Accounting Policies of Thinking Hats Entertainment Solutions Ltd. Company

Mar 31, 2025

B. STATEMENT OF MATERIAL ACCOUNTING POLICIES

1. (a) Basis of Preparation of Financial Statements:

The financial statements has been prepared and presented under historical cost convention on the accrual
basis of accounting in accordance with the Generally Accepted Accounting Principles in India ("GAAP") and
comply withthe mandatory Accounting Standards ("AS") specified under section 133 of the Companies Act 2013,
read with Rule7 of the Companies (Accounts) Rules,2014 and the relevant provisions of the Companies Act 2013
("the 2013 Act").

All 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 (Revised) to the Companies Act, 2013. Based on the nature of
business, the Company has ascertained its operating cycle as 12 months for the purpose of current- non current
classification of assets and liabilities.

The Financial statements are presented in Indian Rupee (Rs.) & all the amounts included in the financial
statements have been rounded off to the nearest Lakhs upto two decimals, as required by General instructions
for preparation of Financial Statements in Division I of Schedule III of the Companies Act, 2013, except number
of shares, face value of shares, earning per shares, or wherever otherwise stated. Wherever the amount
represented Rs ''0.00'' construes value less than Rupees Five Hundred.

(b) Use of Estimates:

The preparation of financial statements in conformity with Indian GAAP requires management to make
judgments, estimates and assumptions to be made that affect the reported amount of assets and liabilities,
disclosure of contingent liabilities on the date of the financial statements and the reported amount of revenues
and expenses during the reporting period. Difference between the actual results and estimates are recognised
in the period in which the results are known materialized.

(c) Going Concern Accounting Assumption:

The enterprise is normally viewed as a going concern, that is, as continuing in operation for the foreseeable
future. lt is assumed that the enterprise has neither the intention nor the necessity of liquidation or of curtailing
materially the scale of the operations.

2. Property plant and equipments:

Items of property, plant and equipment are measured at cost, less accumulated depreciation and accumulated
impairment losses (if any)

The cost of an item of property, plant and equipment comprises: (a) its purchase price, including import duties and
non-refundable purchase taxes, after deducting trade discounts and rebates; (b) any costs directly attributable to
bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended
by management; (c) the initial estimate of the costs of dismantling and removing the item and restoring the site on
which it is located, the obligation for which an entity incurs either when the item is acquired or as a consequence of
having used the item during a particular period for purposes other than to produce inventories during that period.

The cost of a self-constructed item of property, plant and equipment comprises the cost of materials and direct
labour, any other cost directly attributable to bringing the item to working condition for its intended use.

The cost of improvements to leasehold premises, if recognition criteria are met, are capitalized and disclosed
separately under leasehold improvement.

Capital Work-in-progress (CWIP) includes expenditure that is directly attributable to the acquisition/construction of
assets, which are yet to be commissioned

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset. Any gain or loss arising on the disposal and retirement of an
item of property, plant and equipment is determined as the difference between the sale proceeds and the carrying
amount of the asset and is recognized in Statement of profit and loss.

Subsequent cost

Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that the future economic benefits associated with expenditure will flow to the Company and the
cost of the item can be measured reliably. All other subsequent cost are charged to Statement of profit and loss at
the time of incurrence.

Depreciation Policy:

Depreciation on the Property Plant and Equipment is provided to the extent of depreciable amount on Written down
Value (WDV) Method based on the useful life of the assets as prescribed in Schedule ll to Companies Act, 2013 . The
residual value shall not be higher than that prescribed in Part C of Second Schedule. The residual values, useful lives
and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted
prospectively, if appropriate.

3. Intangible Assets:

Intangible Asset is carried in the books, if it is an identifiable non-monetary asset, without physical substance, held
for use in the production or supply of goods or services, for rental to others, or for administrative purposes.

An intangible asset is recognized if, and only if:

a) It is probable that the future economic benefits that are attributed to the asset will flow to the company; and

b) cost of the asset can be measured reliably.

Intangible assets acquired by the Company are stated at cost less accumulated amortization less impairment
loss, if any.

Intangible Asset comprises Film, Music and Content Rights, including acquired rights, which the company
intends to retain post release and are stated at cost less amortization less provision for impairment. Costs
include line production costs, overhead and capitalized interest costs.

Film / Music production cost and content advances are transferred to film, Music and content rights at the point
at which content/Film/Music is first exploited. Till the time it is not exploited/under development stage all such
production cost and content advances are shown under Intangible Asset under Development.

Amortization Policy:

The Cost of Music Rights are amortised over a period of one to five years from the date of release of Music.

The Cost of Film Rights are amortised over a period of one to ten years from the date of release of Films on various
platforms.

The Cost of Content Rights are amortized over a period of 3 years.

The determination of useful life is based upon Management''s judgment and includes assumptions on the timing
and future estimated revenues to be generated by these assets. The Company reviews the expected future revenue
potential at the end of each accounting period and recognises impairment loss, where required.

4. Impairment of Assets:

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is
charged to the Statement of Profit and Loss in the period in which an assets is identified as impaired. The impaired
loss, if any, recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable
amount.

