Afcons Infrastructure Ltd Auditor Reports

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<dhhead>INDEPENDENT AUDITOR’S REPORT</dhhead>

To The Members of AFCONS INFRASTRUCTURE LIMITED Report on the Audit of the Standalone Financial Statements Opinion

We have audited the accompanying standalone financial statements of Afcons Infrastructure Limited ("the Company"), which comprise the Balance Sheet as at 31^st March 2024, and the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flows and the Statement of Changes in Equity for the year ended on that date, and notes to the financial statements, including a summary of material accounting policies and other explanatory information, in which are incorporated the Returns for the year ended on that date audited by the branch auditors of the Company’s branches located at Mauritius, Mozambique, Gabon, Zambia, Mauritania, Ghana, Bhutan, Bangladesh, Liberia, Tanzania, Kuwait, Maldives, Indonesia, Qatar, Peru, Ivory Coast, Jordan, Oman, Abu Dhabi, Bahrain and Benin and which includes 16 jointly controlled operations accounted on proportionate basis.

In our opinion and to the best of our information and according to the explanations given to us, and based on the consideration of reports of the branch auditors and other auditors on separate financial statements of the the Other Matters section below, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act, ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31^st March 2024, and its profit, total comprehensive income, its cash flows and the changes in equity for the year ended on that date

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing ("SAs") specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor’s Responsibility for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India ("ICAI") together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules responsibilities in accordance with these requirements and the ICAI’s Code of Ethics. We believe that the audit evidence obtained by us and the audit evidence obtained by the branch auditors and other auditors in terms of their reports referred to in the Other Matters section below, is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial

Emphasis of Matter

1. We draw attention to Note no. 40 of the standalone financial statements, which describes the uncertainties relating to the outcome of the proceedings in arbitration and High Court in respect of variations recognised by the company in terms of the provisions of the contract with the client, on account of matters stated therein.

Based on the Management’s assessment and technical evaluation of the recoverability of the aforesaid claims, in terms of the provisions of the contract, which is supported by a legal opinion, as stated in the said Note 40, the management of the company is of the view that the amounts recognised as amount due from customers under construction contracts, are considered as good and fully recoverable and no provision is considered necessary at this stage. However, considering that, the proceedings in arbitration and High Court are ongoing, the duration and outcome is uncertain.

2. Audit report on the Financial Statements of Transtonnelstroy Afcons Joint Venture (a jointly controlled operation included in the Standalone Financial Statements of the Company) includes an emphasis of matter as under: "We draw attention to Note 33 to the Financial Statements, which describes the uncertainties relating to the outcome of the negotiation, proceedings in arbitration, High Court and Supreme Court in respect of variations recognised by the joint venture in earlier years in terms of the provisions of the contract with the client, on account of matters stated therein.

Based on the Management’s assessment and technical evaluation of the recoverability of the aforesaid claims, in terms of the provisions of the contract, which is supported by legal opinion, the management is of the view that the amounts recognised as amount due from customers under construction contracts and trade receivable including interest on trade receivables as per arbitration award, are considered as good and fully recoverable and no provision is considered necessary at this stage. However, considering that the negotiation, proceedings in arbitration, High Court and Supreme Court are ongoing, the duration and outcome is uncertain. Our opinion is not modified in respect of this matter." Note 33 as described above is reproduced as Note 37 to the Standalone Financial Statements.

3. Audit report on the Financial Statements of Afcons Gunanusa Joint Venture (a jointly controlled operation included in the Standalone Financial Statements of the Company) includes an emphasis of matter as under: "We draw attention to Note 26 to the Financial Statements, which describes the uncertainties relating to the outcome of the arbitration proceedings in respect of claims recognized by the Joint Venture in the earlier years, on account of change orders.

Based on the Management’s estimates and technical evaluation of the recoverability in terms of the provisions of the contract, which is supported by legal opinion, the management is of the view that the amounts recognized as amount due from customers under construction contract are considered as good and fully recoverable and no provision is considered necessary at this stage. However, considering that the arbitration proceedings are ongoing, the duration and outcome is uncertain.

Our opinion is not modified in respect of this matter."

Note 26 as described above is reproduced as Note 36 to the Standalone Financial Statements.

