Accounting Policies of Pratham EPC Projects Ltd. Company

Mar 31, 2025

2 SIGNIFICANT ACCOUNTING POLICIES
a Basis of Preparation

The standalone financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP)
b Use of Estimates

The preparation of financial statements in conformity with the generally accepted accounting principles (GAAP) requires
c Accounting Assumptions

(i) Going Concern: The enterprise is normally viewed as a going concern, that is, as continuing in operation for the foreseeable

(ii) Consistency: It is assumed that accounting policies are consistent from one period to another.

(iii) Accrual:Revenues and costs are accrued,that is, recognized as they are earned or incurred (and not as money is received or
d Property, Plant and Equipment

Tangible assets are stated at cost, less accumulated depreciation and impairment, if any. Direct costs are capitalized until such
Capital work in progress comprises the cost of fixed assets that are not yet ready for their intended use at the reporting date.

e Intangible assets Intangible assets comprising of software costs is included in the balance sheet as intangible assets when it is
probable that

f Depreciation and amortization

Depreciation has been charged on cost of fixed assets, adopting the following methods / rates: a. Depreciation is calculated
Depreciation is commenced from the dates the assets are available for their intended use and are spread over their estimated
The company has taken over the business of M/s Pratham Construction in 2015-16, a partnership firm, which was being carried
If the cost of a part of the asset is significant to the total cost of the asset and useful life of that part is different from the useful
In accordance with Accounting Standard AS-26, Intangible Assets comprising of Computer Software are valued at cost less

g Impairment of assets At each balance sheet date, the Company reviews the carrying value of its property, plant and equipment and
intangible assets An impairment loss is recognized in the statement of profit and loss as and when the carrying value of an asset
exceeds its

h Investment Long-term investments and current maturities of long-term investments are stated at cost, less provision for other
than

i Inventories

(i) Construction Materials: Construction materials are valued at lower of cost or net realizable value, on the basis of weighted

(ii) Work-in-Progress: The recognition of expenses in the statement of Profit and Loss Statement on the basis of Percentage of

j Cash and cash equivalents PROJECTS LIMITED

Cash and Bank Balances consist of:

a. Cash and Cash Equivalent which includes cash on hand, deposits held at call with banks and other short-term deposits which

b. Other Bank Balances which includes balances and deposits with Banks that are restricted for withdrawal and usage.

k Cash Flow Statement

Cashflows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the
l Revenue recognition

The revenues are recognized to the extent it is probable that the amount is measured reliably and that it is probable of inflow of

m Employee Benefits
Short Term

i) Short Term: Short Term employee benefits are recognized as an expense at the undiscounted amount expected to be paid
Long Term

DefinedBenefitsPlan: Fordefinedbenefitretirementschemes,thecostofprovidingbenefitsisdeterminedusingthe

Defined Contribution Plans: Contributions under defined contribution plans like provident fund, Employee State Insurance

LeaveEncashment: TheemployeesoftheCompanyareentitledforleaveencashmentonyearlybasis.Theamount

n Borrowing Cost Interest and other costs in connection with the borrowing of the funds to the extent related/attributed to the
o Foreign currency transactions

Transactions denominated in foreign currenciesarerecorded at the exchangeratesprevailing on the date of the transaction and
p Taxation

IncometaxexpenseisaccountedforinaccordancewithAS22- "AccountingforTaxesonIncome"prescribedunderthe

Current taxes reflect the impact of tax on income of the previous year as defined under the Income Tax Act, 1961 as per

Deferred taxes reflect the impact of Current year timing differences between taxable income and accounting income for the

q Segment accounting

The Company is primarily engaged in a single segment. Considering the provisions of Accounting Standard 17, the Company do
r Earnings Per Shares

Basic and diluted earnings per share are computed in accordance with Accounting Standard-20. Basic earnings per share is

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Mar 31, 2024

2. SIGNIFICANT ACCOUNTING POLICIES:

2.1 Basis of preparation of Standalone Financial Statements and Method of Accounting:

The standalone financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis. GAAP comprises mandatory accounting standards as prescribed under section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 and the provisions of the Companies Act, 2013 to the extend notified. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use except where specifically stated hereunder.

2.2 Use of estimates:

The preparation of financial statements in conformity with the generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as at the date of the financial statements and reported amounts of revenues and expenses during the reported period. Actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

2.3 Accounting Assumptions:

(i) Going Concern:

The enterprise is normally viewed as a going concern, that is, as continuing in operation for the foreseeable future. It is assumed that the enterprise has neither the intention nor the necessity of liquidation or of curtailing materially the scale of the operations.

(ii) Consistency:

It is assumed that accounting policies are consistent from one period to another.

(iii) Accrual:

Revenues and costs are accrued, that is, recognized as they are earned or incurred (and not as money is received or paid) and recorded in the standalone financial statements of the periods to which they relate. (The considerations affecting the process of matching costs with revenues under the accrual assumption are not dealt with in this Statement.)

2.4 Valuation of Inventories:

(i) Construction Materials:

Construction materials are valued at lower of cost or net realizable value, on the basis of weighted average method after providing for obsolescence and other losses, where considered necessary. Cost of inventory comprises all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventory to their present location and condition.

