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Valecha Engineering Ltd.

BSE: 532389 Sector: Infrastructure
NSE: VALECHAENG ISIN Code: INE624C01015
BSE 00:00 | 04 Mar Valecha Engineering Ltd
NSE 05:30 | 01 Jan Valecha Engineering Ltd
OPEN 111.20
PREVIOUS CLOSE 106.70
VOLUME 27145
52-Week high 112.80
52-Week low 0.00
P/E 209.22
Mkt Cap.(Rs cr) 240
Buy Price 106.70
Buy Qty 865.00
Sell Price 0.00
Sell Qty 0.00
OPEN 111.20
CLOSE 106.70
VOLUME 27145
52-Week high 112.80
52-Week low 0.00
P/E 209.22
Mkt Cap.(Rs cr) 240
Buy Price 106.70
Buy Qty 865.00
Sell Price 0.00
Sell Qty 0.00

Valecha Engineering Ltd. (VALECHAENG) - Auditors Report

Company auditors report

To The Members of Valecha Engineering Limited Report on the Audit ofStandalone Financial Statements Qualified Opinion

We have audited the accompanying standalone financial statements of ValechaEngineering Limited ("the Company") which comprise the standalone balancesheet as at March 312020 the standalone statement of profit and loss (including othercomprehensive income) standalone statement of changes in equity and standalone Statementof cash flows for the year then ended and notes to the standalone financial statementsincluding a summary of the significant accounting policies and other explanatoryinformation (hereinafter referred to as "the Standalone financial statements").

In our opinion and to the best of our information and according to theexplanations given to us except for the effects/possible effects if any of the mattersdescribed in the "Basis for Qualified Opinion" paragraph of our report theaforesaid standalone financial statements give the information required by the CompaniesAct 2013 ("Act") in the manner so required and give a true and fair view inconformity with the Indian Accounting Standards prescribed under section 133 of the Actread with the Companies (Indian Accounting Standards) Rules 2015 as amended ("IndAS") and other accounting principles generally accepted in India of the state ofaffairs of the Company as at 31st March 2020 its profit total comprehensive income itscash flows and the changes in equity for the year ended on that date.

Basis for Qualified Opinion

a) The Company has not evaluated impairment provisions for expectedcredit losses (ECL) as required under Ind AS 109 "Financial Instruments" inrelation to following Investments made loans and advances given and Corporate Guaranteesextended to its Subsidiary Step-Down Subsidiary and Associate Companies whose net-worthis completely eroded on account of continued losses incurred in the past:

- Loans & advances aggregating to Rs. 212.22 crores given to itsthree subsidiary companies and two step-down subsidiary company;

- Investments aggregating to Rs. 2.16 crores in its three subsidiarycompanies and Rs. 0.07 crores in two associate companies;

- Corporate Guarantees aggregating to Rs. 381.35 crores to Banks onbehalf of one subsidiary company and two step-down subsidiary companies.

Had such provision towards impairment of Investments loans andadvances and Corporate Guarantees made by the Company the retained earnings would havebeen reduced by Rs.595.80 crores as at March 312020.

b) The Company has also not done any fair valuation of its Corporateguarantees referred to in pt. (a) above nor has recognized guarantee fees/ commissionduring the period in relation to such Corporate guarantees issued without consideration asper the requirements of Ind AS 109 & Ind AS 113.

In the absence of any further detailed information we are unable tocomment upon the resultant impact if any on the standalone financial statements whichmay arise on account of fair valuation adjustment of referred Corporate guarantees.

c) The Company has neither evaluated any impairment provisions forexpected credit losses (ECL) as required under Ind AS 109 "FinancialInstruments" nor made any fair valuation as per the requirements of Ind AS 113"Fair Value Measurements" for Investment made of Rs. 39.84 crores loan given ofRs. 73.46 crores and Corporate Guarantees extended of Rs. 670.84 crores as at March312020 to one of its subsidiary company (other than subsidiary companies referred inpoint a above). The net-worth of such subsidiary is completely eroded and it continues toincur losses. The Subsidiary Company has filed a claim on its customer for Rs. 1373.70crores and is expected to repay/settle all dues. However in view of the uncertaintyinvolved over settlement of the claim amount and consequent repayment of all its dues weare unable to comment upon the need for impairment provisions and the impact of fairvaluation adjustments if any which may be required and the resultant impact on thestandalone financial statements if any.

