CG Power & Industrial Solutions Ltd Directors Report.

TO THE MEMBERS OF

CG POWER AND INDUSTRIAL SOLUTIONS LIMITED

Report on the Audit of the Revised Standalone Financial Statements

Opinion

We have audited the accompanying revised standalone financial statements of CG Power and Industrial Solutions Limited ("the Company"), which comprise the Revised Standalone Balance Sheet as at March 31, 2021, the Revised Standalone Statement of Profit and Loss, including the Revised Standalone Statement of Other Comprehensive Income, the Revised Standalone Cash Flow Statement, the Revised Standalone Statement of Changes in Equity for the year then ended and notes to the Revised Standalone Financial Statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as the ‘Revised Standalone Financial Statements).

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Revised Standalone Financial Statements give the information required by the Companies Act, 2013, as amended ("the Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2021, its profit including other 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 Revised Standalone Financial Statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the ‘Auditors Responsibilities for the Audit of the Revised 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 together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Revised Standalone Financial Statements.

Emphasis of Matter

(i) We draw attention to note 3A(a) of the Revised Standalone Financial Statements, which describes that there are ongoing investigations by Serious Fraud Investigation Office (‘SFIO) and other regulatory authorities. Pending completion of such investigations, adjustments, if any, have not been considered by the management in these Revised Standalone Financial Statements.

(ii) We draw attention to note 1B of the Revised Standalone Financial Statements as regards completion of recasting and restatements of the standalone financial statements of the Company for the five years ended March 31, 2019 taken on record by National Company Law Tribunal (the ‘NCLT) and NCLT approval dated December 22, 2021 for voluntary revision under section 131 (1) of the Companies Act, 2013 of the Standalone Financial Statements for the year ended March 31, 2020 and March 31, 2021. The revised standalone financial statements for the year ended March 31, 2020 have been approved by the Board of Directors of the Company on December 31, 2021. The Company has now revised the original standalone financial statements for the year ended March 31, 2021, that were approved by the Board of Directors of the Company on June 11, 2021. Consequently, our audit report dated June 11, 2021 on the original standalone financial statements which contained a disclaimer of opinion, on those original standalone financial statements stands withdrawn and this report supersedes our audit report dated June 11, 2021.

Our opinion is not modified in respect of these matters.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Revised Standalone Financial Statements for the financial year ended March 31, 2021. These matters were addressed in the context of our audit of the Revised Standalone Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditors responsibilities for the audit of the Revised Standalone Financial Statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the Revised Standalone Financial Statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying Revised Standalone Financial Statements.

