ಕಂಪನಿಯ ಅಕೌಂಟಿಗ್ ಪಾಲಿಸಿ KVS Castings Ltd.

Mar 31, 2026

Note 1: Corporate Information

KVS Castings Limited (the “Company”) is a public limited company domiciled in India and incorporated on 10 June 2019 as a private limited company under the provisions of the Companies Act, 2013. Subsequently, on 09 September 2024, the status of the Company was changed from a private limited company to a public limited company.Equipped with cutting-edge technology, the Company specializes in manufacturing cast iron, SG iron, alloy steel and stainless steel casting solutions catering to well-known automobile, locomotive and engineering sectors. Through its focus on innovation, advanced manufacturing capabilities and adherence to stringent quality standards, the Company provides comprehensive casting solutions to meet the evolving requirements of its customers.

During the year, the Registered Office of the Company was shifted within the city on 06 March 2026 from its earlier location at B, 25-29, Industrial Estate, Bazpur Road, Kashipur - 244713, Udham Singh Nagar, Uttarakhand to Village Girdhaiyai & Baghelewala, Aliganj Road, Kashipur - 244713, Uttarakhand. The books of account of the Company are maintained at the registered office.

The equity shares of the Company were listed on the SME Emerge Platform of the Bombay Stock Exchange Limited (BSE) with effect from 06 October 2025 pursuant to its Initial Public Offer (IPO) aggregating to Rs. 2,783.20 Lakhs, comprising a fresh issue of 49,70,000 equity shares of face value Rs. 10/- each at an issue price of Rs. 56/- per share.

During the year, the Company commissioned its new production facility having an installed capacity of 12,000 metric tons per annum, in addition to its existing production capacity of 7,200 metric tons per annum. Consequently, the total installed production capacity of the Company increased to 19,200 metric tons per annum. The Company commenced trial and commercial operations of the new facility with effect from 02 March 2026. The capacity expansion is in line with the objects of the IPO, particularly towards capital expenditure for the acquisition of plant and machinery.

Significant Accounting Policies

i. Basis of accounting

The financial statements have been prepared on going concern basis under the historical cost basis, in accordance with the generally accepted accounting principles in India and in compliance with the applicable accounting standards ("AS”) as specified under section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended). The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year. Based on the nature of services and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current or non-current classification of assets and liabilities.

The financial statements are presented in Indian rupee and all values are rounded to the nearest lakh and two decimals thereof, except if otherwise stated.

ii. Use of estimates

The preparation of financial statements is in conformity with Generally Accepted Accounting Principles (GAAP) requires the management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures of contingent liabilities on the date of financial statements and the reported amounts of revenues and expenses during the reporting period.

Management believes that the estimates used in the preparation of financial statements are prudent and reasonable. Accounting estimates could change from period to period. Any revision to accounting estimates are recognized in the periods in which the results are known/materialize.

iii. Property, Plant, and Equipment and Intangible Assets

Property, Plant, and Equipment and intangible assets are stated at cost of acquisition / revalued amount, less accumulated depreciation and impairments, if any. Revalued assets are stated at their fair value as at the date of revaluation based on report of approved valuer less accumulated depreciation. Cost of Property, Plant, and Equipment includes taxes, duties, freight and other incidental expenses related to acquisition and installation net

of Input Tax Credit received/receivable thereon, if any. Borrowing costs attributable to acquisition, construction of a qualifying asset (i.e. an asset requiring substantial period of time to get ready for intended use) are capitalized in accordance with the requirements of Accounting

Standard 16 (AS 16), "Borrowing Costs”. Other pre-operative expenses during construction period are capitalized, where appropriate. Other Property, Plant, and Equipment are stated at their historical cost of acquisition/ installation less depreciation.

Leasehold land is recognized at cost, comprising upfront lease premium, stamp duty, registration charges and other directly attributable costs incurred for acquiring leasehold rights. Leasehold land having finite lease tenure is amortized on a straight-line basis over the lease period. Periodic lease rent and other recurring charges are recognized in the Statement of Profit and Loss on accrual basis.

Capital Work-in-Progress represents expenditure incurred on assets under construction/development and includes direct expenses and other attributable costs incurred for bringing the assets to their intended use. The same is carried at cost and transferred to the respective fixed asset category upon completion/readiness for intended use.

iv. Depreciation

The Company follows straight line method of depreciation for all of its Property, Plant, and Equipment.

Depreciation is provided based on useful life of the asset as prescribed in schedule II to the Companies Act, 2013. The useful lives followed by the Company are as under:

Asset Class	Useful Life
Buildings	30-60 years
Plant & Machinery	15 years
Lab Equipment	10 years
Computers	3 years
Office Equipment	5 years
Furniture & Fixtures	10 years
Vehicles	8 years

Depreciation on addition to Property, Plant, and Equipment has been calculated on pro-rata basis from the date of acquisition / installation.

v. Impairment of assets

At each balance sheet date, the Company assesses 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 and the reduction is treated as an impairment loss and is recognized in the Profit and Loss Account. If at the balance sheet date there is an indication that 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 and is accordingly reversed in the Profit and Loss Account.

vi. Inventories

Inventories are valued at the lower of cost and net realizable value. Cost of raw materials includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost of finished goods and work in progress include cost of direct materials and labour and a proportion of manufacturing overheads based on the normal operating capacity.

Costs of Inventories are determined as follows;

• Raw materials and Stores & Spares are valued at costs on "First in First Out” basis

• WIP/Semi-finished goods are valued at weighted average costs of the raw materials plus related cost of conversion including appropriate overheads;

• Finished goods are valued at cost or net realizable value, whichever is lower.

