Notes to Accounts of Praj Industries Ltd.

Mar 31, 2026

n. Provisions and contingencies

Provisions are recognised only when:

a. the Company has a present obligation (legal or constructive) as a result of a past event; and

b. it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation; and

c. a reliable estimate can be made of the amount of the obligation.

Provision is measured using the cash flows estimated to settle the present obligation and when the effect of
time value of money is material, the carrying amount of the provision is the present value of those cash flows.
Reimbursement expected in respect of expenditure required to settle a provision is recognised only when it is
virtually certain that the reimbursement will be received.

Contingent liability is disclosed in case of:

- a present obligation arising from past events, when it is not probable that an outflow of resources will be
required to settle the obligation.

- present obligation arising from past events, when no reliable estimate is possible

- a possible obligation arising from past events where the probability of outflow of resources is not remote.

Contingent asset is not recognised in the financial statements. A contingent asset is disclosed, where an inflow
of economic benefits is probable.

Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.

Provision for onerous contracts: Where the unavoidable costs of meeting the obligations under the contract
exceed the economic benefits expected to be received under such contract, the present obligation under the
contract is recognised and measured as a provision for onerous contract/foreseeable losses.

o. Earnings per share (EPS)

Basic EPS is calculated by dividing the profit for the year attributable to equity holders of the Company by the
weighted average number of equity shares outstanding during the financial year.

Diluted Earnings per share is calculated by dividing net profit attributable to the equity shareholders of the
Company with the weighted average number of shares outstanding during the financial year, adjusted for effects
of diluting potential equity shares towards ESOP plan.

p. Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity.

Financial assets

Initial recognition and measurement:

All financial assets are initially measured at fair value. However, trade receivables that do not contain a significant
financing component are measured at transaction price. In case of financial assets not recorded at fair value
through profit or loss (FVTPL), transaction cost is attributed to the acquisition value of the financial asset.
Transaction cost of financial assets carried at FVTPL is expensed in the statement of profit and loss.

Subsequent measurement:

For subsequent measurement, the Company classifies its financial assets in the following measurement
categories:

Financial assets measured at amortised cost.

Financial assets measured at fair value (either through OCI, or through profit or loss);

The classification depends on the Company''s business model for managing the financial assets and the
contractual terms of cash flows.

i. Financial assets measured at amortised cost

A financial asset is measured at the amortised cost if both the following conditions are met:

a. The Company''s business model objective for managing the financial asset is to hold financial assets to
collect contractual cash flows, and

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

This category applies to cash and bank balances, trade receivables, loans and other financial assets of the
Company (Refer note 37 for further details). Such financial assets are subsequently measured at amortised
cost using the effective interest method. The effect of the amortisation under effective interest method
is recognised as interest income over the relevant period of the financial asset under other income in the
Statement of Profit and Loss. The amortised cost of a financial asset is also adjusted for loss allowance, if
any.

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

A financial asset is measured at FVTOCI if both of the following conditions are met:

a. The Company''s business model objective for managing the financial asset is achieved both by collecting
contractual cash flows and selling the financial assets, and

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

This category applies to certain investments in debt instruments (Refer note 37 for further details). Such
financial assets are subsequently measured at fair value at each reporting date. Fair value changes are
recognised in the Other Comprehensive Income (OCI). However, the Company recognises interest income
and impairment losses and its reversals in the Statement of Profit and Loss.

On derecognition of such financial assets, cumulative gain or loss previously recognised in OCI is reclassified
from equity to Statement of Profit and Loss.

Further, the Company, through an irrevocable election at initial recognition, may measure certain investments
in equity instruments at FVTOCI (Refer note 37 for further details). The Company has made such election on
an instrument-by-instrument basis. These equity instruments are neither held for trading nor are contingent
consideration recognised under a business combination. Pursuant to such irrevocable election, subsequent
changes in the fair value of such equity instruments are recognised in OCI. However, the Company recognises
dividend income from such instruments in the Statement of Profit and Loss when the right to receive
payment is established, it is probable that the economic benefits will flow to the Company and the amount
can be measured reliably. On derecognition of such financial assets, cumulative gain or loss previously
recognised in OCI is not reclassified from the equity to Statement of Profit and Loss. However, the Company
may transfer such cumulative gain or loss into retained earnings within equity.

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

A financial asset is measured at FVTPL unless it is measured at amortised cost or at FVTOCI as explained
above. This is a residual category applied to all other investments of the Company excluding investments in
subsidiary and associate companies (Refer note 37 for further details).

Such financial assets are subsequently measured at fair value at each reporting date. Fair value changes are
recognised in the Statement of Profit and Loss.

Derecognition

A financial asset is derecognised when the right to receive cash flows from the assets has expired, or has been
transferred, and the Company has transferred substantially all the risks and rewards of ownership.

I n cases where Company has neither transferred nor retained substantially all the risks and rewards of the
financial asset, but retains control of the financial asset, the Company continues to recognise such financial
asset to the extent of its continuing involvement in the financial asset. In that case, the Company also recognises
an associated liability. The financial asset and the associated liability are measured on a basis that reflects the
rights and obligations that the Company has retained.

Impairment of financial assets

The Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on
the assets carried at amortised cost and FVTOCI debt instruments. The impairment methodology applied depends
on whether there has been a significant increase in credit risk. Note 37 details how the Company determines
whether there has been a significant increase in credit risk.

For trade receivables alone, the Company applies the simplified approach permitted by ''Ind AS 109-Financial
instruments'', which requires expected lifetime losses to be recognised from initial recognition of the receivables.

Non-derivative financial liabilities
Initial recognition and measurement

All non-derivative financial liabilities are initially measured at fair value. In case of non-derivative financial
liabilities not recorded at fair value through profit or loss (FVTPL), transaction cost is attributed to the acquisition
of the financial liability. Transaction cost of non-derivative financial liabilities carried at FVTPL is expensed in the
statement of profit and loss.

Subsequent measurement

All financial liabilities of the Company are subsequently measured at amortised cost using the effective interest
method (Refer note 37 for further details). The cumulative amortisation using the effective interest method of
the difference between the initial recognition amount and the maturity amount is added to the initial recognition
value (net of principal repayments, if any) of the financial liability over the relevant period of the financial liability to
arrive at the amortised cost at each reporting date. The corresponding effect of the amortisation under effective
interest method is recognised as interest expense under finance cost in the Statement of Profit and Loss.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired.
When an existing financial liability is replaced by another liability from the same lender on substantially different
terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated
as the derecognition of the original liability and the recognition of a new liability. The difference in the respective
carrying amounts is recognised in the statement of profit or loss.

Offsetting of financial assets and financial liabilities

Financial assets and financial liabilities are offset, and the net amount is reported in the balance sheet if there
is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net
basis, to realise the assets and settle the liabilities simultaneously.

Financial guarantee contracts

Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The
liability is initially measured at fair value and subsequently at the higher of the amount determined in accordance
with ''Ind AS 37-Provisions, contingent liabilities and contingent assets and the amount initially recognised less
cumulative amortisation, where appropriate.

The fair value of financial guarantees is determined as the present value of the difference in net cash flows
between the contractual payments under the debt instrument and the payments that would be required without
the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations.

q. Cash and cash equivalents

Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits
with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.

r. Share-based payments

The fair value of equity-settled share-based payments (such as employee stock options) is measured at the grant
date and recognized as an employee benefit expense over the vesting period, with a corresponding increase in
equity (employee stock option reserve).

The vesting period is the time during which the employee must meet specific conditions to receive the award. At
each reporting date, the Company reviews and updates its estimate of the number of options expected to vest,
based on service and non-vesting conditions. Any changes in these estimates are reflected in the statement of
profit and loss, with a corresponding adjustment to equity.

s. Cash dividend to equity holders

The Company recognises a liability to make cash distributions to equity holders when the distribution is authorised,
and the distribution is no longer at the discretion of the Company. As per the Companies Act, 2013, a distribution
is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.

t. Exceptional items

An item of income or expense which by its size, nature or incidence requires disclosure in order to improve an
understanding of the performance of the Company is treated as an exceptional item and disclosed as such in the
financial statements.

2.3 Material accounting judgments, estimates and assumptions

The preparation of the standalone financial statements in conformity with Ind AS requires the management to make
certain judgments, estimates and assumptions. These judgments, estimates and assumptions affect the reported
amounts of revenue, expenses, current assets, non-current assets, current liabilities, non-current liabilities and
disclosure of the contingent liabilities at the end of each reporting period. Uncertainty about these assumptions and
estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities
effected in future periods.

Detailed information about each of these estimates and judgements is included in relevant notes.

The areas involving critical estimates and judgements are:

• Determining the revenue to be recognised in case of performance obligation satisfied over a period of time. Refer
note 29

• Determining the expected losses, which are recognised in the period in which such losses become probable
based on the expected total contract cost as at the reporting date. Refer note 29

• Determining the method to be applied to arrive at the variable consideration including variations and
claims(including liquidated damages) requiring an adjustment to the transaction price. Refer note 29

• Estimation of defined benefit obligation - Note 33

The cost of the defined benefit gratuity, and the present value of the gratuity obligation are determined using
actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual
developments in the future. Information about the various estimates and assumptions made in determining the
present value of defined benefit obligations are disclosed in note 32.

• Recognition of deferred tax assets - Note 26

The Company uses judgement based on the relevant rulings in the areas of allocation of revenue, costs, allowances
and disallowances in determining the provision for income tax. The Company exercises its judgement to reassess
the carrying amount of deferred tax assets at the end of each reporting period.

• Impairment of trade receivables - Note 38

The Company uses a simplified approach for recognising expected credit loss. The amount of provision depends
on certain parameters set by the Company in its provisioning policy. The setting up of parameters requires
significant judgement and estimation. The same is reviewed by the management at a regular frequency.

• Estimate of useful life of assets - Note 3

The Company determines, based on independent technical assessment, the estimated useful lives of its property,
plant and equipment and intangible assets for calculating depreciation and amortisation. This estimate is
determined after considering the expected usage of the asset or physical wear and tear. Management reviews
the residual value and useful lives periodically and future depreciation and amortisation charge would be adjusted
where the management believes the useful lives differ from previous estimates.

• Fair Value Measurement-Note 37

When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured
based on quoted prices in active markets, their fair value is measured using valuation techniques including the
DCF model. The inputs to these models are taken from observable markets where possible, but where this is not
feasible, a degree of assumption is required in establishing fair values. Assumptions include considerations of
inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the
reported fair value of financial instruments.

Estimation and underlying assumptions are reviewed on ongoing basis. Revisions to estimates are recognised
prospectively.

2.4 New and amended standards

The Company applied for the first-time certain standards and amendments, which are effective for annual periods
beginning on or after 1 April 2025. The Company has not early adopted any standard, interpretation or amendment that
has been issued but is not yet effective.

(i) Amendments to Ind AS 21 - Lack of exchangeability

The Ministry of Corporate Affairs (MCA) notified the Companies (Indian Accounting Standards) Amendment
Rules, 2025, which amend Ind AS 21, The Effects of Changes in Foreign Exchange Rates to specify how an entity
should assess whether a currency is exchangeable and how it should determine a spot exchange rate when
exchangeability is lacking.

The amendments do not have a material impact on the Company''s financial statements.

(ii) Amendments to Ind AS 1-Classification of Liabilities as Current or Non-current and Non-current Liabilities with
Covenants

The amendments do not have a material impact on the Company''s financial statements.

(iii) Amendments to Ind AS 7 and Ind AS 107-Supplier Finance Arrangements

In August 2025, the MCA notified amendments to Ind AS 7 Statement of Cash Flows and Ind AS 107 Financial
Instruments: Disclosures to clarify the characteristics of supplier finance arrangements and require additional
disclosure of such arrangements.

The amendments do not have a material impact on the Company''s financial statements.

(iv) International Tax Reform-Pillar Two Model Rules - Amendments to Ind AS 12

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

Note :

- The write-down of inventories for the year amounts to '' 12.007 (March 31, 2025: '' 15.770). These write-downs have
been recognized as an expense during the year and are included under "Cost of materials consumed".

- Inventories are pledged as security against cash credit facilities availed by the Company for working capital purposes
from banks.

- Inventories include materials lying at project sites, warehouses and with third parties amounting to '' 386.925
(31 March 2025: '' 824.000), in the ordinary course of business.

b. Terms/ Rights attached to equity shares :

The Company has only one class of equity shares having a par value of '' 2 per share. Each holder of the equity
shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The dividend
proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General
Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets
of the company after distributing all preferential amounts.

c. Shares held by holding/ultimate holding company and/or their subsidiaries/associates :

The Company does not have any holding or ultimate holding Company.

d. Details of shareholders holding more than 5% shares in the company :

f. Shares reserved for issue under options :

For shares reserved for issue under the Employee Stock Option Plan (ESOP) please refer note 34.

g. There are no bonus shares issued, shares issued for consideration other than cash and shares bought back
during the period of five years immediately preceding the reporting date.

h. During the year ended 31 March 2026, the Company had paid the final dividend of '' 6.000 per equity share for the
year ended 31 March 2025 amounting to '' 1102.879.

The Board of directors, at their meeting held on 28 May 2026 recommended the final dividend of '' 3.60 per equity
share for the year ended 31 March 2026 subject to approval from shareholders. On approval, the total dividend
outflow is expected to be '' 661.727 based on number of shares outstanding as at 31 March 2026.

1. Capital Reserve - The company had recognised profit or loss on purchase, sale, issue or forfeiture/ cancellation of own
equity instrument to capital reserve.

2. Amalgamation Reserve - Amalgamation reserve represents reserve created on amalgamation under pooling of
interests method, representing the difference between consideration and net assets/share capital in past.

3. Capital Redemption Reserve - The Company had bought back its share in the past. In accordance with section 69 of the
Companies Act, 2013, Capital Redemption Reserve is created (which represent nominal value of share bought back).

4. Securities premium- Securities premium is used to record the premium on issue of shares. This reserve can be utilised
only in accordance with the provisions of the Companies Act, 2013.

5. Share option outstanding account - The Company has established equity-settled share based payment plans for
certain categories of executives.

6. General Reserve - The Company has transferred a portion of the net profit of the Company before declaring dividend to
general reserve pursuant to the earlier provisions of Companies Act 1956. Mandatory transfer to general reserve is not
required under the Companies Act 2013.

7. Debt instruments through Other Comprehensive Income - The Company has elected to recognize changes in the fair
value of certain investments in debt instruments in other comprehensive income. These changes are accumulated
within the debt instruments through other comprehensive income within equity.

8. Retained earnings - It includes profits/(loss) that the Company has earned/incurred till date, less any transfers to
general reserve, dividends or other distributions paid to shareholders. It also include re-measurement loss/(gain) on
defined benefit plans, net of taxes that will not be reclassified to Statement of Profit and Loss.

* The claims against the Company primarily relate to demands arising under Section 156 of the Income-Tax Act, 1961,
specifically involving the computation of interest for Assessment Year 2021-22. These matters are currently pending
before the Deputy Commissioner of Income Tax. Management believes that its position is likely to be sustained upon
final resolution and does not expect any material impact on the Company''s financial position or results of operations.
** The Company has received GST demands in relation to a corporate guarantee for inter-company transactions
pertaining to financial years 2017-18 to 2022-23 and certain cases involving taxation of advances pertaining to
2020-21 and 2021-22 which are currently pending before the Appellate Authorities/Tribunal. Based on its assessment
and legal advice, Management expects its position to be sustained and does not anticipate any material impact on the
Company''s financial position or results of operations.

As regular projects life cycle lasts 12-24 months, the company expects that significant portion of remaining
performance obligation, will be completed withing next two financial years.

Contract assets primarily relate to the Company''s rights to consideration for work completed but not billed
at the reporting date. The Contract assets are transferred to Trade receivables on completion of milestones
and its related invoicing.

The Contract liabilities relate to unearned revenue and customer advances where performance obligations
are yet to be fulfilled as per the contracts. The fulfilment of the performance obligations will extinguish these
liabilities and revenue will be recognised.

The payment is due from the date of invoice and payment terms are in the range of 30 days to 120 days.
The Company expects that the period between when the entity transfers a promised good or service to
a customer and when the customer pays for that good or service will be less than one year. Therefore,
Company does not adjust the promised amount of consideration for the effects of financing component.

33 Employee benefits

a) Defined contribution plans

The Company has recognised '' 120.465 (31 March 2025: '' 112.936) towards post-employment defined
contribution plans comprising of provident fund, Employee State Insurance Scheme, National Pension Scheme
and superannuation fund in the statement of profit and loss.

b) Defined benefit plan

I n accordance with the Payment of Gratuity Act, 1972, the Company is required to provide post-employment
benefit to its employees in the form of gratuity. The Company has maintained a fund with the Life Insurance
Corporation of India and ICICI Prudential Life Insurance to meet its gratuity obligations. In accordance with the
Standard, the disclosures relating to the Company''s gratuity plan are provided below:

Risk Exposure and Asset Liability Matching

Provision of a defined benefit scheme poses certain risks, some of which are detailed hereunder, as companies
take on uncertain long term obligations to make future benefit payments.

1) Liability Risks

a. Asset-Liability Mismatch Risk

Risk which arises if there is a mismatch in the duration of the assets relative to the liabilities. By
matching duration with the defined benefit liabilities, the company is successfully able to neutralize
valuation swings caused by interest rate movements.

b. Discount Rate Risk

Variations in the discount rate used to compute the present value of the liabilities may seem small, but
in practice can have a significant impact on the defined benefit liabilities.

c. Future Salary Escalation and Inflation Risk

Since price inflation and salary growth are linked economically, they are combined for disclosure
purposes. Rising salaries will often result in higher future defined benefit payments resulting in a higher
present value of liabilities especially unexpected salary increases provided at management''s discretion
may lead to uncertainties in estimating this increasing risk.

