ಕಂಪನಿಯ ಅಕೌಂಟಿಗ್ ಪಾಲಿಸಿ Exato Technologies Ltd.

2 SIGNIFICANT ACCOUNTING POLICIES

(i) Basis of Accounting and Preparation of Financial Statements

The financial statements of the Company have been prepared in accordance with generally accepted accounting
principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material
respects with the accounting standards referred to section 133 and relevant provisions of the Companies Act 2013. The
financial statements have been prepared on an accrual basis and under the historical cost convention, except for certain
financial instruments which are measured at fair value. The accounting policies have been consistently applied and are
consistent with those used in the previous year unless stated otherwise.

(ii) Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires the
management of the Company to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the results of
operations during the reporting periods. Although these estimates are based upon management''s best knowledge
of current events and actions, actual results could differ from those estimates. The significant estimates used by the
management in the preparation of these financial statements include estimation of the economic lives of fixed assets
and provision for employee benefits. Any revision to accounting estimates is recognised prospectively in the current
and future periods.

(iii) Classification of Assets and Liabilities as Current and Non Current

All assets and liabilities are classified as current or non-current as per the Company''s normal operating cycle and
other criteria set out in Schedule III to the Companies Act, 2013. Based on the nature of products and the time between
the acquisition of assets for processing and their realisation in cash and cash equivalents, twelve months has been
considered by the Company for the purpose of current/ non-current classification of assets and liabilities.

Assets

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

(a) it is expected to be realised in, or is intended for sale or consumption in, the company''s normal operating cycle;

(b) it is held primarily for the purpose of being traded;

(c) it is expected to be realised within 12 months after the reporting date; or

(d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12
months after the reporting date.

All other assets will be classified as non current
Liabilities

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

(a) it is expected to be settled in the company''s normal operating cycle;

(b) it is held primarily for the purpose of being traded;

(c) it is due to be settled within 12 months after the reporting date; or

(d) the company does not have an unconditional right to defer settlement of the liability for at least 12 months after the
reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue
of equity instruments do not affect its classification.

All other liabilities will be classified as non current.

(iv) Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the
revenue can be reliably measured. The following specific criteria must also be met before revenue is recognised:

(a) Revenue from sale of goods in the ordinary course of activities is recognised when property in the goods or all
significant risks and rewards are transferred to the customers and no significant uncertainty exists regarding the
amount of the consideration that will be derived from the sale of the goods and regarding its collection. Sales are
stated net of taxes, returns and trade discounts.

(b )Revenue from services is recognised based on services rendered to clients as per the terms of specific contracts and
recorded at invoice value net of GST.

(c) Interest is recognized using the time-proportion method, based on rates implicit in the transaction.

(d) Revenue from other income is recognised to the extent that it is probable that the economic benefits will flow to the
company and the revenue can be reliably measured.

(v) Property, plant and equipment and depreciation

Property, Plant and Equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
The cost of Property, Plant and Equipment comprises its purchase price, including import duties and non-refundable
purchase taxes, after deducting trade discounts and rebates, and 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.

Borrowing costs directly attributable to acquisition of those assets which necessarily take a substantial period of time
to get ready for their intended use are capitalised.

Subsequent cost related to an item of Property, Plant and Equipment are recognised in the carrying amount of the item
if the recognition criteria are met.

Items of property, plant and equipment retired from active use and held for disposal are stated at the lower of their
carrying amount and net realisable value. Any write-down in this regard are recognised immediately in the statement
of profit and loss. Losses arising from retirement or gains or losses arising from disposal of property, plant and
equipment which are carried at cost are recognised in the Statement of Profit and Loss.

Advances paid towards the acquisition of Property, Plant and Equipment assets outstanding at each balance sheet date
and the cost of those assets not ready for their intended use before such date are disclosed as capital work-in-progress.
Expenditure directly relating to expansion is capitalised only if it increases the life or functionality of an asset beyond
its original standard of performance.

Depreciation on fixed assets is provided on written down value basis over the estimated economic useful life of the
assets as prescribed in schedule II of the Companies Act, 2013. Where the Company estimates that the useful life of
the assets is less than the prescribed life in schedule II, the former is considered for depreciation purpose. Leasehold
improvements are depreciated over the useful life. The useful life of the assets are as follows :

The useful lives are reviewed by the management at each financial period-end and revised, if appropriate. In case of a
revision, the unamortized depreciable amount is charged over the remaining useful life.

Losses arising from retirement or gains or losses arising from disposal of property, plant and equipment which are
carried at cost are recognised in the Statement of Profit and Loss.

