ಕಂಪನಿಯ ಅಕೌಂಟಿಗ್ ಪಾಲಿಸಿ Annu Projects Ltd.

i) Property, Plant and Equipment (PPE)

The Company has elected to continue with the carrying value of all its property, plant and equipment
recognised as on the date of transition measured as per the previous GAAP and use that carrying value
as the deemed cost of property, plant, and equipment.

An item is recognised as an asset, if and only if, it is probable that the future economic benefits
associated with the item will flow to the Company and its cost can be measured reliably. PPE is stated
at cost, net of accumulated depreciation and accumulated impairment losses, if any. The initial cost of
PPE comprises purchase price (including non-refundable duties and taxes but excluding any trade
discounts and rebates), borrowing costs if capitalization criteria are met and directly attributable cost
of bringing the asset to its working condition for the intended use.

Subsequent costs are included in the asset’s carrying amount or recognised as separate assets, as
appropriate, only when it is probable that the future economic benefits associated with expenditure will
flow to the Company and the cost of the item can be measured reliably. When significant parts of
property, plant and equipment are required to be replaced at intervals, the Company recognises such
components separately and depreciates them based on their specific useful lives. All other repairs and
maintenance are charged to Statement of Profit and Loss at the time of incurrence.

Capital work-in-progress are measured at cost less accumulated impairment losses if any.

Gains or losses arising from de-recognition of PPE are measured as the difference between the net
disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit
and loss when the asset is derecognized.

Depreciation is provided on Straight Line Method (SLM) basis based on life assigned to each asset in
accordance with Schedule II of the Act.

The useful lives, residual values and depreciation method of PPE are reviewed, and adjusted
appropriately, at-least as at each reporting date so, as to ensure that the method and period of
depreciation are consistent with the expected pattern of economic benefits from these assets. The effects
of any change in the estimated useful lives, residual values and / or depreciation method is accounted
prospectively, and accordingly the depreciation is calculated over the PPE’s remaining revised useful
life.

Deposits and advances paid towards the acquisition of property, plant and equipment outstanding as at
each reporting date is classified as capital advances under other current assets and the cost of property,
plant, and equipment not available for use before such dates are disclosed under capital work-in¬
progress.

ii) Intangible Assets

Identifiable intangible assets are recognised when the Company controls the asset, it is probable that
future economic benefits attributed to the asset will flow to the Company and the cost of the asset can
be measured reliably.

Intangible assets are measured on initial recognition at cost. Following initial recognition, intangible
assets are carried at cost less accumulated amortization and accumulated impairment losses, if any.
Intangible assets are amortized on a straight-line basis over the lower of estimated useful economic life
or over a period of 10 years.

The amortization period and the amortization method are reviewed at least at each financial year end.
If the expected useful life of the asset is significantly different from previous estimates, the amortization
period is changed prospectively. If there has been a notable change in the expected pattern of economic
benefits from the asset, the amortization method is changed to reflect the changed pattern. Such changes
are accounted for in accordance with Ind AS 8 - Accounting Policies, Changes in Accounting Estimates
and Errors.

Gains or losses arising from de-recognition of an intangible asset are measured as the difference
between the net disposal proceeds and the carrying amount of the asset and are recognized in the
statement of profit and loss when the asset is derecognized.

iii) Investment Property

The Company has elected to continue with the carrying value for all of its investment properties
recognised as on the transition measured as per the previous GAAP and use that carrying value as the
deemed cost of investment property.

Investment Properties are measured initially at cost, including transaction costs. Subsequent to initial
recognition, investment properties are stated at cost less accumulated depreciation and accumulated
impairment loss, if any.

An investment in land or buildings, which is held by the Company to earn rentals or for capital
appreciation or both, rather than intended to be for use by, or in the operations of, the Company, is
classified as investment property.

The cost comprises purchase price, borrowing costs if capitalization criteria are met and directly
attributable cost of bringing the investment property to its working condition for the intended use. Any
trade discounts and rebates are deducted in arriving at the purchase price.

Depreciation on building component of investment property is calculated on a straight-line basis.

Investment properties are derecognised either when they have been disposed of or when they are
permanently withdrawn from use and no future economic benefit is expected from their disposal. The
difference between the net disposal proceeds and the carrying amount of the asset is recognised in profit
or loss in the year of derecognition.

iv) Borrowing Cost:

Borrowing costs directly attributable to the acquisition, construction or production of an asset that
necessarily takes a substantial period to get ready for its intended use or sale are capitalized as part of
the cost of the respective asset. All other borrowing costs are expensed in the period they occur.
Borrowing costs consist of interest and other costs that an entity incurs in connection with the
borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an
adjustment to the borrowing costs.

v) Financial Instrument

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.

