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K E C International Ltd.

BSE: 532714 Sector: Infrastructure
NSE: KEC ISIN Code: INE389H01022
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OPEN 479.65
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VOLUME 27199
52-Week high 549.20
52-Week low 345.15
P/E 44.92
Mkt Cap.(Rs cr) 12,034
Buy Price 0.00
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Sell Price 0.00
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OPEN 479.65
CLOSE 474.15
VOLUME 27199
52-Week high 549.20
52-Week low 345.15
P/E 44.92
Mkt Cap.(Rs cr) 12,034
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

K E C International Ltd. (KEC) - Auditors Report

Company auditors report

To the Members of KEC International Limited

REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

OPINION

1. We have audited the accompanying standalone statements of KECInternational Limited ("the Company") which comprise the Balance Sheet as atMarch 31 2022 and the Statement of Profit and Loss (including Other ComprehensiveIncome) the Statement of Changes in Equity and the Cash Flow Statement for the year thenended and notes to the standalone financial statements including a summary ofsignificant accounting policies and other explanatory information in which are includedthe Returns for the year ended on that date audited by the branch auditors of theCompany?s 44 branches located at Abu Dhabi Afghanistan Algeria Bangladesh BhutanBurundi Burkina Faso Cameroon Congo Egypt Ethiopia Georgia Ghana GuineaIndonesia Ivory Coast Jordan Kazakhstan Kenya Kuwait Laos Lebanon Libya MalaysiaMali Moldova Morocco Mozambique Nepal Nicaragua Nigeria Oman Papua New GuineaPhilippines Senegal Sierra Leone South Africa Sri Lanka Tanzania Thailand TogoTunisia Uganda and Zambia and 29 jointly controlled operations consolidated on aproportionate basis (refer Notes 3.3 and 50 to the attached standalone financialstatements) (hereinafter referred to as "standalone financial statements").

2. In our opinion and to the best of our information and according tothe explanations given to us and based on the consideration of reports of other auditorson audited financial statements of branches and jointly controlled operations theaforesaid standalone financial statements give the information required by the CompaniesAct 2013 ("the Act") in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at March 31 2022 and total comprehensive income (comprising ofprofit and other comprehensive income) changes in equity and its cash flows for the yearthen ended.

BASIS FOR OPINION

3. We conducted our audit in accordance with the Standards on Auditing(SAs) specified under Section 143(10) of the Act. Our responsibilities under thoseStandards are further described in the "Auditor?s responsibilities for the auditof the standalone financial statements" section of our report. We are independent ofthe Company in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India together with the ethical requirements that are relevant to our auditof the standalone financial statements under the provisions of the Act and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained and the audit evidence obtained by the other auditors in terms of their reportsreferred to in sub-paragraphs 14 and 15 of the Other Matter Paragraph below is sufficientand appropriate to provide a basis for our opinion.

EMPHASIS OF MATTER

4. We draw attention to Note 66 of the standalone financial statementsregarding the Company?s net exposure aggregating to Rs. 233 crores from itstransmission line projects in Afghanistan as at March 31 2022 which are currently onhold due to Force Majeure event. The timing of the recovery of the said exposure isdependent upon the geopolitical environment in Afghanistan and negotiations withinternational funding agencies. Further the bank guarantees issued by the Company inrespect of the aforesaid ongoing projects are also currently not enforceable due to theforce majeure event. Our 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 thestandalone financial statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters.

