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Elecon Engineering Company Ltd.

BSE: 505700 Sector: Engineering
NSE: ELECON ISIN Code: INE205B01023
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NSE 00:00 | 24 Sep 169.75 -2.45
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OPEN 173.00
PREVIOUS CLOSE 171.80
VOLUME 79420
52-Week high 185.95
52-Week low 21.50
P/E 24.38
Mkt Cap.(Rs cr) 1,904
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 173.00
CLOSE 171.80
VOLUME 79420
52-Week high 185.95
52-Week low 21.50
P/E 24.38
Mkt Cap.(Rs cr) 1,904
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Elecon Engineering Company Ltd. (ELECON) - Auditors Report

Company auditors report

To

The Members of

ELECON ENGINEERING COMPANY LIMITED

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the accompanying standalone financial statements of Elecon EngineeringCompany Limited ("the Company") which comprise of the Standalone Balance Sheetas at 31 March 2020 the Standalone Statement of Profit and Loss (including othercomprehensive income) Standalone Statement of Changes in Equity and Standalone Statementof Cash Flows for the year then ended and notes to the standalone financial statementsincluding a summary of the significant accounting policies and other explanatoryinformation (hereinafter referred to as "standalone financial statements").

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the Company as at 31 March 2020 and profit and othercomprehensive income changes in equity and its cash flows for the year ended on thatdate. Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder Section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion on the standalone financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. Description of Key Audit Matters Going concernassessment

See Note 2 to the standalone financial statements.

The key audit matter How the matter was addressed in our audit
The Company is in the engineering sector which is under stress and is operating at low margins. Our audit approach
The directors have evaluated the Company's ability to continue as a going concern in the foreseeable future based on various factors particularly projections of future operating cash flows and the forecasted liquidity position. This evaluation of the Company's ability to generate sufficient future operating cash flows on a timely basis and forecasting liquidity is based on certain key estimates and judgements. These include sales forecasts expected margins working capital performance. These are fundamental to assessing the suitability of the basis adopted for the preparation of the standalone financial statements. In view of the significance of the matter we applied the following audit procedures in this area among others to obtain sufficient appropriate audit evidence:
• Evaluated the estimates and judgements made with respect to the cash flow projections. Tested the underlying data and assumptions used and compared with other evidences such as firm orders on hand and order inflows in subsequent period;
• Compared the cash flow forecast used in going concern assessment with the business plan approved by the Board of Directors;
• For this assessment we compared the cash flow forecast prepared in the prior year with the current year's performance of the Company. We verified significant variations identified by the Company;
The Company has relied on existing liquidity and sufficient future operating cash flows to prepare the financial statements on a going concern basis. • Assessed the adequacy of related disclosures in the standalone financial statements with reference to the going concern assessment;
We identified going concern assessment as a key audit matter because it is based on estimates of future performance and is fundamental to assessing the suitability of the basis adopted for the preparation of the standalone financial statements. We have therefore spent significant audit effort in assessing the appropriateness of this assumption.

Revenue Recognition - Long-term construction contracts

See Note 2 and 43 to the standalone financial statements.

The key audit matter How the matter was addressed in our audit
A significant portion of Company's revenues arise from long-term construction contracts where revenue is recognised over time by measuring the progress towards complete satisfaction of the performance obligation using input method. In view of the significance of the matter we applied the following audit procedures in this area among others to obtain sufficient appropriate audit evidence:
• Evaluated the accounting policy for revenue recognition in terms of the relevant accounting standard;
The measurement of progress requires the Company to make estimates and judgements including total estimated contract costs remaining costs to completion and total estimated contract revenues along with contract risks. We identified measurement of revenue from long-term construction contracts as a key audit matter because the above estimation is inherently subjective and complex requiring significant judgements to be made by the Company. • Evaluated the design and implementation of the Company's key internal financial controls over revenue recognition and tested the operating effectiveness of such controls on selected transactions; • Selected a sample of long-term construction contracts on the basis of risk and volume. For these contracts we evaluated the terms of the contract and assessed the revenue recognised in accordance with relevant accounting standard by:
- Evaluating the Company's estimates of the total contract costs underlying risks involved and status of the projects. Verifying underlying documents like incurred cost reports budgets contracts signed profitability assessment;
- Verifying the allocation of incurred cost to individual contracts as assessed by those responsible for the projects testing attribution of the cost to the period to which it relates and performing search for unrecorded liabilities;
- Challenging the Company's estimates in connection with remaining costs to completion by comparing the outcome of the contracts with previous estimates made for these contracts to assess the reliability of the Company's forecasting process;
- Evaluating the Company's assessment for the stage of completion and any losses anticipated by comparing the forecasts with actuals;
• Evaluated the appropriateness of disclosures in the standalone financial statements with reference to the relevant accounting standards.