• Scrap is valued at cost or net realizable value whichever is lower.

When Inventories are sold, the carrying amount of those inventories is recognized as an expense in the period in which the related revenue is recognized; any write down of Inventory to net realizable value (NRV) is recognized as expense in the period when write down occurs and reversed in which the reversal occurs. Raw material and other supplies held for use in the production of finished products are not written down below cost, except in cases where material prices have declined and it is estimated that the cost of the finished products will exceed their net realizable value. The comparison of cost and net realizable value is made on item by item basis.

vii. Income tax

I ncome tax comprises of current tax and deferred tax. Tax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961, and based on the expected outcome of the assessment. Taxable profit differs from net profit as reported in the statement of profit and loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax is recognized on timing differences between the accounting income and the taxable income for the year and quantified using the tax rates and laws substantially enacted as on the balance sheet date.

Deferred tax assets in respect of unabsorbed depreciation/brought forward losses are recognized to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

Other deferred tax assets are recognized and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

viii. Investments

Investments which are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments.

Current investments are stated at lower of cost and fair market value. Long-term investments are stated at cost and provision for diminution in their carrying value, other than temporary, is made in the accounts.

ix. Borrowing costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are added to the cost of those assets until they are substantially ready for their intended use. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use.

All other Borrowing costs are recognized in the Statement of Profit and Loss in the period in which they are incurred.

Borrowing costs include interest and exchange difference arising from currency borrowing to the extent they are regarded as an adjustment to the interest cost.

x. Revenue Recognition

a. Revenue from sale of products is recognized, net of returns and trade discount, on transfer of significant risks and rewards of ownership to the buyer that coincides with the reliability and reasonableness to expect ultimate collection, which is generally on dispatch of goods.

Revenue from sale of services is recognized upon satisfaction of the performance obligation by provision of service to a customer in an amount that reflects the consideration which a company expects to receive in exchange for those services.

b. Income from investments, including dividend income, interest income and profit or loss on sale/redemption of investments, is recognized in the Statement of Profit and Loss on accrual basis.

xi. Earnings per share

Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period are adjusted for events including a bonus issue; bonus element in a rights issue to existing shareholders; share split; and reverse share split (consolidation of shares).

xii. Contingency/provisions

Depending upon the facts of each case and after due evaluation of legal aspects, claims against the Company not acknowledged as debts are treated as contingent liabilities. In respect of statutory dues disputed and contested by the Company, contingent liabilities are provided for and disclosed as per original demand without taking into account any interest or penalty that may accrue thereafter. The Company makes a provision when there is a present obligation as a result of a past event where the outflow of economic resources is probable and a reliable estimate of the amount of obligation can be made. Possible future or present obligations that may but will probably not require outflow of resources or where the same cannot be reliably estimated, has been made as a contingent liability in the financial statements.

xiii. Retirement benefits

The Company has three post-employment benefit plans in operation viz. Gratuity, Provident Fund and Employee state insurance scheme.

a) Provident Fund and Employee State Insurance Scheme

Provident Fund benefit and Employee State Insurance Benefit are defined contribution plans under which the Company pays fixed contributions into funds established under Employee Provident Fund and Miscellaneous Provision Act, 1952 and Employee State Insurance Act, 1948 respectively. The Company has no legal or constructive obligations to pay further contributions beyond such fixed contribution. The contributions recognised in respect of defined contribution plans are expensed as they accrue. Liabilities and assets may be recognised if underpayment or prepayment has occurred and are included in current liabilities or current assets, respectively, as they are normally of short term nature.

b) Gratuity

The Company’s gratuity scheme is a defined benefit plan. The liability or asset recognised in the Balance Sheet in respect of gratuity is determined on the basis of an actuarial valuation carried out at each Balance Sheet date using the Projected Unit Credit Method.The present value of the defined benefit obligation is determined based on actuarial assumptions relating to demographic and financial variables such as mortality, employee turnover, salary escalation and discount rates.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised immediately in the Statement of Profit and Loss in the period in which they arise.

Past service cost is recognised immediately in the Statement of Profit and Loss to the extent that the benefits are already vested. In cases where the benefits are not yet vested, the past service cost is recognised on a straight-line basis over the average period until the benefits become vested.

Where gratuity obligations are funded through an approved gratuity trust and managed by an insurer, the fair value of plan assets is adjusted against the present value of the defined benefit obligation, and the net surplus or deficit is recognised in the Balance Sheet in accordance with AS 15.

c) Leave Encashment

Leave encashment benefits are provided on accrual basis based on the leave entitlement of employees as at the reporting date. The Company follows a policy of annual settlement/payment of leave encashment and such benefits are not allowed to be accumulated beyond one year.

Accordingly, leave encashment is treated as a short-term employee benefit and is measured at the undiscounted amount expected to be paid. Since the obligation is settled within twelve months and does not result in longterm accumulation of benefits, no actuarial valuation has been carried out.

xiv. Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, balances with banks in current accounts and short-term deposits with maturities of three months or less from the date of acquisition that are readily convertible into known amounts of cash and are subject to insignificant risk of changes in value.

Other bank balances include deposits with banks having maturity of more than three months, margin money deposits, earmarked balances and other restricted deposits which are not readily available for use by the Company.

xv. Cash Flow Statement

Cash flows are reported using the indirect method, whereby Profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts and payments. The cash flows from regular revenue generating, financing and investing activities of the company are segregated.

xvi. Government Grant and Assistance

Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions. Government grants relating to income are recognised in the Statement of Profit and Loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income. Government grants relating to property, plant and equipment are included in non-current liabilities as deferred income and are credited to Statement of Profit and Loss on systematic basis over the expected lives of the related assets and presented within other income.