Rights, preferences and restrictions

The Company has only one class of equity shares having a face value of Rs 5/- per share. Each shareholder is eligible for one vote per share held. In the event of liquidation the equity shareholders are eligible to receive remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholdings.

Nature and purpose of reserves

a) Capital Reserve :

It represents the gain of capital nature.

b) Capital Reserve arising on business combination :

Capital reserve represents gains of capital nature which mainly include the excess of value of net assets acquired over consideration paid by the Company for business combination transactions and the same is not available for distribution as dividends.

c) Capital Redemption Reserve

Created on redemption of preference shares out of profits in accordance with Companies Act.

d) Securities Premium:

Securities premium represents amount received in excess of face value on issue of shares by the Company. It also includes transfer of stock compensation related to options exercised from employee stock options reserve. The securities premium will be utilized in accordance with the provisions of the Companies Act.

e) General Reserve:

General reserve represents the amount of profits appropriated by the Company

f) Employee Stock Option Reserve:

Employee stock options Reserve represents the fair value of equity-settled transactions and recognized over the period of vesting and/or service conditions are fulfilled.

g) Investment Allowance Reserve

It represents reserve created under the Income Tax Act and has been appropriately utilised.

h) Retained Earnings

Retained earnings represents the undistributed earnings, net of amounts transferred to general reserve; if any.

i) Other Comprehensive Income

It represents the cumulative actuarial gains/(losses) net of deferred tax on defined employee benefit plans.

a) The Company had exercised the option of fair value as deemed cost for Property, Plant and Equipment on the date of transition to Ind-AS i.e.; 1st April 2016. Ind As required entities to account for deferred taxes using the Balance Sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the Balance Sheet and its tax base. Accordingly deferred tax liability on account of fair valuing of Land was calculated in prior year.

Under Section 55(2)(b)(i) of Income Tax Act 1961, “fair market value of capital assets means where the capital asset became the property of the assessee before the 1st day of April, 2001, the cost of acquisition of the asset to the assessee or the fair market value of the asset on the 1st day of April, 2001, shall be considered at the option of the assessee.”

Accordingly deferred tax liability on account of fair value of Land is calculated and reviewed at each reporting date as required by Ind AS - 12 ‘Income Taxes’ for changes in respect of temporary differences which have been recognised in previous periods. In F.Y. 2018-19, the Company opted to choose the fair market value of the land as on 01.04.2001 as its cost of acquisition in accordance with Section 55(2)(b)(i) of Income Tax Act 1961. During the year, consequent to withdrawal of indexation benefit and change in tax rate the accounting provision for deferred tax liability created on Land has been reversed. This has resulted in creation of deferred tax credit during the year of Rs. 351.90 Lakhs (P.Y. Rs. 66.58 Lakhs) which is part of deferred tax credit of Rs. 195.19 Lakhs for the year ended 31st March 2025 (P.Y. deferred tax charge of Rs. (531.89) Lakhs).

b) Deferred tax Asset on unabsorbed depreciation, unabsorbed business losses and other temporary differences available as per the Income Tax Act, 1961 had been recognised, since it is probable that taxable profit will be available to adjust them in future years. Unabsorbed depreciation can be carried forward and set off against the profits for infinite number of years under the Income Tax Act, 1961 and profitability projections based on current margins show sufficient profits for set off in future.

c) During the year, the Company has exercised the option permitted under Section 115BAA of the Indian Income Tax Act, 1961 as introduced by The Taxation Laws (Amendment) Act, 2019. Accordingly, the Company has recognized provision for income tax and re-measured its deferred tax assets/liabilities at the rate prescribed in the said section. Impact of this change has been recognized in the Statement of Profit and Loss account and Other Comprehensive Income for the year ended 31st March 2025.

a) Working capital borrowings from consortium banks on cash credit overdraft/short term loan and non-fund based facilities are secured by first pari passu charge on stock of raw materials, stock in process, semifinished, finished goods and stock in trade, consumable stores and spares, bills receivable, book debts and other moveable current assets (both present and future) of the Company and second pari passu charge on the Property, Plant and Equipment’s of the Company (both present and future) at Udhna, Surat. Credit facilities including sub limits extended by consortium banks to Batliboi Environmental Engineering Limited (BEEL-‘Amalgamating Company’) are secured by 2^nd pari passu charge on the Property, Plant and Equipment’s of the Company (both present and future) at Udhna, Surat.

