You are here » Home » Companies » Company Overview » Petron Engineering Construction Ltd

Petron Engineering Construction Ltd.

BSE: 530381 Sector: Engineering
NSE: PETRONENGG ISIN Code: INE742A01019
BSE 00:00 | 18 Feb Petron Engineering Construction Ltd
NSE 05:30 | 01 Jan Petron Engineering Construction Ltd
OPEN 4.56
PREVIOUS CLOSE 4.49
VOLUME 5336
52-Week high 9.19
52-Week low 4.49
P/E
Mkt Cap.(Rs cr) 3
Buy Price 4.50
Buy Qty 200.00
Sell Price 4.49
Sell Qty 2236.00
OPEN 4.56
CLOSE 4.49
VOLUME 5336
52-Week high 9.19
52-Week low 4.49
P/E
Mkt Cap.(Rs cr) 3
Buy Price 4.50
Buy Qty 200.00
Sell Price 4.49
Sell Qty 2236.00

Petron Engineering Construction Ltd. (PETRONENGG) - Auditors Report

Company auditors report

To the Members of Petron Engineering Construction Limited Report on the Audit of theFinancial Statements Qualified Opinion

We have audited the financial statements of Petron Engineering Construction Limited("the Company") which comprise the Balance Sheet as at 31st March 2019 theStatement of Profit and Loss (including Other Comprehensive Income) Statement of Changesin Equity and the Statement of Cash Flows for the year then ended and notes to theFinancial Statements including a summary of the significant accounting policies and otherexplanatory information statements").

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects effects of our observations stated in "Basis forQualified Opinion" paragraph below the 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 31st March 2019 and its loss (including Other Comprehensiveincome) changes in equity and its cash flows for the year ended on that date.

Basis for Qualified Opinion

Attention is drawn to:

i) Note No. 35 of the accompanying financial statements in respect of certain suspended/ delayed contracts as of 31st March 2019 trade receivable of Rs. 246 lakhs (net ofmobilization advance and provisions of Rs. 11 lakhs) (trade receivable as of 31st March2018 of Rs. 331 lakhs net of mobilization advance and provisions of Rs. 3 lakhs) aredoubtful of recovery confirmation/negotiatio. We are unable to comment about the status ofamount receivables / payables and pending for on the reported loss for the year ended 31as at that date. March2019and its corresponding impact on assets / liabilities This matterwas also qualified in our audit report on the financial statements for the year ended 31st March 2018.

ii) Note No. 33 of the accompanying financial statements regarding various claimssubmitted by the financial creditors {including claims filed by Arcelor Mittal IndiaPrivate Limited (AMIPL) as stated in Note No. 34b)} operational creditors othercreditors and employees of the Company to the Resolution Professional pursuant to theInsolvency and Bankruptcy Code 2016 are currently under reconciliation. Pendingreconciliation by the company we are unable to comment on the consequential impact ifany on the financial statements as at that date. This matter was also qualified in ouraudit report on the financial statements for the year ended 31 st March 2018.

iii) Note No. 37 of the accompanying financial statements regarding balances of certaintrade receivable (including from related parties) unbilled revenue trade payables(including MSME and interest payable thereon) secured loans (including Banks and NBFC)bank guarantees and unsecured loans (including from related parties) bank balancescurrent liabilities other liabilities (including statutory dues and returns thereof) andloan & advances are subject to where we are unable to comment on the same and itscorresponding impact on the financial statements as at that date. This matter was alsoqualified in our audit report on the financial statements for the year ended 31 st March2018.

iv) Note No. 43 of the accompanying financial statements regarding certain expenses{including finance statements)}/ liabilities/employee benefit expenses have been accountedfor as approved by the No.44offinancial management based on vouchers and for whichcontracts supportingrecords and agreements could not be made available to the auditorsfor verification as the same are under process of compilation/updation. As per themanagement expenses were incurred for business purposes only. Further in respect ofcertain contract sites the Company is in process of compiling / updating the records withrespect to employees/labour where we are unable to comment on the same and itscorresponding impact on financial statements as at that date. This matter was alsoqualified in our audit report on the financial statements for the year ended 31 st March2018.

