liability are measured on a basis that reflects the rights and obligations that the Company
has retained.

Impairment of Financial Assets

The Company assesses at each balance sheet date whether a financial asset or a group of financial assets
is impaired.

In accordance with Ind AS 109, the Company uses “Expected Credit Loss” (ECL) model, for evaluating impairment
of Financial Assets other than those measured at Fair Value Through Profit and Loss (FVTPL).

Expected credit losses are measured through a loss allowance at an amount equal to:

¦ The 12 months expected credit losses (expected credit losses that result from those default events on the financial

instrument that are possible within 12 months after the reporting date);

¦ Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life

of the financial instrument)

The Company follows simplified approach for recognition of impairment loss allowance on trade receivables and
under the simplified approach, the company does not track changes in credit risk. Rather, it recognises impairment
loss allowance based on lifetime ECL at each reporting date right from its initial recognition. The Company uses a
provision matrix to determine impairment loss allowance on trade receivables. The provision matrix is based on
its historically observed default rates over the expected life of trade receivable and is adjusted for forward looking
estimates. At every reporting date, the historical observed default rates are updated.

For other assets, the Company uses 12-month ECL to provide for impairment loss where there is no significant
increase in credit risk. If there is significant increase in credit risk, full lifetime ECL is used.

b. Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value i.e., loans and borrowings,
payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial
liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of
directly attributable transaction costs.

The Company’s financial liabilities include trade and other payables, loans and borrowings including bank
overdrafts, financial guarantee contracts.

Subsequent measurement

The measurement of financial liabilities depends on their classification.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial
liabilities designated upon initial recognition as fair value through profit or loss. Financial liabilities are classified
as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes
derivative financial instruments entered into by the Company that are not designated as hedging instruments in
hedge relationships as defined by Ind AS 109. Separated embedded derivatives are also classified as held for
trading, unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading
are recognised in the Statement of profit and loss.

Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such
at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as
FVTPL, fair value gains/losses attributable to changes in own credit risk are recognised in OCI. These gains/ loss
are not subsequently transferred to the Statement of profit and loss.

However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of
such liability are recognised in the Statement of profit and loss.

Loans and borrowings

Borrowings is the category most relevant to the Company. After initial recognition, interest-bearing borrowings are
subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the statement
of profit and loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised
cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.

De-recognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de¬
recognition of the original liability and the recognition of a new liability. The difference in the respective carrying
amounts is recognised in the statement of profit and loss.

Reclassification of financial assets and liabilities

The Company determines classification of financial assets and liabilities on initial recognition. After initial
recognition, no re-classification is made for financial assets which are equity instruments and financial liabilities.
For financial assets which are debt instruments, a reclassification is made only if there is a change in the business
model for managing those assets. A change in the business model occurs when the Company either begins or
ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it
applies the re-classification prospectively from the re-classification date, which is the first day of the immediately
next reporting period following the change in business model. The Company does not restate any previously
recognised gains, losses (including impairment gains or losses) or interest.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet, if there is a
currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis,
to realise the assets and settle the liabilities simultaneously.

2.8 Investment in Subsidiaries, Associates and Joint Ventures

The Company accounts for its investments in equity shares of Subsidiaries, associates and joint venture at cost less
impairment loss (if any).

2.9 Cash & Cash Equivalents

Cash and bank balances comprise of cash balance in hand, in current accounts with banks, and other short-term
deposits. For this purpose, “short-term” means investments having maturity of three months or less from the date of

investment, and which are subject to an insignificant risk of change in value. Bank overdrafts that are repayable on
demand and form an integral part of our cash management are included as a component of cash and cash equivalents
for the purpose of the Statement of cash flows.

2.10 Inventories

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

Inventories consisting of raw materials, stores and spares, work-in-progress and consumable stores and spares are
measured at the lower of cost and net realizable value.

The cost of all categories of inventories is based on the weighted average method.

Materials and other items held for use in the production of inventories are not written down below cost if the finished
goods in which they will be incorporated are expected to be sold at or above cost.

Cost includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred
in bringing them to their existing location and condition.

