Square Four Projects India Ltd Management Discussions

[Pursuant to Regulation 34(3) read with Para B of Schedule V to the SEBI (Listing Obligations and Disclosure Requirements)

Regulations, 2015]

1. Industry Structure and Developments

Square Four Projects India Limited ("the Company") is incorporated to undertake real estate development and infrastructure-related activities. However, for the year under review and the immediately preceding year, the Company had no revenue from operations. Its principal business activity remains suspended, and almost all of its fixed assets have been disposed of in earlier years. Consequently, the Company does not currently operate within an active real estate or infrastructure sub-sector, and its financial results are not representative of, nor indicative of trends in, the broader Indian real estate industry.

The Companys present activity is confined to (a) holding unquoted equity investments in its wholly owned subsidiary and other group entities, and (b) extending inter-corporate deposits/loans, predominantly to its subsidiary, on which it earns interest income. The Board has stated its intention to obtain the relevant statutory permissions to recommence project activity.

2. Opportunities and Threats Opportunities

• Fresh equity capital infused by the promoters in an earlier year provides a capital base for a potential re-entry into project activity, subject to statutory approvals.

• The Company is debt-free (no borrowings outstanding at either year-end), which gives it balance-sheet flexibility if and when new projects are undertaken.

• A revival in the residential/infrastructure real estate cycle in West Bengal and Odisha (where Group entities operate) could present opportunities if the Company recommences active development.

Threats

• Prolonged operational suspension with no revenue from operations for at least two consecutive years raises the risk of further erosion of net worth if other income (interest) also declines or ceases.

• Concentration risk: as at 31 March 2026, Rs.523.07 lakhs (93.99% of total inter-corporate loans of Rs.556.52 lakhs) is receivable from a single related party, BRC Construction Co. Private Limited, wholly owned subsidiary, repayable on demand with no stipulated repayment schedule.

• The auditors have qualified their opinion on the standalone financial statements for non-fair-valuation of unquoted investments of Rs.39.50 lakhs, and have separately reported a material weakness in internal financial controls over this area (discussed in Section 6 below).

• No independent, third-party fair valuation exists for the Companys unquoted investments (Rs.65.31 lakhs) or for the recoverability of related-party loans; the carrying values rely on managements assessment of intrinsic worth rather than an external benchmark.

3. Segment-wise / Product-wise Performance

The Company operates in a single business segment. As the Company had no revenue from operations during FY 202526 or FY 2024-25, segment-wise or product-wise performance reporting under Ind AS 108 is not applicable, as confirmed by Note 27 to the financial statements.

4. Outlook

The financial statements have been prepared on a going concern basis. Note 1(c) to the accounts records that although operations have been suspended and substantially all fixed assets disposed of, the promoters have infused fresh equity capital in an earlier year and the Company has initiated steps to obtain relevant permissions from statutory bodies to embark on new projects. The near-term outlook therefore remains dependent on (a) the outcome of those regulatory approvals, (b) continued promoter support, and (c) the Company s ability to recover its related-party loans as and when required. Given the absence of operating revenue, members should treat any outlook as inherently uncertain rather than a projection of near-term financial improvement.

5. Risks and Concerns

• Going concern dependency: the going concern basis rests on continued promoter support and the successful revival of project activity.

• Related-party concentration risk: virtually all loans (93.99%) and a significant portion of investments (Rs.52.47 lakhs of the ^65.31 lakhs total, i.e., investments in the subsidiary and Square Four Housing & Infrastructure Development Private Limited) are with group/related entities, with no fixed repayment terms on the loans.

• Valuation risk: the qualified audit opinion means the carrying value of investments of Rs.39.50 lakhs, and the consequential impact on other comprehensive income, equity, and Ind AS 107 disclosures, could not be independently determined by the auditors as at 31 March 2026.

• Compliance/statutory risk: the Secretarial Auditors report notes a delayed shareholding-pattern filing for the quarter ended 30 June 2025, for which BSE Limited levied a fine of Rs.21,240 (including GST), being paid by the Company.