v) Note No. 40 of the accompanying financial statements regarding non provision againstcarry over Deferred tax assets as on 31st March 2019 of Rs. 5991.31 lakhs for the reasonsstated in the said note that sufficient future taxable income will be available againstwhich the aforesaid deferred tax asset (net) can be realized and our inability to commentthereon. This matter was also qualified in our audit report on the financial statementsfor the year ended 31 st March 2018.

vi) Note No. 46(a) of the accompanying financial statements regarding delays in paymentof certain statutory dues and non- submission /delay in filing of certain statutoryreturns (including PF ESIC TDS. GST etc.) statutory dues written off and pendingreconciliation between books and returns filed where we are unable to comment on theimpact on financial statements as at that date. This matter was also qualified in ouraudit report on the financial ended 31st March 2018.

vii) Note No. 48 of the accompanying financial statements regarding all the directors(including Woman Director) and Company secretary resigned by 31st March 2018. Further CFOalso resigned during the year. Consequently all committees of Directors (includingNomination and Remuneration Committee Audit Committee etc.) were not present during theyear in compliance to the provisions of the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 (as amended). Regardingnon-availability of secretarial forms (including application for extension of AGM) andcompliances thereof and our inability to comment on related party transactionscompliances related to appointment /resignation of Directors compliances with respect toSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (as amended)Corporate Governance submission of annual return with the appropriate authorities andother related regulations and our inability to comment thereon. This matter was alsoqualified in our audit report on the financial statements for the year ended 31 st March2018.

viii) Note No. 41 of the accompanying financial statements regarding pendingadjustment of impact of physical verification of property plant and equipment (PPE) inthe financial books and reconciliation of the same with the books & records where weare unable to comment on the same. In view of the management impact of final adjustmentshall not be material over in our audit report on the result for the year. This matter wasalso qualified financial statements for the year ended 31 st March 2018.

ix) Note No. 39 of the accompanying financial statements regarding liability/provision against performance guarantee to Rs. 3634.80 lakhs have not been provided forin the books encashed by the certain parties where the management is confident aboutsettlement in its favour.

x) Note No. 36 of the accompanying financial statements regarding certain pending/delayed projects estimated costs completion are based upon management estimates and wherethe management is confident that there will not be material impact on completion of workin future.

xi) Note No. 3 & 8 of the accompanying financial statements regarding no provisionagainst overdue Debtors outstanding for more than six months amounting to Rs. 9606 lakhs(net of mobilisation advances of Rs. 301 lakhs and excluding of unbilled revenue of Rs.1486 lakhs and excluding performance guarantee encashed by the certain parties) have beenmade which are doubtful for recovery considering non confirmation of outstandingbalances short closure of running projects encashment of performance bank guarantee anddemand raised for counter claim /liquidated damages by the parties (customers).

xii) Note No. 42 of the accompanying financial statements given the current operationsof the Company and the Company being under CIR process the future impairment if any inthe realizability of the economic value of property plant and equipment cannot bedetermined and our inability to comment thereon.

xiii) Note No. 34 (d) of the accompanying financial statements we have been informedby the Resolution Professional that certain information including the minutes of themeetings of the Committee of Creditors and the outcome of certain specific/ routineprocedures carried out as part of the IBC process could not be shared with anyone otherthan the Committee of Creditors and NCLT. Accordingly we are unable to comment on thepossible financial presentation and disclosure impacts if any that may arise if we havebeen provided access to review that information.

xiv) In view of our comments under para (i) to (xi) above and otherwise the Company'sinternal control systems needs to be further strengthened to be made the same commensuratewith the size of the company and nature of its business.

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder Section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the statements under the provisions of theAct and the 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 ourqualified opinion.