Key audit matter How our audit addressed the key audit matter
Estimation of contract cost and revenue recognition Our procedures over the recognition of construction revenue included the following:
(Refer Notes 38 and 51 to the standalone financial statements) • Understood and evaluated the design and tested effectiveness of key internal financial controls including those related to review and approval of estimated project cost and review of provision for estimated loss by the authorised representatives.
Contract revenue amounting to Rs. 11405.94 crores for engineering procurement and construction contracts which usually extends over a period of 2-3 years contract prices are fixed / subject to price variance clauses. • For sample of contracts we obtained the percentage of completion calculations agreed key contractual terms back to signed contracts tested the mathematical accuracy of the cost to complete calculations and re-performed the calculation of revenue recognized during the year based on the percentage of completion.
The contract revenue is measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs except where this would not be representative of the stage of completion. • For costs incurred to date we tested samples to appropriate supporting documentation and performed cut off procedures
This method requires the Company to perform an initial assessment of total estimated cost and further reassess the total construction cost at each reporting period to determine the appropriate percentage of completion. • To test the forecasted cost to complete we obtained the breakdown of forecasted costs and tested elements of the forecast by obtaining executed purchase orders and agreements evaluating reasonableness of management?s judgements / and assumptions using past trends and comparing the estimated costs to the actual costs incurred for the similar completed projects.
We considered the estimation of construction contract cost as a key audit matter given the involvement of significant management judgement which has consequential impact on revenue recognition. • Assessed the adequacy of presentation and related disclosures in the standalone financial statements. Based on the procedures performed above we considered manner of estimation of contract cost and recognition of revenue to be reasonable.
Valuation of accounts receivable in view of risk of credit losses Our audit incorporated the following procedures with regards to provisioning of receivables:
(Refer to Notes 10 and 15 to the standalone financial statement) • Understood and evaluated the accounting policy of the company.
Accounts receivables amounting to Rs. 5258.06 crores (including retention receivables) is a significant item in the Company?s standalone financial statements as at March 31 2022 and assumptions used for estimating the credit loss on receivables is an area which is influenced by management?s judgment. • Evaluated the design and tested the operating effectiveness of key controls in relation to determination of estimated credit loss.
The Company makes an assessment of the estimated credit losses basis credit risk project status past history latest discussion/ correspondence with the customer. • Inquired with senior management regarding status of collectability of the receivable
Given the relative significance of these receivables to the standalone financial statements and the nature and extent of audit procedures involved to assess the recoverability of receivables we determined this to be a key audit matter. • For material balances the basis of provision was discussed with the audit committee.
• Assessed and challenged the information used by the Management to determine the expected credit losses by considering credit risk of the customer cash collection performance against historical trends. Based on our work as stated above no significant deviations were observed in respect of management?s assessment of valuation of accounts receivables.
Key audit matter How our audit addressed the key audit matter
Assessment of carrying value of investments in subsidiary Our audit incorporated the following procedures with regards to impairment testing of investments:
(Refer to Note 9 to the standalone financial statement) • Evaluated the design and tested the operating effectiveness of key controls in relation to determination of impairment loss.
The Company has an investment of Rs. 867.09 crores in KEC Investment Holding Mauritius whose wholly owned subsidiary SAE Tower holdings LLC (‘SAE?) is making losses over the past few years and the carrying value of the investment is higher than the net assets of SAE. • Assessed and challenged the information used by Management for impairment assessment of the investments. Performed sensitivity analysis on the Model by analysing the impact of using other possible growth rates and discount rates within a reasonable and foreseeable range.
This is an indicator of a potential impairment of the investment. • Compared the growth rates used in the Model with historical information economic and industry forecasts.
Testing for impairment depends on the future results of the company like estimating future cash flows in the value-in use discounted cash flow model prepared by the Company (the Model) to support the carrying value determining the discount and growth rates to be adopted in the Model. • Evaluated the competency and capabilities of the external management?s valuation expert performing the investment impairment assessment.
In addition there is significant scope for judgement in determining the assumptions underlying the forecasted results. • Evaluated the Company?s process regarding impairment assessment by involving auditor?s valuation expert to assist in assessing the appropriateness of the impairment model including the independent assessment of the underlying assumptions relating to discount rate terminal value etc.
Given the relative significance of this investment to the standalone financial statements and the nature and extent of audit procedures involved in valuation of this investment we determined this to be a key audit matter. • Checked the mathematical accuracy of the impairment model.
• Obtained results of work performed by the component auditor of the subsidiary in their impairment valuation including consistency of the operating performance outlook and assumptions used in the component?s valuation model.
• Assessed the adequacy of presentation and disclosures made in the financial statements.
Based on the above procedures performed we observed the management?s impairment assessment related to investments in subsidiaries to be reasonable.

OTHER INFORMATION

6. The Company?s Board of Directors are responsible for the otherinformation. The other information comprises the information included in the annual reportbut does not include the financial statements and our auditor?s report thereon. Theannual report is expected to be made available to us after the date of this auditor?sreport.

Our opinion on the standalone financial statements does not cover theother information and we will 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 identified above when it becomesavailable and in doing so consider whether the other information is materiallyinconsistent with the standalone financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. When we read the annual report ifwe conclude that there is a material misstatement therein we are required to communicatethe matter to those charged with governance and take appropriate action as applicableunder the relevant laws and regulations.

RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FORTHE STANDALONE FINANCIAL STATEMENTS

7. The Company?s Board of Directors is responsible matters statedin Section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the financial position financialperformance changes in equity and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.

8. 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. Those Board of Directors arealso responsible for overseeing the Company?s financial reporting process.

AUDITOR?S RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONEFINANCIAL STATEMENTS

9. 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.

10. As part of an audit in accordance with SAs we exerciseprofessional judgment 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 control relevant to the auditin order to design audit procedures that are appropriate in the circumstances. UnderSection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls with reference to standalonefinancial statements 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.

