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Elecon Engineering Company Ltd.

BSE: 505700 Sector: Engineering
NSE: ELECON ISIN Code: INE205B01023
BSE 12:46 | 02 Feb 378.00 4.20
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371.00

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383.30

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371.00

NSE 12:34 | 02 Feb 378.05 4.30
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375.65

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383.40

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OPEN 371.00
PREVIOUS CLOSE 373.80
VOLUME 20469
52-Week high 475.75
52-Week low 129.30
P/E 26.14
Mkt Cap.(Rs cr) 4,241
Buy Price 377.65
Buy Qty 14.00
Sell Price 378.15
Sell Qty 210.00
OPEN 371.00
CLOSE 373.80
VOLUME 20469
52-Week high 475.75
52-Week low 129.30
P/E 26.14
Mkt Cap.(Rs cr) 4,241
Buy Price 377.65
Buy Qty 14.00
Sell Price 378.15
Sell Qty 210.00

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 ofElecon Engineering Company Limited ("the Company") which comprise theStandalone Balance Sheet as at 31st March 2022 the Standalone Statement ofProfit and Loss (including Other Comprehensive Income) Standalone Statement of Changes inEquity and Standalone Statement of Cash Flows for the year then ended and notes to theStandalone Financial Statements including a summary of significant accounting policiesand other explanatory information (hereinafter referred to as the "standalonefinancial statements").

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 (the "Act") in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standardsprescribed under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended ("Ind AS") and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at 31stMarch 2022 the profit and other comprehensive income changes in equity and its cashflows for the year ended on that date.

Basis for Opinion

We conducted our audit of the Standalone Financial Statements inaccordance with the Standards on Auditing (SAs) specified under section 143(10) of theCompanies Act 2013. Our responsibilities under those Standards are further described inthe Auditor?s responsibilities for the Audit of the Standalone Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with theindependence requirements that are relevant to our audit of the Standalone FinancialStatements under the provisions of the Companies Act 2013 and the Rules thereunder andwe have fulfilled our other ethical responsibilities in accordance with these requirementsand the Code of Ethics. We believe that the audit evidence obtained by us is sufficientand appropriate to provide a basis for our opinion on the Standalone Financial Statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the Standalone Financial Statements of thecurrent period. These matters were addressed in the context of our audit of the StandaloneFinancial Statements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.

Sr. The key audit matter No. Auditor?s Response
1. Expected credit loss on trade receivables. 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; 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 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. In view of the significance of the matter we applied the following audit procedures in this area among others to obtain sufficient and appropriate audit evidence:
• Evaluating the accounting policy for impairment of trade receivables in terms of the relevant accounting standard
• Testing the design implementation and operating effectiveness of the Company?s key internal financial controls. These controls relate to measurement of ECL on trade receivables. 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
• 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
• Evaluating 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 evaluated the historical credit loss experience current observable data and forward-looking outlook as prescribed in the relevant accounting standard
• Assessing the adequacy of the related disclosures in the standalone financial statements with reference to the relevant accounting standards.
Sr. The key audit matter No. Auditor?s Response
2. Related party transactions The Company has undertaken several transactions with its related parties. These include sale of goods purchase of goods and availing services from related parties. We identified related party transactions as a key audit matter due to significance of related party transactions regulatory compliances and risk of such transactions remaining undisclosed in the financial statements. In view of the significance of the matter we applied the following audit procedures in this area among others to obtain sufficient and appropriate audit evidence:
• Obtained and read the Company?s policies processes and procedures in respect of identifying related parties obtaining approval recording and disclosure of related party transactions.
• Read minutes of shareholder meetings board meetings and audit committee meetings regarding Company?s assessment of related party transactions being in the ordinary course of business at arm?s length.
• Tested on a sample basis related party transactions with the underlying contracts confirmations and other supporting documents.
• Verified the related party information disclosed in the financial statements with the underlying supporting documents on a sample basis.
3. IT systems and controls over financial reporting. We identified IT systems and controls over financial reporting as a key audit matter for the Company because its financial accounting and reporting systems are fundamentally reliant on IT systems and IT controls to process significant transaction volumes specifically with respect to revenue and raw material consumption. Also due to large transaction volumes and the increasing challenge to protect the integrity of the Company?s systems and data cyber security has become more significant. Automated accounting procedures and IT environment controls which include IT governance IT general controls over program development and changes access to program and data and IT operations IT application controls and interfaces between IT applications are required to be designed and to operate effectively to ensure accurate financial reporting. In view of the significance of the matter we applied the following audit procedures in this area among others to obtain sufficient and appropriate audit evidence:
• Assessed the complexity of the IT environment through discussion with the IT team and identified IT applications that are relevant to our audit.
• Assessed the design and evaluation of the operating effectiveness of IT general controls over program development and changes access to program and data and IT operations.
• Performed inquiry procedures with the IT team of the Company in respect of the overall security architecture and any key threats addressed by the Company in the current year.
• Assessed the design and evaluation of the operating effectiveness of IT application controls in the key processes impacting financial reporting of the Company;
• Assessed the operating effectiveness of controls relating to data transmission through the different IT systems to the financial reporting systems.

