Accounting Policies of Stanley Lifestyles Ltd. Company

Mar 31, 2025

2 Material accounting policies

Material accounting policies adopted by the
Company are as under:

2.1 Basis of Preparation of Financial Statements

(a) Statement of Compliance with Ind AS

These standalone financial statements have been
prepared in accordance with Indian Accounting
Standards (Ind AS) notified under Section 133 of
the Companies Act, 2013 (the ""Act"") read with the
Companies (Indian Accounting Standards) Rules,
2015 as amended from time to time.

Accounting policies have been consistently applied
to all the years presented except where a newly
issued accounting standard is initially adopted or a
revision to an existing accounting standard requires
a change in the accounting policy hitherto in use.

(b) Basis of measurement

The financial statements have been prepared on a
historical cost convention on accrual basis, except
for items that have been measured at fair value as
required by relevant Ind AS.

i) Certain financial assets and liabilities
measured at fair value (refer accounting policy
on financial instruments);

ii) Embedded derivative; and

iii) Asset classified as held for sale.

All assets and liabilities have been classified as
current or non-current as per the Company''s
operating cycle and other criteria set out in the
Schedule III to the Companies Act, 2013. Based on
the nature of services and the time between the
rendering of service and their realization in cash
and cash equivalents, the Company has ascertained
its operating cycle as twelve months for the purpose
of current and noncurrent classification of assets
and liabilities.

(c) Use of estimates

The preparation of standalone financial statements
in conformity with Ind AS requires the Management
to make estimate and assumptions that affect the
reported amount of assets and liabilities as at the
Balance Sheet date, reported amount of revenue
and expenses for the year and disclosures of
contingent liabilities as at the Balance Sheet
date. The estimates and assumptions used in the
accompanying financial statements are based upon
the Management''s evaluation of the relevant facts
and circumstances as at the date of the financial
statements. Actual results could differ from these
estimates. Estimates and underlying assumptions
are reviewed on a periodic basis. Revisions to
accounting estimates, if any, are recognized in
the year in which the estimates are revised and in
any future years affected. Refer note 3 for detailed
discussion on estimates and judgments.

2.2 Property, plant and equipment

a) Property, plant and equipment are carried at cost
of acquisition or construction less accumulated
depreciation and/ or accumulated impairment, if
any. The cost includes its purchase price, including
import duties and other non-refundable taxes or
levies (for Leasehold improvements and Vehicles,
Goods and Services Tax is not availed but added to
the cost of acquisition or construction), freight and
any directly attributable cost of bringing the asset to
its working condition for its intended use; any trade
discounts and rebates are deducted in arriving at
the purchase price.

b) Subsequent expenditures related to an item of
property plant and equipment added to its book
value only if they increase the future benefits from
the existing asset beyond its previously assessed
standard of performance.

c) The cost of property, plant and equipment not ready
for their intended use at the balance sheet date are
disclosed as capital work in progress.

d) Advances paid towards the acquisition of property,
plant and equipment, outstanding at each balance
sheet date are disclosed as ''capital advances'' under
''long-term loans and advances''.

e) Assets received on amalgamation are recorded at
its fair value.

f) Where a significant component (in terms of cost)
of an asset has an economic useful life shorter than
that of it''s corresponding asset, the component is
depreciated over it''s shorter life.

Depreciation methods, estimated useful lives

Depreciation is provided on straight line method
over the estimated useful life of property plant
and equipment as per the useful life prescribed
under Part C of Schedule II of the Companies Act,
2013.Leasehold improvements are being amortised
over the duration of the lease, or estimated useful
life of the assets, whichever is lower. Depreciation
on addition to property, plant and equipment''s
is provided on pro-rata basis from the date the
assets are ready for intended use. Depreciation on
sale / deletion of property, plant and equipment''s
is provided for up to the date of sale, deduction or
discard of property, plant and equipment as the case
may be. In case of impairment, if any, depreciation
is provided on the revised carrying amount of the
asset over its remaining useful life.

Depreciation methods, useful lives and residual
values are reviewed periodically at each financial
year end and adjusted prospectively, as appropriate.