2) Asset Risks

All plan assets are maintained in a trust fund managed by LIC of India and ICICI Prudential Life Insurance.
The company has opted for a traditional fund wherein all assets are invested primarily in risk averse markets.
The company has no control over the management of funds but this option provides a high level of safety
for the total corpus. A single account is maintained for both the investment and claim settlement and hence
100% liquidity is ensured. Also interest rate and inflation risk are taken care of.

The liabilities for compensated absences represent the Company''s obligations for Privileged/earned leave and
are classified as other long-term employee benefits. These liabilities are presented as current, as the Company
does not have an unconditional right to defer settlement of these obligations. Accordingly, the entire balance is
treated as a current obligation as at the reporting date. However, based on past experience, the Company does
not expect all employees to avail the full amount of accrued leave or require settlement within the next 12 months.
The expense/(gain) recognised in the statement of profit and loss for the year amounts to '' (8.558) million
(31 March 2025: '' 51.675 million).

d) The Code on Social Security, 2020

During the year ended 31 March 2026, the Central Government of India has notified the Code on Wages, 2019,
the Industrial Relations Code, 2020, the Code on Social Security ,2020 and the Occupational Safety, Health and
Working Conditions Code, 2020, collectively referred to as the ''New Labour Codes'', effective from 21 November 2025
primarilyimpactingthewagedefinitiontobeconsideredforthepurposeofdefinedbenefitobligationrelatingtogratuity.
The new Labour Codes introduced by the Government of India, interalia, requires gratuity and leave encashment to
be calculated based on wages as defined in Act. This has resulted in an increase in liability for past service periods.
Company has also changed policy on compensated absences. Based on assessment of changed regulation
and company''s policy for compensated absences, Company has recognised past service cost aggregating to
'' 209.808 millions during the year in accordance with Ind As 19. The Company also recognized an incremental
liability of '' 29.000 million for contract labours. Other potential impacts for contract labours are being evaluated
but are not expected to be material. The Company continues to monitor the finalisation of Central/State Rules
and clarifications from the Government and would provide appropriate accounting effect as and when such
clarifications are issued/rules are notified.

34 Employee Stock Option Plan (ESOP)

In the Annual General Meeting of the Parent held on 22 July 2011, total of 9,238,936 stock options were approved under
the scheme "Employee Stock Option Plan 2011". During the previous years, a total of 79,74,700 options were issued
as ESOP 2011 - Grant I to XI, basis the eligibility and were exercised/ lapsed until 31 March 2024. During the previous
year 2024-25, 4,21,000 options are granted to Managing Director under ESOP 2011 - Grant XII. These stock options
will vest in a graded manner equally over the period of vesting starting from 3 February 2026, and each vesting taking
effect as per the terms of the grant

35 Expenditure on research & development activities

Revenue expenditure on research is charged under respective heads of account in the year in which it is incurred.
Capital expenditure on development consists of property, plant and equipment, Capital work in progress, Intangible
Assets and Intangible assets under development. The property, plant and equipment and Intangible Assets as included
above are depreciated / amortised on the same basis as per their respective categories. The break-up of Research and
development (R&D) capital and revenue expenditure is as below:

37 Fair value measurements

As per assessments made by the management, fair values of all financial instruments carried at amortised cost
(except investment in quoted non-convertible bonds) are not materially different from their carrying amounts since
they are either short term in nature or the interest rates applicable are equal to the current market rate of interest.

The Company has performed a fair valuation of its investment in mutual funds which are classified as fair value
through profit and loss (FVTPL) and bonds which are classified as fair value through other comprehensive income
(FVOCI) using quoted prices and fair valuations of foreign exchange forward contracts as per mark to market valuation
from bank.

The fair value of the financial assets and liabilities are included at the amount at which the instrument that would
be received to sell an asset or paid to transfer liability in an orderly transaction between market participants at the
measurement date.

The following methods and assumptions were used to estimate the fair values:

(i) The management assessed that the fair value of cash and cash equivalents, trade receivables, trade payables
and other current financial assets and liabilities approximate their carrying amounts largely due to the short term
maturities of these instruments.

(ii) The amortized cost using effective interest rate (EIR) of non-current financial assets consisting of security and
term deposits are not significantly different from the carrying amount.

(iii) The fair value of the financial assets and liabilities is included at the amount at which the instrument could be
exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

38 Financial risk management policy and objectives

The Company''s principal financial liabilities, comprise lease liabilities and trade and other payables. The main purpose
of these financial liabilities is to finance company''s operations and to provide guarantees to support its operations.
Company''s principal financial assets include trade and other receivables, security deposits and cash and cash
equivalents, that derive directly from its operations.

In order to minimise any adverse effects on the financial performance of the Company, it has taken various measures.
This note explains the source of risk which the entity is exposed to and how the entity manages the risk and impact of
the same in the financial statements.

The company''s risk management is carried out by management, under policies approved by the board of directors.
Company''s treasury identifies, evaluates and hedges financial risks in close cooperation with the company''s operating
units. The board provides written principles for overall risk management, as well as policies covering specific areas,
such as foreign exchange risk, credit risk, and investment of excess liquidity.

(A) Credit risk

Credit risk in case of the Company arises from cash and cash equivalents, deposits with banks and financial
institutions, as well as credit exposures to customers including outstanding receivables.

Credit risk management

Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. To
manage this, the Company periodically assesses the reliability of customers, taking into account the financial
condition, current economic trends, and analysis of historical bad debts and ageing of accounts receivable.
Individual risk limits are set accordingly.

The company considers the probability of default upon initial recognition of asset and whether there has been a
significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there
is a significant increase in credit risk, the Company compares the risk of a default occurring on the asset as at the
reporting date with the risk of default as at the date of initial recognition. It considers reasonable and supportive
forward looking information such as:

(i) Actual or expected significant adverse changes in business,

(ii) Actual or expected significant changes in the operating results of the counterparty,

(iii) Financial or economic conditions that are expected to cause a significant change to counterparty''s ability to
meet its obligations,

(iv) Significant increases in credit risk on other financial instruments of the same counterparty,

(v) Significant changes in the value of collateral supporting the obligation or in the quality of third-party
guarantees or credit enhancements.

The Company provides for expected credit loss in case of trade receivables when there is no reasonable
expectation of recovery, such as a debtor declaring bankruptcy or failing to engage in a repayment plan with the
company etc.

The Company uses simplified approach for estimating the lifetime expected loss provision. The Company provides
expected loss based on the overdue number of days for receivables as per the provision matrix as decided by the
management which is based on the historical experience of recoverability. Where receivables have been written
off, the Company continues to engage in enforcement activity to attempt to recover the receivable due. Where
recoveries are made, these are recognised in profit or loss.

B) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an
adequate amount of committed credit facilities to meet obligations when due and to close out market positions.
Due to the dynamic nature of the underlying businesses, Company maintains flexibility in funding by maintaining
availability under committed credit lines.

Management monitors rolling forecasts of the Company''s liquidity position (comprising the undrawn borrowing
facilities below) and cash and cash equivalents on the basis of expected cash flows. This is carried out in
accordance with practice and limits set by the Company. In addition, the Company''s liquidity management policy
involves projecting cash flows and considering the level of liquid assets necessary to meet these, monitoring
balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing
plans.

(C) Foreign currency risk

The Company is exposed to foreign exchange risk mainly through its sales to overseas customers and purchases
from overseas suppliers in various foreign currencies.

The Company evaluates exchange rate exposure arising from foreign currency transactions and the Company
follows established risk management policies, including use of derivatives like foreign exchange forward contracts
to hedge exposure to foreign currency risk, where the economic conditions match the Company''s policy.

41 Other Notes

i Title deeds of immovable property not held in the name of the company

The company does not have any immovable property whose title deeds are not in the name of the company.

ii Details of Benami Property

The Company does not own any benami property neither any proceedings are initiated or pending against the
Company under the Prohibition of Benami Property Transactions Act, 1988.

iii Borrowings secured against current assets

Though the Company does not have any fund based borrowings from banks or financial institutions on the basis
of security of current assets, it has filed quarterly returns or statements of current assets with banks or financial
institutions and the same are in agreement with the books of account read with notes given in the quarterly
returns or statements.

iv Wilful Defaulter

The Company has not been declared as wilful defaulter by any bank or financial institution or other lender.

v Relationship with Struck off Companies

As per the information available with the Company, the Company has not entered into any transactions with
companies struck off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956.

vi Registration of charges with ROC

There are charges amounting to '' 6131.550 million (31 March 2025: Charges amounting to '' 6131.550 million)
created in favour of banks which are pending for satisfaction. In respect of three charges amounting to
'' 781.550 million (31 March 2025: '' 781.550 million), there are no outstanding dues to the banks and satisfaction
of the charge is pending due to technical issues which company is in the process of resolving.

vii Utilisation of Borrowed funds and share premium

The Company has not advanced or loaned or invested funds (either borrowed funds or share premium or any
other sources or kind of funds) to any other person or entity, including foreign entities (Intermediaries) with the
understanding (whether recorded in writing or otherwise) that the Intermediary shall (i) directly or indirectly lend
or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company or (ii)
provide any guarantee, security or the like to or on behalf of the Company;

viii Loans or advances to specified persons

The Company has not granted any loans or advances in the nature of loans to promoters, directors, KMPs, or
other related parties. However, the Company has provided loans to employees as per the Company''s policy. These
loans are neither granted severally nor jointly with any other person and are not:

(i) repayable on demand or

(ii) without specifying any terms or period of repayment.

ix Details of Crypto Currency or Virtual Currency

The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

x Valuation of PP&E, right-of-use assets, intangible asset and investment property

The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible
assets or both during the current or previous year.

xi Utilisation of borrowings availed from banks and financial institutions

The Company does not have any borrowings availed from banks and financial institutions.

xii Compliance with number of layers of companies

The Company has complied with the requirement with respect to number of layers as prescribed under section
2(87) of the Companies Act, 2013 read with the Companies (Restriction on number of layers) Rules, 2017.

xiii Undisclosed income

There is no income surrendered or disclosed as income during the year in tax assessments under the Income Tax
Act, 1961.(such as search or survey), that has not been recorded in the books of account.

42 Capital management
Risk management

The Company''s objectives when managing capital are to

- safeguard it''s ability to continue as a going concern, so that it can continue to provide returns to shareholders and
benefits to other stakeholders, and

- Maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Consistent with others in
the industry, the Company monitors capital on the basis of the following gearing ratio: Net debt (total borrowings net
of cash and cash equivalents) divided by total ''equity'' (as shown in the balance sheet).

43 Audit Trail and Audit Backup

a. The Company has used an accounting software for maintaining its books of account which has a feature
of recording audit trail (edit log) facility and the same has been operated throughout the year for all relevant
transactions recorded in the software except audit trail at database level due to absence of SOC report.

Further, audit trail feature has operated throughout the year for all relevant transactions recorded in the accounting
software. Also, there was no instance of audit trail feature being tampered with except for above. Additionally, the
audit trail of prior years has been preserved by the Company as per the statutory requirements for record retention
to the extent it was enabled and recorded in respective years.

b. With effect from August 5, 2022, the Ministry of Corporate Affairs (MCA) has amended the Companies
(Accounts) Rules, 2014, relating to maintenance of electronic books of account and other relevant books
and papers. Pursuant to this amendment, the Company is required to maintain the books of account which
are accessible in India at all times and their backup is to be kept on servers located in India on a daily basis.
The Company has a process to take daily back-up of books of account maintained in electronic mode and along
with the logs of the back-up of such books of account.

44 Exceptional Items:

a. Effective 21 November 2025, the Government of India consolidated 29 existing labour regulations into four Labour
codes, namely, The Code on Wages, 2019, The Industrial Relations Code, 2020, The Code on Social Security, 2020
and the Occupational Safety, Health and Working Conditions Code, 2020, collectively referred to as the ''New
Labour Codes''. The New Labour Codes have resulted in a one-time material increase in provision for employee
benefits on account of recognition of past service costs. Based on the requirements of the New Labour Codes
and ICAI clarification, the Company has assessed and accounted for a net incremental impact of '' 238.308
million, including an additional liability of '' 29.000 million relating to contract labour and is in the process of
evaluating other possible impacts. However, management is of the view that other impacts, if any, is unlikely to be
material. Considering the one-time material increase in provision the impact is recognised as ''Exceptional Item''
for the year ended 31 March 2026.

b. Exceptional Item for the year ended 31 March 2025 consists of profit on sale of land located at Nasarpur.

45 On 28 March 2025, a fire occurred at the R&D facility, resulting in a temporary disruption of R&D activities for a few
weeks. The facility was fully insured, and a claim amounting to '' 125.000 millions has been lodged with the insurance
company. The loss on account of fire accounting to '' 27.341 millions has been recorded in Profit & Loss Account. In
addition to this, Company has incurred capital expenditure for replacement of lossed asset amounting to '' 127.50
millions. The Company has received an advance amounting to '' 65.000 millions against the claim lodged during
the current year. As the final approval of the claim by the insurance authorities is pending, the advance has been
appropriately classified under ''Other Payables''

46 Standards/ Amendment to standards Issued but not effective

The below amendments to the existing standard are notified by Ministry of Corporate affairs but are not yet effective:
Amendment to Ind AS 1 ''Presentation of Financial Statements''-

Classification of Liabilities as current or non-current and non-current liabilities with covenants. The amendment
includes specific provisions that will take effect for reporting periods beginning on or after 1 April 2026, retrospectively,
as outlined below:

a) Breach of material covenant for long-term loan arrangement on or before end of reporting period with effect
that liability becomes payable on demand as on reporting date, then it shall be classified as current liability, if
lender agreed after reporting period and before approval of financial statements to not demand payment as a
consequence of breach.

b) Classify as non-current liability, if lender agreed by end of reporting period to provide grace period ending at least
12 months after reporting period within which entity can rectify the breach provided lender does not demand
immediate repayment.

c) Disclose information about the timing of settlement to understand the impact of the liability on the financial
statements. The Company does not expect this amendment to have an impact on its operations or financial
statements."

47 Prior year figures have been regrouped and reclassified wherever necessary to ensure comparability with the current
period''s presentation. The reclassification pertains to following:

a) Purchases of stock-in-trade are presented separately, which were earlier included under cost of materials
consumed;

b) Foreign exchange gains are reported under other income, which were earlier presented on the face of Profit and
Loss Statement;

c) Right-of-use assets are disclosed separately instead of being included within property, plant and equipment; and

d) Interest on defined benefit plans are reported under employee benefits expense, which were earlier included in
finance costs.

---

Mar 31, 2025

2.21 Provisions and contingencies

Provisions are recognised only when :

a. the Company has a present obligation (legal or constructive) as a result of a past event; and

b. it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and

c. a reliable estimate can be made of the amount of the obligation.

Provision is measured using the cash flows estimated to settle the present obligation and when the effect of time value of
money is material, the carrying amount of the provision is the present value of those cash flows. Reimbursement expected in
respect of expenditure required to settle a provision is recognised only when it is virtually certain that the reimbursement will
be received.

Contingent liability is disclosed in case of :

- a present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle
the obligation.

- present obligation arising from past events, when no reliable estimate is possible

- a possible obligation arising from past events where the probability of outflow of resources is not remote.

Contingent asset is not recognised in the financial statements. A contingent asset is disclosed, where an inflow of economic
benefits is probable.

Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.

2.22 Earnings per share (EPS)

Basic EPS is calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted
average number of equity shares outstanding during the financial year.

Diluted Earnings per share is calculated by dividing net profit attributable to the equity shareholders of the Company with
the weighted average number of shares outstanding during the financial year, adjusted for effects of diluting potential equity
shares towards ESOP plan.

2.23 Fair value measurement

Fair value is the price at which an asset could be sold, or a liability transferred, in an orderly transaction between market
participants on the measurement date.

The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes
place either :

In the principal market for the asset or liability, or

In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or a liability
is measured using those assumptions that market participants would use when pricing the asset or liability, assuming that
market participants act in their economic best interest.

A fair value measurement of a non-financial asset considers a market participant''s ability to generate economic benefits by
using the asset in its highest and best use or by selling it to another.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available
to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

• Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

• Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly
or indirectly observable.

• Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable.

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines
whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level
input that is significant to the fair value measurement as a whole) at the end of each reporting period.

For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities based on the nature,
characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

2.24 Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity.

1 Financial assets

I. Initial recognition and measurement :

All financial assets are initially measured at fair value. However, trade receivables that do not contain a significant
financing component are measured at transaction price. In case of financial assets not recorded at fair value through
profit or loss (FVTPL), transaction cost is attributed to the acquisition value of the financial asset. Transaction cost
of financial assets carried at FVTPL is expensed in the statement of profit and loss.

II. Subsequent measurement :

For subsequent measurement, the Company classifies its financial assets in the following measurement categories :

Financial assets measured at amortised cost.

Financial assets measured at fair value (either through OCI, or through profit or loss);

The classification depends on the Company''s business model for managing the financial assets and the contractual
terms of cash flows.

i. Financial assets measured at amortised cost

A financial asset is measured at the amortised cost if both the following conditions are met :

a. The Company''s business model objective for managing the financial asset is to hold financial assets to
collect contractual cash flows, and

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

This category applies to cash and bank balances, trade receivables, loans and other financial assets of the
Company (Refer note 36 for further details). Such financial assets are subsequently measured at amortised
cost using the effective interest method. The effect of the amortisation under effective interest method
is recognised as interest income over the relevant period of the financial asset under other income in the
Statement of Profit and Loss. The amortised cost of a financial asset is also adjusted for loss allowance, if
any.