d) We draw attention to Note No. 41 to the standalone financialstatement the Company has not evaluated expected credit losses for long outstanding TradeReceivables of Rs. 222.21 crores which includes Rs. 100.32 crores pertaining to additionalclaims raised during earlier years due to price escalation and various other reasons whichare under arbitration before various authorities.

The Company has also not evaluated impairment provisions for expectedcredit losses as required under Ind AS 109 "Financial Instruments" for loansgiven to related parties amounting to Rs. 6.57 crores and to other than related partiesamounting to Rs. 139.10 crores as at March 312020.

In absence of any detailed information regarding the recoverability ofsuch loans third party confirmation/reconciliations for such trade receivables and loans& advances we are unable to comment upon the recoverability and corresponding impactof impairment on the standalone financial statements.

e) We draw attention to Note No. 42 to the standalone financialstatement wherein the Company has not provided for regular interest payable to banksestimated at Rs. 87.07 Crores for the year ended 31st March 2020 as it expectscertain relief in view of the proposed One Time Settlement plan being pursued by theManagement. The Company has also not provided for any penal interest if any which mayarise for defaults in repayments of various borrowings for similar reasons.

The Company has also not provided Interest on its outstanding paymentsto its Vendors registered under MSME.

The Company has also not provided for interest of Rs. 2.61 crores whichmay arise towards delayed payment of dues towards tax deducted at source as on 31stMarch 2020.

Had such provision towards estimated regular interest payable to banksfor the year ended 31st March 2020 and interest on delayed payment of duestowards Tax deducted at Source as on 3151 March 2020 been made in thestandalone financial statements for the year ended 31st March

2020 the Company's net loss after comprehensive income for the yearended 3151 March 2020 would have been Rs. 86.31 crores. In absence of detailedcomputation of penal interest for default in repayment of Borrowings interest for defaultin payment of TDS and interest for delayed payments to vendors registered under MSME weare unable to comment on its resultant impact on the standalone financial statements.

f) We draw attention to Note No. 43 to the standalone financialstatement the Company has not repaid fixed deposits from deposit holders (includingunpaid interest provided upto March 2017 of Rs. 2.58 crores) amounting to Rs. 30.73 croresoutstanding as at March 31 2020 as per the contractual terms. Pursuant to the NCLT orderdated 03.04.2019 11.06.2019 22.08.2019 14.11.2019 and 26.05.2020 and in terms of NCLATorder dated 12.02.2020 the matter has been subjudiced. As per these orders the proceedsfrom Canara Bank and refunds from Income Tax department will be exclusively utilized forrepayment of deposits to deposit holders. The Company has also not provided for regularinterest on such deposits for the F.Y. 2017-18 F.Y.2018-19 and for year ended 31stMarch 2020 as per the terms of issue and acceptance of deposits. Further the Company hasalso not provided penal interest and fine as may be applicable under rule 21 of(Acceptance of Public Deposit) Rules 2014. Non provision of such interest is not incompliance with lnd AS 23 "Borrowing Cost". In absence of detailed informationand computation of such regular interest penal interest and fine if any we are unableto comment upon its resultant impact on the standalone financial statements.

g) We draw attention to Note No. 44 where the Company has previouslyassigned its loan amounting to Rs. 23.29 crores to its various creditors. However theloanee company is unable to repay such creditors and hence the Company has reversed theassignment of creditors with its loan receivable and accordingly reinstated such creditorsand loan receivable in its books of accounts. We have however not been provided withconfirmations / appropriate documentation to verify such assignment of loan / offsettingand its consequent reversal and accordingly are unable to comment upon the resultantimpact if any on the standalone financial statements.

