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ISGEC Heavy Engineering Ltd.

BSE: 533033 Sector: Engineering
NSE: ISGEC ISIN Code: INE858B01029
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OPEN 759.15
PREVIOUS CLOSE 749.70
VOLUME 4651
52-Week high 877.00
52-Week low 231.10
P/E 27.04
Mkt Cap.(Rs cr) 5,483
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 759.15
CLOSE 749.70
VOLUME 4651
52-Week high 877.00
52-Week low 231.10
P/E 27.04
Mkt Cap.(Rs cr) 5,483
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

ISGEC Heavy Engineering Ltd. (ISGEC) - Auditors Report

Company auditors report

To the Members of

Isgec Heavy Engineering Limited

REPORT ON THE AUDIT OF THE STANDALONE IND AS FINANCIAL STATEMENTS

Opinion

We have audited the accompanying standalone Ind AS financial statements of Isgec HeavyEngineering Limited ("the Company") which comprise the Balance Sheet as at 31stMarch 2021 the Statement of Profit and Loss (including the Statement of OtherComprehensive Income) the Statement of Changes in Equity and the Cash Flow statement forthe year then ended and notes to the financial statements including a summary ofsignificant accounting policies and other explanatory information (hereinafter referred toas "the standalone Ind AS financial statements").

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Companies Act 2013 ("the Act") in the manner so required andgive a true and fair view in conformity with the accounting principles generally acceptedin India of the state of affairs of the Company as at 31st March 2021 andits profit including other comprehensive income its cash flows and the changes in equityfor the year ended on that date.

BASIS FOR OPINION

We conducted our audit of the standalone Ind AS financial statements in accordance withthe Standards on Auditing (SAs) as specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the ‘Auditor'sResponsibilities for the Audit of the Standalone Ind AS Financial Statements' section ofour report. We are independent of the Company in accordance with the 'Code of Ethics'issued by the Institute of Chartered

Accountants of India together with the ethical requirements that are relevant to ouraudit of the standalone Ind AS financial statements under the provisions of the Act andthe Rules thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion on the standalone Ind AS financial statements.

EMPHASIS OF MATTER

We draw attention to Note 56 to the standalone Ind AS financial statements whichdescribes the uncertainties and the impact of Covid-19 pandemic on the Company'soperations carrying amounts of property plant & equipment intangible assetsinvestments recoverability of receivables and other assets and management's evaluation ofthe future performance of the Company. In view of the uncertain economic environment adefinitive assessment of the impact on the subsequent periods is dependent uponcircumstances as they evolve. Our opinion is not modified in respect of this matter.

KEY AUDIT MATTERS

Key audit matters are those matters that in our professional judgement were of mostsignificance in our audit of the standalone Ind AS financial statements of the currentperiod. These matters were addressed in the context of our audit of the standalone Ind ASfinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.

Sr. Key Audit Matter No. Auditor's Response
1 Revenue recognition for construction contracts principal Audit Procedures
The Company's significant portion of business is undertaken through construction contracts. Revenue from these contracts is recognized over a period of time in accordance with the requirements of Ind AS 115 "Revenue from Contracts with Customers". Due to the nature of the contracts revenue recognition involves usage of percentage of completion method which is determined based on proportion of contract costs incurred to date compared to estimated total contract costs. The determination of revenues and margin relating to construction contracts depends on total cost at completion estimated by the management. These estimates are reviewed on a quarterly basis or more frequently in the event of any major development during the progress of projects. In the context of our work the procedures set up in terms of contribution to revenues of construction contracts consisted of :
This method involves significant judgments identification of contractual obligations and the Company's rights to receive payments for performance completed till date changes in scope and consequential revised contract price and recognition of the liability for loss making contracts. Refer Note 2.4 to the standalone Ind AS financial statements. • Considering the appropriateness of the Company's revenue recognition accounting policies and assessing compliance with the policies in terms of Ind AS 115.
• Performing testing of the design and implementation of controls over revenue recognition with specific focus on controls over determination of progress of completion recording of costs incurred and estimation of costs to complete the remaining contract obligations.
• Performing tests of details on a sample basis and verifying the underlying customer contracts performing review of actual costs incurred with estimated costs to identify significant variations and assess whether those variations have been considered in estimating the remaining costs to complete and consequential determination of stage of completion which formed the basis of revenue recognition under the input method. We reviewed the management's evaluation process to recognize revenue over a period of time status of completion for projects and total cost estimates. We reviewed and verified the estimated cost of contracts on test check basis arising from contract modifications and analysed current on-going negotiations and settlements that may impair the profitability of such contracts.
• Examining contracts with exceptions including contracts with low or negative margins loss making contracts contracts with significant changes in planned cost estimates to determine the level of provisioning required.
• Verifying the contractual positions and revenue for the year are appropriately presented and disclosed in the standalone Ind AS financial statements

