We have audited the accompanying standalone financial
statements of Praj Industries Limited ("the Company"),
which comprise the Balance Sheet as at March 31, 2026,
and the Statement of Profit and Loss (including Other
Comprehensive Income), the Statement of Changes in
Equity and the Statement of Cash Flows for the year then
ended, and notes to the standalone financial statements,
including material accounting policy information and other
explanatory information (hereinafter referred to as the
"standalone financial statements").
In our opinion and to the best of our information and
according to the explanations given to us, the aforesaid
standalone financial statements give the information
required by the Companies Act, 2013 ("the Act') in the manner
so required and give a true and fair view in conformity with
the Indian Accounting Standards prescribed under section
133 of the Act read with Companies (Indian Accounting
Standards) Rules, 2015, as amended ("Ind AS") and other
accounting principles generally accepted in India, of the
state of affairs of the Company as at March 31, 2026, and
its profit (including other comprehensive income), changes
in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial
statements in accordance with the Standards on Auditing
(SAs) specified under section 143(10) of the Act. Our
responsibilities under those SAs are further described in the
Auditor's Responsibilities for the Audit of the standalone
Financial Statements section of our report. We are
independent of the Company in accordance with the Code
of Ethics issued by the Institute of Chartered Accountants
of India together with the ethical requirements that are
relevant to our audit of the standalone financial statements
under the provisions of the Act and the Rules thereunder,
and we have fulfilled our other ethical responsibilities
in accordance with these requirements and the Code
of Ethics. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for
our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in
our audit of the standalone financial statements for the
year ended March 31, 2026. These matters were addressed
in the context of our audit of the standalone financial
statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
We have determined the matters described below to be the
key audit matters to be communicated in our report.
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Sr. No
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Key Audit Matters
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How the Key Audit Matters was addressed in our audit
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1.
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Revenues are recognised under Ind AS 115,
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Our procedures in respect of recognition of construction contract
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"Revenue from Contracts with Customers"
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revenue and related cost included the following:
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basis the nature and type of contracts (i.e.,
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1. Tested the design, implementation and operating effectiveness
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products, projects and services) involved.
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of key internal financial controls, including those related to
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The Company is engaged in the business
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estimation of construction contract costs, contract revenue and
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of process and project engineering. The
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review and approval thereof.
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Company recognizes revenue on the basis
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2. Assessed the appropriateness of the revenue recognition
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of stage of completion in proportion of
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accounting policies in accordance with Ind AS 115 "Revenue
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the contract costs incurred at balance
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from Contracts with Customers".
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sheet date, relative to the total estimated
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3. Tested sample contracts for identification of performance
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costs of the contract to completion.
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obligations and contract value.
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The recognition of revenue is therefore
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4. For selected sample of contracts with customers, performed the
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dependent on estimates in relation to total
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following procedures:
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estimated costs of each such contract. This
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i) Obtained and read customer contracts, customer
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process involves significant management
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communications, and price or scope variation orders if any
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judgement, particularly in estimating total
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for the project.
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costs to complete, assessing project
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ii) Tested the calculation of percentage of completion as
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progress, and determining the timing of
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per input method adopted by the management including
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revenue and profit recognition. These
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the testing of costs incurred and recorded against the
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estimates also include contingencies
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contracts.
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for uncertainties such as project risks
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iii) Verified relevant supporting documents and performed
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and claims for liquidated damages if
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cut off procedures for construction contract related costs
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any, which are reviewed and reassessed
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incurred through the reporting period.
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periodically during the contract lifecycle
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iv) Assessment of costs-to-complete: Performed procedures
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. Moreover, significant judgements are
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on balance cost estimation, compared actual costs to
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involved in determining the expected
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budgeted costs and discussed variances with project
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losses on onerous contracts, when such
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teams, tested the costs accrued at year-end and tested the
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losses become probable based on the
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significant assumptions for balance costs-to- complete.
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expected total contract cost. Revenue
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Discussed progress to date with project teams to determine
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and profits for the year may deviate
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whether the remaining costs to complete appear sufficient
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significantly on account of changes in
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for the residual risks identified for those projects.
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the above judgements and estimates.