Information other than the Standalone Financial Statement andAuditor?s Report thereon

The Company?s Board of Directors is responsible for the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board?s Report including Annexures to that Board?sReport Corporate Governance and Shareholder?s Information but does not include theStandalone Financial Statements consolidated financial statement and our auditor?sreport thereon.

Our opinion on the Standalone Financial Statements does not cover theother information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the Standalone Financial Statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the Standalone Financial Statements orour knowledge obtained in audit or otherwise appears to be materially misstated.

If based on the work we have performed we conclude that there is amaterial misstatement of this other information we are required to report that fact. Wehave nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance forthe Standalone Financial Statements

The Company?s Board of Directors is responsible for the mattersstated in Section 134(5) of the Companies Act 2013 ("the Act") with respect tothe preparation of these Standalone Financial Statements that give a true and fair view ofthe financial position

financial performance total comprehensive income changes in equityand cash flows of the Company in accordance with the Ind AS and other accountingprinciples generally accepted in India including the accounting Standards specified underSection 133 of the Act. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy 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 management isresponsible 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. The Board of Directors are alsoresponsible for overseeing the company?s financial reporting process.

Auditor?s Responsibilities for the Audit of Standalone FinancialStatements

Our objectives are to obtain reasonable assurance about whether theStandalone Financial Statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor?s report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these Standalone Financial Statements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of theStandalone Financial Statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.

• Obtain an understanding of internal financial control relevantto the audit in order to design audit procedures that are appropriate in thecircumstances. Under section 143(3)(i) of the Companies Act 2013 we are also responsiblefor expressing our opinion on whether the Company has adequate internal financial controlssystem in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management?s use of thegoing 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?sreport to the related disclosures in the Standalone Financial Statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor?s report. However future events orconditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of theStandalone Financial Statements including the disclosures and whether the StandaloneFinancial Statements represent the underlying transactions and events in a manner thatachieves fair presentation.

Materiality is the magnitude of misstatements in the financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the financial statements.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the StandaloneFinancial Statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor?s report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication. Other Matters

1. The audited standalone financial statements for the year ended 31stMarch 2021 included in these financial statements are based on the previously issuedfinancial statements of the Company prepared in accordance with the Indian AccountingStandards ("Ind AS") prescribed under Section 133 of Companies Act 2013. Thoseaudited financial statements prepared under Ind AS were audited by the predecessorauditor whose audit report dated 27th May 2021 expressed an unmodifiedopinion on those financial results.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor?s Report) Order 2020("the Order") issued by the Central Government of India in terms of sub-section(11) of section 143 of the Companies Act 2013 we give in the "Annexure A" astatement on the matters specified in paragraphs 3 and 4 of the Order to the extentapplicable.

2. As required by Section 143(3) of the Act based on our audit wereport that:

(a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.

