Accounting Policies of Supreme Power Equipment Ltd. Company

Mar 31, 2025

Note: 2 Significant Accounting Policies

1 Basis of Preparation:

The Statement of Assets and Liabilities of the Company
as on 31^st March, 2025, and the Statement of Profit and
Loss and Statements of Cash Flows for the financial
year ended on 31^st March, 2025 and the annexure
thereto (collectively, the "Financial Statements")
have been compiled by the management from the
Financial Statements of the Company for the financial
year ended on 31^st March, 2025.

These financial statements are prepared in accordance
with Indian Generally Accepted Accounting Principles
(GAAP) under the historical cost convention on the
accrual basis. GAAP comprises mandatory accounting
standards as prescribed under Section 133 of the
Companies Act, 2013 (''Act'') read with Rule 7 of the
Companies (Accounts) Rules, 2021

2 Revenue Recognition:

The company derives its revenues primarily from
engaging in the business of electrical contractors,
estimators, planners, designers, research workers,
dealers in electrical, mechanical, automobiles,
railway equipment and machinery in all branches of
engineering. Revenue from services provided under
fixed price contracts, where the outcome can be
estimated reliably, is recognized based on contract
activity. Revenue on time-and-material contracts are
recognized as the related services are performed
and the revenues from the end of the last billing to
the balance sheet date are recognized as unbilled
revenues.

Revenue is recognized to the extent that it is probable
that the economic benefits will flow to the Company
and the revenue can be reliably measured in
accordance with AS-9, Revenue Recognition. Sales are
recognized on accrual basis, and only after transfer of
services to the customer.

Interest Income: Revenue is recognized on the time
proportion basis after taking into account the amount
outstanding and the rate applicable i.e, on the basis
of matching concept.

Dividend Income: Dividend Income is recognized
when the owner''s right to receive payment is
established. No dividend income was recognized
during the financial year 2024-25, as no such income
was received.

Other Income: Other items of income and
expenditure are recognized on accrual basis and as a
going concern basis, and the accounting policies are
consistent with the generally accepted accounting
policies.

3 Property, Plant and Equipment Including
Intangible Assets:

Property, Plant and Equipments are stated at cost,
less accumulated depreciation. Cost includes cost of
acquisition including material cost, freight, installation
cost, duties and taxes, and other incidental expenses,
incurred up to the installation stage, related to
such acquisition. Property, Plant and Equipments
purchased in India by foreign currency are recorded
in Rupees, converted at the exchange rate prevailed
on the date of purchase. Intangible assets that are

acquired by the Company are measured initially at
cost. After initial recognition, an intangible asset is
carried at its cost less any accumulated amortisation
and any accumulated impairment loss.

4 Depreciation & Amortisation:

The Company has applied the estimated useful lives
as specified in Schedule II of the Companies Act, 2013
and calculated the depreciation as per the Straight
Line Method (SLM). Depreciation on new assets
acquired during the year is provided at the rates
applicable from the date of acquisition to the end of
the financial year. In respect of the assets sold during
the year, depreciation is provided from the beginning
of the year till the date of its disposal.

Intangible assets are amortised on a straight-line basis
over the estimated useful life as specified in Schedule II
of the Companies Act, 2013. The amortisation expense
on intangible assets with finite lives is recognised in the
statement of profit and loss. In respect of the assets
sold during the year, amortisation is provided from the
beginning of the year till the date of its disposal.

Capital work in-progress represents expenditure
incurred in respect of assets which are yet to be
brought to it working condition for its intended use and
are carried at cost. Cost includes related acquisition
expenses, construction or development cost, borrowing
costs capitalised and other direct expenditure.

5 Impairment of Assets:

The Management periodically assesses using, external
and internal sources, whether there is an indication
that an asset may be impaired. An impairment loss
is recognised wherever the carrying value of an asset
exceeds its recoverable amount. The recoverable
amount is higher of the asset''s net selling price and
value in use, which means the present value of future
cash flows expected to arise from the continuing use

of the asset and its eventual disposal. Reversal of
impairment loss is recognised immediately as income
in the profit and loss account.

6 Use of Estimates:

The preparation of the financial statements in
conformity with Generally Accepted Accounting
Principles requires the management to make estimates
and assumptions that affect the reported balances
of assets and liabilities and disclosures relating to
contingent assets and liabilities as at the date of the
financial statements and the reported amounts of
income and expenses during the year. Examples of
such estimates include provisions for doubtful debts,
income taxes, post - sales customer support and the
useful lives of Property, Plant and Equipments and
intangible assets.