Renewed agreement of working capital borrowings with the consortium banks shall be merged in the name of the Company combining limits of the Amalgamating Company post 31^st March 2025.

b) The Company has used the borrowings from banks and financial institutions for the purpose for which it was obtained.

c) There has not been any default in repayment of borrowings and interest during the current and previous financial years except for below mentioned delays in previous financial year 2023-24 due to shortage of funds:

i) The Company does not expect any reimbursement in respect of the above contingent liabilities.

ii) It is not practicable to estimate the timing of cash outflows, if any, in respect of matters as specified above in note 24.a, above pending resolution of the appellate proceedings.

iii) The Company had given Corporate Guarantee of Rs. 4,470.00 Lakhs (P.Y. Rs. 3,250.30 Lakhs) to banks and financial institutions for credit facilities/performance guarantees extended by them to Batliboi Environmental Engineering Limited (Amalgamating Company) which got merged with Company from the appointed date i.e; 1^st April 2023(refer Note 37). The Corporate Guarantee has not been considered as contingent liability as in substance the corporate guarantee given to the amalgamating company is no longer valid account of merger.

b) Commitments:

i) Estimated amount of Contracts remaining to be executed on capital account and not provided for is Rs. 792.72 lakhs (31^st March 2024 Rs. Nil).

c. Financial risk management

The Company has exposure to the Credit risk, Liquidity risk and Market risk arising from financial instruments.

Risk Management Framework: The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Board of Directors has established the Risk Management Committee (RMC), which is responsible for developing and monitoring the Company’s risk management policies.

The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits to control / monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities.

The Company’s financial risk management is an integral part of how to plan and execute its business strategies. The Company’s financial risk management policy is approved by the Board of Directors.

d. Credit Risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company’s receivables.

NOTES FORMING PART OF THE IND AS FINANCIAL STATEMENTS

Trade receivables: The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period.

Cash and cash equivalents:

The Company held cash and cash equivalents of Rs 332.69 lakhs as at 31^st March 2025 (31st March 2024: Rs. 147.36 lakhs). The cash and cash equivalents are held with reputed banks.

e. Liquidity Risk:

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

f. Market Risk

Market risk is the risk that changes in market prices such as foreign exchange rates, interest rates and commodity prices, will affect the Company’s income or the value of its financial instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables, long term debt and commodity prices. The Company is exposed to market risk primarily related to foreign exchange rate risk, interest rate risk and commodity price risk.

g. Interest rate risk:

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest-bearing investments because of fluctuations in the interest rates, in cases where the borrowings are measured at fair value through the Statement of Profit and Loss. Cash flow interest rate risk is the risk that the future cash flows of floating interest-bearing investments will fluctuate because of fluctuations in the interest rates.

h. Currency risk:

The Company is exposed to currency risk on account of its operating and financing activities. The functional currency of the Company is Indian Rupee.

To the extent the exposures on purchases and borrowings are not economically hedged by the foreign currency denominated receivables, the Company uses derivative instruments, like, foreign exchange forward contracts to mitigate the risk of changes in foreign currency exchange and principal only swap rates. The Company does not use derivative financial instruments for trading or speculative purposes.

The Company evaluates exchange rate exposure arising from foreign currency transactions and the Company follows established risk management policies including the use of derivatives like foreign exchange forward contracts to hedge exposure.

Performance obligations are satisfied at the point of time when the customer obtains the controls of the goods. The Company has not disclosed the information required to be given as per Ind AS 115 -"Revenue from Contracts with Customers" as all the unsatisfied performance obligations as on 31st March 2025 which are part of contract is expected to be completed within duration of one year in accordance with para 121 of Ind AS 115.

NOTE 31:CAPITAL MANAGEMENT:

For the purpose of the Company’s capital management, capital includes issued equity capital, share premium and all other equity reserves. The primary objective of the Company’s capital management is to maximise the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents, excluding discontinued operations.

The Company had total cash outflows for leases of Rs. 145.45 Lakhs (PY Rs. 119.37 Lakhs) (excluding interest) for the year ended 31^st March 2025. The Company did not have any non-cash additions to right-of-use assets and lease liabilities for the year ended 31^st March 2025. Further, there are no future cash outflows relating to leases that have not yet commenced.

The lease agreement of the Corporate Office of the Company expired in July 2023. The renewed lease agreement has been made dated 20^th December 2024 based on communication with the lessor. However, the lease agreement is pending to be duly executed for being a valid legal document as sign of the lessor and notary of the lease deed is in process. As per letter from the lessor, the renewed lease agreement has been executed for 10 years i.e; from August 2023 to July 2033. Accordingly, right to use asset and corresponding lease liability has been recognised.