A) Financial asset

All financial assets are recognized initially at fair value. Transaction costs that are directly
attributable to the acquisition of financial assets (other than financial assets at fair value through
profit or loss) are added to the fair value measured on initial recognition of financial asset. Purchase
and sale of financial assets are accounted for at settlement date.

Classification

a) Financial instruments at amortized cost

A financial instrument is measured at the amortized cost if both the following conditions are met:

a. The asset is held within a business model whose objective is to hold assets for collecting
contractual cash flows, and

b. Contractual terms of the asset give rise on specified dates to cash flows that are solely payments
of principal and interest (SPPI) on the principal amount outstanding.

After initial measurement, such financial assets are subsequently measured at amortized cost
using the effective interest rate (EIR) method. Amortized cost is calculated by considering any
discount or premium on acquisition and fees or costs that are an integral part of the EIR. The
EIR amortization is included in other income in the statement of profit and loss. The losses
arising from impairment are recognized in the statement of profit and loss.

b) Financial instruments at Fair Value through Other Comprehensive Income (FVTOCI)

A financial instrument is classified and measured at FVTOCI if both of the following criteria
are met:

a. The objective of the business model is achieved both by collecting contractual cash flows
and selling the financial assets, and

b. The asset’s contractual cash flows represent solely payments of principal and interest
thereon.

Financial instruments included within the OCI category are measured initially as well as at
each reporting date at fair value. Fair value movements are recognized in OCI. On
derecognition of the asset, cumulative gain or loss previously recognized in OCI is reclassified
from OCI to statement of Profit and Loss.

c) Financial instruments at Fair Value through Profit and Loss (FVTPL)

Any financial instrument, which does not meet the criteria for categorization at amortized cost
or at FVTOCI, is classified at FVTPL. Financial instruments included in the FVTPL category
are measured at fair value with all changes recognized in the statement of profit and loss.

Offsetting of financial instruments

Financial assets and financial liabilities are Offset, and the net amount is reported in the balance
sheet if there is a currently enforceable legal right to off Set the recognised amounts and there
is an intention to settle on a net basis, to realise the assets and settle the liabilities
simultaneously.

Equity investments

All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments
which are held for trading are classified as at FVTPL. For all other equity instruments, the
Company may make an irrevocable election to present in OCI all subsequent changes in the
fair value. The Company makes such election on an instrument-by-instrument basis.

The classification is made on initial recognition and is irrevocable. If the Company decides to
classify an equity instrument as at FVTOCI, then all fair value changes on the instrument,
excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI
to P&L, even on sale of investment. Equity instruments included within the FVTPL category
are measured at fair value with all changes recognized in the Standalone Statement of Profit &
Loss.

Derecognition of financial assets

A financial asset is primarily derecognized when the rights to receive cash flows from the asset
have expired, or the Company has transferred its rights to receive cash flows from the asset.

Impairment of financial assets

The Company applies the expected credit loss (ECL) model for recognising impairment loss
on financial assets measured at amortised cost, debt instruments at FVTOCI, trade receivables,
other contractual rights to receive cash or the other financial asset.

The Company measures the loss allowance for a financial instrument at an amount equal to
the lifetime expected credit losses if the credit risk on that financial instrument has increased
significantly since initial recognition. Further, for the purpose of measuring lifetime expected
credit loss allowance for trade receivables, the Company has used a practical expedient as
permitted under Ind AS 109. This expected credit loss allowance is computed based on
historical credit loss experience and adjustments for forward looking information.

All financial liabilities are recognized initially at fair value. The Company’s financial liabilities
include borrowings, trade payables and other payables.

After initial recognition, financial liabilities are subsequently measured either at amortized cost
using the effective interest rate (EIR) method, or at FVTPL. Gains and losses are recognized in
the statement of profit and loss when the liabilities are derecognized as well as through the EIR
amortization process.

Amortized cost is calculated by considering any discount or premium on acquisition and fees or
costs which are an integral part of the EIR. The EIR amortization is included as finance costs in
the statement of profit and loss.

