SFC Environmental Technologies Ltd Management Discussions

OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

The following discussion is intended to convey managements perspective on our financial condition and results of operations for the Fiscals 2025, 2024 and 2023. You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our Restated Consolidated Financial Information as of and for Fiscals 2025, 2024 and 2023, including the related annexures.

Unless otherwise indicated or context otherwise requires, the financial information for Fiscals 2025, 2024 and 2023, included herein is derived from the Restated Consolidated Financial Information, included in this Draft Red Herring Prospectus. For further information, see "Restated Consolidated Financial Information " and "Summary Financial Information" on pages 353 and 97.

Our Fiscal year ends on March 31 of each year. Accordingly, all references to a particular Fiscal are to the 12-month period ended March 31 of that year.

The industry information contained in this section is derivedfrom the industry report titled "Industry Report on Indian STP, Tertiary Treatment, MSW Management, and Biogas Market" dated August 20, 2025, which is exclusively prepared for the purposes of the Offer and issued by Frost & Sullivan and is commissioned and paid for by our Company ("F&S Report"). Frost & Sullivan was appointed pursuant to the engagement letter dated February 28, 2024, as extended on May 26, 2025. We commissioned and paid for the F&S Report for the purposes of confirming our understanding of the industry specificallyfor the purposes of the Offer. The F&S Report is available on the website of our Company at https://www.sfcenvironment.com/investors/financial-highlights/industry-reports. Unless otherwise indicated, financial, operational, industry and other related information derived from the F&S Report and included herein with respect to any particular year refers to such information for the relevant calendar year. For further information, please see "Certain Conventions, Use of Financial Information and Market Data and Currency of Presentation - Industry and Market Data" on page 24.

This discussion contains forward-looking statements that involve risks and uncertainties and reflects our current view with respect to future events and financial performance. Actual results may differ from those anticipated in these forward-looking statements as a result offactors such as those set forth under "Forward-Looking Statements" and "Risk Factors" on pages 27 and 47, respectively.

OVERVIEW

For an overview of our business, please see "Our Business - Overview" on page 260.

SIGNIFICANT FACTORS AFFECTING OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Ability to effectively execute and expand our Order book

Our order book and the new projects that we have bid for and will continue to bid for in the future will have an effect on the revenues we will earn in the future.

Wastewater Treatment (WWT) Segment: As at March 31, 2025, we had an order book of ?4,597.53 million for the WWT segment, which amounted to 97.98% of our revenue from operations from WWT segment for Fiscal 2025.As of March 31, 2025, March 31, 2024 and March 31, 2023, we had an order book in the WWT segment of ?4,597.53 million, ?6,564.47 million and ?5,574.20 million, respectively.

Solid Waste Treatment (SWT) Segment: As at March 31, 2025, we had an order book of ?1,006.34 million of SWT segment, which amounted to 84.31% of our revenue from operations from SWT segment for Fiscal 2025.As of March 31, 2025, March 31, 2024 and March 31, 2023, we had an order book in the SWT segment of ?1,006.34 million, ?1,287.87 million and ?858.32 million respectively.

Wastewater Recycling and Reuse (WRR) Segment: The order book building for the new WRR segment has started

from Fiscal 2026 on receipt of our first WRR order in July 2025.

Our order book, the likelihood of the completion of contracts reflected in our order book and the period over which such contracts are likely to be executed, may vary significantly based on the product or service, and various factors that may affect our operations or the time period within which we are able to execute such contracts. Even where a project proceeds as scheduled, it is possible that contracting parties may default or delay and fail to pay amounts owed. Any delay, cancellation or payment default could adversely affect our cash flow position, revenues and/or profit. Many of these factors may be beyond our control.

Accordingly, the realization of our order book and the effect on our results of operations may vary significantly depending on the nature of such contracts, actual performance of such contracts, as well as the stage of completion of such contracts as of the relevant reporting date as it is impacted by applicable accounting principles affecting revenue and cost recognition. The value of the orders we receive and our ability to execute them in a timely manner therefore impacts our future performance. As we expand our order book, the modified terms of payments for new projects may necessitate higher working capital requirements and therefore impact our financial performance. Any cancellation of orders or termination of projects under construction by our customers may result in a reduction of our future revenue. Any delay in payments that are due and payable to us will affect our operations and have an impact on our cash flows. This may result in an increase in our working capital borrowings thereby affecting our business and results of operations.