INFORMATION OTHER THAN THE STANDALONE IND AS FINANCIAL STATEMENTS AND AUDITOR'S REPORTTHEREON

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 standalone Ind AS financial statements and ourauditor's report thereon.

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

In connection with our audit of the standalone Ind AS financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone Ind AS financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated. If based on the work we have performed on the other information obtained priorto the date of this auditor's report we conclude that there is a material misstatement ofthis other information we are required to report that fact. We have nothing to report inthis regard.

MANAGEMENT'S RESPONSIBILITY FOR THE STANDALONE IND AS FINANcIAL STATEMENTS

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Act with respect to the preparation of these standalone Ind AS financialstatements that give a true and fair view of the financial position financial performanceincluding other comprehensive income changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended. 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 wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone Ind AS financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone Ind AS 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.

Those Board of Directors are also responsible for overseeing the Company's financialreporting process.

AUDITOR'S RESPONSIBILITY FOR THE AUDIT OF THE STANDALONE IND AS FINANcIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the standalone Ind ASfinancial 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 Ind AS 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 standalone Ind ASfinancial 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 Companyhas adequate internal financial controls system in place and the operating effectivenessof such controls.

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

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone Ind AS financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.

• Evaluate the overall presentation structure and content of the standalone IndAS financial statements including the disclosures and whether the standalone Ind ASfinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

Materiality is the magnitude of misstatements in the standalone Ind AS financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the standalone Ind AS financial statementsmay be influenced. We consider quantitative materiality and qualitative factors in (i)planning the scope of our audit work and in evaluating the results of our work; and (ii)to evaluate the effect of any identified misstatements in the standalone Ind AS financialstatements.

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 also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships 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 Ind AS financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's

report unless law or regulation precludes public disclosure about the matter or whenin extremely rare circumstances we determine that a matter should not be communicated iin our report because the adverse consequences of doing so would reasonably be expected tooutweigh the public i interest benefits of such communication.

REPORT ON OTHER LEGAL AND REGULATORY

REQUIREMENTS

i 1. As required by the Companies (Auditor's Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in the Annexure -A which forms a part of this report astatement on the matters specified in paragraph 3 and 4 of the Order to the extentapplicable.

i 2. 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 purpose of our audit;

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

(c) The Balance Sheet Statement of Profit and Loss (including Other ComprehensiveIncome) the Statement of Changes in Equity and the Cash Flow Statement dealt with by thisReport are in agreement with the books of account;

(d) I n our opinion the aforesaid standalone Ind AS financial statements comply withthe Accounting Standards specified under Section 133 of the Act read with relevant rulesissued thereunder.

(e) On the basis of written representations received from the Directors and taken onrecord by the Board of Directors we report that none of the Directors is disqualified ason 31st March 2021 from being appointed as a Director in terms of Section164(2) of the Companies Act 2013.

(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure- B".

(g) As required by Rule 11 of the Companies (Audit and Auditors) Rules 2014 issued bythe Central Government of India in terms of clause (j) of subsection (3) of section 143 ofthe Act in our opinion and to the best of our information and according to theexplanation given to us:

(a) The Company has disclosed the impact of pending litigations on its financialposition in its standalone Ind AS financial statements - Refer Note 43 to the standaloneInd AS financial statements.

(b) The Company has made provision as required under the applicable law and accountingstandards for material foreseeable losses if any on longterm contracts includingderivative contracts.

(c) There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.

i 3. With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended:

In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration for the year ended 31st March 2021 has beenpaid/provided by the Company to its directors in accordance with the provisions of section197 read with Schedule V to the Act.

