corrtech international pvt ltd Management discussions

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

The following discussion is intended to convey our managements perspective on our financial condition and results of our operations. Our Financial Year commences on April 1 and ends on March 31 of the following year, so all references to a particular Financial Year or a Fiscal are to the twelve months ended March 31 of that year.

You should read the following discussion in conjunction with the Restated Financial Statements included in this Draft Red Herring Prospectus as of six month period ended September 30, 2021, andfor the financial years ended March 31, 2021, March 31, 2020 and March 31, 2019 including the related notes, schedules, and annexures. For further information, see "RestatedFinancial Statements" on page 69.

The Restated Financial Statements included in this Draft Red Herring Prospectus are prepared and presented in accordance with requirements of Section 26 of the Companies Act, 2013, as amended, the SEBIICDR Regulations and the Guidance Note on "Reports in Company Prospectuses (Revised 2019) " issued by the ICAI, which differ in certain material respects from IFRS, U.S. GAAP and GAAP in other countries, and our assessment of the factors that may affect our prospects and performance in future periods. This discussion may include certain forward looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors or contingencies, including those described below and elsewhere in, this Draft Red Herring Prospectus. For further information, see "Forward-Looking Statements" on page 21. Also read "Risk Factors" and "Factors affecting our results of operations " on pages 32 and 298, respectively, for a discussion of certain factors or contingencies that may affect our business, financial condition or results of operations. Unless otherwise indicated, the industry-related information contained in this section is derived from the Industry Report. We commissioned and paid for such report for the purposes of confirming our understanding of the industry in connection with the Offer. For further details and risks in relation to commissioned reports, see "Risk Factors - Certain sections of this Draft Red Herring Prospectus disclose information from industry reports commissioned and paidfor by us and any reliance on such information for making an investment decision in the Offer is subject to inherent risks. " on page 55.

Unless otherwise indicated, industry and market data used in this section has been derived from a report titled "Industry Research Report on Oil & Gas Sector " dated March, 2022, by CARE Advisory Research and Training Limited prepared and issued by CARE Advisory, appointed by us pursuant to an engagement letter dated November 13, 2021, and exclusively commissioned and paid for by us in connection with the Offer. Unless otherwise indicated, all industry and other related information derived from the Industry Report and included herein with respect to any particular year refers to such information for the relevant calendar year. CARE Advisory was appointed by our Company and is not connected to our Company, the Directors, and the Promoters.

Overview

We are one of the leading focused providers of pipeline laying solutions including hydrocarbon pipeline laying works in India. In addition to pipeline laying and construction, our Company has also emerged as amongst the leading player in horizontal directional drilling ("HDD") and cathodic protection solutions ("CPS") over the years (source: CARE Advisory Report). We, through our subsidiary, Corrtech Energy Limited ("CEL"), manufacture precision components and provide products and services to the gas turbines and steam turbines operators along with services to the aerospace and defence sectors (source: CARE Advisory Report). CEL is also engaged in providing EPC solutions towards process facilities for material and feed handling in oil and gas refineries and petrochemical complexes. We also manufacture equipment like conditioning skids, pressure vessels, material handling equipment and cathodic protection materials like sacrificial anode for connectivity of oil and gas networks through our other wholly owned subsidiary Control Plus Oil & Gas Solutions.

Our Company was incorporated on June 8, 1982 as a CPS provider and ventured into laying of pipeline projects in 2002 We are one of the pioneers in pipeline construction, HDD and CPS and offering wide basket of services in pipeline industry (source: CARE Advisory Report), till date we have completed more than 50 Hydrocarbon pipeline laying projects spanning over 3,500 kms in more than 13 states across a variety of topographies and weather conditions including over 229 kms of gas pipeline with 48" diameter and HDD crossing with individual crossing profile length of 2.2 kms. We have successfully completed projects across geographical and weather conditions including laying of pipeline from Haldia Oil Jetty to Haldia Coastal Area and Dhobi-Durgapur-Haldia Pipeline section along with spurlines under Jagdishpur Haldia Bokaro Dhamra Pipeline project and have received numerous awards including certificate of appreciation from Engineers India Limited as project management consultant and a letter from Indian Oil Corporation Limited for our performance for mainline welding of 9.245 km in a single day against a target of 5 kms welding in a single day. Further, one of our Subsidiaries, CEL has

executed a project in the Dahej region for transportation of LPG / propane from port terminal area to the processing area under a composite contract involving EPC of related facilities at both locations and laying of 11.65 kms pipeline between the two.

Our revenues from operations includes Oil and Gas services business ("O&G services Business"), Manufacturing Business and sale of traded products, the details of which for the last three Fiscals and six months ended September 30, 2021 is as follows:

				(Rs. in million)
Segment	Six months ended September 30, 2021	Fiscal 2021	Fiscal 2020	Fiscal 2019
O&G Services Business	4,117.86	9,303.27	7,524.64	5,334.75
Manufacturing Business	114.41	188.70	199.20	84.77
Sale of traded products	560.43	417.34	58.35	187.81
Total	4,792.70	9,909.31	7,782.19	5,607.33

As part of our O&G Services Business, we execute projects as construction contractors or as engineering, procurement and construction ("EPC") contractors as specified in the contract wherein the scope of our services typically includes design and engineering of the project, procurement of materials such as pipes, valves etc., and project execution at site with overall project management up to the commissioning of these projects. We believe that our employee resources and fleet of equipment, together with our engineering skills and capabilities, enable us to execute a range of pipeline construction projects involving varying degrees of complexity.

Our order book, as of any particular date, consists of the unexecuted portions of our outstanding orders, that is, the total contract value of the existing contracts secured by us, as reduced by the value of work executed and billed until the date of such order book ("Order Book"). Order Book for our O&G Services Business as of December 31, 2021, was over Rs.24,400 million. The following table sets out forth operation-wise summary of our Order Book as of December 31, 2021:

Our Order Book for our Company included the following as of December 31, 2021:

Type	No. of projects	Outstanding Order Book (Rs.)	% of Order Book of our Company
EPC Projects	02	3,609.81	16.43
Non-EPC Projects	33	18,363.61	83.57
Total	35	21,973.42	100

Our Order Book for our Material Subsidiary, CEL: included the following as of December 31, 2021:

Type	No. of projects	Outstanding Order Book (Rs.)	% of Order Book for CEL
EPC Projects	01	198.39	8.06
Non-EPC Projects	20	2,263.49	91.94
Total	21	2,461.88	100

Our customers in O&G Services Business include large players in the Indian oil and gas sector such as GAIL (India) Limited, Indian Oil Corporation Limited, Oil and Natural Gas Corporation Limited Hindustan Petroleum Corporation Limited, GSPL India Gasnet Limited and Bharat Petroleum Corporation Limited, and other players such as IHB Limited and Indradhanush Gas Grid Limited.

Our Manufacturing Business caters to diverse industry segments including energy, defence and general manufacturing wherein we supply components and services to customers including Ethos Energy GmbH, ET International and one of the leading aerospace and defence companies in India.

Our Company is an ISO 9001-2015, ISO 14001:2015 and ISO 45001:2018 certified company. Our Material Subsidiary, CEL is an ISO 14001:2015 and ISO 45001:2018 certified company for manufacturing, supply, service and repair of machined metal components for aerospace, defense application, gas turbines, steam turbines and marine engines, applications including turbine rotor overhauling and cold coating for turbine compressor components and AS9100D certified company for the scope of manufacturing and supply of machined metal components for aerospace and defence application. Further, our Subsidiary, CPOG is an ISO 9001-2015 certified company.

For our O&G Services Business, we own, operate and lease a large fleet of pipeline construction equipment, including HDD rigs, excavator and boring machine which permits us to cater to diverse project requirements across geographies. For our Manufacturing Business, we own and operate certain equipment including vertical machining centres, turning centres, vertical turret lathes, and rotor balancing machine.

A summary of our financial performance during the last three Fiscals and six months ended September 30, 2021, is as follows:

				(Rs. in million)
Particulars	Six months ended September 30, 2021	Fiscal 2021	Fiscal 2020	Fiscal 2019
Revenue from operations	4,792.70	9,909.31	7,782.19	5,607.33
PAT	154.76	285.55	349.49	244.71
EBITDA	459.37	956.21	978.69	741.07
Net Worth	1,606.69	1,425.22	1,180.34	912.62

 

Particulars	Six months ended September 30, 2021	Fiscal 2021	Fiscal 2020	Fiscal 2019
Net Debt	1,297.05	1,283.20	1,435.38	1,853.39

For the six month period ended September 30, 2021 and the Fiscals 2021, 2020, 2019 and for the, our top five customers contributed 73.23%, 80.53%, 71.16% and 75.42%, of our consolidated revenue from operations, respectively. We have established long standing relationships with some of our major customers. Three of our top five customers for the six month period ended September 30, 2021 were also the top five customers in Fiscal 2021, Fiscal 2020 and Fiscal 2019.

Factors affecting our results of operations

The following is a discussion of certain factors that have had, and continue to have, a significant effect on our financial results:

(a) The coronavirus pandemic ("COVID-19") could have significant adverse effect on our business and operations.

Our business and operations could be adversely affected by health epidemics, including the ongoing COVID-19 pandemic, that affects the markets and communities in which we, our customers and suppliers operate in.

The impact of the COVID-19 pandemic on our business is dependent upon numerous factors which we are not able to accurately predict or comprehend, including the duration, severity and scope of the pandemic, the impact of the pandemic on economic activity in India and globally, and the nature and severity of measures adopted by governments. These factors include, but are not limited to:

• ability of various stakeholders involved, including contractors, manpower, equipment suppliers, raw material suppliers, consultants, independent engineers, relevant authorities, to carry out/conduct their work effectively and in a timely manner or their ability to carry out their work at all for example: obtaining right of use/ right of way, physical construction work, physical site inspections, procurement of raw material, which may entail suspended operations and/or delayed completion of projects and may entail additional costs, delays and additional requirements under various regulations;

• abilities of the GoI/ state governments/ governmental authorities to be able to contain the spread of the pandemic thereby enabling economic activity and which in-turn would enable us to continue with the implementation of our projects that are under development;

• our ability to bill our clients on a timely basis due to the inability or delay in the independent verification of completion of works by our customers, through their independent engineers or otherwise;

• our ability to ensure the safety of our workforce and continuity of our operations while conforming with measures implemented by the GoI / state governments/ governmental authorities in relation to health and safety of our employees, which may result in increased costs;

• our ability to carry out construction work during lockdown periods, on account of unavailability of migrant labourers and such other constrained environments, and corresponding impact on our financial condition and operations; and

• restrictions in operations or temporary shutdown of our manufacturing facilities due to government restrictions in connection with COVID-19.

