NOTE 1: CORPORATE INFORMATION

JNK India Limited (JNK), the Company, was incorporated in 2010 as private limited company. The Company got converted into a public limited company on May 26 2023.

The Company and its subsidiaries viz, JNK India Private FZE and JNK Renewable Energy Private Limited (together referred to as "the Group") are in the business of Technology based EPC Contracts and Solutions in Renewable Energy respectively. The Group's main activity consists of Designing, Engineering, Manufacture, Fabrication, Procurement, Erection and Commissioning of fired heaters and related combustible engineering products.

JNK Global Co. Ltd., one of the leading EPC contractors in Korea, is one of the major shareholders in the Company.

The Company's registered office is at Unit No. 203 to 206, Opp. TMC Office, Centrum IT Park, Near Satkar Hotel, Thane (West) - 400604, Maharashtra.

The CIN of the Company is U29268MH2010PLC204223.

The Company has completed its Initial Public Offer (IPO) and accordingly the Company's equity shares are listed on National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) with effect from April 30 2024.

Subsidiaries:

JNK India Private FZE was incorporated in Nigeria in the fiscal 2020.

It is mainly engaged in providing Erection Commissioning services in the field of Fired Heaters.

JNK Renewable Energy Private Limited was incorporated in the fiscal 2023.

It is mainly engaged in providing Solar Power Solutions.

NOTE 2: BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS

1) HISTORICAL COST CONVENTION

These Consolidated Financial Statements are prepared in accordance with Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Companies Act, 2013 ('the Act'), other provisions of the Act (to the extent notified) read with the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.

These Consolidated Financial Statements are prepared on a historical cost convention on the accrual basis, except for the following:

- certain financial assets and liabilities (including derivative instruments) which are measured at fair value or amortised cost;

- defined benefit plans and

- share- based payments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between the market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique.

2) USE OF ESTIMATES

Preparation of the consolidated financial statements requires the use of certain critical accounting judgements, estimates and assumptions. It also requires the management to exercise judgment in the process of applying the Group's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4.

3) Recent Accounting Pronouncements

(a) New and Amended Standards Adopted by the Company:

The Company has applied the following amendments for the first time for their annual reporting period commencing April 1, 2023:

i) Ind AS 1 - Presentation of Financial Statements

The amendments to Ind AS 1 provide guidance and examples to help entities apply materiality judgements to accounting policy disclosures. The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their 'significant' accounting policies with a requirement to disclose their 'material' accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures. This amendment do not have any material impact on the Company's financial statements and disclosures.

ii) Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors

The amendments to Ind AS 8 clarify the distinction between changes in accounting estimates, changes in accounting policies and the correction of errors. They also clarify how entities use measurement techniques and inputs to develop accounting estimates.

iii) Ind AS 12 - Income Taxes

The amendments to Ind AS 12 Income Tax narrow the scope of the initial recognition exception, so that the exception no longer applies to transactions that give rise to equal taxable and deductible temporary differences such as leases and decommissioning liabilities.

The above amendments did not have any material impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.

(b) New Standards/Amendments notified but not yet effective:

Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. During the year ended March 31, 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.

The Consolidated Financial Statements are presented in Indian Rupees in Million, the national currency of India which the Group has selected as its functional currency.

"0" or "-" in the Consolidated Financial Statements indicates value below the rounding off conversion of INR Million.

NOTE 3: MATERIAL ACCOUNTING POLICIES i. Principles of Consolidation

The consolidated financial statements incorporate the financial information of the Company and its subsidiaries. For this purpose, an entity which is controlled by the Company is treated as subsidiary.

The Company together with its subsidiaries constitute the Group. Control exists when the Company, directly or indirectly, has power over the investee, is exposed to variable returns from its involvement with the investee and has the ability to use its power to affect its returns.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Income and expenses of a subsidiary acquired are included in the consolidated Statement of Profit and Loss from the date the Company. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:

• Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);

• Exposure, or rights, to variable returns from its involvement with the investee, and

• The ability to use its power over the investee to affect its returns.

In current case the consolidated financial statements are prepared for the group where JNK India Limited is a Parent Company and JNK India Pvt FZE and JNK Renewable Energy Pvt Ltd are its subsidiaries.

All intra-group assets, liabilities, income, expenses and unrealised profits / losses on intra-group transactions are eliminated on consolidation.

The Consolidated Financial Statements are prepared using uniform accounting policies for like transactions and events in similar circumstances and necessary adjustments required for deviations, if any, to the extent possible unless otherwise stated, are made in the Consolidated Financial Statements.