Maintaining our customer relationships

We believe that our continued relationship with our customers plays a significant role in determining our continued success and results of operations. Our relationship with these customers have thus been gradually strengthened by proving our reliability and quality over a period of time. The demand for our services and products from our customers has a significant impact on our results of operations and financial condition. Over the years, we have successfully executed a diverse portfolio of projects spanning various capacities and geographical locations. Set out below are details of our revenue attributable to repeat customers for the periods mentioned:

Financial Year	Revenue from repeat customers (in ? million)	Revenue from repeat customers as a % of revenue from operations	Revenue from new customers as a % of revenue from operations
FY 2025	4,039.74	85.18%	14.82%
FY 2024	4,691.84	89.96%	10.04%
FY 2023	3,421.83	83.18%	16.82%

Note: Revenues from repeat customers refer to the revenue generated from customers from whom our Company has derived revenues in any of the three preceding fiscal years for the respective financial year (on standalone basis).

In the event that we lose any of our major customers or if the amount of business we receive from them is reduced for any reason, our cash flows and results of operations may be affected. Our arrangements with our customers also require us to meet certain standards and performance obligations and our failure to meet such specifications could result in a reduction of business from them, termination of contracts or additional costs and penalties, all of which may adversely impact our results of operations and financial condition.

Technology and process innovation

Over the years, we have developed a suite of proprietary technologies and engineering solutions. Our technology prowess and proficiency help us improve our service delivery and maintain and improve our margins and profitability. Our ability to stay abreast of such changes and provide commercially viable and marketable solutions to our customers plays a significant role in determining the attractiveness of our offering to customers. Our future success will depend substantially on our ability to respond to new technologies.

Management of our costs, including those of our raw materials cost management through backward andforward integration

Our ability to profitably expand our execution capabilities is dependent on our ability to efficiently manage our corresponding increase in expenditures and achieve timely completion and commissioning of our projects. We believe

that our backward integration strategy will further enhance our operations and increase profitability by development and manufacture of key components, to achieve cost savings and improve profit margins. By increasing our backward integration measures, we will be in a position to control the quality and availability of materials which in turn will reduce reliance on external suppliers and enhance our ability to negotiate more favorable pricing from customers.

We depend on external suppliers for our materials and components required and typically purchase materials and components on a purchase order basis and place such orders with them in advance on the basis of our anticipated requirements. As a result, the success of our business is significantly dependent on maintaining good relationships with our materials and component suppliers. Further, we source raw materials from a number of international suppliers as well as from vendors in India. Our supply arrangements are subject to price volatility caused by various factors such as market fluctuation, currency fluctuations, climatic and environmental conditions, production and transportation cost, changes in domestic as well as international government policies, and regulatory and trade sanctions. Changes in import duties also impact our cost materials consumed and consequently operating margins. If we cannot fully offset increases in material prices with increases in the prices for our services and products, we will experience lower margins.

Our execution capabilities

Our projects for SWT segment are typically awarded through a competitive bidding process. This process therefore involves pre-qualifying for bids based on the companys technical and financial strengths, and an evaluation of the nature and value of contracts executed in the past to determine a companys eligibility to bid for new projects. Further, the ability to strategically partner with other players also determines the outcome of pre-qualification and consequently the award of projects.

While evaluating our performance in contracts previously executed, our project management capabilities are also assessed. This would require continuing and improving on our project management practices which includes amongst others efficient equipment and material sourcing, good communication between the site office and head office, and project planning and monitoring to suit the projects under execution. Our ability to continue implementation of such practices as our business grows would determine our overall performance, which is likely to impact our profitability.

Availability of cost-effective funding sources

As of June 30, 2025, our outstanding borrowings (fund based and non-fund based) (on a consolidated basis) aggregated to ?1,522.76 million. Any increase in interest expense may have an adverse effect on our results of operations and financial condition. In cases, significant amounts of working capital are required to finance the performance of engineering, construction and other work on projects before payments are received from clients. Our finance costs are dependent on various external factors, including Indian and global credit markets and, in particular, interest rate movements and adequate liquidity. We believe that we have been able to maintain relatively stable finance costs. Our ability to maintain our finance costs at optimum levels will continue to have a direct impact on our profitability, results of operations and financial condition.

MATERIAL ACCOUNTING POLICIES

• Basis for Measurement

The Restated Consolidated Financial Information have been prepared in accordance with the provisions of the Companies Act, 2013 and the Indian Accounting Standards ("Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2015 issued by Ministry of Corporate Affairs in respect of Section 133 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued thereafter. In addition, the guidance notes / announcements issued by the Institute of Chartered Accountants of India (ICAI) are also applied except if compliance with other statutory promulgations require a different treatment.