The COVID-19 pandemic may also adversely affect our ability to raise additional capital that is needed to implement our strategies. We intend to continue to execute our strategic plans and operational initiatives during the COVID 19 pandemic. However, the aforementioned uncertainties may result in delays or modifications to these plans and initiatives, which could have a material adverse effect on our business, financial condition and results of operations.

(b) We derive majority of our revenue from our O&G Services Business and our financial condition would be materially and adversely affected if we fail to obtain new contracts or our current contracts are terminated.

Our O&G Services Business depends significantly on our ability to bid for and be awarded the projects across cathodic protection services, laying of cross-country pipeline, horizontal direction drilling, construction services for city gas distribution as well as for petrochemical complexes. For the six months period ended September 30, 2021, and Fiscals 2021, 2020, and 2019, the revenues from our O&G Services Business was Rs.4,117.86 million, Rs.9,303.27 million, Rs.7,524.65 million and Rs.5,334.75 million, respectively, which contributed to 85.92%, 93.88%, 96.69% and 95.14% respectively, of our revenue from operations. We bid for projects on an ongoing basis and projects in our O&G Services Business are typically awarded by our customers following a competitive bidding process and post satisfaction of prescribed qualification criteria.

Our business, growth prospects and financial performance largely depends on our ability to obtain new contracts, and there can be no assurance that we will be able to procure new contracts. Our future results of operations and cash flows may fluctuate from period to period depending on the timing of our contract. In the event we are unable to obtain new contracts, our business will be materially and adversely affected.

(c) Currently our business is primarily dependent on projects in India undertaken or awarded by oil and gas companies, and we derive majority of our revenues from contracts with a limited number of customers. Our inability to manage relationships with our major customers and any adverse changes in the government policies may lead to our contracts being terminated or renegotiated, which may have a material effect on our business and results of operations.

Our business is primarily dependent on projects undertaken or awarded by limited number of customers who are involved in up-stream, mid-stream and down-stream activities of oil and gas sector. Our top five customers contributed to 73.23%, 80.53%, 71.16% and 75.42%, of our revenue from operations for the six months period ended September 30, 2021, Fiscal 2021, Fiscal 2020 and Fiscal 2019 respectively. Further, 63.00% of the value of unexecuted orders in our Order Book as at December 31, 2021 comprised of unexecuted orders from our top five customers as for the six months period ended September 30, 2021. Larger contracts from few customers may represent a larger portion of our Order Book, increasing the potential volatility of our results and exposure to individual contract risks. Such concentration of our business on a few projects or clients may have an adverse effect on our business if we do not achieve our expected margins or suffer losses on one or more of these large contracts, from such clients. Further, we typically do not have firm commitment in the form of long-term supply agreements with most of our key customers and instead rely on purchase orders including through the tender route to govern the volume and other terms of our sales of products. The loss of one or more of these significant customers or a significant decrease in business from any such key customer may materially and adversely affect our business, results of operations and financial condition.

Our Critical Accounting Policies (as per Restated Financial Statements)

Certain of our accounting policies require the application of judgment by our management in selecting appropriate assumptions for calculating financial estimates, which inherently contain some degree of uncertainty. Our management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the reported carrying values of assets and liabilities and disclosure of contingent liabilities and the reported amounts of revenues and expenses that may not be readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We believe the following are the critical accounting policies and estimates used in the preparation of our financial statements. For more information on each of these policies, see the Restated Financial Statements included in this Draft Red Herring Prospectus.

1. Group Information

This restated consolidated financial statements comprise the financial statements of Corrtech International Limited (formerly known as Corrtech International Private Limited) ("the Holding Company", "Company") and its subsidiary and associates (collectively known as "the Group"). The Holding Company is a Company incorporated in India and registered under the Companies Act, 1956 (‘the Act). The Company is primarily engaged in the business of laying of oil and gas pipeline, horizontal directional drilling and cathodic protection services on EPC/contracts basis.

This restated consolidated financial statements were authorized for issue in accordance with a resolution passed by board of directors on March, 14, 2022.

2. Basis of preparation

2.1. Statement of compliance & basis of preparation

The Restated Consolidated Financial Statements relates to the Group and has been specifically prepared for inclusion in the document to be filed by the Company with the Securities and Exchange Board of India ("SEBI") in connection with the proposed Initial Public Offer (‘IPO) of equity shares of the Company (referred to as the "Issue"). The Restated Consolidated Financial Statements comprise Restated Consolidated Statement of Assets and Liabilities as at 30 September 2021, 31 March 2021, 31 March 2020, and 31 March 2019, the Restated Consolidated Statement of Profit and Loss (including Other Comprehensive Income), the Restated Consolidated Cash Flow Statement, the Restated Consolidated Statement of Changes in Equity and Notes forming part of the Restated Consolidated Financial Statements for the years/period ended 30 September 2021 , 31 March 2021, 31 March 2020 and 31 March 2019 (hereinafter collectively referred to as "Restated Consolidated Financial Statements").

The Restated Consolidated Financial Statements have been prepared by the Management of the Company to comply with the requirements of:

a) Section 26 of Part I of Chapter III of the Companies Act, 2013 ("the Act");

b) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended (""ICDR Regulations""); and

c) The Guidance Note on Reports in Company Prospectuses (Revised 2019) issued by the Institute of Chartered Accountants of India (ICAI), as amended (the "Guidance Note")."

The Restated Consolidated Financial Statements have been compiled from:

I. Audited Special Purpose Interim Consolidated Ind AS Financial Statements of the Group as at and for the six months period ended 30 September 2021 and prepared in accordance with the Indian Accounting Standard 34 "Interim Financial Reporting" as prescribed under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules 2015, as amended, and other accounting principles generally accepted in India, which has been approved by the Board of Directors at their meeting held on March 14, 2022;

II. Audited Special Purpose Consolidated Ind AS Financial Statements of the Group as at and for the year ended 31 March 2021 prepared in accordance with the Ind AS, as prescribed under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules 2015, as amended, and other accounting principles generally accepted in India, which has been approved by the Board of Directors at their meeting held on March 14, 2022; and

III. Audited Special Purpose Consolidated Ind AS Financial Statements of the Group as at and for the year ended 31 March 2020 prepared in accordance with the Ind AS, as prescribed under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules 2015, as amended, and other accounting principles generally accepted in India, which has been approved by the Board of Directors at their meeting held on March 14, 2022; and

IV. The Company has prepared the Special Purpose Consolidated Financial Statements as at and for the year ended March 31, 2019 (the "Special Purpose Consolidated Financial Statements") as per following basis:

The Audited Special Purpose Consolidated Financial Statements of the Group as at and for the year ended March 31, 2019, have been prepared by the management of the Company in accordance with Accounting Standards prescribed under Section 133 of the Companies Act, 2013 (‘Previous GAAP or ‘Indian GAAP) after giving effect to accounting policy and accounting policy choices (both mandatory exceptions and optional exemptions availed as per Indian Accounting Standards

101 ‘First-time Adoption of Indian Accounting Standards (Ind AS 101)) as initially adopted on transition date i.e. April 1, 2019. These Audited Special Purpose Consolidated Financial Statements prepared in accordance with the Ind AS as described in this paragraph, have been approved by the Board of Directors on March 14, 2022. Suitable restatement adjustments (both re-measurements and reclassifications) as per Ind AS 101, are made to these Financial Statements for the year ended March 31, 2019.

These Special Purpose Consolidated Financial Statements have been prepared solely for the purpose of preparation of Restated Consolidated Financial Statements for inclusion in Offer Documents in relation to the proposed IPO. As such these Special Purpose Consolidated Financial Statements are not suitable for any other purpose other than for the purpose of preparation of Restated Consolidated Financial Statements and are also not financial statements prepared pursuant to any requirements under section 129 of the Companies Act, 2013, as amended.

The accounting policies have been consistently applied by the Holding Company in preparation of the Restated Consolidated Financial Statements and are consistent with those adopted in the preparation of financial statements for the six months period ended September 30, 2021. This Restated Consolidated Financial Statements does not reflect the effects of events that occurred subsequent to the respective dates of board meeting held to approve and adopt the audited special purpose interim consolidated financial statements, audited consolidated financial statements and audited special purpose consolidated financial statements as mentioned above.

The Restated Consolidated Financial Statements have been prepared so as to contain information/disclosures and incorporating adjustments set out below in accordance with the ICDR Regulations:

a. Adjustments to the profits or losses of the earlier periods and of the period in which the change in the accounting policy has taken place, recomputed to reflect what the profits or losses of those periods would have been if a uniform accounting policy was followed in each of these periods, if any;

b. Adjustments for reclassification of the corresponding items of income, expenses, assets and liabilities, in order to bring them in line with the groupings as per the restated consolidated financial statements of the Group for the period ended 30 September 2021 and the requirements of the SEBI Regulations, if any; and

c. The resultant impact of tax due to the aforesaid adjustments, if any.

2.2. Basis of measurement

The Restated Financial Statements have been prepared on the historical cost basis except for the following items which are measured at fair values:

- certain financial assets and liabilities

- defined benefit plans assets

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.

2.3. Basis of consolidation

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, the income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit and loss from the date the Company gains control until the date when the Company ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Groups accounting policies. All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

The restated consolidated financial statements include the financial statements of Corrtech International Limited and its subsidiaries and associates as set out below:

Name of the Company	Country of Incorporation	% of holding as at 30th September, 2021	% of holding as at 31st March, 2021	% of holding as at 31st March, 2020	% of holding as at 31st March, 2019
Corrtech Energy Limited	India	100%	100%	100%	100%
Control Plus Oil and Gas Solutions Private Limited	India	100%	100%	100%	100%
MJB India Technical Services Private Limited (Subsidiary of Corrtech Energy Limited)	India	74%	74%	74%	74%
MJB India Industrial Repairs Private Limited (Associate of Corrtech Energy Limited)	India	26%	26%	26%	26%

2.4. Functional and presentation currency

Indian rupee is the functional and presentation currency. The Restated Consolidated Financial statements are presented in INR and all values are rounded to the Millions, except when otherwise indicated.