The list of subsidiary companies which are included in the consolidation are as under:

ii. Cash Flow Statement

Cash flow statement is prepared segregating the cash flows from operating, investing and financing activities. Cash flow from operating activities is reported using indirect method as set out in Indian Accounting Standard (IND AS) -7 "Statement of Cash Flows".

Under the indirect method, the net profit is adjusted for the effects of:

a. transactions of a non-cash nature

b. any deferrals or accruals of past or future operating cash receipts or payments and

c. items of income or expense associated with investing or financing cash flows.

Cash and cash equivalents comprise cash at bank and in hand and demand deposits with banks and are reflected as such in the cash flow statement. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

iii. Property, Plant & Equipment

Property, plant and equipment, other than freehold land, are stated at cost less accumulated depreciation

and impairment, if any. Costs directly attributable to acquisition are capitalized until the property, plant equipment are ready for use, as intended by the Management. Freehold land is carried at cost and is not depreciated.

The Group depreciates property, plant and equipment, other than leasehold improvements, over their estimated useful lives using the written down value method. Leasehold improvements are depreciated over the tenure of Lease Term. The useful lives of material assets are estimated as follows:-

If significant parts of an item of Property, Plant & Equipment have different useful lives then they are accounted for as separate items (major components) of Property, plant & Equipment.

Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates.

Advances paid towards the acquisition of property, plant and equipment outstanding at each Balance Sheet date are classified as capital advances under other non-current assets and the costs of assets not put to use before such date are disclosed under 'Capital work-in-progress'. Subsequent expenditures relating to property, plant and equipment are capitalized only when it is probable that future economic benefits associated with these will flow to the Group and the cost of the item can be measured reliably.

Repairs and maintenance costs are recognized while computing net profit, in the Statement of Profit and Loss, when incurred. The cost and its corresponding accumulated depreciation are eliminated from the financial statements upon sale or retirement of the asset and the resultant gains or losses are recognized in the Statement of Profit and Loss. Assets to be disposed off are reported at the lower of the carrying value or the fair value less cost to sell.

Gains or losses arising from de-recognition of tangible assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.

iv. Intangible Assets

Intangible assets are stated at cost less accumulated amortization and impairment. Intangible assets having finite lives are amortized over their respective individual estimated useful lives, from the date that they are available for use. The estimated useful life of an identifiable intangible asset is based on a number of factors including the effects of obsolescence, demand, competition, and other economic factors (such as the stability of the industry and known technological advances) and the level of maintenance expenditure required to obtain the expected future cash flows from the asset. Amortization methods and useful lives are reviewed periodically including at each financial year end.

Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the profit and loss when the asset is derecognized.

v. Impairment of Non-Financial Assets

The carrying amounts of Property, Plant and Equipment, Intangible Assets and investments in subsidiary companies are reviewed for impairment at the end of each financial year and also whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. An asset's recoverable amount is the higher of an asset's or Cash Generating Unit's (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

vi. Current / Non Current Classification

Ind AS requires that an entity shall present current and non-current assets, and current and non-current liabilities, as separate classifications in its balance sheet.

Any asset or liability is classified as current if it satisfies any of the following conditions:

a. it is expected to be realized or settled or is intended for sale or consumption in the Group's normal operating cycle which is ascertained by the Group as 12 months;

b. it is expected to be realized or settled within twelve months from the reporting date;

c. in the case of an asset,

• it is held primarily for the purpose of providing services; or

• it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date;

d. in the case of a liability, the Group does not have an unconditional right to defer settlement of liability for at least twelve months from the reporting date.

All other assets and liabilities are classified as noncurrent.

vii. Financial Instruments

A. Financial Assets

Financial assets include investments in equity and debt securities, cash and cash equivalents, trade receivables, employee and other advances and eligible current and non-current assets.

All financial assets, except Trade Receivables are recognized initially at fair value.

Subsequent to initial recognition, financial assets are measured as described below:

a. Investments:

i. Financial instruments measured at amortized cost:

Debt instruments that meet the following criteria are measured at amortized cost (except for debt instruments that are designated at fair value through Profit or Loss (FVTPL) on initial recognition):

a. The asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and

b. The contractual terms of the instrument give rise on specified dates to cash flows that are solely payment of principal and interest on the principal amount outstanding.

ii. Financial instruments measured at fair value through other comprehensive income (FVTOCI):

Debt instruments that meet the following criteria are measured at fair value through other comprehensive income (FVTOCI) (except for debt instruments that are designated at fair value through Profit or Loss (FVTPL) on initial recognition)

a. The asset is held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial asset; and

b. The contractual terms of the instrument give rise on specified dates to cash flows that are solely payment of principal and interest on the principal amount outstanding.