Material Uncertainty related to Going Concern

As stated in Note No. 38 of the accompanying financial statements regardingpreparation of the financial statements on ‘going concern' basis notwithstanding thefact that the Company is having negative net worth continuous losses lower level ofoperations effecting cash flows and going concern short closure in certain projectscurrent liabilities are in excess of current assets and default in repayment of loaninstallments and payment of due interest both on term loans and working capital. Theseconditions indicate the existence of material uncertainty that may cast significant doubtabout the Company's ability to continue as a going concern. As company is under corporateinsolvency resolution process (CIR process) (as stated in Note No. 32 of the accompanyingfinancial statements) the Committee of Creditors (CoC) at its meeting have resolved thatthe Company may be liquidated under liquidation as a "Going Concern". In thisregard the Resolution Professional has filed necessary application with the NCLT CourtMumbai and final decision is pending before the NCLT. The management and the RP havecontinued its practice to prepare financial statements on going concern basis.

Emphasis of Matters

Attention is drawn to: i) Pending necessary approvals of the secured creditors andshareholders for the payment of managerial remuneration to the erstwhile Managing Director(ceased w.e.f. February 14 2018) as stated in Note No. 45 of accompanying financialstatements. ii) Revenue for the year includes Rs. 1677 lakhs as stated in Note No. 58 ofaccompanying financial statements in respect of certain contracts work /invoices whichhave not been certified by the parties/customers. Management is confident that there wouldnot be any material variation on final billing / acceptance of work by the customers andamount is fully realisable. iii) In case of short closure of certain projects during theyear the management is confident that there shall not be any liability on account ofliquidated damages or performance failure. iv) Margin money (Fixed Deposit) deposit byAMIPL in the name of Petron Engineering Construction Limited against outstanding bankguarantees shown under other bank balances where company is not entitled to receive dueinterest and accordingly the company has not recognized accrued/due interest income (noteno. 10).

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the whole and in forming our opinionthereon and we do not provide a separate opinion on these matters.

Except for the matters described in the Basis for Qualified Opinion section andMaterial Uncertainty section we have determined that there are no other key audit mattersto be communicated in our report.

Information Other than the Financial Statements and Auditor's Report Thereon

The Company's management is responsible for the.The other informationcomprises the information included in the Annual report but does not include thefinancial statements and our auditor's report thereon. The Annual Report is expected to bemade available to us after the date of this Auditors' Report. Our opinion on the financialdoes not cover the other information and we do not express any form of assuranceconclusion thereon.

In connection with our audit of the financial statements our responsibility is to readthe inconsistent with the financial statements or our knowledge obtained in considerwhether the other information the audit or otherwise appears to be materially misstated.

Responsibility of Management and Those Charged with Governance for the FinancialStatements

The Company's Resolution Professional is responsible for the matters stated in Section134(5) of preparation of these financial statements that give a true and fair view of thestate of affairs equity and cash flows of the Company accounting principles generallyaccepted in India including the accordance with the Indian Accounting Standards (Ind AS)specified under Section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records with the provisions of the Act for safeguarding of the assetsof the Company and for preventing and detecting frauds and other irregularities; selectionand application of appropriate implementation accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the management either intends to liquidate the Companyor to cease operations or has no realistic alternative but to do so.

Resolution Professional is also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these 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 financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and provide a basis for ouropinion. The risk of not detecting a material misstatement resulting from fraud is higherthan for one resulting from error as fraud may involve collusion forgery intentionalomissions misrepresentations override of internal control.

• 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 the Company has adequate internal financial controls system inplace and the operating effectiveness of. controls such

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates 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 ability ofthe Company to continue as a going concern. If we conclude that a material uncertaintyexists we are required to draw attention in our auditor's report to the relateddisclosures in the financial statements or if such disclosures are inadequate to modifyour opinion. Our conclusions are based on the audit evidence obtained up to the date ofour auditor's report. However future events or conditions may cause the Company to ceaseto continue concern.

• Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation

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

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of Section 143 ofthe Act we give in the "Annexure A" a statement on the matters specifiedparagraphs 3 and 4 of the Order to the extent applicable.