11. We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant de_ciencies in internal control that we identify during ouraudit.

12. 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.

13. 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 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 MATTER

14. W e did not audit the financial statements/ information of 40branches and 28 jointly controlled operations included in the standalone financialstatements of the Company which constitute total assets of Rs. 3500 crores and net assetof Rs. 450 crores as at March 31 2022 total revenue of Rs. 3022 crores total netprofit after tax of Rs. 92 crores total comprehensive income (comprising of profit andother comprehensive income) of Rs. 96 crores and net cash inflows amounting to Rs. 29crores for the year then ended. These financial statements/ financial information havebeen audited by other auditors whose reports have been furnished to us by the Managementand our opinion on the standalone financial statements (including other information) in sofar as it relates to the amounts and disclosures included in respect of these branches andjointly controlled operations and our report in terms of sub-section (3) of Section 143 ofthe Act including report on Other Information insofar as it relates to the aforesaidbranches and jointly controlled operations is based solely on the report of such otherauditors.

15. The financial statements/ financial information of 4 branches and 1jointly controlled operation located outside India included in the standalone financialstatements which constitute total assets of Rs. 36 crores and net liabilities of Rs. 95crores as at March 31 2022 total revenue from operations of Rs. 27 crores total netloss after tax of Rs. 71 crores total comprehensive loss (comprising of loss and othercomprehensive income) of Rs. 71 crores and net cash outflows amounting to

Rs. 3 crores for the year then ended have been prepared in accordancewith accounting principles generally accepted in their respective countries and have beenaudited by other auditors under generally accepted auditing standards applicable in theirrespective countries. The Company?s management has converted the financialstatements/ financial information of such branches and jointly controlled operationslocated outside India from the accounting principles generally accepted in theirrespective countries to the accounting principles generally accepted in India. We haveaudited these conversion adjustments made by the Company?s management. Our opinion inso far as it relates to the balances and affairs of such branches and jointly controlledoperations located outside India including other information is based on the report ofsuch other auditors and the conversion adjustments prepared by the management of theCompany and audited by us. Material uncertainty related to going concern has been reportedby two branches and one jointly controlled operation on account of loss incurred duringthe year by these branches and jointly controlled operation which are not material to theCompany.

Our opinion on the standalone financial statements and our‘Report on Other Legal and Regulatory Requirements? below is not modified inrespect of the above matters with respect to our reliance on the work done and the reportsof the other auditors.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

16. 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 Act we give in the Annexure B a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.

17. As required by Section 143(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 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 andproper returns adequate for the purposes of our audit have been received from the branchesand jointly controlled operations.

(c) The reports on the accounts of the branch offices of the Companyaudited under Section 143(8) of the Act by branch auditors have been sent to us and havebeen properly dealt with by us in preparing this report.

(d) The Balance Sheet the Statement of Profit and Loss (includingOther Comprehensive Income) the Statement of Changes in Equity and the Cash FlowStatement dealt with by this Report are in agreement with the books of account and withthe returns received from the branches and financial statements/ financial information ofjointly controlled operations.

(e) In our opinion the aforesaid standalone financial statementscomply with the Accounting Standards specified under Section 133 of the Act.

(f) On the basis of the written representations received from thedirectors as on March 31 2022 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2022 from being appointed as a director in termsof Section 164(2) of the Act.

(g) With respect to the adequacy of the internal financial controlswith reference to standalone financial statements of the Company and the operatingeffectiveness of such controls refer to our separate Report in "Annexure A".

(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 standalone financial statements disclose theimpact if any of pending litigations on the standalone financial position of theCompany its branches and jointly controlled operations – Refer Note 57 to thestandalone financial statements. ii. Provision has been made in the standalone financialstatements as required under the applicable law or accounting standards for materialforeseeable losses if any on long-term contracts as at March 31 2022 - Refer Note 36 tothe standalone financial statements. The Company did not have any long-term derivativecontracts as at March 31 2022. iii. There has been no delay in transferring amountsrequired to be transferred to the Investor Education and Protection Fund by the Companyduring the year. iv. a) The management has represented that to the best of its knowledgeand belief no funds have been advanced or loaned or invested (either from borrowed fundsor share premium or any other sources or kind of funds) by the Company to or in any otherpersons or entities including foreign entities ("Intermediaries") with theunderstanding whether recorded in writing or otherwise that the Intermediary shallwhether directly or indirectly lend or invest in other persons or entities identified inany manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries")or provide any guarantee security or the like on behalf of the Ultimate Beneficiaries(Refer Note 9.8 to the standalone financial statements);

(b) The management has represented that to the best of its knowledgeand belief no funds have been received by the Company from any persons or entitiesincluding foreign entities ("Funding Parties") with the understanding whetherrecorded in writing or otherwise that the Company shall whether directly or indirectlylend or invest in other persons or entities identified in any manner whatsoever by or onbehalf of the Funding Party ("Ultimate Beneficiaries") or provide any guaranteesecurity or the like on behalf of the Ultimate Beneficiaries (Refer Note 9.8 to thestandalone financial statements); and

(c) Based on such audit procedures that we considered reasonable andappropriate in the circumstances nothing has come to our notice that has caused us tobelieve that the representations under sub-clause (a) and (b) contain any materialmisstatement.

v. The dividend declared and paid during the year by the Company is incompliance with Section 123 of the Act.

