We have audited the accompanying standalone financialstatements of Praj Industries Limited ("the Company"),which comprise the Balance Sheet as at March 31, 2026,and the Statement of Profit and Loss (including OtherComprehensive Income), the Statement of Changes inEquity and the Statement of Cash Flows for the year thenended, and notes to the standalone financial statements,including material accounting policy information and otherexplanatory information (hereinafter referred to as the"standalone financial statements").
In our opinion and to the best of our information andaccording to the explanations given to us, the aforesaidstandalone financial statements give the informationrequired by the Companies Act, 2013 ("the Act') in the mannerso required and give a true and fair view in conformity withthe Indian Accounting Standards prescribed under section133 of the Act read with Companies (Indian AccountingStandards) Rules, 2015, as amended ("Ind AS") and otheraccounting principles generally accepted in India, of thestate of affairs of the Company as at March 31, 2026, andits profit (including other comprehensive income), changesin equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone financialstatements in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Act. Ourresponsibilities under those SAs are further described in theAuditor's Responsibilities for the Audit of the standaloneFinancial Statements section of our report. We areindependent of the Company in accordance with the Codeof Ethics issued by the Institute of Chartered Accountantsof India together with the ethical requirements that arerelevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules thereunder,and we have fulfilled our other ethical responsibilitiesin accordance with these requirements and the Codeof Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis forour opinion.
Key Audit Matters
Key audit matters are those matters that, in our professionaljudgment, were of most significance in
our audit of the standalone financial statements for theyear ended March 31, 2026. These matters were addressedin the context of our audit of the standalone financialstatements 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 thekey audit matters to be communicated in our report.
Sr. No
How the Key Audit Matters was addressed in our audit
1.
Revenues are recognised under Ind AS 115,
Our procedures in respect of recognition of construction contract
"Revenue from Contracts with Customers"
revenue and related cost included the following:
basis the nature and type of contracts (i.e.,
1. Tested the design, implementation and operating effectiveness
products, projects and services) involved.
of key internal financial controls, including those related to
The Company is engaged in the business
estimation of construction contract costs, contract revenue and
of process and project engineering. The
review and approval thereof.
Company recognizes revenue on the basis
2. Assessed the appropriateness of the revenue recognition
of stage of completion in proportion of
accounting policies in accordance with Ind AS 115 "Revenue
the contract costs incurred at balance
from Contracts with Customers".
sheet date, relative to the total estimated
3. Tested sample contracts for identification of performance
costs of the contract to completion.
obligations and contract value.
The recognition of revenue is therefore
4. For selected sample of contracts with customers, performed the
dependent on estimates in relation to total
following procedures:
estimated costs of each such contract. This
i) Obtained and read customer contracts, customer
process involves significant management
communications, and price or scope variation orders if any
judgement, particularly in estimating total
for the project.
costs to complete, assessing project
ii) Tested the calculation of percentage of completion as
progress, and determining the timing of
per input method adopted by the management including
revenue and profit recognition. These
the testing of costs incurred and recorded against the
estimates also include contingencies
contracts.
for uncertainties such as project risks
iii) Verified relevant supporting documents and performed
and claims for liquidated damages if
cut off procedures for construction contract related costs
any, which are reviewed and reassessed
incurred through the reporting period.
periodically during the contract lifecycle
iv) Assessment of costs-to-complete: Performed procedures
. Moreover, significant judgements are
on balance cost estimation, compared actual costs to
involved in determining the expected
budgeted costs and discussed variances with project
losses on onerous contracts, when such
teams, tested the costs accrued at year-end and tested the
losses become probable based on the
significant assumptions for balance costs-to- complete.
expected total contract cost. Revenue
Discussed progress to date with project teams to determine
and profits for the year may deviate
whether the remaining costs to complete appear sufficient
significantly on account of changes in
for the residual risks identified for those projects.
the above judgements and estimates.
v) Performed retrospective review of Management's
Therefore, considering the judgements and
forecasting process by reviewing past trends of estimated
complexities involved in the estimation
costs to actual costs over time, discussed variances with
process and due to the significance of
project teams and substantively tested where relevant,
the amounts to the standalone financial
the elements of the committed cost to executed purchase
statements, this is a key audit matter. Refer
orders
to note no 29 of the standalone financial
5. Provision for liquidated damages and claims: Discussed with
statements.
management and project teams to understand the status ofthe project, likelihood of customers imposing any contractualpenalties through inspection of the relevant documents, etc.