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 purposes of our audit except as statedin Note No. 43 & 34 (d ).

b) Except for the effect / possible effect of the matter described in the ‘Basisfor Qualified Opinion' paragraph above In our opinion proper books of account asrequired by law have been kept by the Company so far as it appears from our examination ofthose books.

c) The Balance Sheet the Statement of Profit and Loss including other comprehensiveincome the Statement of Changes in Equity and the Statement of Cash Flows dealt with bythis Report are in agreement with the books of account (read with our comment in (b)above.

d) In our opinion except for the effect / possible effect of the matters described in‘Basis for Qualified Opinion' paragraph above the aforesaid financial statementscomply with the Indian Accounting Standards specified under Section 133 of the Act readwith Rule 7 of the Companies (Accounts) Rules 2014

e) The matters described in ‘Basis for Qualified Opinion' paragraph above in ouropinion may have an adverse effect on the functioning of the Company.

f) As stated in Note No. 48 there are no directors in the Company as on 31st March2019 and therefore our inability to comment thereon as required under the provisions ofSection 143(3)(g) of the Companies Act 2013 with respect to disqualifications ofdirectors as on 31st March 2019 from being appointed as a director in terms of Section(2) of the Act;

g) With respect to the adequacy of the internal financial controls over financialstatements of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B". Our report expresses an modified opinion on theadequacy and operating effectiveness of the Company's internal financial controls overfinancial statements.

h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its financial Refer Note No. 49 to the financial statements;

ii. The Company has made provision as required under the applicable law or Indianaccounting standards for material foreseeable losses if any on long-term contractsincluding derivative contracts;

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company. i) The company has not paid /provided any managerial remuneration during the year accordingly provision of section 197of the Act are not applicable on the company. (Refer Note No. 45 & 48 to the financialstatements.)

For LODHA & CO.

Chartered Accountants

Firm Registration No.: 301051E

(Gaurav Lodha)

Partner

Membership No. 507462

Place : Mumbai

Dated : 28nd May 2019

Annexure "A" referred to in paragraph 1 under the heading "Report onother legal and regulatory requirements" of our report of even date on the FinancialStatements of PETRON ENGINEERING CONSTRUCTION LIMITED for the year ended 31st March 2019

1. (a) The Company has maintained proper records in respect of its fixed assets showingfull particulars including quantitative details and situation of fixed assets except inrespect of certain fixed assets where these records are in the process of compilation /updation in respect of location/ situation (read with note no. 41).

(b) The Company has a regular programme of Physical Verification of its Fixed assets bywhich fixed asset are verified in a phased manner over a period of three years. Currentlywith respect to certain sites physical verification is in process and reconciliation withthe book records will be done on completion of physical verification as stated in noteNo. 41. Physical verification process needs to be further strengthened to be commensuratewith the size of the company and nature of its assets.

(c) The title deeds of the immovable properties held in the name of the company hasbeen pledged with the banks/ lenders as explained for securing the borrowings and loanraised by the company pending confirmation of the same from the bank / lenders we areunable to comment under clause 3(i)(c) of the order.

2. The Company does not have any inventory and hence provisions of clause 3 (ii) of theorder are not applicable.

3. According to the records and information and explanations made available to us theCompany has not granted any loans secured or unsecured to companies firms LLP and otherparties covered in the register maintained under section 189 of the Companies Act 2013.

4. According to the information explanations and representations provided by themanagement and based upon audit procedures performed the Company has not granted anyloans investments guarantees and security; accordingly the provisions of Clause 3(iv)of the Order are not applicable.

5. According to the information and explanations given to us the Company has notaccepted any deposits from the public within the provisions of Section 73 to76 of the Actor any other relevant provisions of the Act and the rules framed there under. According tothe information and explanations given to us no order has been passed by the Company LawBoard or National Company Law Tribunal or Reserve Bank of India or any Court or othertribunal in this regard.

6. According to the information and explanation given to us during the year noproduction activity was undertaken by the company related to manufacture of Machinery andMechanical appliances and parts thereof and execution of projects having application ofMechanical Engineering Fabrication Construction of cost records as prescribed in therules made by the central government for the maintenance of cost records under section148(1) of the act are not applicable.