For SCV & Co. LLP Chartered Accountants Firm Reg. No: 000235N/ N500089
Place: Noida Dated: June 28 2021 Abhinav Khosla Partner Membership No.: 087010 ICAI UDIN:21087010AAAADI9757

Annexure - A To The Independent Auditor's Report

The Annexure referred to in Independent Auditors' Report to the members of the Companyon the standalone Ind AS financial statements for the year ended 31st March2021 we report that:

i. (a) The Company has maintained proper records

showing full particulars including quantitative details and situation of its fixedassets.

(b) According to the information and explanations given to us fixed assetsverification has been conducted by the management during the year. All the fixed assets ofthe Company have not been physically verified by the management during the year but thereis a regular phased programme of physical verification which in our opinion isreasonable having regard to the size of the Company and nature of its fixed assets. Nomaterial discrepancies were noticed on such verification..

(c) According to information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the company.

ii. Physical verification has been carried out by the Management in respect ofinventory at reasonable intervals during the year. In our opinion the frequency ofverification is reasonable. According to the information and explanations given to usdiscrepancies noticed on physical verification of inventory as compared to the bookrecords were not material and have been dealt with in the books of account.

iii. According to the information and explanations given to us and on the basis of ourexamination of the books of account the Company has not granted any loans secured orunsecured to firms Limited Liability Partnerships or other parties covered in theregister maintained under Section 189 of the Companies Act 2013. The Company during theyear and in earlier year has granted unsecured loan to two subsidiaries covered in theregister maintained under section 189 of the Companies Act 2013.

(a) In our opinion and according to the information and explanations given to us theterms and conditions of unsecured loans given by the Company during the year are not primafacie prejudicial to the interest of the Company.

(b) As explained to us and as per records the schedule of repayment of principal andpayment interest

has been stipulated and no repayment of principal and payment of interest was dueduring the year as per terms and conditions of loans given during the year and in earlieryears.

(c) As per information and explanations given to us and as per our examination ofrecords since no re-payment of principal and payment of interest was due during the yeartherefore no amount of principal or interest was overdue at the year end.

iv. In our opinion and according to the information and explanations given to us theCompany has not made investments given security which is covered under provisions ofsection 185 and 186 of the Companies Act 2013. In respect of loan given and guaranteeprovided during the year the same in our opinion is in compliance of section 185 and 186of Companies Act 2013.

v. According to the information and explanations provided by the management we are ofthe opinion that the Company has not accepted any deposits from public covered undersection 73 to 76 or any other relevant provisions of the Companies Act 2013 and rulesframed there under. Accordingly the paragraph 3(v) of the Order is not applicable to theCompany.

vi. We have broadly reviewed the cost records maintained by the Company pursuant to thesub-section (1) of section 148 of the Companies Act 2013 specified by the CentralGovernment and are of the opinion that prima facie the prescribed cost records have beenmaintained. We have however not made a detailed examination of the cost records with aview to determine whether they are accurate or complete.

vii. (a) According to the information and explanations

given to us and records of the Company examined by us in our opinion the company isregular in depositing undisputed statutory dues including Provident Fund Employees' StateInsurance Goods and Services Tax Income-tax Sales-tax Service tax Value Added TaxCustoms Duty Excise Duty cess and any other statutory dues with the appropriateauthorities. According to the information and explanations given to us no undisputedamounts payable in respect of Provident Fund Employees' State Insurance Goods andServices Tax Income- tax Sales-tax Service tax Value Added Tax Customs Duty ExciseDuty cess and other material statutory dues were outstanding as on 31stMarch 2021 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us there are no dues ofincome tax sales tax service tax duty of customs duty of excise goods and servicestax or value added tax which have not been deposited on account of any dispute except asgiven under:

Name Of the Statute Nature of Due Amount involved (Rs in Lakhs) Amount Unpaid (Rs in Lakhs) Period to which it relates Forum where dispute is pending
Central Excise Act Excise Duty 5.00 5.00 1994-95 Hon'ble High Court Allahabad
Central Excise Act Excise Duty 8.00 8.00 1994-96 Tribunal New Delhi
Central Excise Act Excise Duty 3.57 3.57 2011-12 Assistant commissioner Yamunanagar
Central Excise Act Excise Duty 0.37 0.37 2015-17 Superintendent (Yamunanagar)
Central Excise Act Excise Duty 15.03 15.03 2016-17 Assistant Commissioner (Yamunanagar)
Central Excise Act Excise Duty 21.67 21.67 2017-18 Additional Commissioner (A) Panchkula
Central Excise Act Excise Duty 7.18 7.18 2017-18 Superintendent CGST Division
Central Excise Act Excise Duty 5.55 5.55 2019-20 Additional Commissioner Panchkula
Local Area Tax Local Area Tax 22.00 22.00 2006-07 to 2015-16 Hon'ble Supreme Court of India
Water Cess Water Cess 17.96 17.96 1992-93 Hon'ble Supreme Court of India
Goods and services tax act Goods and services tax 2.62 - 2020-21 Addl. Commissioner Appeal commercial tax MP
Goods and services tax act Goods and services tax 3.09 - 2020-21 Asstt. Commissioner
Sales Tax Act Sales Tax 4.00 4.00 1987-88 Dy Comm. of Commercial Taxes(appeals) Kolkata
Sales Tax Act Sales Tax 61.00 61.00 1994-95 Dy Comm. of Commercial Taxes(appeals) Kolkata
Sales Tax Act Sales Tax 34.00 34.00 1995-96 Dy Comm. of Commercial Taxes(appeals) Kolkata
Sales Tax Act Sales Tax 9.02 9.02 1993-94 Sales Tax Tribunal Orissa
Sales Tax Act Sales Tax 17.00 17.00 1995-96 Sales Tax Tribunal Orissa
Sales Tax Act Sales Tax 5.00 5.00 1996-97 Sales Tax Tribunal Orissa
Sales Tax Act Sales Tax 18.30 16.67 2009-10 to 2013-14 Joint Commissioner of Sales Tax
Sales Tax Act Sales Tax 0.82 0.82 2006-07 Dy Comm. Of Commercial Taxes Tamil Nadu.
Sales Tax Act Sales Tax 87.48 87.48 2010-11 Commercial Tax Tribunal
Sales Tax Act Sales Tax 53.77 21.33 2013-14 High Court Lukhnow
Sales Tax Act Sales Tax 93.91 88.91 2014-15 Commercial Tax Tribunal
Sales Tax Act Sales Tax 110.31 110.31 2015-16 Commercial Tax Tribunal
Sales Tax Act Sales Tax 12.31 12.31 2015-16 Commercial Tax Tribunal
Sales Tax Act Sales Tax 48.47 45.47 2016-17 Addl. Commissioner Grade-2 Appeals
Sales Tax Act Sales Tax 8.19 8.19 2016-17 Addl. Commissioner Grade-2 Appeals
Sales Tax Act Sales Tax 1.30 - 2020-21 Addl. Commissioner AppealCommercial tax UP
Sales Tax Act Sales Tax 3.26 3.26 2014-15 Dy Comm. Of Commercial Taxes Kerala.
Sales Tax Act Sales Tax 0.58 0.58 2016-17 Dy Comm. Of Commercial Taxes Kerala.
Sales Tax Act Sales Tax 59.32 53.10 2009-10 Assistant Commissioner (WC) Department of Commercial Taxes Ernakulam
Sales Tax Act Sales Tax 0.37 0.33 2010-11 Assistant Commissioner (WC) Department of Commercial Taxes Ernakulam
Sales Tax Act Sales Tax 68.62 68.62 2014-15 Joint Commissioner of SGST Kochi
Sales Tax Act Sales Tax 1.28 0.93 2015-16 Excise & Tax Officer Punjab
Sales Tax Act Sales Tax 2.61 1.96 2015-16 Excise & Tax Officer Punjab
Sales Tax Act Sales Tax 3.54 2.66 2015-16 Excise & Tax Officer Punjab
Sales Tax Act Sales Tax 21.67 17.53 2013-14 Dy. Commissioner of Sales Tax Mumbai
Sales Tax Act Sales Tax 71.06 70.44 2015-16 Dy. Commissioner of Sales Tax Mumbai
Sales Tax Act Sales Tax 8.31 7.95 2015-16 Dy. Commissioner of Sales Tax Mumbai
Sales Tax Act Sales Tax 559.88 559.88 2016-17 Deputy Commissioner State Tax LTU Mumbai
Sales Tax Act Sales Tax 3.54 3.54 2016-17 Deputy Commissioner State Tax LTU Mumbai
Sales Tax Act Sales Tax 44.13 30.89 2015-16 Joint Commissioner Appeal
Sales Tax Act Sales Tax 6.00 6.00 1971-73 Commissioner Sales Tax Lucknow
Finance Act 1994 Service Tax 60.31 60.31 2012-13 Tribunal Ahmedabad
Finance Act 1994 Service Tax 19.66 19.66 2014-15 Additional Commissioner (Audit) C.Ex. Surat. Order awaited.
Finance Act 1994 Service Tax 100.54 100.54 2015- 16 & 2016- 17 Commissioner Central goods and service tax (Appeals Noida )
Custom Act Custom Duty 3.28 3.28 2017-18 Tribunal New Delhi
Custom Act Custom Duty 563.8 513.65 2017-18 Tribunal Ahemdabad