• Statement of Compliance

The Restated Consolidated Financial Information of the group, its associate and its joint ventures comprise the

Restated Consolidated Balance Sheet as at March 31, 2025, March 31, 2024, March 31, 2023; the related Restated Consolidated Statement of Profit and Loss (including Other Comprehensive Income), the Restated Consolidated Statement of Changes in Equity, and the Restated Consolidated Statement of Cash Flows for the year ended March 31, 2025, March 31, 2024 and March 31, 2023 and the material accounting policies and Restated Consolidated Other Financial Information (together referred to as ‘Restated Consolidated Financial Information).

The Restated Consolidated Financial Information have been prepared on a going concern basis and accrual basis of accounting. The accounting policies, effective as on March 31, 2025 are applied consistently to all the periods presented in the Restated Consolidated Financial Information.

The Restated Consolidated financial information comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act), Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and other relevant provisions of the Act.

These Restated Consolidated Financial Information have been prepared by the management as required under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended issued by the Securities and Exchange Board of India ("SEBI"), in pursuance of the Securities and Exchange Board of India Act, 1992, for the purpose of inclusion in the Draft Red Herring Prospectus in connection with the proposed initial public offering of equity shares of the Company comprising a fresh issue of Equity Shares and an offer for sale of Equity Shares held by the Selling Shareholders (the "Offer"), prepared by the in terms of the requirements of:

• Section 26 of Part I of Chapter III of the Companies Act, 2013 (the "Act");
• The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended ("ICDR Regulations"); and
• The Guidance Note on Reports in Company Prospectuses (Revised 2019) issued by the Institute of Chartered Accountants of India as amended from time to time (the "Guidance Note").

The Restated Consolidated Financial Information has been compiled by the Group from:

Audited Consolidated Financial Statements of the Group, its associate and its joint ventures as at and for the years ended March 31, 2025, March 31, 2024 and March 31, 2023, prepared in accordance with Indian Accounting Standard (referred to "Ind AS") as prescribed under section 133 of the Act read with the 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 August 13, 2025, August 08, 2024 and October 27, 2023 respectively.

• Further, there were no changes in accounting policies during the period of these Financial Statements (Refer Annexure VI - "Statement of adjustments to restated consolidated financial information");
• There were no material amounts which have been adjusted for, in arriving at profit / loss of the respective periods.

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

1. Adjustments for reclassification / regrouping 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 Information for the year ended March 31, 2025 and the requirements of the SEBI ICDR Regulations, if any; (Refer Annexure VI - "Statement of adjustments to restated consolidated financial information");
2. do not require any adjustments for modifications as there is no modification in the underlying audit reports.

The Restated Consolidated Financial Information for the year ended March 31, 2025, March 31, 2024 and March 31, 2023 were approved for issue in accordance with the resolution of the Board of Directors on August 13, 2025.

These Restated Consolidated Financial Information are presented in Indian Rupees (INR), which is also the functional currency. All amounts have been rounded-off to the nearest million, unless otherwise indicated.

• Basis of accounting and preparation and presentation of Restated Consolidated Financial Information

The Restated Consolidated Financial Information have been prepared on a historical cost basis, except for the following assets and liabilities which are measured on an alternative basis on each reporting date:

• Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments)
• Employees Defined Benefit Plan as per actuarial valuation.

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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.

In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or

liability, either directly or indirectly; and

Level 3 inputs are unobservable inputs for the asset or liability.

When measuring the fair value of an asset or a liability, the group uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

• Significant accounting judgements, estimates and assumptions

The preparation of these Restated Consolidated Financial Information in conformity with the recognition and measurement principles of Ind AS requires the management of the group to make estimates, assumptions and judgments that affect the reported balances of assets and liabilities, disclosures of contingent liabilities as at the date of the Restated Consolidated Financial Information and the reported amounts of income and expense for the periods presented.