Assets individually costing up to Rupees five
thousand are fully depreciated in the year of
capitalisation.

2.3 Foreign Currency Transactions

(a) Functional and presentation currency

Items included in the financial statements are
measured using the currency of the primary
economic environment in which the entity operates
(‘the functional currency''). The financial statements
are presented in Indian Rupee (INR), which is the
Company''s functional and presentation currency.

Foreign currency transactions are recorded in the
reporting currency by applying the exchange rate
between the reporting currency and the foreign
currency at the date of the transaction.

(b) Transactions and balances

On initial recognition, all foreign currency
transactions are recorded by applying to the foreign
currency amount the exchange rate between the
functional currency and the foreign currency at the
date of the transaction. Gains / (losses) arising out
of fluctuation in foreign exchange rate between the
transaction date and settlement date are recognised
in the Statement of Profit and Loss.

All monetary assets and liabilities in foreign
currencies are restated at the year end at the
exchange rate prevailing at the year end and
the exchange differences are recognised in the
Statement of Profit and Loss.

Non-monetary items which are carried in terms of
historical cost denominated in a foreign currency
are reported using the exchange rate at the date of
the transaction; non-monetary items denominated
in a foreign currency and measured at fair value are
translated at the exchange rate prevalent at the date
when the fair value was determined.

2.4 Fair value measurement

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
accessible to the Company.

The Company uses valuation techniques that are
appropriate in the circumstances and for which sufficient
data are available to measure fair value, maximizing the
use of relevant observable inputs and minimizing the use
of unobservable inputs.

All assets and liabilities for which fair value is measured
or disclosed in the financial statements are categorized
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.

2.5 Revenue Recognition

Revenue is measured at fair value of the consideration
received or receivable. Revenue is reduced for estimated
customer returns, rebates and other similar allowances.
Ind AS 115 Revenue from contracts with customers,
outlines a single comprehensive model of accounting for
revenue arising from contracts with customers.

The Company recognises revenue from operations based
on five step model as set out in Ind AS 115:

Step 1: Identify contract(s) with a customer: A Contract
is defined as an agreement between two or more parties
that creates enforceable rights and obligations and sets
out the criteria for every contract that must be met.

Step 2: Identify performance obligations in the contract:
A performance obligation is a promise in a contract with
a customer to transfer a good or service to the customer.
Step 3: Determine the transaction price: The transaction
price is the amount of consideration to which the
Company expects to be entitled in exchange for
transferring promised goods or services to a customer,
excluding amounts collected on behalf of third parties.

Step 4: Allocate the transaction price to the performance
obligations in the contract: For a contract that has more
than one performance obligation, the Company allocates
the transaction price to each performance obligation in
an amount that depicts the amount of Consideration to
which the Company expects to be entitled in exchange
for satisfying each performance obligation.

Step 5: Recognise revenue when the Company satisfies a
performance obligation.

Revenue from sale of goods in the course of ordinary
activities is recognised when the property in the goods
and all significant risks and rewards of their ownership
are transferred to the customer which generally
coincides with delivery to the customers and no
significant uncertainty exists regarding the amount of the
consideration that will be derived from the sale of goods
and regarding its collection. The amount recognised
as revenue is exclusive of GST and net of trade and
quantity discounts.

The Company presents revenues net of indirect taxes in
its Standalone Statement of Profit and loss.

Billings in excess of revenue recognized is classified as
contract liabilities (‘Deferred revenue'') included in other
current liabilities.

Other Income

Interest Income is recognised on basis of effective
interest method as set out in Ind AS 109 , Financial
Instruments, and where no significant uncertainty as to
measurability or collectability exists.

Interest income is recognised using the time-proportion
method, based on underlying interest rates.

2.6 Taxes

Tax expense for the year, comprising current tax, deferred
tax and minimum alternate tax credit are included in the
determination of the net profit or loss for the year.

(a) Current income tax

Current tax is the amount of tax payable on the
taxable income for the year as determined in
accordance with the provisions of the Income
Tax Act, 1961. Current tax assets and liabilities are
measured at the amount expected to be recovered
or paid to the taxation authorities. Current tax assets
and tax liabilities are offset where the entity has a
legally enforceable right to offset and intends either
to settle on a net basis, or to realize the asset and
settle the liability simultaneously.