7 Inventories:

Inventory of consumables/spares and loose tools are
valued at lower of cost and net realisable value. The
cost is calculated at purchase price and expenditure
directly attributable to the acquisition of such
inventories for bringing them to their present location
and condition.

8 Trade Receivables:

A receivable represents the Company''s right to an
amount of consideration that is unconditional (i.e.,
only the passage of time is required before payment
of the consideration is due).

9 Borrowing Costs :

Borrowing costs that are attributable to acquisition,
construction or production of qualifying assets, are
capitalized as part of the cost of such qualifying assets.
A qualifying asset is an asset that necessarily takes a
substantial period of time to get ready for intended
use. All other borrowing costs are charged to the
Statement of profit and loss in the period in which
they occur. Borrowing costs consist of interest and
other costs that an entity incurs in connection with the
borrowing of funds.

10 Foreign Currency Transactions:

Domestic Operation:

I . Initial Recognition :

A foreign currency transactions are recorded,
on initial recognition in the reporting currency,
by applying to the foreign currency amount the
exchange rate between the reporting currency
and the foreign currency at the date of the
transaction.

II . Measurement :

Foreign currency monetary items are reported
using the closing rate.

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 which are carried at fair
value or other similar valuation denominated
in a foreign currency are reported using the
exchange rates that existed when the values
were determined.

III . Treatment of Foreign Exchange :

Exchange differences arising on settlement/
restatement of foreign currency monetary assets
and liabilities of the Company are recognised as
income or expenses in the Statement of Profit
and Loss.

11 Employee Benefits:

Benefits such as salaries, wages and performance
incentives are charged to the statement of profit and
loss at the actual amounts due in the period in which
the employee renders the related service. However
the Company has not adopted any policy for payment
of Bonus and thus no amount has been charged to
profit and loss account or provisioned in the balance
sheet.

A. Post-Employment Benefits:

Defined Benefit Plan:

Gratuity liability is a defined benefit obligation and
is unfunded. The Company accounts for liability
for future gratuity benefits based on the actuarial
valuation using Projected Unit Credit Method
carried out as at the end of each financial year.

Defined Contribution Plan:

Provident Fund: Eligible employees receive
benefit from provident fund covered under the
Provident Fund Act. Both the employee and
the company make monthly contributions. The
employer contribution is charged off to Profit &
Loss Account as an expense.

12 Taxes on Income:

Income Tax expense is accounted for in accordance
with AS-22 "Accounting for Taxes on Income" for both
Current Tax and Deferred Tax stated below:

A. Current Tax:

Provision for current tax is made in accordance
with the provisions of the Income Tax Act,
1961.

B. Deferred Tax:

Deferred tax is recognised, subject to the
consideration of prudence, as the tax effect of
timing difference between the taxable income
and accounting income computed for the current
accounting year using the tax rates and tax laws
that have been enacted or substantially enacted
by the balance sheet date.

Deferred tax assets are recognised and carried
forward to the extent that there is a reasonable
certainty, except arising from unabsorbed
depreciation and carried forward losses, that
sufficient future taxable income will be available
against which such deferred tax assets can be
realised.

---

Mar 31, 2024

Company Overview & Significant Accounting Policies Note: 1 Company Overview

Supreme Power Equipment Private Limited (the Holding Company) was incorporated on 21st June 2005 under the provisions of the Companies Act 1956, and having its registered office at 55, SIDCO Industrial Estates Thirumazhisai Poonamallee Tiruvallur, Tamil Nadu - 600124. Subsequently, Company was converted into Public Limited Company vide special resolution passed by our shareholders at the Extra Ordinary General Meeting held on 31.08.2023 and the name of the Company was changed to Supreme Power Equipment Limited (''the Company") pursuant to issuance of Fresh Certificate of Incorporation dated 18.9.2023 by Registrar of Companies, Chennai with Corporate Identification Number U31200TN2005PLC056666.

During the year, Company has been listed on SME platform of NSE on 29th December, 2023, by way of Initial Public Offer ("IPO") of 71,80,000 fully-paid-up equity shares of face value Rs.10 each at a premium of Rs.55 each.

The Company is engaged to carrry on the business of manufacturing, assembling, fabrication of transformers of all varities electrical transmission equipments under control units, erection, commission and testing of high tension lines, electrical distributions panels, electrical, electronic and mechanical apparatus for any purpose and to deal, sell, supply, inaccumulators, lamps, meters, engines, dynamic batteries.

Note: 2 Significant Accounting Policies

1 Basis of Preparation:

The Statement of Assets and Liabilities of the Company as on March 31, 2024, and the Statement of Profit and Loss and Statements of Cash Flows for the financial year ended on March 31, 2024 and the annexure thereto (collectively, the "Financial Statements") have been compiled by the management from the Financial Statements of the Company for the financial year ended on March 31,2024.