7. (a) According to the records of the Company (read with note no. 46) and informationand explanation made available the Company has delayed/ defaulted in depositing undisputedstatutory dues including provident fund employees' state insurance income-tax servicetax Goods & Services Tax Duty of Excise Value Added Tax cess and any otherstatutory dues (except duty of custom) with the appropriate authorities and undisputedstatutory dues payable for a period of more than six months from the date they becamepayable as at 31st March 2019 are Provident Fund Rs. 467.62 Lacs Tax Deducted as SourceRs. 274.18 Lacs Service Tax Rs. 681.36 Lacs Goods and Services Tax Rs. 725.88 LacsExcise Duty Rs. 3.36 Lacs VAT Rs. 62.75 Lacs. (This is to be read with the mattersdescribed in para (vi) under basis for Qualified Opinion paragraph)

(b) According to the records and information & explanations given to us there areno dues in respect of Duty of Custom Goods and Services Tax that have not been depositedwith the appropriate authorities account of any dispute and the dues in respect of IncomeTax Sales Tax Service Tax Duty of Excise Value added Tax or Cess that have not beendeposited with the appropriate authorities on account of dispute and the forum where thedispute is pending are given below:

Name of Statute Nature of Dues Period Amount Forum where dispute is pending
(in Rs.)
Finance Act 1994 Service Tax 2005-09 46822758 CESTAT Ahmedabad
2007-08 251566 Deputy Commissioner (Appeals) Central Excise Panipat
2008-09 184672 Commissioner (Appeals) of Central Excise Haldia
Finance Act 1994 Service Tax 2006-07 2475194 CESTAT New Delhi
Central Excise Act 1944 Excise Duty 2001-02 252640 CESTAT Navi Mumbai
Central Excise Act 1944 Excise Duty 2004-05 219156 CESTAT Vadodara

 

Name of Statute

Nature of Dues

Period Amount (in Rs.) Forum where dispute is pending
Central Sales Tax 1956 Central Sales 2006-07 807261 Joint Commissioner Sales Tax West Bengal
Tax
Bombay Sales Tax Act 1959 Sales Tax 2004-05 169822 Joint Commissioner of Sales Tax (Appeals)
West Bengal Value Added Tax Act 2003 VAT 2009-10 17483088 Joint Commissioner of Sales Tax
Central Sales Tax (West Bengal) Rules 1958 Central Sales 2009-10 1514805 Joint Commissioner of Sales Tax
Tax
West Bengal Value Added Tax Act 2003 VAT 2010-11 16694017 Joint Commissioner of Sales Tax
Gujarat Value Added Tax Act 2003 VAT 2012-13 14552760 Appeal Tribunal Ahmedabad
Central Sales Tax 1956 CST 2012-13 52648259 Appeal Tribunal Ahmedabad
U.P. Value Added Tax Act 2008 VAT 2010-11 2011-12 & 2012-13 19720989 Addl. Commissioner Gr-2 (Appeal)-I Bareilly
U.P. Value Added Tax Act 2008 Entry Tax 2010-11 2011-12 & 2012-13 14011416 Addl. Commissioner Gr-2 (Appeal)-I Bareilly
Building and Other Construction Workers' Welfare Cess Act 1996 Labour Welfare Cess 2007-08 3970102 Bihar Building and Other Construction Workers' Welfare Board
Orissa Value Added Tax 2004 VAT 2009-14 42769428 Comm. Of Sales Tax cuttack Orissa
Orissa Value Added Tax 2004 VAT 2002-03 244655 Sales Tax Authority Angul Orissa

[This is to be read with Note No. 46 & 49]

8. In our opinion on the basis of audit procedures and according to the informationand explanations given to us the company has defaulted in repayment of dues (includinginterest) to banks and financial institutions at various days during the year [maximumdelay (no. of days) noticed was 517 Days]. The lender wise detail of overdue payable as onMarch 31 2019 read with Note No. 34 44 and 37 of the financial statements is asfollows:

(Rs. in Lakhs)
Name of Banks / FIs Default Period Principal / Interest For the year ended 31st March 2019
1 Karur Vysya Bank Less than 469 days Principal 325.00
Karur Vysya Bank Less than 486 days Interest 19.34
Mahindra & Mahindra Financial Services Ltd Less than 331 days Principal & Interest 8.62
Axis Bank Less than 518 Days Principal & Interest 2330.46

9. On the basis of information and explanation given to us no moneys have been raisedduring the year by way of initial public offer or further public offer (including debtinstruments) and term loans. Accordingly the provisions of Clauses 3(ix) of the Order arenot applicable.