(b) Minimum Alternate Tax

Minimum Alternate Tax (MAT) under the provisions
of the Income Tax Act, 1961 is recognised as current
tax in the Statement of Profit and Loss. The credit
available under the Income tax act, in respect of
MAT paid is recognised as asset only when and to
the extent there is convincing evidence that the
Company will pay normal income tax during the
period for which the MAT credit can be carried
forward for set- off against the normal tax liability.
MAT credit recognised as an asset is reviewed
at each Balance Sheet date and written down
to the extent the aforesaid convincing evidence
no longer exists.

(c) Deferred tax

Deferred income tax is provided in full, using the
balance sheet approach, on temporary differences
arising between the tax bases of assets and liabilities
and their carrying amounts in financial statements.
Deferred income tax is also not accounted for if it
arises from initial recognition of an asset or liability
in a transaction other than a business combination
that at the time of the transaction affects neither
accounting profit nor taxable profit (tax loss).
Deferred income tax is determined using tax rates
(and laws) that have been enacted or substantially
enacted by the end of the year and are expected to

apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled.

Deferred tax assets are recognised for all
deductible temporary differences and unused
tax losses only if it is probable that future taxable
amounts will be available to utilize those temporary
differences and losses.

Management periodically evaluates positions taken
in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation.
It establishes provisions where appropriate on
the basis of amounts expected to be paid to the
tax authorities.

Deferred tax assets and liabilities are offset when
there is a legally enforceable right to offset current
tax assets and liabilities and when the deferred tax
balances relate to the same taxation authority.

Current and deferred tax is recognized in Statement
of Profit and Loss, except to the extent that it
relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is
also recognised in other comprehensive income or
directly in equity, respectively.

2.7 Leases
As a lessee

The Company''s lease asset classes primarily consist of
leases for buildings. The Company assesses whether a
contract contains a lease at the inception of a contract. A
contract is, or contains, a lease if the contract conveys the
right to control the use of an identified asset for a period
of time in exchange for consideration. To assess whether a
contract conveys the right to control the use of an identified
asset, the Company assesses whether: (i) the contract
involves the use of an identified asset (ii) the Company has
substantially all of the economic benefits from use of the
asset through the period of the lease and (iii) the Company
has the right to direct the use of the asset.

At the date of commencement of the lease, the
Company recognizes a right-of-use (ROU) asset and a
corresponding lease liability for all lease arrangements in
which it is a lessee, except for leases with a term of 12
months or less (short-term leases) and low-value leases.
For these short-term and low-value leases, the Company
recognizes the lease payments as an operating expense
on a straight-line basis over the term of the lease.

As a lessor

Leases for which the Company is a lessor is classified as a
finance or operating lease. Whenever the terms of the lease
transfer substantially all the risks and rewards of ownership
to the lessee, the contract is classified as a finance lease.
All other leases are classified as operating leases.

For operating leases, rental income is accounted for on
a straight-line basis or another systematic basis over
the lease terms based on agreement/contract entered
into with the third party and is included in revenue in the
Statement of Profit or Loss due to its operating nature.

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

Leases where the lessor effectively retains substantially all
the risks and rewards of ownership of the leased asset are
classified as operating leases. Operating lease payments
are recognised as an expense in the statement of profit
and loss on a straight-line basis over the lease term.

2.8 Inventories

Inventories are valued at lower of cost (weighted average
method) and net realisable value after providing for
obsolescence and other losses, where considered
necessary. For traded goods purchases costs include
cost of purchase and other costs bringing inventory to
there location.

Stock of raw materials, stores, spares, bought out
items and certain components are valued at cost less
amounts written down.

Stock of certain aero structures, components, work-in¬
progress and finished goods are valued at lower of cost
and net realisable value based on technical estimate of
the percentage of work completed.

In determining the cost of raw materials, components,
stores, spares and loose tools, the First In First Out (FIFO)
method is used. Cost of inventory comprises all costs of
purchase, duties, taxes (other than those subsequently
recoverable from tax authorities) and all other costs
incurred in bringing the inventory to their present
location and condition.