Derecognition

A financial liability is derecognized when the obligation under the liability is discharged,
cancelled, or expires. The gain or loss on derecognition is recognised in the statement of profit
and loss.

Loans and borrowings

After initial recognition, interest-bearing loans and borrowings are subsequently measured at
amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the
liabilities are derecognised as well as through the EIR amortisation process.

vi) Inventory

Inventory comprises of Material in Transit, Material at Site and Work in progress.

Material in Transit is valued at cost and material at sites have been valued at cost or Net Realisable
Value, whichever is lower on FIFO basis.

Cost of inventory comprises of cost of purchase, procurement, logistic expenses and other construction
overheads—net of recoverable taxes—incurred to bring materials to their respective present location
and condition.

Work-in-Progress w.r.t construction contracts represents ongoing partly executed work/projects in
progress on the date of balance sheet and includes contractual variations, cost of material, labour and
other expenses incurred towards substitute items, extra items, part rates, deviations etc.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated
costs of completion and the estimated costs necessary to make the sale.

The net realisable value of work-in-progress is determined with reference to the selling prices of related
finished products. Raw materials and other supplies held for use in the production of finished products
are not written down below cost, except in cases where material prices have declined and it is estimated
that the cost of the finished products will exceed their net realisable value. The comparison of cost and
net realisable value is made on an item-by-item basis.

vii) Earnings per share

Basic earnings per share are calculated by dividing the profit or loss for the period attributable to equity
shareholders by the weighted average number of equities shares outstanding during the period. The
weighted average number of equity shares outstanding during the period is adjusted for events such as
bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of shares)
that have changed the number of equity shares outstanding, without a corresponding change in
resources.

To 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 are adjusted for
the effects of all dilutive potential equity shares.

viii) Income tax:

The income tax expense comprises of current and deferred income tax. Income tax is recognised in the
statement of profit and loss, except to the extent that it relates to items recognised in the other
comprehensive income or directly in equity, in which case the related income tax is also recognised
accordingly.

a. Current tax:

The current tax is calculated based on the tax rates, laws, and regulations, which have been enacted
or substantively enacted as at the reporting date. The payment made in excess / (shortfall) of the
Company’s income tax obligation for the period are recognised in the balance sheet as current
income tax assets / liabilities. Any interest related to accrued liabilities for potential tax assessments
are not included in Income tax charge or (credit) but are recognised within finance costs.

Current income tax assets and liabilities are off set against each other, and the resultant net amount
is presented in the balance sheet, if and only when,

(a) the Company currently has a legally enforceable right to set-off the current income tax assets
and liabilities, and

(b) when it relates to income tax levied by the same taxation authority and where there is an
intention to settle the current income tax balances on net basis.

b. Deferred tax

Deferred tax is recognised, using the liability method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying values in the SFS.

Deferred tax assets are recognised only to the extent that it is probable that future taxable profit
will be available against which the temporary differences can be used.

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 to allow all or part
of the deferred tax asset to be used. Unrecognised deferred tax assets are re-assessed at each
reporting date and are recognised to the extent that it has become probable that future taxable profits
will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year
when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted at the reporting date.

ix) Impairment of non-financial asset

The Company assesses at each reporting date, whether there is an indication that an asset may be
impaired. If any indication exists, or when annual impairment testing for an asset is required, the
Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an
assets or cash-generating unit’s (CGU) fair value less costs of disposal and its value in use. The
recoverable amount is determined for an individual asset, unless the asset does not generate cash
inflows that are independent of those from other assets or Companys of assets. When the carrying
amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is
written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted 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. In determining fair value less costs of disposal, recent market transactions are
considered. If no such transactions can be identified, an appropriate valuation model is used.

The Company bases its impairment calculation on detailed budgets and forecast calculations, which
are prepared separately for each of the Company’s CGUs to which the individual assets are allocated.
Impairment losses of continuing operations are recognised in the statement of profit and loss.

For assets, an assessment is made at each reporting date to determine whether there is an indication that
previously recognised impairment losses no longer exist or have decreased. If such indication exists,
the Company estimates the assets or CGU’s recoverable amount. A previously recognised impairment
loss is reversed only if there has been a change in the assumptions used to determine the asset’s
recoverable amount since the last impairment loss was recognised. The reversal is limited so that the
carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount
that would have been determined, net of depreciation, had no impairment loss been recognised for the
asset in prior years. Such reversal is recognised in the statement of profit and loss.