Accounting Policies of Sathlokhar Synergys E&C Global Ltd. Company

Note: 2 Material Accounting Policy Information2.1 Statement of Compliance

These financial statements have been prepared in
accordance with Indian Accounting Standards ("Ind
AS”) notified under Section 133 of the Companies
Act, 2013 ("the Act”) read with the Companies (Indian
Accounting Standards) Rules, 2015, as amended, and
other relevant provisions of the Act, and guidelines
issued by the Securities and Exchange Board of India
(SEBI). The Company has adopted Ind AS in accordance
with Ind AS 101 - First-time Adoption of Indian
Accounting Standards. These are the Company''s
first financial statements prepared in accordance
with Ind AS, the date of transition being 1 April 2024.
The transition was carried out from the accounting
standards notified under the Companies (Accounting
Standards) Rules, 2006 ("previous GAAP”).

2.2 Basis of Preparation and Presentation

"The financial statements have been prepared on
the historical cost basis, except for certain financial
instruments that are measured at fair value at the end
of each reporting period, as explained in the accounting
policies below. Historical cost is generally based on
the fair value of the consideration given in exchange
for goods and services. The financial statements are
presented in Indian Rupees (Rs.) and all values are
rounded off to the nearest lakh, except where otherwise
stated. Assets and liabilities have been classified
as current and non-current based on the operating
cycle of the business as set out in the policy below.
The financial statements of the Company for the year
ended 31st March 2026 were approved for issue in
accordance with the resolution of the Board of Directors
on 28th May 2026."

2.3 Use of Estimates, Judgements and Assumptions

"The preparation of financial statements in
conformity with Ind AS requires management to make
judgements, estimates and assumptions that affect
the reported amounts of assets, liabilities (including
contingent liabilities), income and expenses, and the
accompanying disclosures. Actual results may differ
from these estimates; differences between actual
results and estimates are recognised in the periods
in which the results are known or materialise. The
significant areas involving estimation uncertainty and
critical judgements are

(i) Recognition of contract revenue and estimation of
total contract costs (cost-to-cost method);

(ii) Measurement of lease liabilities and right-of-use
assets, including the discount rate;

(iii) Estimation of useful lives and residual values of
property, plant and equipment;

(iv) Fair value measurement of financial instruments;

(v) Measurement of defined benefit obligations
(actuarial assumptions); and

(vi) Recognition of deferred tax assets and provisions
for expected credit losses."

2.4 Foreign Currency Transactions

The functional and presentation currency of the
Company is the Indian Rupee. Transactions in foreign
currencies are recorded at the exchange rates

prevailing on the dates of the transactions. Monetary
assets and liabilities denominated in foreign currencies
are restated at the exchange rates prevailing at the
reporting date. Exchange differences arising on
settlement or restatement of monetary items are
recognised in the Statement of Profit and Loss in the
period in which they arise.

2.5 Current and Non-Current Classification

The Company presents assets and liabilities in the
Balance Sheet based on a current/non-current
classification. An asset is classified as current when it
is expected to be realised or consumed in the normal
operating cycle, held primarily for trading, expected to
be realised within twelve months after the reporting
period, or is cash or a cash equivalent (unless restricted).
A liability is classified as current when it is expected to
be settled in the normal operating cycle, held primarily
for trading, due to be settled within twelve months after
the reporting period, or there is no unconditional right
to defer settlement for at least twelve months after
the reporting period. All other assets and liabilities
are classified as non-current. Deferred tax assets and
liabilities are classified as non-current. Based on the
nature of its operations, the Company has determined
its operating cycle as twelve months for the purpose of
current/non-current classification.

2.6 Revenue Recognition

Revenue from contracts with customers (Ind AS 115)
- Nature of contracts and performance obligations:
The Company undertakes EPC and civil construction
contracts for residential buildings, commercial
complexes, institutional structures, industrial facilities
and infrastructure projects for government and private-
sector clients. Each construction contract is generally
treated as a single performance obligation, since the
promised goods and services (civil works, structural
works, MEP and finishing) are highly interdependent
and together result in a customised combined output.
Where a contract contains multiple distinct promises
capable of being separated, these are treated as
separate performance obligations with the transaction
price allocated on a relative stand-alone selling price
basis.

