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Hindustan Construction Company Ltd.

BSE: 500185 Sector: Infrastructure
NSE: HCC ISIN Code: INE549A01026
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3.65

NSE 00:00 | 27 Mar 3.80 0.15
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3.65

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3.80

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OPEN 3.75
PREVIOUS CLOSE 3.67
VOLUME 475801
52-Week high 16.60
52-Week low 3.60
P/E
Mkt Cap.(Rs cr) 567
Buy Price 3.75
Buy Qty 1050.00
Sell Price 3.81
Sell Qty 20000.00
OPEN 3.75
CLOSE 3.67
VOLUME 475801
52-Week high 16.60
52-Week low 3.60
P/E
Mkt Cap.(Rs cr) 567
Buy Price 3.75
Buy Qty 1050.00
Sell Price 3.81
Sell Qty 20000.00

Hindustan Construction Company Ltd. (HCC) - Auditors Report

Company auditors report

To the Members of Hindustan Construction Company Limited

Report on the Audit of the Standalone Financial Statements

Opinion

1. We have audited the accompanying standalone financial statements ofHindustan Construction Company Limited ('the Company') which comprise the Balance Sheetas at 31 March 2019 the Statement of Profit and Loss (including Other ComprehensiveIncome) the Cash Flow Statement and the Statement of Changes in Equity for the year thenended and a summary of the significant accounting policies and other explanatoryinformation.

2. In our opinion and to the best of our information and according tothe explanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 (Act') in the manner so required and givea true and fair view in conformity with the accounting principles generally accepted inIndia including Indian Accounting Standards ('Ind AS') specified under section 133 of theAct of the state of affairs (financial position) of the Company as at 31 March 2019 andits

loss (financial performance including other comprehensive income) itscash flows and the changes in equity for the year ended on that date.

Basis for Opinion

3. We conducted our audit in accordance with the Standards on Auditingspecified under section 143(10) of the Act. Our responsibilities under those standards arefurther described in the Auditor's Responsibilities for the Audit of the 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 ('ICAI') togetherwith the ethical requirements that are relevant to our audit of the 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.

Emphasis of Matter

4. We draw attention to Note 271 to the standalone financialstatements regarding excess managerial remuneration accrued/paid to the Chairman andManaging Director (CMD) aggregating र 1740 crore for the financial years ended 31 March2015 and 31 March 2016 in excess of the limits prescribed under the provisions of theerstwhile Companies Act 1956 and the Act for which Company had filed applicationsseeking approval of the Central Government as required by the relevant provisions of theAct and rules thereunder. Further as discussed in the aforementioned note pursuant tothe notification of the effective date of Section 67 of the Companies (Amendment) Act2017 amending Section 197 'Overall maximum managerial remuneration and managerialremuneration in case of absence or inadequacy of profits' of the Act the aforesaidapplications pending with the Central Government stand abated and the Company is in theprocess of seeking requisite approvals required in accordance with the provisions ofsection 197 of the Act. Our audit opinion is not modified in respect of this matter.

Key Audit Matters

5. Key audit matters are those matters that in our professionaljudgment were of most significance in our audit of the standalone financial statements ofthe current period. These matters were addressed in the context of our audit of thefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.