2.5. Use of estimates

The preparation of the financial statements in conformity with Ind AS requires management to make estimates, judgments and assumptions.

These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period.

Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.

This note provides an overview of the areas that involved a higher degree of judgement or complexity and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgements is included in the relevant note.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.

Significant accounting judgments, estimates and assumptions

The preparation of the Groups Restated Consolidated Financial statements requires management to make estimates, judgments and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and the accompanying disclosure, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its assumptions and estimates on parameters available when the Restated Consolidated Financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

a. Impairment of Investments

The Group reviews carrying value of its investments carried at cost annually, or more frequently when there is indicationfor impairments. If the recoverable amount is less than it carrying amount, the impairment loss is accounted for.

b. Taxes

A deferred tax asset is recognised for all the deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilized.

c. Recognition and measurement of other provision

The recognition and measurement of other provisions are based on the assessment of the probability of an outflow of resources, and on past experience and circumstances known at the balance sheet date. The actual outflow of resources at a future date may therefore vary from the figure included in other provisions.

d. Fair value measurement of financial instruments

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 judgment is required in establishing fair values. Judgments include considerations of inputs such as market risk, liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

2.6. Current versus Non-current Classification

• The Group presents assets and liabilities in the Balance Sheet based on current/non-current classification. An asset is current when it is:

o Expected to be realized or intended to be sold or consumed in the normal operating cycle; o Held primarily for the purpose of trading;

o Expected to be realized within twelve months after the reporting period; or o Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

• All other assets are classified as non-current.

• A liability is current when:

o It is expected to be settled in the normal operating cycle; o Held primarily for the purpose of trading;

o It is due to be settled within twelve months after the reporting period; or o There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

• The Group classifies all other liabilities as non-current.

• Deferred tax assets and liabilities are classified as non-current assets and liabilities.

2.7. Operating cycle

Operating cycle for the business activities of the Group covers the duration of the specific project/contract/service including the defect liability period, wherever applicable and extends up to the realization of receivables (including retention monies) within the agreed credit period normally applicable

to the respective lines of business.

3. Significant Accounting Policies

3.1. Property, Plant and Equipment

Property, Plant and Equipment are stated at cost of acquisition/construction net of recoverable taxes and include amounts added on revaluation, less accumulated depreciation / amortization and impairment loss, if any. All costs, including finance costs and adjustment arising from exchange rate variations attributable to fixed assets till assets are put to use, are capitalized.

The cost comprises the purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for its intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.

Subsequent expenditures relating to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with these will flow to the Group and the cost of the item can be measured reliably.

All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

Property, Plant and Equipment not ready for the intended use on the date of the Balance Sheet are disclosed as "Capital Work in Progress".

Gains or losses arising from derecognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset at the time of disposal and are recognized in the statement of profit and loss when the asset is derecognized.

Depreciation

Depreciation on all Property, Plant and Equipment is provided on straight line method as per the useful life prescribed in schedule II to the Companies Act, 2013.

Depreciation is provided for all Property, Plant and Equipment as per the useful life prescribed in the Schedule II of the Companies Act, 2013 except in respect of following assets, in whose case, life of the assets has been assessed as under, based on technical advice, taking into account the nature of asset, the estimated usage of the asset, the operating conditions of the asset etc.

Type of Asset	Estimated useful life
Plant & Equipment	8-16 Years
Vehicles	8 years

In respect of Property, Plant and Equipment purchased/sold during the year, depreciation is provided on a pro-rata basis from the date on which such asset is ready to use or till the date when asset is sold, as the case may be. Assets costing less than rupees five thousand each are fully depreciated in the year of purchase.

The residual value, useful live and method of depreciation of Property, Plant and Equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

For transition to Ind AS, the Group elected to continue with carrying value of all its Property, plant, equipment and intangible assets recognised as of April 1, 2019 (transition date) measured as per the previous GAAP and use that carrying value as deemed cost as of the transition date.

3.2. Intangible Assets

An intangible asset is recognized, only where it is probable that future economic benefits attributable to the asset will accrue to the enterprise and the cost can be measured reliably.

Intangible assets are stated at cost, less accumulated amortization and impairment losses, if any.

Intangible assets not ready for the intended use on the date of the Balance Sheet are disclosed as intangible assets under development.

Intangible assets are amortized over their estimated useful life on straight line method. The estimated useful life of the intangible assets and the amortization period are reviewed at the end of each financial year and the amortization method is revised to reflect the changed pattern.

In respect of intangible assets acquired / purchased during the year, amortization is provided on a pro-rata basis from the date on which such asset is ready to use.

3.3. Inventories

Inventories which comprise of project materials, stores, spares and consumables are valued at the lower of cost and net realizable value. Cost of inventories comprises all the costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location. In determining the cost, weighted average cost method is used. Net realizable value is the estimated selling price less estimated cost necessary to make the sale.

Work in progress represents contract costs incurred till the Balance Sheet date relating to activities on the contract which are not completed. Such costs incurred are recognized as revenue when it is probable that they will be recovered from the customers.

3.4. 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.

a) Financial assets

i. Initial recognition and measurement of financial assets

All financial assets are recognized initially at fair value. Transaction costs that are directly attributable to the acquisition offinancial assets that are not at fair value through profit or loss are added to the fair value on initial recognition.

ii. Subsequent measurement of financial assets

For purposes of subsequent measurement, financial assets are classified in below categories:

- Financial assets at amortized cost

- Financial assets at fair value through profit or loss

- Financial assets at fair value through other comprehensive income

• Financial assets at amortized cost

A financial asset is measured at amortized cost if it is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.

• Debt instruments at amortized cost

A ‘debt instrument is measured at the amortized cost if both the above conditions mentioned in "Financial assets at amortized cost" are met. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the profit or loss. The losses arising from impairment are recognized in the profit or loss.

• Financial assets at fair value through other comprehensive income:

Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains / (losses). Interest income from these financial assets is included in other income using the effective interest rate method. Foreign exchange gains and losses are presented in other gains and losses and impairment expenses in other expenses.

• Financial assets at fair value through profit or loss:

Financial assets at fair value through profit or loss are carried in the balance sheet at fair value with net changes in fair value recognised in the statement of profit and loss.

In addition, the Group may elect to designate a debt instrument, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as ‘accounting mismatch). The Group has not designated any debt instrument as at FVTPL.

iii. De-recognition of financial assets

The Group derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retain substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

b) Financial Liabilities

i. Initial recognition and measurement of financial liabilities

The Groups financial liabilities mainly include trade and other payables, loans and borrowings including bank overdrafts.

All financial liabilities are recognized initially at fair value in case of loan and borrowings and payable, fair value is reduced by directly attributable transaction costs.

ii. Subsequent measurement of financial liabilities

Financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial liabilities (other than financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial liabilities, as appropriate, on initial recognition. Transaction costs that are directly attributable to the acquisition or issue of financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

iii. Derecognition of financial liabilities

A financial liability (or a part of a financial liability) is derecognized from its balance sheet when the obligation specified in the contract 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 de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amount is recognized in the Consolidated Statement of Profit and Loss.

c) Offsetting of financial instruments

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

3.5. Impairment

• Financial assets other than investments in subsidiaries

The Group recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit or loss.

Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL.

For all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL.

The impairment loss allowance (or reversal) recognized during the period is recognized as income / expense in the statement of profit and loss.

• Financial assets - investments in subsidiaries

The Group assesses at each reporting date whether there is an indication that an asset may be impaired.

If any indication exists the Group estimates the assets recoverable amount based on value in use.

To arrive at the value in use of the investment, the Group has used expected future cash flows of projects in subsidiaries which generally covering period of the concession agreement using long term growth rate applied to future cash flows.

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.

Where the carrying amount of an asset exceeds its value in use amount, the asset is considered impaired and is written down to its recoverable amount. The impairment loss is recognized in statement of profit and loss.

• Non-financial assets - Tangible and intangible assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired.

If any indication exists the Group estimates the assets recoverable amount.

An assets recoverable amount is the higher of an assets net selling price and its value in use.

The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.

Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. The impairment loss is recognized in the statement of profit and loss.

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.

In determining net selling price, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used.

3.6. Fair Value Measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The fair value measurement assumes 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

A fair value measurement of a non-financial asset takes into account a market participants ability to generate economic benefit by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group 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.

All assets and liabilities for which fair value is measured or disclosed in the restated financial statements are categorized within the fair value hierarchy. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels:

Level 1 - inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 - inputs are 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 prices)

Level 3 - inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumption that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

3.7. Revenue Recognition

The Group applied Ind AS 115 for the first time. The nature and effect of the changes as a result of adoption of these new accounting standards are described below.

Ind AS 115 Revenue from Contracts with Customer

Ind AS 115 establishes a five-step model to account for revenue arising from contracts with customers and requires that revenue be recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.

Ind AS 115 requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their customers. The standard also specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. In addition, the standard requires extensive disclosures.

The Group adopted Ind AS 115 using the modified retrospective method of adoption. The adoption of the standard did not have any material impact on these Restated Consolidated Financial statements.

a) Revenue from contracts with customer

Revenue from contracts with customers is recognized when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services. The specific recognition criteria described below must also be met before revenue is recognized. The Group has concluded that it is principal in its revenue arrangements because it typically controls goods or services before transferring them to the customer.

Revenue from construction / project related activity:

When the outcome of a fixed price construction contract cannot be estimated reliably, contract revenue is recognized only to the extent of cost incurred that it is probable will be recoverable.

When the outcome of a fixed price contract is ascertained reliably, contract revenue is recognized by reference to the stage of completion of the contract activity at the end of the reporting period.