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

A financial asset is measured at FVTOCI if both of the following conditions are met :

a. The Company''s business model objective for managing the financial asset is achieved both by collecting
contractual cash flows and selling the financial assets, and

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

This category applies to certain investments in debt instruments (Refer note 36 for further details). Such financial
assets are subsequently measured at fair value at each reporting date. Fair value changes are recognised in the
Other Comprehensive Income (OCI). However, the Company recognises interest income and impairment losses
and its reversals in the Statement of Profit and Loss.

On derecognition of such financial assets, cumulative gain or loss previously recognised in OCI is reclassified
from equity to Statement of Profit and Loss.

Further, the Company, through an irrevocable election at initial recognition, may measure certain investments
in equity instruments at FVTOCI (Refer note 36 for further details). The Company has made such election on
an instrument-by-instrument basis. These equity instruments are neither held for trading nor are contingent
consideration recognised under a business combination. Pursuant to such irrevocable election, subsequent
changes in the fair value of such equity instruments are recognised in OCI. However, the Company recognises
dividend income from such instruments in the Statement of Profit and Loss when the right to receive payment
is established, it is probable that the economic benefits will flow to the Company and the amount can be
measured reliably. On derecognition of such financial assets, cumulative gain or loss previously recognised
in OCI is not reclassified from the equity to Statement of Profit and Loss. However, the Company may transfer
such cumulative gain or loss into retained earnings within equity.

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

A financial asset is measured at FVTPL unless it is measured at amortised cost or at FVTOCI as explained
above. This is a residual category applied to all other investments of the Company excluding investments in
subsidiary and associate companies (Refer note 36 for further details).

Such financial assets are subsequently measured at fair value at each reporting date. Fair value changes are
recognised in the Statement of Profit and Loss.

II. Derecognition

A financial asset is derecognised when the right to receive cash flows from the assets has expired, or has been
transferred, and the Company has transferred substantially all the risks and rewards of ownership.

In cases where Company has neither transferred nor retained substantially all the risks and rewards of the financial
asset, but retains control of the financial asset, the Company continues to recognise such financial asset to the extent
of its continuing involvement in the financial asset. In that case, the Company also recognises an associated liability.
The financial asset and the associated liability are measured on a basis that reflects the rights and obligations that
the Company has retained.

IV. Impairment of financial assets

The Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the
assets carried at amortised cost and FVTOCI debt instruments. The impairment methodology applied depends on
whether there has been a significant increase in credit risk. Note 37 details how the Company determines whether
there has been a significant increase in credit risk.

For trade receivables alone, the Company applies the simplified approach permitted by ‘Ind AS 109 - Financial
instruments'', which requires expected lifetime losses to be recognised from initial recognition of the receivables.

2. Non-derivative financial liabilities

I. Initial recognition and measurement

All non-derivative financial liabilities are initially measured at fair value. In case of non-derivative financial liabilities
not recorded at fair value through profit or loss (FVTPL), transaction cost is attributed to the acquisition of the
financial liability. Transaction cost of non-derivative financial liabilities carried at FVTPL is expensed in the statement
of profit and loss.

II. Subsequent measurement

All financial liabilities of the Company are subsequently measured at amortised cost using the effective interest
method (Refer note 36 for further details). The cumulative amortisation using the effective interest method of the
difference between the initial recognition amount and the maturity amount is added to the initial recognition value

(net of principal repayments, if any) of the financial liability over the relevant period of the financial liability to arrive
at the amortised cost at each reporting date. The corresponding effect of the amortisation under effective interest
method is recognised as interest expense under finance cost in the Statement of Profit and Loss.

III. Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired. When
an existing financial liability is replaced by another liability from the same lender on substantially different terms,
or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the
derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying
amounts is recognised in the statement of profit or loss.

3. Offsetting of financial assets and financial liabilities

Financial assets and financial liabilities are offset, and the net amount is reported in the balance sheet if there is a
currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to
realise the assets and settle the liabilities simultaneously.

4. Financial guarantee contracts

Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is
initially measured at fair value and subsequently at the higher of the amount determined in accordance with ‘Ind AS 37 -
Provisions, contingent liabilities and contingent assets'' and the amount initially recognised less cumulative amortisation,
where appropriate.

The fair value of financial guarantees is determined as the present value of the difference in net cash flows between the
contractual payments under the debt instrument and the payments that would be required without the guarantee, or the
estimated amount that would be payable to a third party for assuming the obligations.

2.25 Cash dividend to equity holders

The Company recognises a liability to make cash distributions to equity holders when the distribution is authorised, and the
distribution is no longer at the discretion of the Company. As per the Companies Act, 2013, a distribution is authorised when it
is approved by the shareholders. A corresponding amount is recognised directly in equity.

2.26 Government grant

Government grants are recognised at their fair value when there is a reasonable assurance that the grant will be received, and
Company will comply with all attached conditions.

Government grants relating to income, are deferred and are recognised as other income in profit or loss in the period in which
such costs that these grant intends to compensate, are incurred.

Government grants relating to purchase of property, plant and equipment are initially recognised as deferred income at fair
value. Subsequently, the grant is recognised as income in profit and loss on a systematic basis over the useful life of the asset.

2.27 New and amended standards

The Ministry of Corporate Affairs vide notification dated 9 September 2024 and 28 September 2024 notified the Companies
(Indian Accounting Standards) Second Amendment Rules, 2024 and Companies (Indian Accounting Standards) Third
Amendment Rules, 2024, respectively, which amended/ notified certain accounting standards, and are effective for annual
reporting periods beginning on or after 1 April 2024 :

• Insurance contracts - Ind AS 117; and

• Lease Liability in Sale and Leaseback - Amendments to Ind AS 116

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

2.28 Standards issued but not effective

The Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies
(Indian Accounting Standards) Rules. For the year ended March 31, 2025, MCA has not notified any new standards or
amendments to existing standards that significantly impact the Company.

b. Terms/ Rights attached to equity shares :

The Company has only one class of equity shares having a par value of '' 2 per share. Each holder of the equity shares is
entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board
of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

The Board of Directors proposed a final dividend of '' 6 per equity share for the financial year ended 31 March 2025 (31 March
2024 : '' 6 per equity share). The proposal is subject to the approval of shareholders at the Annual General Meeting to be held
and if approved, will be recognised as distributions to equity shareholders during the year ended 31 March 2026. This event is
considered as non-adjusting event.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the
company after distributing all preferential amounts.

- Contract assets primarily relate to the Company''s rights to consideration for work completed but not billed at the
reporting date. The Contract assets are transferred to Trade receivables on completion of milestones and its related
invoicing.

- The Contract liabilities relate to unearned revenue and customer advances where performance obligations are yet
to be fulfilled as per the contracts. The fulfilment of the performance obligations will extinguish these liabilities and
revenue will be recognised.

- The payment is due from the date of invoice and payment terms are in the range of 30 days to 120 days. The
Company expects that the period between when the entity transfers a promised good or service to a customer and
when the customer pays for that good or service will be less than one year. Therefore, Company does not adjust the
promised amount of consideration for the effects of financing component.

29 Segment reporting

The business activities of the Company from which it earns revenue and incurs expenses; whose operating results are regularly
reviewed by the chief operating decision maker to make decisions about resources to be allocated to the segment and assess
its performance, and for which discrete financial information is available involve predominantly one operating segment i.e.
process and project engineering.

Disclosures applicable to the entity having single reportable segment have been reported in Consolidated Financial Statements.

32 Employee benefits

a) Defined contribution plans

The Company has recognised '' 112.936 (31 March 2024 : '' 95.620) towards post-employment defined contribution plans
comprising of provident fund, Employee State Insurance Scheme, National Pension Scheme and superannuation fund in
the statement of profit and loss.

b) Defined benefit plan

In accordance with the Payment of Gratuity Act, 1972, the Company is required to provide post-employment benefit to its
employees in the form of gratuity. The Company has maintained a fund with the Life Insurance Corporation of India and
ICICI Prudential Life Insurance to meet its gratuity obligations. In accordance with the Standard, the disclosures relating
to the Company''s gratuity plan are provided below :

The changes in the present value of defined benefit obligation representing reconciliation of opening and closing balances
thereof are as follows :

The above cash flows have been arrived at based on the demographic and financial assumptions.

Risk Exposure and Asset Liability Matching

Provision of a defined benefit scheme poses certain risks, some of which are detailed hereunder, as companies take on
uncertain long term obligations to make future benefit payments.

1) Liability Risks

i. Asset-Liability Mismatch Risk

Risk which arises if there is a mismatch in the duration of the assets relative to the liabilities. By matching
duration with the defined benefit liabilities, the company is successfully able to neutralize valuation swings
caused by interest rate movements.

ii. Discount Rate Risk

Variations in the discount rate used to compute the present value of the liabilities may seem small, but in
practice can have a significant impact on the defined benefit liabilities.

iii. Future Salary Escalation and Inflation Risk

Since price inflation and salary growth are linked economically, they are combined for disclosure purposes.
Rising salaries will often result in higher future defined benefit payments resulting in a higher present value of
liabilities especially unexpected salary increases provided at management''s discretion may lead to uncertainties
in estimating this increasing risk.

37 Financial risk management policy and objectives

The Company''s principal financial liabilities, comprise lease liabilities, trade and other payables and financial guarantee
contracts. The main purpose of these financial liabilities is to finance company''s operations and to provide guarantees to
support operations of the subsidiaries. Company''s principal financial assets include investments, trade and other receivables,
security deposits and cash and cash equivalents, that it derives directly from its operations.

In order to minimise any adverse effects on the financial performance of the Company, it has taken various measures. This
note explains the source of risk which the entity is exposed to and how the entity manages the risk and impact of the same in
the financial statements.

The Company''s management handles the risk management based on policies approved by the Board of Directors. Company''s
treasury identifies, evaluates and hedges financial risks in close co-operation with the company''s operating units. The Board
provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange
risk, credit risk, and investment of excess liquidity.

(A) Credit risk

Credit risk in case of the Company arises from cash and cash equivalents, trade receivables, financial assets measured
at amortised cost, corporate guarantees issued to group companies, as well as credit exposures to customers including
outstanding receivables.

Credit risk management

Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. To manage
this, the Company periodically assesses the reliability of customers, taking into account the financial condition, current
economic trends, and analysis of historical bad debts and ageing of accounts receivable. Individual risk limits are set
accordingly.

The company considers the probability of default upon initial recognition of asset and whether there has been a significant
increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant
increase in credit risk, the Company compares the risk of a default occurring on the asset as at the reporting date with
the risk of default as at the date of initial recognition. It considers reasonable and supportive forward looking information
such as :

(i) Actual or expected significant adverse changes in business,

(ii) Actual or expected significant changes in the operating results of the counterparty,

(iii) Financial or economic conditions that are expected to cause a significant change to counterparty''s ability to meet
its obligations,

(iv) Significant increases in credit risk on other financial instruments of the same counterparty,

(v) Significant changes in the value of collateral supporting the obligation or in the quality of third-party guarantees or
credit enhancements.

The company provides for expected credit loss in case of trade receivables when there is no reasonable expectation of
recovery, such as a debtor declaring bankruptcy or failing to engage in a repayment plan with the company etc.

The Company uses simplified approach for estimating the lifetime expected loss provision. The Company provides
expected loss based on the overdue number of days for receivables as per the provision matrix as decided by the
management which is based on the historical experience of recoverability. Where receivables have been written off, the
company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are
made, these are recognised in profit or loss.

B) Liquidity risk

The company follows a prudent approach to liquidity risk management by ensuring it has sufficient cash and access to
committed credit facilities to meet its financial obligations as they fall due and to manage market positions effectively.
Given the dynamic nature of its operations, the company maintains funding flexibility through available committed credit
lines.

Management regularly monitors the company''s liquidity position using rolling cash flow forecasts, which include cash
and cash equivalents and undrawn borrowing facilities. This monitoring is aligned with internal policies and limits. The
Company''s liquidity management also includes :

- Forecasting future cash flows,

- Assessing the required level of liquid assets,

- Monitoring liquidity ratios in line with internal benchmarks and regulatory requirements, and

- Maintaining appropriate debt financing strategies.

(C) Foreign currency risk

The Company is exposed to foreign exchange risk mainly through its sales to overseas customers and purchases from
overseas suppliers in various foreign currencies.

The Company evaluates exchange rate exposure arising from foreign currency transactions and the Company follows
established risk management policies, including use of derivatives like foreign exchange forward contracts to hedge
exposure to foreign currency risk, where the economic conditions match the Company''s policy.

40 Other Notes

i Title deeds of immovable property not held in the name of the company

The Company does not own any immovable property whose title deeds are not in the name of the Company.

ii Details of Benami Property

The Company does not own any benami property neither any proceedings are initiated or pending against the Company under
the Prohibition of Benami Property Transactions Act, 1988.

iii Borrowings secured against current assets

Though the Company does not have any fund based borrowings from banks or financial institutions on the basis of security of
current assets, it has filed quarterly returns or statements of current assets with banks or financial institutions and the same
are in agreement with the books of account read with notes given in the quarterly returns or statements.

iv Wilful Defaulter

The Company has not been declared as wilful defaulter by any bank or financial institution or other lender.

v Relationship with Struck off Companies

As per the information available with the Company, the Company has not entered into any transactions with companies struck
off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956.

vi Registration of charges with ROC

There are three charges totalling to '' 781.550 million (31 March 2024 : three charges totalling to '' 781.550 million) created in
favour of banks which are pending for satisfaction. There are no outstanding dues to these banks and satisfaction of these
charges are pending due to technical issues which are being sorted out by the Company.

vii Utilisation of Borrowed funds and share premium

The Company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources
or kind of funds) to any other person or entity, including foreign entities (Intermediaries) with the understanding (whether
recorded in writing or otherwise) that the Intermediary shall (i) directly or indirectly lend or invest in other persons or entities
identified in any manner whatsoever by or on behalf of the Group or (ii) provide any guarantee, security or the like to or on
behalf of the Company.

viii Loans or advances to specified persons

The Company has not granted loans or advances in the nature of loans to promoters, directors, KMPs and other the related
parties either severally or jointly with any other person, that are :

(i) repayable on demand or

(ii) without specifying any terms or period of repayment.

ix Details of Crypto Currency or Virtual Currency

The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

x Valuation of PP&E, right-of-use assets, intangible asset and investment property

The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both
during the current or previous year.

xi Utilisation of borrowings availed from banks and financial institutions

The Company does not have any borrowings availed from banks and financial institutions.

xii Compliance with number of layers of companies

The Company has complied with the requirement with respect to number of layers as prescribed under section 2(87) of the
Companies Act, 2013 read with the Companies (Restriction on number of layers) Rules, 2017.

xiii Undisclosed income

There is no income surrendered or disclosed as income during the year in tax assessments under the Income Tax Act, 1961
(such as search or survey), that has not been recorded in the books of account.

xiv Disclosure pursuant to Sec 186 (4) of the Companies Act, 2013

A 1) Name : Praj Far East (Philippines) Inc.

2) Purpose : Corporate Guarantee given for working capital limit

3) Amount : 129.330 (31 March 2024 : 125.835)

4) No outstanding borrowings as on reporting date (31 March 2024 : Nil)

B 1) Name : Praj HiPurity Systems Limited

2) Purpose : Corporate Guarantee given for working capital limit

3) Amount : '' 940.000 (31 March 2024 : 940.000)

4) No outstanding borrowings as on reporting date (31 March 2024 : Nil)

C Name : Praj GenX Limited

a) Nature of transaction : Corporate Guarantee given

i) Purpose : Corporate Guarantee given for lease payments

ii) Amount : '' 1444.564 (31 March 2024 : 324.591)

iii) Lease liability as on reporting date is '' 1388.740 (31 March 2024 : 246.595)

b) Nature of transaction : Corporate Guarantee given

i) Purpose : Corporate Guarantee given for banking facilities

ii) Amount : '' 1500.000 (31 March 2024 : Nil)

iii) Unused banking limits as on reporting date is '' 1500.000 (31 March 2024 : Nil)

c) Nature of transaction : Inter Corporate Loan given

i) Purpose : General corporate purpose

ii) Amount : '' 1567.500 (31 March 2024 : 798.500)

iii) Maximum outstanding balance is '' 1567.500 (31 March 2024 : 798.500)

iv) Rate of interest : 5-year Government Bond Yield 3.5% (31 March 2024 : SBI MCLR 2%)

D Name : Praj Projects (Tanzania) Limited

a) Nature of transaction : Corporate Guarantee given

i) Purpose : Corporate Guarantee given for customer advance

ii) Amount : '' 695.878 (31 March 2024 : NIL)

iii) Customer Advance outstanding as on reporting date is '' 241.460 (31 March 2024 : NIL)

b) Nature of transaction : Inter Corporate Loan given

i) Purpose : General corporate purpose

ii) Amount : '' 220.691 (31 March 2024 : NIL)

iii) Maximum outstanding balance is '' 220.691 (31 March 2024 : NIL)

iv) Rate of interest : 13.40% i.e. negotiated lending interest rate as published by Bank of Tanzania (31 March 2024
: NA)

41 Capital management
Risk management

The Company''s objectives when managing capital are to

- safeguard it''s ability to continue as a going concern, so that it can continue to provide returns to shareholders and
benefits to other stakeholders, and

- Maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell assets to reduce debt. Consistent with others in the industry, the
Company monitors capital on the basis of the following gearing ratio : Net debt (total borrowings net of cash and cash
equivalents) divided by total ''equity'' (as shown in the balance sheet).