18. The Company has paid/ provided for managerial remuneration inaccordance with the requisite approvals mandated by the provisions of Section 197 readwith Schedule V to the Act.

For Price Waterhouse Chartered Accountants LLP
Firm Registration Number: 012754N/N500016
Sarah George
Partner
Place: Mumbai Membership Number: 045255
Date: May 03 2022 UDIN: 22045255AIIEEP1897

REPORT ON THE INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO STANDALONEFINANCIAL STATEMENTS UNDER CLAUSE (I) OF SUB-SECTION 3 OF SECTION 143 OF THE ACT

1. We have audited the internal financial controls reference tostandalone financial statements of KEC International Limited ("the Company") asof March 31 2022 in conjunction with our audit of the standalone financial statements ofthe Company for the year ended on that date which includes the internal financialcontrols over financial reporting of the Company?s 44 branches.

MANAGEMENT?S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

2. The Company?s management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting ("the Guidance Note") issued by the Institute of CharteredAccountants of India ("ICAI"). These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of its business includingadherence to Company?s policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under the Act.

AUDITOR?S RESPONSIBILITY

3. Our r esponsibility is to express an opinion on the internalfinancial controls with reference to standalone financial statements based on our audit.We conducted our audit in accordance with the Guidance Note and the Standards on Auditingdeemed to be prescribed under Section 143(10) of the Act to the extent applicable to anaudit of internal financial controls both applicable to an audit of internal financialcontrols and both issued by the ICAI. Those Standards and the Guidance Note require thatwe comply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls with reference to standalonefinancial statements was established and maintained and if such controls operatedeffectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidenceabout the adequacy of the internal financial controls system with reference to standalonefinancial statements and their operating effectiveness. Our audit of internal financialcontrols with reference to standalone financial statements included obtaining anunderstanding with of internal financial controls with reference to standalone financialstatements 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 ofthe risks of material misstatement of the standalone financial statements whether due tofraud or error.

5. We believe that the audit evidence we have obtained and the auditevidence obtained by the other auditors in terms of their reports referred to in the OtherMatter paragraph below is sufficient and appropriate to provide a basis for our auditopinion on the Company?s internal financial controls system with reference tostandalone financial statements.

MEANING OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO STANDALONEFINANCIAL STATEMENTS

6. A Company?s internal financial controls with reference tofinancial statements is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. ACompany?s internal financial controls with reference to financial statements includesthose policies and procedures that (1) pertain to the maintenance of records that inreasonable detail accurately and fairly reflect the transactions and dispositions of theassets of the company; (2) provide Company?s reasonable assurance that transactionsare recorded as necessary to permit preparation of financial statements in accordance withgenerally accepted accounting principles and that receipts and expenditures of thecompany are being made only in accordance with authorisations of management and directorsof the company; and (3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the company?s assetsthat could have a material effect on the financial statements.

INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TOSTANDALONE FINANCIAL STATEMENTS

7. Because of the inherent limitations of internal financial controlswith reference to standalone financial statements including the possibility of collusionor improper management override of controls material misstatements due to error or fraudmay occur and not be detected. Also projections of any evaluation of the internalfinancial controls with reference to standalone financial statements to future periods aresubject to the risk that the internal financial control controls with reference tostandalone financial statements may become inadequate because of changes in conditions orthat the degree of compliance with the policies or procedures may deteriorate.

OPINION

8. In our opinion the Company including 44 branches has in allmaterial respects an adequate internal financial controls system with reference tostandalone financial statements and such internal financial controls with reference tostandalone financial statements were operating effectively as at March 31 2022 based onthe internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Noteissued by ICAI.

OTHER MATTER

9. Our aforesaid report under Section 143(3)(i) of the Act on theadequacy and operating effectiveness of the internal financial controls with reference tostandalone financial statements insofar as it relates to 44 branches of the Company isbased on the corresponding reports of the auditors of such Branches of the Company. Ouropinion is not modified in respect of this matter.