The outcome of a fixed price construction contract can be estimated reliably when total contract revenue can be measured reliably, it is probable that economic benefits associated with the contract will flow to the Group, contract costs to complete the contract and stage of contract completion at the end of the reporting period can be measured reliably and contract cost attributable to the contract can be identified and measured reliably.

Percentage of completion is determined by survey of work performed and/or completion of physical proportion of the contract work as the case may be at the end of each year. The effect of a change in the estimate of contract revenue or contract costs, or the effect of a change in the estimate of the outcome of a contract, is accounted for as a change in accounting estimate and the effect of which are recognized in the Statement of Profit and Loss in the period in which the change is made and in subsequent periods.

Contract revenue includes the initial amount agreed in the contract plus any variations in contract work, claims and incentive payments, to the extent that it is probable that they will result in revenue and can be measured reliably.

Contract Balances:

Contract assets

The contract assets represent amount due from customer, relating to the Groups rights to consideration for work executed but not billed at the reporting date. The contract assets are transferred to receivables when the rights become unconditional, that is when invoice is raised on achievement of contractual milestone. This usually occurs when the Group issues an invoice to the customer.

Trade Receivable

A receivable is recognised if an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies of financial instruments - initial recognition and subsequent measurement.

Contract liabilities

The contract liabilities represent amount due to customer, primarily relate invoice raised on customer on achievement of milestone for which revenue to be recognised over the period of time.

Rendering of Services:

Revenue from contracts to provide services (other than those covered under construction contracts referred above) are recognized by reference to the stage of completion of the contract.

b) Other income

Interest income

Interest income is recognized using effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through expected life of the financial asset to the gross carrying amount of the financial asset. When calculating the effective interest rate, the Group estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses.

Dividend income

Dividend income is recognized when the right to receive dividend is established.

3.8. Income tax

Income tax expense comprises current tax, deferred tax and MAT Credit.

Current Tax

Current tax is recognized in profit or loss.

Current tax for current and prior periods is recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

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

Deferred Tax

Deferred tax is recognized in profit or loss.

Deferred tax liabilities are recognized for all taxable temporary differences, except to the extent that the deferred tax liability arises from initial recognition of goodwill; or initial recognition of an asset or liability in a transaction which is not a business combination and at the time of transaction, affects neither accounting profit nor taxable profit or loss.

Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax losses and carry forward of unused tax credits to the extent that it is probable that taxable profit will be available against which those temporary differences, losses and tax credit can be utilized, except when deferred tax asset on deductible temporary differences arise from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit or loss.

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

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

Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

MAT Credit

Deferred tax assets include Minimum Alternative Tax (MAT) paid in accordance with the tax laws in India, which gives rise to future economic benefits in the form of adjustment of future income tax liability. Accordingly, MAT is recognised as deferred tax asset in the balance sheet when the assets can be measured reliably and it is probable that the future economic benefit associated with the asset will be realised.

3.9. Borrowing costs

Borrowing cost includes interest and other costs that Group has incurred in connection with the borrowing of funds.

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset.

All other borrowing costs are expensed in the year they occur.

3.10. Employee Benefits

a) Short Term Employee Benefits

Short-term benefits payable before twelve months after the end of the reporting period in which the employees have rendered service are accounted as expense in statement of profit and loss.

b) Post-Employment Benefits

(i) Defined contribution plan

Contributions to defined contribution plans (provident fund, superannuation and other social security schemes) are recognised as expense when employees have rendered services entitling them to such benefits.

(ii) Defined benefit plan

The Groups net obligation in respect of an approved gratuity plan, which is defined benefit plan, is calculated using the projected unit credit method and the same is carried out by qualified actuary. The current service cost and interest on the net defined benefit liability / (asset) is recognised in the statement of profit and loss. Past service cost are immediately recognised in the statement of profit and loss. Actuarial gains and losses net of deferred taxes arising from experience adjustment and changes in actuarial assumptions are recognised in other comprehensive income in the period in which they arise.

(iii) Termination Benefits

Termination benefits are recognised as an expense when the Group is committed without any possibility of withdrawal of an offer made to either terminate employment before the normal retirement date or as a result of an offer made to encourage voluntary retirement.

3.11. Provisions, Contingent Liabilities and Contingent Assets

a) Provision

A provision is recognised when as a result of a past event, the Group has a present obligation whether legal or constructive that can be estimated reliably and it is probable that an outflow of economic benefits will be required to settle the obligation. If the obligation is expected to be settled more than 12 months after the end of reporting date or has no definite settlement date, the provision is recorded as non-current liabilities after giving effect for time value of money, if material. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost

b) Contingent Liabilities:

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Group does not recognize a contingent liability but discloses its existence in the financial statements.

c) Contingent Assets:

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only be occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. The Group does not recognize a contingent asset.

3.12. Foreign Currency Transactions and Translations

Foreign currency transactions are recorded at exchange rates prevailing on the date of the transaction. The net gain or loss on account of exchange differences arising on settlement of foreign currency transactions are recognised as income or expense of the period in which they arise. Monetary assets and liabilities denominated in foreign currency as at the balance sheet date are translated at the closing rate. The resultant exchange rate differences are recognised in the statement of profit and loss. Non-monetary assets and liabilities are carried at the rates prevailing on the date of transaction.

3.13. Cash and cash equivalent

Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank (including demand deposits) and in hand and short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and 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 or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

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

3.15. Lease

Ministry of Corporate Affairs ("MCA") through Companies (Indian Accounting Standards) Amendment Rules, 2019 and Companies (Indian Accounting Standards) Second Amendment Rules, has notified Ind AS 116 "Leases" which replaces the existing lease standard, Ind AS 17 "Leases", and other interpretations. Ind AS 116 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. Ind AS 116 introduces a single lease accounting model for lessee and requires the lessee to recognize right of use assets (ROU assets) and lease liabilities for all leases with a term of more than twelve months, unless the underlying asset is low value in nature.

Lease agreements where the risks and the rewards incident to ownership of an asset substantially vest with the lessor, are recognized as operating leases.

a. Group as a lessee

Effective April 01, 2019, the Group had adopted Ind AS 116 "Leases" and applied the standard to all lease contracts existing on April 01, 2019 using the Modified Retrospective Approach under which the Lease liabilities are recognized based on incremental borrowing rate on the initial application date i.e., April 01, 2019 and same amount is recognized for ROU assets. The Group had used a single discount rate to a portfolio of leases with similar characteristics. For the purpose of preparing Restated Consolidated Financial Statement, Ind AS 116 has been applied using the modified retrospective method.

For transition, the Group has elected not to apply the requirements of Ind AS 116 to leases which are expiring within 12 months from the date of transition by class of asset and leases for which the underlying asset is of low value on a lease-by-lease basis. The Group recognized the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

The lease liability is initially measured at the present value of the lease payments to be made over the lease term. The lease payments are discounted using the incremental borrowing rate. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest on the lease liability and reduced for the lease payments made and remeasured (with a corresponding adjustment to the related ROU asset) when there is a change in future lease payments in case of renegotiation, changes of an index or rate or in case of reassessment of options.

The ROU asset is initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses. The ROU asset is depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of the ROU asset. The estimated useful lives of the ROU assets are determined on the same basis as those of property and equipment. In addition, the ROU asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

b. Group as lessor

Leases for which the Group is a lessor is classified as finance or operating lease. Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms.

The Group has applied this standard to all lease contracts existing on April 1, 2019 using the modified retrospective approach under which the Right-of-use Asset is recognised at an amount equal to the Lease Liability adjusted for previously recognised prepaid or accrued lease payments. However, and

as per the ICDR guidelines, the Group has restated comparative information for the year ended 31 March 2019 to ensure consistency of presentation, disclosures and accounting policies for all the periods presented in line with that of the latest financial year (incl. the stub period).

Assets given on operating lease are included in Property, Plant and Equipment. Lease income is recognized in the statement of profit and loss on a straight-line basis.

3.16. Segment Reporting

An operating segment is component of the Group that engages in the business activity from which the Group earns revenues and incurs expenses, for which discrete financial information is available and whose operating results are regularly reviewed by the chief operating decision maker, in deciding about resources to be allocated to the segment and assess its performance. The Groups chief operating decision maker is the Chief Executive Officer, Whole time director and Managing Director. There is only one reportable segment in accordance with the requirements of Ind AS-108- "Operating Segments", prescribed under Companies (Indian Accounting Standards) Rules, 2015.

Operating assets and operating liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as un-allocable

3.17. Recent pronouncements

On 24 March 2021, the Ministry of Corporate Affairs ("MCA") through a notification, amended Schedule III of the Companies Act, 2013. The amendments revise Division I, II and III of Schedule III and are applicable from 1 April 2021. There are no such recently issued standards or amendments to the existing standards for which the impact on the restated consolidated financial statements is required to be disclosed.

3.18. Estimation of uncertainties relating to the global health pandemic from COVID-19:

On account of Outbreak of Novel Corona Virus ("COVID-19"), the Government has ordered nationwide lockdown from 25 March 2020 to avoid spreading of virus across the country. To follow direction of Government, the Group has closed down its operation as well as offices w.e.f. 25 March 2020.

The Group is closely monitoring the impact of the pandemic on all aspects of its business, including how it will impact its customers, employees, vendors and business partners. The management has exercised due care , considering internal & external factors and information available to date while concluding on significant accounting judgements and estimates, inter-alia, recoverability of receivables, assessment for impairment of investments, intangible assets, inventory, based on the information available to date, both internal and external, for preparing the Groups financial statements for the year ended 31st March, 2020 and 31st March, 2021 and half year ended 30th September, 2021. The said impact assessment is an ongoing process considering various external factors associated with COVID19. The Group will continue to monitor any material changes to future economic conditions and any significant impact of these changes would be recognized in the financial statements. However, the group is not likely to have any material impact on the overall financial position as on the reporting dates.

Principal components of income and expenditure

Our revenue and expenditure are reported in the following manner:

Income

Total income comprises revenue from operations and other income.

Revenue from operations

Our revenue from operations consists of sale of products, contract revenues, sale of services and other operating revenue.

Other Income

Our other income primarily consists of interest income, interest income on income tax refund, miscellaneous income, balances written back, foreign exchange gain, profit on sale of assets, liquidated damages charges and gain on fair valuation of investments.