6. We have determined the matters described below to be the key auditmatters to be communicated in our report.

Key audit matter How our audit addressed the key audit matter
Assessment of impairment of investment in subsidiary (Refer note 34 of the standalone financial statements)
The Company as at 31 March 2019 has non-current investment of र 1559.28 crores in HCC Infrastructure Our audit procedures included but were not limited to the following:
Company Limited ('HICL) its wholly owned subsidiary. • Obtained an understanding of the management process
HICL has an investment of 85.45% in HCC Concessions Limited ('HCL) which has further interests in several Build Operate and Transfer (BOT) Special Purpose Vehicle's ('SPV'). for identification of possible impairment indicators and process followed by the management for impairment testing.
The consolidated net worth of HICL as at 31 March 2019 has substantially eroded. Given the losses incurred by HCL the management was required to assess its investment for impairment. • Discussed extensively with management regarding impairment indicators and evaluated the design and testing operating effectiveness of controls;
• Assessed the methodology used by the management to estimate the recoverability of investment and ensured that it is consistent with applicable accounting standards;
Key audit matter How our audit addressed the key audit matter
As at 31 March 2019 management has obtained valuation of HICL from an independent valuer and relied upon legal opinion for certain receivables which are disputed by its customers. This involves significant judgement with respect to estimating future cashflows of the BOT SPVs determining • Evaluated the appropriateness of the assumptions applied in determining key inputs such as traffic projections operating costs long-term growth rates and discount rates which included assessments based on our knowledge of the Group and the industry;
key assumptions including the growth in traffic projections operating costs long-term growth rates and discount rates applied. Judgement is also required to assess the ultimate outcome of on-going dispute resolution proceedings with customers. • Tested mathematical accuracy of the projections and applied independent sensitivity analysis to the key assumptions mentioned above to determine and focus on inputs leading to high estimation uncertainty of the cash flow projections;
Due to the significance of the carrying amounts of the investment and the significant management judgement involved in carrying out the impairment assessment this was considered to be a key audit matter of the standalone • Evaluated the legal opinion obtained by management from independent legal counsel with respect to receivables disputed by customers;
financial statements. • Involved auditor's experts to assist in evaluating the assumptions and appropriateness of the valuation
Emphasis of Matter methodology used by the management;
Considering this matter is fundamental to the understanding of the user of standalone financial statement we draw attention to Note 34 of the financial statement regarding the Company's non-current investment in a subsidiary company • Compared the carrying value of the non-current investment with the realizable value determined by the Independent valuer to ensure there is no impairment/ provision required to be recognised.
HCC Infrastructure Limited. • Assessed that the disclosures made by the management are in accordance with applicable accounting standards.
Uncertainties relating to recoverability of unbilled work-in receivables and current trade receivables (Refer note 35 of progress (other current assets) non-current trade the standalone financial statements)
The Company as at 31 March 2019 has unbilled work-inprogress (other current assets) non-current trade receivables and current trade receivables amounting to र 416.49 crore Our audit procedures included but were not limited to the following:
र 54.14 crore and र 320.94 crore respectively which represent various claims raised in the earlier years in respect of projects substantially closed or suspended and where the claims are currently under negotiations/ discussions/ • Obtaining an understanding of the management process for assessing the recoverability of unbilled work-inprogress (other current assets) non-current trade receivables and current trade receivables
arbitration/litigation. • Discussed extensively with management regarding steps taken for recovering the amounts and evaluated the
Management based on contractual tenability of the claims progress of the discussions and relying on the legal opinion design and testing operating effectiveness of controls;
obtained from independent legal counsel has determined that no provision is required to be recognised for these receivables. • Assessed the reasonability of judgements exercised and estimates made by management in recognition of these receivables and validating them with corroborating evidence;
Considering the materiality of the amounts involved uncertainty associated with the outcome of the negotiations/ discussions/ arbitration/ litigation and significant management judgement involved in its assessment of recoverability this • Verified contractual arrangements to support management's position on the tenability and recoverability of these receivables.
was considered to be a key audit matter in the audit of the standalone financial statements. • Obtained an understanding of the current period developments for respective claims pending at various stages of negotiations/ discussions/ arbitration/ litigation
Emphasis of Matter and corroborating the updates with relevant underlying documents.
Considering this matter is fundamental to the understanding of the user of financial statement we draw attention to Note 35 of the standalone financial statement regarding uncertainties relating to recoverability of above discussed • Reviewed the legal opinion obtained by management from independent legal counsel with respect to certain contentious matters.
receivables. • Assessed that the disclosures made by the management are in accordance with applicable accounting standards.