4. Audit report on the Financial Statements of Dahej Standby Jetty Project Undertaking (a jointly controlled operation included in the Standalone Financial Statements of the Company) includes an emphasis of matter as under: "We draw attention to Note no. 23 to the Financial Statement, which describes the uncertainties relating to the outcome of the Hon’ble High Court Delhi, proceedings, where the Joint Venture has filed appeal to set aside an unfavourable award granted in Arbitration, towards claims of liquidated damages for delay in completion of works by Joint Venture.

Based on the Management’s assessment and technical evaluation of the recoverability of the aforesaid client claims which are already encashed and claims filed by the Joint Venture against the client, in terms of the provisions of the contract, which is supported by a legal opinion, as stated in the said Note 23, the management is of the view that the amounts recognised as amount due from customers under construction contracts and other receivable, are considered as good and fully recoverable and no provision is considered necessary at this stage. However, considering that the proceedings in High Court are ongoing, the duration and outcome is uncertain.

Our opinion is not modified in respect of this matter."

Note 23 as described above is reproduced as Note 38 to the Standalone Financial Statements. Our opinion is not modified in respect of the above matters.

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

The Company’s Board of Directors is responsible for the other information. The other information comprises the information included in the Board’s report including annexures to Board’s report, but does not include the consolidated financial statements, standalone financial statements and our auditor’s report thereon.

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

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

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements

The Company’s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including Ind AS specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, management and Board of Directors is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intend to liquidate the Company or to cease operations, or has no realistic alternative but to do so. The Company’s Board of Directors are also responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibility for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone financialstatements as a whole are free from material misstatement, whether due 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 audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to standalone financial statements in place and the operating effectiveness of such controls.

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

Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Obtain sufficientappropriate audit evidence regarding the financial information of the Company operations to express an opinion on the standalone financial statements. We are responsible for the direction, supervision and performance of the audit of the financial statements of such entities or business activities included in the standalone financial statements of which we are the independent auditors. For the other entities or business activities included in the standalone financial statements, which have been audited by the branch auditors or other auditors, such branch auditors and other auditors remain responsible for the direction, supervision and performance of the audits carried out by them. We remain solely responsible for our audit opinion.

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

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal financial controls that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

Other Matters

1. We did not jointly audit the financial statements/ financial information of 20 branches and 16 jointly standalone financial statements of the Company whose financial statements/financialinformation reflect total assets of Rs. 5,912.17 Crores as at 31^st March, 2024 and total revenue of Rs. 3,436.18 Crores for the year ended on that date, as considered in the standalone financial statements. The financial statements / financial information of these branches and joint operations have been audited by the branch either of us in our individual capacity or jointly with other auditors or other auditors whose reports have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of these branches and joint operations and our report in terms of subsection (3) of Section 143 of the Act, in so far as it relates to the aforesaid branches and jointly controlled operations, is based solely on the report of such branch auditors, reports issued by either of us in our individual capacity or jointly with other auditors and other auditors.

2. We did not jointly audit the financial statements/ financial information of a branch whose financial statements/financial information reflect total assets of Rs. Nil as at 31st March, 2024 and total revenue of Rs. Nil for the year ended on that date, as considered in the standalone financial statements. The financial statements / financial information is unaudited and have been furnished to us by the Management and our opinion on the standalone financial statement, in so far as it relates to the amounts and disclosures included in respect of a branch, is based solely on such unaudited financial statement/financial information. In our opinion and according to the information and explanations given to us by the Management, the financial statements/financial information are not material to the Company.

Our opinion on the standalone financial statements and our report on Other Legal and Regulatory Requirements below, in respect of above matters with respect to our reliance on the work done and the reports of the branch auditors and other auditors and the financial statements/financial information certified by the Management.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act, based on our audit and on the consideration of the reports of the branch auditors and other auditors on the separate financial statements/ financial information of the branches and jointly controlled operations, referred to in the Other Matters section above we report, to the extent applicable that: a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. b) In our opinion, proper books of account as required by law have been kept by the Company and its jointly controlled operation which is a company incorporated in India so far as it appears from our examination of those books and the reports of the other auditors and proper returns adequate for the purposes of our audit have been received from the branches not visited by us, except for not complying with the requirement of audit trail as stated in paragraph (j)(vi) below. c) The reports on the accounts of the branch offices of the Company audited under Section 143(8) of the Act by branch auditors have been sent to us and have been properly dealt with by us in preparing this report. d) The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, the Statement of Cash Flows and Statement of Changes in Equity dealt with by this Report are in agreement with the relevant books of account and with the returns received from the branches not visited by us. e) In our opinion, the aforesaid standalone financial statements comply with the IndAS specified under Section 133 of the Act.