Expenses

Our expenses primarily comprise of the following:

• Cost of materials consumed, which primarily consists of raw material, project materials and packing material

• Changes in inventories of finished goods, stock-in-trade and work in progress, which primarily consists of finished goods, work-in-progress and traded goods

• Project expenses, which primarily consists of stores, tools and spares, contractor and sub-contractor charges, power, fuel and electricity, equipment / vehicle hiring charges, rent, rates and taxes and professional and consultancy expenses

• Purchase of stock in trade and trading materials

• Employee benefits expense, which primarily consists of salaries, wages and bonus, contributions to provident fund and other fund, compensated absences and staff welfare expenses.

• Finance costs, which primarily consists of interest on borrowings, interest expenses on lease and other borrowing costs.

• Depreciation and amortization expenses, which primarily consists of property, plant and equipment, intangible assets and right-of-use assets.

• Other expenses, which primarily consists of legal and professional charges, travelling and conveyance expenses, insurance premium, rent, rates and taxes, bad debts and advances written off and miscellaneous expenses.

Tax Expenses

Elements of our tax expenses are as follows:

• Current Tax: Our current tax expenses primarily consist of income tax paid on the profits and other income generated by us during a financial year / period. Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off;

• Deferred Tax: Our deferred tax expenses consist of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes.

Other comprehensive income

Other comprehensive income consists of all the items of income and expense (including reclassification adjustments) that are not recognised in profit or loss.

Total Comprehensive Income for the year

Total comprehensive income for the year consists of profit for the year and other comprehensive income.

Our results of operations

The following table sets forth our revenue from operations and other income for the six month period ended September 30, 2021, Fiscals 2021, 2020 and 2019, in absolute terms and expressed as a percentage of our total income for such periods.

	(Rs. in million)
Particulars	6 month period ended September 30, 2021		Fiscal 2021		Fiscal 2020		Fiscal 2019
	Amount (Rs. mn)	as % of Total Income	Amount (Rs. mn)	as % of Total Income	Amount (Rs. mn)	as % of Total Income	Amount (Rs. mn)	as % of Total Income
Income
Revenue from operations	4,792.70	99.63%	9,909.31	99.49%	7,782.19	99.17%	5,607.33	99.63%
Other income	17.87	0.37%	50.40	0.51%	65.02	0.83%	20.88	0.37%
Total Income	4,810.57	100.00%	9,959.71	100.00%	7,847.21	100.00%	5,628.21	100.00%
Expenses
Cost of Materials Consumed	160.97	3.35%	891.15	8.95%	927.46	11.82%	293.02	5.21%
Changes in Inventories of Finished Goods, Stock-InTrade and Work in Progress	(160.07)	(3.33%)	(189.20)	(1.90%)	14.77	0.19%	(214.64)	(3.81%)
Project Expenses	3,495.96	72.67%	7,225.87	72.55%	5,196.40	66.22%	4,185.78	74.37%
Purchase of Stock in Trade & Trading Materials	516.31	10.73%	348.39	3.50%	31.92	0.41%	42.97	0.76%
Employee benefits expense	261.88	5.44%	510.43	5.12%	484.81	6.18%	392.93	6.98%
Finance Costs	161.05	3.35%	408.00	4.10%	325.81	4.15%	289.08	5.14%
Depreciation and amortization expenses	76.35	1.59%	150.84	1.51%	144.81	1.85%	130.08	2.31%
Other expenses	75.99	1.58%	216.61	2.17%	212.82	2.71%	186.62	3.32%
Total Expenses	4,588.44	95.38%	9,562.09	96.01%	7,338.80	93.52%	5,305.84	94.27%
Profit/(Loss) before share of profit / (loss) of associate, exceptional items and tax	222.13	4.62%	397.62	3.99%	508.41	6.48%	322.37	5.73%
Total Share in Profit / (Loss) of Associate Concerns	(0.16)	(0.00%)	(0.25)	(0.00%)	(0.34)	(0.00%)	(0.46)	(0.01%)
Profit/(Loss) before exceptional items and tax	221.97	4.61%	397.37	3.99%	508.07	6.47%	321.91	5.72%
Profit/(Loss) before tax	221.97	4.61%	397.37	3.99%	508.07	6.47%	321.91	5.72%

 

Particulars	6 month period ended September 30, 2021		Fiscal 2021		Fiscal 2020		Fiscal 2019
	Amou nt (Rs. mn)	as % of Total Income	Amou nt (Rs. mn)	as % of Total Income	Amou nt (Rs. mn)	as % of Total Income	Amou nt (Rs. mn)	as % of Total Income
Total tax items	67.21	1.40%	111.82	1.12%	158.58	2.02%	77.20	1.37%
Profit/(Loss) for the period / year	154.76	3.22%	285.55	2.87%	349.49	4.45%	244.71	4.35%
Other Comprehensive Income
Items that will not be reclassified to Profit or Loss
Re-measurement gains/ (losses) on post employment benefit plans	(0.72)	(0.01%)	0.88	0.01%	(2.36)	(0.03%)	(1.80)	(0.03%)
Gain / (Loss) on fair valuation of investment in equity shares	0.00	0.00%	0.01	0.00%	(0.02)	(0.00%)	(0.02)	(0.00%)
Tax impacts on the above adjustments in OCI	0.55	0.01%	(0.51)	(0.01%)	0.69	0.01%	0.62	0.01%
Other Comprehensive Income/ (Loss) for the period / year	(0.17)	(0.00%)	0.38	0.00%	(1.68)	(0.02%)	(1.20)	(0.02%)
Total Comprehensive Income/ (Loss) for the period / year	154.59	3.21%	285.93	2.87%	347.81	4.43%	243.51	4.33%

Six month period ended September 30, 2021

Income

Our total income was Rs.4,810.57 million in the six month period ended September 30, 2021, which primarily included revenue from operations of Rs.4,792.70 million and other income of Rs.17.87 million.

Revenue from operations

Our revenue from operations was Rs.4,792.70 million in the six months ended September 30, 2021, which primarily included revenue from sale of products of Rs.674.83 million, revenue from contract revenues of Rs.3,330.11 million, revenue from sale of services of Rs.570.29 million and revenue from other operating revenue of Rs.217.47 million.

Other Income

Our other income was Rs.17.87 million in the six month period ended September 30, 2021, which primarily included interest income of Rs.9.73 million, interest income on income tax refund of Rs.1.52 million, miscellaneous income of Rs.2.81 million, sundry balances written back of Rs.0.04 million and foreign exchange gain of Rs.3.77 million.

Expenses

Our total expenses were Rs.4,588.44 million, representing 95.38% of our Total Income for the six months ended September 30, 2021 which primarily included cost of materials consumed, changes in inventories of finished goods, stock-in-trade and work in progress, project expenses, purchase of stock in trade and trading materials, employee benefits expense, finance costs, depreciation and amortization expenses and other expenses.

Cost of Materials Consumed

Our cost of materials consumed was Rs.160.97 million, representing 3.35% of our Total Income for the six months ended September 30, 2021 which primarily included raw materials costs, project materials and packing materials.

Changes in Inventories of Finished Goods and Work-In-Progress

Our change in inventories of finished goods, toolings and work-in-progress were Rs.(160.07) million for the six months ended September 30, 2021.

Project expenses

Our project expenses was Rs.3,495.96 million, representing 72.67% of our Total Income for the six months ended September 30, 2021 which primarily included contractor and sub-contractor charges aggregating to Rs.2,919.18 million, stores, tools and spares aggregating to ^ 183.53 million, power, fuel and electricity aggregating to Rs.103.12 million, equipment / vehicle hiring charges aggregating to Rs.107.14 million, rent, rates and taxes aggregating to Rs.24.89 million, professional and consultancy expenses aggregating to Rs.48.74 million, site expenses aggregating to Rs.37.99 million and freight and forwarding expenses Rs.49.25 million.

Purchase of stock in trade and trading materials

Our purchase of stock in trade and trading materials was Rs.516.31 million, representing 10.73% of our Total Income for the six months ended September 30, 2021.

Employee benefits expense

Our employee benefits expenses was Rs.261.88 million, representing 5.44% of our Total Income for the six months ended September 30, 2021 which primarily included salaries, wages and bonus aggregating to 1244.20 million, contributions to provident fund and other fund aggregating to Rs.13.32 million and staff welfare expenses aggregating to Rs.4.31 million.

Finance costs

Our finance costs was Rs.161.05 million, representing 3.35% of our Total Income for the six months ended September 30, 2021 which primarily included interest on borrowings aggregating to Rs.143.83 million and other borrowing costs aggregating to Rs.16.90 million.

Depreciation and Amortization Expense

Our depreciation and amortization expense was Rs.76.35 million representing 1.59% of our Total Income for the six months ended September 30, 2021, which primarily included depreciation and amortization of plant and equipment of Rs.66.08 million.

Other Expenses

Our other expenses was Rs.75.99 million representing 1.58% of our Total Income for the six months ended September 30, 2021, which primarily included expenses such as legal and professional charges aggregating to Rs.17.36 million, travelling and conveyance expenses aggregating to Rs.14.43 million, insurance premium aggregating to Rs.5.62 million, rent, rates and taxes aggregating to Rs.4.55 million and miscellaneous expenses aggregating to Rs.6.15 million.

Tax Expense

Our tax expense was Rs.67.21 million representing 1.40% of our Total Income for the six months ended September 30, 2021, which primarily included current tax of Rs.78.57 million and deferred tax charge of (11.36) million.

Profit for the Six Months Ended September 30, 2021

As a result of the foregoing factors, our profit after tax for the period was Rs.154.76 million representing 3.22% of our Total Income for the six months ended September 30, 2021.