Measurement of progress: Revenue is recognised
over time, as control of the asset is transferred to the
customer over the period of construction. The Company
measures progress towards complete satisfaction of the
performance obligation using the input (cost-to-cost)
method, which faithfully depicts the transfer of control.
Costs included in measuring progress comprise direct

materials consumed at site, direct labour, subcontractor
costs, plant hire directly attributable to the contract and
other directly allocable costs. Costs excluded from the
measure of progress are: (i) costs of materials ordered
or delivered but not yet installed or consumed; (ii) costs
arising from inefficiencies or abnormal wastage; and
(iii) mobilisation advance adjustments.

Variable consideration: Variable elements include (i)
price escalation linked to WPI/CPI indices; (ii) variation
or extra-work orders for approved scope changes;
(iii) claims for delays attributable to the client; (iv)
performance bonuses for early completion; and (v)
liquidated damages (LD) leviable for delays. Variable
consideration is included in the transaction price only
to the extent that it is highly probable that a significant
reversal of cumulative revenue will not occur when the
associated uncertainty is resolved. LD, where probable,
is deducted from the transaction price.

Contract balances: A contract asset (unbilled revenue)
is recognised when revenue recognised exceeds the
running-account bills raised on the customer, and is
subject to expected credit loss assessment under Ind
AS 109. A contract liability (advance from customers) is
recognised when consideration received or receivable
exceeds revenue recognised; mobilisation advances
are adjusted against progressive running-account bills.
Retention money withheld by customers, recoverable
on expiry of the contractual retention/defect-
liability period, is disclosed separately as Retention
Receivable.

Onerous contracts: When it is probable that total
estimated contract costs will exceed total contract
revenue, the expected loss is recognised immediately
as an expense in the Statement of Profit and Loss, and a
provision for onerous contracts is presented separately
under ‘Provisions'' (Ind AS 37).

"Other income:

(a) Interest income is recognised on a time-proportion
basis using the effective interest rate, provided it
is probable that the economic benefits will flow to
the Company and the amount can be measured
reliably.

(b) Dividend income is recognised when the
Company''s right to receive payment is established.

(c) Government grants that are revenue in nature and
relate to compensation for qualifying costs are
recognised in the Statement of Profit and Loss in
the period in which such costs are incurred.

(d) All other items of income are recognised when the
right to receive such income is established and it
is probable that the economic benefits will flow to
the Company and the amount can be measured
reliably."

2.7 Employee Benefits

(a) Short-term employee benefits: Salaries, wages,
short-term compensated absences, bonus, ex-
gratia and performance-linked rewards expected
to be settled wholly within twelve months of the
employees rendering the related service are
classified as short-term employee benefits and are
recognised as an expense in the period in which
the service is rendered.

(b) Defined contribution plans: The Company''s
contributions to provident fund and employees''
state insurance are defined contribution plans.
Contributions are charged to the Statement of
Profit and Loss in the period to which they relate,
as and when the related service is rendered. The
Company has no further obligation beyond its
contribution.

(c) Defined benefit plans: The Company provides
gratuity to employees who have rendered
continuous service of five years, payable on
retirement or termination and computed on the
basis of the employee''s last-drawn basic salary.
The gratuity plan is unfunded; the Company has
not set up any plan assets or fund (such as an
insurer-managed trust) to meet this obligation.
The liability recognised in the Balance Sheet is the
present value of the defined benefit obligation at
the reporting date, determined by an independent
actuary using the projected unit credit method
and discounted by reference to market yields
on government bonds. Net interest on the net
defined benefit liability is included in employee
benefit expenses in the Statement of Profit and
Loss. Remeasurement gains and losses arising
from experience adjustments and changes in
actuarial assumptions are recognised in Other
Comprehensive Income in the period in which
they arise and are not reclassified to profit or
loss. Past service cost is recognised in profit
or loss in the period of a plan amendment or
curtailment.

2.8 Fair Value Measurement

Where the fair value of a financial asset or financial
liability cannot be measured based on quoted prices
in active markets, it is measured using valuation
techniques, including the discounted cash flow (DCF)

model. Inputs to these techniques are taken from
observable markets where possible; where this is not
feasible, a degree of judgement is applied in estimating
fair values, having regard to inputs such as liquidity
risk, credit risk and volatility. All assets and liabilities
measured at fair value are categorised within the
fair value hierarchy (Levels 1, 2 and 3) based on the
lowest-level input that is significant to the fair value
measurement as a whole.

