Accounting Policies of Konstelec Engineers Ltd. Company

Mar 31, 2025

2.1 Significant accounting policies

i Use of estimates

The preparation of financial statements in conformity with Indian GAAP requires the management to make
judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities
and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based
on the management''s best knowledge of current events and actions, uncertainty about these assumptions and
estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.

ii Property, Plant and Equipment and Intangible assets

Property, Plant and Equipment are stated at the cost of acquisition, less accumulated depreciation and impairment
losses, if any. Cost comprises purchase price, duties, levies and any directly attributable cost of bringing the asset
to its working condition for the intended use. Interest on borrowed money, allotted to and utilized for qualifying
tangible assets, pertaining to the period up to the date of capitalization is added to the cost of the assets. Advances
paid towards the acquisition of tangible assets outstanding at each Balance Sheet date and the cost of tangible
assets not ready for their intended use before such date are disclosed under capital work-in-progress.

Depreciation on Property, plant and equipment and Intangible assets

Depreciation on property, plant and equipmentis calculated based on written down value method using the rates
arrived at, based on the useful lives estimated by the management.

The Company has used the following useful lives to provide depreciation on its property, plant and equipment.

The management has estimated the useful lives of Property, Plant and Equipment and Intangible assets is based on
past experience of the Company and supported by independent assessment by professionals, which may differ in
some cases from useful lives mentioned in Companies Act 2013

iii Impairment of Assets

An asset is considered as impaired in accordance with Accounting Standard 28 on Impairment of Assets, when at
balance sheet date there are indications of impairment and the carrying amount of the asset, or where applicable
the cash generating unit to which it belongs, exceeds its recoverable amount (i.e. the higher of the asset''s net selling
price and value in use.) An impairment loss is charged off to the Statement of Profit and Loss in the year in which an
asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has
been a change in the estimate of its recoverable amount.

iv Borrowing Costs

Borrowing cost includes interest and amortization of ancillary costs incurred in connection with the arrangement
of borrowings. Borrowing costs directly attributable to the acquisition, construction or production of an asset that
necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the
cost of the respective asset. All other borrowing costs are expensed in the period they occur.

v Investment

Investments which are readily realizable and intended to be held for not more than one year from the date
of such investments are made, are classified as current investments. All other investments are classified
as long term investments. On initial recognition, all investments are measured at cost. The cost comprises
of purchase price and directly attributable acquisition charges such as brokerage, fees and duties.
Current investments are carried in the financial statements at lower of cost or fair value determined
on an individual investment basis. 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.
On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charge or
credited to the statement of profit and loss.

vi Inventories

There is no closing stock of material or stock-in-trade as on the balance sheet date. The Company executes its
projects by purchasing material as per the orders and ships it directly to the construction site. Therefore, the
material lying at site is considered under work in progress and taken in the books as unbilled revenue. Material in
transit is also considered in unbilled revenue.

vii Revenue recognition:

Work Contracts:

Revenue from Sales of products is recognized when substantial risks and rewards of ownership of
products are passed on to the buyer under the terms of the contract. Sales exclude goods and service
tax and trade discounts. Transportation cost forming part of work order is included as part of Sales.
The Company is recognizing the revenue based on percentage completion method as it satisfies performance
obligations over time as it meets the above criteria.

The Company derives revenue primarily from EPC Contracts relating to works and services.
Contract revenue and cost are recognised by reference to the stage of completion of the activity at the balance
sheet date, as measured by the proportion that contract cost incurred for the work performed to date bear to the
estimated total contract cost.

In case of contracts with defined milestones it recognises revenue on transfer of significant risks and rewards which
coincided with achievement of milestones and its acceptance by the customer. Provision is made for all losses incurred
to the balance sheet date. Any further losses that are foreseen in bringing contracts to completion are also recognised.
Contract revenue earned in excess of billing is reflected under “Unbilled Revenue" under other current assets.

Dividends:

Dividend income is recognized when the Company''s right to receive dividend is established by the reporting date.

viii Foreign Currency Transaction
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.

Conversion:

Foreign currency monetary items are translated using the exchange rate prevailing at the reporting date.
Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are
reported using the exchange rate at the date of the transaction.

Forward Contracts:

The premium or discount arising at the inception of forward exchange contract is amortised and recognized as a
expense/income over the life of the contract. Exchange differences on such contracts, except the contracts which
are long term foreign currency monetary items, are recognized in the statement of profit and loss in the period in
which the exchange rates change. Any profit or loss arising on cancellation or renewal of such forward exchange
contract is also recognized as income or as expense for the period.

ix Employee Benefits

Employee Benefits include provident fund, gratuity and compensated absences.

Defined contribution plans

The Company has defined contribution plans for post employment benefits namely provident fund which are
recognized by income tax authorities and administered through appropriate authorities. The Company contributes
to a government administered provident fund and has no further obligation beyond making its contribution.
The Company''s contribution to above fund is charged to revenue every year.

Defined benefit plan:

The Company provides for gratuity obligation through a defined benefit retirement plan (the ''Gratuity Plan’)
covering all employees. The gratuity plan provides a lump sum payment to vested employees at retirement or
termination of employment based on respective employee salary and years of employment with the Company. The
Company makes annual contribution to LIC for the gratuity plan in respect of employees at certain circles.