Fiscal 2021 compared to Fiscal 2020

Total Income

Our total income increased by 26.92% to Rs.9,959.71 million in Fiscal 2021 from Rs.7,847.21 million in Fiscal 2020, primarily due to an increase in our revenue from operations which was partially offset by decrease in other income as discussed below:

Revenue from operations:

Our revenue from operations increased by 27.33% to Rs. 9,909.31 million in Fiscal 2021 from Rs. 7,782.19 million in Fiscal 2020, primarily as a result of 135.25% increase in revenue from sale of products to Rs. 605.88 million in Fiscal 2021 from Rs. 257.55 million in Fiscal 2020, 21.79% increase in contract revenue to Rs. 8,349.06 million in Fiscal 2021 from Rs. 6,855.37 million in Fiscal 2020, 79.42% increase in revenue from sale of services to Rs. 571.62 million in Fiscal 2021 from Rs. 318.60 million in Fiscal 2020 and 9.15% increase in other operating revenue to Rs. 382.75 million in Fiscal 2021 from Rs. 350.67 million in Fiscal 2020.

Other Income

Our other income decreased by 22.48% to Rs.50.40 million in Fiscal 2021 from Rs.65.02 million in Fiscal 2020, primarily as a result of 70.84% decrease in sundry balances written back to Rs. 6.32 million in Fiscal 2021 from Rs. 21.67 million in Fiscal 2020 and reduction of foreign exchange gain from Rs. 8.56 million in Fiscal 2020 to NIL in Fiscal 2021 this was partially offset by 193.26% increase in profit on sale of assets to Rs. 5.22 million in Fiscal 2021 from Rs. 1.78 million in Fiscal 2020 and 19.41% increase in interest income to Rs. 32.12 million in Fiscal 2021 from Rs. 26.90 million in Fiscal 2020.

Expenses

Our total expenses, which primarily included which primarily included cost of materials consumed, changes in inventories of finished goods, stock-in-trade and work in progress, project expenses, purchase of stock in trade and trading materials, employee benefits expense, finance costs, depreciation and amortization expenses and other expenses increased by 30.30% to Rs. 9,562.09 million for Fiscal 2021 from Rs.7,338.80 million for Fiscal 2020.

Cost of materials consumed

Our cost of material consumed decreased by 3.91% to Rs.891.15 million in Fiscal 2021 from Rs.927.46 million in Fiscal 2020, primarily as a result of 5.24% decrease in cost of project materials to Rs. 804.24 million in Fiscal 2021 from Rs. 848.69 million in Fiscal 2020 this was partially offset by 9.79% increase in cost of raw materials to Rs. 85.64 million in Fiscal 2021 from Rs. 78.00 million in Fiscal 2020 and 64.94% increase in cost of packing material to Rs. 1.27 million in Fiscal 2021 from Rs. 0.77 million in Fiscal 2020.

Changes in inventories of finished goods, stock-in-trade and work in progress

Our changes in inventories of finished goods, stock-in-trade and work in progress decreased to Rs.(189.20) million in Fiscal 2021 from Rs.14.77 million in Fiscal 2020, primarily as a result of increase in closing inventory of work in progress and traded goods which was partially offset by decrease in closing inventory of finished goods.

Project expenses

Our project expenses increased by 39.06% to Rs.7,225.87 million in Fiscal 2021 from Rs.5,196.40 million in Fiscal 2020, primarily as a result of 90.44% increase in stores, tools and spares to Rs. 657.97 million in Fiscal 2021 from Rs. 345.50 million in Fiscal 2020, 34.72% increase in contractor and sub -contractor charges to Rs. 5,738.64 million in Fiscal 2021 from Rs. 4,259.57 million in Fiscal 2020, 75.98% increase in power, fuel and electricity costs to Rs. 177.05 million in Fiscal 2021 from Rs. 100.61 million in Fiscal 2020, 45.29% increase in equipment/vehicle hiring charges to Rs. 288.95 million in Fiscal 2021 from Rs. 198.88 million in Fiscal 2020, 89.35% increase in site expenses to Rs. 88.18 million in Fiscal 2021 from Rs. 46.57 million in Fiscal 2020, 33.13% increase in labour work compensation tax to Rs. 35.60 million in Fiscal 2021 from Rs. 26.74 million in Fiscal 2020 and 17.96% increase in freight and forwarding expenses to Rs. 60.76 million in Fiscal 2021 from Rs. 51.51 million in Fiscal 2020. This was partially offset by 19.88% decrease in travelling expenses to Rs. 11.65 million in Fiscal 2021 from Rs. 14.54 million

in Fiscal 2020 and 1.42% decrease in professional and consultancy expenses to Rs. 111.64 million in Fiscal 2021 from Rs. 113.25 million in Fiscal 2020.

Purchase of stock in trade and trading materials

Our purchase of stock in trade and trading materials increased by 991.47% to Rs.348.39 million in Fiscal 2021 from ^31.92 million in Fiscal 2020, primarily as a result of increase in sale of traded products to Rs. 417.34 million in Fiscal 2021 from Rs. 58.35 million in Fiscal 2020.

Employee benefits expense

Our employee benefit expense increased by 5.28% to Rs.510.43 million in Fiscal 2021 from Rs.484.81 million in Fiscal 2020, primarily as a result of 5.65% increase in salaries, wages and bonus to Rs. 469.17 million in Fiscal 2021 from Rs. 444.10 million in Fiscal 2020 and 5.53% increase in staff welfare expenses to Rs. 13.56 million in Fiscal 2021 from Rs. 12.85 million in Fiscal 2020.

Finance costs

Our finance costs increased by 25.23% to Rs.408.00 million in Fiscal 2021 from Rs.325.81 million in Fiscal 2020, primarily as a result of 94.69% increase in interest to others Rs. 209.84 million in Fiscal 2021 from Rs. 107.78 million in Fiscal 2020. This was partially offset by decrease in other borrowing costs by 46.80% to Rs. 21.39 million in Fiscal 2021 from Rs. 40.21 million in Fiscal 2020.

Depreciation and amortization expenses

Our depreciation and amortization expenses increased by 4.16% to Rs.150.84 million in Fiscal 2021 from Rs.144.81 million in Fiscal 2020, primarily as a result of purchase of fixed assets during Fiscal 2021 of Rs.86.04 million.

Other expenses

Our other expenses increased by 1.78% to Rs.216.61 million in Fiscal 2021 from Rs.212.82 million in Fiscal 2020, primarily as a result of 46.58% increase in legal and professional charges aggregating to Rs.61.49 million in Fiscal 2021 from Rs. 41.95 million in Fiscal 2020, 29.85% increase in bad debts and advances written off to Rs.30.28 million in Fiscal 2021 from Rs.23.32 million in Fiscal 2020 and increase in net loss on account of foreign exchange fluctuations to Rs.6.97 million in Fiscal 2021 from Rs.0.04 million in Fiscal 2020. This was partially offset by decrease in insurance premium by 33.36% to Rs. 16.74 million in Fiscal 2021 from Rs. 25.12 million in Fiscal 2020, decrease in travelling and conveyance expenses by 29.74% to Rs. 19.09 million in Fiscal 2021 from Rs. 27.17 million in Fiscal 2020, decrease in miscellaneous expenses by 19.17% to Rs. 12.48 million in Fiscal 2021 from Rs. 15.44 million in Fiscal 2020 and decrease in donation and CSR expenditure to Rs. 7.13 million in Fiscal 2021 from Rs. 23.77 million in Fiscal 2020.

Profit before tax:

As a result of the factors outlined above and on account of share in profit/loss of associate concerns, our profit before tax decreased by 21.79% to Rs.397.37 million in Fiscal 2021 from Rs.508.07 million in Fiscal 2020.

Tax expense

• Current tax: Our current tax decreased by 26.44% to Rs.9.58 million in Fiscal 2021 from Rs.13.03 million in Fiscal 2020. This decrease was primarily as a result of decrease in profit before tax.

• Deferred tax: Our deferred tax expenses was Rs.102.24 million in Fiscal 2021 as compared to a deferred tax expenses of Rs.145.55 million in Fiscal 2020. This decrease was primarily as a result of absorption of carry forward losses.

Profit for the year

Due to the factors mentioned above, our profit for the year decreased by 18.3% to Rs.285.55 million in Fiscal 2021 from Rs.349.49 million in Fiscal 2020.

Fiscal 2020 compared to Fiscal 2019

Total Income

Our total income increased by 39.43% to Rs.7,847.21 million in Fiscal 2020 from Rs.5,628.21 million in Fiscal 2019, primarily due to a decrease in our revenue from operations and other income as discussed below:

Revenue from operations:

Our revenue from operations increased by 38.79% to Rs.7,782.19 million in Fiscal 2020 from Rs.5,607.33 million in Fiscal 2019, primarily as a result of 45.27% increase in contract revenue to Rs.6,855.37 million in Fiscal 2020 from Rs.4,719.04 million in Fiscal 2019, 52.36% increase in other operating revenue to Rs.350.67 million in Fiscal 2020 from Rs.230.16 million in Fiscal 2019. This was partially offset by 5.52% decrease in revenue from sale of products to Rs.257.55 million in Fiscal 2020 from Rs.272.59 million in Fiscal 2019 and 17.36% decrease in revenue from sale of services to Rs.318.60 million in Fiscal 2020 from Rs.385.54 million in Fiscal 2019.

Other Income

Our other income increased by 211.44% to Rs.65.02 million in Fiscal 2020 from Rs.20.88 million in Fiscal 2019, primarily as a result of 154.49% increase in increase in interest income to Rs. 26.90 million in Fiscal 2020 from Rs. 10.57 million in Fiscal 2019, 116.91% increase in miscellaneous income to Rs. 6.03 million in Fiscal 2020 from Rs. 2.78 million in Fiscal 2019, 83.30% increase in foreign exchange gain to Rs. 8.56 million in Fiscal 2020 from Rs. 4.67 million in Fiscal 2019 and increase in sundry balances written back to Rs. 21.67 million in Fiscal 2020 from Rs. 1.39 million in Fiscal 2019.

Expenses

Our total expenses, which primarily included which primarily included cost of materials consumed, changes in inventories of finished goods, stock-in-trade and work in progress, project expenses, purchase of stock in trade and trading materials, employee benefits expense, finance costs, depreciation and amortization expenses and other expenses increased by 38.32% to Rs. 7,338.80 million for Fiscal 2020 from Rs. 5,305.84 million for Fiscal 2019.