h) We draw attention to Note No. 45 to the standalone financialstatement where the Company has stated that Other Current Assets as at March 312020includes Rs 33.73 crores receivable towards various indirect taxes from GovernmentAuthorities which are pending for assessments. However in view of unavailability ofupdated information on status of such assessments we are unable to comment upon theresultant impact if any on the standalone financial statements.

i) We draw attention to Note No. 46 to the standalone financialstatement where the Company in relation to its sixteen project sites which have eitherbeen de-mobilized or completed or otherwise shut or non-operational could not obtaindetails of transactions effecting if any through Bank accounts previously operatedthrough such project sites. There have been no operations in such project sites during theyear. Movement in accounts of such project sites if any is on account of balances beingwritten off/written back and payments / receipts being made by the Head Office division inrelation to assets / liabilities of such project sites.

Such Project Sites comprises total assets of Rs. 92.04 crores[including Trade Receivables Rs. 78.65 crores and loans to other parties Rs. 4.30 croresreferred in point (d) above balances with revenue authorities of Rs. 7.32 crores referredin point (h) above] and total liabilities of Rs. 42.20 crores as at the year end. In viewof unavailability of information we are unable to comment upon the resultant impact ifany on the standalone financial statements.

j) The accounts of certain Banks Loans & Advances given TradeReceivables Other Current Assets Lenders' liability Trade Payables and Otherliabilities are subject to confirmations reconciliations and adjustments if any havingconsequential impact on the standalone financial statements.

k) There are various Legal Cases filed by / against the Company sincethe cases are ongoing we are unable to comment on any consequential impact in respect ofthe same on the standalone financial statements.

The matters stated above except at point (h) were subject matter ofqualification in our audit opinion on the standalone financial statements for the yearended 31 March 2020 also.

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 Audit ofthe Financial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the ethical requirements that are relevant to our audit of thestandalone financial statements under the provisions of the Act and the Rules madethereunder 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 is sufficient and appropriate to provide a basis for our qualified audit opinionon the standalone financial statements.

Material Uncertainty Related to Going Concern:

We draw attention to Note No. 42 & Note No. 55 to the standalonefinancial statements which indicates that the Company has accumulated losses and its networth has been substantially eroded and there has been defaults in repayment of variousborrowings and deposits. These conditions along with other matters set forth in Note No42 & Note No. 55 indicate the existence of a material uncertainty that may castsignificant doubt about the Company's ability to continue as a going concern. However thestandalone financial statements of the Company have been prepared on a going concern basisfor the reasons stated in Note No.55 to the standalone financial statements.

Emphasis of matter:

a. We draw attention to Note no. 49 to the standalone financialstatements as per MCA Notification dated 12/09/2018 the Company has to obtain SecuredLenders approval for payment of remuneration to managing/ whole time director. The Companyis in the process of one-time settlement (OTS) with secured lenders and which are expectedto be concluded in due course. Pending the aforesaid OTS settlement recovery ofmanagerial remuneration of Rs.3.08 Crores pertaining to previous years in terms of specialresolution passed by the members in the Annual General meeting has been kept in abeyance.

b. We draw attention to Note no. 50 to the standalone financialstatements where during the year ended 31st March 2020 the Company hasidentified certain balances which are not recoverable and / or payable. The aggregate ofnon-recoverable balances is Rs.67.21 crores and aggregate of non-payable balances isRs.67.88 crores. These balances have been netted and a net income of Rs.0.67 crores hasbeen recorded as "Balances written (back)/ off (Net)"

c. We draw your attention to Note no 54 of the standalone financialstatements with regards to Management's assessment of inter-alia realisability offinancial Investments Inventories and recoverability of Trade receivables measured atamortised cost due to COVID 19 pandemic outbreak. The management apart from consideringthe internal and external information upto the date of approval of these standalonefinancial statements has also performed sensitivity analysis on the assumptions used andbased on current indicators of future economic conditions the management expects torecover the carrying amount of these assets.

The impact of the global health pandemic may be different from thatestimated as at the date of approval of these standalone financial statements. Consideringthe continuing uncertainties the management will continue to closely monitor any materialchanges to future economic conditions.