Key audit matters How our audit addressed the key audit matter
Revision of standalone financial statements (as described in note 1B of the Revised Standalone Financial Statements)
On March 5, 2020, basis application from Ministry of Corporate Affairs (‘MCA), the National Company Law Tribunal (‘NCLT) had allowed for reopening and recasting of books of accounts of the Company and its subsidiary companies for the 5 years ending March 31, 2019, under section 130 of the Companies Act 2013. Our audit procedures amongst others included the following:
Recasting of those financial statements have been completed and taken on record by NCLT on October 26, 2021. • We obtained and read the order passed by NCLT for reopening and recasting of books of accounts of the Company and its subsidiary companies for the past 5 years ending March 31, 2019, under section 130 of the Companies Act 2013.
The Company had also made an application to the NCLT for voluntary revision of books of accounts of the Company for the financial years 2019-20 and 2020-21 under section 131(1) of the Companies Act 2013, to give consequential impact of the above recasting and reauditing of such prior years financial statements. The NCLT approved such application on December 22, 2021. • We obtained and read the NCLT order for taking on record the re-casted standalone financial statements for 5 years ending March 31, 2019.
In accordance with the above, subsequent to year end, revision of the standalone financial statements for the five years ended March 31, 2019 and also March 31, 2020 have been completed. The effect of these revisions on the opening balances as on April 1, 2020 are described in note 3B of the Revised Standalone Financial Statements. • We obtained and read the application to and order of the NCLT for voluntary revision of books of accounts of the Company for the financial years 2019-20 and 2020-21 under section 131(1) of the Companies Act 2013.
The Revision of Standalone Financial Statements is identified as key audit matter considering consequential changes in opening balances as on April 1, 2020. • We obtained the reconciliation prepared by the management in respect of impact of revision on the amounts reported in the approved standalone financial statements for the year ended March 31, 2021.
• We tested reconciliations and treatment of the effect of changes in the books of accounts.
• We have assessed the disclosures made in note 3B of the Revised Standalone Financial Statements.
Restructuring of Debts (as described in note 3A(b) of the Revised Standalone Financial Statements)
During the year on November 20, 2020, the Company executed the Master Implementation cum Compromise Settlement Agreement (‘Settlement Agreement) with lenders and the Company has discharged and settled the existing credit facilities including corporate guarantees. Our audit procedures amongst others included the following:
Further, the lenders and the Company received a binding offer from Tube Investments of India Limited (‘TII), for resolving the debts of the Company and to infuse capital in the Company. • We obtained and read the Master Implementation cum Compromise Settlement and Corporate guarantee settlement agreements.
During the year, the Company, lenders and TII executed the required binding agreement for one time settlement and restructuring of funded and unfunded credit facilities. After receiving necessary regulatory approvals and fulfilment of Conditions Precedents, the Board of the Company allotted securities to TII and discharged the liability of the lenders. • We obtained and read the minutes of the board meeting providing approvals in relation to restructuring of debt
Consequent to the settlement of outstanding debt and corporate guarantees, the Company recognised cessation of liability arising on settlement and restructuring of borrowings including interest thereon as per resolution plan amounting to Rs. 1426.89 crores and provision towards corporate guarantee obligation settlement amounting to Rs. 306.01 (including foreign exchange gain of Rs. 1.75 crores) respectively as an exceptional item in the statement of profit and loss during the year. • We tested the accounting entries in relation to debt restructuring and settlement of corporate guarantees and exceptional gain on the debt restructuring.
The Restructuring of Debt is identified as key audit matter considering the significance of amounts involved. • We tested the computation prepared by the management of the Company in relation to debt restructuring and settlement of corporate guarantees.
• We traced the payment made to lenders and capital infusion in the bank statements of the Company.
• We obtained and read the No Objection Certificates provided by the lenders for settlement of the existing debts.
• We obtained direct bank confirmation for balance outstanding as on March 31, 2021.
• We assessed the disclosures in the revised standalone financial statements in relation to restructuring of debt and settlement of corporate guarantees as exceptional items.
Recognition of Deferred Tax Asset (as described in note 24 of the Revised Standalone Financial Statements)
The Company has Deferred Tax Asset (DTA) of Rs. 727.27 crores as at March 31, 2021 on tax losses based on availability of future taxable profits against which DTA will be utilized. The tax losses were primarily on account of write off of receivable balances in relation to various transactions, which are under investigations by regulatory authorities. Our audit procedures amongst others included the following:
Basis legal opinion, management has considered these written-offs as an allowable expense under the Income tax and recognized deferred tax assets on such losses. • We obtained an understanding, assessed and tested the operating effectiveness of internal control relating to the measurement and recognition of deferred tax.
The recognition of deferred tax asset is identified as key audit matter considering the significance of amounts and judgements involved. • We involved internal experts to assess tax computation as per the local fiscal regulations in India
• We tested on a sample basis the identification and quantification of differences between the recognition of assets and liabilities according to tax law and financial reporting in accordance with Indian Accounting Standards.
• We obtained and verified the budgeted forecast approved by the senior management which was in line with the projections approved by the Board of the Company for recoverability of deferred tax asset.
• We performed reasonability testing in relation to assumptions and estimates considered by the management for assessing recoverability of deferred tax asset
• We obtained and read the legal opinion considered by the management for recognisation of deferred tax assets on losses
• We assessed the disclosures in the Revised Standalone Financial Statements in accordance with the requirements of Ind AS 12 "Income Taxes".
Revenue recognition (as described in note 30 of the Revised Standalone Financial Statements)
The Company has two operating segments, namely, Power and Industrial Segment. Our audit procedures amongst others included the following:
The type of customers varies across these segments, ranging from Large Government companies to Original Equipment Manufacturers and Industrial Customers etc. • We read and understood the Companys accounting policy for timing of revenue recognition.
The Company has major revenue from sale of goods which is recognized at a point in time based on the terms of the contract with customers which may vary case to case, further revenue from construction contracts is recognized over period of time. Terms of sales arrangements with various customers within each of the operating segments, including Incoterms determine the timing of transfer of control and require judgment in determining timing of revenue recognition. • We understood the Companys revenue processes, including design and implementation of controls which vary based on product segment and customer, and tested the operating effectiveness of such controls in relation to revenue recognition.
Due to the judgement relating to determination of point of time in satisfaction of performance obligations with respect to sale of products, this matter is considered as Key Audit Matter. • On a sample basis, we tested contracts with customers, purchase orders issued by customers, and sales invoices raised by the Company to determine the timing of transfer of control along with pricing terms and the timing of revenue recognition in respect of such contracts.
• Compared revenue with historical trends and where appropriate, conducted further enquiries and testing.
• On a sample basis, we analyzed revenue transactions near the reporting date and tested whether the timing of revenue was recognized in the appropriate period with reference to shipping records, sales invoices etc. for those transactions
• We evaluated the Companys accounting policies pertaining to revenue recognition and assessed compliance with the policies in terms of Ind AS 115 - Revenue from Contracts with Customers.
• We assessed the disclosures for compliance with applicable accounting standards.
Claims and exposures relating to taxation and litigation (as described in note 39 of the Revised Standalone Financial Statements)
The Company has disclosed contingent liabilities of Rs. 34.83 crores in respect of disputed claims/ levies under tax and legal matters. Our audit procedures included the following:
Taxation and litigation exposures have been identified as a key audit matter due to significant outstanding matters with authorities and management assessment towards potential financial impact of these matters will involve significant judgement and assumptions. • We understood the process and assessed the internal control environment relating to the identification, recognition and measurement of provisions for disputes, potential claims and litigation, and contingent liabilities.
• We obtained details of legal and tax disputed matters from management and assessed managements position through discussions on both the probability of success in significant cases, and the magnitude of any potential loss.
• We involved tax specialists to assist us in evaluating tax positions taken by management.
• We circulated legal confirmation for material litigations to external legal counsel and review their assessment and had a discussion on their assessment with the senior management of the Company.
• We assessed the relevant disclosures made in the Revised Standalone Financial Statements for compliance with the requirements of Ind AS 37.