Investment in/advances to Lavasa Corporation Limited ('LCL') and HCCReal Estate Limited (HREL) written off pursuant to initiation of Corporate InsolvencyResolution Process against LCL (Refer note 31.1 of the standalone financial statements)

The Hon'ble National Company Law Tribunal Mumbai (the 'NCLT) vide order dated 30 August 2018 admitted an Our audit procedures included but were not limited to the following:
application for insolvency filed by an operational creditor against LCL and initiated Corporate Insolvency Resolution Process ('CIRP') under the Insolvency and Bankruptcy Code 2016 ('IBC'). HREL a wholly owned subsidiary of the Company is presently holding 68.70% equity stake in LCL. • Evaluated the impact of the NCLT order on financial statements of the Company including assessing the Company's control over LCL to determine the accounting implications thereof.
In view of significant uncertainties associated with the outcome of CIRP the Company has fully impaired its investment in LCL and HREL aggregating र 630.83 crore and • Obtained and evaluated the impact of the settlement agreements entered with lenders of LCL who exercised the put options/invoked corporate guarantee issued by the Company.
also written off its non-current loans and non-current financial assets from LCL and HREL aggregating र 634.36 crore. • Obtained an understanding of the management's
Further the Company has also taken over liabilities rationale for recognizing impairment loss/writing off the aggregate exposure relating to LCL.
aggregating र 745.94 crore pursuant to settlement agreements entered into by the Company with certain lenders of LCL in connection with the put options/corporate guarantees issued by the Company for borrowings of LCL. • Assessed that the disclosures made by the management are in accordance with applicable accounting standards.
The overall resultant loss of र 2011.13 crores has been disclosed as an exceptional item in the standalone financial statements
Considering the significance of the amount and the complexities involved this was considered as a key audit matter of the standalone financial statements.

Recognition of contract revenue margin and contract costs (Refer note2.1(xix) of the standalone financial statements)

The Company's revenue primarily arise from construction contracts which by its nature is complex given the significant judgements involved in the assessment of current and future contractual performance obligations. Our audit of the recognition of contract revenue margin and related receivables and liabilities included but were not limited to the following: • Evaluated the appropriateness of the Company's
Effective 1 April 2018 the Company has adopted Ind AS revenue recognition policies;
115 Revenue from Contracts with Customers using the cumulative catch-up transition method. Accordingly the Company recognizes revenue and margins based on the stage of completion which is determined on the basis of the • Assessed the design and implementation of key controls over the recognition of contract revenue and margins and tested the operating effectiveness of these controls.
proportion of value of goods or services transferred as at the Balance Sheet date relative to the value of goods or services promised under the contract. All the projects of the Company satisfy the criteria for recognition of revenue over time (using the percentage of completion method) since the control • For a sample of contracts tested the appropriateness of amount recognized by evaluating key management judgements inherent in the forecasted contract revenue and costs to complete that drive the accounting under the percentage of completion method including:
of the overall asset (property/ site / project) lies with the customer who directs the Company. Further the Company - reviewed the contract terms and conditions;
has assessed that its does not have any alternate use of these assets. - evaluated the identification of performance obligation of the contract - evaluated the appropriateness of management's
The recognition of contract revenue contract costs and the resultant profit/loss therefore rely on the estimates in relation to forecast contract revenue and the total cost. These contract estimates are reviewed by the management on a assessment that performance obligation was satisfied over time and consequent recognition of revenue using percentage of completion method.
periodic basis. In doing so the management is required to exercise judgement in its assessment of the valuation of contract variations and claims and liquidated damages as well as the completeness and accuracy of forecast costs to - tested the existence and valuation of claims and variations within contract costs via inspection of correspondence with customers;
complete and the ability to deliver contracts within contractually determined timelines. The final contract values - reviewed legal and contracting experts' reports received on contentious matters;
can potentially be impacted on account of various factors and are expected to result in varied outcomes. - obtained an understanding of the assumptions applied in determining the forecasted revenue and
Changes in these judgements and the related estimates cost to complete;
as contracts progress can result in material adjustments to revenue and margins. As a result of the above judgments complexities involved and material impact on the related - assessed the ability of the Company to deliver contracts within budgeted timelines and exposures if any to liquidated damages for late delivery; and
financial statement elements this area has been considered a key audit matter in the audit of the standalone financial statements. • Assessed that the disclosures made by the management are in accordance with applicable accounting standards.