42 The Ministry of Corporate Affairs vide notification number GSR 205 (E) dated 24th March 2021 and as amended from time to
time, read with proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014, for the financial year commencing April 1, 2023
has prescribed, inter-alia, certain requirements related to maintenance of an audit trail emanating from accounting software.
The Company had enabled the audit trail at an application level for all the tables and fields for its books of account and relevant
transactions in the accounting software used by it, in conformity with the said regulations. However, the accounting software
used by the Company has not been enabled with the feature of audit trail log at the database layer to log direct transactional
changes, due to the present design of the accounting software.

43 Exceptional item represents profit on sale of land located at Nasarapur, which was classified as "Asset held for sale" as of 31
March 2024.

44 On 28th March 2025, a fire broke out at R&D facility, Praj Matrix, causing a temporary disruption of R&D activities for a couple
of weeks. The facility was fully insured, and a claim for the loss has already been lodged with the insurance company. The
Management of the Company expects to recover the estimated losses, including damage to the property, and therefore, no
provision for losses has been made in the financial statements.

As per our report of even date.

For P G BHAGWAT LLP For and on behalf of the Board of Directors of Praj Industries Limited

Chartered Accountants

Firm Regn. No : 101118W/W100682

Abhijeet Bhagwat Dr. Pramod Chaudhari Shishir Joshipura Sachin Raole

Partner Chairman CEO and Managing Director CFO and Director- Resources

Membership No. : 136835 (DIN : 00196415) (DIN : 00574970) (DIN : 00431438)

Anant Bavare

Place : Pune Company Secretary

Date : 29 April 2025 (M.No. : ACS21405)

---

Mar 31, 2024

Terms/ Rights attached to equity shares:

The Company has only one class of equity shares having a par value of INR 2 per share. Each holder of the equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

The Board of Directors proposed a final dividend of INR 6 per equity share for the financial year ended 31 March 2024. The proposal is subject to the approval of shareholders at the Annual General Meeting to be held and if approved, will be recognised as distributions to equity shareholders during the year ended 31 March 2025. This event is considered as nonadjusting event.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the company after distributing all preferential amounts.

Contract assets primarily relate to the Company''s rights to consideration for work completed but not billed at the reporting date. The Contract assets are transferred to Trade receivables on completion of milestones and its related invoicing.

The Contract liabilities relate to unearned revenue and customer advances where performance obligations are yet to be fulfilled as per the contracts. The fulfilment of the performance obligations will extinguish these liabilities and revenue will be recognised.

The payment is due from the date of invoice and payment terms are in the range of 30 days to 120 days. The company expects that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be less than one year. Therefore, Company does not adjust the promised amount of consideration for the effects of financing component.

29 Segment reporting

The business activities of the Company from which it earns revenue and incurs expenses; whose operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available involve predominantly one operating segment i.e. process and project engineering.

Disclosures applicable to the entity having single reportable segment have been reported in Consolidated Financial Statements.

a) Defined contribution plans

The Company has recognised INR 95.620 (31 March 2023: INR 78.590) towards post-employment defined contribution plans comprising of provident fund, Employee State Unsurance Scheme, National Pension Scheme and superannuation fund in the statement of profit and loss.

b) Defined benefit plan

In accordance with the Payment of Gratuity Act, 1972, the Company is required to provide post-employment benefit to its employees in the form of gratuity. The Company has maintained a fund with the Life Insurance Corporation of India and ICICI Prudential Life Insurance to meet its gratuity obligations. In accordance with the Standard, the disclosures relating to the Company’s gratuity plan are provided below:

Risk Exposure and Asset Liability Matching

Provision of a defined benefit scheme poses certain risks, some of which are detailed hereunder, as companies take on uncertain long term obligations to make future benefit payments.

1) Liability Risks

a. Asset-Liability Mismatch Risk-

Risk which arises if there is a mismatch in the duration of the assets relative to the liabilities. By matching duration with the defined benefit liabilities, the company is successfully able to neutralize valuation swings caused by interest rate movements.

b. Discount Rate Risk-

Variations in the discount rate used to compute the present value of the liabilities may seem small, but in practice can have a significant impact on the defined benefit liabilities.

c. Future Salary Escalation and Inflation Risk-

Since price inflation and salary growth are linked economically, they are combined for disclosure purposes. Rising salaries will often result in higher future defined benefit payments resulting in a higher present value of liabilities especially unexpected salary increases provided at management''s discretion may lead to uncertainties in estimating this increasing risk.

2) Asset Risks

All plan assets are maintained in a trust fund managed by LIC of India and ICICI Prudential Life Insurance.

The company has opted for a traditional fund wherein all assets are invested primarily in risk averse markets. The company has no control over the management of funds but this option provides a high level of safety for the total corpus. A single account is maintained for both the investment and claim settlement and hence 100% liquidity is ensured. Also interest rate and inflation risk are taken care of.

In the Annual General Meeting of the Company held on 22 July 2011, total of 9,238,936 stock options were approved under the scheme "Employee Stock Option Plan 2011”. In the Meeting of the Compensation and Share Allotment Committee held on 27 January 2015 it was decided to grant options to CEO & MD and senior executives of the Company at the relevant market price as ESOP 2011 - Grant I. The total options granted under ESOP 2011 - Grant I are 3,750,000 options out of which 250,000 options (Plan A) were granted to CEO & MD and 3,500,000 options (Plan B) were granted to senior executives of the Company.

During the year 2015-16 390,000 options were granted to senior executives of the Company as ESOP 2011 - Grant II to V. During the year 2016-17 100,000 options were granted to senior executive of the Company as ESOP 2011 - Grant VI. During the year 2017-18 1,969,700 options were granted to certain employees of the Company as ESOP 2011 - Grant VII. During the year 2018-19 1,625,000 options were granted to certain employees of the Company as ESOP 2011- Grant VIII to X. During the year 2021-22 140,000 options were granted to CEO& MD and certain senior executives of the Company as ESOP 2011- Grant XI.

The stock options vest in a graded manner equally over the period of vesting, each vesting taking effect as per the terms of the grant. The stock options granted are exercisable at 100% of the fair market value of the underlying equity shares of the Company as on the date of grant.

34 Expenditure on research & development activities

Revenue expenditure on research is charged under respective heads of account in the year in which it is incurred. Capital expenditure on development consists of property, plant and equipment, Capital work in progress, Intangible Assets and Intangible assets under development. The property, plant and equipment and Intangible Assets as included above are depreciated / amortised on the same basis as per their respective categories. The break-up of Research and development (R&D) capital and revenue expenditure is as below:

36 Fair value measurements

This note explains the judgements and estimates made in determining the fair values of the financial instruments that are recognised & measured at i. fair value ii. measured at amortised cost and for which fair values are considered to be same as the amortised costs disclosed in the financial statements. They are further classified into Level 1 to Level 3 as required by the accounting standard and described in the significant accounting policies of the Company. Further, the note describes valuation techniques used, key inputs to valuations and quantitative information about significant unobservable inputs for fair value measurements.

As per assessments made by the management, fair values of all financial instruments carried at amortised cost (except investment in quoted non-convertible bonds) are not materially different from their carrying amounts since they are either short term in nature or the interest rates applicable are equal to the current market rate of interest.

The Company has performed a fair valuation of its investment in mutual funds which are classified as fair value through profit and loss (FVTPL) and bonds which are classified as fair value through other comprehensive income (FVOCI) using quoted prices and fair valuations of foreign exchange forward contracts as per mark to market valuation from bank.

37 Financial risk management policy and objectives

The Company’s principal financial liabilities, comprise lease liabilities and trade and other payables. The main purpose of these financial liabilities is to finance company''s operations and to provide guarantees to support its operations. Company’s principal financial assets include trade and other receivables, security deposits and cash and cash equivalents, that derive directly from its operations.

In order to minimise any adverse effects on the financial performance of the Company, it has taken various measures. This note explains the source of risk which the entity is exposed to and how the entity manages the risk and impact of the same in the financial statements.

The company''s risk management is carried out by management, under policies approved by the board of directors. Company''s treasury identifies, evaluates and hedges financial risks in close cooperation with the company''s operating units. The board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, credit risk, and investment of excess liquidity.

(A) Credit risk

Credit risk in case of the Company arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposures to customers including outstanding receivables.

Credit risk management

Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses the reliability of customers, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of accounts receivable. Individual risk limits are set accordingly.

The company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk, the Company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers reasonable and supportive forward looking information such as:

(i) Actual or expected significant adverse changes in business,

(ii) Actual or expected significant changes in the operating results of the counterparty,

(iii) Financial or economic conditions that are expected to cause a significant change to counterparty''s ability to meet its obligations,

(iv) Significant increases in credit risk on other financial instruments of the same counterparty,

(v) Significant changes in the value of collateral supporting the obligation or in the quality of third-party guarantees or credit enhancements.

The company provides for expected credit loss as per simplified approach in case of trade receivables, claims receivable and security deposits when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or failing to engage in a repayment plan with the Company. The Company categorises a receivable for provision for doubtful debts/write off when a debtor fails to make contractual payments greater than 180 days past due. The amount of provision depends on certain parameters set by the Company in its provisioning policy. Where loans or receivables have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised in profit or loss.

B) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, Company maintains flexibility in funding by maintaining availability under committed credit lines.

Management monitors rolling forecasts of the Company''s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. This is carried out in accordance with practice and limits set by the Company. In addition, the Company''s liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.

(C) Foreign currency risk

The Company is exposed to foreign exchange risk mainly through its sales to overseas customers and purchases from overseas suppliers in various foreign currencies.

The Company evaluates exchange rate exposure arising from foreign currency transactions and the Company follows established risk management policies, including use of derivatives like foreign exchange forward contracts to hedge exposure to foreign currency risk, where the economic conditions match the Company''s policy.

40 Other Notes

i Details of Benami Property

The Company does not own any benami property neither any proceedings are initiated or pending against the Company under the Prohibition of Benami Property Transactions Act, 1988.

ii Borrowings secured against current assets

Though the Company does not have any fund based borrowings from banks or financial institutions on the basis of security of current assets, it has filed quarterly returns or statements of current assets with banks or financial institutions and the same are in agreement with the books of account read with notes given in the quarterly returns or statements.

iii Wilful Defaulter

The Company has not been declared as wilful defaulter by any bank or financial institution or other lender.

iv Relationship with Struck off Companies

As per the information available with the Company, the Company has not entered into any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956.

v Registration of charges with ROC

There are three charges totalling to INR 781.550 million created in favour of banks which are pending for satisfaction. There are no outstanding dues to these banks and satisfaction of these charges are pending due to technical issues which are being sorted out by the Company.

vi Utilisation of Borrowed funds and share premium

The company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary shall (i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or (ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries;

41 Capital management

Risk management

The Company''s objectives when managing capital are to

- safeguard it''s ability to continue as a going concern, so that it can continue to provide returns to shareholders and benefits to other stakeholders, and

- Maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Consistent with others in the industry, the Company monitors capital on the basis of the following gearing ratio: Net debt (total borrowings net of cash and cash equivalents) divided by total ''equity'' (as shown in the balance sheet).

42 The Ministry of Corporate Affairs vide notification number GSR 205 (E) dated 24th March 2021 and as amended from time to time, read with proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014, for the financial year commencing April 1,2023 has prescribed, inter-alia, certain requirements related to maintenance of an audit trail emanating from accounting software. The Company had enabled the audit trail at an application level for all the tables and fields for its books of account and relevant transactions in the accounting software used by it, in conformity with the said regulations. However, the accounting software used by the Company has not been enabled with the feature of audit trail log at the database layer to log direct transactional changes, due to the present design of the accounting software. The interpretation and guidance on what level of edit log and audit trail needs to be maintained, continues to evolve.

---

Mar 31, 2023

b. Terms/ Rights attached to equity shares:

The Company has only one class of equity shares having a par value of INR 2 per share. Each holder of the equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

The Board of Directors proposed a final dividend of INR 4.50 per equity share for the financial year ended 31 March 2023. The proposal is subject to the approval of shareholders at the Annual General Meeting to be held and if approved, will be recognised as distributions to equity shareholders during the year ended 31 March 2024. This event is considered as nonadjusting event.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the company after distributing all preferential amounts.

c. Shares held by holding/ultimate holding company and/or their subsidiaries/associates:

The company does not have any holding or ultimate holding company.

Contract assets primarily relate to the Company''s rights to consideration for work completed but not billed at the reporting date. The Contract assets are transferred to Trade receivables on completion of milestones and its related invoicing.

The Contract liabilities relate to unearned revenue and customer advances where performance obligations are yet to be fulfilled as per the contracts. The fulfilment of the performance obligations will extingusih these liabilities and revenue will be recognised.

28 Segment reporting

The business activities of the Company from which it earns revenues and incurs expenses; whose operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available involve predominantly one operating segment i.e. process and project engineering.

30 Leases

The company classifies the lease transactions as per the requirements of IND-AS 116 "Leases"

Nature of Leasing activity:

The Company has entered into lease arrangements for office and factory premises, residential premises for its employees, office equipments, plant & machinery, vehicles, furniture & fixtures and computers.

31 Employee benefits

a) Defined contribution plans

The Company has recognised INR 78.590 (31 March 2022: INR 66.922) towards post-employment defined contribution plans comprising of provident fund, Employee State Insurance Scheme, National Pension Scheme, and superannuation fund in the statement of profit and loss.

b) Defined benefit plan

In accordance with the Payment of Gratuity Act, 1972, the Company is required to provide post-employment benefit to its employees in the form of gratuity. The Company has maintained a fund with the Life Insurance Corporation of India to meet its gratuity obligations. In accordance with the Standard, the disclosures relating to the Company''s gratuity plan are provided below:

Risk Exposure and Asset Liability Matching

Provision of a defined benefit scheme poses certain risks, some of which are detailed hereunder, as companies take on uncertain long term obligations to make future benefit payments.

1) Liability Risks

a. Asset-Liability Mismatch Risk-

Risk which arises if there is a mismatch in the duration of the assets relative to the liabilities. By matching duration with the defined benefit liabilities, the company is successfully able to neutralize valuation swings caused by interest rate movements. Hence companies are encouraged to adopt asset-liability management.

b. Discount Rate Risk-

Variations in the discount rate used to compute the present value of the liabilities may seem small, but in practise can have a significant impact on the defined benefit liabilities.

c. Future Salary Escalation and Inflation Risk-

Since price inflation and salary growth are linked economically, they are combined for disclosure purposes. Rising salaries will often result in higher future defined benefit payments resulting in a higher present value of liabilities especially unexpected salary increases provided at management''s discretion may lead to uncertainties in estimating this increasing risk.

2) Asset Risks

All plan assets are maintained in a trust fund managed by a public sector insurer viz; LIC of India. LIC has a sovereign guarantee and has been providing consistent and competitive returns over the years.

The company has opted for a traditional fund wherein all assets are invested primarily in risk averse markets. The company has no control over the management of funds but this option provides a high level of safety for the total corpus. A single account is maintained for both the investment and claim settlement and hence 100% liquidity is ensured. Also interest rate and inflation risk are taken care of.

32 Employee Stock Option Plan (ESOP)

In the Annual General Meeting of the Company held on 22 July 2011, total of 9,238,936 stock options were approved under the scheme “Employee Stock Option Plan 2011". In the Meeting of the Compensation and Share Allotment Committee held on 27 January 2015 it was decided to grant options to CEO & MD and senior executives of the Company at the relevant market price as ESOP 2011 - Grant I. The total options granted under ESOP 2011 - Grant I are 3,750,000 options out of which 250,000 options (Plan A) were granted to CEO & MD and 3,500,000 options (Plan B) were granted to senior executives of the Company.

During the year 2015-16 390,000 options were granted to senior executives of the Company as ESOP 2011 - Grant II to V. During the year 2016-17 100,000 options were granted to senior executive of the Company as ESOP 2011 - Grant VI. During the year 2017-18 1,969,700 options were granted to certain employees of the Company as ESOP 2011 - Grant VII. During the year 2018-19 1,625,000 options were granted to certain employees of the Company as ESOP 2011- Grant VIII to X. During the year 2021-22 140,000 options were granted to CEO& MD and certain senior executives of the Company as ESOP 2011- Grant XI.

The stock options vest in a graded manner equally over the period of vesting, each vesting taking effect as per the terms of the grant.

35 Fair value measurements

This note explains the judgements and estimates made in determining the fair values of the financial instruments that are recognised & measured at i. fair value ii. measured at amortised cost and for which fair values are considered to be same as the amortised costs disclosed in the financial statements. They are further classified them into Level 1 to Level 3 as required by the accounting standard and described in the significant accounting policies of the Company. Further, the note describes valuation techniques used, key inputs to valuations and quantitative information about significant unobservable inputs for fair value measurements.

As per assessments made by the management, fair values of all financial instruments carried at amortised cost (except investment in quoted non-convertible bonds) are not materially different from their carrying amounts since they are either short term nature or the interest rates applicable are equal to the current market rate of interest.

The Company has performed a fair valuation of its investment in mutual funds which are classified as FVTPL and bonds which are classified as FVOCI using quoted prices and fair valuations of foreign exchange forward contracts as per mark to market valuation from bank.

36 Financial risk management policy and objectives

Company''s principal financial liabilities, comprise lease liabilities and trade and other payables. The main purpose of these financial liabilities is to finance company''s operations and to provide guarantees to support its operations. Company''s principal financial assets include trade and other receivables, security deposits and cash and cash equivalents, that derive directly from its operations.

In order to minimise any adverse effects on the financial performance of the company, it has taken various measures. This note explains the source of risk which the entity is exposed to and how the entity manages the risk and impact of the same in the financial statements.

The company''s risk management is carried out by management, under policies approved by the board of directors. Company''s treasury identifies, evaluates and hedges financial risks in close cooperation with the company''s operating units. The board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, credit risk, and investment of excess liquidity.