Information Other than the Financial Statements and Auditors Report Thereon

The Companys Board of Directors is responsible for the other information. The other information comprises the information included in the Annual report, but does not include the Revised Standalone Financial Statements and our auditors report thereon.

Our opinion on the Revised 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 Revised Standalone Financial Statements, our responsibility is to read the other information and, in doing so, consider whether such other information is materially inconsistent with the financial statements or our knowledge obtained in the 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 Revised Standalone Financial Statements

The Companys Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these Revised 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 the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of 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 the 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 Revised Standalone Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the Revised Standalone Financial Statements, management is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are also responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the Audit of the Revised Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the Revised Standalone Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors 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 Revised 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 Revised Standalone Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for 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 control 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 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 management.

• Conclude on the appropriateness of managements 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 Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the 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 auditors 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 Revised Standalone Financial Statements, including the disclosures, and whether the Revised Standalone Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.

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 control 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.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Revised Standalone Financial Statements for the financial year ended March 31, 2021 and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Other Matters

I. The comparative figures for the year ended March 31, 2020 of the Company included in these Revised Standalone Financial Statements, are as per the revised standalone financial statements of the Company for the year ended March 31, 2020, which have been audited by the Independent firm of Chartered Accountants approved by the NCLT vide its order dated December 22, 2021, who have issued an unmodified opinion on those revised standalone financial statements.

II. As mentioned in Note 1B to the Revised Standalone Financial Statements, the recasting of the standalone financial statements of the Company for the five years ended March 31, 2019 has been completed in accordance with the Section 130 of the Act and taken on record by National Company Law Tribunal (the ‘NCLT).

Report on Other Legal and Regulatory Requirements

Read with the matters related to revision of financial statements as stated in paragraph (ii) of the Emphasis of Matter section of this report and paragraph I of the Other Matters section of this report, as above, we report as follows;

1. As required by the Companies (Auditors Report) Order, 2016 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the "Annexure 1" a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

i. 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;

ii. in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

iii. the Revised Standalone Balance Sheet, the Revised Standalone Statement of Profit and Loss including the Revised Standalone Statement of Other Comprehensive Income, the Revised Standalone Cash Flow Statement and Revised Standalone Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

iv. in our opinion, the aforesaid Revised Standalone Financial Statements comply with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;

v. on the basis of the written representations received from the directors as on March 31, 2021 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2021 from being appointed as a director in terms of Section 164(2) of the Act;

vi. with respect to the adequacy of the internal financial controls with reference to these Revised Standalone Financial Statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure 2" to this report;

vii. in our opinion remuneration of the Managing Director for the year ended March 31, 2021 is in excess of the limits applicable under section 197 of the Act, read with Schedule V thereto. Subsequent to year, the management has obtained approval of the shareholders for remuneration paid to the Managing Director in the extraordinary general meeting held on June 7, 2021 by way of a special resolution;

viii. with respect to the other matters to be included in the Auditors 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 Revised Standalone Financial Statements - Refer Note 39 to the Revised Standalone Financial Statements;