viii. In our opinion and according to the information and explanations given to us theCompany has not defaulted in repayment of loans or borrowing to any financial institutionbank or government. The Company has not issued any debentures.

ix. In our opinion and according to the information and explanations given to us theCompany has not raised moneys by way of initial public offer or further public offer(including debt instruments) during the year. Based on our audit procedures and accordingto information and explanations given by the management the term loans were applied forthe purpose for which they were obtained.

x. According to the information and explanations given to us no fraud by the Companyor any material fraud on the Company by its officers or employees has been noticed orreported during the year.

xi. According to the information and explanations given to us and based on ourexamination of records of Company the Company has paid / provided for the managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Companies Act 2013.

xii. According to the information and explanation given to us the Company is not aNidhi Company. Therefore the provisions of paragraph 3(xii) of the Order are 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 section 177 and 188 of the Companies Act 2013. Further the details of thetransactions have been disclosed in the standalone Ind AS financial statements as requiredby the applicable accounting standards.

xiv. According to the information and explanations give 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 provisions of paragraph 3(xiv) of the Order are not applicable tothe 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 non-cashtransactions with directors or persons connected with him as referred to in section 192 ofthe Companies Act 2013. Accordingly provisions of paragraph 3(xv) of the Order are notapplicable to the Company.

xvi. According to the information and explanations given to us the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.Accordingly provisions of paragraph 3 (xvi) of the Order are not applicable to theCompany.

For ScV & co. LLp Chartered Accountants Firm Reg. No: 000235N/ N500089
Place: Noida Dated: June 28 2021 Abhinav Khosla Partner Membership No.: 087010 ICAI UDIN:21087010AAAADI9757

Annexure - B To The Independent Auditor's Report

(Referred to in paragraph 2(f) under ‘Report on Other Legal and RegulatoryRequirements' section of the independent Auditor's Report of even date to the members ofIsgec Heavy Engineering Limited on the standalone Ind AS financial statements for the yearended 31st March 2021)

REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER CLAUSE (I) OF SUB-SECTION 3 OF SECTION143 OF THE COMPANIES ACT 2013 ("THE ACT")

We have audited the internal financial controls over financial reporting of Isgec HeavyEngineering Limited ("the Company") as of 31st March 2021 inconjunction with our audit of the standalone Ind AS financial statements of the Companyfor the year ended on that date.

MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the"Guidance Note") issued by the Institute of Chartered Accountants of India('ICAI'). These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company's policiesthe safeguarding 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.

AUDITOR'S RESPONSIBILITY

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note and the Standards on Auditing issued by Institute of CharteredAccountants of India and deemed to be prescribed under section 143(10) of the CompaniesAct

2013 to the extent applicable to an audit of internal financial controls bothapplicable to an audit of Internal Financial Controls and both issued by the Institute ofChartered Accountants of India. Those Standards and the Guidance Note require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the standalone Ind AS financial statements whether due to fraudor 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 systemover financial reporting.

MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures 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

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2021based on the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.

For SCV & Co. LLP Chartered Accountants Firm Reg. No: 000235N/ N500089
Place: Noida Dated: June 28 2021 Abhinav Khosla Partner Membership No.: 087010 ICAI UDIN:21087010AAAADI9757

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