Work-in-progress, manufactured finished goods
and traded goods are valued at the lower of cost
and net realisable value. Cost of work -in-progress
and manufactured finished goods is determined on
the weighted average basis and comprises direct
material, cost of conversion and other costs incurred
in bringing these inventories to their present location
and condition. Cost of traded goods is determined on a
weighted average basis.

Net realizable value is the estimated selling price in the
ordinary course of business, less the estimated cost of
completion and the estimated costs necessary to make
the sale. The comparison of cost and net realizable value
is made on item by item basis.

2.9 Impairment of non-financial assets

The Company assesses at each year end whether there
is any objective evidence that a non financial asset or
a group of non financial assets is impaired. If any such
indication exists, the Company estimates the asset''s
recoverable amount and the amount of impairment loss.

An impairment loss is calculated as the difference
between an asset''s carrying amount and recoverable
amount. Losses are recognized in Statement of Profit and
Loss and reflected in an allowance account. When the
Company considers that there are no realistic prospects
of recovery of the asset, the relevant amounts are written
off. If the amount of impairment loss subsequently
decreases and the decrease can be related objectively to
an event occurring after the impairment was recognised,
then the previously recognised impairment loss is
reversed through Statement of Profit and Loss.

The recoverable amount of an asset or cash-generating
unit 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. 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
inflows of other assets or groups of assets (the “cash¬
generating unit").

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Mar 31, 2024

1 General Information

Stanley Lifestyles Limited ("the Company" or "SLL") was incorporated on 11 October 2007 as a public limited company under the provisions of the Companies Act 1956 with its registered office in Bengaluru, India. The Company together with its subsidiaries (Collectively referred to as "the Group") is primarily engaged in the business of manufacturing and trading of furniture and leather products.

The Company is incorporated and domiciled in India under the provisions of the Companies Act, applicable in India. The registered office of the company is located at SY No.16/2 and 16/3 Part, Hosur Road, Veerasandra village, Attibele Hobli,Anekal Taluk, Bangalore,Karnataka-560100, India. The Company''s equity shares have been listed on Bombay Stock Exchange Limited ( "" BSE"" ) and on National Stock Exchange of India Limited ( ""NSE"") on June 28, 2024 by completing Initial Public Offering of 14,553,508 equity shares of face value of Rs. 2 each at an issue price of Rs 369 per equity share, consisting of an offer for sale of 9,133,454 equity shares by selling shareholders and fresh issue of 5,420,054 equity shares.

The standalone financial statements of the Company were approved in the meeting of the Board of Directors held on 19 July 2024.

2 Material accounting policies

Material accounting policies adopted by the Company are as under:

2.1 Basis of Preparation of Financial Statements

(a) Statement of Compliance with Ind AS

These standalone financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the ""Act"") read with the Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time.

Accounting policies have been consistently applied to all the years presented except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

(b) Basis of measurement

The financial statements have been prepared on a historical cost convention on accrual basis, except for items that have been measured at fair value as required by relevant Ind AS.

i) Certain financial assets and liabilities measured at fair value (refer accounting policy on financial instruments)

ii) Embedded derivative and

iii) Asset classified as held for sale

All assets and liabilities have been classified as current or non-current as per the Company''s operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of services and the time between the rendering of service and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current and noncurrent classification of assets and liabilities.

(c) Use of estimates

The preparation of standalone financial statements in conformity with Ind AS requires the Management to make estimate and assumptions that affect the reported amount of assets and liabilities as at the Balance Sheet date, reported amount of revenue and expenses for the year and disclosures of contingent liabilities as at the Balance Sheet date. The estimates and assumptions used in the accompanying financial statements are based upon the Management''s evaluation of the relevant facts and circumstances as at the date of the financial statements. Actual results could differ from these estimates. Estimates and underlying assumptions are reviewed on a periodic basis. Revisions to accounting estimates, if any, are recognized in the year in which the estimates are revised and in any future years affected. Refer note 3 for detailed discussion on estimates and judgments.