Information other than the Financial Statements and

Auditor's Report thereon

7 The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the AnnualReport but does not include the financial statements and our auditor's report thereon.The Annual Report is expected to be made available to us after the date of this auditor'sreport.

Our opinion on the financial statements does not cover the otherinformation and we will not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements ourresponsibility is to read the other information identified above when it becomes availableand in doing so consider whether the other information is materially inconsistent withthe financial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.

When we read the Annual Report if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance.

Responsibilities of Management and Those Charged with

Governance for the Standalone Financial Statements

8. The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these standalonefinancial statements that give a true and fair view of the state of affairs (financialposition) profit or loss (financial performance including other comprehensive income)changes in equity and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Ind AS specified under section 133of the Act. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and

presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

9. In preparing the financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

10. Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibilities for the Audit of the Financial

Statements

11. Our objectives are to obtain reasonable assurance about whether thefinancial 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 accordance with Standardson Auditing 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 financial statements.

12. As part of an audit in accordance with Standards on Auditing weexercise professional judgment and maintain professional skepticism throughout the audit.We also:

• Identify and assess the risks of material misstatement of thefinancial statements whether due to fraud

or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.

• Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)

(i) of the Act we are also responsible for explaining our opinion onwhether the Company has adequate internal financial controls system in place and theoperating 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 the goingconcern basis of accounting and based on the audit evidence obtained whether

a material uncertainty exists related to events or conditions that maycast significant doubt on the Company's ability to continue as a going concern. If weconclude that a material uncertainty exists we are required to draw attention in ourauditor's report to the related disclosures in the 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 thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

13. 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.

14. We also provide those charged with governance with a statement thatwe have complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

15. From the matters communicated with those charged with governancewe determine 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 precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Other Matter

16. We did not audit the financial statements / financial informationof eight (8) joint operations included in the standalone financial statements of theCompany whose financial statements / financial information reflect total assets and netliabilities of र 70.17 crore and र 66.08

crore respectively as at 31 March 2019 and total revenues and net cashinflows of र 23.25 crore and र 4.19 crore respectively for the year ended on that dateas considered in the standalone financial statements. This financial statements /financial information have been audited by other auditors whose reports have beenfurnished to us by the management.

Further of these joint operations financial statement/ financialinformation of four (4) joint operations have been prepared in accordance with accountingprinciples generally accepted in India including accounting standards issued by theInstitute of Chartered Accountants of India. The Company's management has converted thefinancial statements / financial information of such joint operations in accordance withInd AS. We have audited these conversion adjustments made by the Company's management. Ouropinion on the standalone financial statements in so far as it relates to the amounts anddisclosures included in respect of these joint operations are solely based on report ofthe other auditors and the conversion adjustments prepared by the Company's management andaudited by us.

Our opinion on the standalone financial statements and our report onOther Legal and Regulatory Requirements below is not modified in respect of the abovematter.

Report on Other Legal and Regulatory Requirements

17 As required by section 197 (16) of the Act we report that theCompany has paid remuneration to its directors during the year in accordance with theprovisions of and limits laid down under section 197 read with Schedule V to the Act.

18. As required by the Companies (Auditor's Report) Order

2016 ('the Order') issued by the Central Government of India in termsof section 143(11) of the Act we give in the Annexure I a statement on the mattersspecified in paragraphs 3 and 4 of the Order.

19. Further to our comments in Annexure I as required by section143(3) of the Act we report that:

a) we have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purpose of our audit;

b) In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books;

c) the standalone financial statements dealt with by this report are inagreement with the books of account;

d) In our opinion the aforesaid standalone financial statements complywith Ind AS specified under section 133 of the Act;

e) on the basis of the written representations received from thedirectors and taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2019 from being appointed as a director in terms of section164(2) of the Act;

f) we have also audited the internal financial controls over financialreporting (IFCoFR) of the Company as at 31 March 2019 in conjunction with our audit of thestandalone financial statements of the Company for the year ended on that date and ourreport dated 9 May 2019 as per Annexure II expressed an unmodified opinion; and