For Price Waterhouse Chartered Accountants LLP
Firm Registration Number: 012754N/N500016
Sarah George
Partner
Place: Mumbai Membership Number: 045255
Date: May 03 2022 UDIN: 22045255AIIEEP1897

Annexure B to Independent Auditor?s Report

Referred to in paragraph 16 of the Independent Auditor?s Report ofeven date to the members of KEC International Limited on the standalone financialstatements as of and for the year ended March 31 2022

i. (a) (A) The Company is maintaining proper records showing fullparticulars including quantitative details and situation of Property Plant andEquipment.

(B) The Company is maintaining proper records showing full particularsof Intangible Assets.

(b) The Property Plant and Equipment are physically verified by theManagement according to a phased programme designed to cover all the items over a periodof 3 years which in our opinion is reasonable having regard to the size of the Companyand the nature of its assets. Pursuant to the programme a portion of the Property Plantand Equipment has been physically verified by the Management during the year and nomaterial discrepancies have been noticed on such verification.

(c) The title deeds of all the immovable properties (other thanproperties where the Company is the lessee and the lease agreements are duly executed infavor of the lessee) as disclosed in Note 5 to the standalone financial statements areheld in the name of the Company except for the following :

Description of property Gross carrying value ( Rs. in Crores) Held in the name of Whether promoter director or their relative or employee Period held - indicate range where appropriate* Reason for not being held in the name of the Company
Freehold land at Jabalpur 0.81 SAE (I) Limited No 01-10-2007 Transferred to and vested in the Company pursuant to schemes of Amalgamation/Arrangement in the earlier years. Third party has claimed title of the property and the said matter is sub judice before the Hon'ble High Court.
Flat at Worli Mumbai 1.30 Kamani Engineering Corporation Limited No 31-03-2005 Transferred to and vested in the Company pursuant to the Schemes of Amalgamation /Arrangement in earlier years. The Company has been following up with the society for transfer of the fiat in its name and is in the process of sending legal notice through its lawyers to the Society.
Freehold land at Mysore 24.24 RPG Telecom Limited No 01-03-2010 Transferred to and vested in the Company pursuant to the Schemes of Amalgamation/ Arrangement in earlier years. The Company has been following up with the Tehsildars office Mysore Karnataka for transfer of the land in its name and is in the process of engaging the external local legal Counsel to change the relevant records of Government Department.
Freehold land at Village Dhanot - i. Asian Cables Corporation Limited No 01-03-2010 Transferred to and vested in the Company pursuant to the Schemes of Amalgamation/ Arrangement in earlier years. Applications for change of name in the revenue record were rejected by Sub-Divisional Officer (SDO)
Taluka Kalol Gujarat ii. CETEX Petrochemicals Limited 31-03-2005 for want of payment of stamp duty. The Company is in the process of filing a revision application before Appropriate Authority challenging the order passed in the Appeal.

 

*The dates stated in column refers to transfer and vesting datepursuant to the appointed date as per the Schemes of Amalgamation/ Arrangement with thecompanies stated in column "Held in the name of".

( The Company has not revalued its Property Plantd) and Equipment(including Right-of-use assets) or intangible assets during the year. Consequently thequestion of our commenting on whether the revaluation is based on the valuation by aRegistered Valuer or specifying the amount of change if the change is 10% or more in theaggregate of the net carrying value of each class of Property Plant and Equipment(including Right-of-use assets) or intangible assets does not arise.

(e) Based on the information and explanations furnished to us noproceedings have been initiated on or are pending against the Company for holding benamiproperty under the Prohibition of Benami Property Transactions Act 1988 (as amended in2016) (formerly the Benami Transactions (Prohibition) Act 1988 (45 of 1988) and Rulesmade thereunder and therefore the question of our commenting on whether the Company hasappropriately disclosed the details in its standalone financial statements does not arise.

ii. (a) The physical verification of inventory excluding stocks withthird parties has been conducted at reasonable intervals by the Management during the yearand in our opinion the coverage and procedure of such verification by Management isappropriate. In respect of inventory lying with third parties these have substantiallybeen confirmed by them. The discrepancies noticed on physical verification of inventory byManagement as compared to book records were not material and have been appropriately dealtwith in the books of account.