Interest income is recognized in statement of profit and loss for FVTOCI debt instruments. Other changes in fair value

of FVTOCI financial assets are recognized in other comprehensive income. When the investment is disposed of, the cumulative gain or loss previously accumulated in reserves is transferred to statement of profit and loss.

iii. Financial instruments measured at fair value through profit or loss (FVTPL):

Instruments that do not meet the amortised cost or FVTOCI criteria are measured at FVTPL. Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on re-measurement recognized in statement of profit and loss. The gain or loss on disposal is recognized in statement of profit and loss.

Interest income is recognized in statement of profit and loss for FVTPL debt instruments. Dividend on financial assets at FVTPL is recognized when the Group's right to receive dividend is established.

b. Trade Receivables

Trade receivables that do not contain a significant financing component are initially recognized at transaction price. They are subsequently measured at amortised cost less any impairment losses. Due to their short term maturity, the carrying amount approximate fair value. Expected credit losses are estimated by adopting the simplified approach using a provision matrix reflecting current condition and forecast of future economic condition.

c. Other Financial Assets

Other financial assets, cash and cash equivalents and other assets. They are presented as current assets, except for those maturing later than 12 months after the reporting date which are presented as noncurrent assets. These are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less any impairment losses. For most of these assets the carrying amounts approximate fair value due to their short term maturity.

Impairment of Financial Assets:

In accordance with Ind AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss and credit risk exposure on the financial assets that are debt instruments measured at amortized costs e.g. loans, deposits, trade receivables, contractual receivables

and bank balances. The Company follows 'simplified approach' for recognition of impairment allowance. For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognizing impairment allowance based on 12-month. The Company considers current and anticipated future economic conditions relating to industries of the customer and the countries where it operates. ECL impairment allowance (or reversal) recognized during the period is recognized as income/expense in the Statement of profit and loss under the head 'other expenses'. ECL is presented as an allowance, i.e. as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.

Derecognition

The Group derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expires or it transfers the financial asset and the transfer qualifies for de-recognition. If the Group retains substantially all the risks and rewards of a transferred financial asset, the Company continues to recognise the financial asset and also recognizes a borrowing for the proceeds received.

B. Financial Liabilities

Financial liabilities include long and shortterm loans and borrowings, bank overdrafts, trade payables, eligible current and non-current liabilities.

All financial liabilities are recognized initially at fair value.

Subsequent to initial recognition financial liabilities are measured as described below:

Trade and Other Payables

Trade and other payables, which consist of Trade Creditors and Borrowings are subsequently carried at amortized cost using the effective interest method. For Trade and other payables, the

carrying amounts approximate fair value due to the short-term maturity of these instruments.

A financial liability (or a part of a financial liability) is derecognized from the Group's balance sheet when the obligation specified in the contract is discharged or cancelled or expires.

viii Cash & Cash Equivalents

Cash and cash equivalents comprise of cash on hand, cash at banks, short-term deposits and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

ix. Inventories

Inventories are assets held for sale in the ordinary course of business or in the form of materials or supplies to be consumed in the production process or in the rendering of services.

Inventories held as on the reporting date are valued at the lower of cost and estimated net realizable value. In some cases, manufacturing work-in-progress is valued at lower of specifically identifiable cost and proportionate overheads or net realisable value. The cost of inventories comprises of all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. The cost of inventories is assigned by using the first-in, first-out (FIFO) formula. When inventories are sold or consumed in rendering services, the carrying amount of those inventories is recognized as an expense in the period in which the related revenue is recognized.

x. Borrowing Costs

Borrowing costs include Interest and other incidental costs.

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

In case of general borrowings, the borrowing costs are capitalised as per the Indian Accounting Standard 23. Capitalisation of borrowing costs is suspended during extended periods in which active development is interrupted and is ceased when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete.

Borrowing costs which are not directly attributable to the acquisition, construction production or development of a qualifying asset are recognised as an expense in the period in which they are incurred.

xi. Government Grants

Government grants are assistance by government in the form of transfers of resources to an entity in return for past or future compliance with certain conditions relating to the operating activities of the entity. They exclude those forms of government assistance which cannot reasonably have a value placed upon them and transactions with government which cannot be distinguished from the normal trading transactions of the entity.