2.2 Property, plant and equipment

a) Property, pl an t an d eq u i pm en t are carri ed at cost of acquisition or construction less accumulated depreciation and/ or accumulated impairment, if any. The cost includes its purchase price, including import duties and other non-refundable taxes or levies (for Leasehold improvements and Vehicles, Goods and Services Tax is not availed but added to the cost of acquisition or construction), freight and any directly attributable cost of bringing the asset to its working condition for its intended use; any trade discounts and rebates are deducted in arriving at the purchase price.

b) Subsequent expenditures related to an item of tangible fixed asset are added to its book value only

if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.

c) The cost of property, plant and equipment not ready for their intended use at the balance sheet date are disclosed as capital work in progress.

d) Advances paid towards the acquisition of property, plant and equipment, outstanding at each balance sheet date are disclosed as ''capital advances'' under ''long-term loans and advances''.

e) Assets received on amalgamation are recorded at its fair value.

f) Where a significant component (in terms of cost) of an asset has an economic useful life shorter than that of it''s corresponding asset, the component is depreciated over it''s shorter life.

Depreciation methods, estimated useful lives

Depreciation is provided on straight line method over the estimated useful life of fixed assets as per the useful life prescribed under Part C of Schedule II of the Companies Act, 2013.Leasehold improvements are being amortised over the duration of the lease, or estimated useful life of the assets, whichever is lower. Depreciation on addition to property, plant and equipment''s is provided on prorata basis from the date the assets are ready for intended use. Depreciation on sale / deletion of property, plant and equipment''s is provided for up to the date of sale, deduction or discard of property, plant and equipment as the case may be.In case of impairment, if any, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

Depreciation methods, useful lives and residual values are reviewed periodically at each financial year end and adjusted prospectively, as appropriate.

Assets individually costing up to Rupees five thousand are fully depreciated in the year of capitalisation.

2.3 Foreign Currency Transactions

(a) Functional and presentation currency

Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency''). The financial statements are presented in Indian Rupee (INR), which is the Company''s functional and presentation currency.

Foreign currency transactions are recorded in the reporting currency by applying the exchange rate

between the reporting currency and the foreign currency at the date of the transaction.

(b) Transactions and balances

On initial recognition, all foreign currency transactions are recorded by applying to the foreign currency amount the exchange rate between the functional currency and the foreign currency at the date of the transaction. Gains / (losses) arising out of fluctuation in foreign exchange rate between the transaction date and settlement date are recognised in the Statement of Profit and Loss.

All monetary assets and liabilities in foreign currencies are restated at the year end at the exchange rate prevailing at the year end and the exchange differences are recognised in the Statement of Profit and Loss.

Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; non-monetary items denominated in a foreign currency and measured at fair value are translated at the exchange rate prevalent at the date when the fair value was determined.

2.4 Fair value measurement

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 accessible to the Company.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized 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.

2.5 Revenue Recognition

Revenue is measured at fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances. Ind AS 115 Revenue from contracts with customers, outlines a single comprehensive model of accounting for revenue arising from contracts with customers. The Company recognises revenue from operations based on five step model as set out in Ind AS 115:

Step 1: Identify contract(s) with a customer: A Contract is defined as an agreement between two or more parties that creates enforceable rights and obligations and sets out the criteria for every contract that must be met.

Step 2: Identify performance obligations in the contract: A performance obligation is a promise in a contract with a customer to transfer a good or service to the customer.

Step 3: Determine the transaction price: The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.

Step 4: Allocate the transaction price to the performance obligations in the contract: For a contract that has more than one performance obligation, the Company allocates the transaction price to each performance obligation in an amount that depicts the amount of Consideration to which the Company expects to be entitled in exchange for satisfying each performance obligation.

Step 5: Recognise revenue when the Company satisfies a performance obligation.

Revenue from sale of goods in the course of ordinary activities is recognised when the property in the goods and all significant risks and rewards of their ownership are transferred to the customer which generally coincides with delivery to the customers and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of goods and regarding its collection. The amount recognised as revenue is exclusive of GST and net of trade and quantity discounts.

The Company presents revenues net of indirect taxes in its Standalone Statement of Profit and loss.

Billings in excess of revenue recognized is classified as contract liabilities (‘Deferred revenue'') included in other current liabilities.