(ii) Work-in-Progress:

The recognition of expenses in the statement of Profit and Loss Statement on the basis of Percentage of Completion method under which the contract cost incurred in reaching the stage of completion is matched with the percentage of work completed on the basis of the work certified by the surveyor/engineer. The cost incurred towards future contract activity and for the portion of work uncertified is classified under Project Work-in-progress. Work-in-progress represents cost incurred directly in respect of construction activity and indirect construction cost to the extent to which the expenditure is related to the future contract activity or incidental thereto and is valued at lower of cost or net realizable value.

2.5 Property, Plant and Equipment:

Tangible assets are stated at cost, less accumulated depreciation and impairment, if any. Direct costs are capitalized until such assets are ready for use. Where an item of property, plant and equipment comprises major components having different useful lives, these components are accounted for as separate items. Borrowing costs incurred during the period of construction is capitalized as part of cost of qualifying asset. The residual values, useful lives and method of depreciation of property, plant and equipment is reviewed at each financial year end and adjusted prospectively, if appropriate.

Capital work in progress comprises the cost of fixed assets that are not yet ready for their intended use at the reporting date.

Intangible assets comprising of software costs is included in the balance sheet as intangible assets when it is probable that associated future economic benefits would flow to the Company. In this case they are measured initially at purchase cost and then amortized on a written down value method over their estimated useful lives. All other costs on intangible assets including software are expensed in the statement of profit and loss as and when incurred.

2.6 Depreciation & Amortization:

Depreciation has been charged on cost of fixed assets, adopting the following methods / rates:

a. Depreciation is calculated using Straight Line Method (SLM) to allocate their cost, net of their residual values, over their estimated useful lives prescribed in Schedule II of the Companies Act, 2013 with the exception of the following:

b. Depreciation is commenced from the dates the assets are available for their intended use and are spread over their estimated useful economic lives. The estimated useful lives of assets, residual values and depreciation method are reviewed regularly and are revised when necessary.

c. The company has taken over the business of M/s Pratham Construction in 2015-16, a partnership firm, which was being carried on by the directors respectively, who are also directors in the company. The assets taken from the said firms has been recorded at the book value of which was reflected in the books of M/s Pratham Construction and are depreciated over the remaining useful life of the asset.

d. If the cost of a part of the asset is significant to the total cost of the asset and useful life of that part is different from the useful life of the remaining asset, useful life of that significant part is determined separately for depreciation. For other assets acquired / sold during the year pro-rata charge has been made from the date of first use or till the date of sale.

e. In accordance with Accounting Standard AS-26, Intangible Assets comprising of Computer Software are valued at cost less accumulated amortization. Computer software is amortized over the useful life of the software subject to maximum useful life of 10 years as prescribed under Accounting Standard - 26 "Intangible Asset".

2.7 Impairment:

At each balance sheet date, the Company reviews the carrying value of its property, plant and equipment and intangible assets to determine whether there is any indication that the carrying value of those assets may not be recoverable through continuing use. If any such indication exists, the recoverable amount of the asset is reviewed in order to determine the extent of impairment loss, if any. Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs. Recoverable amount is the higher of assets net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. Since the company''s net selling price of the cash generating unit to which the asset belongs based on the valuation report is higher than the recoverable amount, the company has not arrived at the value in use and has complied with the requirement of AS-28 based on the valuation of independent valuer.

An impairment loss is recognized in the statement of profit and loss as and when the carrying value of an asset exceeds its recoverable amount. Where an impairment loss subsequently reverses, the carrying value of the asset (or cash generating unit) is increased to the revised estimate of its recoverable amount so that the increased carrying value does not exceed the carrying value that would have been determined had no impairment loss been recognized for the asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognized in the statement of profit and loss immediately.

2.8 Revenue Recognition:

The revenues are recognized to the extent it is probable that the amount is measured reliably and that it is probable of inflow of resources. The revenue has been booked based on the work certified. The revenues are booked on completion of stages and accordingly, on achieving of the milestone, the revenues have been booked. The progress / work certified is measured on the basis of the certificate issued by the Chartered Engineer/Surveyor. Amounts received before the related work is performed are disclosed in the Balance Sheet as contract liability and termed as "Advances from customer". An expected loss on the contract is recognized as an expense immediately. Cost incurred towards future contract activity is classified as project work in progress.

2.9 Earnings per Share:

Basic and diluted earnings per share are computed in accordance with Accounting Standard-20. Basic earnings per share is calculated by dividing the net profit or loss after tax for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Diluted earnings per equity share are computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the year, except where the results are anti-dilutive.

2.10 Taxes on Income:

Income tax expense is accounted for in accordance with AS 22- "Accounting for Taxes on Income" prescribed under the Companies (Accounting Standard) Rules, 2006 which includes current tax and deferred taxes.

Current taxes reflect the impact of tax on income of the previous year as defined under the Income Tax Act, 1961 as per applicable rates.

Deferred taxes reflect the impact of Current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years if any. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax asset will be recognized. Deferred tax assets are reviewed for their appropriateness of their respective carrying values at each reporting date. Deferred tax assets and deferred tax liabilities have been offset wherever the company has legally enforceable right to set off current tax assets against current tax liabilities and where deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority.