Notes to Accounts of SFC Environmental Technologies Ltd.

3.9 Provisions, contingent liabilities and contingent assets

A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that
is reasonably estimable, and it is probable that an outflow of economic benefits will be required to settle the
obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and the risks specific to the liability. Unwinding of the
discount is recognised in the Statement of Profit and Loss as a finance cost.

Contingent liability is a possible obligation arising from past events and whose existence will be confirmed only by the
occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity or a
present obligation that arises from past events but is not recognized because it is not probable that an outflow of
resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot
be measured with sufficient reliability.

A contingent asset is not recognised unless it becomes virtually certain that an inflow of economic benefits will arise.
When an inflow of economic benefits is probable, contingent asset are disclosed in the financial statements.

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

3.10 Employee benefits

Employee benefits include provident fund and gratuity fund.

(i) Defined Contribution Plan:

The Company''s contributions towards provident fund is defined contribution scheme. The Company''s contribution
paid/payable under the schemes is recognised in the Statement of Profit and Loss on accrual basis during the period in
which the employee renders the related service.

(ii) Short-Term Employee Benefits:

All employee benefits payable wholly within twelve months of rendering the service are classified as short-term
employee benefits. Benefits such as salaries, wages, and short term compensated absences, etc. and the expected
cost of ex-gratia, if any are recognized in the statement of profit and loss in the period in which the employee renders
the related service.

(iii) Defined benefit plan:

The Company’s gratuity benefit scheme with Life Insurance Corporation of India is a defined benefit plan. The
Company’s net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future
benefit that employees have earned in return for their service in the current and prior periods; that benefit is
discounted to determine its present value, and the fair value of any plan assets is deducted.

The present value of the obligation under such defined benefit plans is determined based on actuarial valuation at
each balance sheet date by an independent actuary using the Projected Unit Credit Method, which recognizes each
period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to
build up the final obligation.

The obligation is measured at the present value of the estimated future cash flows. The discount rates used for
determining the present value of the obligation under defined benefit plans are based on the market yields on
Government securities as at the balance sheet date. When the calculation results in a benefit to the Company, the
recognized asset is limited to the net total of any unrecognized actuarial losses and past service costs and the present
value of any future refunds from the plan or reductions in future contributions to the plan.

Actuarial gains and losses are recognized immediately in the statement of other comprehensive income.

3.11 Taxation

The tax expenses comprise of current tax and deferred income tax charge or credit. Tax is recognised in Statement of
Profit and Loss, except to the extent that it relates to items recognised in the Other Comprehensive Income or in
Equity. In which case, the tax is also recognised in Other Comprehensive Income or Equity, respectively.

Current Tax

Current tax is determined as the amount of tax payable in respect of taxable income for the period. Taxable profit
differs from ‘profit before tax’ as reported in the statement of profit and loss because of items of income or expense
that are taxable or deductible in other years and items that are never taxable or deductible.

Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the
recognized amounts and there is an intention to settle the asset and the liability on a net basis.

The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after
considering the uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or
substantively enacted by the reporting date.

Deferred Tax

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the
company’s financial statements and the corresponding tax bases used in computation of taxable profit and quantified
using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

Deferred tax liabilities are generally recognised for all taxable temporary differences at the reporting date between the
tax base of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets are
generally recognised for all taxable temporary differences to the extent that is probable that taxable profits will be
available against which those deductible temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent
that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be
recovered.

Deferred tax assets relating to unabsorbed depreciation/business losses are recognised and carried forward to the
extent of available taxable temporary differences or where there is convincing other evidence that sufficient future
taxable income will be available against which such deferred tax assets can be realised.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the
manner in which the company expects, at the end of reporting period, to recover or settle the carrying amount of its
assets and liabilities.

Transaction or event which is recognised outside profit or loss, either in other comprehensive income or in equity, is
recorded along with the tax as applicable.

Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off the
recognised amounts and there is an intention to settle the asset and the liability on a net basis.

3.12 Foreign currency transactions

Transactions in currencies other than the Company’s functional currency are recorded on initial recognition using the
exchange rate at the transaction date or at rates that closely approximate the rate at the date of the transaction. At
each Balance Sheet date, foreign currency monetary items are reported using the closing rate. Non-monetary items
that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date
of initial transactions. Exchange differences that arise on settlement of monetary items or on reporting of monetary
items at each Balance Sheet date are recognised in the Statement of Profit & Loss in the period in which they arise.

3.13 Cash and cash equivalents

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

3.14 Earnings per share

Basic earnings per share is calculated by dividing the net profit for the year attributable to equity shareholders by the
weighted average number of equity shares outstanding during the year and equity shares to be issued on conversion of
mandatorily convertible instruments. The weighted average number of equity shares outstanding during the period and
for all periods presented is adjusted for events such as bonus issue; bonus element in a rights issue to existing
shareholders; share split; and reverse share split (consolidation of shares) that have changed the number of equity
shares outstanding, without a corresponding change in resources.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity
shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of
all dilutive potential equity shares.

3.15 Dividend distribution to equity holders

The Company recognises a liability to make cash or non-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 corporate laws in India, a
distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in
equity.

3.16 Cash flow statement

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

Cash and cash equivalents in the cash flow statement comprise cash, cheque in hand, cash at banks and bank
deposits with original maturity of three months or less.

3.17 Events after reporting date

Where events occurring after the balance sheet date provide evidence of conditions that existed at the end of the
reporting period, the impact of such events is adjusted with financial statements. Otherwise, events after the balance
sheet date of material size or nature are only disclosed.

4 Recent pronouncement

i) New and amended standards adopted by Company

Ministry of Corporate Affairs (“MCA”) notifies new standards or amendments to the existing standards under Companies
(Indian Accounting Standards) Rules as issued from time to time.

In May 2025 and August 2025, MCA notified following key amendments effective for annual reporting periods beginning on
or after April 1, 2025:

1. Lack of Exchangeability of currency (Amendments to Ind AS 21)

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

3. Supplier Finance Arrangements (Amendments to Ind AS 7 and Ind AS 107)

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

The Company has reviewed the above new pronouncements and based on its evaluation has determined it does not have
any significant impact on its financial statements wherever applicable as at and for the year ended 31st March 2026.

ii) Amendments applicable from next Financial Year

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

This amendment also includes specific provisions that will take effect for reporting periods beginning on or after April 1,
2026 as outlined below:

Under the existing Ind AS 1, where there is a breach of a material provision of a long-term loan arrangement on or before
the end of the reporting period with the effect that the liability becomes payable on demand on the reporting date, the
entity does not classify the liability as current, if the lender agreed, after the reporting period and before the approval of
the financial statements for issue, not to demand payment as a consequence of the breach.

However, the amended requirements stipulate that entities will no longer be permitted to consider lender waivers that are
granted after the reporting date but before the financial statements are approved for the purpose of classification of
loans. This amendment is required to be applied retrospectively in accordance with Ind AS 8.

The impact of the aforesaid amendment will be assessed and, where applicable, appropriately recognised in the financial
statements upon the amendment becoming effective.

(d) Terms/rights attached to Equity Shares

The Company has only one class of equity shares having Face Value of Rs 2/- per share. Each holder of equity share is entitled to one vote per share. The company declares and pays dividend in Indian Rupees. The dividend
proposed by the Board of Directors are 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 distribution of all preferential amounts. However no such preferential amount exists as at March 31, 2026 and March 31, 2025. The distribution will be in proportion to the number of
Equity Shares held by the Shareholders.

(e) Aggregate number and class of shares allotted as fully paid-up pursuant to bonus issue: 6,22,74,180 Equity Shares of ^2 each bonus shares issued on 5 December 2024

(f) Aggregate n umber and class of shares bought back : Nil

(g) Aggregate number and class of shares allotted as fully paid up pursuant to contract(s) without payment being received in cash : Nil

(h) The Company does not have any securities outstanding as at March 31, 2026 and March 31, 2025 which are convertible into equity/preference shares.

General Reserve:

The Company created a General Reserve in earlier years pursuant to the provisions of the Companies Act, where in certain
percentage of profits were required to be transferred to General Reserve before declaring dividends. General Reserve is a free
reserve available to the company. During the year ended March 31, 2025, general reserves has been utilised for the purpose of
issuing bonus shares.

44 Earnings per share ("EPS")

Basic EPS is calculated by dividing the profit /(loss) for the year attributable to equity holders by the weighted average number
of equity shares outstanding during the years.

Diluted EPS are calculated by dividing the profit /(loss) for the year attributable to equity holders by the weighted average
number of equity shares outstanding during the year plus the weighted average number of equity shares that would be issued
on conversion of all the dilutive potential equity shares into equity shares.

Note: Personal guarantee have been given by Mr. Sandeep Sudhakar Asolkar for the loans/credit facilities availed by the Group.
Refer Note 51 for the same.

* Dividend amounts for FY 2024-25 includes the interim dividend declared on March 30, 2025 by the Board of Directors which was
paid in FY 2025-26.

- The information given above, has been reckoned on The basis of information available with The Company and relied upon by
the auditors.

- The transactions from related parties are made at terms equivalent to those that prevail in arm’s length transactions.

48 Segment reporting

As per Ind AS 108- “Operating Segment”, segment information has been provided under the Notes to Consolidated Financial
Statements.

49 Fair values of financial assets and financial liabilities

Thefair value ofloans, cash and cash ecvhenotrOgeeisbLs, oSir edt financial assets, trade payables, short-term borrowings and other financial liabilities approximate the carrying amounts because
of the short term nature of these financial instruments.

The amortized cost using effectiveinterestrate (EIR) ofnon-eurrentfinancial assetsconsisting of security and term deposits are not significantly different from the carrying amount.

Financial assets that are neither past due nor impaired include cash and cash equivalents, security deposits, term deposits, and other financial assets.

Fair value hierarchy

The following is the hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

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

- Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

- Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

No financial assets/liabilities have been valued using level 1 fair value measurements.

The following table presents fair value hierarchy of assets and liabilities measured at fair value on a recurring basis:

Markⁿ risk isthe risk thitt t^fak''v^je^f^uree^^iflc^mc^f a^d ancial instrument will fluctuate because of changes in
market prices. Market risk comprises three types of risk: Foreign currency risk, interest rate risk and price risk. The Company''s
exposure to market risk is on account of foreign currency risk and interest rate risk.

(i) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes
in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the
Company''s borrowings with floating interest rates. The fixed rate borrowings are carried at amortised cost, hence, they are
not subject to interest rate risk since the carrying amount and future cash flows will not fluctuate because of change in
market interest rates. The exposure of the Company''s borrowings to interest rate changes at the end of reporting period are
as follows:

Foreign currency riskis the risk thatthefair value or future cmi flows of a financial instrument will fluctuate because of
changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily
to the Company''s operating activities (when revenueor expenseisdenominated in a different currency from the Company''s
functional currency.

The Company''s exposure to currency risk (carrying amounts of the Company''s foreign currency denominated monetary assets
and monetary liabilities) at the end of the reporting period are as follows:

Foreign currency sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in foreign currency, with all other variables held
constant relating to unhedged foreign currency exposure. The sensitivity analysis includes only outstanding foreign currency
denominated monetary items and adjusts their translation at the period end for a 10% change in the foreign currency rates. The
impact on the Company''s profit after tax is as follows:

Credit riskis therisk of financia^c less srisingfromcounterparty failure to repay or service debt according to the contractual
terms and obligations. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of
creditworthiness as well as concentration of risks. Credit risk is controlled by analysing credit limits and credit worthiness of
the customer on continuous basis to whom the credit has been granted. The financial instruments that are subject to
concentration of credit risk principally consist of trade receivables and cash and bank equivalents.

To manage credit risk, the Company follows a policy of providing credit to its customers based on prevailing market credit
terms. The credit limit policy is established considering the current economic trend of the industry in which the Company is
operating. Also, the trade receivables are monitored on a periodic basis for assessing any significant risk of non-recoverability
of dues and provision is created accordingly. These receivables are monitored on a periodic basis for assessing any significant
risk of non-recoverability of dues and provision is created accordingly.

The Company recognises lifetime expected credit losses on trade receivable using simplified approach by computing the
expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account
historical credit loss experience and is adjusted for forward looking information. The expected credit loss allowance is based
on the ageing of the receivables that are due and rates used in provision matrix.