Cost of materials consumed

Our cost of material consumed increased by 216.52% to Rs.927.46 million in Fiscal 2020 from Rs.293.02 million in Fiscal 2019, primarily as a result of 284.04% increase in cost of project materials to Rs.848.69 million in Fiscal 2020 from Rs.220.99 million in Fiscal 2019 and 9.87% increase in cost of raw materials to Rs.78.00 million in Fiscal 2020 from Rs.70.99 million in Fiscal 2019.

Changes in inventories of finished goods, stock-in-trade and work in progress

Our expense towards changes in inventories of finished goods, stock-in-trade and work in progress changed to Rs.14.77 million in Fiscal 2020 from Rs.(214.64) million in Fiscal 2019, primarily as a result of decrease in closing inventory of work in progress which was partially offset by increase in closing inventory of finished goods and traded goods.

Project expenses

Our project expenses increased by 24.14% to Rs. 5,196.40 million in Fiscal 2020 from Rs.4,185.78 million in Fiscal 2019, primarily as a result of 29.78% increase in contractor and sub-contractor charges to Rs. 4,259.57 million in Fiscal 2020 from Rs. 3,282.24 million in Fiscal 2019, 51.25% increase in equipment/vehicle hiring charges to Rs. 198.88 million in Fiscal 2020 from Rs. 131.49 million in Fiscal 2019, 22.68% increase in power, fuel and electricity costs to Rs. 100.61 million in Fiscal 2020 from Rs. 82.01 million in Fiscal 2019, 29.87% increase in site expenses to Rs. 46.57 million in Fiscal 2020 from Rs. 35.86 million in Fiscal 2019. This was partially offset by 12.26% decrease in stores, tools and spares to Rs. 345.50 million in Fiscal 2020 from Rs. 393.77 million in Fiscal 2019, 25.93% decrease in travelling expenses to Rs. 14.54 million in Fiscal 2020 from Rs. 19.63 million in Fiscal 2019 and slight decrease in freight and forwarding expenses, and professional and consultancy expenses.

Purchase of stock in trade and trading materials

Our purchase of stock in trade and trading materials decreased by 25.72% to Rs.31.92 million in Fiscal 2020 from Rs.42.97 million in Fiscal 2019, primarily as a result of decrease in sale of traded products to Rs. 58.35 million in Fiscal 2020 from 187.81 million in Fiscal 2019.

Employee benefits expense

Our employee benefit expense increased by 23.38% to t484.81 million in Fiscal 2020 from t392.93 million in Fiscal 2019, primarily as a result of 22.09% increase in salaries, wages and bonus to Rs.444.10 million in Fiscal 2020 from Rs.363.74 million in Fiscal 2019, 47.56% increase in contribution to provident fund and other fund to Rs.27.80 million in Fiscal 2020 from Rs.18.84 million in Fiscal 2019 and 24.39% increase in staff welfare expenses to Rs.12.85 million in Fiscal 2020 from Rs.10.33 million in Fiscal 2019.

Finance costs

Our finance costs increased by 12.71% to t325.81 million in Fiscal 2020 from t289.08 million in Fiscal 2019, primarily as a result of 184.83% increase in interest to others to Rs.107.78 million in Fiscal 2020 from Rs.37.84 million in Fiscal 2019. This was partially offset by decrease in interest to banks by 15.19% to Rs.177.05 million in Fiscal 2020 from Rs.208.75 million in Fiscal 2019 and 4.58% decrease in other borrowing costs to Rs.40.21 million in Fiscal 2020 from Rs.42.14 million in Fiscal 2019.

Depreciation and amortization expenses

Our depreciation and amortization expenses increased by 11.33% to t144.81 million in Fiscal 2020 from t130.08 million in Fiscal 2019, primarily as a result of purchase of fixed assets during Fiscal 2020 of t148.34 million.

Other expenses

Our other expenses increased by 14.04% to t212.82 million in Fiscal 2020 from t186.62 million in Fiscal 2019, primarily as a result of increase in insurance premium by 67.36% to Rs.25.12 million in Fiscal 2020 from Rs.15.01 million in Fiscal 2019, 22.45% increase in legal and professional charges aggregating to Rs.41.95 million in Fiscal 2020 from t34.26 million in Fiscal 2019, increase in travelling and conveyance expenses by 12.51% to Rs.27.17 million in Fiscal 2020 from Rs.24.15 million in Fiscal 2019, increase in miscellaneous expenses by 64.78% to Rs.15.44 million in Fiscal 2020 from Rs.9.37 million in Fiscal 2019 and increase in donation and CSR expenditure to Rs.23.77 million in Fiscal 2020 from Rs.0.23 million in Fiscal 2019. This was partially offset by 54.18% decrease in bad debts and advances written off to t23.32 million in Fiscal 2020 from t50.90 million in Fiscal 2019.

Profit before tax:

As a result of the factors outlined above and on account of share in profit/loss of associate concerns, our profit before tax increase by 57.83% to t508.07 million in Fiscal 2020 from t321.91 million in Fiscal 2019.

Tax expense

• Current tax: Our current tax decreased by 19.03% to t13.03 million in Fiscal 2020 from t16.09 million in Fiscal 2019. This decrease was primarily due to change in adoption of new income tax regime adopted by Corrtech Energy Limited.

• Deferred tax: Our deferred tax expenses was t145.55 million in Fiscal 2020 as compared to a deferred tax expense of t80.65 million in Fiscal 2019. This increase was primarily due to absorption of carry forward losses.

• Short provisions of income tax of earlier years provided for: t19.54 million.

Profit for the year

Due to the factors mentioned above, our profit for the year increased by 42.82% to t349.49 million in Fiscal 2020 from t244.71 million in Fiscal 2019.

Liquidity and Capital Resources

Historically, we have been able to finance our capital requirements and the expansion of our business and operations through a combination of funds generated from our operations, equity infusions from shareholders and debt financing, and we expect to continue to do so. Our primary capital requirements are towards working capital for our operations and capital expenditure. We evaluate our funding requirements regularly in light of our cash flow from our operating activities and market conditions. To the extent we do not generate sufficient cash flow from operating activities, we may rely on debt financing activities, subject to market conditions.

For the six months ended September 30, 2021 and Fiscals 2021, 2020 and 2019, we had cash and cash equivalents (comprising of cash on hand and balances with banks) of Rs.111.10 million, Rs.187.31 million, Rs.79.08 million and Rs.24.02 million, respectively as per our Restated Financial Statements.

Cash Flows Based on Our Restated Financial Statements

The table below summarizes the statement of cash flows, as per our restated consolidated cash flow statements, for the periods indicated:

				(Rs. in millions)
	6 month period ended September 30, 2021	Fiscal 2021	Fiscal 2020	Fiscal 2019
Net cash flow from operating activities	157.85	606.57	847.77	514.51
Net cash flow from investing activities	(1.00)	141.54	(492.94)	(183.82)
Net cash flow from financing activities	(233.06)	(639.89)	(299.76)	(437.51)
Cash and cash equivalents at the end of the year/ period	111.10	187.31	79.08	24.02

Net cash flow from operating activities

Our net cash generated from operating activities was Rs.157.85 million during the six months ended September 30, 2021. Restated profit before tax for the period was Rs. 221.97 million and our operating profit before working capital changes for the period was Rs. 452.67 million primarily as a result of adjustments made for depreciation and amortization, interest and financial charges, interest income and bad debts written off. Working capital adjustments to our operating profit before working capital changes for the period included decrease in trade receivables, loans and advances and other assets by Rs. 226.97 million, increase in inventory by Rs. 298.05 million, decrease in trade payables, other liabilities and provisions by Rs. 122.83 million, and income tax paid (net of refunds) of Rs. 100.91 million.

Our net cash generated from operating activities was Rs.606.57 million for Fiscal 2021. Restated profit before tax for the period was Rs. 397.37 million and our operating profit before working capital changes for the period was Rs. 955.81 million primarily as a result of adjustments made for depreciation and amortization, interest and financial charges, interest income and bad debts written off. Working capital adjustments to our operating profit before working capital changes for the period included increase in trade receivables, loans and advances and other assets by Rs. 328.39 million, increase in inventory by Rs. 198.89 million, increase in trade payables, other liabilities and provisions by Rs. 182.52 million, and income tax paid (net of refunds) of Rs. 4.48 million.

Our net cash generated from operating activities was Rs.847.77 million for Fiscal 2020. Restated profit before tax for the period was Rs. 508.07 million and our operating profit before working capital changes for the period was Rs. 975.80 million primarily as a result of adjustments made for depreciation and amortization, interest and financial charges, interest income and bad debts written off. Working capital adjustments to our operating profit before working capital changes for the period included increase in trade receivables, loans and advances and other assets by Rs. 578.87 million, increase in inventory by Rs. 140.49 million, increase in trade payables, other liabilities and provisions by Rs. 671.73 million, and income tax paid (net of refunds) of Rs. 80.40 million.

Our net cash generated from operating activities was Rs.514.51 million for Fiscal 2019. Restated profit before tax for the period was Rs. 321.91 million and our operating profit before working capital changes for the period was Rs. 752.71 million primarily as a result of adjustments made for depreciation and amortization, interest and financial charges, interest income and bad debts written off. Working capital adjustments to our operating profit before working capital changes for the period included increase in trade receivables, loans and advances and other assets by Rs. 232.45 million, increase in inventory by Rs. 219.22 million, increase in trade payables, other liabilities and provisions by Rs. 185.56 million, and income tax refund of Rs. 27.91 million.

Net cash flow from investing activities

Our net cash used in investing activities was Rs.1.00 million during the six months ended September 30, 2021 on account of purchase of fixed assets aggregating to Rs. 16.25 million which was partially offset by proceeds from sale of fixed assets of Rs. 0.30 million, interest received aggregating to Rs. 9.73 million and proceeds from other bank balances aggregating to Rs. 5.22 million.

Our net cash generated from investing activities was Rs. 141.54 million for Fiscal 2021 on account of purchase of fixed assets aggregating to Rs. 86.04 million which was partially offset by proceeds from sale of fixed assets of Rs. 11.57 million, interest received aggregating to Rs. 32.12 million, proceeds from other bank balances aggregating to Rs. 181.13 million and proceeds from investments aggregating to Rs. 2.76 million.