Other Income

Interest Income is recognised on basis of effective interest method as set out in Ind AS 109, Financial Instruments, and where no significant uncertainty as to measurability or collectability exists.

Interest income is recognised using the time-proportion method, based on underlying interest rates.

2.6 Taxes

Tax expense for the year, comprising current tax, deferred tax and minimum alternate tax credit are included in the determination of the net profit or loss for the year.

(a) Current income tax

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961. Current tax assets and liabilities are measured at the amount expected to be recovered or paid to the taxation authorities. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

(b) Minimum Alternate Tax

Minimum Alternate Tax (MAT) under the provisions of the Income Tax Act, 1961 is recognised as current tax in the Statement of Profit and Loss. The credit available under the Income tax act, in respect of MAT paid is recognised as asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the period for which the MAT credit can be carried forward for set- off against the normal tax liability. MAT credit recognised as an asset is reviewed at each Balance Sheet date and written down to the extent the aforesaid convincing evidence no longer exists.

(c) Deferred tax

Deferred income tax is provided in full, using the balance sheet approach, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in financial statements. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss). Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the year and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses.

Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority.

Current and deferred tax is recognized in Statement of Profit and Loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

2.7 Leases As a lessee

The Company''s lease asset classes primarily consist of leases for buildings. The Company assesses whether a contract contains a lease at the inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:

(i) the contract involves the use of an identified asset

(ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and

(iii) the Company has the right to direct the use of the asset.

At the date of commencement of the lease, the Company recognizes a right-of-use (ROU) asset and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of 12

months or less (short-term leases) and low-value leases. For these short-term and low-value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.

As a lessor

Leases for which the Company is a lessor is classified as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases. For operating leases, rental income is accounted for on a straight-line basis or another systematic basis over the lease terms based on agreement/contract entered into with the third party and is included in revenue in the Statement of Profit or Loss due to its operating nature.

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

Leases where the lessor effectively retains substantially all the risks and rewards of ownership of the leased asset are classified as operating leases. Operating lease payments are recognised as an expense in the statement of profit and loss on a straight-line basis over the lease term.

2.8 Inventories

Inventories are valued at lower of cost (weighted average method) and net realisable value after providing for obsolescence and other losses, where considered necessary. For traded goods purchases costs include cost of purchase and other costs bringing inventory to there location.

Stock of raw materials, stores, spares, bought out items and certain components are valued at cost less amounts written down.

Stock of certain aero structures, components, work-inprogress and finished goods are valued at lower of cost and net realisable value based on technical estimate of the percentage of work completed.

In determining the cost of raw materials, components, stores, spares and loose tools, the First In First Out (FIFO) method is used. Cost of inventory comprises all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs

incurred in bringing the inventory to their present location and condition.

Work-in-progress, manufactured finished goods and traded goods are valued at the lower of cost and net realisable value. Cost of work -in-progress and manufactured finished goods is determined on the weighted average basis and comprises direct material, cost of conversion and other costs incurred in bringing these inventories to their present location and condition. Cost of traded goods is determined on a weighted average basis.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and the estimated costs necessary to make the sale. The comparison of cost and net realizable value is made on item by item basis.

2.9 Impairment of non-financial assets

The Company assesses at each year end whether there is any objective evidence that a non financial asset or a group of non financial assets is impaired. If any such indication exists, the Company estimates the asset''s recoverable amount and the amount of impairment loss.

An impairment loss is calculated as the difference between an asset''s carrying amount and recoverable amount. Losses are recognized in Statement of Profit and Loss and reflected in an allowance account. When the Company considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, then the previously recognised impairment loss is reversed through Statement of Profit and Loss.

The recoverable amount of an asset or cash-generating unit 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 pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. 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 inflows of other assets or groups of assets (the “cash-generating unit").

2.10 Provisions and contingent liabilities

Provisions are recognized when there is a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation.

Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date.

These are reviewed at each Balance Sheet date and adjusted to reflect the current management estimates.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made. When there is an obligation in respect of which the likelihood of outflow of resources is remote no provision or disclosure is made.

Contingent assets are neither recognised nor disclosed in the financial statements.