(b) During the year the Company has been sanctioned working capitallimits in excess of Rs. 5 crores in aggregate from banks on the basis of security ofcurrent assets. The Company has filed quarterly returns or statements with such bankswhich are in agreement with the unaudited books of account. (Also refer Note 30 to thestandalone financial statements)

iii. (a) The Company has made investments in three companies grantedunsecured loans to two companies and provided guarantee to four companies including onejointly controlled operation (JCO). The aggregate amount during the year and balanceoutstanding at the balance sheet date with respect to such loans and guarantees to thesubsidiaries and a jointly controlled operation are as per the table given below:

Particulars Loans Guarantees
Aggregate amount granted/ provided during the year*
- Subsidiaries 26.91 467.73
- Jointly Controlled Operation - 522.82
Balance outstanding as at balance sheet date in respect of the above
- Subsidiaries 15.71 467.73
- Jointly Controlled Operations - 522.82

 

* Excludes impact of revaluation of foreign currency loan

(Also refer Notes 9 18 and 53 to the standalone financial statements)(b) In respect of the aforesaid investments/guarantees/ loans the terms and conditionsunder which such loans were granted/investments were made/ guarantees were provided arenot prejudicial to the Company?s interest.

(c) In respect of the aforesaid loans no schedule for repayment ofprincipal and interest was stipulated. Therefore in the absence of stipulation ofrepayment terms we are unable to comment on the regularity of repayment of principal andpayment of interest. (d) In respect of the aforesaid loans there is no amount which isoverdue for more than ninety days.

(e) There were no loans which fell due during the year and were renewedor extended. Further no fresh loans were granted to same parties to settle the existingoverdue loans.

(f) Following loans were granted during the year including to relatedparties under Section 2(76) of the Act which are repayable on demand or where no schedulefor repayment of principal and interest has been stipulated by the Company.

All Parties Promoters Related Parties
Aggregate of loans
Repayable on demand 15.71 - 15.71
Percentage of loans 100% - 100%

(Also refer Note 18 to the standalone financial statements).

iv. TheCompanyisengagedinprovidinginfrastructuralfacilities asspecified in Schedule VI to the Act and accordingly the provisions of Section 186 exceptsub section (1) of the Act are not applicable to the Company. In our opinion andaccording to the information and explanations given to us the Company has complied withthe provisions of Sections 185 and 186(1) of the Act in respect of the loans andinvestments made and guarantees provided by it.

v. The Company has not accepted any deposits or amounts which aredeemed to be deposits within the meaning of Sections 73 74 75 and 76 of the Act and theRules framed there under to the extent notified.

vi. Pursuant to the rules made by the Central Government of

India the Company is required to maintain cost records as specifiedunder Section 148(1) of the Act in respect of its products. We have broadly reviewed thesame and are of the opinion that prima facie the prescribed accounts and records havebeen made and maintained. We have not however made a detailed examination of the recordswith a view to determine whether they are accurate or complete.

vii. (a) According to the information and explanations given to us andthe records of the Company examined by us in our opinion the Company is regular indepositing undisputed statutory dues including goods and services tax provident fundemployees? state insurance sales tax income tax service tax duty of customs dutyof excise value added tax cess and other material statutory dues as applicable withthe appropriate authorities. Also refer Note 79 to the standalone financial statementsregarding management?s assessment on certain matters relating to provident fund.

(b) According to the information and explanations given to us and therecords of the Company examined by us there are no statutory dues of provident fundemployees? state insurance cess which have not been deposited on account of anydispute. The particulars of other statutory dues referred to in sub-clause (a) as at March31 2022 which have not been deposited on account of a dispute are as follows:

Name of the statute Nature of dues Amount (Rs.) Period to which the amount relates Forum where the dispute is pending
The Central Sales Tax Act 1956 and Local Sales Tax Acts Sales tax and value added tax 16.92 21.65 2002-2003 to 2016-2017 2006-2007 to 2014-2015 Appellate Authority – up to Commissioner?s level Revisionary Board of Madhya Pradesh & West Bengal
4.58 2007-2008 to 2014-2015 Appellate Tribunal
2.15 2009-2010 to 2014-2015 Rajasthan Tax Board Ajmer
The Finance Act 1994 Service Tax 178.90 2004-2005 to 2016-2017 Customs Excise and Service Tax Appellate Tribunal (CESTAT)
145.33 2004-2005 to 2008-2009 Supreme Court of India
The Customs Act 1962 Custom Duty 0.60 1995-1996 High Court
The Central Excise Act 1944 Excise Duty 1.61 1989-1995 to 2016-17 Appellate Authority – up to Commissioner?s level
11.28 2005-2006 to 2016 -2017 Customs Excise and Service Tax Appellate Tribunal (CESTAT)
1.44 2005-2006 to 2016-2017 High Court
0.13 2008-2009 to 2009-2010 Supreme Court
The Income- Tax Act 1961 Income Tax 1.52 2012-2013 Commissioner of Income Tax Income Tax Appellate Tribunal
3.80 2017-18
Name of the statute Nature of dues Amount Period to which the Forum where the dispute is pending
Rs. amount relates
Entry Tax Act 1976 Madhya Pradesh Entry Tax 0.23 2001-2002 to 2002-2003 Appellate Authority – up to Deputy Commissioner?s level Board of Appeals Madhya Pradesh
2009-2010 to 2011-2012
Entry Tax Gurgaon Entry Tax 1.25 2013-14 to 2016-17 Sales Tax Appellate Authority
Goods and Services Tax Goods and 0.08 2018-19 to 2019-2020 GST Appeal
Services Tax