f) On the basis of the written representations received from the directors as on 31st March 2024 taken on record by the Board of Directors of the Company and the reports of the statutory auditors of its jointly controlled operation company incorporated in India, none of the directors is disqualified as on 31 March, 2024 from being appointed as a director in terms of Section 164(2) of the Act. g) The modificationrelating to the maintenance of accounts and other matters connected therewith, is as stated in paragraph (b) above. h) With respect to the adequacy of the internal financial controls with reference to standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure A" which is based on the auditors’ reports of the Company and its jointly controlled operation company incorporated in India. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company’s internal financial controls with reference to standalone financial statements of those companies. i) With respect to the other matters to be included in the Auditor’s Report in accordance with the requirements of section 197(16) of the Act, as amended, in our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act. Further, in our opinion and to the best of our information and according to the explanations given to us and based on the auditor’s reports of a jointly controlled operation company incorporated in India, the said jointly controlled operation company being private companies, section 197 of the Act related to the managerial remuneration is not applicable. j) With respect to the other matters to be included in the Auditor’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 according to the explanations given to us: i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer Note 30, 36, 37, 38, 40, 41, 42 and 43 to the standalone financial statements ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts - Refer Note 18 to the standalone financial statements. Further the Company did not have any material foreseeable losses on derivative contracts. iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the jointly controlled operation company incorporated in India. iv. (a) The respective Management of the Company and of its jointly controlled operation which is a company incorporated in India, whose financial statements have been audited under the Act, has represented to us and to the other auditors of such jointly controlled operation respectively, that, to the best of its knowledge and belief, as disclosed in the note 48(x) to the financial statements, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company or such jointly controlled operation company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any 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.

(b) The respective Management of the Company and one of its jointly controlled operation which is a company incorporated in India, whose financial statements have been audited under the Act, has represented to us and to the other auditors of such jointly controlled operation respectively that, to the best of its knowledge and belief, as disclosed in the note 48(x) to the financial statements, no funds have been received by the Company or such jointly controlled operation from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company or such jointly controlled operation company shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(c) Based on the audit procedures performed that have been considered reasonable and appropriate in the circumstances performed by us and that performed by the auditors of the jointly controlled operation which is a company incorporated in India whose financialstatements have been audited under the Act, nothing has come to our or other auditor’s notice that has caused us or the other auditors to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement. v. The preference and equity dividend of the previous year, declared and paid by the Company during the year is in accordance with section 123 of the Act, as applicable.

As stated in note 12(B) and 12.12 to the standalone financial statements, the Board of Directors of the Company have proposed dividend on equity and preference shares for the year 2023-24 which is subject to the approval of the members of the Company at the ensuing respective Annual General Meetings. Such dividend proposed is in accordance with section 123 of the Act, as applicable.

The jointly controlled operation which is a company incorporated in India, whose financial statements have been audited under the Act, have not declared or paid any dividend during the year and have not proposed final dividend for the year.

vi. Based on our examination which included test checks and based on the other auditor’s reports of its jointly controlled operation which is a company incorporated in India whose financial statements have been audited under the Act, the Company and its jointly controlled operation, incorporated in India have used accounting software for maintaining their respective books of account for the financial year ended 31 st March 2024 which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software except that audit trail was not enabled at database level to log any direct data changes for the period 1st April 2023 to 20th November 2023.

Further, during the course of our audit, we did not come across any instance of audit trail feature being tampered with in respect of the accounting software for the period for which the audit trail feature was operating.

As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from April 1, 2023, reporting under Rule 11 (g) of the Companies (Audit and Auditors) Rules, 2014 on preservation of audit trail as per the statutory requirements for record retention is not applicable for the year ended 31st March 2024.

2. As required by the Companies (Auditor’s Report) Order, 2020 ("the Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in "Annexure B" a statement on the matters specified in paragraphs 3 and 4 of the Order.