(A) Credit risk

Credit risk in case of the Company arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposures to customers including outstanding receivables.

Credit risk management

Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses the reliability of customers, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of accounts receivable. Individual risk limits are set accordingly.

The company considers the probability of default upon intial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers reasonable and supportive forward looking information such as:

(i) Actual or expected significant adverse changes in business,

(ii) Actual or expected significant changes in the operating results of the counterparty,

(iii) Financial or economic conditions that are expected to cause a significant change to counterparty''s ability to meet its obligations,

(iv) Significant increases in credit risk on other financial instruments of the same counterparty,

(v) Significant changes in the value of collateral supporting the obligation or in the quality of third-party guarantees or credit enhancements.

The company provides for expected credit loss in case of trade receivables, claims receivable and security deposits when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or failing to engage in a repayment plan with the company. The company categorises a receivable for provision for doubtful debts/write off when a debtor fails to make contractual payments greater than 180 days past due. The amount of provision depends on certain parameters set by the Company in its provisioning policy Where loans or receivables have been written off, the company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised in profit or loss.

B) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, company maintains flexibility in funding by maintaining availability under committed credit lines.

Management monitors rolling forecasts of the company''s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. This is carried out in accordance with practice and limits set by the group. In addition, the company''s liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.

(C) Foreign currency risk

The company is exposed to foreign exchange risk mainly through its sales to overseas customers and purchases from overseas suppliers in various foreign currencies.

The company evaluates exchange rate exposure arising from foreign currency transactions and the company follows established risk management policies, including use of derivatives like foreign exchange forward contracts to hedge exposure to foreign currency risk, where the economic conditions match the company''s policy.

(a) Decrease in ratio is mainly on account of increase in number of leases entered during the year compared to increase in profit

(b) Improved ratio is on account of higher revenue from operations compared to increase in average working capital employed

(c) Favourable increase due to better market conditions

(d) Improved ratio due to better performance of subsidiaries business

19 Other Notes

i Details of Benami Property

The Company does not own any benami property neither any proceedings are initiated or pending against the Company under the Prohibition of Benami Property Transactions Act, 1988.

ii Borrowings secured against current assets

Though the Company does not have any fund based borrowings from banks or financial institutions on the basis of security of current assets, it has filed quarterly returns or statements of current assets with banks or financial institutions and the same are in agreement with the books of account read with notes given in the quarterly returns or statements.

iii Wilful Defaulter

The Company has not been declared as wilful defaulter by any bank or financial institution or other lender.

iv Relationship with Struck off Companies

As per the information available with the Company, the Company has not entered into any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956.

v Registration of charges with ROC

There are three charges totalling to INR 781.550 million created in favour of banks which are pending for satisfaction. There are no outstanding dues to these banks and satisfaction of these charges is pending due to technical issues which are being sorted out by the Company.

vi Utilisation of Borrowed funds and share premium

The Company does not have any borrowings. The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) nor has it received any fund from any person(s) or entity(ies), including foreign entities (Funding Party).

vii Details of Crypto-Currency or Virtual Currency

The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

viii Disclosure pursuant to Sec 186 (4) of the Companies Act, 2013

a i) Name: Praj Far East Co. Ltd

ii) Purpose: Corporate Guarantee given for working capital limit

iii) Amount: INR 124.050 (31 March 2022: 114.360)

iv) No outstanding borrowings as on reporting date (31 March 2022: Nil)

b i) Name: Praj HiPurity Systems Limited

ii) Purpose: Corporate Guarantee given for working capital limit

iii) Amount: INR 700.000 (31 March 2022: 700.000)

iv) No outstanding borrowings as on reporting date (31 March 2022: Nil)

40 Capital management

Risk management

The company''s objectives when managing capital are to

- safeguard it''s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, and

- Maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Consistent with others in the industry, the company monitors capital on the basis of the following gearing ratio: Net debt (total borrowings net of cash and cash equivalents) divided by total ''equity'' (as shown in the balance sheet).

41 Prior year comparatives are regrouped / reclassified wherever necessary to conform to current period''s presentation.

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Mar 31, 2022

The Company had obtained independent valuation for year ended 31 March 2019, for its investment property from a government approved valuer who is a specialist in valuing these types of investment properties.

The valuation had been made with reference to the prevailing market rates and using the approved valuation method. Considering the current scenario and constraints in physical verification, the Company has considered a marginal increase of 5% in the valuation which is based on the trend for the earlier years.

All resulting fair value estimates for investment property are considered as level 3.

b. Terms/ Rights attached to equity shares:

The Company has only one class of equity shares having a par value of INR 2 per share. Each holder of the equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

The Board of Directors proposed a final dividend of INR 2.70 per equity share and a Special Amrit Mahotsava dividend of INR 1.50 per equity share for the financial year ended 31 March 2022. The proposal is subject to the approval of shareholders at the Annual General Meeting to be held and if approved, will be recognised as distributions to equity shareholders during the year ended 31 March 2023. This event is considered as non-adjusting event.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the company after distributing all preferential amounts.

c. Shares held by holding/ultimate holding company and/or their subsidiaries/associates:

The company does not have any holding or ultimate holding company.

26 Capitalcommitmentsandcontingentliabilities
Particulars	31 March 2022	31 March 2021
Capital commitments
Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances)	115.454	26.032
Other commitments Partly paid shares-Praj Far East Co. Ltd Contingent liabilities	13.408	13.770
Claims against Company not acknowledged as debts (primarily relating to performance related claims filed by customers) (net of possibility of reimbursement from insurance company of INR 41.021)	21.845	17.550
Disputed demands in appeal towards income tax, service tax & sales tax	366.235	201.795
Guarantee issued in respect of obligations of a subsidiary	814.360	571.060

Contract assets primarily relate to the Company''s rights to consideration for work completed but not billed at the reporting date. The Contract assets are transferred to Trade receivables on completion of milestones and its related invoicing.

The Contract liabilities relate to unearned revenue and customer advances where performance obligations are yet to be fulfilled as per the contracts. The fulfilment of the performance obligations will extingusih these liabilities and revenue will be recognised.

28 Segment reporting

The business activities of the Company from which it earns revenues and incurs expenses; whose operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available involve predominantly one operating segment i.e. process and project engineering.

30 Leases

The company classifies the lease transactions as per the requirements of IND-AS 116 "Leases"

Nature of Leasing activity:

The Company has entered into lease arrangements for office and factory premises, residential premises for its employees, office equipments and computers.

31 Employee benefits

a) Defined contribution plans

The Company has recognised INR 66.922 (31 March 2021: INR 55.979) towards post-employment defined contribution plans comprising of provident and superannuation fund in the statement of profit and loss.

b) Defined benefit plan

In accordance with the Payment of Gratuity Act, 1972, the Company is required to provide post-employment benefit to its employees in the form of gratuity. The Company has maintained a fund with the Life Insurance Corporation of India to meet its gratuity obligations. In accordance with the Standard, the disclosures relating to the Company''s gratuity plan are provided below:

Risk Exposure and Asset Liability Matching

Provision of a defined benefit scheme poses certain risks, some of which are detailed hereunder, as companies take on uncertain long term obligations to make future benefit payments.

1) Liability Risks

a. Asset-Liability Mismatch Risk-

Risk which arises if there is a mismatch in the duration of the assets relative to the liabilities. By matching duration with the defined benefit liabilities, the company is successfully able to neutralize valuation swings caused by interest rate movements. Hence companies are encouraged to adopt asset-liability management.

b. Discount Rate Risk-

Variations in the discount rate used to compute the present value of the liabilities may seem small, but in practise can have a significant impact on the defined benefit liabilities.

c. Future Salary Escalation and Inflation Risk-

Since price inflation and salary growth are linked economically, they are combined for disclosure purposes. Rising salaries will often result in higher future defined benefit payments resulting in a higher present value of liabilities especially unexpected salary increases provided at management''s discretion may lead to uncertainties in estimating this increasing risk.

2) Asset Risks

All plan assets are maintained in a trust fund managed by a public sector insurer viz; LIC of India. LIC has a sovereign guarantee and has been providing consistent and competitive returns over the years.

The company has opted for a traditional fund wherein all assets are invested primarily in risk averse markets. The company has no control over the management of funds but this option provides a high level of safety for the total corpus. A single account is maintained for both the investment and claim settlement and hence 100% liquidity is ensured. Also interest rate and inflation risk are taken care of.

32 Employee Stock Option Plan (ESOP)

In the Annual General Meeting of the Company held on 22 July 2011, total of 9,238,936 stock options were approved under the scheme “Employee Stock Option Plan 2011". In the Meeting of the Compensation and Share Allotment Committee held on 27 January 2015 it was decided to grant options to CEO & MD and senior executives of the Company at the relevant market price as ESOP 2011 - Grant I. The total options granted under ESOP 2011 - Grant I are 3,750,000 options out of which 250,000 options (Plan A) were granted to CEO & MD and 3,500,000 options (Plan B) were granted to senior executives of the Company.

During the year 2015-16 390,000 options were granted to senior executives of the Company as ESOP 2011 - Grant II to V. During the year 2016-17 100,000 options were granted to senior executive of the Company as ESOP 2011 - Grant VI. During the year 2017-18 1,969,700 options were granted to certain employees of the Company as ESOP 2011 - Grant VII. During the year 2018-19 1,625,000 options were granted to certain employees of the Company as ESOP 2011- Grant VIII to X. During the year 2021-22 140,000 options were granted to CEO& MD and certain senior executives of the Company as ESOP 2011- Grant XI.

The stock options vest in a graded manner equally over the period of vesting, each vesting taking effect as per the terms of the grant. The stock options granted are exercisable at 100% of the fair market value of the underlying equity shares of the Company as on the date of grant.

34 Note on COVID-19 impact

During Financial Year 2020/21, the second wave of COVID-19 pandemic continued to spread across the globe and affected all businesses around the world albeit with less intensity when compared with previous year.

Considering the uncertainties, the Company will continue to closely monitor material changes, if any, in future economic conditions.

The Company''s operations at all its manufacturing units are normal and the Company is operating strictly as per the guidelines issued by Central and State Government.

As the Company''s operations for the first quarter of the year ended 31 March 2021 were affected due to the outbreak of COVID-19, the results for the year ended 31 March 2022 are not strictly comparable with corresponding figures for the year ended 31 March 2021.

37 Financial risk management policy and objectives

Company''s principal financial liabilities, comprise loans and borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance company''s operations and to provide guarantees to support its operations. Company''s principal financial assets include advances to subsidiaries, trade and other receivables, security deposits and cash and cash equivalents, that derive directly from its operations.

The company''s risk management is carried out by management, under policies approved by the board of directors. Company''s treasury identifies, evaluates and hedges financial risks in close cooperation with the company''s operating units. The board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, credit risk, and investment of excess liquidity.

(A) Credit risk

Credit risk in case of the Company arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposures to customers including outstanding receivables.

Credit risk management

Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses the reliability of customers, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of accounts receivable. Individual risk limits are set accordingly.

The company considers the probability of default upon intial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers reasonable and supportive forward looking information such as:

(i) Actual or expected significant adverse changes in business,

(ii) Actual or expected significant changes in the operating results of the counterparty,

(iii) Financial or economic conditions that are expected to cause a significant change to counterparty''s ability to meet its obligations,

(iv) Significant increases in credit risk on other financial instruments of the same counterparty,

(v) Significant changes in the value of collateral supporting the obligation or in the quality of third-party

guarantees or credit enhancements.

The company provides for expected credit loss in case of trade receivables, claims receivable and security deposits when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or failing to engage in a repayment plan with the company. The company categorises a receivable for provision for doubtful debts/write off when a debtor fails to make contractual payments greater than 180 days past due. The amount of provision depends on certain parameters set by the Company in its provisioning policy Where loans or receivables have been written off, the company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised in profit or loss.

B) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, company maintains flexibility in funding by maintaining availability under committed credit lines.

Management monitors rolling forecasts of the company''s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. This is carried out in accordance with practice and limits set by the group. In addition, the company''s liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to meet these, monitoring

(C) Foreign currency risk

The company is exposed to foreign exchange risk mainly through its sales to overseas customers and purchases from overseas suppliers in various foreign currencies.

The company evaluates exchange rate exposure arising from foreign currency transactions and the company follows established risk management policies, including use of derivatives like foreign exchange forward contracts to hedge exposure to foreign currency risk, where the economic conditions match the company''s policy.

(a) There is favourable change in these ratios on account of increase in revenue from operations during the year by 88.62%. Increase in profit before tax (before exceptional item of INR 300.000 million on account of dividend from subsidiary) by 90.22% mainly due to increase in revenue from operations.

Further, Return on Equity Ratio and Return on Capital Employed improved due to exceptional item of income of INR 300.000 million.

(b) Favourable increase is due to better realisation from the debtors.

(c) Change in ratio is due to improved liquidity position of the Company.

(d) Improvedratio is on account ofhigher revenue fromoperationscomparedto increase in average working capital employed.

(e) Variation in returns is due to market conditions.

40 Other Notes

i Details of Benami Property

The Company does not own any benami property neither any proceedings are initiated or pending against the Company under the Prohibition of Benami Property Transactions Act, 1988.

ii Borrowings secured against current assets

Though the Company does not have any fund based borrowings from banks or financial institutions on the basis of security of current assets, it has filed quarterly returns or statements of current assets with banks or financial institutions and the same are in agreement with the books of account read with notes given in the quarterly returns or statements.

iii Wilful Defaulter

The Company has not been declared as wilful defaulter by any bank or financial institution or other lender.

iv Relationship with Struck off Companies

As per the information available with the Company, the Company has not entered into any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956.

v Registration of charges with ROC

There are three charges totalling to INR 781.550 created in favour of banks which are pending for satisfaction. There are no outstanding dues to these banks and satisfaction of these charges is pending due to technical issues which are being sorted out by the Company.

vi Utilisation of Borrowed funds and share premium

The Company does not have any borrowings. The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) nor has it received any fund from any person(s) or entity(ies), including foreign entities (Funding Party).

vii Details of Crypto-Currency or Virtual Currency

The Company has not traded or invested in Crypto-Currency or Virtual Currency during the financial year.

41 Capital management

Risk management

The company''s objectives when managing capital are to

- safeguard it''s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, and

- Maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Consistent with others in the industry, the company monitors capital on the basis of the following gearing ratio: Net debt (total borrowings net of cash and cash equivalents) divided by total ''equity'' (as shown in the balance sheet).

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Mar 31, 2019

The Company is evaluating the requirements of Ind AS 116 and its impact on financial statements.

2. Appendix C, Uncertainty over Income Tax Treatments, to Ind AS 12, ''Income Taxes''

The appendix explains how to recognize and measure deferred and current income tax assets and liabilities where there is uncertainty over a tax treatment. In particular, it discusses:

- How to determine the appropriate unit of account, and that each uncertain tax treatment should be considered separately or together as a group, depending on which approach better predicts the resolution of the uncertainty;

- That the entity should assume a tax authority will examine the uncertain tax treatments and have full knowledge of all related information, i.e. that detection risk should be ignored;

- That the entity should reflect the effect of the uncertainty in its income tax accounting when it is not probable that the tax authorities will accept the treatment;

- That the impact of the uncertainty should be measured using either the most likely amount or the expected value method, depending on which method better predicts the resolution of the uncertainty; and

- That the judgments and estimates made must be reassessed whenever circumstances have changed or there is new information that affects the judgments.

The application of this guidance is not expected to have an impact on the separate financial statements.

3. Prepayment Features with Negative Compensation - Amendments to Ind AS 109, ''Financial Instruments''

The narrow-scope amendments made to Ind AS 109 enable entities to measure certain repayable financial assets with negative compensation at amortized cost. These assets, which include some loan and debt securities, would otherwise have to be measured at fair value through profit or loss. To qualify for amortized cost measurement, the negative compensation must be ''reasonable compensation for early termination of the contract'' and the asset must be held within a ''held to collect'' business model.

These amendments are not expected to have any impact on the separate financial statements.

4. Plan Amendment, Curtailment or Settlement - Amendments to Ind AS 19, ''Employee Benefits''

The amendments to Ind AS 19 clarify the accounting for defined benefit plan amendments, curtailments and settlements. They confirm that entities must:

- Calculate the current service cost and net interest for the remainder of the reporting period after a plan amendment, curtailment or settlement by using the updated assumptions from the date of the change;

- Any reduction in a surplus should be recognized immediately in profit or loss either as part of past service cost, or as a gain or loss on settlement. In other words, a reduction in a surplus must be recognized in profit or loss even if that surplus was not previously recognized because of the impact of the asset ceiling; and

- Separately recognize any changes in the asset ceiling through other comprehensive income.

These amendments will apply to any future plan amendments, curtailments or settlements of the Company on or after 1 April 2019.

5. Ind AS 12, ''Income Taxes''

The amendments clarify that the income tax consequences of dividends on financial instruments classified as equity should be recognized according to where the past transactions or events that generated distributable profits were recognized. These requirements apply to all income tax consequences of dividends. Previously, it was unclear whether the income tax consequences of dividends should be recognized in profit or loss, or in equity, and the scope of the existing guidance was ambiguous.

These amendments are not expected to have any material impact on the separate financial statements.

6. Ind AS 23, ''Borrowing Costs''

The amendments clarify that if a specific borrowing remains outstanding after the related qualifying asset is ready for its intended use or sale, it becomes part of general borrowings.

As the Company does not have any borrowings, there is no impact on account of this amendment.

The Company has obtained independent valuation for its investment property from a government approved valuer who is a specialist in valuing these types of investment properties.

The valuation has been made with reference to the prevailing market rates and using the approved valuation method.