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v) Performed retrospective review of Management's
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Therefore, considering the judgements and
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forecasting process by reviewing past trends of estimated
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complexities involved in the estimation
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costs to actual costs over time, discussed variances with
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process and due to the significance of
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project teams and substantively tested where relevant,
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the amounts to the standalone financial
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the elements of the committed cost to executed purchase
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statements, this is a key audit matter. Refer
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orders
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to note no 29 of the standalone financial
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5. Provision for liquidated damages and claims: Discussed with
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statements.
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management and project teams to understand the status of
the project, likelihood of customers imposing any contractual
penalties through inspection of the relevant documents, etc.
6. Performed analytical procedures and conducted inquiries
about any unusual trends of revenue recognition, checked
exceptions for contracts with low or negative margins, loss
making contracts/ onerous contracts, contracts with significant
changes in cost estimates and significant overdue net receivable
positions for contracts, etc
7. Ensured that the disclosures provided in notes are in accordance
with the Ind AS 115 and Companies Act, 2013.
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Sr. No
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Key Audit Matters
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How the Key Audit Matters was addressed in our audit
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2.
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Impairment of trade receivables and
contract assets is accounted through
allowance for Expected Credit Losses
(ECL) under Ind AS 109. The assumptions
used for estimating the expected credit
loss in respect of these balances is an
area which is influenced by Management's
judgment.
The calculation of the impairment
allowance under ECL method is highly
judgmental as it requires management
to assess the estimated credit losses in
respect of trade receivables based on
credit risk profile of customers, project
status, past collection experience,
ongoing litigations and disputes, if any,
economic and market conditions and
applicable forward looking estimates and
recoverability of contract assets ('unbilled
revenue') and retention money.
Considering such assessment,
management uses a provision matrix to
recognize impairment for expected credit
losses in respect of trade receivables and
contract assets.
Given the relative significance of these
balances to the standalone financial
statements, Management judgement
and uncertainties involved as well as the
nature and extent of audit procedures
performed to assess the recoverability of
trade receivables and contract assets, we
determined this to be a key audit matter.
Refer to note no 38 of the standalone
financial statements.
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Our procedures in respect of recoverability of trade receivables and
contract assets included the following:
1) Evaluated the design and tested the operating effectiveness of
key internal financial controls over Management's assessment
of recoverability of trade receivables and contract assets.
2) For selected samples of contracts
i) Obtained an understanding from Management the
related contractual terms, collection experience, basis of
Management's assessment of collectability, and expected
realization plan.
ii) Performed test of details over key contract terms,
correspondence with customers and subsequent
settlements/collections, where relevant.
iii) Tested the ageing of trade receivables and contract assets
at the year end.
3) Reviewed the key assumptions and data sources used by
Management in the provision matrix model to calculate the
probability of default and estimate the expected credit losses
in respect of trade receivables and contract assets.
4) For aged contract asset balances, held discussions with
management on timing and expectation of recoverability,
historical payment records, status of certified dues and other
relevant correspondence with customers to challenge adequacy
of impairment allowance considered.
5) Verified the consistency of various inputs and assumptions
use by the Company's management to determine impairment
provisions.
6) Ensured the adequacy of presentation and related disclosures
in the financial statements are in line with the accounting
standards and Schedule III.
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Sr. No
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Key Audit Matters
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How the Key Audit Matters was addressed in our audit
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3.
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As at March 31, 2026, the Company held
inter corporate loans amounting to INR
of ' 2,910.000 millions and investment
amounting to ' 0.50 millions in Praj GenX
Limited, a wholly owned subsidiary.
Due to accumulation of losses amounting
to ' 1831.675 million incurred by the
subsidiary, there is risk of Impairment of
investments and loans and advances given
to the subsidiary.
The recoverable amount of the investment
and loans granted to the subsidiary is
assessed based on future discounted cash
flows of the subsidiary. We considered this
as a key audit matter due to significant
judgement involved in estimating future
cash flows of the subsidiary and in
determining the discount rate to be used.
Changes in inputs and assumptions could
impact the results of the impairment
assessment.
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Our procedures in respect of impairment assessment of investment
and recoverability of loans included the following:
1) Tested design and implementation and operating effectiveness
of controls over the Company's process of impairment
assessment and approval of forecasts.