(b) Details of statutory dues referred to in sub-clause (a) above which have not been deposited as on 31st March, 2024 on account of disputes are given below:

Name of the statute	Nature of dues	Forum where the dispute is pending	Period to which the amount relates	Total Amount Rs. in Crores	Unpaid Amount Rs. in Crores *
The Income Tax Act, 1961	Income Tax	Commissioner of Income tax (Appeals)	AY 2015-16	0.10	-
The Income Tax Act, 1961	Income Tax	Commissioner of Income tax (Appeals)	AY 2016-17	11.44	7.74
The Income Tax Act, 1961	Income Tax	Commissioner of Income tax (Appeals)	AY 2020-21	31.94	25.55
The Finance Act 1994	Service Tax	Appellate Authority Tribunal	AY 2008 to 2019	64.51	61.83
Local Sales Tax Acts applicable in respective States (Andhra Pradesh, Tamil Nadu and Madhya Pradesh)	Sales Tax	Appellate Authority up to Commissioner’s level	AY 1986 to 1991 and AY 1993 to 2000	0.42	0.41
Local Sales Tax Acts applicable in respective States (West Bengal)	Sales Tax	Appellate Authority- Tribunal Level	AY 1988 to 1990 and AY 1998 to 1999	0.16	0.16
Local Sales Tax Acts applicable in respective States (Orissa)	Sales Tax	Appeal before Commissioner	AY 2005-06	0.44	0.15
Local Sales Tax Acts applicable in respective States (Orissa)	Sales Tax	At High court	AY 2000-01	1.36	0.31
The Central Goods and Service Tax Act, 2017 (Uttar Pradesh)	Goods and Service tax	Appeal before Additional Commissioner, Lucknow	AY 2020-21	3.11	1.79
UP Goods & Service Tax, 2017 ( Uttar Pradesh)	Goods and Service tax	Appeal before Additional Commissioner, Lucknow	AY 2020-21	3.11	1.79
Central Goods & Service Tax, 2017	Goods and Service tax	Appeal before Commissioner Customs & Indirect Tax (Appeal II), Hyderabad	AY 2018-19	11.98	11.98
Telangan Goods & Service Tax, 2017	Goods and Service tax	Appeal before Commissioner Customs & Indirect Tax (Appeal II), Hyderabad	AY 2018-19	11.98	11.98
Central Goods & Service Tax, 2017)	Goods and Service tax	Appeal before GST Commissioner Customs & Indirect Tax (Appeal I), Lucknow	AY 2018-19	7.13	6.74
UP Goods & Service Tax, 2017	Goods and Service tax	Appeal before GST Commissioner Customs & Indirect Tax (Appeal I), Lucknow	AY 2018-19	7.13	6.74
Central Goods & Service Tax, 2017	Goods and Service tax	Appeal before GST Commissioner Customs & Indirect Tax (Appeal I), Bhubaneswar	AY 2018-19	4.69	4.47
Odisha Goods & Service Tax, 2017	Goods and Service tax	Appeal before GST Commissioner Customs & Indirect Tax (Appeal I), Bhubaneswar	AY 2018-19	4.69	4.47
Central Goods & Service Tax, 2017	Goods and Service tax	Before Asst Commissioner Tamil Nadu	AY 2018-19	0.09	0.09
Tamil Nadu Goods & Service Tax, 2017	Goods and Service tax	Before Asst Commissioner Tamil Nadu	AY 2018-19	0.09	0.09
Central Goods & Service Tax, 2017	Goods and Service tax	Asst Commissioner State Tax, Mumbai	AY 2020-21	1.38	1.38
State Goods & Service Tax, 2017	Goods and Service tax	Asst Commissioner State Tax, Mumbai	AY 2020-21	1.03	1.03

For DELOITTE HASKINS & SELLS LLP	For HDS & Associates LLP
Chartered Accountants	Chartered Accountants
Firm Registration No. 117366W/ W-100018	Firm Registration No. W-100144
Nilesh Shah	Suresh K. Joshi
Partner	Partner
Membership No. 049660	Membership No. 030035
UDIN: 24049660BKFRRK2567	UDIN: 24030035BKEIZN3724
Place: Mumbai	Place: Mumbai
Date: 24th June, 2024	Date: 24th June, 2024

*Amount unpaid is net of the amounts paid under protest.