(b) In our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books.

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

(d) In our opinion the aforesaid Standalone Financial Statementscomply with the Indian Accounting Standards specified under Section 133 of the Act readwith Rule 7 of the Companies (Accounts) Rules 2014.

(e) On the basis of the written representations received from thedirectors as on 31st March 2022 taken on record by the Board of Directorsnone of the directors is disqualified as on 31st March 2022 from beingappointed as a director in terms of Section 164(2) of the Act.

(f) With respect to the adequacy of the internal financial controlsover financial reporting of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the company?s internalfinancial controls over financial reporting.

(g) With respect to the other matters to be included in theAuditor?s Report in accordance with the requirements of section 197(16) of the Actas amended:

In our opinion and to the best of our information and according to theexplanations given to us the remuneration paid by the Company to its directors during theyear is in accordance with the provisions of section 197 of the Act; and

(h) With respect to the other matters to be included in theAuditor?s Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 as amended in our opinion and to the best of our information and accordingto the explanations given to us:

i. The Company has disclosed the impact of pending litigations on itsfinancial position in its Standalone Financial Statements. (Refer Note No. - 40 to theStandalone Financial Statements)

ii. The Company has made provision as required under the applicablelaw or accounting standards for material foreseeable losses if any on long termcontracts including derivative contracts. (Refer Note No.- 23 to the standalone financialstatements)

iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.

iv. i. The Management has represented that to the best of itsknowledge and belief no funds (Which are

material either individually or in the aggregate) have been advanced orloaned or invested (either from borrowed funds or share premium or any other sources orkind of funds) by the company to or in any other person or entity including foreignentities ("Intermediaries") with the understanding whether recorded in writingor otherwise that the Company shall whether directly or indirectly lend or invest inother persons or entities identified in any manner whatsoever by or on behalf of thecompany ("Ultimate Beneficiaries") or provide any guarantee security or thelike on behalf of the Ultimate Beneficiaries;

ii. The Management has represented that to the best of its knowledgeand belief no funds (Which are material either individually or in the aggregate) havebeen received by the company from any person(s) or entity(ies) including foreign entities("Funding Parties") with the understanding whether recorded in writing orotherwise that the Company shall whether directly or indirectly lend or invest inother persons or entities identified in any manner whatsoever by or on behalf of theFunding Party ("Ultimate Beneficiaries") or provide any guarantee security orthe like on behalf of the Ultimate Beneficiaries; and

iii. Based on such audit procedures that have been consideredreasonable and appropriate in the circumstances nothing has come to our notice that hascaused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e)as provided under (a) and (b) above contain any material mis- statement.

v. The final dividend paid by the company during the year in respect ofthe same declared for the previous year is in accordance with section 123 of the CompaniesAct 2013 to the extent it applies to payment of dividend.

As stated in note 16.2 to the financial statements the Board ofDirectors of the Company have proposed final dividend for the year which is subject to theapproval of the members at the ensuring Annual General Meeting. The dividend declared isin accordance with section 123 of the Act to the extent it applies to declaration ofdividend.

For C N K & Associates LLP
Chartered Accountants
Firm?s Registration No: 101961W/W-100036
Himanshu Kishnadwala
Partner
Membership No. 037391
ICAI UDIN : 22037391AIICPP9779
Place : Vallabh Vidyanagar
Date : 3rd May 2022

ANNEXURE "A" TO THE INDEPENDENT AUDITOR?S REPORT

Referred to in paragraph 1 ‘Report on Other Legal and RegulatoryRequirements? of our report of even date.

To the best of our information and according to the explanationsprovided to us by the Company and the books of account and records examined by us innormal course of audit we state that:

I. In respect of the Company?s Property Plant and Equipment andIntangible Assets:

a) (A) The Company has maintained proper records showing fullparticulars including quantitative details and situation

of Property Plant and Equipments and relevant details of right-of-useassets.

