1.13 Provisions and Contingent Liabilities

Provisions: Provisions are recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date and are not discounted to its present value.

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 company 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 or a reliable estimate of the amount cannot be made.

1.14 Earnings Per Share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the Company’s earnings per share is the net profit for the period after deducting preference dividends and any attributable tax thereto for the period, if any. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.

1.15 Employee Benefits

(i) Short term employee benefits:

All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits and they are recognized in the period in which the employee renders the related service. The Company recognizes the undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered as a liability (accrued expense) after deducting any amount already paid.

(ii) Post-Employment Benefits:

The Company operates the following post-employment schemes:

- defined benefit plans and

- defined contribution plans

Defined benefit plans: Gratuity obligations

The liability or asset recognised in the Balance Sheet in respect of defined benefit pension and gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the period on government bonds that have terms approximating to the terms of the related obligation. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the Statement of Profit and Loss.

Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in Other Comprehensive Income (OCI). They are included in retained earnings in the Statement of Changes in Equity and in the Balance Sheet. Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately as profit or loss as past service cost.

Defined contribution plans - Provident fund

The Company pays provident fund contributions to publicly administered provident funds as per local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

1.16 Joint Ventures

Interest in joint ventures is identified through Contractual Arrangement/ Agreement made between ventures and according to the arrangement, company identify that it covered under ‘Jointly Controlled Operation’, ‘Jointly Controlled Asset’ or, Jointly Controlled Entities. In case of Jointly Controlled Entity, investments in such joint venture are carried in the financial statements in accordance with IND AS-111 and accounting for investments as described in IND AS-27 ‘Investments in Associates and Joint Ventures’.

1.17 Revenue Recognition

The Company recognizes revenue from engineering, procurement and construction contracts (‘EPC’) over the period of time, as performance obligations are satisfied over time due to continuous transfer of control to the customer. EPC contracts are generally accounted for as a single performance obligation as it involves complex integration of goods and services. The performance obligations are satisfied over time as the work progresses. The Company recognizes revenue using input method (i.e. percentage-of-completion method), based primarily on contract cost incurred to date compared to total estimated contract costs. Changes to total estimated contract costs, if any, are recognised in the period in which they are determined as assessed at the contract level. If the consideration in the contract includes price variation clause or there are amendments in contracts, the Company estimates the amount of consideration to which it will be entitled in exchange for work performed.

1.18 Contract Balances Contract Asset:

In a contract, if the entity performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, it shall be presented as a contract asset, excluding any amounts presented as receivable. A contract asset is an entity’s right to consideration in exchange for goods and services that the entity has transferred to the customer.

Contract Liability:

If a customer pays consideration, or an entity has a right to an amount of consideration that is unconditional (i.e. a receivable), before the entity transfers a good or service to the customer, it shall be presented as a contract liability when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company performs the contract i.e., (transfers control of the related goods or services to the customer).

Trade Receivables:

A receivable is an entity’s right to consideration that is unconditional. A right to consideration is unconditional if only the passage of time is required before payment of that consideration is due.

(a) The Company has entered into a Joint Venture agreement, MEPIDL-MCL-JV (the joint venture), for construction of roads. This is classified as joint operations under the accounting standards applicable to the company, which require the company to follow equity method.

(b) The figures of MEPIDL-MCL JV have been accounted at 74% upto December 31,2023. Since the company is carrying out all the execution and operations of MEPIDL-MCL JV, and the other party has not contributed anything in said execution and operations, the company has accounted for the figures of MEPIDL-MCL JV at 100% for the full year ended March 31,2024.

(c) During FY 2023-24, the Company has entered into Joint Venture agreement, Aquatech-MEPL-JV (the joint venture), for “Khopoli Underground Sewerage Scheme”. This is classified as joint operations under the accounting standards applicable to the company, which require the company to follow equity method.