All resulting fair value estimates for investment property are considered as level 3.

b. Terms/ Rights attached to equity shares:

The Company has only one class of equity shares having a par value of INR 2 per share. Each holder of the equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

The Board of Directors proposed a final dividend of INR 1.62 per equity share for the financial year ended 31 March 2018 and the same was approved by the shareholders at the Annual General Meeting held on 6 August 2018. The amount was recognized as distributions to equity shareholders during the year ended 31 March 2019.

The Board of Directors proposed a final dividend of INR 1.62 per equity share for the financial year ended 31 March 2019. The proposal is subject to the approval of shareholders at the Annual General Meeting to be held and if approved, will be recognized as distributions to equity shareholders during the year ended 31 March 2020. This event is considered as non-adjusting event.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the company after distributing all preferential amounts.

7.Disclosures pursuant to Ind AS 115-Revenue from Contracts with Customers

''Ind AS 115 - Revenue from Contracts with Customers'' is a new accounting standard effective from 1 April 2018 which replaces earlier revenue recognition requirements. With effect from 1 April 2018, the Company has adopted Ind AS 115 using cumulative effect method i.e. the new standard is applied retrospectively to the contracts that are not completed as at the date of initial application. The Company has recognized the cumulative effect of INR 153.912 (net of tax effect of INR 82.672) as an adjustment to the opening balance of retained earnings as at 1 April 2018. The comparative information for the previous periods is not restated.

8. Segment reporting

The business activities of the Company from which it earns revenues and incurs expenses; whose operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available involve predominantly one operating segment i.e. process and project engineering.

9. Related party transactions

a) Parties where control exists Subsidiaries

Praj Engineering & Infra Limited Praj Far East Co. Limited Praj Americas Inc.

Praj Industries (Africa) Pty Limited Praj HiPurity Systems Limited Praj Industries (Namibia) Limited Praj Far East (Philippines) Inc.

Step down subsidiaries

Praj Industries (Sierra Leone) Limited (upto 18 May 2018)

b) Key management personnel and their close members of family

Executive chairman Pramod Chaudhari

CEO & Managing Director (w.e.f 2 April 2018) Shishir Joshipura

Chief Financial Officer & Director-Finance & Commercial Sachin Raole

Chief Internal Auditor & Company Secretary Dattatraya Nimbolkar

Non-executive directors Berjis Desai

Daljit Mirchandani Parimal Chaudhari Rajiv Maliwal Sivaramakrishnan S. Iyer Mrunalini Joshi Dr. Shridhar Shukla

Close members of family of key management personnel Parimal Chaudhari (Director)

Parth Chaudhari

c) Entity controlled or jointly controlled by a person identified in b)

Praj Foundation Plutus Properties LLP

10. Employee Stock Option Plan (ESOP)

In the Annual General Meeting of the Company held on 22 July 2011, total of 9,238,936 stock options were approved under the scheme “Employee Stock Option Plan 2011". In the Meeting of the Compensation and Share Allotment Committee held on 27 January 2015 it was decided to grant options to CEO & MD and senior executives of the Company at the relevant market price as ESOP 2011 - Grant I. The total options granted under ESOP 2011 - Grant I are 3,750,000 options out of which 250,000 options (Plan A) were granted to CEO & MD and 3,500,000 options (Plan B) were granted to senior executives of the Company. During the year 2015-16 390,000 options were granted to senior executives of the Company as ESOP 2011 - Grant II to V. During the year 2016-17 100,000 options were granted to senior executive of the Company as ESOP 2011 - Grant VI. During the year 2017-18 1,969,700 options were granted to certain employees of the Company as ESOP 2011 - Grant VII. During the year 2018-19 1,625,000 options were granted to certain employees of the Company as ESOP 2011- Grant VIII to X. The stock options vest in a graded manner equally over the period of vesting, each vesting taking effect as per the terms of the grant. The stock options granted are exercisable at 100% of the fair market value of the underlying equity shares of the Company as on the date of grant.

* Expected volatility has been determined based on closing price of the share of the Company over a period equivalent to expected life.

11. Expenditure on research & development activities

Revenue expenditure on research and development is charged under respective heads of account in the year in which it is incurred. Capital expenditure on research and development is included as part of property, plant and equipment and depreciated on the same basis as other property, plant and equipment.

12. Taxes

The company has not recognized MAT credit entitlement to the extent of INR 156.787 till 31 March, 2019 in respect of Income Tax paid in view of uncertainty of its utilization for payment of tax in foreseeable future.

*Includes INR 13.652 given to Praj Foundation which is a related party.

The above expenditure includes contribution/donation of INR 14.652 to trusts / institute which are engaged in activities eligible under section 135 of Companies Act, 2013 read with Schedule VII thereto.

13. Fair value measurements

As per assessments made by the management, fair values of all financial instruments carried at amortized cost (except as specified below) are not materially different from their carrying amounts since they are either short term nature or the interest rates applicable are equal to the current market rate of interest.

The Company has performed a fair valuation of its investment in mutual funds which are classified as FVTPL using quoted prices.

14. Financial risk management policy and objectives

Company''s principal financial liabilities, comprise loans and borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance company''s operations and to provide guarantees to support its operations. Company''s principal financial assets include advances to subsidiaries, trade and other receivables, security deposits and cash and cash equivalents, that derive directly from its operations. In order to minimize any adverse effects on the financial performance of the company, it has taken various measures. This note explains the source of risk which the entity is exposed to and how the entity manages the risk and impact of the same in the financial statements.

The company''s risk management is carried out by management, under policies approved by the board of directors. Company''s treasury identifies, evaluates and hedges financial risks in close cooperation with the company''s operating units. The board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, credit risk, and investment of excess liquidity.

(A) Credit risk

Credit risk in case of the Company arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposures to customers including outstanding receivables.

Credit risk management

Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses the reliability of customers, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of accounts receivable. Individual risk limits are set accordingly.

The company considers the probability of default upon intial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers reasonable and supportive forward looking information such as:

(i) Actual or expected significant adverse changes in business,

(ii) Actual or expected significant changes in the operating results of the counterparty,

(iii) Financial or economic conditions that are expected to cause a significant change to counterparty''s ability to meet its obligations,

(iv) Significant increases in credit risk on other financial instruments of the same counterparty,

(v) Significant changes in the value of collateral supporting the obligation or in the quality of third-party guarantees or credit enhancements.

The company provides for expected credit loss in case of trade receivables, claims receivable and security deposits when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or failing to engage in a repayment plan with the company. The company categorizes a receivable for provision for doubtful debts/write off when a debtor fails to make contractual payments greater than 180 days past due. The amount of provision depends on certain parameters set by the Company in its provisioning policy where loans or receivables have been written off, the company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognized in profit or loss.

B) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, company maintains flexibility in funding by maintaining availability under committed credit lines.

Management monitors rolling forecasts of the company''s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. This is carried out in accordance with practice and limits set by the group. In addition, the company''s liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.

15. Capital management

Risk management

The company''s objectives when managing capital are to

- safeguard it''s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, and

- Maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Consistent with others in the industry, the company monitors capital on the basis of the following gearing ratio: Net debt (total borrowings net of cash and cash equivalents) divided by total ''equity'' (as shown in the balance sheet).

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Mar 31, 2018

1 The corporate overview

Praj Industries Limited (‘PIL’ or ‘the company’) is a public company domiciled in India and incorporated under the provisions of Indian Companies Act. The company’s registered office is “Praj Tower”, S. No. 274 and 275/2, Bhumkar Chowk-Hinjewadi road, Hinjewadi, Pune - 411057, Maharashtra, India. The company’s ordinary shares are listed on the Bombay Stock Exchange and National Stock Exchange in India.

The company is engaged in the business of process and project engineering. The company caters to both domestic and international markets. Further, the company also provides design and engineering services.

A. Terms/ Rights attached to equity shares:

The Company has only one class of equity shares having a par value of INR 2 per share. Each holder of the equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

The Board of Directors proposed a final dividend of INR 1.62 per equity share for the financial year ended 31 March 2017 and the same was approved by the shareholders at the Annual General Meeting held on 11 August 2017. The amount was recognised as distributions to equity shareholders during the year ended 31 March 2018.

The Board of Directors proposed a final dividend of INR 1.62 per equity share for the financial year ended 31 March 2018. The proposal is subject to the approval of shareholders at the Annual General Meeting to be held and if approved, will be recognised as distributions to equity shareholders during the year ended 31 March 2019. This event is considered as non-adjusting event.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the company after distributing all preferential amounts.

c. Shares held by holding/ultimate holding company and/or their subsidiaries/associates:

The company does not have any holding or ultimate holding company.

2 Segment reporting

The business activities of the Company from which it earns revenues and incurs expenses; whose operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available involve predominantly one operating segment i.e. process and project engineering.

3 Related party transactions

a) Parties where control exists Subsidiaries

Praj Engineering & Infra Limited (Formerly Pacecon Engineering Projects Limited)

Praj Far East Co. Limited Praj Americas Inc.

Praj Industries (Africa) Pty Limited Praj HiPurity Systems Limited Praj Industries (Namibia) Limited Praj Far East (Philippines) Inc.

Step down subsidiaries

Praj Industries (Tanzania) Limited (upto 23 October 2017)

Praj Industries (Sierra Leone) Limited

c) Entity controlled orjointly controlled by a person identified in b)

Praj Foundation Plutus Properties LLP

4 Leases

The Company has entered into operating lease arrangements for office space, equipment and residential premises for its employees. Certain lease arrangements provide for cancellation by either party and also contain a clause for renewal of the lease agreement. Lease payments on cancellable and non-cancellable operating lease arrangements debited to the statement of profit and loss and the future minimum lease payments in respect of non-cancellable operating leases are summarised below:

5 Employee benefits

a) Defined contribution plans

The Company has recognised INR 46.018 (31 March 2017: INR 40.895) towards post-employment defined contribution plans comprising of provident and superannuation fund in the statement of profit and loss.

b) Defined benefit plan

In accordance with the Payment of Gratuity Act, 1972, the Company is required to provide post-employment benefit to its employees in the form of gratuity. The Company has maintained a fund with the Life Insurance Corporation of India to meet its gratuity obligations. In accordance with the Standard, the disclosures relating to the Company’s gratuity plan are provided below:

A quantitative sensitivity analysis for significant assumptions is shown as follows:

Sensitivity analysis indicates the influence of a reasonable change in certain significant assumptions on the outcome of the present value of obligation. Sensitivity analysis is done by varying (increasing / decreasing) one parameter by 100 basis points (1%)

6 Employee Stock Option Plan (ESOP)

In the meeting of the Compensation and Share Allotment Committee held on 16th November, 2010 it was decided to utilise the surrendered and lapsed options out of earlier grant and 1,250,000 options (Plan A) were granted to CEO & MD with vesting period of 5 years in terms of his appointment at the relevant market price as Grant IV. In the Annual General Meeting of the Company held on 22 July 2011, total of 9,238,936 stock options were approved under the scheme “Employee Stock Option Plan 2011”. In the Meeting of the Compensation and Share Allotment Committee held on 27 January 2015 it was decided to grant options to CEO & MD and senior executives of the Company at the relevant market price as ESOP 2011 - Grant I. The total options granted under ESOP 2011 - Grant I are 3,750,000 options out of which 250,000 options (Plan A) were granted to CEO& MD and 3,500,000 options (Plan B) were granted to senior executives of the Company. During the year 2015-16 390,000 options were granted to senior executives of the Company as ESOP 2011 - Grant II to V. During the year 2016-17 100,000 options were granted to senior executive of the Company as ESOP 2011 - Grant VI. During the year 2017-18 1,969,700 options were granted to certain employees of the Company as ESOP 2011 - Grant VII. The stock options vest in a graded manner equally over the period of vesting, each vesting taking effect as per the terms of the grant. The stock options granted are exercisable at 100% of the fair market value of the underlying equity shares of the Company as on the date of grant.

7 Expenditure on research & development activities

Revenue expenditure on research and development is charged under respective heads of account in the year in which it is incurred. Capital expenditure on research and development is included as part of property, plant and equipment and depreciated on the same basis as other property, plant and equipment.

8 Taxes

The company has not recognised MAT credit entitlement to the extent of INR 294.143 till 31 March, 2018 in respect of Income Tax paid in view of uncertainty of its utilisation for payment of tax in foreseeable future.

*Includes INR 15.773 given to Praj Foundation which is a related party.

The above expenditure includes contribution/donation of INR 16.773 to trusts / institute which are engaged in activities eligible under section 135 of Companies Act, 2013 read with Schedule VII thereto.

9 Fair value measurements

As per assessments made by the management, fair values of all financial instruments carried at amortised cost (except as specified below) are not materially different from their carrying amounts since they are either short term nature or the interest rates applicable are equal to the current market rate of interest. The Company has performed a fair valuation of its investment in mutual funds which are classified as FVTPL using quoted prices.

10 Financial risk management policy and objectives

Company’s principal financial liabilities, comprise loans and borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance company’s operations and to provide guarantees to support its operations. Company’s principal financial assets include advances to subsidiaries, trade and other receivables, security deposits and cash and cash equivalents, that derive directly from its operations. In order to minimise any adverse effects on the financial performance of the company, it has taken various measures. This note explains the source of risk which the entity is exposed to and how the entity manages the risk and impact of the same in the financial statements.

The company’s risk management is carried out by management, under policies approved by the board of directors. Company’s treasury identifies, evaluates and hedges financial risks in close cooperation with the company’s operating units. The board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, credit risk, and investment of excess liquidity.

(A) Credit risk

Credit risk in case of the Company arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposures to customers including outstanding receivables.

Credit risk management

Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses the reliability of customers, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of accounts receivable. Individual risk limits are set accordingly. The company considers the probability of default upon intial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers reasonable and supportive forward looking information such as:

(i) Actual or expected significant adverse changes in business,

(ii) Actual or expected significant changes in the operating results of the counterparty,

(iii) Financial or economic conditions that are expected to cause a significant change to counterparty’s ability to meet its obligations,

(iv) Significant increases in credit risk on other financial instruments of the same counterparty,

(v) Significant changes in the value of collateral supporting the obligation or in the quality of third-party guarantees or credit enhancements.

The company provides for expected credit loss in case of trade receivables, claims receivable and security deposits when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or failing to engage in a repayment plan with the company. The company categorises a receivable for provision for doubtful debts/write off when a debtor fails to make contractual payments greater than 180 days past due. The amount of provision depends on certain parameters set by the Company in its provisioning policy. Where loans or receivables have been written off, the company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised in profit or loss.

B) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, company maintains flexibility in funding by maintaining availability under committed credit lines.

Management monitors rolling forecasts of the company’s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. This is carried out in accordance with practice and limits set by the group. In addition, the company’s liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.

(C) Foreign currency risk

“The company is exposed to foreign exchange risk mainly through its sales to overseas customers and purchases from overseas suppliers in various foreign currencies. The company evaluates exchange rate exposure arising from foreign currency transactions and the company follows established risk management policies, including use of derivatives like foreign exchange forward contracts to hedge exposure to foreign currency risk, where the economic conditions match the company’s policy. “

11 Capital management

Risk management

The company’s objectives when managing capital are to

- safeguard it’s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, and

- Maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Consistent with others in the industry, the company monitors capital on the basis of the following gearing ratio: Net debt (total borrowings net of cash and cash equivalents) divided by total ‘equity’ (as shown in the balance sheet).

The company’s strategy is to maintain a gearing ratio of 0%. The gearing ratios were as follows:

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Mar 31, 2017

1. Terms/ Rights attached to equity shares:

The Company has only one class of equity shares having a par value of INR 2 per share. Each holder of the equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

The Board of Directors proposed a final dividend of INR 1.62 per equity share for the financial year ended 31 March 2015 and the same was approved by the shareholders at the Annual General Meeting held on 6 August 2015. The amount was recognized as distributions to equity shareholders during the year ended 31 March 2016. This event is considered as non-adjusting event.

The Board of Directors declared an interim dividend of INR 1.62 per equity share during the financial year 2015-16. The amount was recognized as distributions to equity shareholders during the year ended 31 March 2016.

The Board of Directors proposed a final dividend of INR 1.62 per equity share for the financial year ended 31 March 2017. The proposal is subject to the approval of shareholders at the Annual General Meeting to be held and if approved, will be recognized as distributions to equity shareholders during the year ended 31 March 2018.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the company after distributing all preferential amounts.

2. Shares held by holding/ultimate holding company and/or their subsidiaries/associates:

The company does not have any holding or ultimate holding company.

3. Shares reserved for issue under options:

Shares reserved for issue under the Employee Stock Option Plan (ESOP) please refer note 34.

4. Employee Stock Option Plan (ESOP)

In the meeting of the Compensation and Share Allotment Committee held on 16 November, 2010 it was decided to utilize the surrendered and lapsed options out of earlier grant and 1,250,000 options (Plan A) were granted to CEO & MD with vesting period of 5 years in terms of his appointment at the relevant market price as Grant IV. In the Annual General Meeting of the Company held on 22 July 2011, total of 9,238,936 stock options were approved under the scheme “Employee Stock Option Plan 2011". In the Meeting of the Compensation and Share Allotment Committee held on 27 January 2015 it was decided to grant options to CEO & MD and senior executives of the Company at the relevant market price as ESOP 2011 - Grant I. The total options granted under ESOP 2011 - Grant I are 3,750,000 options out of which 250,000 options (Plan A) were granted to CEO & MD and 3,500,000 options (Plan B) were granted to senior executives of the Company. During the year 2015-16 390,000 options were granted to senior executives of the Company as ESOP 2011 - Grant II to V. During the year 2016-17 100,000 options were granted to senior executive of the Company as ESOP 2011 - Grant VI. The stock options vest in a graded manner equally over the period of vesting, each vesting taking effect as per the terms of the grant. The stock options granted are exercisable at 100% of the fair market value of the underlying equity shares of the Company as on the date of grant.