2.11 Borrowing costs

Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Borrowing costs directly attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of the assets up to the date the asset is ready for its intended use. All other borrowing costs are recognised as an expense in the Statement of Profit and Loss in the year in which they are incurred.

2.12 Cash and cash equivalents

Cash and cash equivalent in the Balance Sheet comprise cash at banks, cash on hand and short-term deposits net of bank overdraft with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.

Cash and Cash Equivalents includes deposits maintained by the Company with banks, which can be withdrawn by the Company at any point of time without prior notice or penalty on the principal. Cash and cash equivalents include restricted cash and bank balances. The restrictions are primarily on account of bank balances held as margin money deposits against guarantees.

2.13 Investment in Subsidiary

When an entity prepares separate financial statements, it shall account for investments in subsidiaries, joint ventures and associates either:

(a) at cost, or

(b) in accordance with Ind AS 109.

Company accounts for its investment in subsidiary at cost.

2.14 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

(i) Initial recognition and measurement

At initial recognition, financial asset is measured at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

(ii) Subsequent measurement

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

a) at amortized cost; or

b) at fair value through other comprehensive income; or

c) at fair value through profit or loss. The classification depends on the entity''s business model for managing the financial assets and the contractual terms of the cash flows.

Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. Interest income from these financial assets is included in finance income using the Effective Interest Rate method (EIR).

Fair Value Through Other Comprehensive

Income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets'' cash flows represent solely payments of

principal and interest, are measured at Fair Value Through Other Comprehensive Income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognized in Statement of Profit and Loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to Statement of Profit and Loss and recognized in other gains / (losses). Interest income from these financial assets is included in other income using the effective interest rate method.

Fair Value Through Profit or Loss: Assets that do not meet the criteria for amortized cost or FVOCI are measured at fair value through profit or loss. Interest income from these financial assets is included in other income.

(iii) Impairment of financial assets

In accordance with Ind AS 109, Financial Instruments, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss on financial assets that are measured at amortized cost and FVOCI.

For recognition of impairment loss on financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, twelve-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly lifetime ECL is used. If in subsequent years, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognizing impairment loss allowance based on twelve months ECL.

Life time ECLs are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The twelve month ECL is a portion of the lifetime ECL which results from default events that are possible within twelve months after the year end.

ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e. all

shortfalls), discounted at the original EIR. When estimating the cash flows, an entity is required to consider all contractual terms of the financial instrument (including pre-payment, extension etc.) over the expected life of the financial instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated reliably, then the entity is required to use the remaining contractual term of the financial instrument.

In general, it is presumed that credit risk has significantly increased since initial recognition if the payment is more than 30 days past due.

(iv) De-recognition of financial assets

A financial asset is de-recognized only when :

a) the rights to receive cash flows from the financial asset is transferred; or

b) retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients."

Where the financial asset is transferred then in that case financial asset is de-recognized only if substantially all risks and rewards of ownership of the financial asset is transferred. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not de-recognized.

(b) Financial liabilities

(i) Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss and at amortized cost, as appropriate.

All financial liabilities are recognized initially at fair value and, in the case of borrowings and payables, net of directly attributable transaction costs.

(ii) Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

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 at fair value through profit or loss.

Loans and borrowings

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the Effective Interest Rate (EIR) method. Gains and losses are recognized in Statement of Profit and Loss when the liabilities are de-recognized as well as through the EIR amortization process. Amortized 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 amortization is included as finance costs in the Standalone Statement of Profit and Loss.

(iii) De-recognition

A financial liability is de-recognized when the obligation under the liability is discharged or cancelled or expires. 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 recognized in the Statement of Profit and Loss as finance costs.

(c) Offsetting financial instruments

Financial assets and liabilities are offset and the net amount is reported in the Balance Sheet where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.

2.15 Employee benefits

(a) Short-term obligations

Liabilities for wages and salaries, including nonmonetary benefits that are expected to be settled wholly within twelve months after the end of the year in which the employees render the related service are recognized in respect of employees'' services up to the end of the year and are measured at the amounts expected to be paid when the liabilities

are settled. The liabilities are presented as current employee benefit obligations in the Balance Sheet.