Our report is not modified in respect of the above matters.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the financial statements of the current period.These matters were addressed in the context of our audit of the financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.

Sr. No Key Audit Matters Auditor's response
1 Revenue from Construction Contracts
There are significant accounting judgment including estimation of costs to complete determining the stage of completion and the timing of revenue recognition. Our procedures included:
• Assessing the appropriateness of the Company's revenue recognition accounting policies in line with Ind As 115 and testing thereof.
The Company recognizes revenue and profit/loss on the basis of stage
of completion based on the proportion of contract costs incurred at balance sheet date relative to the total estimated costs of the contract at completion. The recognition of revenue and profit/loss therefore rely on estimates in relation to total estimated costs of each contract. • Testing of the design and implementation of controls involved for the determination of the estimates used as well as their operating effectiveness;
• Testing the relevant information technology systems' access and change management controls relating to contracts and related information used in recording and disclosing revenue in accordance with the new revenue accounting standard;
Refer to Note No. 2.7 Summary of significant accounting policies - "Revenue Recognition" of the Standalone Financial Statements
• Testing a sample of contracts for appropriate identification of performance obligations;
• For the sample selected reviewing for change orders and the impact on the estimated costs to complete;
• Discussion with the qualified & experienced project personnel regarding estimates of costs to complete for sample contracts determination of milestones various inherent contingencies in the contracts.
• Performed analytical procedures for reasonableness of revenues disclosed by type and service offerings.

Information Other than the Standalone Financial Statements andAuditor's report thereon

The Company's Board of Directors is responsible for the preparation ofother information. The Other information comprises the information included in theManagement Discussion and Analysis Board's Report including Annexures to the Boardreport Corporate Governance report and Shareholder's information but does not includethe standalone financial statements and our auditor's report thereon.

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

In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained during the course of our audit or otherwise appears to bematerially misstated.

If based on the work we have performed we conclude that there is amaterial misstatement of this other information we required to report that fact. We havenothing to report in this regard.

Responsibilities of Management and those charged with Governance forthe Standalone Financial Statements

The Company's Board of Directors is responsible for the 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 other comprehensive income changes in equity and cash flows of the Companyin accordance with the accounting principles generally accepted in India including theaccounting Standards specified under section 133 of the Act read with Rule 7 of theCompanies (Account) Rules 2014.

This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding of the assets of theCompany and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the financial statements the Management is responsiblefor assessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

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

Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements

Our objectives are to obtain reasonable assurance about whether thefinancial statements 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 from fraud or error and are considered materialif individually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.

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

• Identify and assess the risks of material misstatement of thefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial control system in place and theoperating effectiveness of such controls.

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

• Conclude on the appropriateness of Management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theentity's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the entity 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 financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

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

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

We also provide those charged with governance with a statement that wehave 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.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on Other Legal and Regulatory Requirements

1. Pursuant to the Companies (Auditor's Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofSection 143 of the Act we give in the Annexure "A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order.

2. As required by Section 143(3) of the Act we report that:

a) We have sought and except for the possible effects of mattersdescribed in the "Basis for Qualified Opinion" paragraph above obtained all theinformation and explanations which to the best of our knowledge and belief were necessaryfor the purpose of our audit.

b) Except for the effects / possible effects of the matters describedin the "Basis for Qualified Opinion" paragraphs above in our opinion properbooks of account as required by law have been kept by the Company so far as it appearsfrom our examination of those books.

c) The standalone balance sheet the standalone Statement of profit& loss (including other comprehensive income) the standalone statement of changes inequity and the standalone cash flow statement dealt with by this Report are in agreementwith the books of account.

d) Except for the effects / possible effects of matters described inthe "Basis for Qualified Opinion" paragraphs above in our opinion theaforesaid Standalone Financial Statements comply with the Accounting Standards specifiedunder Section 133 of the Act read with rule 7 of the Companies (Accounts) Rules 2014.