Disclosure pursuant to IND AS 103 “Business Combination”:

Amalgamation of Batliboi Environmental Engineering Limited with the Company

The Board of Directors of the Company, at its meeting held on 11^th March 2024 approved The Scheme of Amalgamation and Arrangement under Sections 230 - 232 and other applicable provisions of the Companies Act, 2013 for amalgamation of Batliboi Environmental Engineering Limited (‘Amalgamating Company’) with the Company.

The aforesaid Scheme was sanctioned by Hon’ble National Company Law Tribunal (NCLT) Mumbai Bench vide order dated 24^th March 2025. The Appointed Date of the Scheme is 1^st April 2023 and in terms of the Scheme, all the assets, liabilities, reserves and surplus of the Amalgamating Company have been transferred to and vested in the Company.

The amalgamation had been accounted in accordance with “Pooling of interest method” as laid down in Appendix C -‘Business combinations of entities under common control’ of Ind AS 103 notified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as specified in the scheme, such that:

a) All assets and liabilities of the Amalgamating Company are stated at the carrying values as appearing in the standalone financial statements of Amalgamating Company.

b) The identity of the reserves had been preserved and were recorded in the same form and at the carrying amount as appearing in the standalone financial statements of Amalgamating Company.

c) The inter-company balances between both the companies have been eliminated.

d) Comparative financial information in the financial statements of the Amalgamated Company has been restated for the accounting impact of merger, as stated above, as if the merger had occurred from the beginning of the comparative period.

e) The difference between the amount recorded as Equity and Preference shares pending issuance and the amount of share capital of the Amalgamating Company has been transferred to capital reserve separately from other capital reserves.

Consequent to the Scheme coming into effect, in accordance with the share exchange ratio as specified in the Scheme, the Company has to allot 1,26,81,963 equity shares of Rs. 5/- each and 2,70,000 8% Redeemable Non-Cumulative preference shares of Rs. 100/- each to the equity and preference shareholders of the Amalgamating Company which is pending for issuance as on date.

In accordance with the Scheme the authorised share capital of the Amalgamating Company shall be added to the authorised share capital of the Company. Consequently, the authorised share capital of the Company shall increase by 3,40,00,000 equity shares of Rs. 5/- each and 4,00,000 8% Redeemable Non-Cumulative preference shares of Rs. 100/- each. The increase in authorised share capital of the Company is pending as on date.

d) CSR activities include contribution towards promoting health care for the promotion of sanitation under clause (i) of Schedule VII of the Companies Act, 2013.

e) Details of related party transactions, e.g., contribution to a trust / society / section 8 company controlled by the company in relation to CSR expenditure as per Accounting Standard (AS) 18, Related Party Disclosures: The Company has partnered with Bhogilal Leherchand Foundation for promoting health care and in previous year with Leherchand Uttamchand Trust Fund. The Company contributed Rs. 16.83 Lakhs (P.Y. Rs. 5.70 Lakhs) to the Foundation.

NOTE 39:ADDITIONAL REGULATORY DISCLOSURES:

i) a) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (“Intermediaries”) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries).

b) The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

ii) For the year ended 31st March 2025, there are no instances of transactions not recorded in the books of account, which have been surrendered or disclosed as income in the tax assessments under the Income Tax Act, 1961 (43 of 1961).

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

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

v) The Company has not undertaken any transactions with companies struck off under section 248 of Companies Act, 2013 or section 560 of the Companies Act, 1956.

vi) There is no charge form filed beyond the statutory period for registration of charges or satisfaction with Registrar of Companies.

vii) The Company has not granted any loans or advances in the nature of loans to its promoters, directors, Key Managerial Personnel’s and the related parties, either severally or jointly with any other person, that are repayable on demand and/or without specifying any terms or period of repayment.

1. Increase in current assets and due to improvement in working capital has resulted in improvement in the ratio.

2. Reduction in borrowings has resulted in improvement in the respective ratios.

3. Reduction in operating margin due to reduction in turnover has resulted in variance of the respective ratios.

4. Reduction in turnover has resulted in improvement in this ratio.

5. Increase in Investments during the year and return on investments has resulted in improvement in the ratio. Note 40

Proposed Dividend on Equity and Preference Shares

The Board of Directors at its meeting held on 23^rd May 2025, has proposed to declare final dividend of Rs. 0.60 per equity share (12%) [P.Y. Rs. 0.50 per equity share] and Rs. 1.00 per preference share (1%) for the year ended 31^st March 2025 [P.Y. Rs. 1.00 per preference share].

NOTE 41:EVENTS AFTER REPORTING DATE:

There have been no significant events after the reporting date that requires disclosure in these Ind AS financial statements.

NOTES FORMING PART OF THE IND AS FINANCIAL STATEMENTS NOTE 42:

Previous year’s figures have been reclassified and re grouped to conform to current years classification and grouping.