The estimates and associated assumptions are based on historical experience and other factors that are relevant. Actual results may differ from these estimates considering different assumptions and conditions. Estimates and underlying assumptions are reviewed on an ongoing basis. Impact on account of revisions to accounting estimates are recognised in the period in which the estimates are revised, and future periods are affected. The following are the critical estimates, assumptions and judgements that the management have made in the process of applying the Groups accounting policies and that have a significant effect on the amounts recognized in the Restated Consolidated Financial Information:

1. Useful lives of Property, plant and equipment: Property, plant and equipment represent a significant proportion of the asset base of the Group. The charge in respect of periodic depreciation is derived after determining an estimate of an assets expected useful life and the expected residual value at the end of its life. The useful lives and residual values of Groups assets are determined by the Management at the time the asset is acquired and reviewed periodically.
2. Employee benefits: Employee benefit obligations are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, employee benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
3. Provision for income tax and deferred tax assets: The Group uses estimates and judgements based on the relevant rulings in the areas of revenue, costs, allowances and disallowances which is exercised while

determining the provision for income tax. A deferred tax asset is recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilised. Accordingly, the Group exercises its judgement to reassess the carrying amount of deferred tax assets at the end of each reporting period.

• Provisions and contingent liabilities: The Group estimates the provisions that have present obligations as a result of past events, and it is probable that outflow of resources will be required to settle the obligations. These provisions are reviewed at the end of each reporting period and are adjusted to reflect the current best estimates. The Group uses significant judgements to disclose contingent liabilities. Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made. Contingent assets are neither recognised nor disclosed in the Restated Consolidated Financial Information.
• Fair value measurement of financial instruments: When the fair value 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 Discounted Cash Flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as market risk, liquidity risk and credit risk.
• Allowance for credit losses on receivables: The Group determines the allowance for credit losses based on historical loss experience adjusted to reflect current and estimated future economic conditions. The Group considered current and anticipated future economic conditions relating to industries the Group deals with and the countries where it operates.
• Impairment of non-financial assets: The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the assets recoverable amount. An assets recoverable amount is the higher of an assets fair value less costs of disposal and its value in use. It is determined for an individual asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. 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 assessment of the time value of money and the risk specific to the asset. In determining fair value less cost of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share price for publicly traded subsidiaries or other available fair value indicators.
• Impairment of Goodwill: Management reviews the carrying value of goodwill annually, to determine whether there has been any impairment by allocating the value of goodwill to a Cash Generating Unit (CGU). The Group has identified CGUs for this purpose, considering the nature of the businesses to which each of the CGU relates. Value in use i.e. the enterprise value of each CGU is aggregate of cash flow projections, for five years as approved by Management and beyond five years extrapolated using a long-term growth rate which ranges from 0% to 5%. Cash flow projections are discounted by a pre-tax discount rate, which ranges from 8% to 12%. The Management believes that any reasonably possible change in the above key assumptions on which recoverable amount is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the CGU. During the year ended March 31, 2025, the Group has determined that there is no impairment towards Goodwill.

• Classification of Assets and Liabilities into Current / Non-Current

The Operating Cycle of the Group is the time between the acquisitions of the assets for processing and their

realisation in cash & cash equivalents. The Group has identified twelve months as its operating cycle for the

purpose of current and non current classification of assets and liabilities.

For the purpose of Balance Sheet, an asset is classified as current if:

• It is expected to be realized, or is intended to be sold or consumed, in the normal operating cycle; or
• It is held primarily for the purpose of trading; or
• It is expected to realise the asset within twelve months after the reporting period; or

• The asset is a cash or cash equivalent unless it is 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.

Similarly, a liability is classified as current if:

• It is expected to be settled in the normal operating cycle; or
• It is held primarily for the purpose of trading; or
• It is due to be settled within twelve months after the reporting period; or
• The Group does not have an unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could result in its settlement by the issue of equity instruments at the option of the counterparty does not affect this classification.

All other liabilities are classified as non-current.

• Basis of Consolidation

(a) Consolidation of Subsidiaries: The Restated Consolidated Financial Information comprise the financial statements of the Group and its associate and joint venture. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:

1. Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);
2. Exposure, or rights, to variable returns from its involvement with the investee, and
3. The ability to use its power over the investee to affect its returns.

Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

• The contractual arrangement with the other vote holders of the investee
• Rights arising from other contractual arrangements
• The Groups voting rights and potential voting rights
• The size of the groups holding of voting rights relative to the size and dispersion of the holdings of the other voting rights holders.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the Restated Consolidated Financial Information from the date the Group gains control until the date the Group ceases to control the subsidiary.

Restated Consolidated Financial Information is prepared using uniform accounting policies for like transactions and other events in similar circumstances. If a member of the Group uses accounting policies other than those adopted in the Restated Consolidated Financial Information for like transactions and events in similar circumstances, appropriate adjustments are made to that Group members financial statements in preparing the Restated Consolidated Financial Information to ensure conformity with the Groups accounting policies.