g) with respect to the other matters to be included in the Auditor'sReport in accordance with rule 11 of the Companies (Audit and Auditors) Rules 2014 (asamended) in our opinion and to the best of our information and according to theexplanations given to us:

i. the Company as detailed in notes 6.133 A(i) to (iii) 33 A(vi) and35 to the standalone financial statements has disclosed the impact of pending litigationson its financial position as at 31 March 2019;

ii. the Company as detailed in note 19.1 to the standalone financialstatements has made provision as at 31 March 2019 as required under the applicable lawor Ind AS for material

foreseeable losses if any on long-term contracts including derivativecontracts;

iii. there has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company during the yearended 31 March 2019; and

iv. the disclosure requirements relating to holdings as well asdealings in specified bank notes were applicable for the period from 8 November 2016 to 30December 2016 which are not relevant to these standalone financial statements. Hencereporting under this clause is not applicable.

For Walker Chandiok & Co LLP
Chartered Accountants
Firm's Registration No.: 001076N/N500013
Rakesh R. Agarwal
Partner
Membership No.: 109632
Place: Mumbai
Date: May 9 2019

ANNEXURE I TO THE INDEPENDENT AUDITOR'S REPORT

Annexure I to the Independent Auditor's Report of even date to themembers of Hindustan Construction Company Limited on the standalone financial statementsfor the year ended 31 March 2019

Based on the audit procedures performed for the purpose of reporting atrue and fair view on the standalone financial statements of the Company and taking intoconsideration the information and explanations given to us and the books of account andother records examined by us in the normal course of audit and to the best of ourknowledge and belief we report that:

(i) (a) The Company has maintained proper records showing

full particulars including quantitative details and situation of itsfixed assets.

(b) The Company has a regular program of physical verification of itsfixed assets under which fixed assets are verified in a phased manner over a period ofthree (3) year which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets. In accordance with this program certain fixedassets were verified during the year and no material discrepancies were noticed on suchverification.

(c) The title deeds of all the immovable properties (which are includedunder the head 'Property plant and equipment') are held in the name of the Company.

(ii) In our opinion the management has conducted physical verificationof inventory at reasonable intervals during the year and no material discrepancies betweenphysical inventory and book records were noticed on physical verification.

(iii) The Company has granted unsecured loans to eight (8) companiescovered in the register maintained under Section 189 of the Act; and with respect to thesame:

(a) in our opinion the terms and conditions of such loans are notprima facie prejudicial to the Company's interest;

(b) the schedule of repayment of the principal and the payment of theinterest has not been stipulated and hence we are unable to comment as to whetherrepayments/receipts of the principal amount and the interest are regular;

(c) in the absence of stipulated schedule of repayment of principal andpayment of interest we are unable to comment as to whether there is any amount which isoverdue for more than 90 days and whether reasonable steps have been taken by the Companyfor recovery of the principal amount and interest.

(iv) In our opinion the Company has complied with the provisions ofSections 185 and 186 of the Act to the extent applicable in respect of loansinvestments guarantees and security.

(v) In our opinion the Company has not accepted any deposits withinthe meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits)Rules 2014 (as amended). Accordingly the provisions of clause 3(v) of the Order are notapplicable.

(vi) We have broadly reviewed the books of account maintained by theCompany pursuant to the Rules made by the Central Government for the maintenance of costrecords under

sub-section (1) of Section 148 of the Act in respect of Company'sproducts/services and are of the opinion that prima facie the prescribed accounts andrecords have been made and maintained. However we have not made a detailed examination ofthe cost records with a view to determine whether they are accurate or complete.

(vii) (a) Undisputed statutory dues including provident fundemployees' state insurance income-tax sales-tax service tax goods and service taxduty of customs duty of excise value added tax cess and other material statutory duesas applicable have not been regularly deposited to the appropriate authorities and therehave been significant delays in a large number of cases. Further no undisputed amountspayable in respect thereof were outstanding at the year-end for a period of more than sixmonths from the date they become payable.