These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis. GAAP comprises mandatory accounting standards as prescribed under Section 133 of the Companies Act, 2013 (''Act'') read with Rule 7 of the Companies (Accounts) Rules, 2021

2 Revenue Recognition:

The company derives its revenues primarily from engaging in the business of electrical contractors, estimaters, planners, designers, research workers, dealers in electrical, mechanical, automobiles, railway equipments and machinery in all branches of engineering. Revenue from services provided under fixed price contracts, where the outcome can be estimated reliably, is recognized based on contract activity. Revenue on time-and-material contracts are recognized as the related services are performed and the revenues from

the end of the last billing to the balance sheet date are recognized as unbilled revenues.

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured in accordance with AS-9, Revenue Recognition. Sales are recognized on accrual basis, and only after transfer of services to the customer.

Interest Income: Revenue is recognized on the time proportion basis after taking into account the amount outstanding and the rate applicable i.e on the basis of matching concept

Dividend Income: Dividend Income is recognized when the owners right to receive payment is established.

Other Income: Other items of income and expenditure are recognized on accrual basis and as a going concern basis, and the accounting policies are consistent with the generally accepted accounting policies.

3 Property, Plant and Equipment Including Intangible Assets:

Property, Plant and Equipments are stated at cost, less accumulated depreciation. Cost includes cost of acquisition including material cost, freight, installation cost, duties and taxes, and other incidental expenses, incurred up to the installation stage, related to such acquisition. Property, Plant and Equipments purchased in India by foreign currency are recorded in Rupees, converted at the exchange rate prevailed on the date of purchase. Intangible assets that are acquired by the Company are measured initially at cost. After initial recognition, an intangible asset is carried at its cost less any accumulated amortisation and any accumulated impairment loss.

4 Depreciation & Amortisation:

The Company has applied the estimated useful lives as specified in Schedule II of the Companies Act, 2013 and calculated the depreciation as per the Straight Line Value (SLM) method. Depreciation on new assets acquired during the year is provided at the rates applicable from the date of acquisition to the end of the financial year. In respect of the assets sold during the year, depreciation is provided from the beginning of the year till the date of its disposal.

Intangible assets are amortised on a straight-line basis over the estimated useful life as specified in Schedule II of the Companies Act, 2013. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit and loss. In respect of the assets sold during the year, amortisation is provided from the beginning of the year till the date of its disposal.

Capital work in-progress represents expenditure incurred in respect of assets which are yet to be brought to it working

condition for its intended use and are carried at cost. Cost includes related acquisition expenses, construction or development cost, borrowing costs capitalised and other direct expenditure.

Useful Life of Property, Plant and Equipments

Category	Useful life
Computer & Accessories	6 years
Furniture & Fittings	10 years
Testing Equipments	15-20 years
Buildings	58 years
Plant & Machinery	15 years
Electrical Fittings	15 years
Vehicles	10 years

5 Impairment of Assets:

The Management periodically assesses using, external and internal sources, whether there is an indication that an asset may be impaired. An impairment loss is recognised wherever the carrying value of an asset exceeds its recoverable amount. The recoverable amount is higher of the asset''s net selling price and value in use, which means the present value of future cash flows expected to arise from the continuing use of the asset and its eventual disposal. Reversal of impairment loss is recognised immediately as income in the profit and loss account.

6 Use of Estimates:

The preparation of the financial statements in conformity with Generally Accepted Accounting Principles requires the management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent assets and liabilities as at the date of the financial statements and the reported amounts of income and expenses during the year. Examples of such estimates include provisions for doubtful debts, income taxes, post -sales customer support and the useful lives of Property, Plant and Equipments and intangible assets.

7 Inventories:

Inventory of consumables/spares and loose tools are valued at lower of cost and net realisable value. The cost is calculated at purchase price and expenditure directly attributable to the acquisition of such inventories for bringing them to their present location.

8 Trade Receivables:

A receivable represents the Company''s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due).

9 Foreign Currency Transactions:

Domestic Operation:

I . Initial Recognition :

A foreign currency transactions are recorded, on initial recognition in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

II . Measurement :

Foreign currency monetary items are reported using the closing rate.

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 which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.

III . Treatment of Foreign Exchange :

Exchange differences arising on settlement/ restatement of foreign currency monetary assets and liabilities of the Company are recognised as income or expenses in the Statement of Profit and Loss.