In the case of finished goods and work-in-progress, cost includes an appropriate share of overheads based on normal
operating capacity. Stores and spares, that do not qualify to be recognised as property, plant and equipment, consist
of packing materials, engineering spares (such as machinery spare parts) and consumables which are used in operating
machines or consumed as indirect materials in the manufacturing process.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of
completion and selling expenses. The net realisable value of work-in-progress is determined with reference to the selling
prices of related finished products.

2.11 Impairment of non-financial assets

The carrying amounts of the Company’s non-financial assets, other than inventories and deferred tax assets are reviewed
at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the
asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives or that are not yet
available for use, an impairment test is performed each year at March 31.

The recoverable amount of an asset or cash-generating unit(“CGU”) (as defined below) is the greater of its value in use
and its fair value less costs to sell. 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 or the cash-generating unit. For the purpose of impairment testing, assets are grouped
together into the smallest group of assets that generates cash inflows from continuing use that are largely independent
of the cash inflow of other assets or groups of assets (the “CGU”).

The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared
separately for each of the company’s CGUs to which the individual assets are allocated. These budgets and forecast
calculations generally cover a period of five years. For longer periods, a long-term growth rate is calculated and applied
to project future cash flows after the fifth year. To estimate cash flow projections beyond periods covered by the most
recent budgets/forecasts, the company extrapolates cash flow projections in the budget using a steady or declining
growth rate for subsequent years, unless an increasing rate can be justified. In any case, this growth rate does not
exceed the long-term average growth rate for the products, industries, or country in which the entity operates, or for the
market in which the asset is used.

An impairment loss is recognised in the statement of profit and loss if the estimated recoverable amount of an asset or
its CGU is lower than its carrying amount. Impairment losses recognised in respect of CGUs are allocated first to reduce
the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets
in the unit on a pro-rata basis.

Reversal of Impairment of Assets

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in
prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. 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 amortisation, if no impairment loss had been recognised.

2.12 Employee Benefits

Short term employee benefits

Short-term employee benefits are expensed as the related service is 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

The Company’s contributions to defined contribution plans are charged to the Statement of profit and loss as and when
the services are received from the employees.

Defined benefit plans

The liability in respect of defined benefit plans and other post-employment benefits is calculated using the projected
unit credit method consistent with the report of qualified independent actuaries. The present value of the defined
benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality
corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity
approximating to the terms of the related defined benefit obligation. In countries where there is no deep market in such
bonds, the market interest rates on government bonds are used. The current service cost of the defined benefit plan,
recognised in the statement of profit and loss in employee benefit expense, reflects the increase in the defined benefit
obligation resulting from employee service in the current year, benefit changes, curtailments and settlements. Past
service costs are recognised immediately in the Statement of profit and loss.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation
and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and
loss. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions for defined
benefit obligation and plan assets are recognised in OCI in the period in which they arise. When the benefits under a plan
are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on
curtailment is recognised immediately in the statement of profit and loss. The Company recognises gains or losses on
the settlement of a defined benefit plan obligation when the settlement occurs.

Termination benefits

Termination benefits are recognised as an expense in the statement of profit and loss when the company is demonstrably
committed, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before
the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary
redundancy. Termination benefits for voluntary redundancies are recognised as an expense in the statement of profit
and loss if the Company has made an offer encouraging voluntary redundancy, it is probable that the offer will be
accepted, and the number of acceptances can be estimated reliably.

Other long-term employee benefits

The Company’s net obligation in respect of other long-term employee benefits is the amount of future benefit that
employees have earned in return for their service in the current and previous periods. That benefit is discounted to
determine its present value. Re-measurements are recognised in the statement of profit and loss in the period in which
they arise.

Compensated absences

The Company’s current policies permit certain categories of its employees to accumulate and carry forward a portion of
their unutilised compensated absences and utilise them in future periods or receive cash in lieu thereof in accordance
with the terms of such policies. The Company measures the expected cost of accumulating compensated absences
as the additional amount that the company incurs as a result of the unused entitlement that has accumulated at the
reporting date. Such measurement is based on actuarial valuation as at the reporting date carried out by a qualified
independent actuary.

The Company treats accumulated leave expected to be carried forward beyond 12 months, as long-term employee
benefit for measurement purposes. The Company presents the compensated absences as a current liability in the
balance sheet as it does not have an unconditional right to defer its utilisation for 12 months after the reporting date.