Measurement of Expected Credit Loss on Trade Receivables (including retention monies)

See Note 2 and 12 to the standalone financial statements.

The key audit matter How the matter was addressed in our audit
Evaluation of trade receivables for impairment requires exercise of judgement and involves consideration of various factors. These factors include customer's ability and willingness to pay the outstanding amounts past due receivables financial and economic difficulties of customers. In view of the significance of the matter we applied the following audit procedures in this area among others to obtain sufficient appropriate audit evidence: • Evaluated the accounting policy for impairment of trade receivable (including retention monies) in terms of the relevant accounting standard;
This assessment is done for each group of customers resulting from possible defaults over the expected life of the receivables. Based on this assessment credit loss rate is determined in provision matrix. The credit loss rate is based on the experience of actual credit losses over past years adjusted to reflect the current economic conditions and forecasts of future economic conditions. Based on such credit loss rate the Company records expected • Tested the design implementation and operating effectiveness of the Company's key internal financial controls. These controls relate to measurement of ECL on trade receivables and retention monies. Evaluated monitoring related to credit control collection of trade receivables follow up for past due amounts and for identification and recognition of corresponding impairment losses;
credit loss (ECL) allowance for trade receivables. In view of this we have considered measurement of ECL on trade receivables (including retention monies) as a key audit matter. • For a sample of past due receivables selected on the basis of risk ageing and volume we examined the ageing of receivables impairment losses provided/ reversed during the year and compared them to historical experience;
• Evaluated the Company's assessment regarding credit worthiness of such customers and identification of the credit impaired customers;
• Balance confirmation requests were circulated to some of the customers selected basis random sampling;
• We challenged the credit loss rate in the provision matrix by examining the information used to determine such rates. We evaluated the historical credit loss experience current observable data and forward-looking outlook as prescribed in the relevant accounting standard;
• Assessed the adequacy of the related disclosures in the standalone financial statements with reference to the relevant accounting standards.

Impairment - Investment in Radicon Transmission UK Limited (Wholly owned subsidiary)

See Note 2 and 6 to the standalone financial statements.

The key audit matter How the matter was addressed in our audit
The Company values its investments in Radicon Transmission UK Limited (a wholly owned subsidiary) at cost and adjusts for any impairment losses. In view of the significance of the matter the following audit procedures in this area were applied among others to obtain sufficient appropriate audit evidence:
The Company assesses at the end of each reporting period existence of any indication that the investment may be impaired. • Evaluated the accounting policy for impairment of investment in subsidiaries in terms of relevant accounting standards;
The recoverable amount of the investment is determined based on discounted cash flow projections. It uses several key assumptions including estimated future cash flows EBIT margins terminal growth rate and discount rate • Evaluated the design and implementation of the Company's key internal financial controls over the impairment of investment in subsidiary and tested the operating effectiveness of such controls;
based on weighted average cost of capital. • Assessed the discounted cash flow projections. We
The assessment of impairment in respect of investment in the wholly owned subsidiary involves significant judgement and is dependent on external factors such as future market conditions and the economic environment. challenged the key assumptions such as revenue projections discount rate and terminal growth rate and performed sensitivity analysis as these are the key assumptions which the valuation is most sensitive to;
In view of this and the significance of this investment we have identified it as a key audit matter. • Assessed the projections by comparing projections for previous and current financial year with the actual performance. We assessed the robustness of the overall budgeting process through deviations observed;
• Involved valuation specialist to assist us in evaluating the valuation methodology used by the Company and key assumptions particularly relating to discount rate used;
• Evaluated the adequacy of the related disclosures in the standalone financial statements with reference to relevant accounting standards.