6. Performed analytical procedures and conducted inquiriesabout any unusual trends of revenue recognition, checkedexceptions for contracts with low or negative margins, lossmaking contracts/ onerous contracts, contracts with significantchanges in cost estimates and significant overdue net receivablepositions for contracts, etc
7. Ensured that the disclosures provided in notes are in accordancewith the Ind AS 115 and Companies Act, 2013.
2.
Impairment of trade receivables andcontract assets is accounted throughallowance for Expected Credit Losses(ECL) under Ind AS 109. The assumptionsused for estimating the expected creditloss in respect of these balances is anarea which is influenced by Management'sjudgment.
The calculation of the impairmentallowance under ECL method is highlyjudgmental as it requires managementto assess the estimated credit losses inrespect of trade receivables based oncredit risk profile of customers, projectstatus, past collection experience,ongoing litigations and disputes, if any,economic and market conditions andapplicable forward looking estimates andrecoverability of contract assets ('unbilledrevenue') and retention money.
Considering such assessment,management uses a provision matrix torecognize impairment for expected creditlosses in respect of trade receivables andcontract assets.
Given the relative significance of thesebalances to the standalone financialstatements, Management judgementand uncertainties involved as well as thenature and extent of audit proceduresperformed to assess the recoverability oftrade receivables and contract assets, wedetermined this to be a key audit matter.Refer to note no 38 of the standalonefinancial statements.
Our procedures in respect of recoverability of trade receivables andcontract assets included the following:
1) Evaluated the design and tested the operating effectiveness ofkey internal financial controls over Management's assessmentof recoverability of trade receivables and contract assets.
2) For selected samples of contracts
i) Obtained an understanding from Management therelated contractual terms, collection experience, basis ofManagement's assessment of collectability, and expectedrealization plan.
ii) Performed test of details over key contract terms,correspondence with customers and subsequentsettlements/collections, where relevant.
iii) Tested the ageing of trade receivables and contract assetsat the year end.
3) Reviewed the key assumptions and data sources used byManagement in the provision matrix model to calculate theprobability of default and estimate the expected credit lossesin respect of trade receivables and contract assets.
4) For aged contract asset balances, held discussions withmanagement on timing and expectation of recoverability,historical payment records, status of certified dues and otherrelevant correspondence with customers to challenge adequacyof impairment allowance considered.
5) Verified the consistency of various inputs and assumptionsuse by the Company's management to determine impairmentprovisions.
6) Ensured the adequacy of presentation and related disclosuresin the financial statements are in line with the accountingstandards and Schedule III.
3.
As at March 31, 2026, the Company heldinter corporate loans amounting to INRof ' 2,910.000 millions and investmentamounting to ' 0.50 millions in Praj GenXLimited, a wholly owned subsidiary.
Due to accumulation of losses amountingto ' 1831.675 million incurred by thesubsidiary, there is risk of Impairment ofinvestments and loans and advances givento the subsidiary.
The recoverable amount of the investmentand loans granted to the subsidiary isassessed based on future discounted cashflows of the subsidiary. We considered thisas a key audit matter due to significantjudgement involved in estimating futurecash flows of the subsidiary and indetermining the discount rate to be used.Changes in inputs and assumptions couldimpact the results of the impairmentassessment.
Our procedures in respect of impairment assessment of investment
and recoverability of loans included the following:
1) Tested design and implementation and operating effectivenessof controls over the Company's process of impairmentassessment and approval of forecasts.
2) Assessed the valuation methodologies applied by the Company,including understanding the basis and key assumptionsunderlying projected profitability.
3) Evaluated the reasonableness of key assumptions and analysedforecasted cash flows of subsidiary based on our understandingof the Company and the industry/markets in which they operate.
4) Compared the forecasted financial information with historicalperformance to assess consistency and reliability ofmanagement's estimates.