(B) The Company has maintained proper records showing full particularsof intangible assets.

b) The company has a programme of physical verification of itsProperty Plant and Equipment investment property and right-of-use assets so by which allthe items are verified in a phased manner over a period of three years. In accordance withthis programme the Company has physically verified certain Property Plant and Equipmentsduring the year and the discrepancies were not material and have been properly dealt within the books of account.

c) On the basis of our examination of the records of the Company thetitle deeds of all the immovable properties (other than properties where the company isthe lessee and the lease agreements are duly executed in favour of the lessee) disclosedin the financial statements are held in the name of the Company Except the following:

Description of property Gross carrying value held (' In Lakhs) Title deeds held in name of Whether promoter director or their relative or employee Period held since which date Reason for not being held in name of company
Survey No.79/P 82/P1 94/9 99/1P 100P 108/P4 Naransari Bhachau Kutch 37.23 Veer Energy & Infrastructure Limited No August 29 2008 Mutation Pending
Survey No.79/P Naransari Bhachau Kutch 4.65 Veer Energy & Infrastructure Limited No July 14 2009 Mutation Pending

d) The company has not revalued any of its Property Plant andEquipment (including Right of Use assets) or intangible assets or both during the year.

e) Based on our verification of the documents provided to us andaccording to the information and explanations given by the Management the Company doesnot have any proceedings initiated or pending as at 31st March 2022 forholding any benami property under the Benami Transactions (Prohibition) Act 1988 (45 of1988) (as amended in 2016) and rules made thereunder.

II. (A) The physical verification of inventory except goods-in-transithas been verified by the management during the year.

The discrepancies noticed on verification between the physical stocksand the books records were not material and have been properly dealt in the books ofaccount.

(B) The company has been sanctioned working capital limits in excess offive crore rupees in aggregate during the year from various banks on the basis ofsecurity of current assets. The discrepancies in quarterly filed returns or statementswith the books of accounts are mentioned in Note 17 to the standalone financialstatements.

III. The Company has made investment in companies firms LimitedLiability Partnerships and granted unsecured loans to other parties during the year inrespect of which:

(a) The Company has provided unsecured loan and Guarantee during theyear and details of which are as follow.

Unsecured Loan Guarantees
Aggregate amount granted/Provided during the year:
- Subsidiary - ' 869.31 - ' 4285.65
- Joint Ventures - Not Applicable - Not Applicable
- Associate - Not Applicable - Not Applicable
- Others - Not Applicable - Not Applicable
Unsecured Loan Guarantees
Balance outstanding as at balance sheet date in respect of above cases - Subsidiary - ' 869.31 - ' 4285.65
- Joint Ventures - Not Applicable - Not Applicable
- Associate - Not Applicable - Not Applicable
- Others - Not Applicable - Not Applicable

(b) In our opinion the investment made and the terms and conditions ofthe grant of loans during the year are prima facie not prejudicial to theCompany?s interest.

(c) The repayment of principal and payment of interest is as stipulatedand the same are regular;

(d) In respect of loans granted by the company in respect of theaforesaid loan there is no amount which is overdue for more than ninety days.

(e) No loan granted by the company which has fallen due during theyear has been renewed or extended or fresh loans granted to settle the overdues ofexisting loans given to the same parties.

(f) The Company has not granted any loans or advances in the nature ofloans either repayable on demand or without specifying any terms or period of repaymentduring the year. Hence reporting under clause 3(iii)(f) is not applicable.

IV. The Company has complied with the provisions of Sections 185 and186 of the Companies Act 2013 in respect of loans granted investment made and guaranteeand securities provided as applicable.

V. The Company has not accepted any deposits or amounts which aredeemed to be deposits. Hence reporting under clause 3(v) of the order is not applicable.

VI. We have broadly reviewed the books of accounts maintained by theCompany pursuant to the rules prescribed by the Central Government for the maintenance ofcost records under Section 148(1) of the Act and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. However we have not made adetailed examination of the cost records with a view to determine whether they areaccurate or complete.