Other Information

The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the financial statements and our auditors' reportthereon.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.

Management's and Board of Directors' Responsibility for the Standalone FinancialStatements

The Company's management and Board of Directors are responsible for the matters statedin Section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the state of affairs profit and othercomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under Section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the

accuracy and completeness of the accounting records relevant to the preparation andpresentation of the standalone financial statements that give a true and fair view and arefree from material misstatement whether due to fraud or error.

In preparing the standalone financial statements the management and Board of Directorsare responsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

Board of Directors is also responsible for overseeing the Company's financial reportingprocess.

Auditor's Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures in the standalone financial statementsmade by management and Board of Directors.

• Conclude on the appropriateness of management's and Board of Directors use ofthe going concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor's report tothe related disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit. We alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditors' report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication. Report onOther Legal and Regulatory Requirements

1. As required by the Companies (Auditors' Report) Order 2016 ("the Order")issued by the Central Government in terms of

section 143 (11) of the Act we give in the "Annexure-A" a statement on thematters specified in paragraphs 3 and 4 of the Order to the extent applicable.

A) 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 bestof our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.

c) The Standalone Balance Sheet the Standalone Statement of Profit and Loss (includingother comprehensive income) the Standalone Statement of Changes in Equity and theStandalone Statement of Cash Flows dealt with by this Report are in agreement with thebooks of account.

Report on Other Legal and Regulatory Requirements

d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under section 133 of the Act.

e) On the basis of the written representations received from the directors as on 31March 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2020 from being appointed as a director in terms of Section164(2) of the Act.

f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate report in "Annexure-B".

B) With respect to the other matters to be included in the Auditors' Report inaccordance with Rule 11 of the Companies

(Audit and Auditors) Rules 2014 in our opinion and to the best of our information andaccording to the explanations given to us:

i) The Company has disclosed the impact of pending litigations as at 31 March 2020 onits financial position in its standalone financial statements - Refer Note 41 to thestandalone financial statements;

ii) Provision has been made in the standalone financial statements as required underthe applicable law or Ind AS for material foreseeable losses if any on long-termcontracts. The Company has not entered into any derivative contracts - Refer Note 23 tothe standalone financial statements;

iii) There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company; and

iv) The disclosures in the standalone financial statements regarding holdings as wellas dealings in specified bank notes during the period from 8 November 2016 to 30 December2016 have not been made in these financial statements since they do not pertain to thefinancial year ended 31 March 2020.

C) With respect to the matter to be included in the Auditors' Report under Section197(16) of the Act:

In our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under Section 197(16) which arerequired to be commented upon by us.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No: 101248W/W-100022
Rupen Shah
Partner
Place : Vallabh Vidyanagar Membership No. 116240
Date : June 26 2020 ICAI UDIN : 20116240AAAABS6143

ANNEXURE - A TO THE INDEPENDENT AUDITORS' REPORT ON STANDALONE FINANCIAL STATEMENTS -YEAR ENDED MARCH 31 2020

(Referred to in Paragraph 1 under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date)

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of

property plant and equipment and investment properties.

(b) The Company has a programme of physical verification of its property plant andequipment and investment properties by which all the items are verified in a phased mannerover a period of three years. In our opinion this periodicity of physical verification isreasonable having regard to the size of the Company and the nature of its assets. Inaccordance with the policy the Company has physically verified certain property plantand equipment during the year and the discrepancies were not material and have beenproperly dealt with in the books of account.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable propertiesincluded in property plant and equipment as disclosed in the standalone financialstatements are held in the name of the Company.

(ii) The inventory except goods-in-transit has been physically verified by themanagement during the year. In our opinion the frequency of such verification isreasonable. The discrepancies noticed on verification between the physical stocks and thebook records were not material and have been properly dealt with in the books of account.