5) With the assistance of our valuation specialists, evaluated thereasonableness of the methodology and assumptions used bytesting the source information underlying the determinationof such assumptions and mathematical accuracy of thecalculations;
6) Performed sensitivity analysis of the various key assumptions toassess its impact on the impairment.
7) Obtained independent confirmations to assess completenessand existence of loans given to subsidiary as on 31 March 2026.
8) Ensured the adequacy of disclosures in respect of theinvestments and loans in subsidiary.
Information Other than the Standalone FinancialStatements and Auditor's Report Thereon
The Company's Board of Directors is responsible forthe other information. The other information comprisesthe information included in the Annual Report, but doesnot include the standalone financial statements and ourauditor's report thereon, which we obtained prior to the dateof this auditor's report.
Our opinion on the standalone financial statements doesnot cover the other information and we do not express anyform of assurance conclusion thereon.
In connection with our audit of the standalone financialstatements, our responsibility is to read the other informationidentified above and, in doing so, consider whether the otherinformation is materially inconsistent with the standalonefinancial 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 otherinformation that we obtained prior to the date of this auditor'sreport, we conclude that there is a material misstatement ofthis other information, we are required to report that fact.We have nothing to report in this regard.
Responsibilities of Management and Board of Directors forthe Standalone Financial Statements
The Company's Management and Board of Directors areresponsible for the matters stated in section 134(5) of theAct with respect to the preparation of these standalonefinancial statements that give a true and fair view of thefinancial position, financial performance, changes in equityand cash flows of the Company in accordance with theaccounting principles generally accepted in India, includingthe Indian Accounting Standards specified under section133 of the Act. This responsibility also includes maintenanceof adequate accounting records in accordance with theprovisions of the Act for safeguarding of the assets ofthe Company and for preventing and detecting frauds andother irregularities; selection and application of appropriateaccounting policies; making judgments and estimates thatare reasonable and prudent; and design, implementationand maintenance of adequate internal financial controls,that were operating effectively for ensuring the accuracyand completeness of the accounting records, relevant tothe preparation and presentation of the standalone financialstatement that give a true and fair view and are free frommaterial misstatement, whether due to fraud or error.
In preparing the standalone financial statements, theCompany's management and the Board of Directors of theCompany are responsible for assessing the Company'sability to continue as a going concern, disclosing, asapplicable, matters related to going concern and usingthe going concern basis of accounting unless the Boardof Directors either intends to liquidate the Company or tocease operations, or has no realistic alternative but to do so.
The Company's management and the Board of Directorsis also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements
Our objectives are to obtain reasonable assurance aboutwhether the standalone financial statements as a wholeare free from material misstatement, whether due to fraudor error, and to issue an auditor's report that includes ouropinion. Reasonable assurance is a high level of assurance,but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and areconsidered material if, individually or in the aggregate, theycould reasonably be expected to influence the economicdecisions of users taken on the basis of these standalonefinancial statements.
We give in "Annexure A" a detailed description of Auditor'sresponsibilities for Audit of the Standalone FinancialStatements.
Other Matter:
The standalone financial statements of the Company for theyear ended March 31,2025, were audited by another auditorwhose report dated April 29, 2025 expressed an unmodifiedopinion 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 Governmentof India in terms of sub-section (11) of section 143 ofthe Act, we give in "Annexure B" a statement on thematters specified in paragraphs 3 and 4 of the Order, tothe extent applicable.
2. As required by Section 143(3) of the Act, we reportthat:
(a) We have sought and obtained all the informationand explanations which to the best of ourknowledge and belief were necessary for thepurposes of our audit of the aforesaid standalonefinancial statements.
(b) In our opinion, proper books of account asrequired by law relating to preparation of theaforesaid standalone financial statements havebeen kept by the Company so far as it appearsfrom our examination of those books except forthe matters stated in the paragraph 2 (h) (vi)below on reporting under Rule 11(g).
(c) The Balance Sheet, the Statement of Profit andLoss (including other comprehensive income),the Statement of Changes in Equity and theStatement of Cash Flows dealt with by this Reportare in agreement with the books of accountmaintained for the purpose of preparation of thestandalone financial statements.