(ii) the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses; and

(iii) other than amount stated in Note 27(a) of the Revised Standalone Financial Statements, there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

ANNEXURE 1 REFERRED TO IN PARAGRAPH 1 OF THE HEADING "REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS" OF OUR REPORT OF EVEN DATE, READ WITH PARAGRAPH II OF THE OTHER MATTERS SECTION OF OUR REPORT OF EVEN DATE

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) According to the information and explanations given by the management and audit procedures performed by us, the title deeds of immovable properties, included in property, plant and equipment are held in the name of the Company, except

(i) the title deeds of immovable properties included in property plant and equipment amounting to Rs 149.98 crores are pledged with the banks. The same has been independently confirmed by the Trustee of the bank;

(ii) Original title deeds of immovable properties included in property plant and equipment amounting to Rs 11.96 crores are not available with the Company and hence we are unable to comment on the same.

(iii) The land and building aggregating to Rs 188.62 crores, for which land lease deed have been expired. As explained to us, the Company is in the process of renewal of expired lease deed.

(ii) The inventory has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable. No material discrepancies were noticed on such physical verification. Inventories lying with third parties have been confirmed by them as at March 31, 2021 and no material discrepancies were noticed in respect of such confirmations.

(iii) According to the information and explanations given to us and audit procedures performed by us during the year ended March 31, 2021, the Company has not granted any loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013.

(iv) According to the information and explanations given to us, during the year ended March 31, 2021 (i) the Company has not given any loans, investments, guarantees, and securities in respect of which provisions of section 185 of the Companies Act 2013 are applicable; (ii) the Company has made investments, given loans and guarantees exceeding limits specified under section 186 of the Companies Act 2013, hence Company has not complied with the provisions of Section 186 of the Companies Act 2013.

(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.

(vi) According to the information and explanations given to us and a certificate by cost accountant provide by the management, we have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Companies Act, 2013, related to the manufacture or service of Power and Industrial products, and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

(vii) According to the information and explanations given to us, during the year ended March 31, 2021;

(a) undisputed statutory dues including provident fund, employees state insurance, income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax, goods and service tax, cess and other statutory dues have generally been regularly deposited with the appropriate authorities though there has been a slight delay in a few cases.

(b) no undisputed amounts payable in respect of provident fund, employees state insurance, income-tax, service tax, sales-tax, duty of custom, duty of excise, value added tax, goods and service tax, cess and other statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) the dues of income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax and cess on account of any dispute, are as follows:

Name of the Statute Nature of Dues Amount Unpaid (Rs. in crores) Period to which Amount relates Forum where the dispute is pending
Income Tax Act, 1961 Income Tax and interest 607.50* 2015-2017 Commissioner of Income Tax (Appeals)
Central Sales Tax Act, 1956 and Sales Tax Acts of various states Sales Tax, VAT, Penalty, Interest and Pending sales tax forms including related entry tax 308.29# 1994-2017 Additional Commissioner/ Deputy Commissioner/ Joint Commissioner/ Commissioner (Appeals)
6.49# 1992-2017 Appellate Tribunal High Court
1.11# 1989-2007
Central Excise Act, 1944 Excise Duty, Penalty and Interest 3.98 2002-2016 Additional Commissioner/ Deputy Commissioner/ Joint Commissioner/ Commissioner (Appeals)
4.50 1999-2015 Appellate Tribunal
0.14 2001-2002 High Court
Finance Act, 1994 Service Tax, Penalty and Interest 13.12 2013-2014 Additional Commissioner/ Deputy Commissioner/ Joint Commissioner/ Commissioner (Appeals)
0.05 2005-2007 Appellate Tribunal

* Bombay High Court has stayed the demand of Rs. 606.30 crores. There is a stay from jurisdictional assessing officer on balance amount of Rs. 1.20 crores.

# The Company has collected ‘C Forms aggregating Rs. 243.79 Crores which it expects the authorities to accept to reduce total unpaid amount to Rs. 72.10 crores and further the liability will reduce to Rs. 36.66 crores after considering related entry tax impact. Further there is stay on these demands in terms of appellate forums procedures.

(viii) During the year the Company executed the Master Implementation cum Compromise Settlement (‘Settlement Agreement) with lenders and under the said agreement, the Company has discharged and settled the existing credit facilities. In relation to the borrowings made post restructuring, in our opinion an according to the information and explanations given by the management, the Company has not defaulted in repayment of loans or borrowing to a bank and financial institution.