Government grants shall be recognised in profit or loss on a systematic basis over the periods in which the entity recognises as expenses the related costs for which the grants are intended to compensate.

A government grant may take the form of a transfer of a non-monetary asset, such as land or other resources, for the use of the entity. In these circumstances the fair value of the non-monetary asset is assessed and both grant and asset are accounted for at that fair value.

xii. Employee Benefits

A. Short Term Employee Benefits:

All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits and they are recognized in the period in which the employee renders the related service.

B. Post-employment benefits:

a. Provident Fund scheme and Employee State Insurance Scheme:

Eligible employees receive benefits of a state run provident fund and insurance scheme. These are defined contribution plans. Both the eligible employee and the Group make monthly contributions to provident fund plan and the insurance scheme equal to a specified percentage of the covered employees' salary. There are no other obligations other than the contribution payable to the relevant fund/ scheme.

b. Gratuity scheme

The Group provides for gratuity, a defined benefit retirement plan covering eligible employees. The Gratuity plan provides a lump sum payment to the vested employees at retirement, death, incapacitation or termination of employment of an amount based on the respective employees' salary and tenure with the Group. Liabilities with regard to Gratuity are determined in accordance with the actuarial valuation.

The Group has opted for a scheme and a fund run by LIC for gratuity.

C. Share-based payment

Equity share-based payment (ESOP) are governed by ESOP scheme of the company. The fair value of ESOP granted to employees is recognised as an employee expense, with a corresponding increase in equity.

xiii Revenue Recognition

The Group recognizes revenue in accordance with Accounting Standard Ind AS 115, as per which revenue should be recognized when the performance obligation is satisfied.

Performance obligation is a promise in a contract with customer to transfer to customer either:

• A good or service (or a bundle of goods or services) which is distinct or

• A series of goods or services that are substantially the same and that have same pattern of transfer to the customer.

The Group needs to identify the transaction price. Transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods and services to a customer, excluding amounts collected on behalf of third parties.

Such a transaction price needs to be allocated to performance obligations in a contract.

An entity transfers control of a good or service over time and therefore satisfies a performance obligation and recognizes revenue over time if any of the following criteria is met:

(a) The customer simultaneously receives and consumes the benefits provided by the entity's performance as the entity performs, or

(b) The entity creates and enhances an asset which is controlled by customer as it is created or enhanced, or

(c) The entity's performance does not create an asset with alternative use b the entity and the entity has an enforceable right to payment for performance completed to date.

In any other case, revenue is recognized at a point of time.

A. General Policy

Revenue is recognized when it has approval and commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and collectability of consideration is probable. The Group recognizes revenue from contracts with customers when it satisfies performance obligation by transferring promised goods or services to a customer. The revenue is recognized to the extent of the transaction price allocated to the performance obligation satisfied.

B. EPC Contracts

Engineering, Procurement and Construction (EPC) contracts are contracts specifically negotiated for the construction of plants and systems, involving design, engineering, fabrication, supply, erection and commissioning thereof.

The Group recognizes revenue over time as it performs because EPC contracts involve continuous transfer of control to the customer.

The Group identifies performance obligations regarding distinct goods or services, if any, within the context of EPC contracts most of which involve products or services that do not have an alternative use and the customer controls the work in process. The contracts contain clauses such as customer's ownership over goods and drawings, customer's right to termination of contract and in that event, the rights of the Group to payment towards performance obligations within the overall EPC Contract already fulfilled, including some profit corresponding thereto.

The Group uses cost-based measure of progress (or input method) for indivisible works contracts containing a single performance obligation, wherein the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues, including estimated profits, are recorded proportionally as costs are incurred.

C. Sale of Goods

Revenue from sale of goods is recognized when the control of the same is transferred to the customer and it is probable that the Group will collect the consideration to which it is entitled for the exchanged goods.

D. Service Contracts

Revenue from rendering of services including works contracts is recognized over time as the customer receives the benefit of the Group's performance and the Company has an enforceable right to payment for services transferred.

E. Unbilled Revenue

Unbilled revenue represents value of goods supplied and value of services performed in accordance with the contract terms but not billed.

F. Contract Balances:

(i) Contract Assets:

A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Group performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration and are transferred to Trade receivables on completion of milestones and its related invoicing. Contract assets are recorded in

balance sheet as unbilled revenue and Retention Money Receivable from Customers.

(ii) Trade Receivables:

A receivable represents the Group'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).