(d) In our opinion, the aforesaid standalone financialstatements comply with the Ind AS specifiedunder Section 133 of the Act.
(e) On the basis of the written representationsreceived from the directors as on March 31, 2026taken on record by the Board of Directors, noneof the directors are disqualified as on March 31,2026 from being appointed as a director in termsof Section 164 (2) of the Act.
(f) The modification relating to the maintenance ofaccounts and other matters connected therewithare as stated in paragraph 2(b) above onreporting under Section 143(3)(b) and paragraph2(h)(vi) below on reporting under Rule 11(g).
(g) With respect to the adequacy of the internalfinancial controls with reference to standalonefinancial statements of the Company and theoperating effectiveness of such controls, refer toour separate Report in "Annexure C".
(h) With respect to the other matters to be included inthe Auditor's Report in accordance with Rule 11 ofthe Companies (Audit and Auditors) Rules, 2014,in our opinion and to the best of our informationand according to the explanations given to us:
i. The Company has disclosed the impact ofpending litigations on its financial positionin its standalone financial statements -Refer Note 28 to the standalone financialstatements.
ii. The Company has made provision,as required under the applicable lawor accounting standards, for materialforeseeable losses, if any, on long-termcontracts. The Company did not have any
derivative contracts. Refer Note 38 to thestandalone financial statements.
iii. There has been no delay in transferringamounts, to the Investor Education andProtection Fund by the Company during theyear 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 thestandalone financial statements, nofunds have been advanced or loaned orinvested (either from borrowed funds orshare premium or any other sources orkind of funds) by the Company to or in anyother person(s) or entity(ies), includingforeign entities ("Intermediaries"), withthe understanding, whether recordedin writing or otherwise, that theIntermediary shall, directly or indirectlylend or invest in other persons or entitiesidentified in any manner whatsoeverby or on behalf of the Company("Ultimate Beneficiaries") or provideany guarantee, security or the like onbehalf of the Ultimate Beneficiaries.
(b) . The Management has represented
that, to the best of it's knowledge andbelief, as disclosed in the note 41 (vii)to the standalone financial statements,no funds have been received bythe Company from any person(s)or entity(ies), including foreignentities ("Funding Parties"), with theunderstanding, whether recorded inwriting or otherwise, that the Companyshall, directly or indirectly, lend orinvest in other persons or entitiesidentified in any manner whatsoeverby or on behalf of the Funding Party("Ultimate Beneficiaries") or provideany guarantee, security or the like onbehalf of the Ultimate Beneficiaries.
(c) . Based on the audit procedures
performed that have been consideredreasonable and appropriate in thecircumstances, nothing has come toour notice that has caused us to believethat the representations under sub¬clause (i) and (ii) of Rule 11(e) containany material mis-statement.
v. (a). The final dividend proposed in the
previous year, declared and paid bythe Company during the year is inaccordance with section 123 of the Act,as applicable.
(b). The Board of Directors of the Companyhave proposed final dividend for theyear which is subject to the approvalof the members at the ensuing AnnualGeneral Meeting. The dividend declaredis in accordance with section 123 of theAct to the extent it applies to declarationof dividend. (Refer Note 12 (h) to theStandalone financial statements).
vi. Based on examination which includedtest checks, the Company has used anaccounting software for maintaining itsbooks of account which has a feature ofrecording audit trail (edit log) facility andthe same has been operated throughout theyear for all relevant transactions recordedin the software except that we are unableto comment on audit trail at database leveldue to absence of SOC report, as explainedin Note 43 to the financial statements.Further, except for above, audit trail featurehas operated throughout the year forall relevant transactions recorded in theaccounting software. Also, during the courseof our audit, we did not come across anyinstance of audit trail feature being tamperedwith except for above. Additionally, the audittrail of prior year(s) has been preserved by theCompany as per the statutory requirementsfor record retention to the extent it wasenabled and recorded in respective years.
3. In our opinion, according to information, explanationsgiven to us , the remuneration paid or provided bythe Company to its directors is within the limits laidprescribed 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