viii. According to the information and explanations given to us and therecords of the Company examined by us there are no transactions in the books of accountthat has been surrendered or disclosed as income during the year in the tax assessmentsunder the Income Tax Act 1961 that has not been recorded in the books of account. ix.(a) According to the records of the Company examined by us and the information andexplanation given to us the Company has not defaulted in repayment of loans or otherborrowings or in the payment of interest to any lender during the year.

(b) According to the information and explanations given to us and onthe basis of our audit procedures we report that the Company has not been declared WilfulDefaulter by any bank or financial institution or government or any government authority.

(c) In our opinion and according to the information and explanationsgiven to us the term loans have been applied for the purposes for which they wereobtained. (Also refer Note 78 to the standalone financial statements)

(d) According to the information and explanations given to us and theprocedures performed by us and on an overall examination of the standalone financialstatements of the Company we report that no funds raised on short-term basis have beenused for long-term purposes by the Company.

(e) According to the information and explanations given to us and on anoverall examination of the standalone financial statements of the Company we report thatthe Company has not taken any funds from any entity or person on account of or to meet theobligations of its subsidiaries or jointly controlled operations.

(f) According to the information and explanations given to us andprocedures performed by us we report that the Company has not raised loans during theyear on the pledge of securities held in its subsidiaries or jointly controlledoperations.

x. (a) The Company has not raised any money by way of initial publicoffer or further public offer (including debt instruments) during the year. Accordinglythe reporting under clause 3(x)(a) of the Order is not applicable to the Company.

(b) The Company has not made any preferential allotment or privateplacement of shares or fully or partially or optionally convertible debentures during theyear. Accordingly the reporting under clause 3(x)(b) of the Order is not applicable tothe Company.

xi. (a) During the course of our examination of the books and recordsof the Company carried out in accordance with the generally accepted auditing practicesin India and according to the information and explanations given to us we have neithercome across any instance of material fraud by the Company or on the Company noticed orreported during the year nor have we been informed of any such case by the Management.

(b) During the course of our examination of the books and records ofthe Company carried out in accordance with the generally accepted auditing practices inIndia and according to the information and explanations given to us a report underSection 143(12) of the Act in Form ADT-4 as prescribed under rule 13 of Companies (Auditand Auditors) Rules 2014 was not required to be filed. Accordingly the reporting underclause 3(xi)(b) of the Order is not applicable to the Company.

(c) During the course of our examination of the books and records ofthe Company carried out in accordance with the generally accepted auditing practices inIndia and according to the information and explanations given to us the Company hasreceived whistle-blower complaints during the year which have been considered by us forany bearing on our audit and reporting.

xii. As the Company is not a Nidhi Company and the Nidhi

Rules 2014 are not applicable to it the reporting under clause 3(xii)of the Order is not applicable to the Company.

xiii. The Company has entered into transactions with related parties incompliance with the provisions of Sections 177 and 188 of the Act. The details of suchrelated party transactions have been disclosed in the standalone financial statements asrequired under Indian Accounting Standard 24 "Related Party Disclosures"specified under Section 133 of the Act.

xiv. (a) In our opinion and according to the information andexplanation given to us the Company has an internal audit system commensurate with thesize and nature of its business.

(b) The reports of the Internal Auditor for the period under audit havebeen considered by us.

xv. The Company has not entered into any non-cash transactions with itsdirectors or persons connected with him. Accordingly the reporting on compliance with theprovisions of Section 192 of the Act under clause 3(xv) of the Order is not applicable tothe Company.

xvi. (a) The Company is not required to be registered under Section45-IA of the Reserve Bank of India Act 1934. Accordingly the reporting under clause3(xvi)(a) of the Order is not applicable to the Company.

(b) The Company has not conducted non-banking financial / housingfinance activities during the year. Accordingly the reporting under clause 3(xvi)(b) ofthe Order is not applicable to the Company.

(c) The Company is not a Core Investment Company (CIC) as defined inthe regulations made by the Reserve Bank of India. Accordingly the reporting under clause3(xvi)(c) of the Order is not applicable to the Company.

(d) Based on the information and explanations provided by themanagement of the Company the Group has 3 CICs as part of the Group. We have nothowever separately evaluated whether the information provided by the management isaccurate and complete.

xvii. The Company has not incurred any cash losses in thefinancial year or in the immediately preceding financial year.