(d) On February 13, 2024, the Company has entered into Joint Venture agreement, Aquatech-MEPL Nashik JV (the joint venture), for “Design, Construction, Supply, Erection, Testing and Commissioning of 11.5 MLD STP, 29.5 MLD TTP & allied works, followed by O&M of 60 months, for NMC, Nashik”. This is classified as joint operations

Key managerial personnel who are under the employment of the Company are entitled to post employment benefits recognized as per Ind AS 19 - ‘Employee Benefits’ in the Standalone financial statements. As these employee benefits are amounts provided on the basis of actuarial valuation, the same is not included above. Gratuity has been computed for the Company as a whole and hence not included as part of managerial remuneration.

The transactions with related parties are made on terms equivalent to those that prevail in arm’s length transactions. Outstanding balances at the year-end are unsecured and settlement occurs in cash. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

27 Employee Benefit Obligations

(i) Defined contribution plan Provident Fund

The contributions to the Provident Fund of the employees are made to a Government administered Provident Fund and there are no further obligations beyond making such contribution. Employer’s Contribution to Provident Fund amounting to ' 8.55 Lakhs (March 31,2023 - ' 6.72 lakhs) has been recognized as an expense in the Statement of Profit and Loss.

(ii) Leave Encashment

The leave obligations cover the Company’s liability for earned leave.

The amount of ' Nil (March 31,2023 - ' 3.17 lakhs) has been recognised in statement of profit and loss, since the company does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the company does not expect all employee to take the full amount of accrued leave or require payment within the next 12 months.

(iii) Defined benefit plan Gratuity

Every employee is entitled to a benefit equivalent to fifteen days salary last drawn for each completed year of service in line with the Payment of Gratuity Act, 1972 or company scheme whichever is beneficial. The same is payable at the time of separation from the company or retirement, whichever is earlier. The benefits vest after five years of continuous service.

28. Financial 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 is responsible for developing and monitoring the Company’s risk management policies. The Board holds regular meetings on its activities. The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to 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, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations. The Board oversees how management monitors compliance with the Company’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company.

a) 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 from customers.

Cash and cash equivalents

Credit risk on cash and cash equivalents and other deposits with banks is limited as the Company generally invest in deposits with banks with high credit ratings assigned by external credit rating agencies, accordingly the Company considers that the related credit risk is low.

(b) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. 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. The Company’s treasury maintains flexibility in funding by maintaining liquidity through investments in liquid funds. Management monitors rolling forecasts of the Company’s liquidity position and cash and cash equivalents on the basis of expected cash flows.

Market risk is the risk arising from changes in market prices - such as foreign exchange rates and interest rates which could affect the Company’s income or the value of its holdings of financial instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables and debt. The Company is exposed to market risk primarily related to foreign exchange rate risk. Thus, the exposure to market risk is a function of revenue generating and operating activities in foreign currency.

(i) Currency risk

The Company is not exposed to currency risk on account of foreign currency transactions including recognized assets and liabilities denominated in a currency that is not the Company’s functional currency (').

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. 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.

Exposure to interest rate risk

The Company’s deposits/loans are all at fixed rate and are carried at amortized cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates

The Company has assessed no exposure to fluctuating change of market interest rates.

29 Fair value measurement

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities if the carrying amount is a reasonable approximation of fair value - these include cash and cash equivalents, other bank balances, trade receivables and trade payables.

35 Segment reporting

The Company is engaged in only one business. Therefore, no separate segment disclosure is provided in terms of Ind AS -108, i.e. Operating Segment.

36 Other Statutory Information

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

(ii) The Company did not have any transactions with companies struck off.

(iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

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

(v) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries

(vi) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries

(vii) The Company does not have any such transaction which is not recorded in the books of account that has been surrendered or disclosed as income during the year in the tax assessments under the Income-tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income-tax Act, 1961).

(viii) The compliance of number of layers prescribed under clause 87 of Section 2 of the Companies Act read with Companies (Restriction on number of Layers) Rule, 2017 is not applicable to the Company.

(ix) The Company is not declared wilful defaulter by bank or Financial Institutions or any lender during the Financial Year.