Li quidityrisk is the risk thatthe Company maynotbeabletomeetits present and future cash and collateral obligations
without incurring unacceptable losses. The Company''s objective is to maintain optimum levels of liquidity and to ensure
that funds are available for use as per requirement.

The liquidity risk principally arises from obligations on account of financial liabilities viz. borrowings, lease liabilities, trade
payables and other financial liabilities.

The finance department of" the Comp any is responsible for liquidity and funding as well as settlement management. In
addition, processes and policies related to such risks are overseen by senior management.

Exposure tm liquidity risk

The table below summarizes the maturity profile of the Company''s financial liabilities:

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and
undiscounted and include contractual interest payments and exclude the impact of netting agreements.

51 Semused Borrowing

i. The Company has entered into Term Loan facility from Axis Bank, for the purpose of purchase of commercial premises
situated at 22nd Floor, the Ambience Court, Sector 19D, Vashi, Navi Mumbai-400 705. Loan amount is Rs 100 Mn. @ Repo
2.25% for period of 84 months, repayable in monthly installment ending on July 2030. This credit facility is against primary
security of collateral of office premises. This credit facility is also backed by personal guarantee of Mr. Sandeep Sudhakar
Asolkar, director & promoter of the Company.

ii. Fund based working capital facilities from banks carry interest ranging from 7.25% to 9.55% per annum (March 31, 2025:
7.70% to 9.85% p.a.). The said facilities are against primary security of lien of fixed or time Deposits, primary hypothecation of
current assets, guest houses, movable fixed assets, investment properties, collateral of office premises. The credit facility of
the company is also backed by personal guarantee of Mr. Sandeep Sudhakar Asolkar, director & promoter of the Company.

iii. Bill discounted under letter of credit with usance period of upto 180 days

Notes

(i) In case of Debtors, amount reported in the quarterly return/statement does not include the impact of Expected Credit Loss (ECL) in all periods. Further, for the quarter ended September, certain reception from debtors were
not considered and for the quarter ended March cheques in hand were considered while reporting in the quarterly return /statement.

(ii) In case of Creditors for Goods, amount reported in the quarterly return/statement includes few Creditor for expense in all periods. Further, for the quarter ended June, few creditor were reported twice resulting in duplication.

(iii) In case of Closing Stock, revaluation of stock as per relevant standards impact and work-in-progress (WIP) was not considered while reporting in the quarterly return /statement.

Capital includes equity attributableto theequity iidderstoensure that it maintains an efficient capital structure and healthy
capital ratios in order to support its business and maximise shareholder value. The Company manages its capital structure
and makes adjustments to it, in light of changes in economic conditions or its business requirements. To maintain or adjust
the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue
new shares. No changes were made in the objectives, policies or processes during the year ended March 31, 2026 and the year
ended March 31, 2025. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net
debt. Net debt is calculated as loans, borrowings and lease liabilities less cash and cash equivalents.

60 Other additional regulatory information

60.01 The Company has not revalued any property, plant & equipment nor any intangible assets.

60.02 The Company does not have any Benami property, where any proceeding has been initiated or pending against the
Company for holding any Benami property.

60.03 The Company does not hold any intangible assets under development and accordingly, no ageing nor completion
schedule is provided.

60.04 The Company has utilised borrowings from banks or financial institutions for the purpose for which it was obtained.

60.05 The Company has not been declared wilful defaulter by any bank or financial institution or government or any
government authority.

60.06 The Company does not have any transactions with struck off companies.

60.07 The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the
statutory year.

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

60.09 The Company has no such transaction which is not recorded in the books of accounts that has been surrendered or
disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 such as, search or
survey or any other relevant provisions of the Income Tax Act, 1961.

60.10 The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read
with the Companies (Restriction on number of Layers) Rules, 2017.

60.11 The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign
entities (Intermediaries) with the understanding that the Intermediary shall: (a) 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 (b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

60.12 The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party)
with the understanding (whether recorded in writing or otherwise) that the Company shall: (a) directly or indirectly
lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party
(Ultimate Beneficiaries) or (b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

61 Any discrepancies in any amount in Financial Statement between the total and the sums of the amounts listed
are due to rounding off. All figures in decimals have been rounded off to the second decimal.

62 Previous period figures have been regrouped/reclassified to confirm presentation as per Ind AS as required by
Schedule III of the Act.