(iii) Contract Liabilities:

A contract liability is the obligation to transfer goods or services to a customer for which the Group has received consideration from the customer. If a customer pays consideration before the Group transfers goods or services to the customer, a contract liability is recognised when the payment is made. Contract liabilities are recognised as revenue when the Group satisfies the performance obligation. Contract liabilities are recorded in balance sheet as Advance from Customers and Retention Money Payable to Vendors.

xiv. Expenditure

Expenses are accounted on accrual basis.

xv. Taxes on Income

Tax expense for the year comprises current tax and deferred tax.

Current Tax is determined as the amount of tax payable in respect of the taxable income for the period in accordance with Income Tax Act, 1961.

Income tax expense is recognized in net profit in the Statement of Profit and Loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in other comprehensive income.

Current income tax for current and prior periods is recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.

The Group offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

Deferred tax is recognised using the balance sheet approach. Deferred tax assets and liabilities are recognized for deductible and taxable temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of the goodwill. The deferred tax is also not accounted, if it arises from initial recognition of an asset or liability

in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profits / (taxable loss).

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised. Therefore, in case of a history of recent losses, the Group recognises a deferred tax asset only to the extent that it has sufficient taxable temporary differences or there is other convincing evidence that sufficient taxable profit will be available against which such deferred tax assets can be realised. Deferred tax assets positions are reviewed at each reporting date and are recognised / reduced to the extent that it is probable / no longer probable respectively that the related tax benefit will be realized.

Deferred tax liabilities are generally recognised for all taxable temporary differences except in respect of taxable temporary differences between the carrying amount and the tax bases of investments in subsidiaries, where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.

xvi. Provisions

Provision involving substantial degree of reliable estimation in measurement is recognized if, as a result of a past event, the Group has a present legal or constructive obligation that is reasonably estimable, and it is probable that an outflow of economic benefits will be required to settle the obligation.

xvii. Contingent Liabilities

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.

xviii. Foreign Currency Transactions

Since functional currency of the Company is Indian Rupee (INR) which is also the presentation currency, consolidated financial statements are prepared in INR. Transactions denominated in foreign currencies entered into by the Company are initially recorded at the exchange rates prevailing on the date of the transaction. Monetary items denominated in foreign currencies at the year-end are restated at the closing rates. Nonmonetary 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. On consolidation, the assets and liabilities of foreign operations are translated into INR at the rate of exchange prevailing at the reporting date and their statements of profit or loss are translated at exchange rates prevailing at the dates of the transactions. For practical reasons, the group uses an average rate to translate income and expense items, if the average rate approximates the exchange rates at the dates of the transactions. The exchange differences arising on translation for consolidation are recognized in OCI. On disposal of a foreign operation, the component of OCI relating to that particular foreign operation is recognized in profit or loss.

xix. Earnings per share

Basic earnings per equity share are computed by dividing the net profit or loss (excluding other comprehensive income) for the year attributable to the equity holders of the Group by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares is adjusted for events such as bonus issue, bonus element in a right issue, share split and reserve share splits (consolidation of shares) that have changed the number of equity shares.

Diluted earnings per equity share are computed by dividing the net profit or loss (excluding other comprehensive income) for the year attributable to the equity holders of the Group by the weighted average number of equity shares outstanding during the year adjusted for the effects of all dilutive potential equity shares.

xx. Derivative Financial Instruments

Derivative financial instruments are those which create rights and obligations that have the effect of transferring between the parties to the instrument one or more of the financial risks inherent in an underlying primary financial instrument.

Derivative financial instruments are recognized and measured at fair value. Attributable transaction costs are recognized in the statement of profit and loss as cost.

Subsequent to initial recognition, derivative financial instruments are measured as described below:

a. Cash flow hedges

Changes in the fair value of the derivative hedging instruments designated as a cash flow hedge are recognized in other comprehensive income and held in cash flow hedging reserve, net of taxes, a component of equity, to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair value are recognized in the statement of profit and loss and reported within foreign exchange gains / (losses), net within results from operating activities. If the hedging instrument no longer meets the criteria for hedge accounting, then hedge accounting is discontinued prospectively. If the hedging instrument expires or is sold, terminated or exercised, the cumulative gain or loss on the hedging instrument recognized in cash flow hedging reserve till the period the hedge was effective remains in cash flow hedging reserve until the forecasted transaction occurs. The cumulative gain or loss previously recognized in the cash flow hedging reserve is transferred to the statement of profit and loss upon the occurrence of the related forecasted transaction. If the forecasted transaction is no longer expected to occur, such cumulative balance is recognized in the statement of profit and loss.

b. Other Derivative Instruments

Changes in fair value of foreign currency derivative instruments not designated as cash flow hedges are recognized in the statement of profit and loss and reported within foreign exchange gains, net within results from operating activities.

