ಕಂಪನಿಯ ಅಕೌಂಟಿಗ್ ಪಾಲಿಸಿ Highness Microelectronics Ltd.

2. Significant accounting policies

2.1 Basis for preparation of financial statements

a) The financial statements have been prepared to
comply in all material aspects with the applicable
accounting principles generally accepted in India, the
accounting standards issued by the Institute of
Chartered Accountants of India to the extent
applicable and as per the Accounting Standards
prescribed in the Companies (Accounting
Standards) Rules, 2014 issued by the Central
Government in consultation with the National Advisory
Committee on Accounting Standards (NACAS) and the
relevant provisions of the Companies Act, 2013.

b) Accounting Policies not specifically referred to
otherwise are in consonance with prudent accounting
principles.

c) The financial statements are prepared in accordance
with the historical cost convention.

2.2. Revenue recognition

a) Sales are accounted when significant risk and
rewards are passed on to the customer. Sales are
accounted net of excise duty.

b) Interest income is accounted on a time proportion
basis taking into account the amounts invested and
the rate of interest.

c) Dividend incomes on investments are accounted for
when the right to receive the payment is established.

2.3 Use of Estimates

The preparation of financial statements in conformity
with the generally accepted accounting principles
(''GAAP'') requires management to make estimates and

assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent
liabilities on the date of the financial statements. Actual
results could differ from those estimates. Any revision
to accounting estimates is recognized prospectively in
current and future periods.

2.4 Expenditure

Expenses are accounted for on accrual basis and
provision is made for all known losses and liabilities.

2.5 Translation of Foreign Currency Items

Transactions in foreign currencies are translated into
Indian Rupees (INR) at RBI reference rate of exchange
ruling on the date of the transactions.

Gains or losses resulting from foreign currency
transactions are taken to the i ncome statement.

Intangible Assets -

The Company operates in the microelectronics
industry and procures new enclosure designs, software
files, layouts and technical specifications which form
the basis for production of LED panels, backlights,
controller boards and other electronic products for
specific customers.

Costs incurred towards such activities are in the nature
of development costs and meet the recognition criteria
of an intangible asset as per applicable accounting
standards. Accordingly, these costs are capitalised as
Intangible Assets - Research and Development Costs.

2.7. Depreciation

Depreciation is provided on the written down value
method over the useful life of assets in the manner
specified under Part C of Schedule II of the Companies
Act, 2013. Assets acquired prior to 1st April, 2015, the
carrying amount as on 1st April, 2015 is depreciated over
the remaining useful life based on evaluation.
Depreciation on additions during the year is provided
on pro-rate basis from the date of addition.

As per companies act such costs are amortised to
Statement of Profit and Loss over a useful life period
of four years or in proportion to the revenue is
generated against the related contracts, as and when
such revenue is recognised, in accordance with AS 9 -
Revenue Recognition and matching principle.

2.8 Impairment of Assets

The management periodically accesses, using
internal sources, whether there is an indication that
an asset may be impaired. An impairment occurs
where the carrying value exceeds the present value of
future cash flows expected to arise from the
continuing use of assets and its eventual disposal.
The impairment loss to be expensed is determined as
the excess of carrying amount over the higher of the
assets net sales price or present value as determined
above.

2.9 Investments

Non-current investments are stated at cost. Provision
for diminution is made to recognize a decline, other
than temporary, in the value of Non-current
investments.

2.10 Inventories

Inventories, stores and spares are valued at cost or net
realizable value, whichever is lower. Cost is arrived at
on First-In-First-Out (FI FO) basis.

2.11 Retirement benefits to employees

a. Defined benefit plan

The Company provides for gratuity, a defined benefit
retirement plan (''the Gratuity Plan'') covering eligible
employees. 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
and the tenure of employment with the Company.
Liabilities with regard to the Gratuity Plan are
determined by actuarial valuation at each Balance
Sheet date using the projected unit credit method.
The Company recognizes the net obligation of the
gratuity plan in the Balance Sheet as an asset or
liability, respectively in accordance with Accounting
Standard (AS) 15, ''Employee Benefits.

b. Defined Contribution plan

Eligible employees of Highness Microelectronics Ltd
receive benefits from provident funds which is a
defined benefit plan. Both eligible employee &

company make monthly contributions to provident
fund.

2.12 Taxation

Income Tax expense comprises of current tax and
deferred tax charge or credit. Deferred Tax resulting
from timing differences between book profit and tax
profit is accounted for under the liability method, at
the current rate of tax, to the extent that the timing
difference is expected to crystallize & accounted as
per AS - 22