VII. In respect of statutory dues:

a) In our opinion the company has been generally regular in depositingundisputed statutory dues including Goods and Service tax Provident FundEmployees? State Insurance Income Tax Service Tax Sales tax Duty of Custom Dutyof Excise Value Added Tax Cess and other material statutory dues applicable to it withthe appropriate authorities. There were no undisputed amounts payable in respect of Goodsand Service tax Provident Fund Employees? State Insurance Income Tax Service TaxDuty of Custom Duty of Excise Value Added Tax Cess and other material statutory dues inarrears as at 31st March 2022 for a period of more than six months from thedate they became payable:

b) Details of statutory dues referred to above which have not beendeposited as on 31st March 2022 on account of disputes are given below:

Sr. Name of the No. statute Nature of dues Amounts (') 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 1869.12 - November 2014 to June 2017 Gujarat High court
3. Finance Act 1944 Service tax including penalty 1041.96 86.72 2013 to 2016 Central Excise Commissioner (Appeals) Vadodara
4. Finance Act 1944 Central excise and Service tax including penalty 135.50 July 2017 to December 2017 Gujarat High court
5 West Bengal Value Added Tax Value Added Tax 347.05 2010-2011 CIT (Appeals)
6 Income Tax Act 1961 Tax including interest 3733.81 1824.95 AY 2009-10 AY 2013-14 to 2018-19 CIT (Appeals) Vadodara
7 Income Tax Act 1961 Income tax 333.94 AY 2012-13 ITAT (Ahmedabad)

VIII. There were no transactions relating to previously unrecordedincome that have been surrendered or disclosed as income during the year in the taxassessments under the Income Tax Act 1961;

IX. a) The Company has not defaulted in repayment of loans or otherborrowings or in the payment of interest thereon to

any lender during the year.

b) The Company is not a declared wilful defaulter by any bank orfinancial institution or other lender.

c) On an examination of the records of the company We report that thefunds of term loans have been utilised for the purpose for which the loans were obtained;

d) We report that the company has not raised any funds on short termbasis. Accordingly reporting under this clause is not applicable.

e) The Company has not taken any funds from any entity or person onaccount of or to meet the obligations of its subsidiaries associates or joint ventures.

f) We report that the company has not raised loans during the year onthe pledge of securities held in its subsidiaries joint ventures or associate companies.

X. a) No moneys were raised by way of initial public offer or furtherpublic offer (including debt instruments) during the

year hence reporting under this clause is not applicable to Company;

b) The Company has not made any preferential allotment or privateplacement of shares or convertible debentures (fully partially or operationallyconvertible) during the year.

XI. (a) No fraud by the Company and no material fraud on the companyhas been noticed or reported during the year.

(b) No report under Sub-section (12) of section 143 of the CompaniesAct has been filed by the auditors in Form ADT-4 as prescribed under Rule 13 of Companies(Audit and Auditors) Rules 2014 with the Central Government during the year and upto thedate of this report;

(c) As represented to us by the management there are no whistle blowercomplaints received by the Company during the year.

XII. The Company is not a Nidhi Company and hence reporting underclause (xiii) of the Order is not applicable.

XIII. The Company is in compliance with Section 177 and 188 of theCompanies Act 2013 with respect to applicable transactions with the related parties.

XIV. (a) In our opinion the company has an adequate internal auditsystem commensurate with the size and nature of its

business;

(b) We have considered report of the internal auditors for the periodunder audit; issued to the company during the year and till date in determining thenature timing and extent of our audit procedures.

XV. The Company has not entered into non-cash transactions with thedirectors or persons connected with its directors. Hence the provisions of Section 192 ofthe Act are not applicable;

XVI. (a) The Company is not required to be registered under Section45-IA of the Reserve Bank of India Act 1934. Hence

reporting under Clause 3 (xvi) (a) (b) and (c) of the Order is notapplicable.

(b) In our opinion there is no core investment company within theGroup (as defined in the Core Investment Companies (Reserve Bank) Directions 2016) andaccordingly reporting under clause 3 (xvi) (d) of the Order is not applicable.