10 Employee Benefits:A. Post-Employment Benefits:Defined Benefit Plan:

Gratuity liability is a defined benefit obligation and is unfunded. The Company accounts for liability for future gratuity benefits based on the actuarial valuation using Projected Unit Credit Method carried out as at the end of each financial year.

Defined Contribution Plan:

Provident Fund: Eligible employees receive benefit from provident fund covered under the Provident Fund Act. Both the employee and the company make monthly contributions. The employer contribution is charged off to Profit & Loss Account as an expense.

11 Taxes on Income:

Income Tax expense is accounted for in accordance with AS-22 "Accounting for Taxes on Income" for both Current Tax and Deferred Tax stated below:

A. Current Tax:

Provision for current tax is made in accordance with the provisions of the Income Tax Act, 1961.

B. Deferred Tax:

Deferred tax is recognised, subject to the consideration of prudence, as the tax effect of timing difference between the taxable income and accounting income computed for the current accounting year using the tax rates and tax laws that have been enacted or substantially enacted by the balance sheet date.

Deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty, except arising from unabsorbed depreciation and carried forward losses, that sufficient future taxable income will be available against which such deferred tax assets can be realised.

12 Provisions and Contingent Liabilities:

A provision is recognised if, as a result of past event, the Company has a present legal obligation that can be estimated reliably and it is probable that an outflow of economic benefit will be required to settle the obligation. Provisions are determined by the best estimate of outflow of economic benefits required to settle the obligation at the reporting date. Where no reliable estimate can be made, a disclosure is made as contingent liability. A disclosure for a contingent liability is also made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is possible obligation or present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

13 Earnings Per Share:

Basic Earnings per share is computed by dividing the net profit after tax by the weighted average number of equity shares outstanding during the period. Diluted earnings per share is computed by dividing the net profit after tax by the weighted average number of shares considered for deriving basic earnings per share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The diluted potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value which is the average market value of the outstanding shares. Dilutive potential equity shares are deemed converted as at the beginning of the period, unless issued at a later date. Dilutive potential equity shares are determined independently for each period presented.

14 Cash and Cash Equivalents:

The Company''s cash and cash equivalents consist of cash on hand and in banks , which can be withdrawn at any time, without prior notice or penalty on the principal. For the purposes of the statement of cash flows, cash and cash equivalents include cash on hand, in banks are considered part of the Company''s cash management system. In the balance sheet, bank overdrafts are presented under borrowings within current liabilities.

15 Cash Flow Statement:

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

16 Investments:

Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments.

---

Mar 31, 2023

Company Overview & Significant Accounting Policies 1 Company Overview

The Company was incorporated as a Private Limited Company on 21st June 2005 under the provisions of the Companies Act 1956, with_the name named as "SUPREME POWER EQUIPMENT PRIVATE LIMITED" & CIN:U31200TN2005PTC056666. Its registered office at 55, S1DCO Industrial Estates. Thirumazhisai, Tiruvallur-600124, Tamilnadu, India.

The Company is engaged to cany on the business of manufacturing, assembling, fabneation of transformer of allparities including electrical transmission equipments and control units. The company's business also involves erection, commission and testing ot high tensionlmes, electrical distribution panels, electrical, electronic and mechanical apparatus for any purpose and to deal, sell, supply m accumulators, lamps,melers, engi , dynamic batteries.

[I Significant Accounting Policies

•^TrmllTs^ements have been prepared in accordanee with Indian Generally Accepted[Accounting^^Pr^^|e^s

convention on the accrual basis. GAAP comprises mandatory accounting standards prescribed by the Companies (Account.ng Standards) Ru . 2021.

2 Revenue Recognition:

The _company derives its revenues primarily from engaing in the business of electrical contractors,estimates,planners.desi^ers,research workers dealers in clectrical.mechanical,automobiles,railway equipments and machinery in all branches ol enginenng. evenue niin scrv iLcs provided under fixed price contracts, where the outcome can be estimated reliably, is recognized based on contract activity. Revenue on time- -material contracts are recognized as the related services are performed and tire revenues from the end of the last billing to the balance sheet date are

recognized as unbilled revenues.

Revenue is recognized fit the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured in accordance w ith AS-9. Revenue Recognition. Sales am recognized on accrual basis, and only after Iranster of services to the custoi .

Interest Income: Revenue is recognized on the lime proportion basis after taking into account the amount outstanding and the rate applicable. Dividend Income: Dividend Income is recognised when the owners right to receive payment is established.

Other Income : Other items of income and expenditure are recognized on accrual basis and as a going concern basis, and the accounting policies are consistenl with the generally accepted accounting policies.