Following matters have been reported by the auditors of the respectivecomponents under the report on the matters specified in paragraphs 3 and 4 of theCompanies (Auditor?s Report) Order 2020 (CARO) on the financial statements ofrespective components of the Company which have been reproduced under this clause by us asunder :

Sr. No. Name of component Date of report Matters reproduced
1 KEC International Limited - Cameron Branches April 19 2022 The branch has incurred cash losses of XOF 94749766 in the financial year and of XOF 5248115 in the immediately preceding financial year.
2 KEC INTERNATIONAL LIMITED - UAE BRANCHES April 21 2022 The Branches have incurred cash losses of AED 39191292 during the financial year ended March 31 2022 while there was no cash loss in the immediately preceding financial year;
3 KEC International Limited Kazakhstan branch April 19 2022 The branch has incurred cash losses of KZT 22605126 in the financial Year and of KZT 37879253 in the immediately preceding financial year.
4 KEC International Limited Kenya branch April 14 2022 The branch has incurred cash losses of Kshs. 27583665 in the financial year and of Kshs. 20718406 in the immediately preceding financial year.
5 KEC International Limited - Kuwait branch April 13 2022 The branch has incurred cash losses of KWD 56.616 in the financial year and of KWD 730.608 in the immediately preceding financial year.
6 KEC International Limited - Laos Branch April 19 2022 The branch has incurred cash losses of LAK 4073706 in the financial year and of LAK 3229406 in the immediately preceding financial year.
7 KEC International Limited - Lybia Branch April 19 2022 The branch has incurred cash losses of LYD 287717.212 in the financial year and of LYD 60126.265 in the immediately preceding financial year.
8 KEC International Limited - Morocco Branch April 13 2022 The branch has incurred cash losses of MAD 2230956 in the financial year and of Mad NIL in the immediately preceding financial year.
9 KEC International LTD Nicargua Branch April 22 2022 The branch has incurred cash losses of NIO 69079025 in the financial year and of NIO 70567882 in the immediately preceding financial year.
10 KEC International Limited – (South Africa Branch) April 26 2022 The branch has incurred a loss of ZAR 130 756 859 in the financial year and of ZAR 8 333 347 in the immediately preceding financial year(2021).
11 KEC International Zambia Branch April 29 2022 The branch has incurred cash losses of ZMW 15257799 in the financial year and of ZMW 1583432 in the immediately preceding financial year.
12 KEC International Limited Moldova Branch April 21 2022 The branch has commenced operation in the current financial year and has incurred cash losses of MDL 117300 in the current financial year.
13 KEC International Limited Sri Lanka April 11 2022 The branch has incurred cash losses of Rs. 74022047 in the financial year and Rs. Nil in the immediately preceding financial year.

xviii. There has been no resignation of the statutory auditors duringthe year and accordingly the reporting under clause 3(xviii) of the Order is notapplicable.

xix. According to the information and explanations given to us and onthe basis of the financial ratios (Also refer Note 67 to the standalone financialstatements) ageing and expected dates of realisation of financial assets and payment offinancial liabilities other information accompanying the standalone financial statementsour knowledge of the Board of Directors and management plans and based on our examinationof the evidence supporting the assumptions nothing has come to our attention whichcauses us to believe that any material uncertainty exists as on the date of the auditreport that the Company is not capable of meeting its liabilities existing at the date ofbalance sheet as and when they fall due within a period of one year from the balance sheetdate. We however state that this is not an assurance as to the future viability of theCompany. We further state that our reporting is based on the facts up to the date of theaudit report and we neither give any guarantee nor any assurance that all liabilitiesfalling due within a period of one year from the balance sheet date will get discharged bythe Company as and when they fall due.

xx. (a) In respect of other than ongoing projects as at balance sheetdate the Company does not have any amount remaining unspent under Section 135(5) of theAct. Accordingly reporting under clause 3(xx)(a) of the Order is not applicable. (Alsorefer Note 60 to the standalone financial statements)

(b) The Company has transferred the amount of Corporate SocialResponsibility remaining unspent under sub- section (5) of Section 135 of the Act pursuantto ongoing projects to a special account in compliance with the provision of sub-section(6) of Section 135 of the Act. (Also refer Note 60 to the standalone financial statements)

xxi. The reporting under clause 3(xxi) of the Order is not applicablein respect of audit of Standalone Financial

. Statements. Accordingly no comment in respect of the said clause hasbeen included in this report.

For Price Waterhouse Chartered Accountants LLP
Firm Registration Number: 01274N/N500016
Sarah George
Partner
Place: Mumbai Membership Number: 045255
Date: May 03 2022 UDIN: 22045255AIIEEP1897

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