Our net cash used in investing activities was Rs.492.94 million for Fiscal 2020 on account of purchase of fixed assets aggregating to Rs. 148.34 million, investment in other bank balances aggregating to Rs. 375.77 million and proceeds towards investments aggregating to Rs. 3.08 million which was partially offset by proceeds from sale of fixed assets of Rs. 7.35 million and interest received aggregating to Rs. 26.90 million.

Our net cash used in investing activities was Rs.183.82 million for Fiscal 2019 on account of purchase of fixed assets aggregating to Rs. 138.35 million, investment in other bank balances aggregating to Rs. 55.71 million and proceeds towards investments aggregating to Rs. 0.10 million which was partially offset by proceeds from sale of fixed assets of Rs. 0.33 million and interest received aggregating to Rs. 10.01 million.

Net cash flow from financing activities

Our net cash used in financing activities was Rs.233.06 million during the six months ended September 30, 2021, primarily on account of repayment of borrowings (net) of Rs. 69.66 million, repayment of leased obligations of Rs. 2.35 million and interest and finance charges of Rs.161.05 million.

Our net cash used in financing activities was Rs.639.89 million for Fiscal 2021, primarily on account of repayment of borrowings (net) of Rs.226.63 million, repayment of leased obligations of Rs.5.26 million and interest and finance charges of Rs. 408.00 million.

Our net cash used in financing activities was Rs.299.76 million for Fiscal 2020, primarily on account of interest and finance charges of Rs. 325.81 million which was partially offset by increase in borrowings (net) of Rs. 15.58 million and incurrence of leased obligations of Rs. 10.47 million.

Our net cash used in financing activities was Rs.437.51 million for Fiscal 2019, primarily on account of repayment of borrowings (net) of Rs. 141.22 million and interest and finance charges of Rs. 296.29 million.

Capital expenditure

For the six month period ended September 30, 2021, Fiscal 2021, Fiscal 2020 and Fiscal 2019, our capital expenditure was Rs.16.25 million, Rs.86.04 million, Rs.148.34 million and Rs.138.35 million, respectively. This primarily consists of investments in plant and equipment and vehicles.

Indebtedness

Our Company avails credit facilities in the ordinary course of our business. Pursuant to our Articles of Association, subject to applicable laws, our Board is authorised to borrow sums of money for the purpose of our Company, with or without security, upon such terms and conditions as the Board may think fit which, together with the monies borrowed by the Company (apart from the temporary loans obtained or to be obtained by the Companys banker in the ordinary course of business) shall not exceed up to Rs.10,000 million exceeding the aggregate of paid- up share capital and free reserves of our Company.

As of September 30, 2021, we had non-current borrowings (including current maturities & lease liabilities) of Rs.1,276.83 million, current borrowings (including lease liabilities) of Rs.503.98 million and total debt (net off free cash and cash equivalent) is of Rs.1,664.01 million, with a net debt to equity ratio of 1.10 as per our Restated Financial Statements. Some of our financing agreements include various conditions and covenants that require us to obtain lender consents prior to carrying out certain activities and entering into certain transactions. We cannot assure you that we will be able to obtain these consents and any failure to obtain these consents could have significant adverse consequences for our business.

Related Party Transactions

We enter into various transactions with related parties. See "Financial Statements- Related Party Disclosures as per Indian Accounting Standards 24 Note 42" on page 279.

Contingent Liabilities

As on September 30, 2021, our contingent liabilities are set out below:

	(Rs. in million)
Particulars	Brief description of nature and obligations as on September 30, 2021
a) Service tax and GST matters*	198.56
b) Sales tax and VAT matters*	0.60
c) Income tax matters*	67.06
d) MSMED Act, 2006*	-
e) Bank guarantees (net of margin)	1,044.91
Total	1,311.13

*As the matters covered from (a) to (d) are under dispute with respective authorities, the actual outflow would be determined based on the settlement of such dispute.

Our contingent liabilities may become actual liabilities. In the event that any of our contingent liabilities become non-contingent, our business, financial condition and results of operations may be adversely affected. Furthermore, there can be no assurance that we will not incur similar or increased levels of contingent liabilities in the current fiscal year or in the future. For further details, see "Risk Factors" and "Outstanding Litigation and Material Developments beginning on pages 32 and 332.

Capital and other commitments

As on September 30, 2021, there were no Capital and other commitments.

Off balance sheet arrangements

As on September 30, 2021, our Company does not have any off balance sheet arrangements, derivative instruments or other relationships with any entities that would have been established for the purposes of facilitating off balance sheet arrangements.

Quantitative and Qualitative Disclosures about

Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of the following types of risk: interest rate risk, foreign currency risk and other price risk, such as equity price risk and commodity risk.

Credit Risk

We are subject to the risk that our counterparties under various financial or customer agreements will not meet their obligations. If our customers do not pay us promptly, or at all, it may affect our working capital cycle and/or we may have to make provision for or write-off on such amounts.

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. Majority of our borrowings, both term and working capital, are floating rate linked borrowings wherein interest rate is reset at different time intervals. Fluctuation in interest rates will therefore have a bearing on our debt service obligations.

Foreign Currency Risk

Our Company operates both in domestic as well as international market, however, the nature of its operations requires it to transact in in several currencies and consequently our Company is exposed to foreign exchange risk in certain categories of foreign currencies. It also out sources expert advice whenever required.

Liquidity risk

Liquidity risk is the risk that a group may encounter difficulties in meeting its obligations associated with financial liabilities that are settled by delivering cash or other financial assets. Our Companys principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The ultimate responsibility for liquidity risk management rests with the Board to appropriately manage our Companys short, medium and longterm funding and liquidity management requirements.

Seasonality of business

Seasonal variations may adversely affect our businesses. For example, severe weather may require us to evacuate personnel or curtail services, may result in damage to a portion of our equipment or facilities resulting in the suspension of operations, and increase our maintenance costs. For further details see "Risk Factors - Some of our business activities are subject to seasonal and other fluctuations that may affect our cash flows and business operationson page 44.

Changes in accounting policies

Other as disclosed in the Restated Financial Statements, there have been no changes in accounting policies in the last three fiscal years and six month period ended September 30, 2021, please see "Financial Statements -Note 1" on page 235.

Reservations, qualifications and adverse remarks

There are no reservations, qualifications, matters of emphasis and adverse remarks by our Statutory Auditors for six month period ended September 30, 2021, the Fiscal 2021, 2020 and 2019 except as mentioned below.

The emphasis of matter paragraphs included in the auditors report on the financial statements as at and for the six-month period ended September 30, 2021, Fiscals 2021, 2020 and 2019 which does not require any corrective adjustments to the Restated Financial Statements, are as follows:

Emphasis of Matter - September 30, 2021

We draw attention to Note 48 of the Interim Consolidated Financial Statements which describes the continuing impact of COVID-19 pandemic, and its possible consequential implications, on the Groups operations and financial metrics. Our opinion is not modified in respect of this matter.

Emphasis of Matter - March 31, 2021

We draw attention to Note 48 of the Ind AS Consolidated Financial Statements which describes the continuing impact of COVID -19 pandemic, and its possible consequential implications, on the Groups operations and financial metrics. Our opinion is not modified in respect of this matter.

Emphasis of Matter - March 31, 2020

We draw attention to Note 48 of the Ind AS Consolidated Financial Statements which describes the continuing impact of COVID -19 pandemic, and its possible consequential implications, on the Groups operations and financial metrics. Our opinion is not modified in respect of this matter.

Unusual or infrequent events or transactions

Except as disclosed in this Draft Red Herring Prospectus, there have been no unusual or infrequent events or transactions that have in the past or may in future affect our business operations or future financial performance.

Significant economic changes that materially affected or are likely to affect income from continuing operations

Except as described in this Draft Red Herring Prospectus, there have been no significant economic changes that have taken place in the last three fiscal years that have materially affected or are likely to affect our income from continuing operations.

Known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations

Our business has been affected and we expect that it will continue to be affected by the trends identified above in "Managements Discussion and Analysis of Financial Condition and Results of Operations -Factors affecting our results of operations" and the uncertainties described in the section titled "Risk Factors" on pages 295 and 32, respectively. To our knowledge, except as disclosed in this Draft Red Herring Prospectus, there are no known factors which we expect to have a material adverse impact on revenue or income from continuing operations.

Future changes in relationships between Costs and Revenues

Other than as disclosed in "Risk Factors", "Our Business" and "Managements Discussion and Analysis of Financial Condition and Results of Operations" beginning on pages 32, 166 and 295, respectively, we believe there are no known factors that might adversely affect the future changes in relationship between cost and revenue.

Competitive Conditions

We expect competition in our industry from existing and potential competitors to intensify. For details, please see the discussions of our competition in "Our Business" and "Risk Factors - We operate in a highly competitive market. If we are unable to bidfor and win projects, or compete with larger competitors, we couldfail to increase, or maintain, our volume of order intake and our results of operations may be materially adversely affected" beginning on pages 166 and 41, respectively.

New products or business segments

Except as described in this Draft Red Herring Prospectus, we have not announced and do not expect to announce any new products or business segments in the near future.

Dependence on Customers and Suppliers

We are dependent on a limited number of customers for a significant portion of our revenues. Revenues generated from sales to our top five customers represented 73.23%, 80.53%, 71.16% and 75.42% of our consolidated revenue from operations for six months ended September 30, 2021, Fiscal 2021, Fiscal 2020 and Fiscal 2019, respectively. For further details, please see "Risk Factors - Currently our business is primarily dependent on projects in India undertaken or awarded by oil and gas companies, and we derive majority of our revenues from contracts with a limited number of customers. Our inability to manage relationships with our major customers and any adverse changes in the government policies may lead to our contracts being terminated or renegotiated, which may have a material effect on our business and results of operations" on page 34.

Significant developments after September 30, 2021

Except as disclosed in this Draft Red Herring Prospectus, there are no significant developments or circumstances that have occurred post September 30, 2021, which has materially and adversely affected, or is likely to materially and adversely affect, our operations or profitability, or the value of our assets, or our ability to pay our material liabilities within the next 12 months.

Recent Accounting Pronouncements

As of the date of this Prospectus, there are no recent accounting pronouncements, which would have a material effect on our financial condition or results of operations.