(x) Since there are no borrowings during the Years from Banks or Financial Institutions, the Company has not submitted any Quarterly Returns or Statement of Current Assets with Banks or Financial Institutions.

37 Commitments and contingent liabilities

(i) During financial year 2018-19, the Company received a Notice of Demand dated December 18, 2018 for the Assessment Year 2016-17 from the Income Tax officer, for ' 10.42 Lakhs (March 31,2024: ' 10.42 Lakhs; March 31, 2023: ' 10.42 Lakhs) for addition made on account of disallowances of Loss on sale of shares and other securities of ' 14.68 Lakhs, Addition made on account of disallowance of Listing Fees Expenses of ' 31.37 Lakhs, totaling to ' 46.06 Lakhs. The Company has disputed the above addition and disallowance and filed an appeal before the Commissioner of Income-Tax Appeals on January 25, 2019 which is pending for disposal. During the year 2021-22, the Company’s case was selected for reassessment proceedings u/ s 147 of the Income Tax Act, 1961 (“Act”). Thereafter, Assessment Unit, The National Faceless Assessment Centre (NFAC), completed the reassessment proceedings and passed order dated May 12, 2023, which reaffirmed the addition that had been made during the assessment proceedings. In the aforementioned reassessment order, no additional addition was made. Therefore, no action was taken.

(ii) During financial year 2021-22, the Company received a Notice of Demand dated March 26, 2022 for the Assessment Year 2015-16 from Income Tax Officer, for ' 45.29 lakhs (March 31, 2024: ' 45.29 Lakhs; March 31,2023: ' 45.29 lakhs) for addition made u/s 68 r.w.s 115BBE of the Income Tax Act, 1961(“Act”) as Income Tax Officer is of the viewed that Bogus Profit of ' 30.00 Lakhs and Bogus losses claimed of ' 15.25 Lakhs, addition made u/s 69C r.w.s 115BBE of the Act in respect of Unexplained expenditure of ' 0.91 Lakh,

Addition made u/s 68 r.w.s 115BBE of the Act in respect of Share application money of ' 15.00 Lakhs, totaling to ' 61.16 Lakhs. The Company has disputed the above addition and disallowance and filed an appeal before the Commissioner of Income -Tax Appeals on April 23, 2022 which is pending for disposal.

In all the above income tax matters, respective authorities have initiated penalty proceedings towards the additions made, however, the same is kept under abeyance till disposal of the respective matters. The Management considers these demands as not tenable against the Company, and therefore no provision has been made in the books of accounts.

38 Appointment of Chief Finance Officer

During the year, the Chief Financial Officer resigned from the company on December 8, 2023. As per the provisions of Section 203(4) of Companies Act, 2013 if any casual vacancy is caused in the office of the Chief Financial Officer same need to be filled up within 6 months from the date of such vacancy. The company is taking necessary steps to fill the vacancy and ensure compliance with all legal requirements.

39 Going concern

The management has taken initiatives directed towards improving the profitability through operational efficiencies. The Company expects that these initiatives would result in sustainable cash flows. The Company, based on the support given by the parent company, is confident of meeting its operating and capital funding requirements. Accordingly, these financial statements have been prepared on going concern basis.

40 Material Developments

The Company has evaluated subsequent events from the balance sheet date to May 24, 2024, the date at which the financial statements were available to be issued and determined that there are no other material developments.

41 The financial statements were reviewed by the Audit Committee and approved by the Board of Directors at meeting held on May 24, 2024.

42 Previous year/ period figures

Previous year figures have been regrouped to confirm to current year presentation.

As per our attached report of even date For and on behalf of the Board of Directors

For S K Patodia & Associates LLP of Modern Engineering and Projects Limited

Chartered Accountants FRN No. 112723W/W100962

Sitaram Dhulipala Pandit Sawant

Dhiraj Lalpuria Managing Director Director

Partner DIN: 03408989 DIN: 06581946

Membership No: 146268

Sanjay Jha Company Secretary

Date : 24th May, 2024 Date : 24th May, 2024

Place : Mumbai Place : Mumbai