J Property Plant and Equipment Including Intangible Assets:

Property Planl and Equipments are stated a. cost, less accumulated depreciation. Cost includes cost of acquisition

installation cost duties and taxes, and other incidental expenses, incun-ed up to the installation stage, related to such acquisition. Property Plant and Equipments purchased in India in foreign currency are recorded in Rupees, converted at the exchange rale prevatled on the date of Intangible assets that are acquired by the Company are measured initially at cost. After initial recognition, an intangible asset » earned any accumulated amortisation and any accumulated impairment loss.

4 Depreciation & Amortisation:    , .    ,

The Company has applied the estimated useful fives as specified in Schedule II of the Companies Act 2013 and.calculatori the    ” ^PCT ^

Written Down Value (WDV) method. Depreciation on new assets acquired during the year is provided at the rates    _ti)]

acquisition to the end of the financial year. In respect of the assets sold during the year, depreciation is provided from the beginning of the year till

the date of its disposal.

Intangible assets arc amortised on a straight-line basis over the estimated useful life as specified in Schedule II of the Companies Act 2013. The SlnSpense on inedible _m with linte live, i,recognised in *. <«="»*** - '»* '»»"«*“• **

v«r amortisation is nrovided from the beginning of the year till the dote of its disposal.

Notes to Financial Statements for the ’S ear Ended March 31, 2023 Useful Fife of Property, Plant and Equipments

Category    ^l'^{scful lifc}

Computer & Accessories    o years

Furniture & Fittings    ¹⁰ y^ears

Testing Equipments    15-20 years

Buildings    y^cars

Plant &. Machinery    15 years

Electrical Fittings    15 years

Vehicles    ¹⁽⁾y^ears

^ Impairment of Assets:

lira Manag— Periodically «— -* «»— and    .«»-.»

_r - -—. - ** - - *

eventual dl^nsal. Ruvcs.l of impairment loss is re-pused io.racdi.iely ns income in the profit .nd loss account.

6    Use of Estimates:

_{thp flnan(}. l| statements and the reported amounts of income and expenses during the year. Lxamples ot suen estimates mu t LSd^1“Zs, post - sales customer supped and d,e useful lives of Propcdy Pi— E,„iprac„t. and mtan.thic assets.

7    Foreign Currency Transactions:

Domestic Operation:

I. Initial Recognition :

A foreign currency transactions are recorded, on initial recognition in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date ol the transaction.

II . Measurement:

Foreign currency monetary items are reported using the closing rate.    _r

Non-monetary items which arc carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at, e a e o

the transaction    ...

Non-monetary^- items which are carried at fair value or other similar valuation denominated in a foreign currency are reported usmg the exchange r

that existed when the values were determined.

,—-«—-*¦ <=¦*¦*--**-»¦—

or expenses in the Statement of Profit and Loss,

8 Employee Benefits:

A.    Short - Term Employee Benefits:

Leave Encashment:

The leave encashment liability upon retirement would not arise as the accumulated leave is reimbursed every year and accounted a. actual.

B.    Post-Employment Benefits:

Defined Benefit Plan:

Of..«ii, liability is . defined bepef.i obligu.ion and is unfunded, lira Crapuny aecunis fra li.biliiy f« M-    <»-» *- - **

valuation using Projected l Init Credit Method cairied out as at the end of each financial year.

Defined Contribution flan:

Provident Fund: Eligible employees receive benefit from provident fund covered undergo Provident Fund Act. Both the employee and the company make monthly contributions. The employer contribution is charged off to Profit & Loss Account as an expense.

V    (of :    (JS

Notes to Financial Statements for the Year Ended March 31,2023

⁹ Incom^Tax expaise is accounted for in accordance with AS-22 "Accounting for Taxes on Income" for both Current Tax and Deferred Tax stated

A.    Current Tax:

Provision for current tax is made in accordance with the provisions ol the Income lax Act. 1 *>1.

B.    Deferred Tax:

date.

Deferred tax assets arc recognised and carried forward to the extent that there is a reasonable certainty, except arising from un absorbed depreciation md carried forward Kisses, that sufficient future taxable income will he available against which such deferred tax assets can be realised.

H) Provisions and Contingent Liabilities:

¦mmmmwmtm

provision or disclosure is made.

11 Earnings Per Share:

mmmsmssmSB

average market value of the outstanding shares. Dilutive potential equity shares are deemed converted as at the beginning    P

at a later date. Dilutive potential equity shares arc determined independently for each period presented.

12    Cash Flow Statement:

flows. The cash flows from operating, investing and financing activities of the Company are Segregated.

13    Investments:

Investments, which arc readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments arc classified as long-term investments.