(b) There are no dues in respect of duty of customs excise duty andgoods and service tax that have not been deposited with the appropriate authorities onaccount of any dispute. The dues outstanding in respect of income-tax sales-taxservice-tax and value added tax on account of disputes are as follows:

Statement of Disputed Dues

Name of the statute Nature of dues Amount (र in crore) Amount Paid Under Protest (र in crore) Period to which the amount relates Forum where dispute is pending
The Income Tax Act 1961 Income Tax 15.54 15.54 A.Y. 20082009 to 20102011 Income Tax Appellate Tribunal
2.47 2.47 AY 2015-16 Commissioner of Income Tax (Appeals)
The Sales Tax Act Sales Tax/ Value Added Tax/ Entry Tax 8.71 - A.Y 1997-98 to A.Y 200001 and A.Y 2012-13 High Court
74.34 0.49 A.Y1996-97 to A.Y 2000-01 A.Y 2003-04 A.Y 2005-06 A.Y 2006-07 A.Y 2010-11 and A.Y 201314 to AY 2015-16 Tribunal
98.42 4.42 A.Y 2004-05 to A.Y 2014-15 Commissioner level up to Appellate Authority
The Finance Act 1994 Service tax including interest and penalty as applicable 314.34 - January 2006 to March 2015 Taxation Tribunal
59.1 1.73 April 2011 to March 2013 and April 2015 to March 2016 Commissioner level up to Appellate Authority

(viii) There are no loans or borrowings payable to government. TheCompany has defaulted in repayment of following dues to the financial institutions banksand debenture holders during the year which were paid on or before the Balance Sheetdate.

(र in crore)

Particulars Days Principal Interest Total
Debenture holders
Axis Bank 0-30 2.67 2.82 5.49
31-90 8.00 1.42 9.42
Banks
Axis Bank 0-30 5.05 6.54 11.59
31-90 14.01 3.06 17.07
Bank of Maharashtra 0-30 0.10 0.13 0.23
31-90 - 0.04 0.04
Canara Bank 0-30 8.60 6.58 15.18
31-90 25.81 9.13 34.94
Central Bank of India 0-30 - 1.51 1.51
31-90 1.11 0.18 1.29
Development Bank of 0-30 - 0.41 0.41
Singapore 31-90 - 0.77 0.77
Federal Bank 0-30 - 0.30 0.30
31-90 0.04 0.18 0.22
IDBI Bank 0-30 0.75 3.40 4.15
31-90 12.89 5.13 18.02
Indian Overseas Bank 0-30 2.12 2.03 4.15
31-90 4.24 1.11 5.35
Punjab National Bank 0-30 1.01 0.86 1.87
31-90 1.01 0.65 1.66
Standard Chartered 0-30 - 1.87 1.87
Bank 31-90 - 1.58 1.58
State Bank of Baroda 0-30 - 0.11 0.11
State Bank of 0-30 - 1.14 1.14
Hyderabad 31-90 - 0.60 0.60
State Bank of 0-30 - 0.77 0.77
Maharashtra 31-90 - 0.24 0.24
State Bank of Mysore 0-30 - 2.09 2.09
31-90 - 1.64 1.64
State Bank of 0-30 - 0.27 0.27
Travancore 31-90 - 0.22 0.22
Syndicate Bank 0-30 4.63 5.94 10.57
31-90 12.93 1.17 14.10

(र in crore)

Particulars Days Principal Interest Total
Union Bank of India 0-30 - 0.50 0.50
31-90 1.08 0.35 1.43
United Bank of India 0-30 3.00 7.67 10.67
31-90 13.32 3.58 16.90
Financial Institutions
Export Import Bank of 0-30 - 12.19 12.19
India 31-90 23.55 5.87 29.42
National Bank of 0-30 3.22 0.32 3.54
Agriculture and Development 31-90 1.05 0.10 1.15
Industrial Finance 0-30 0.5 2.89 3.39
Corporation of India 31-90 10.56 4.80 15.36
Life Insurance Corporation 181 365 - 0.06 0.06
SREI Equipment Finance Limited 0-30 - 0.50 0.50
31-90 2.54 0.97 3.51
91-180 - 1.40 1.40

The Company has defaulted in repayment of following dues to thefinancial institutions banks and debenture holders during the year which were not paidas at the Balance Sheet date.