e) The matters described in the "Basis for Qualified Opinion"paragraphs and the "Emphasis of Matter" paragraphs above in our opinion mayhave an adverse effect on the functioning of the Company.

f) On the basis of the written representation received from thedirectors as on March 312020 taken on record by the Board of Directors none of thedirectors is disqualified as on March 312020 from being appointed as a Directors in termsof Section 164(2) of the Act.

g) With respect to the adequacy of the internal financial controls overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate Report in Annexure "B".

h) With respect to the other matters to be included in the Auditor'sReport in accordance with the requirements of Sec 197(16) of the Act as amended:

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

i) With respect to the matters to be included in the Auditor's reportin accordance with the rule 11 of the Companies (Audit and Auditors) Rules 2014 in ouropinion and 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 itsfinancial position in its standalone financial statements. [Refer Note No. 31]

ii. Except for the possible effects of the matter described in theBasis for Qualified Opinion paragraph the Company has made provision as required underthe applicable law or Ind AS for material foreseeable losses if any on long-termcontracts.

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

For Bagaria & Co. LLP
Chartered Accountants
Firm Registration No: 113447W/W-100019
Vinay Somani
Place : Mumbai Partner
Date : August 20 2020 Membership No: 143503
UDIN:20143503AAAAJT1436

Annexure "A" referred to in "Report on Other Legal andRegulatory Requirements" section of our report to the members of Valecha EngineeringLimited of even date

On the basis of such checks as we considered appropriate and accordingto the information and explanations given to us during the course of our audit we statethat:

i) a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of its Property Plant and

Equipment.

b) A major portion of fixed assets have been physically verified by themanagement in accordance with the programme of verification which in our opinionprovides for physical verification of all fixed assets at reasonable interval havingregard to the size of the Company and nature of its assets. According to the informationand explanations given to us the discrepancies noticed on such verification were properlydealt with in the books of account.

c) According to the information and explanations given to us and on thebasis of our examination of the records of the Company the title deeds of immovableproperties are held in the name of the Company.

ii) According to the information and explanations given to us theinventories have been physically verified during the year by the management at reasonableintervals and no material discrepancies were noticed on such verification. Due to COVID 19related nationwide lockdown the Management was not able to perform year end physicalverification of inventory.

iii) The Company has granted unsecured loans to six parties covered inthe register maintained under Section 189 of the Act in respect of which:

a. According to the information and explanations given to us and basedon the audit procedures conducted by us we are of the opinion that the terms andconditions of loans granted by the company to six parties covered in the registermaintained under Section 189 of the Act (balance outstanding as at balance sheet date Rs.285.68 crores) are prejudicial to the Company's interest on account of them being interestfree and without adequate security.

b. Since there is no stipulated repayment schedule in case of loans toabove referred parties we are unable to comment on the regularity of repayment ofprincipal & interest.

iv) In our opinion and according to the information and explanationsgiven to us the Company has not entered into any transactions referred to in section 185of the Act. The Company has complied with the provisions of 186 of the Act with respect tothe loans and investments made.

v) According to the information and explanations given to us theCompany has not accepted any fresh deposits from the public during the year. However theCompany has defaulted in repayment of Deposits accepted in earlier years amounting toRs.28.16 Crores and cumulative interest thereon of Rs.2.58 Crores. Further the Companyhas not complied with repayment schedule / order passed by the Company Law Board - NewDelhi Branch heard on February 22 2016 (Order passed under section 74(2) of the CompaniesAct Ref.C.PNO. 05(Mb) 2016). Further the Company has also not provided penal interest andfine as levied under rule 21 of (Acceptance of Public Deposit) Rules 2014.

vi) We have broadly reviewed the books of account maintained by theCompany pursuant to the rules made by the Central Government of India regarding themaintenance of cost records under sub-section (1) of Section 148 of the Act and are of theopinion that prima facie the prescribed accounts and records have been maintained. Wehave however not made a detailed examination of the records with a view to determinewhether they are accurate or complete.