(vi) Intangible assets

Intangible assets are stated at cost less accumulated amortisation and accumulated impairment losses. The cost of
Intangible asset acquired comprises its purchase price including any import duties and other taxes (other than those
subsequently recoverable by the enterprise from the taxing authorities) and any directly attributable expenditure on
making the intangible asset ready for its use. And the cost of an internally generated intangible asset is the sum of
the expenditure incurred from the time when it first met the recognition criteria for an intangible asset and the cost
comprises all expenditure that can be directly attributed or allocated on a reasonable and consistent basis to creating,
producing and making the intangible asset for its intended use.

Borrowing costs directly attributable to acquisition of those assets which necessarily take a substantial period of time
to get ready for their intended use are capitalised.

Subsequent expenditure on an intangible asset after its purchase or its completion are recognised in the carrying
amount of the item if the recognition criteria are met.

An intangible asset is derecognised on disposal or when no future economic benefits are expected from its use and
subsequent disposal. Gains or losses arising from the retirement or disposal of an intangible asset are determined as
the difference between the net disposal proceeds and the carrying amount of the asset and are recognised as income or
expense in the statement of profit and loss.

Advances paid towards the acquisition, creating, producing and making the intangible asset outstanding at each
balance sheet date and the cost of those assets not ready for their intended use before such date are disclosed as
Intangible assets under development.

(vii) Impairment of assets

The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any
such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the
asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount,
the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is
recognised in the Profit and Loss Account. If at the balance sheet date there is an indication that if a previously assessed
impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable
amount, subject to a maximum of depreciated historical cost.

(viii) Borrowing Costs

Borrowing Costs include interest, amortization of ancillary costs incurred and exchange differences arising from
foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection
with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the
Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilized for qualifying assets,
pertaining to the period from commencement of activities relating to construction / development of the qualifying
asset upto the date of capitalization of such asset is added to the cost of the assets.

(ix) Foreign currency transactions

(i) Initial Recognition

Foreign currency transactions are recorded 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 of foreign currency items at the Balance Sheet date

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.

(iii) Exchange Differences

Exchange differences arising on the settlement of monetary items or on reporting of monetary items at rates different
from those at which they were initially recorded during the year, or reported in previous financial statements, are
recognised as income or as expenses in the year in which they arise. Investments in shares of foreign subsidiaries
are not restated at the end of the year.

ix) Operating leases

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term are
classified as operating leases. Operating lease payments are recognized as an expense in the Profit and Loss account
with reference to lease terms & other considerations.

(xi) Taxes on income

Tax expenses for the period, comprising current tax and deferred tax, are included in the determination of net profit or
loss for the period. Current tax are measured at the amount expected to be paid to tax authorities in accordance with
the Income Tax Act, 1961

Deferred Tax is recognized for all the timing differences, subject to the consideration of prudence in respect of deferred
tax assets. Deferred tax assets are recognized and carried forward only to the extent that there is reasonable certainty
that sufficient future taxable income will be available against which such deferred tax asset can be realized. Deferred
tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted
by the Balance Sheet date. At each Balance Sheet date, The Company re-assesses unrecognized deferred tax assets, if
any. In case of unabsorbed losses and unabsorbed depreciation, all deferred tax assets are recognized only if there is
virtual certainty supported by convincing evidence that can be realized against future taxable profit. At each balance
sheet date the Company reassesses unrecognized deferred tax assets.

(xii) Employee benefits

Short- term employee benefits:

All employee benefits payable wholly within twelve months of rendering service are classified as short-term employee
benefits. Benefits such as salaries, allowances, short-term compensated absences and the expected cost of other benefits
is recognised in the period in which the employee renders the related services.

Post-employment benefits

(a) Defined benefit plan

The Company''s gratuity plan is a defined benefit plan. The present value of gratuity obligation under such defined
benefit plan is determined annually based on an actuarial valuation carried out by an independent actuary using the
Projected Unit Credit Method, which recognises each period of current and past service as giving rise to additional
unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation
is measured at the present value of the estimated future cash flows. The discount rate used for determining the
present value of the obligation under defined benefit plan is based on the market yields on Government securities
as at the valuation date having maturity periods approximating to the terms of related obligations. Actuarial gains
and losses are recognised immediately in the Statement of Profit and Loss. Gains or losses on the curtailment or
settlement of any defined benefit plan are recognised when the curtailment or settlement occurs.

(b) Other long term benefits
Compensated absences

Accumulated compensated absences, which are expected to be availed or encashed within 12 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 12 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.

(c) Defined Contribution Plans

In respect to retirement benefit in the form of Provident fund, the Company''s Contribution paid/payable under
the schemes is recognized as an expense in the period in which the employee renders the related service. The
Company''s contributions towards provident fund, which are being deposited with the Regional Provident Fund
Commissioner, are charged to the Statement of Profit and Loss.

(xiii) Earnings per share

The basic earnings per share is computed by dividing the net profit/ (loss) attributable to equity shareholders for the
year by the weighted average number of equity shares outstanding during the year. 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 are adjusted for the effects of all dilutive potential equity shares.