• Concentration of income: the entirety of the Companys other income in FY 2025-26 was interest income (Rs.38.43 lakhs); the prior year additionally benefited from a one-off Rs.19.38 lakh share of profit from Singhania Developers LLP that did not recur, which is the principal driver of the year-on-year decline in profit.

6. Internal Control Systems and their Adequacy

The Company has an internal control system commensurate with its size and the nature of its operations, supported by an internal audit function under Section 138 of the Companies Act, 2013 (the Chief Financial Officer served as Internal Auditor during the year), with findings reported to and reviewed by the Audit Committee.

However, the statutory auditors, in their report on internal financial controls over financial reporting (Annexure B to the Auditors Report), have identified a material weakness: the Company did not have an adequate internal financial control system for periodic fair valuation of financial instruments classified under Ind AS 109, specifically in respect of investments aggregating Rs.39.50 lakhs required to be fair valued under Ind AS 109 read with Ind AS 113. This material weakness directly underlies the qualified opinion on the standalone financial statements. Except for the effect of this specific weakness, the auditors have opined that the Companys internal financial controls were, in all other material respects, adequate and operating effectively as at 31 March 2026.

The Board has acknowledged this observation and has directed the Audit Committee to review the internal financial control framework and design the necessary controls and standard operating procedures to ensure periodic fair valuation of all financial instruments in line with applicable accounting standards going forward.

7. Discussion on Financial Performance with respect to Operational Performance

The Company had no revenue from operations in either year under comparison. Total revenue (comprising entirely other income) declined 26.50% from Rs.52.29 lakhs to Rs.38.43 lakhs, driven by the non-recurrence of the prior years Rs.19.38 lakh share of profit from Singhania Developers LLP, partly offset by higher interest income (Rs.38.43 lakhs vs Rs.32.91 lakhs) on inter-corporate deposits.

Total expenses rose 10.01% from Rs.22.98 lakhs to Rs.25.28 lakhs, primarily on account of higher legal and professional fees (Rs.9.36 lakhs vs Rs.8.27 lakhs) and marginally higher employee benefits expense (Rs.5.59 lakhs vs Rs.5.30 lakhs); the Company has only two employees. As a result, profit before tax fell 55.15% to Rs.13.15 lakhs (from Rs.29.32 lakhs) and profit after tax fell 56.24% to Rs.9.73 lakhs (from Rs.22.24 lakhs). Basic and diluted EPS accordingly declined from Rs.0.11 to Rs.0.05.

On the balance sheet, total assets grew marginally from Rs.634.00 lakhs to Rs.646.52 lakhs, almost entirely reflecting the growth in inter-corporate loans/other financial assets (Rs.548.94 lakhs to Rs.556.52 lakhs) and cash balances. Net worth improved from Rs.627.99 lakhs to Rs.637.73 lakhs on the back of the current years retained profit; accumulated losses in retained earnings, however, still stand at Rs.436.45 lakhs. The Company remains debt-free, it carries no borrowings and had a negative net-debt-to-equity ratio of (0.01) at both year-ends, but total current liabilities increased from Rs.6.01 lakhs to Rs.8.79 lakhs, mainly on higher provisions and current tax liability, which is the reason for the sharp fall in the current ratio discussed in Section 9 below.

Cash flow from operating activities was an outflow of Rs.37.74 lakhs (previous year: outflow of Rs.239.39 lakhs), largely reflecting the increase in inter-corporate loans/financial assets, which was offset by an equivalent inflow under investing activities (interest and LLP profit share received of Rs.38.43 lakhs). There were no financing cash flows in either year, consistent with the Companys debt-free status.

8. Material Developments in Human Resources / Industrial Relations Front

The Company had only two employees during FY 2025-26, and employee benefits expense (salaries and wages) was Rs.5.59 lakhs (previous year: Rs.5.30 lakhs). Given the headcount, the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 does not mandate constitution of an Internal Complaints Committee (applicable only to workplaces with 10 or more employees); the Board has confirmed no complaints were received during the year. There were no changes in Key Managerial Personnel other than the Company Secretary Ms. Sneha Saraswat resigned effective 5 March 2026 and Ms. Richa Saraf was appointed in her place with effect from the same date. No industrial relations issues have been reported.