5. Expenditure on research & development activities

Revenue expenditure on research and development is charged under respective heads of account in the year in which it is incurred. Capital expenditure on research and development is included as part of property, plant and equipment and depreciated on the same basis as other property, plant and equipment.

6. Taxes

The company has not recognized MAT credit entitlement to the extent of INR 296.768 till 31st March, 2017 in respect of Income Tax paid in view of uncertainty of its utilization for payment of tax in foreseeable future.

7. Fair value measurements

As per assessments made by the management, fair values of all financial instruments carried at amortized cost (except as specified below) are not materially different from their carrying amounts since they are either short term nature or the interest rates applicable are equal to the current market rate of interest. The Company has performed a fair valuation of its investment in mutual funds which are classified as FVTPL using quoted prices

8. Financial risk management policy and objectives

Company''s principal financial liabilities, comprise loans and borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance company''s operations and to provide guarantees to support its operations. Company''s principal financial assets include advances to subsidiaries, trade and other receivables, security deposits and cash and cash equivalents, that derive directly from its operations. In order to minimize any adverse effects on the financial performance of the company, it has taken various measures. This note explains the source of risk which the entity is exposed to and how the entity manages the risk and impact of the same in the financial statements.

9. Credit risk

Credit risk in case of the Company arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposures to customers including outstanding receivables.

Credit risk management

Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses the reliability of customers, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of accounts receivable. Individual risk limits are set accordingly. The company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers reasonable and supportive forward looking information such as:

10. Actual or expected significant adverse changes in business,

11. Actual or expected significant changes in the operating results of the counterparty,

12. Financial or economic conditions that are expected to cause a significant change to counterparty''s ability to meet its obligations,

13. Significant increases in credit risk on other financial instruments of the same counterparty,

14. Significant changes in the value of collateral supporting the obligation or in the quality of third-party guarantees or credit enhancements.

The company provides for expected credit loss in case of trade receivables, claims receivable and security deposits when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or failing to engage in a repayment plan with the company. The company categorizes a receivable for provision for doubtful debts/write off when a debtor fails to make contractual payments greater than 180 days past due. The amount of provision depends on certain parameters set by the Company in its provisioning policy. Where loans or receivables have been written off, the company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognized in profit or loss.

15. Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, company maintains flexibility in funding by maintaining availability under committed credit lines. Management monitors rolling forecasts of the company''s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. This is carried out in accordance with practice and limits set by the Company. In addition, the company''s liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.

16. Foreign currency risk

The company is exposed to foreign exchange risk mainly through its sales to overseas customers and purchases from overseas suppliers in various foreign currencies. The company evaluates exchange rate exposure arising from foreign currency transactions and the company follows established risk management policies, including use of derivatives like foreign exchange forward contracts to hedge exposure to foreign currency risk, where the economic conditions match the company''s policy.

17. Capital management Risk management

The company''s objectives when managing capital are to

-safeguard it''s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, and

-Maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Consistent with others in the industry, the company monitors capital on the basis of the following gearing ratio: Net debt (total borrowings net of cash and cash equivalents) divided by total ''equity'' (as shown in the balance sheet).

18. Explanation of transition to Ind AS

These are Company''s first financial statements prepared in accordance with Indian Accounting Standards (Ind AS) as notified under Companies'' (Indian Accounting Standards) Rules, 2015. In preparing the financial statements for the year ended 31 March 2016 and balance sheet as at 1 April 2015 (date of transition), the Company has adjusted amounts reported previously in financial statements prepared in accordance with Indian Generally Accepted Accounting Principles (Indian GAAP). This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at 1 April 2015 and the financial statements for the year ended 31 March 2016.

19.. Exemptions applied

Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has elected to apply the following exemptions:

20.. Property, plant and equipment, investment property and intangible assets

Since, there is no change in the functional currency, the Company has elected to continue with the carrying value for all of its property, plant and equipment, investment property and intangible assets as recognized in its Indian GAAP financials as deemed cost at the transition date.

21. Share based payments

Ind AS 102 share based payment has not been applied to equity instruments in share based transactions that vested before 1 April 2015.

22. Investments in subsidiaries

The Company has elected to continue with carrying value for all of its investment in subsidiaries as recognized in its Indian GAAP financials as deemed cost as at the transition date.

23. Exceptions applied

24. Government loans

The Company as a first-time adopter did not, under Indian GAAP, recognize and measure a government loan at a below-market rate of interest as a government grant. Accordingly, the Company has used its previous GAAP carrying amount of the loan at the date of transition.

25. Estimates

The estimates at 1 April 2015 and at 31 March 31 2016 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies) apart from the following items where application of Indian GAAP did not require estimation:

FVTOCI - unquoted equity shares

FVTPL - debt securities

Impairment of financial assets based on expected credit loss model Fair valuation of financial instruments carried at FVTPL

Determination of the discounted value of financial instruments carried at amortized cost

The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at 1 April 2015, the date of transition to Ind AS and as of 31 March 2016.

26. De-recognition of financial assets and liabilities

Ind AS 101, requires first time adopter to apply the de-recognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 allows a first-time adopter to apply the de-recognition requirements of Ind AS 109, retrospectively from a date of the company''s choosing, provided that the information needed to apply Ind AS 109 to financial assets and financial liabilities de-recognized as a result of past transaction was obtained at the time of initially accounting of transactions. The Company has elected to apply the de-recognition provisions of Ind AS 109 prospectively from date of transition to Ind AS.

Explanation of transition to Ind AS

An explanation of how the transition from Indian GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flow is set out in the following tables and notes that accompany the tables. The reconciliations include

- equity reconciliation as at 1 April 2015;

- equity reconciliation as at 31 March 2016;

- profit reconciliation for the year ended 31 March 2016;

There are no material adjustments to the cash flow statements

27. Excise duty

Under Indian GAAP, excise duty is reduced from gross revenues to report revenues net of excise duty. Under Ind AS, revenue includes gross inflows of economic benefits received by a company for its own account. Excise duty collected, which is a duty on manufacture and a primary obligation of the manufacturer is considered as revenue with the corresponding payments to government as expenditure. This adjustment does not have any impact on statement of profit and loss.

28. Share based payment transactions - Employee Stock Option Plan (ESOP)

Under Indian GAAP, a company uses intrinsic value approach to measure the cost of share based payments. Under this approach, if the exercise price for employee stock option is not less than the market price of the underlying shares on the date of the grant, no compensation cost is recorded. Under Ind AS, costs of share based payments are recorded based on the fair value of employee stock option. Under this approach, the instrument would have a value even if the exercise price is equal to the market price of the underlying shares on the date of grant.

29. Employee benefit expenses - actuarial gains and losses and return on plan assets

Under Indian GAAP, actuarial gains and losses and return on plan assets on post-employment defined benefit plans are recognized immediately in statement of profit and loss. Under Ind AS, re-measurements which comprise of actuarial gains and losses, return on plan assets and changes in the effect of asset ceiling, if any, with respect to post-employment defined benefit plans are recognized immediately in other comprehensive income (OCI). Further, re-measurements recognized in OCI are never reclassified to statement of profit and loss.

30. Reclassification of leases of land

Under Indian GAAP, there is no specific guidance for contracts that involve leases of land. Under Ind AS, lease of land is recognized as operating or finance lease as per definition and classification criteria stated in standard on leases. Accordingly, as on the date of transition, the leases of land have been classified as operating / finance lease as the case may be.

31. Foreign exchange forward derivative contracts

Under Indian GAAP the premium or the discount on foreign exchange forward derivative contracts related to underlying receivables and payables are amortized over the period of the contracts. In case of foreign exchange forward derivative contracts entered into at highly probable future transactions or firm commitments, mark to market losses (gains are ignored), if any, are recognized in the statement of profit and loss at the reporting date. Under Ind AS, all the foreign exchange forward derivative contracts are recorded at fair value with the subsequent changes in fair value recognized in the statement of profit and loss.

32. Corporate guarantee

Under Indian GAAP, financial guarantee given by the parent on behalf of its subsidiaries is recognized as ''contingent liability''. Under Ind AS, corporate / financial guarantee is treated as financial liability and recognized at fair value on initial and subsequent recognition. The fair value of the guarantee recoverable from the subsidiary is treated as receivable from subsidiary. The fair value of the guarantee not recoverable from the subsidiary is written off as expenditure. Finance income is recognized over the term of the guarantee using effective interest method.

33. Interest-free security deposits paid

Under Indian GAAP, interest-free lease security deposits paid are reported at their transaction values. Under Ind AS, interest-free security deposits are measured at fair value on initial recognition and at amortized cost on subsequent recognition. The difference between the transaction value and fair value of the lease deposit at initial recognition is treated as prepaid rentals. This amount is recognized in statement of profit and loss on a straight line basis over the lease term.

34. Investment property

Under Indian GAAP there is limited guidance on investment property. Under Ind AS, investment property comprises of land or building held for earning rentals or for capital appreciation or both. Where a property is held for a currently undetermined future use, it is regarded as held for capital appreciation. Investment property is required to be measured at cost and is subsequently depreciated based on its useful life. Fair value of the investment property is to be disclosed at every reporting period end.

35. Proposed dividend

Under Indian GAAP, dividend proposed after the date of the financial statements but prior to the approval of financial statements is considered as an adjusting event, and a provision for dividend is recognized in the financial statements of the period to which the dividend relates. Under Ind AS, dividend declaration is considered as a non-adjusting event and provision for dividend is recognized only in the period when the dividend is approved by the shareholders in annual general meeting.

36. Deferred tax

Under Indian GAAP, deferred taxes are recognized using income statement approach i.e. reflecting the tax effects of timing differences between accounting income and taxable income for the period. Under Ind AS, deferred taxes are recognized using balance sheet approach i.e. reflecting the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes using the income tax rates enacted or substantively enacted at reporting date. Also, deferred taxes are recognized on account of the above mentioned changes explained in notes (a)

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Mar 31, 2016

1. Segment reporting

The Company''s activities involve predominantly one business segment i.e. Process and Project Engineering, which are considered to be within a single business segment since these are subject to similar risks and returns. Accordingly, Process and Project Engineering comprise the primary basis of segmental information as set out in these financial statements, which therefore reflect the information required by AS 17 - Segment Reporting, with respect to primary segments.

The Company has identified India and Rest of the World as geographical segments for secondary segmental reporting. Geographical sales are segregated based on the location of the customer who is invoiced or in relation to which the sale is otherwise recognised. Assets other than receivables used in the Company''s business or liabilities contracted have not been identified to any of the reportable segments, as these are used interchangeably between segments. All assets other than receivables are located in India. Similarly, capital expenditure is incurred towards fixed assets located in India.

2. Employee benefits

a) Defined contribution plans

The Company has recognised Rs. 42.474 (31st March, 2015 Rs. 37.134) towards post-employment defined contribution plans comprising of provident and superannuation fund in the Profit and loss account.

b) Defined benefit plan

In accordance with the Payment of Gratuity Act, 1972, the Company is required to provide post-employment benefit to its employees in the form of gratuity. The Company has maintained a fund with the Life Insurance Corporation of India to meet

3. Employee stock options

In the Meeting of the Compensation and Share Allotment Committee held on 16th November, 2010 it was decided to utilise the surrendered and lapsed options out of earlier grant and 1,250,000 options (Plan A) were granted to CEO & MD with vesting period of 5 years in terms of his appointment at the relevant market price as Grant IV.

In the Annual General Meeting of the Company held on 22th July, 2011, total of 9,238,936 stock options were approved under the scheme "Employee Stock Option Plan 2011". In the Meeting of the Compensation and Share Allotment Committee held on 27th January, 2015 it was decided to grant options to CEO & MD and senior executives of the Company at the relevant market price as ESOP 2011 - Grant I. The total options granted under ESOP 2011 - Grant I are 3,750,000 options out of which 250,000 options (Plan A) were granted to CEO& MD and 3,500,000 options (Plan B) were granted to Senior Executives of the Company.

During the year 2015-16 390,000 options were granted to Senior Executives of the Company as ESOP 2011 - Grant II to V. The stock options vest in a graded manner equally over the period of vesting, each vesting taking effect as per the terms of the grant. The stock options granted are exercisable at 100% of the fair market value of the underlying equity shares of the Company as on the date of grant.

4. Taxes

The Company has not recognised MAT credit entitlement to the extent of Rs. 172.943 till 31st March, 2016 in respect of Income Tax paid in view of uncertainty of its utilisation for payment of tax in foreseeable future.

5. Prior year comparatives

Previous year''s figures have been regrouped/reclassified to conform to the current year''s presentation.

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Mar 31, 2015

A. Terms/ Rights attached to equity shares:

The Company has only one class of equity shares having a par value of Rs. 2 per share. Each holder of the equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended 31st March, 2015, the amount of per share dividend recognised as distributed to equity shareholders was Rs.1.62 (31st March, 2014Rs.2.22) In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the company after distributing all preferetial amounts.

b. Shares reserved for issue under options:

Shares reserved for issue under the Employee Stock Option Plan (ESOP) please refer Note 35.

Loan received from Department of Biotechnology (DBT) carrying interest at the rate of 2%.

The Company has received disbursement of loan partly and full disbursement is not made. The loan is repayable after completion of the project as approved by ''DBT''.

2 Capital commitments, contingent liabilities and secured loans

March 2015 March 2014

Capital commitments

Estimated amount of contracts 42.109 72.390 remaining to be executed on capital account and not provided for (net of advances)

Contingent liabilities

Claims against Company not acknowledged as debts (primarily 35.679 64.329 relating to performance related claims filed by customers) Disputed demands in appeal towards income tax, Service tax & sales tax 32.463 2.203 Guarantee issued in respect of obligations of a subsidiary 186.100 291.565 Unfulfilled Export Obligations under EPCG scheme to be fulfilled over 8 years 46.402 48.910

Secured Loans

Working Capital borrowings from consortium of bankers are secured by a first charge by way of hypothecation of company''s inventories and book debts both present and future. It is further secured by way of first charge of hypothecation of movable fixed assets. Additionally there is collateral security by way of mortgage on company''s property situated at Pune.

3 Segment reporting

The Company''s activities involve predominantly one business segment i.e. Process and Project Engineering, which are considered to be within a single business segment since these are subject to similar risks and returns. Accordingly, Process and Project Engineering comprise the primary basis of segmental information as set out in these financial statements, which therefore reflect the information required by AS 17 - Segment Reporting, with respect to primary segments.

The Company has identified India and Rest of the World as geographical segments for secondary segmental reporting. Geographical sales are segregated based on the location of the customer who is invoiced or in relation to which the sale is otherwise recognized. Assets other than receivables used in the Company''s business or liabilities contracted have not been identified to any of the reportable segments, as these are used interchangeably between segments. All assets other than receivables are located in India. Similarly, capital expenditure is incurred towards fixed assets located in India.

4 Related party transactions

a) Parties where control exists Subsidiaries

Pacecon Engineering Projects Limited Praj Far East Co. Limited Praj Americas, Inc.

Praj Industries (Africa) (Pty.) Limited

Praj HiPurity Systems Limited

Praj Industries (Namibia) Pty. Limited

Praj Sur America, SRL

Praj Far East Philippines Ltd. Inc.

Fellow Subsidiaries Praj Industries (Tanzania) Limited Praj Industries (Sierra Leone) Limited Others

Others

Praj Foundation

b) Key management personnel and their relatives

Executive Chairman Mr. Pramod Chaudhari

CEO & Managing Director Mr. Gajanan Nabar

Relative of key management personnel Ms. Parimal Chaudhari (Director)

Mr. Parth Chaudhari

c) Transactions and balances with related parties have been set out below:

5 Leases

The Company has entered into operating lease arrangements for office space, equipments and residential premises for its employees. Certain lease arrangements provide for cancellation by either party and also contain a clause for renewal of the lease agreement. Lease payments on cancellable and non-cancellable operating lease arrangements debited to the profit and loss account and the future minimum lease payments in respect of non-cancellable operating leases are summarized below:

Notes:

1 Deposits with banks having maturity of more than three months aggregating to Rs. 100.520 (31st March, 2014: Rs. 135.020) are not readily liquid and have been excluded from cash and cash equivalents.

2 * Balance with bank include bank balances in relation to unclaimed dividends Rs. 9.026 (31st March, 2014: Rs. 8.561).

6 Quantitative information of foreign exchange instruments outstanding as at the Balance Sheet date

The foreign currency forward contracts outstanding as at the Balance sheet date aggregate USD 26.850 million (31st March, 2014: 10.550 million), Euro 1.000 million (31st March, 2014: Nil) & GBP Nil (31st March, 2014: Nil).

The following foreign currency receivables/ advances/payables balances are outstanding at the Balance sheet date, which are not hedged by foreign exchange instruments:

7 Employee benefits

a) Defined contribution plans

The Company has recognized Rs. 37.134 (31st March, 2014Rs.36.061) towards post-employment defined contribution plans comprising of provident and superannuation fund in the Profit and loss account.

b) Defined benefit plan

In accordance with the Payment of Gratuity Act, 1972, the Company is required to provide post- employment benefit to its employees in the form of gratuity. The Company has maintained a fund with the Life Insurance Corporation of India to meet its gratuity obligations. In accordance with the Standard, the disclosures relating to the Company''s gratuity plan are provided below:

Notes:

1 Expected rate of return on plan assets is based on actuarial expectation of the average long-term rate of return expected on investments of the fund during the estimated term of the obligations.