2) Assessed the valuation methodologies applied by the Company,
including understanding the basis and key assumptions
underlying projected profitability.
3) Evaluated the reasonableness of key assumptions and analysed
forecasted cash flows of subsidiary based on our understanding
of the Company and the industry/markets in which they operate.
4) Compared the forecasted financial information with historical
performance to assess consistency and reliability of
management's estimates.
5) With the assistance of our valuation specialists, evaluated the
reasonableness of the methodology and assumptions used by
testing the source information underlying the determination
of such assumptions and mathematical accuracy of the
calculations;
6) Performed sensitivity analysis of the various key assumptions to
assess its impact on the impairment.
7) Obtained independent confirmations to assess completeness
and existence of loans given to subsidiary as on 31 March 2026.
8) Ensured the adequacy of disclosures in respect of the
investments and loans in subsidiary.
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Information Other than the Standalone Financial
Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for
the other information. The other information comprises
the information included in the Annual Report, but does
not include the standalone financial statements and our
auditor's report thereon, which we obtained prior to the date
of this auditor's report.
Our opinion on the standalone financial statements does
not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the standalone financial
statements, our responsibility is to read the other information
identified above and, in doing so, consider whether the other
information is materially inconsistent with the standalone
financial statements or our knowledge obtained in the audit,
or otherwise appears to be materially misstated.
If, based on the work we have performed on the other
information that we obtained prior to the date of this auditor's
report, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Management and Board of Directors for
the Standalone Financial Statements
The Company's Management and Board of Directors are
responsible for the matters stated in section 134(5) of the
Act with respect to the preparation of these standalone
financial statements that give a true and fair view of the
financial position, financial performance, changes in equity
and cash flows of the Company in accordance with the
accounting principles generally accepted in India, including
the Indian Accounting Standards specified under section
133 of the Act. This responsibility also includes maintenance
of adequate accounting records in accordance with the
provisions of the Act for safeguarding of the assets of
the Company and for preventing and detecting frauds and
other irregularities; selection and application of appropriate
accounting policies; making judgments and estimates that
are reasonable and prudent; and design, implementation
and maintenance of adequate internal financial controls,
that were operating effectively for ensuring the accuracy
and completeness of the accounting records, relevant to
the preparation and presentation of the standalone financial
statement that give a true and fair view and are free from
material misstatement, whether due to fraud or error.
In preparing the standalone financial statements, the
Company's management and the Board of Directors of the
Company are responsible for assessing the Company's
ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using
the going concern basis of accounting unless the Board
of Directors either intends to liquidate the Company or to
cease operations, or has no realistic alternative but to do so.
The Company's management and the Board of Directors
is also responsible for overseeing the Company's financial
reporting process.
Auditor's Responsibilities for the Audit of the Standalone
Financial Statements
Our objectives are to obtain reasonable assurance about
whether the standalone financial statements as a whole
are free from material misstatement, whether due to fraud
or error, and to issue an auditor's report that includes our
opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance
with SAs will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these standalone
financial statements.
We give in "Annexure A" a detailed description of Auditor's
responsibilities for Audit of the Standalone Financial
Statements.
Other Matter:
The standalone financial statements of the Company for the
year ended March 31,2025, were audited by another auditor
whose report dated April 29, 2025 expressed an unmodified
opinion on those statements.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order,
2020 ("the Order"), issued by the Central Government
of India in terms of sub-section (11) of section 143 of
the Act, we give in "Annexure B" a statement on the
matters specified in paragraphs 3 and 4 of the Order, to
the extent applicable.
2. As required by Section 143(3) of the Act, we report
that:
(a) We have sought and obtained all the information
and explanations which to the best of our
knowledge and belief were necessary for the
purposes of our audit of the aforesaid standalone
financial statements.
(b) In our opinion, proper books of account as
required by law relating to preparation of the
aforesaid standalone financial statements have
been kept by the Company so far as it appears
from our examination of those books except for
the matters stated in the paragraph 2 (h) (vi)
below on reporting under Rule 11(g).