(iii) The Company has granted unsecured loans to wholly owned foreign subsidiarycompany covered in the register maintained under Section 189 of the Companies Act 2013('the Act'). The Company has not granted any loans secured or unsecured to firmsLimited Liability Partnerships or other parties covered under Section 189 of the Act:

a) In our opinion the rate of interest and other terms and conditions on which theloans had been granted to the wholly owned foreign subsidiary company listed in theregister maintained under Section 189 of the Act were not prejudicial to the Company'sinterest.

b) According to the information and explanations given to us the loans granted to thewholly owned foreign subsidiary company listed in the register maintained under Section189 of the Act are repayable on demand. The borrower has been regular in repaying theprincipal amounts as demanded and in the payment of interest when due.

c) There is no overdue amount in respect of loans granted to the wholly owned foreignsubsidiary company listed in the register maintained under Section 189 of the Act.

(iv) In our opinion and according to the information and explanations given to us theCompany has not given any loans or provided any guarantees or security to the partiescovered under Section 185 of the Act. Accordingly compliance under Section 185 of the Actis not applicable to the Company. According to the information and explanations given tous the Company has complied with the provisions of Section 186 of the Act in respect ofthe loans given and investment made.

(v) In our opinion and according to the information and explanations given to us theCompany has not accepted deposits as per the directives issued by the Reserve Bank ofIndia and the provisions of Sections 73 to 76 or any other relevant provisions of the Actand the rules framed thereunder. Accordingly paragraph 3 (v) of the Order is notapplicable to the Company.

(vi) We have broadly reviewed the books of accounts maintained by the Company pursuantto the rules prescribed by the Central Government for the maintenance of cost recordsunder Section 148(1) of the Act and are of the opinion that prima facie the prescribedaccounts and records have been made and maintained. However we have not made a detailedexamination of the cost records with a view to determine whether they are accurate orcomplete.

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the

Company amounts deducted / accrued in the books of account in respect of undisputedstatutory dues including Provident fund Employees' state insurance Income Tax CustomsDuty Goods and Services Tax and other material statutory dues as applicable to theCompany have been generally regularly deposited during the year by the Company with theappropriate authorities except in the case of interest on Goods and Services Tax wherethere have been a few delays. The Company is not having any dues in respect of Cess.

According to the information and explanations given to us no undisputed amountspayable in respect of Employees' state insurance Income Tax Customs Duty Goods andServices Tax cess and other material statutory dues were in arrears as at 31 March 2020for a period of more than six months from the date they became payable. In respect ofProvident Fund as explained in Note 41 to the standalone financial statements pendingclarity on the matter the Company is currently unable to determine the extent of arrearsof such Provident Fund outstanding as at 31 March 2020 for a period of more than sixmonths from the date they become payable and hence we are unable to comment on suchProvident Fund arrears if any.

(b) According to the information and explanations given to us there are no dues ofIncome Tax Sales Tax Service Tax Customs Duty Excise Duty and Goods and Services Taxas at 31 March 2020 which have not been deposited with the appropriate authorities onaccount of any dispute other than those mentioned in the Appendix I to this report.

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of loans and borrowings to the banks andfinancial institutions and dues to debenture holders during the year. The Company did nothave any outstanding loans and borrowings to Government during the year.

(ix) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not raised any moneys by way ofinitial public offer or further public offer (including debt instruments) during the year.In our opinion and according to the information and explanations given to us no termloans were taken by the Company during the year.

(x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theCompany's management.

(xi) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid / accrued for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly paragraph 3 (xii) of the Order is notapplicable to the Company.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with Sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the standalone financial statements as required by theapplicable Ind AS.

(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly paragraph 3 (xiv) of the Order is not applicable to the Company.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into any non-cashtransactions within the meaning of section 192 of the Act with directors or personsconnected with them. Accordingly paragraph 3 (xv) of the Order is not applicable to theCompany.

(xvi) In our opinion and according to the information and explanations given to us theCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934. Accordingly paragraph 3 (xvi) of the Order is not applicable to the Company.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No: 101248W/W-100022
Rupen Shah
Partner
Place : Vallabh Vidyanagar Membership No. 116240
Date : June 26 2020 ICAI UDIN : 20116240AAAABS6143

ANNEXURE - A TO THE INDEPENDENT AUDITORS' REPORT ON STANDALONE

FINANCIAL STATEMENTS - YEAR ENDED 31st MARCH 2020.