(ix) According to the information and explanations given by the management, the Company has not raised any money by way of initial public offer / further public offer / debt instruments. According to the information and explanations given by the management and audit procedures performed by us, the Company has utilized the monies raised by term loan for the purposes for which they were raised.

(x) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the Revised Standalone Financial Statements and according to the information and explanations given by the management, we report that no fraud by the Company or no fraud on the Company by the officers and employees of the Company has been noticed or reported during the year. We draw attention to note 3A of the Revised Standalone Financial Statements which describes ongoing regulatory investigations in progress in respect of certain transactions with erstwhile promoters group etc.

(xi) According to the information and explanation given by the management and audit procedures performed by us, we report that remuneration of the Managing Director for the year ended March 31, 2021 is in excess of the limits applicable under section 197 of the Act, read with Schedule V thereto. Subsequent to year, the management has obtained approval of the shareholders for remuneration paid to the Managing Director in the extraordinary general meeting held on June 07, 2021 by way of a special resolution.

(xii) In our opinion, the Company is not a nidhi company. Therefore, the provisions of clause 3(xii) of the order are not applicable to the Company and hence not commented upon.

(xiii) According to the information and explanations given by the management and audit procedures performed by us, transactions entered with the related parties during the year ended March 31, 2021 are in compliance with section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the notes to the Revised Standalone Financial Statements, as required by the applicable accounting standards.

(xiv) According to the information and explanations given by the management and procedures performed by us, the Company has complied with provisions of section 42 of the Companies Act, 2013 in respect of the preferential allotment of shares and warrants during the year. According to the information and explanations given by the management, we report that the amounts raised, have been used for the purposes for which the funds were raised.

(xv) According to the information and explanations given by the management, during the year ended March 31, 2021, the Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in section 192 of Companies Act, 2013.

(xvi) According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.

ANNEXURE 2 TO THE INDEPENDENT AUDITORS REPORT OF EVEN DATE ON THE REVISED STANDALONE FINANCIAL STATEMENTS OF CG POWER AND INDUSTRIAL SOLUTIONS LIMITED, READ WITH PARAGRAPH III OF THE OTHER MATTERS SECTION OF OUR REPORT OF EVEN DATE

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls over financial reporting of CG Power and Industrial Solutions Limited ("the Company") as of March 31, 2021, in conjunction with our audit of the Revised Standalone financial statements of the Company for the year ended on that date.

Managements Responsibility for Internal Financial Controls

The Companys management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (‘ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls over financial reporting with reference to these Revised Standalone Financial Statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing specified under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting with reference to these Revised Standalone Financial Statements was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls over financial reporting with reference to these Revised Standalone Financial Statements and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting with reference to these Revised Standalone Financial Statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls over financial reporting with reference to these Revised Standalone Financial Statements.

Meaning of Internal Financial Controls Over Financial Reporting With Reference to these Standalone Financial Statements

A companys internal financial control over financial reporting with reference to these Revised Standalone Financial Statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal financial control over financial reporting with reference to standalone financial statements includes those policies and procedures that

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting with reference to these Revised Standalone Financial Statements

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

Opinion

In our opinion, the Company has, in all material respects, adequate internal financial controls over financial reporting with reference to these Revised Standalone Financial Statements and such internal financial controls over financial reporting with reference to these Revised Standalone Financial Statements were operating effectively as at March 31, 2021, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

Emphasis of Matter

We draw attention to note 1B of these Revised Standalone Financial Statements as regards completion of recasting and restatements of the standalone financial statements of the Company for the five years ended March 31, 2019 taken on record by National Company Law Tribunal (the ‘NCLT) and NCLT approval dated December 22, 2021 for voluntary revision under section 131 (1) of the Companies Act, 2013 of the standalone financial statements for the year ended March 31, 2020 and March 31, 2021. The revised standalone financial statements for the year ended March 31, 2020 have been approved by the Board of Directors of the Company on December 31, 2021. The Company has now revised the original standalone financial statements for the year ended March 31, 2021, that were approved by the Board of Directors of the Company on June 11, 2021. Consequently, our audit report dated June 11, 2021 on the original standalone financial statements which contained a disclaimer of opinion, on those original standalone financial statements stands withdrawn and this report supersedes our audit report dated June 11, 2021.

For S R B C & CO LLP
Chartered Accountants
ICAI Firm Registration Number: 324982E/E300003
per Bharath N S
Partner
Membership Number: 210934
UDIN: 21210934AAAAIS2966
Place of Signature: Chennai
Date: December 31, 2021