2 The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors on long-term basis.

8 Employee stock options

The Compensation Committee of the Company established the Employee Stock Option Plan on 23rd July, 2005. Employees covered by the Plan are granted an option to purchase shares of the Company subject to the requirements of vesting.

In the Annual General Meeting of the Company held on 23rd July 2005, total of 8,100,265 (including impact of bonus) stock options were approved, of which the employees have been granted 2,759,139 stock options on 12th October, 2005 (''Grant I''), 2,311,500 stock options on 28th December, 2006 (''Grant II'') and 3,029,626 stock options on 9th July, 2009 (''Grant III'') with a vesting period of 3 years. Stock options under Grant II lapsed on 28th December, 2010. In the Meeting of the Compensation and Share Allotment Committee held on 16th November, 2010 it was decided to utilise the surrendered and lapsed options out of Grant II to grant them to new CEO & MD in terms of his appointment letter and also to senior executives of the Company at the relevant market price as Grant IV. The total options granted under Grant IV are 1,950,000 options out of which 1,250,000 options (Plan A) were granted to CEO & MD with vesting period of 5 years and 700,000 options (Plan B) were granted to Senior Executives of the Company with vesting period of 2 years. Stock options under Grant IV - Plan B lapsed on 31st July, 2014.

In the Annual General Meeting of the Company held on 22nd July, 2011, total of 9,238,936 stock options were approved under the scheme "Employee Stock Option Plan 2011". In the Meeting of the Compensation and Share Allotment Committee held on 27th January, 2015 it was decided to grant options to CEO & MD and senior executives of the Company at the relevant market price as ESOP 2011 - Grant I. The total options granted under ESOP 2011 - Grant I are 3,750,000 options out of which 250,000 options (Plan A) were granted to CEO & MD and 3,500,000 options (Plan B) were granted to Senior Executives of the Company.

The stock options vest in a graded manner equally over the period of vesting, each vesting taking effect as per the terms of the grant. The stock options granted are exercisable at 100% of the fair market value of the underlying equity shares of the Company as on the date of grant.

9 Expenditure on research & development activities

Revenue expenditure on research and development is charged under respective heads of account in the year in which it is incurred. Capital expenditure on research and development is included as part of fixed assets and depreciated on the same basis as other fixed assets.

10 Taxes

The Company has not recognised MAT credit entitlement to the extent of Rs. 334.847 till 31st March, 2015 in respect of Income Tax paid in view of uncertainty of its utilisation for payment of tax in foreseeable future.

11 CSR Expenditure

The Company was required to spend Rs. 18.574 as expenditure on CSR as per requirements of the Companies Act, 2013. During the year, the Company has incurred CSR expenses of Rs. 18.620 as follows:

*Includes Rs. 13.500 given to Praj Foundation which is a related party.

The above expenditure includes contribution/donation of Rs. 18.500 to trusts/institute which are engaged in activities eligible under section 135 of Companies Act, 2013 read with Schedule VII thereto and other expenses of Rs. 0.120 directly incurred by the Company.

12 Prior year comparatives

Previous year''s figures have been regrouped/reclassified to conform to the current year''s presentation.

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Mar 31, 2013

1. Nature of business

Praj Industries Limited (the Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The company is engaged in the business of Process and Project Engineering. The Company caters to both domestic and international markets. Further, the Company also provides design and engineering services.

2. Related party transactions

a) Parties where control exists

Subsidiaries Pacecon Engineering Projects Limited

Praj Far East Co. Limited

BioCnergy Europa B.V.

Praj Americas Inc. (from June 2009)

Praj Industries (Africa) Pty Limited

Neela Systems Limited Fellow Subsidiaries Praj Industries (Tanzania) Limited

Praj Industries (Sierra Leone) Limited

b) Key management personnel and their relatives

Executive Chairman Mr. Pramod Chaudhari

CEO & Managing Director Mr. Gajanan Nabar

Relative of key management personnel Mrs. Parimal Chaudhari

Mr. Parth Chaudhari

3. Leases

The Company has entered into operating lease arrangements for offce space, equipments and residential premises for its employees. Certain lease arrangements provide for cancellation by either party and also contain a clause for renewal of the lease agreement. Lease payments on cancellable and non-cancellable operating lease arrangements debited to the proft and loss

4. Employee benefts

a) Defned contribution plans

The Company has recognised Rs. 32.921 (31st March, 2012 Rs. 28.724) towards post employment defned contribution plans comprising of provident and superannuation fund in the Proft and loss account.

b) Defned beneft plan

In accordance with the Payment of Gratuity Act, 1972, the Company is required to provide post employment beneft to its employees in the form of gratuity. The Company has maintained a fund with the Life Insurance Corporation of India to meet its gratuity obligations. In accordance with the Standard, the disclosures relating to the Company''s gratuity plan are provided below:

5. Employee stock options

The Compensation Committee of the Company established the Employee Stock Option Plan on 23rd July, 2005. Employees covered by the Plan are granted an option to purchase shares of the Company subject to the requirements of vesting. Total of 8,100,265 (including impact of bonus) stock options were approved in the Annual General Meeting of the Company held on 23rd July, 2005, of which the employees have been granted 2,759,139 stock options on 12th October, 2005 (‘Grant I''), 2,311,500 stock options on 28th December, 2006 (‘Grant II'') and 3,029,626 stock options on 9th July, 2009 (‘Grant III'') with a vesting period of 3 years. Stock options under Grant II lapsed on 28th December, 2010. In the Meeting of the Compensation and Share Allotment Committee held on 16th November, 2010 it was decided to utilise the surrendered and lapsed options out of Grant II to grant them to new CEO & MD in terms of his appointment letter and also to senior executives of the Company at the relevant market price as Grant IV. The total options granted under Grant IV are 1,950,000 options out of which 1,250,000 options (Plan A) were granted to CEO & MD with vesting period of 5 years and 700,000 options (Plan B) were granted to Senior Executives of the Company with vesting period of 2 years.

The stock options vest in a graded manner equally over the period of vesting, each vesting taking effect as per the terms of the grant. The stock options granted are exercisable at 100% of the fair market value of the underlying equity shares of the Company as on the date of grant.

6. Expenditure on research and development activities

Revenue expenditure on research and development is charged under respective heads of account in the year in which it is incurred. Capital expenditure on research and development is included as part of fxed assets and depreciated on the same basis as other fxed assets.

7. Taxes

a) The Company has not recognised MAT credit entitlement to the extent of Rs. 275.885 till 31st March, 2013 in respect of Income Tax paid in view of uncertainty of its utilisation for payment of tax in foreseeable future.

b) In April 2012 the Income Tax Department initiated proceedings against the Company under Section 132 of the Income Tax Act, 1961. Currently, the proceedings are pending before the Settlement Commission. As per Company''s estimate, adequate provision for liability arising out of this has already been made in the books of account.

8. Buy Back of Shares

The Company had announced a scheme of buy-back of equity shares with effect from 26th December, 2011 as per Section 77A of the Companies Act, 1956. Pursuant to the board of directors approval for buy-back, the Company has bought back 2,083,013 equity shares (31st March, 2012: 5,230,631) through open market transactions for an aggregate amount of Rs. 152.810 (31st March, 2012: Rs. 405.828), by utilising Securities Premium of Rs. 152.810 (31st March, 2012: Rs. 405.828) during the year.

Capital Redemption Reserve has been created out of securities premium for Rs. 4.166 (31st March, 2012 : Rs. 10.461) being the nominal value of shares bought back in terms of Section 77A of the Companies Act, 1956.

The buy-back of equity shares was completed on 24th April, 2012. On completion of buy back the Company has bought back total 7,313,644 shares for an aggregate amount of Rs. 558.638.

9. Prior year comparatives

Previous year''s fgures have been regrouped/reclassifed to conform to the current year''s presentation.

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Mar 31, 2012

1. Nature of business

Praj Industries Limited (the Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The Company is engaged in the business of Process and Project Engineering. The Company caters to both domestic and international markets. Further, the Company also provides design and engineering services.

The company does not have any holding or ultimate holding company.

31/03/2012 31/03/2011

Contingent liabilities

Claims against Company not acknowledged as debts (primarily 35.679 35.831 relating to performance related claims filed by customers)

Disputed demands in appeal towards income tax, Service tax and sales tax 1.191 39.090

Guarantee issued in respect of obligations of a subsidiary 181.773 Nil

Unfulfilled Export Obligations under EPCG scheme to be fulfilled 129.711 292.064 over 8 years

2. Segment reporting

The Company's activities involve predominantly one business segment i.e. Process and Project Engineering, which are considered to be within a single business segment since these are subject to similar risks and returns. Accordingly, Process and Project Engineering comprise the primary basis of segmental information as set out in these financial statements, which therefore reflect the information required by AS 17 - Segment Reporting, with respect to primary segments.

The Company has identified India and Rest of the World as geographical segments for secondary segmental reporting. Geographical sales are segregated based on the location of the customer who is invoiced or in relation to which the sale is otherwise recognised. Assets other than receivables used in the Company's business or liabilities contracted have not been identified to any of the reportable segments, as these are used interchangeably between segments. All assets other than receivables are located in India. Similarly, capital expenditure is incurred towards fixed assets located in India.

Notes:

1. Deposits with banks having maturity of more than three months aggregating to Rs 850.020 (31st March, 2011: 850.115) are not readily liquid and have been excluded from cash and cash equivalents.

2. *Balance with bank include bank balances in relation to unclaimed dividends Rs 5.753 (31st March, 2011: 5.257)

3. Quantitative information of foreign exchange instruments outstanding as at the Balance Sheet date

The foreign currency forward contracts outstanding as at the Balance sheet date aggregate USD 19.750 millions and GBP Nil (31st March, 2011: USD 20.850 millions, GBP Nil).

3. Employee benefits

a) Defined contribution plans

The Company has recognised Rs 28.724 (31st March, 2011 Rs 27.882) towards post employment defined contribution plans comprising of provident and superannuation fund in the Profit and loss account.

b) Defined benefit plan

In accordance with the Payment of Gratuity Act, 1972, the Company is required to provide post employment benefit to its employees in the form of gratuity. The Company has maintained a fund with the Life Insurance Corporation of India to meet its gratuity obligations. In accordance with the Standard, the disclosures relating to the Company's gratuity plan are provided below:

Notes:

1. Expected rate of return on plan assets is based on actuarial expectation of the average long-term rate of return expected on investments of the fund during the estimated term of the obligations.

2. The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors on long-term basis.

4. Employee stock options

The Compensation Committee of the Company established the Employee Stock Option Plan on 23rd July, 2005. Employees covered by the Plan are granted an option to purchase shares of the Company subject to the requirements of vesting. Total of 8,100,265 (including impact of bonus) stock options were approved in the Annual General Meeting of the Company held on 23 July 2005, of which the employees have been granted 2,759,139 stock options on 12 October 2005 ('Grant I'), 2,311,500 stock options on 28th December, 2006 ('Grant II') and 3,029,626 stock options on 9th July, 2009 ('Grant III') with a vesting period of 3 years. Stock options under Grant II lapsed on 28th December, 2010.

In the Meeting of the Compensation and Share Allotment Committee held on 16th November, 2010 it was decided to utilise the surrendered and lapsed options out of Grant II to grant them to new CEO & MD in terms of his appointment letter and also to senior executives of the Company at the relevant market price as Grant IV. The total options granted under Grant IV are 1,950,000 options out of which 1,250,000 options(Plan A) were granted to CEO & MD with vesting period of 5 years and 700,000 options (Plan B) were granted to Senior Executives of the Company with vesting period of 2 years.

5. Expenditure on research and development activities

Revenue expenditure on research and development is charged under respective heads of account in the year in which it is incurred. Capital expenditure on research and development is

included as part of fixed assets and depreciated on the same basis as other fixed assets.

6. Taxes

a) The Company has not recognised MAT credit entitlement to the extent of Rs 220.381 in respect of Income Tax paid in view of uncertainty of its utilisation for payment of tax in foreseeable future.

b) Subsequent to the balance sheet date i.e. 31st March, 2012, in April 2012, the Income Tax Department initiated proceedings against the Company under Section 132 of the Income Tax Act, 1961.

As on the date of adoption of accounts by the Board of directors (29th May, 2012), the Company is yet to receive a demand notice from the Income Tax Department and is also in the process of gathering information/documents and tax advice. Due to this, the Company is not in a position to reliably estimate the liability (if any) arising out of these proceedings. The management, on the basis of best estimate, has made a prudential provision of Rs 25 Crores in the Statement of Profit and Loss. In the subsequent quarters, when more clarity is achieved, the difference, if any, between the above referred provision and envisaged liability will be debited/credited to the profit and loss account, as the case may be.

7. Buy-back of Shares

During the year the Company had announced a buy-back of equity shares with effect from 26th December, 2011 as per section 77A of the Companies Act, 1956. Pursuant to the board of directors approval for buy-back the Company has bought back 5,230,631 shares up to 31st March, 2012 through open market transactions for an aggregate amount of Rs 405.828, by utilising Securities Premium of Rs 405.828. Capital Redemption Reserve has been created out of securities premium for Rs10.461 being the nominal value of shares bought back in terms of Section 77A of the Companies Act, 1956.

Out of 5,230,631 shares bought back up to 31st March, 2012,2,402,402 shares were extinguished in April 2012. To that extent the disclosure of number of equity shares and value thereof, as mentioned in financial statements and Corporate Governance Report differ.

The buy-back of equity shares was completed on 24th April, 2012. On completion of buy back the Company has bought back (including above) total 7,313,644 shares for an aggregate amount of Rs 558.638.

8. Insurance Claim

During the year the Company has received insurance claim of Rs 60.351 (31st March, 2011: Rs 59.413) for damage occurred for certain project from Insurance Company.

9. Acquisition of Neela Systems Limited

The Company has acquired 50.20 % stake in Neela Systems Limited on 6th January, 2012 for a total consideration of Rs 645.711.

10. Prior year comparatives

Till the year end 31st March, 2011, the company had adopted pre-revised Schedule VI as required by the Companies Act, 1956, for preparation and presentation of its financial statements. During the year ended 31st March, 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the Company. The Company has reclassified previous year figures to confirm to this year's classification. The adoption of revised Schedule VI does not impact recognition and measurement principle followed for preparation of financial statements. However, it significantly impacts presentation and disclosures made in the financial statements, particularly presentation of balance sheet.

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Mar 31, 2010

1.1 Segment reporting

The Company’s activities involve predominantly one business segment i.e. Process and Project Engineering, which are considered to be within a single business segment since these are subject to similar risks and returns. Accordingly, Process and Project Engineering comprise the primary basis of segmental information as set out in these financial statements, which therefore reflect the information required by AS 17 - Segment Reporting, with respect to primary segments.

The Company has identified India and Rest of the World as geographical segments for secondary segmental reporting. Geographical sales are segregated based on the location of the customer who is invoiced or in relation to which the sale is otherwise recognised. Assets other than receivables used in the Company’s business or liabilities contracted have not been identified to any of the reportable segments, as these are used interchangeably between segments. All assets other than receivables are located in India. Similarly, capital expenditure is incurred towards fixed assets located in India.

1.2 Related party transactions

a) Parties where control exists

Subsidiaries Pacecon Engineering Projects Limited

Praj Far East Co. Limited Praj Schneider Inc. (upto 28-02-2010) BioCnergy Europa B.V. Praj Jaragua Bioenergia S.A. Praj Americas Inc. (from June 2009)

b) Key management personnel and their relatives

Executive Chairman Mr. Pramod Chaudhari

CEO & MD Mr. Shashank Inamdar

Relative of key management personnel Mrs. Parimal Chaudhari

1.3 Employee benefits

The disclosures in accordance with the requirements of Accounting Standard 15 (Revised 2005) Employee Benefits are provided below :

a) Defined contribution plans

The Company has recognised Rs. 24.038 towards post employment defined contribution plans comprising of provident and superannuation fund in the Profit and Loss Account.

1.4 Employee stock options

The Compensation Committee of the Company established the Employee Stock Option Plan on 23 July 2005. Employees covered by the Plan are granted an option to purchase shares of the Company subject to the requirements of vesting. Total of 8,100,265 (including impact of bonus) stock options were approved in the Annual General Meeting of the Company held on 23 July 2005, of which the employees have been granted 2,759,139 stock options on 12 October 2005 (‘Grant I’), 2,311,500 stock options on 28 December 2006 (‘Grant II’) and 3,029,626 stock options on 9 July 2009 (‘Grant III’).

The stock options vest in a graded manner equally over three years with each vesting taking effect on the expiry of 12 months from the date of grant. These can be exercised within a period of three years from the date of vesting. The stock options granted are exercisable at 100% of the fair market value of the underlying equity shares of the Company as on the date of grant.

1.5 Expenditure on research & development activities

Revenue expenditure on research and development is charged under respective heads of account in the year in which it is incurred. Capital expenditure on research and development is included as part of fixed assets and depreciated on the same basis as other fixed assets.

1.6 Taxes

In consonance with retrospective amendment to Section 10AA of the Income Tax Act, related to the profit derived by SEZ undertaking which was ascertained hitherto based on the business of the assessee instead of the business of undertaking, the excess provision of current tax of earlier financial years 2007-08 & 2008-09 of Rs. 131.500 is written back during the year. Accordingly current tax expense of Rs. 69.885 is net of the said write back.

Long-term capital loss is adjustable against future capital gains considering the quantum of investible surplus available with the Company.

1.7 Exceptional item

During the year, the process of divestment of Praj Schneider Inc., the wholly owned subsidiary of the company in USA was completed. Consequently the loss of Rs 74.717 (net of write back of Rs 34.763) has been taken to Profit and Loss Account and shown under ‘exceptional items’.

1.8 Prior year comparatives

Previous year’s figures have been regrouped/reclassified to conform to the current year’s presentation.