9. Details of Significant Changes (25% or more) in Key Financial Ratios

The following ratios registered a variance of 25% or more as compared to the previous financial year, computed on the standalone financial statements as disclosed in Note 31 to the financial statements. The explanations below reflect the actual direction of the underlying movements (profit after tax and other income both declined during the year), which should be read together with, and in place of, the abbreviated remarks in Note 31 of the financial statements.

10. Details of Change in Return on Net Worth

Return on Net Worth (Return on Equity) declined from 3.6% in FY 2024-25 to 1.5% in FY 2025-26, a fall of 57.37%. This was driven entirely by the 56.24% decline in profit after tax (from Rs.22.24 lakhs to Rs.9.73 lakhs), while average shareholders equity remained broadly stable (Rs.627.99 lakhs to Rs.637.73 lakhs). The decline in profit, in turn, reflects the non-recurrence of the prior years Rs.19.38 lakh share of profit from Singhania Developers LLP and a rise in legal and professional expenses, as set out in Section 7 above. As the Company has no revenue from operations, Return on Net Worth in both years is driven solely by other income (interest and, in the prior year, LLP profit share) rather than by any operating business performance, and should be interpreted with this limitation in mind.

11. Disclosure of Accounting Treatment

Note 1(g)(b) (Accounting Policies - Investments: Valuation) to the standalone financial statements states that long-term investments are valued at fair value in accordance with Ind AS 109, with fair value changes recognised through Other Comprehensive Income (FVOCI). However, per Note 2 to the financial statements, the Companys unquoted long-term

equity investments aggregating Rs.65.31 lakhs as at 31 March 2026 (Rs.65.31 lakhs as at 31 March 2025) have in fact been carried at cost/amortised cost and have not been fair valued. Of this amount, Rs.39.50 lakhs has been specifically identified by the statutory auditors as a departure from the Companys stated accounting policy and from the measurement basis required under Ind AS 109 read with Ind AS 113, this is the subject matter of the Basis for Qualified Opinion in the Independent Auditors Report and of the related Key Audit Matter and material weakness reported in Annexure B thereto.

Managements explanation: The investments in question are unquoted equity shares held in the Companys wholly owned subsidiary, BRC Construction Co. Private Limited, and in other related/group entities (Square Four Asset Management & Reconstruction Co. Private Limited and Square Four Housing & Infrastructure Development Private Limited). In the absence of an active market or readily observable inputs for these unquoted shares, management holds the view that their intrinsic worth exceeds the original cost of investment, and has accordingly continued to carry them at cost rather than performing a formal fair valuation exercise. Management believes this treatment reflects a conservative and reasonable approximation of value given the nature of the holdings (investments in a wholly owned subsidiary and other group entities engaged in the same line of business), and that no fair valuation shortfall or impairment is indicated.

The Board records, however, that this explanation does not by itself satisfy the measurement requirements of Ind AS 109 read with Ind AS 113, and has directed the Audit Committee to institute a formal process, including obtaining fair valuation reports from registered valuers, to bring the measurement of these investments into compliance with the prescribed Accounting Standards in future reporting periods. Until that fair valuation is performed, the consequential impact, if any, on the carrying value of investments, other comprehensive income/profit or loss, other equity, and the related Ind AS 107 sensitivity and fair-value-hierarchy disclosures cannot be determined, as also noted by the statutory auditors.

Cautionary Statement

Statements in this Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, expectations or outlook may be "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed or implied. Important factors that could influence the Companys operations include, among others, the outcome of regulatory approvals for recommencing project activity, continued availability of promoter support, recoverability of related-party loans, resolution of the qualified audit matter concerning fair valuation of investments, and general economic and real estate market conditions in India. The Company assumes no obligation to publicly update or revise any forward-looking statements, except as required by law.