(c) The Balance Sheet, the Statement of Profit and
Loss (including other comprehensive income),
the Statement of Changes in Equity and the
Statement of Cash Flows dealt with by this Report
are in agreement with the books of account
maintained for the purpose of preparation of the
standalone financial statements.
(d) In our opinion, the aforesaid standalone financial
statements comply with the Ind AS specified
under Section 133 of the Act.
(e) On the basis of the written representations
received from the directors as on March 31, 2026
taken on record by the Board of Directors, none
of the directors are disqualified as on March 31,
2026 from being appointed as a director in terms
of Section 164 (2) of the Act.
(f) The modification relating to the maintenance of
accounts and other matters connected therewith
are as stated in paragraph 2(b) above on
reporting under Section 143(3)(b) and paragraph
2(h)(vi) below on reporting under Rule 11(g).
(g) With respect to the adequacy of the internal
financial controls with reference to standalone
financial statements of the Company and the
operating effectiveness of such controls, refer to
our separate Report in "Annexure C".
(h) With respect to the other matters to be included in
the Auditor's Report in accordance with Rule 11 of
the Companies (Audit and Auditors) Rules, 2014,
in our opinion and to the best of our information
and according to the explanations given to us:
i. The Company has disclosed the impact of
pending litigations on its financial position
in its standalone financial statements -
Refer Note 28 to the standalone financial
statements.
ii. The Company has made provision,
as required under the applicable law
or accounting standards, for material
foreseeable losses, if any, on long-term
contracts. The Company did not have any
derivative contracts. Refer Note 38 to the
standalone financial statements.
iii. There has been no delay in transferring
amounts, to the Investor Education and
Protection Fund by the Company during the
year ended March 31, 2026.
iv. (a). The Management has represented that,
to the best of it's knowledge and belief,
as disclosed in the note 41 (vii) to the
standalone financial statements, 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, 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 provide
any guarantee, security or the like on
behalf of the Ultimate Beneficiaries.
(b) . The Management has represented
that, to the best of it's knowledge and
belief, as disclosed in the note 41 (vii)
to the standalone financial statements,
no funds have been received by
the Company from any person(s)
or entity(ies), including foreign
entities ("Funding Parties"), with the
understanding, whether recorded in
writing or otherwise, that the Company
shall, 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 provide
any guarantee, security or the like on
behalf of the Ultimate Beneficiaries.
(c) . Based on the audit procedures
performed that have been considered
reasonable and appropriate in the
circumstances, nothing has come to
our notice that has caused us to believe
that the representations under sub¬
clause (i) and (ii) of Rule 11(e) contain
any material mis-statement.
v. (a). The final dividend proposed in the
previous year, declared and paid by
the Company during the year is in
accordance with section 123 of the Act,
as applicable.
(b). The Board of Directors of the Company
have proposed final dividend for the
year which is subject to the approval
of the members at the ensuing Annual
General Meeting. The dividend declared
is in accordance with section 123 of the
Act to the extent it applies to declaration
of dividend. (Refer Note 12 (h) to the
Standalone financial statements).
vi. Based on examination which included
test checks, the Company has used an
accounting software for maintaining its
books of account which has a feature of
recording audit trail (edit log) facility and
the same has been operated throughout the
year for all relevant transactions recorded
in the software except that we are unable
to comment on audit trail at database level
due to absence of SOC report, as explained
in Note 43 to the financial statements.
Further, except for above, audit trail feature
has operated throughout the year for
all relevant transactions recorded in the
accounting software. Also, during the course
of our audit, we did not come across any
instance of audit trail feature being tampered
with except for above. Additionally, the audit
trail of prior year(s) has been preserved by the
Company as per the statutory requirements
for record retention to the extent it was
enabled and recorded in respective years.
3. In our opinion, according to information, explanations
given to us , the remuneration paid or provided by
the Company to its directors is within the limits laid
prescribed under Section 197 of the Act.
For M S K A & Associates LLP
(Formerly known as M S K A & Associates)
Chartered Accountants
ICAI Firm Registration No. 105047W/W101187
Nitin Manohar Jumani
Partner
Membership No.: 111700
UDIN:26111700JHLUXE8875
Place: Pune
Date: May 28, 2026
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