vii) a) The Company is generally regular in depositing with appropriateauthorities undisputed statutory dues including provident fund employees'

state insurance income-tax sales-tax service tax duty of customduty of excise value added tax goods and service tax cess and other material statutorydues applicable to it.

b) According to the information and explanations given to us noundisputed amounts payable in respect of provident fund employees' state insuranceincome-tax service tax sales-tax duty of custom duty of excise value added tax goodsand service tax cess and other material statutory dues were outstanding at the year endfor a period of more than six months from the date they became payable except for thefollowing :

Name of the Statute Nature of the Dues Amount (Rs.in Crores) Period to which the amount relates Due Date
Income Tax Act 1961

Tax Deducted at source

2.11 FY 2015-16

7th day from the end of the relevant month.

1.15 FY 2016-17
0.14 FY 2017-18
0.29 FY 2018-19
0.33 April 2019 to September 2019
Total 4.01
Provident Fund & Misc. Provision Act 1952.

Provident Fund Contribution

0.08 FY 2015-16

15th day from the end of the relevant month.

0.04 FY 2016-17
0.01 FY 2017-18
Total 0.13
Goods and Service Act 2017

Goods and Service Tax

0.54 FY 2017-18

20th day from the end of the relevant month.

1.35 FY 2018-19
0.11 April 2019 to September 2019
Total 2.00
Profession Tax Act 1975 Profession Tax 0.01 FY 2017-18 30th day from the end of the relevant month.
Total 0.01

c) According to the information and explanations given to us and on thebasis of our examination of the records of the Company and except for the possible effectsof the matter described in point (h) under the "Basis for qualified opinion"paragraph there are no dues of Income Tax Goods and Service Tax and Duty of CustomsDuty of Excise and Value Add Tax which have not been deposited on account of any dispute.

viii) Based on our audit procedures and on the basis of information andexplanations given to us the Company does not have any debentures issued / outstandingnor have taken any loan from the government at any time during the year. The Company hasdefaulted in repayment of loans or borrowings to Banks and financial institution asmentioned below:

Particulars

Amount of Default (Rs. in Crores)

Total

Period of Default (maximum)

Principal Interest
Term Loan from banks
Central Bank of India 35.98 13.04 49.02 1644 Days
Syndicate Bank 58.16 19.71 77.87 1551 Days
Yes Bank Limited 6.90 1.65 8.55 1033 Days
State Bank of India (SBI) 12.08 3.47 15.55 1460 Days
Term Loan from others
SREI Equipment Finance Limited 17.53 10.28 27.81 1095 Days
Working Capital Facilities
State Bank of India 194.04 44.48 238.52 1462 Days
Axis Bank Limited 71.65 22.96 94.61 1471 Days
Canara Bank 21.40 1.93 23.33 1631 Days
Lakshmi Vilas Bank 30.29 - 30.29 821 Days
Fixed Deposits from Public 28.16 2.58 30.73 2038 Days
Total 476.19 120.11 596.28

ix) The Company has not raised any money by way of initial public offeror further public offer (including debt instruments) or term loan during the year.

x) To the best of our knowledge and according to the information andexplanations given to us no fraud by the Company and no material fraud on the Company bythe officers or employees has been noticed or reported during the year.

xi) According to the information and explanations given to us and basedon the examination of the records the Company has not paid / provided for managerialremuneration during the year. Also refer point (a) under "Emphasis of Matter"and Note no. 49 to the standalone financial statements in relation to excess managerialremuneration paid in earlier years.

xii) The provisions of Nidhi Company are not applicable to the Company.Therefore Para 3 (xii) of the Order is not applicable to the Company.

xiii) According to the information and explanations given to us theprovision of Section 177 and 188 of Act to the extent applicable in respect oftransactions with the related parties have been complied by the Company and the detailshave been disclosed in the Financial Statements as required by the applicable accountingstandards in note no. 35 of the Standalone Financial Statements.

xiv) During the year the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures.Therefore Para 3 (xiv) of the Order is not applicable to the Company.

xv) According to the information and explanations given to us duringthe year the Company has not entered into any non-cash transactions with directors orpersons connected with him under Section 192 of the Act.

xvi) According to the information and explanations given to us theCompany is not required to be registered under Section 45 IA of the Reserve Bank of IndiaAct 1934.