The financial statements of all entities used for the purpose of consolidation are drawn up to same reporting date as that of the parent company, i.e., year ended on March 31. When the end of the reporting period of the parent is different from that of a subsidiary, the subsidiary prepares, for consolidation purposes, additional financial information as of the same date as the financial statements of the parent to enable the parent to consolidate the financial information of the subsidiary, unless it is impracticable to do so.

Consolidation procedure:

• Combine like items of assets, liabilities, equity, income, expenses and cash flows of the parent with those of its subsidiaries.
• Offset (eliminate) the carrying amount of the parents investment in each subsidiary and the parents portion of equity of each subsidiary. Business combinations policy explains how to account for any related goodwill.
• Eliminate in full intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between entities of the Group (profits or losses resulting from intragroup transactions that are recognised in assets, such as inventory and fixed assets, are eliminated in full). Intragroup losses may indicate an impairment that requires recognition in the Restated Consolidated Financial Information. Ind AS 12 Income Taxes applies to temporary
• differences that arise from the elimination of profits and losses resulting from intragroup transactions.

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group 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 intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:

• Derecognises the assets (including goodwill) and liabilities of the subsidiary at their carrying amounts at the date when control is lost
• Derecognises the carrying amount of any non-controlling interests
• Derecognises the cumulative translation differences recorded in equity
• Recognises the fair value of the consideration received
• Recognises the fair value of any investment retained
• Recognises any surplus or deficit in profit or loss
• Reclassifies the parents share of components previously recognised in OCI to profit or loss or transferred directly to retained earnings, if required by other Ind ASs as would be required if the Group had directly disposed of the related assets or liabilities.

(b) Associate and joint venture: An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. The considerations made in determining whether significant influence or joint control are similar to those necessary to determine control over the subsidiaries.

The Groups investments in its associate and joint venture are accounted for using the equity method. Under the equity method, the investment in an associate or a joint venture is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Groups share of net assets of the associate or joint venture since the acquisition date. Goodwill relating to the associate or joint venture is included in the carrying amount of the investment and is not tested for impairment individually.

The Restated Summary Statement of profit and loss reflects the Groups share of the results of operations of the associate and joint venture. Any change in OCI of those investees is presented as part of the Groups OCI. In addition, when there has been a change recognised directly in the equity of the associate or joint venture, the Group recognises its share of any changes, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting from transactions between the Group and the associate or joint venture are eliminated to the extent of the interest in the associate or joint venture.

If an entitys share of losses of an associate or a joint venture equal or exceeds its interest in the associate or

joint venture (which includes any long-term interest that, in substance, form part of the Groups net investment in the associate or joint venture), the entity discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture. If the associate or joint venture subsequently reports profits, the entity resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised.

The aggregate of the Groups share of profit or loss of an associate and a joint venture is shown on the face of the restated summary statement of profit and loss outside operating profit.

The financial statements of the associate or joint venture are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring the accounting policies in line with those of the Group.

After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss on its investment in its associate or joint venture. At each reporting date, the Group determines whether there is objective evidence that the investment in the associate or joint venture is impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate or joint venture and its carrying value, and then recognises the loss as ‘Share of profit of an associate and a joint venture in the restated consolidated statement of profit and loss.

Upon loss of significant influence over the associate or joint control over the joint venture, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence or joint control and the fair value of the retained investment and proceeds from disposal is recognised in profit or loss.

• Revenue from contracts with customers

• Revenue from operations: Revenue is recognized on the basis of approved contracts regarding the transfer of goods or services to a customer for an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable consideration) allocated to that performance obligation. The transaction price of goods sold and services rendered is net of variable consideration. Revenue excludes taxes collected from customers on behalf of the government. Any amount receivable from customer are recognized as revenue at the point in time when control of the goods sold are transferred to the customer, generally on delivery of the goods. Revenue from services is recognised at the point in time when the performance obligation is satisfied, which typically coincides with the completion of the service or achievement of a delivery milestone when the customer obtains control.
• For Revenue from service concession arrangement accounted under financial asset model:

• The entity recognizes financial asset arising from service concession arrangement to the extent it has an unconditional contractual right to receive payment. Financial assets are initially recognized at their fair value.
• Contract cost is recognized as the total cost incurred towards the financial assets. Subsequent to initial recognition financial assets are recognized at amortized cost.

• For Revenue from service concession arrangement accounted under intangible asset model:

• The total construction cost incurred is capitalized as part of the intangible asset. Post initial recognition, the intangible asset is carried at cost less accumulated amortization and impairment losses, in accordance with Ind AS 38, and is amortized systematically over the term of the concession arrangement.
• Revenue from such contracts is recognized over time as per the terms of concession arrangement.