2.9 Income Taxes

Income tax expense represents the sum of current
tax and deferred tax. Current and deferred tax are
recognised in the Statement of Profit and Loss, except
to the extent that they relate to items recognised in
Other Comprehensive Income or directly in equity, in
which case the tax is also recognised in OCI or equity
respectively.

Current tax: Current tax assets and liabilities are
measured at the amount expected to be recovered
from, or paid to, the taxation authorities, using the tax
rates and tax laws that are enacted or substantively
enacted at the reporting date.

Deferred tax: Deferred tax is recognised on temporary
differences between the carrying amounts of assets
and liabilities in the financial statements and the
corresponding tax bases used in the computation of
taxable profit, measured at the tax rates that are enacted
or substantively enacted at the reporting date and are
expected to apply when the asset is realised or the
liability is settled. Deferred tax liabilities are generally
recognised for all taxable temporary differences.
Deferred tax assets are recognised for all deductible
temporary differences and unused tax losses/credits to
the extent that it is probable that future taxable profits
will be available against which they can be utilised. The
carrying amount of deferred tax assets is reviewed at
each reporting date and reduced to the extent that it is
no longer probable that sufficient taxable profit will be
available. Deferred tax assets and liabilities are offset
where there is a legally enforceable right of set-off and
they relate to income taxes levied by the same taxation
authority.

2.10 Property, Plant and Equipment

"Property, Plant and Equipment is recognized when it
is probable that future economic benefits associated
with the item will flow to the Company and the cost
can be measured reliably. Items of property, plant
and equipment are measured at cost, which includes
capitalised eligible borrowing costs, less accumulated
depreciation and accumulated impairment losses, if any.
Cost of an item of property, plant and equipment

comprises its purchase price, including import duties
and non-refundable purchase taxes, after deducting
trade discounts and rebates, any directly attributable
cost of bringing the item to its working condition for its
intended use and estimated costs of dismantling and
removing the item and restoring the site on which it is
located.Subsequent costs are included in the asset''s
carrying amount, or recognised as a separate asset,
only when it is probable that future economic benefits
will flow to the Company and the cost can be measured
reliably. Freehold land is not depreciated. "

Depreciation, useful lives and residual values:
Depreciable amount is the cost of an asset (or other
amount substituted for cost) less its estimated
residual value. During the year, the Company changed
the method of depreciation on property, plant and
equipment from the Written Down Value (WDV) method
to the Straight Line Method (SLM), as management
believes the SLM more appropriately reflects the
pattern in which the future economic benefits of the
assets are expected to be consumed; the change has
been applied as a change in accounting estimate.
Depreciation on additions / (disposals) is provided on a
pro-rata basis i.e. from / (upto) the date on which asset
is ready for use / (disposed of)Depreciation is provided
over the estimated useful lives, which are consistent
with Schedule II to the Companies Act, 2013, as
follows:

The residual values, useful lives and method of
depreciation are reviewed at each financial year-end
and adjusted prospectively, if appropriate. An item
of property, plant and equipment and any significant
part is derecognised on disposal or when no future
economic benefits are expected; gains or losses on
derecognition are recognised in the Statement of Profit
and Loss.

2.11 Capital Work-in-Progress

Projects under which tangible assets are not yet ready
for their intended use are carried as capital work-
in-progress at cost, comprising direct cost, related
incidental expenses and attributable borrowing costs.
Depreciation is not provided on capital work-in¬
progress until construction or installation is complete
and the asset is ready for its intended use.

2.12 Intangible Assets

Intangible assets that the Company controls and from
which it expects future economic benefits are capitalised
upon acquisition at cost comprising the purchase price
and directly attributable costs to prepare the assets or
its intended use. Intangible assets acquired separately
are measured on initial recognition at cost. Following
initial recognition, intangible assets are carried at
cost less accumulated amortisation and accumulated
impairment losses, if any. Intangible assets comprising
computer software are amortised on a straight-line
basis over their estimated useful life of six years.
The amortisation period and method are reviewed at
each financial year-end and adjusted prospectively,
if appropriate. Intangible Asset is derecognized upon
disposal or when no future economic benefits are
expected from its use or disposal. Any gain or loss
arising on derecognition is recognized in the Statement
of Profit and Loss in the same period