5. Investments:

Long-term Investments are carried at cost. However, provision for diminution in value is made to recognize a decline,
other than temporary, in the value of the investments.

Current Investments are carried at lower of cost or market value. The cost of securities sold is determined on the
first-in-first-out (FIFO) method.

6. Borrowing Costs:

Borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended
use. All other borrowing costs are recognized as an expense in the period in which they are incurred. Capitalization of
borrowing costs is suspended during the extended period in which active development is interrupted. Capitalization
of borrowing costs is ceased when substantially all the activities necessary to prepare the qualifying asset for its
intended use or sale are complete. Other borrowing costs are charged to statement of profit and loss as and when
incurred.

7. Employee Benefits:

Employee benefit liabilities such as salaries, wages and bonus, etc. that are expected to be settled wholly within
twelve months after the end of the reporting period in which the employees render the related service are recognized
in respect of employee''s services up to the end of the reporting period and are measured at an undiscounted amount
expected to be paid when the liabilities are settled. Gratuity has been calculated based on date of joining for all the
employees.

Post Retirement Employee Benefits

(a) Defined contribution plans:

Defined contribution plans are employee state insurance scheme and Government administered pension fund
scheme for all applicable employees and superannuation scheme for eligible employees. Retirement benefits
in the form of contribution to Provident fund are defined contribution plans. The Company''s contribution to
defined contribution plans is recognized in the Statement of Profit and Loss in the financial year to which they
relate.

(b) Defined benefit plans

Defined Benefit plans are the plans for which the benefits has been defined for the eligible employees which are
meant to be paid to then at the time of retirement. The Company operates defined benefit plan viz., gratuity.
The costs of providing benefits under this plan are determined on the basis of actuarial valuation at each year-
end. Actuarial valuation is carried out for the plan using the projected unit credit method.

Defined benefit costs are comprised of:

a) service cost (including current service cost, past service cost, as well as gains and losses on curtailments
and settlements);

b) Net interest expense or income; and

c) Re-measurement.

8. Foreign Currency Transactions:

Foreign currency transactions are accounted at the exchange rates prevailing on the date of the transactions or that
approximates the actual rate on transaction date.

Monetary items denominated in foreign currencies at the year-end are restated at year end rates. 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

Any Income or Expense on account exchange difference in respect of current assets and current liabilities not covered
by forward contracts, are recognized in the Statement of Profit and Loss at the period end.

9. Revenue Recognition:

a) Revenue from Sale of Goods:

Sale of goods are recognized, net of returns and trade discounts on transfer of significant risks and rewards of
ownership to the buyer. Sales include excise duty but exclude Goods & Service Tax.

b) Revenue from Service:

Revenue from service transactions is usually recognized as the service is performed, either by the proportionate
completion method or by the completed service contract method.

c) Revenue from Films:

Income from production of films is recognized in the statement of Profit and Loss on release/Streaming of films/
Web series as per the contracts/ arrangements with distributors/Channels/Buyers. Revenue from distribution
of motion pictures is recognized based on ticket sales on exhibition of motion pictures at exhibition theatres.

d) Revenues from Terrestrial Rights, Video Rights, Satellite Rights etc :

Revenue recognized on transfer/ assignment/ effective date of respective rights in accordance with the
respective agreement or on realization of the substantial consideration whichever is earlier and on delivery of
the specified telecasting material.

e) Audio Product Sale:

Revenue from sale of Audio Rights is recognized on transfer/ assignment of the rights as per the contracts/
arrangements with parties.

f) Revenue from Event: Revenue from events is recognised on exhibition of Events through ticket sales and
sponsorship. Contracted minimum guarantees are recognised on exhibition of event.

f) Interest Income:

Interest income is recognized on time proportion basis taking into account the amount outstanding and the
rate applicable, And Dividend income is recognized when right to receive is established.

g) Others:

Income is recognized when no significant uncertainty exists as to measurability and realization.

10. Inventories:

Items of inventory are valued on the basis as given below:

a) Raw Material:

Raw Materials are valued at cost (on First-in-First Out basis) or net realizable value whichever is lower.

b) Work-In-Progress:

Work-ln-Progress is valued at cost of materials consumed and services used.

c) Finished Goods:

Finished Goods are value at cost or net realizable value whichever is lower. Cost comprises of cost of purchase,
cost of in-house productions {audio/video/films), cost of conversion and other costs incurred in bringing the
inventory to their present location and condition.

d) Cost of Feature Films:

Cost of feature films produced or acquired, the rights of which company intends to sell is inventorized and
charged to statement of profit and loss account on release of films.

e) Cost of under Production Film:

Expenses of under production films incurred till the films are ready for release are inventorized if the company
intends to sell the rights of the same. The production of films requires various types of material ls in different
qualities and quantities. Considering the peculiar nature of those items including where multiplicity and
complexity, it is not practicable to maintain quantitative records of those items. Further, in the absence of
reusability of such items, the same are not valued.

lnventories includes films under production are stated at lower of cost/ un-amortized cost or realizable value.
Cost comprises acquisition direct production cost. Where the realizable value on the basis of its estimated
useful economic life is less than its carrying amount, the difference is expensed as impairment.