(र in crore)

Particulars Days Principal Interest Total
Debenture holders
Life Insurance Corporation 31-90 2.09 1.24 3.33
91-180 2.09 0.89 2.98
181-365 4.19 2.88 7.07
Banks
Axis Bank 0-30 0.38 - 0.38
Central Bank of India 31-90 - 0.06 0.06
Syndicate Bank 0-30 0.32 - 0.32
United Bank of India 0-30 0.39 - 0.39
Financial Institutions
Industrial Finance Corporation of India 0-30 0.25 - 0.25
Life Insurance Corporation 31-90 0.16 0.19 0.35
91-180 0.27 0.13 0.40
181-365 - 0.31 0.31
0-30 0.18 - 0.18
SREI Equipment 31-90 2.73 1.51 4.24
Finance Limited 91-180 2.54 0.99 3.53
181-365 0.36 0.40 0.76

(ix) In our opinion the Company has applied moneys raised by way ofrights issue for the purposes for which these were raised. The Company did not raise moneyby way of term loans/initial public offer (including debt instrument).

(x) No fraud by the Company or on the Company by its officers oremployees has been noticed or reported during the period covered by our audit.

(xi) Managerial remuneration has been paid and provided by the Companyin accordance with the requisite approvals mandated by the provisions of Section 197 ofthe Act read with Schedule V to the Act.

(xii) In our opinion the Company is not a Nidhi Company. Accordinglyprovisions of clause 3(xii) of the Order are not applicable.

(xiii) In our opinion all transactions with the related parties are incompliance with Sections 177 and 188 of Act where applicable and the requisite detailshave been disclosed in the standalone financial statements as required by the applicableInd AS.

(xiv) During the year the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures.

(xv) In our opinion the Company has not entered into any noncashtransactions with the directors or persons connected with them covered under Section 192of the Act.

(xvi) The Company is not required to be registered under Section 45-IAof the Reserve Bank of India Act 1934

For Walker Chandiok & Co LLP
Chartered Accountants
Firm's Registration No.: 001076N/N500013
Rakesh R. Agarwal
Partner
Membership No.: 109632
Place: Mumbai
Date: May 9 2019

ANNEXURE II TO THE INDEPENDENT AUDITOR'S REPORT

Independent Auditor's report on the Internal Financial

Controls under Clause (i) of Sub-section 3 of Section 143 of

the Companies Act 2013 ("the Act")

1. In conjunction with our audit of the standalone financial statementsof Hindustan Construction Company Limited ("the Company") as at and for the yearended 31

March 2019 we have audited the internal financial controls overfinancial reporting of the Company as at that date.

Management's Responsibility for Internal Financial Controls

2. The Company's Board of Directors is responsible for establishing andmaintaining internal financial controls based on internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting ('the Guidance Note') issued by the Institute of Chartered Accountants of India('the ICAI'). These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of the Company's business including adherence to Company'spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.

Auditors' Responsibility

3. Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting based on our audit. We conducted ouraudit in accordance with the Standards on Auditing issued by the ICAI and deemed to beprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls over financial reporting and the Guidance Note issued by theICAI. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting were established andmaintained and if such controls operated effectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidenceabout the adequacy of the internal financial controls over financial reporting 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 judgement including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.

5. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit

opinion on the Company's internal financial controls over financialreporting.

Meaning of Internal Financial Controls over Financial

Reporting

6. A company's internal financial controls over financial reporting isa process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlsover financial reporting include those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over

Financial Reporting

7 Because of the inherent limitations of internal financial controlsover financial 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 internal financialcontrols over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.

Opinion

8. In our opinion the Company has in all material respects adequateinternal financial controls over financial reporting as at 31 March 2019 based oninternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note issued by theICAI and the Company's internal financial controls over financial reporting were operatingeffectively as at 31 March 2019.

For Walker Chandiok & Co LLP
Chartered Accountants
Firm's Registration No.: 001076N/N500013
Rakesh R. Agarwal
Partner
Membership No.: 109632
Place: Mumbai
Date: May 9 2019