2.13 Impairment of Non-Financial Assets

At each reporting date, the Company assesses whether
there is any indication that its property, plant and
equipment, right-of-use assets and intangible assets
may be impaired. If any such indication exists, the
recoverable amount of the asset is estimated in order
to determine the extent of the impairment loss, if any.
Recoverable amount is the higher of an asset''s fair
value less costs of disposal and its value in use. Value
in use is determined by discounting the estimated
future cash flows to their present value using a pre-tax
discount rate that reflects current market assessments
of the time value of money and the risks specific to
the asset. Where the recoverable amount of an asset
(or cash-generating unit) is estimated to be less than
its carrying amount, the carrying amount is reduced
to the recoverable amount and the impairment loss is
recognised immediately in the Statement of Profit and
Loss. An impairment loss recognised in prior periods
(other than for goodwill) is reversed if, and only if, there
has been a change in the estimates used to determine
the recoverable amount, limited to the carrying amount
that would have been determined had no impairment
loss been recognised.

2.14 Inventories

Stock of units in completed projects and work-in¬
progress viz., Construction material, components,

stores and spares are valued at the lower of cost and
net realisable value. Cost is the aggregate of materials,
contract works, direct expenses, provisions and
apportioned borrowing costs, net of scrap receipts
and all other costs incurred to bringing in the Inventory
to their present location and condition. Net realisable
value is the estimated selling price in the ordinary
course of business less the estimated costs necessary
to make the sale.

2.15 Financial Instruments

Initial recognition and measurement: Financial assets
and financial liabilities are recognised when the
Company becomes a party to the contractual provisions
of the instrument. They are initially measured at
fair value plus, in the case of financial assets and
liabilities not measured at fair value through profit or
loss (FVTPL), transaction costs directly attributable
to their acquisition or issue. Trade receivables that
do not contain a significant financing component are
measured at their transaction price.

Classification and subsequent measurement of
financial assets: Based on the Company''s business
model for managing the asset and the contractual cash
flow characteristics, financial assets are subsequently
measured at: (i) amortised cost - assets held to collect
contractual cash flows that are solely payments of
principal and interest (e.g. trade receivables, loans,
deposits, bank balances), measured using the
effective interest method; (ii) fair value through other
comprehensive income (FVOCI) - where the asset is held
both to collect contractual cash flows and to sell; and
(iii) fair value through profit or loss (FVTPL) - all other
financial assets, including investments in instruments
for which the FVOCI election is not made.

Impairment of financial assets (Expected Credit Loss):
The Company applies the expected credit loss (ECL)
model for measuring impairment of financial assets
carried at amortised cost and contract assets. For
trade receivables and contract assets, the Company
applies the simplified approach and recognises a loss
allowance based on lifetime expected credit losses at
each reporting date, using a provision matrix based on
historical credit-loss experience adjusted for forward¬
looking information.

Financial liabilities: Financial liabilities are classified
as measured at amortised cost or FVTPL. Borrowings,
trade and other payables and other financial liabilities
are subsequently measured at amortised cost using
the effective interest method. A financial liability is
derecognised when the obligation is discharged,
cancelled or expires.

Derecognition and offsetting: A financial asset is
derecognised when the contractual rights to the cash
flows expire or are transferred along with substantially
all the risks and rewards of ownership. Financial assets
and financial liabilities are offset and the net amount
presented in the Balance Sheet only when the Company
has a legally enforceable right to set off and intends
either to settle on a net basis or to realise the asset and
settle the liability simultaneously.

II Significant Accounting Policies

a) Basis of preparation:

The Statement of Assets and Liabilities of the Company as on March 31, 2025, and the Statement of Profit and Loss
and Statement of Cash Flows for the financial year ended on March 31, 2025 and the annexure thereto (collectively,
the "Financial Statements”) have been compiled by the management from the Financial Statements of the Company
for the financial year ended on March 31, 2025.The Financial Statements have been prepared in accordance with

Indian Generally Accepted Accounting Principles (IGAAP) under historical cost convention on the accrual basis. GAAP
comprises mandatory accounting standards prescribed by the Companies (Accounting Standards) Rules, 2021.

b) Revenue recognition:

"A contract is considered completed when the last technical milestone is achieved, which occurs upon contractual
transfer of ownership of the asset. The Company recognises revenue as per Accounting Standard AS-7 (Percentage-
Of-Completion Method), based primarily on contract cost incurred to date compared to total estimated contract costs.
Construction related performance obligations are satisfied over a period of time and contracts revenue is recognised
over a period of time by measuring progress towards complete satisfaction of the performance obligation at the
reporting date. This percentage of completion could be based on technical milestones or as per the contractual terms
specified. The progress is measured based on the proportion of contract costs incurred for work performed to date.