Changes in fair value and gains / (losses) on settlement of foreign currency derivative instruments relating to borrowings, which have not been designated as hedges are recorded in finance expense.

xxi. Leases

The Group assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a

lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:

(i) the contract involves the use of an identified asset

(ii) the Group has substantially all of the economic benefits from use of the asset through the period of the lease and

(iii) the Group has the right to direct the use of the asset.

At the date of commencement of the lease, the Group recognizes a right-of-use (ROU) asset and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of 12 months or less (short-term leases) and low value leases. For these short-term and low-value leases, the Group recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.

xxii. Share Based Payments:

Equity Settled Transactions (ESOP)

The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model. That cost is recognised, together with a corresponding increase in ESOP reserves in equity, over the period in which the performance and/or service conditions are fulfilled in employee benefits expense. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group's best estimate of the number of equity instruments that will ultimately vest. The statement of profit and loss expense or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period and is recognised in employee benefits expense. The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.

xxiii. Valuation of interest in subsidiary

Investments in subsidiaries are carried at cost less accumulated impairment losses in the Group's balance sheet. On disposal of such investments, the difference bet disposal proceed and the carrying amounts of the investments are recognised in the statement of profit and loss.

xxiv. Dividends

Dividend to equity shareholders is recognized as a liability in the period in which the dividends are approved by the equity shareholders. Interim dividends that are declared by the Board of Directors without the

need for equity shareholders' approvals are recognized as a liability and deducted from shareholders' equity in the year in which the dividends are declared by the Board of directors.

xxv. Exceptional items

The Group considers exceptional items to be those which derive from events or transactions which are significant for separate disclosure by virtue of their size or incidence in order for the user to obtain a proper understanding of the Group's financial performance. These items include, but are not limited to, acquisition costs, impairment charges, restructuring costs and profits and losses on disposal of subsidiaries, contingent consideration and other one-off items which meet this definition. To provide a better understanding of the underlying results of the period, exceptional items are reported separately in the Statement of Profit and Loss.

NOTE 4: ESTIMATES AND JUDGEMENTS

i. Use of Estimates

The preparation of the consolidated financial statements in conformity with Ind AS requires the Management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the period. Accounting estimates could change from period to period and actual results could differ from those estimates. Appropriate changes in estimates are made as the Management becomes aware of the changes in circumstances surrounding the estimates. Changes in estimates are reflected in the consolidated financial statements in the period in which changes are made and, if material, their effects are separately disclosed in the notes to the financial statements.

ii. Significant Estimates

In particular, information about major areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements is given in the following notes:

a. Stage Of Completion

EPC Contracting is a complex business involving many activities and is a team effort the success of which depends of effectiveness many sub-vendors and service providers. Assessing the stage of completion for the purpose of revenue recognition, valuation of work in progress and inventory; is

subject to substantial judgement and subjective opinions which vary considerably. Since EPC contracts are high value contracts, slight difference in opinion and judgement leads to considerable difference in financial results.

b. Warrantees

The business of the Group requires giving performance guaranties and maintenance during warranty period. The circumstances which may involve expenditure on this account are completely unpredictable and considerable degree of estimation is involved in ascertaining the same. This impacts the provision for warrantees.

c. Taxes

The major tax jurisdiction for the Group is India. Significant judgments are involved in determining the tax liabilities including judgment on whether tax positions adopted by the Group are probable of being sustained in tax assessments. A tax assessment can involve complex issues, which can only be resolved over extended time periods through a lengthy litigation process, at the end of which even if the Group wins, huge expenditure gets incurred in litigation which has an impact on the financial results.

d. Impairment

Testing for impairment, of assets in general and intangible assets in particular is a very difficult task because there is no objective way of doing the same. It involves use of significant estimates and assumptions regarding economic conditions, growth rates and market conditions. Slight error or inaccuracy in such estimates or assumptions can have a material impact on the financial results of the Group.

e. Leases

The Group evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant judgment. The Group uses significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate.

The Group determines the lease term as the noncancellable period of a lease, together with both periods covered by an option to extend the lease if the Group is reasonably certain to exercise that option; and periods covered by an option to terminate the lease if the Group is reasonably certain not to exercise that option. The Group revises the lease term if there is a change in the non-cancellable period of a lease.