• Costs to obtain a contract which are incurred regardless of whether the contract was obtained are charged off in Statement of Profit and Loss immediately in the period in which such costs are incurred.
• The scrap sales arising directly due to operating activity is a part of revenue from operations.

• Recognition of Dividend Income, Interest income or expense

Interest income or expense is recognized using the effective interest method. The ‘effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to:

1. the gross carrying amount of the financial asset; or
2. the amortized cost of the financial liability

In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired) or to the amortized cost of the liability. However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortized cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.

Interest income from other financial assets is recognized when it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably. Interest income is recognized on time proportion basis taking into account the amount outstanding and the interest rate applicable.

• Property, Plant & Equipment (PPE)

PPE is recognised when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. The initial cost of PPE comprises its purchase price, including import duties and non-refundable purchase taxes, and any directly attributable costs of bringing an asset to working condition and location for its intended use, less accumulated depreciation and accumulated impairment losses, if any. Cost includes professional fees related to the acquisition of PPE and for qualifying assets, borrowing costs capitalised in accordance with the Groups accounting policy.

Expenditure incurred after the PPE have been put into use such as repairs and maintenance, are charged to the Statement of Profit and Loss in the period in which the costs are incurred.

Subsequent costs are included in the assetss carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. All other repairs and maintenance cost are charged to the Statement of Profit and Loss during the period in which they were incurred.

If significant parts of an item of PPE have different useful lives, then they are accounted for as separate items (major components) of PPE.

Capital work in Progress:

Expenditure during construction period (including financing cost related to borrowed funds for construction or acquisition of qualifying PPE if any) is included under Capital Work-in-Progress, and the same is allocated to the respective PPE on the completion of their construction. Advances given towards acquisition or construction of PPE outstanding at each reporting date are disclosed as Capital Advances under "Other non-current Assets"

Depreciation:

Depreciation is the systematic allocation of the depreciable amount of PPE over its useful life and is provided using written down value method, so as to write off the cost of the assets less their residual values over their useful lives specified in Schedule II to the Companies Act, 2013, or in the case of assets where the useful life was determined by technical evaluation, over the useful life so determined. Depreciation method is reviewed at each financial year end to reflect the expected pattern of consumption of the future economic benefits embodied in the asset. The estimated useful life and residual values are also reviewed at each financial year end and the effect of any change in the estimates of useful life / residual value is accounted on prospective basis. In respect of additions

to / deletions from the PPE, depreciation is provided on pro-rata basis with reference to the month of addition / deletion of the Assets.

Gains or losses arising from de-recognition of a Property, Plant and Equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the asset is derecognised.

• Investment Property

Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Upon initial recognition, an investment property is measured at cost. After initial recognition, the company measures investment property by using cost model. Subsequent to initial recognition, investment property is measured at cost less accumulated depreciation and accumulated impairment losses, if any.

The company depreciates the investment properties on written down value which is in line with the indicative useful life of relevant type of building mentioned in Part C of Schedule II to the Act.

Though investment property is measured using cost model, the fair value of investment property is disclosed in the notes.

• Goodwill

Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any. For the purposes of impairment testing, goodwill is allocated to each of the Groups cash-generating units (or groups of cash generating units (CGUs)) that is expected to benefit from the synergies of the combination. A CGU to which goodwill has been allocated is tested for impairment annually, or more frequently when there is indication that the unit may be impaired. If the recoverable amount of the CGU is less than its carrying amount, impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata based on the carrying amount of each asset in the unit. An impairment loss recognized for goodwill is not reversed in subsequent periods. On disposal of the relevant CGU, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

• Intangible assets

Recognition and initial measurement

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any.

Subsequent measurement (amortisation)

All intangible assets are accounted for using the cost model whereby capitalised costs are amortised on a straightline basis over their estimated useful lives. The estimated useful life of an identifiable intangible asset is based on a number of factors including the effects of obsolescence, demand, competition, and other economic factors (such as the stability of the industry, and known technological advances), and the level of maintenance expenditures required to obtain the expected future cash flows from the asset

The cost thereof is amortised over a period of 5 years. The amortisation period and the amortisation method for intangible assets are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates.

Revenue expenditure on research is recognised as expense in the year in which it is incurred and are included with the respective nature of account heads in the standalone statement of profit and loss.

Capital expenditure on research is shown as addition to property, plant and equipment and depreciation is computed in a manner prescribed for property, plant and equipment.