(b) Defined contribution plan

The Company makes defined contribution to provident fund and superannuation fund, which are recognised as an expense in the Statement of Profit and Loss on accrual basis. The Company has no further obligations under these plans beyond its monthly contributions.

Employee''s State Insurance Scheme: Contribution towards employees'' state insurance scheme is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as defined contribution schemes as the Company does not carry any further obligations, apart from the contributions made on a monthly basis which are charged to the Statement of Profit and Loss."

(c) Defined benefit plans

Gratuity: The Company provides for gratuity, a defined benefit plan (the "Gratuity Plan") covering eligible employees in accordance with the Payment of Gratuity Act, 1972. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary. The Company''s liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses / (gains) are recognized in the other comprehensive income in the year in which they arise.

(d) Other long term employee benefits

Compensated Absences: Accumulated compensated absences, which are expected to be availed or encashed within Twelve months from the end of the year are treated as short term employee benefits. The obligation towards the same is measured at the expected cost of accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlement as at the year end.

Accumulated compensated absences, which are expected to be availed or encashed beyond twelve months from the end of the year are treated as other long-term employee benefits. The Company''s liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses / (gains) are recognized in the Statement of Profit and Loss in the year in which they arise.

Leaves under define benefit plans can be encashed only on discontinuation of service by employee.

2.16 Earnings Per Share

Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Earnings considered in ascertaining the Company''s earnings per share is the net profit or loss for the year after deducting preference dividends and any attributable tax thereto for the year (if any). The weighted average number of equity shares outstanding during the year and for all the years presented is adjusted for events, that have changed the number of equity shares outstanding, without a corresponding change in resources.

For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year is adjusted for the effects of all dilutive potential equity shares.

All amounts disclosed in financial statements and notes have been rounded off to the nearest thousands as per requirement of Schedule III of the Act, unless otherwise stated.

2.17 Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker regularly monitors and reviews the operating results separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. Segments are identified having regard to the dominant source and nature of risks and returns and internal organization and management structure. The Company has considered business segments as the primary segments for disclosure. The business segment in which the Company operates is ‘manufacture, trading and sale of Automotive Seating Covers, Furniture, Fixtures and Accessories''. The Company does not have any geographical segment. The accounting principles used in the preparation of the financial statements are consistently applied to record revenue and expenditure in the individual segment, and are as set out in the significant accounting policies.

Thus, as defined in Ind AS 108 - Operating Segments, The Company operates in a single business segment of namely manufacture, trading and sale of Automotive Seating Covers, Furniture, Fixtures and Accessories

2.18 Rounding off amounts

All amounts disclosed in financial statements and notes have been rounded off to the nearest million

as per requirement of Schedule III of the Act, unless otherwise stated.

3 Significant accounting judgments, estimates and assumptions and recent pronouncements

The preparation of financial statements requires Management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future years.

3.1 Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the year end date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below.The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

(a) Defined Benefits and other long term benefits

The cost of the defined benefit plans such as gratuity and leave encashment are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each year end.

The principal assumptions are the discount and salary growth rate. The discount rate is based upon the market yields available on government bonds at the accounting date with a term that matches that of liabilities. Salary increase rate takes into account inflation, seniority, promotion and other relevant factors on long-term basis.

(b) Share-based payments

Estimating fair value for share-based payment transactions requires determination of the most

appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 51 Equity-settled transactions: The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model. That cost is recognised, together with a corresponding increase in share-based payment reserves in equity, over the period in which the service conditions are fulfilled in employee benefits expense. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and Company best estimate of the number of equity instruments that will ultimately vest. The expense or credit in the Standalone Statement of Profit and Loss for a period represents the movement in cumulative expense recognised as at the beginning and end of that period and is recognised in employee benefits expense.

(c) Taxes

Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

The Company neither have any taxable temporary difference nor any tax planning opportunities available that could partly support the recognition of these losses as deferred tax assets. On this basis, the Company has determined that it cannot recognize deferred tax assets on the tax losses carried forward except for the unabsorbed depreciation.

3.2 Recent pronouncements

Ministry of Corporate Affairs (“MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended 31 March 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.