10. Based on the audit procedure performed and on the basis of information andexplanations provided by the management no material fraud by the Company and on theCompany by its officersor employees (this is to be read with note no. 37 41 & 43)has been noticed or reported during the course of the audit.

11. On the basis of records and information and explanations made available and basedon our examination of the records of the company no managerial remuneration (covered bythe provision of Section 197 of the Companies Act 2013) has been paid or provided duringthe year. Accordingly paragraph 3(xi) of the Order is not applicable.

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

13. As per the information and explanations and records made available by themanagement of the Company and audit procedure performed for the related partiestransactions entered during the year the Company has complied with the provisions ofSection 177 and 188 of the Act where applicable. As explained and as per records /details the related parties transactions have been disclosed as per the applicableAccounting Standards. (this is to be read with note no. 48 and 56) 14. According to theinformation and explanations given to us the Company has not made any preferentialallotment or private placement of shares or fully / partly convertible debentures duringthe year in terms of provisions of Section 42 of the Act.

15. On the basis of records made available to us and according to information andexplanations given to us the Company has not entered into non-cash transactions with thedirectors or persons connected with him. Accordingly paragraph 3(xv) of the Order is notapplicable.

16. The company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934 as the provision of section is not applicable to the company.

For LODHA & CO.

Chartered Accountants

Firm Registration No.: 301051E

(Gaurav Lodha)

Partner

Membership No. 507462

Place : Mumbai

Dated : 28nd May 2019

ANNEXURE ‘B' TO THE INDEPENDENT AUDITOR'S REPORT

(Refer to in paragraph 2 (g) under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date) Report on the Internal FinancialControls overFinancialReportingunder Clause (i) of Sub-section 3 of Section 143 of theCompanies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting ofCompany") as of March 312019 financial statements of the Company for the yearended conjunction with our audit of the 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 Reportingissued by the Institute of Chartered Accountants of India (ICAI).These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the adherence to Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.

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 on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") issued by the ICAI and the Standards on Auditingprescribed under section 143(10) of the Companies Act 2013 to the extent applicable toan audit of internal financial controls. Those Standards and the Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting was established and maintained and if such controls operated effectively in allmaterial respects.

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 financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the

Company's internal financial controls system over 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 authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized 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 improper management override of controls materialmisstatements due to error or fraud may occur and not be detected. Also risk overprojections become inadequate because of changes in conditions or that the that theinternal financial control over financial degree of compliance with the policies orprocedures may deteriorate.

Qualified Opinion

According to the information and explanations given to us and based on our audit thefollowing material weaknesses has identified in the operating effectiveness of theCompany's internal financial controls over financial reporting as at 31st March 2019:

i) In respect of certain suspended / delayed contracts as of 31st March 2019 tradereceivable of Rs. 246 lakhs (net of mobilization advance and provisions of Rs. 11 lakhs)(trade receivable as of 31st March 2018 of Rs. 331 lakhs net of doubtful of recovery andpending for confirmation/negotiation mobilizationadvanceandprovisionsofRs.3lakhs)are Weare unable to comment about the status of amount receivables / payables on the reportedloss for the year ended 31st March 2019 and its corresponding impact on assets /liabilities as at that date. (Read with 35) Note No.