XVII. The Company has not incurred cash losses in the financial yearand in the immediately preceding financial year;

XVIII. There has been no resignation of the statutory auditors of theCompany during the year;

XIX. On the basis of the financial ratios ageing and expected dates ofrealisation of financial assets and payment of financial liabilities other informationaccompanying the financial statements knowledge of the Board of Directors and managementplans and based on our examination of the evidence supporting the assumptions nothing hascome to our attention which causes us to believe that any material uncertainty exists ason the date of the audit report indicating that company is not capable of meeting itsliabilities existing at the date of balance sheet as and when they fall due within aperiod of one year from the balance sheet date; We however state that this is not anassurance as to the future viability of the company. We further state that our reportingis based on the facts up to the date of the audit report and we neither give any guaranteenor any assurance that all liabilities falling due within a period of one year from thebalance sheet date will get discharged by the company as and when they fall due.

XX. (a) The Company is not required to transfer unspent amount to afund specified in Schedule VII to the Companies Act

for other than ongoing projects. Accordingly reporting under clause3(xx)(a) of the Order is not applicable for the year;

(b) The Company has not spent amount towards Corporate SocialResponsibility (CSR) on ongoing project. Accordingly reporting under clause 3(xx)(b) ofthe Order is not applicable for the year.

For C N K & Associates LLP
Chartered Accountants
Firm?s Registration No: 101961W/W-100036
Himanshu Kishnadwala
Partner
Membership No. 037391
ICAI UDIN : 22037391AIICPP9779
Place : Vallabh Vidyanagar
Date : 3rd May 2022

ANNEXURE "B" TO THE INDEPENDENT AUDITOR?S REPORT

Report on the Internal Financial Controls with reference to theaforesaid standalone financial statements under Clause (i) of Sub-section 3 of Section 143of the Companies Act 2013 ("the Act")

Opinion

We have audited the internal financial controls over financialreporting of Elecon Engineering Company Limited ("the Company") as of 31stMarch 2022 in conjunction with our audit of the Standalone Financial Statements of theCompany for the year ended on that date.

In our opinion to the best of our information and according to theexplanations given to us the Company has in all material respects an internal financialcontrols with reference to standalone financial statements of the Company and suchinternal financial controls over financial reporting were operating effectively as at 31stMarch 2022 based on the internal financial controls with reference to standalonefinancial statements criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.

Management?s Responsibility for Internal Financial Controls

The Company?s management and The Board of Directors of the companyare responsible for establishing and maintaining internal financial controls based on theinternal financial controls with reference to standalone financial statements criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (the "ICAI"). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls with reference to financial statements of the Company that wereoperating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company?s policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

Auditors? Responsibility

Our responsibility is to express an opinion on the Company?sinternal financial controls over financial reporting of the Company based on our audit. Weconducted our audit in accordance with the Guidance Note on Audit of Internal FinancialControls over Financial Reporting (the "Guidance Note") issued by the ICAI andthe Standards on Auditing prescribed under section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial controls. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlswith reference to standalone financial statements of the company were established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe internal financial controls system over financial reporting of the company and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor?s judgment including the assessment of therisks of material misstatement of the Standalone Financial Statements whether due tofraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company?s internalfinancial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company?s internal financial control over financial reporting isa process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of standalone financial statements for external purposes inaccordance with generally accepted accounting principles. A company?s internalfinancial control over financial reporting includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the Company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation ofstandalone financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the Company are being made only inaccordance with authorisations of management

and directors of the Company; and (3) provide reasonable assuranceregarding prevention or timely detection of unauthorised acquisition use or dispositionof the Company?s assets that could have a material effect on the financialstatements.

Inherent Limitations of Internal Financial Controls over FinancialReporting

Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.

For C N K & Associates LLP
Chartered Accountants
Firm?s Registration No: 101961W/W-100036
Himanshu Kishnadwala Partner
Membership No. 037391
ICAI UDIN : 22037391AIICPP9779
Place : Vallabh Vidyanagar
Date : 3rd May 2022

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