The Company recognises 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. Due to the nature of the work required to be performed on many of the performance obligations, the estimation
of total revenue and cost at completion is complex, subject to many variables and requires significant judgment.
The difference between the timing of revenue recognised and customer billings result in changes to contract assets
and contract liabilities. Contractual retention amounts billed to customers are generally due upon expiration of the
contract period. The contracts generally result in revenue recognised in excess of billings which are presented as
contract assets on the statement of financial position. Amounts billed and due from customers are classified as
receivables on the statement of financial position.

Interest Income: Revenue is recognized on accrual basis as and when it is recognized.

Other Income : Other items of income and expenditure are recognized on accrual basis and as a going concern basis,
and the accounting policies are consistent with the generally accepted accounting policies.

c) Property Plant and Equipment including Intangible assets:

Property Plant and Equipments are stated at cost, less accumulated depreciation. Cost includes cost of acquisition
including material cost, freight, installation cost, duties and taxes, and other incidental expenses, incurred up to the
installation stage, related to such acquisition.

Intangible assets are stated at their cost of acquisition, less accumulated amortization and impairment losses, if any.
An intangible asset is recognized, where it is probable that the future economic benefits attributable to the asset will
flow to the enterprise and the cost of the asset can be measured reliably.

d) Depreciation & Amortisation:

The Company has provided depreciation under the ''written down'' method as per the estimated useful lives as
specified in Schedule II of the Companies Act 2013. Depreciation on new assets acquired during the year is provided
from the date of acquisition to the end of the financial year. In respect of the assets sold during the year, depreciation
is provided from the beginning of the year till the date of its disposal. Residual values of assets are measured at not
more than 5% of their original cost. Individual low cost assets (acquired for less than 5000) are depreciated within a
year of acquisition.

Estimated Useful life of Property, Plant and Equipments:

(e) Use of estimates:

The preparation of the financial statements in conformity with Generally Accepted Accounting Principles requires
the Management to make estimates and assumptions that affect the reported balances of assets and liabilities and
disclosures relating to contingent assets and liabilities as at the date of the financial statements and the reported
amounts of income and expenses during the year. Examples of such estimates include provisions for doubtful debts,
income taxes, post - sales customer support and the useful lives of Property Plant and Equipments and intangible
assets.

f) Employee Benefits:

Benefits such as salaries, wages and performance incentives are charged to the statement of profit and loss at the
actual amounts due in the period in which the employee renders the related service. However the Company has
not adopted any policy for payment of Bonus and thus no amount has been charged to profit and loss account or
provisioned in the balance sheet.

Post-Employment benefits:

Defined benefit plan:

Gratuity liability is a defined benefit obligation and is unfunded. The Company accounts for liability for future gratuity
benefits based on the actuarial valuation using Projected Unit Credit Method carried out as at the end of each
financial year.

Defined contribution Plan:

The company makes provident fund and employee state insurance scheme contributions which are defined
contribution plans, for qualifying employees. Under these schemes, both the employee and the Firm make monthly
contributions. The employer contribution is charged off to Profit & Loss Account as an expense.

g) Taxes on Income:

Income Tax expense is accounted for in accordance with AS-22 "Accounting for Taxes on Income" for both Current
Tax and Deferred Tax stated below:

A. Current Tax:

Provision for current tax is made in accordance with the provisions of the Income Tax Act, 1961.

B. Deferred Tax:

Deferred tax is recognised, subject to the consideration of prudence, as the tax effect of timing difference between
the taxable income and accounting income computed for the current accounting year using the tax rates and tax
laws that have been enacted or substantially enacted by the balance sheet date.Deferred tax assets are recognised
and carried forward to the extent that there is a reasonable certainty, except arising from unabsorbed depreciation
and carried forward losses, that sufficient future taxable income will be available against which such deferred tax
assets can be realised.