ii) Regarding balances of certain trade receivable (including from related parties)unbilled revenue trade payables (including MSME and interest payable thereon) securedloans (including Banks and NBFC) bank guarantees and unsecured loans (including fromrelated parties)bank balances current liabilities thereof) and loan & advances aresubject to confirmation/ reconciliation. (Read with Note No. 37 & 49)

iii) Regarding certain expenses {including finance costs (refer note no. 44 offinancial statements)}/ liabilities/employee benefit expenses have been accounted for asapproved by the management based on vouchers and for which contracts supporting recordsand agreements could not be made available to the auditors for verification as the sameare under process of compilation/updation. As per the management expenses were incurredfor business purposes only. Further in respect of certain contract sites the Company isin process of compiling / updating the records with respect to employees/ labour. (Readwith Note No. 43)

iv) Regarding delays in payment of certain statutory dues and non- submission /delay infiling of certain statutory returns (including PF ESIC TDS GST etc.) statutory dueswritten off and pending reconciliation between books and returns filed. Presently due taxhas been accounted for on best estimated basis as the reconciliation between the financialbooks and statutory returns filed are in process. {Read with Note(a)} No. 46

v) Regarding all the directors (including Woman Director) and Company secretaryresigned by 31st March 2018. Further CFO also resigned during the year. Consequently allcommittees of Directors (including Nomination and Remuneration Committee Audit Committeeetc.) were not present during the year in compliance to the provisions of the CompaniesAct 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (asamended). Regarding non- availability of secretarial forms (including application forextension of AGM) and compliances thereof and our inability to comment on related partytransactions compliances related to appointment /resignation of Directors complianceswith Disclosure Requirements) Regulations 2015 (as amended) Corporate GovernancerespecttoSEBI(Listing submission of annual return with the appropriate authorities andother related regulations. (Read with Note No. 48)

vi) Regarding pending adjustment of impact of physical verification of property plantand equipment (PPE) in the financial books and reconciliation of the same with the books& records where we are unable to comment on the same. In view of then managementimpact of final adjustment shall not be material over result for the year. (Read with NoteNo. 41)

vii) Regarding various claims submitted by the financial creditors {including claimsfiled by Arcelor Mittal India Private Limited (AMIPL) as stated in note no. 34b)}operational creditors other creditors and employees of the Company to the ResolutionProfessional (RP) pursuant to the Insolvency and Bankruptcy Code 2016 are currently underconsideration/verification/ reconciliation. Pending completion of exercise of finalverification / reconciliation and admission and claims by RP. (Read with Note No. 33)

viii) Regarding certain pending/ delayed projects estimated costs to completion arebased upon where the management is confident that there will not be any material impact oncompletion of work in future. (Read with Note No. 36)

The matters reported in point (i) and (vi) were also qualified in our report on thefinancial

March 2018.

A ‘material weakness' is a deficiency or a combination of deficiencies ininternal financial financial reporting such control over that there is a reasonablepossibility that a material misstatement of the Company's annual or interim financialstatements will not be prevented or detected on a timely basis.

In our opinion except for the effects / possible effects of the material weaknessesdescribed above in (i) and (viii) under Qualified Opinion paragraph on the achievement ofthe objectives of the control criteria the Company has in all material respects anadequate internal financial controls system over financial reporting and such internalfinancial controls over financial reporting were operating effectively as at March 312019 based on the internal control over financial reporting criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India. determining the nature timing and extent ofaudit We have considered material weakness identified tests applied in our audit of the31st March 2019 financial statements of the Company and these material weaknesses affectour opinion on financial statements of the Company for the year ended 31st March 2019 [ourAudit Report dated 28th May 2019 which expressed an qualified opinion on those financialstatements of the Company].

Emphasis of Matters

Attention is drawn to: -

Revenue for the year includes Rs. 1677 lakhs in respect of certain contracts work/invoices which have not been certified by the parties/customers. Management is confidentthat there would not be any material variation on final billing / acceptance of work bythe customers and amount is fully realizable. (Read with Note No. 60) Our opinion is notmodified in respect of matter stated above

For LODHA & CO.

Chartered Accountants

Firm Registration No.: 301051E

(Gaurav Lodha)

Partner

Membership No. 507462

Place : Mumbai

Dated : 28nd May 2019

.