For Bagaria & Co. LLP
Chartered Accountants
Firm Registration No: 113447W/W-100019
Vinay Somani
Place : Mumbai Partner
Date : August 20 2020 Membership No: 143503 UDIN: 20143503AAAAJT1436

Annexure "B" referred to in "Report on Other Legal andRegulatory Requirements" section of our report to the members of Valecha EngineeringLimited of even date

Report on the Internal Financial Controls over Financial Reportingunder Clause (i) of Sub-section 3 of Section 143 of the Act

We have audited the internal financial controls over financialreporting of Valecha Engineering Limited ("the Company") as of March312020 in conjunction with our audit of the standalone financial statements of theCompany for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Board of Directors of the Company is responsible for establishingand maintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential component ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India (ICAI).These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including 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 Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") and the Standards on Auditing deemed to beprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of internal financial controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.

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

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

Meaning of Internal Financial Controls Over Financial Reporting

A Company's internal financial control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A Company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2)provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the entity are being made only in accordance with authorisations ofmanagement; (3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the entity's assets that could have amaterial effect on the financial statements and (4) also provide us reasonable assuranceby the internal auditors through their internal audit reports given to the Company fromtime to time.

Inherent Limitations of Internal Financial Controls Over FinancialReporting

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

Qualified Opinion

According to the information and explanations given to us and based onour audit the following material weaknesses have been identified in the operatingeffectiveness of the Company's internal financial controls over financial reporting as atMarch 312020:

a. The Company is not having a full fledge ERP system to managedifferent operational activities. Accordingly many of the operations which would havebeen taken care by the system required manual intervention and to that extent there arelimitations in control system and processes.

The discrepancies noticed due to the above weakness were howeverrectified by the year end with manual intervention.

b. The Company did not have an appropriate internal control system atSixteen (16) projects sites which could potentially result in the Company recordingtransactions and carrying balances of assets and liabilities without establishingreasonable certainty of its true nature recoverability / liability to pay and couldpotentially result in material misstatements in the Company's standalone financialstatements.

c. The Company's internal control system were not operating effectivelyin evaluating the impairment provisions for expected credit losses and / or fair valuationas per the respective requirements of Ind AS 109 - "Financial Instruments" andInd AS 113 - "Fair Value Measurement" in relation to the following:

- Investment loans & advances and corporate guarantees in certainsubsidiaries step-down subsidiaries and associates as more fully explained in note no. 40(a) to (d) to the standalone financial statements; and

- Long outstanding trade receivables and loans to related parties(other than subsidiaries step-down subsidiaries and associates referred above) and otherparties as more fully described in note no 41 to the standalone financial statements.

This could result in the Company not providing for adjustment if anythat may be required to the carrying values of such loans investments corporateguarantees and trade receivables and further provisions if any required to be made forthe obligations on behalf of those entities and its consequential impact on theaccompanying standalone financial statements

A ‘material weakness' is a deficiency or a combination ofdeficiencies in internal financial control over financial reporting such that there is areasonable possibility that a material misstatement of the Company's annual or interimfinancial statements will not be prevented or detected on a timely basis.

In our opinion to the best of our information and according to theexplanations given to us except for the possible effects of the material weaknessesdescribed above on the achievement of the objectives of the control criteria the Companyhas maintained in all material respects adequate internal financial controls overfinancial reporting and such internal financial controls over financial reporting wereoperating effectively as of March 312020 based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the said Guidance Note.

We have considered the material weaknesses identified and reportedabove in determining the nature timing and extent of audit tests applied in our audit ofthe standalone financial statements of the Company for the year ended March 312020.

For Bagaria & Co. LLP
Chartered Accountants
Firm Registration No: 113447W/W-100019
Vinay Somani
Place : Mumbai Partner
Date : August 20 2020 Membership No: 143503
UDIN: 20143503AAAAJT1436

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