Appendix - I

Sr. Name of Statute Nature of Dues Net Amount Amount paid under protest Period to which amount relates Forum where the Dispute is pending
1 Finance Act 1944 Service tax including penalty 2809.99 250.88 2009 to 2014 CESTAT Ahmedabad
2 Finance Act 1944 Service tax including penalty 1128.69 2013 to 2016 Central Excise Commissioner (Appeals) Vadodara
3 Central Sales Tax Act 1956 and Value added tax of various States. Sales Tax / Work 233.39 1991-92 to 1995-96 Odisha High Court
4 Central Sales Tax Act 1956 and Value added tax of various States. Sales Tax / Work Contract Tax 711.86 2009-10 to 2014-15 Commissioner Of Commercial Tax West Bengal
5 Central Sales Tax Act 1956 and Value added tax of various States. Sales Tax / Work Contract Tax 0.21 2014-15 Commissioner (Appeals) of Commercial tax UP
6 Central Sales Tax Act 1956 and Value added tax of various States. Sales Tax / Work Contract Tax 17.23 2014-15 Commissioner Of Commercial Tax Karnataka
7 Central Sales Tax Act 1956 and Value added tax of various States. Sales Tax / Work Contract Tax 45.24 12.00 2013-14 Joint Commissioner of Commercial tax (Appeals) Vadodara
8 Income Tax Act 1961 Tax including interest 397.76 563.35 AY 2012-13 and 2013-14 ITAT
9 Income Tax Act 1961 Tax including interest 3187.32 1571.49 AY 2009-10 2014-15 to 2017-18 CIT (Appeals) Vadodara

ANNEXURE-B TO THE INDEPENDENT AUDITORS' REPORT ON STANDALONE

FINANCIAL STATEMENTS - YEAR ENDED 31st MARCH 2020

Report on the internal financial controls with reference to the aforesaid standalonefinancial statements under Clause (i) of Sub-section 3 of Section 143 of the CompaniesAct 2013

(Referred to in paragraph 1(A) (f) under 'Report on Other Legal and RegulatoryRequirements' section of our report of even date) Opinion

We have audited the internal financial controls with reference to standalone financialstatements of Elecon Engineering Company Limited ("the Company") as of 31 March2020 in conjunction with our audit of the standalone financial statements of the Companyfor the year ended on that date.

In our opinion the Company has in all material respects adequate internal financialcontrols with reference to standalone financial statements and such internal financialcontrols were operating effectively as at 31 March 2020 based on the internal financialcontrols with reference to standalone financial statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India ("the Guidance Note").

Management's Responsibility for Internal Financial Controls

The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to standalone financial statements criteria established by the companyconsidering the essential components of internal control stated in the Guidance Note.These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013 (hereinafterreferred to as "the Act"). Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to standalone financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note and the Standards on Auditingspecified under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls with reference to standalone financial statements. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls with reference to standalone financial statements were established andmaintained and whether such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to standalone financial statements andtheir operating effectiveness. Our audit of internal financial controls with reference tostandalone financial statements included obtaining an understanding of such internalfinancial controls assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgement including theassessment of the risks of material misstatement of the standalone financial statementswhether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls withreference to standalone financial statements.

Meaning of Internal Financial Controls with reference to Standalone FinancialStatements

A company's internal financial controls with reference to standalone financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of standalone financial statements for externalpurposes in accordance with generally accepted accounting principles. A company's internalfinancial controls with reference to standalone financial statements include thosepolicies and procedures that (1) pertain to the maintenance of records that in reasonabledetail accurately and fairly reflect the transactions and dispositions of the assets ofthe company; (2) provide reasonable assurance that transactions are recorded as necessaryto permit preparation of standalone financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the standalone financial statements.

Inherent Limitations of Internal Financial Controls with reference to StandaloneFinancial Statements

Because of the inherent limitations of internal financial controls with reference tostandalone financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to standalone financial statements to future periods are subjectto the risk that the internal financial controls with reference to standalone financialstatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No: 101248W/W-100022
Rupen Shah
Partner
Place : Vallabh Vidyanagar Membership No. 116240
Date : June 26 2020 ICAI UDIN : 20116240AAAABS6143

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