Other employee benefits:

The employees of the Company are entitled to leave as per the leave policy of the Company. The liability in respect
of unutilized leave balances is charged to revenue when option is exercised by employees.

x Accounting for Taxes

Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be
paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India and tax laws prevailing in
the respective tax jurisdictions where the Company operates. Deferred income taxes reflect the impact of timing
differences between taxable income and accounting income originating during the current year and reversal of
timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or
substantively enacted at the reporting date. Deferred tax liabilities are recognized for all taxable timing differences.
Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable
certainty that sufficient future taxable income will be available against which such deferred tax assets can be
realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax
assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized
against future taxable profits.

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Mar 31, 2024

2.1 Significant accounting policies

i Use of estimates

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

ii Property, Plant and Equipment and Intangible assets

Property, Plant and Equipment are stated at the cost of acquisition, less accumulated depreciation and impairment losses, if any. Cost comprises purchase price, duties, levies and any directly attributable cost of bringing the asset to its working condition for the intended use. Interest on borrowed money, allotted to and utilized for qualifying tangible assets, pertaining to the period up to the date of capitalization is added to the cost of the assets. Advances paid towards the acquisition of tangible assets outstanding at each Balance Sheet date and the cost of tangible assets not ready for their intended use before such date are disclosed under capital work-in-progress.

Depreciation on Property, plant and equipment and Intangible assets

Depreciation on property, plant and equipmentis calculated

based on written down value method using the rates arrived at, based on the useful lives estimated by the management. The company has used the following useful lives to provide depreciation on its property, plant and equipment.

The management has estimated the useful lives of Property, Plant and Equipment and Intangible assets is based on past experience of the Company and supported by independent assessment by professionals, which may differ in some cases from useful lives mentioned in Companies Act 2013

iii Impairment of Assets

An asset is considered as impaired in accordance with Accounting Standard 28 on Impairment of Assets, when at balance sheet date there are indications of impairment and the carrying amount of the asset, or where applicable the cash generating unit to which it belongs, exceeds its recoverable amount (i.e. the higher of the asset''s net selling price and value in use.) An impairment loss is charged off to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of its recoverable amount.

iv Borrowing Costs

Borrowing cost includes interest and amortization of ancillary costs incurred in connection with the arrangement of borrowings. Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.

v Investment

Investments which are readily realizable and intended to be held for not more than one year from the date of such investments are made, are classified as current investments. All other investments are classified as long term investments.

On initial recognition, all investments are measured at cost. The cost comprises of purchase price and directly attributable acquisition charges such as brokerage, fees and duties. Current investments are carried in the financial statements at lower of cost or fair value determined on an individual investment basis. 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. On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charge or credited to the statement of profit and loss.

vi Inventories

There is no closing stock of material or stock-in-trade as on the balance sheet date. The Company executes its projects by purchasing material as per the orders and ships it directly to the construction site. Therefore, the material lying at site is considered under work in progress and taken in the books as unbilled revenue.

vii Revenue recognition:

Work Contracts:

Revenue from Sales ofproducts is recognizedwhen substantial risks and rewards of ownership of products are passed on to the buyer under the terms of the contract. Sales exclude goods and service tax and trade discounts. Transportation cost forming part of work order is included as part of Sales. The Company is recognizing the revenue based on percentage completion method as it satisfies performance obligations over time as it meets the above criteria.

The company derives revenue primarily from

EPC Contracts relating to works and services.

Contract revenue and cost are recognised by reference to the stage of completion of the activity at the balance sheet date, as measured by the proportion that contract cost incurred for the work performed to date bear to the estimated total contract cost. In case of contracts with defined milestones it recognises revenue on transfer of significant risks and rewards which coincided with achievement of milestones and its acceptance by the customer. Provision is made for all losses incurred to the balance sheet date.Any further losses that are foreseen in bringing contracts to completion are also recognised. Contract revenue earned in excess of billing is reflected under Unbilled Revenue under other current assets.

Dividends:

Dividend income is recognized when the company''s right to receive dividend is established by the reporting date.

viii Foreign Currency Transaction 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.

Conversion:

Foreign currency monetary items are translated using the exchange rate prevailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction.

Forward Contracts:

The premium or discount arising at the inception of forward exchange contract is amortised and recognized as a expense/income over the life of the contract. Exchange differences on such contracts, except the contracts which are long term foreign currency monetary items, are recognized in the statement of profit and loss in the period in which the exchange rates change. Any profit or loss arising on cancellation or renewal of such forward exchange contract is also recognized as income or as expense for the period.

ix Employee Benefits

Employee Benefits include provident fund, gratuity and compensated absences.

Defined contribution plans

The company has defined contribution plans for post employment benefits namely provident fund which are recognized by income tax authorities and administered through appropriate authorities. The company contributes to a government administered provident fund and has no further obligation beyond making its contribution. The company''s contribution to above fund is charged to revenue every year.

Defined benefit plan:

The company provides for gratuity obligation through a defined benefit retirement plan (the ''Gratuity Plan'') covering all employees. The gratuity plan provides a lump sum payment to vested employees at retirement or termination of employment based on respective employee salary and years of employment with the company. The company makes annual contribution to LIC for the gratuity plan in respect of employees at certain circles.

Other employee benefits:

The employees of the company are entitled to leave as per the leave policy of the company. The liability in respect of unutilized leave balances is charged to revenue when option is exercised by employees.

x Accounting for Taxes

Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the company operates. Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.