IVRCL Ltd Auditors Report.

To the Members of

IVRCL Limited

1. Corporate Insolvency Proceedings as per Insolvency and Bankruptcy Code, 2016 (IBC)

The Honble National Company Law Tribunal, Hyderabad Bench ("NCLT") admitted an insolvency and bankruptcy petition filed by a financial creditor against IVRCL Limited ("the Company") and appointed Mr. Sutanu Sinha to act as Interim Resolution Professional (IRP) with direction to initiate appropriate action contemplated with extent provisions of the Insolvency and Bankruptcy Code, 2016 and other related rules.

2. Report on the Standalone Financial Statements

We have audited the accompanying Standalone Financial Statements of IVRCL Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2018, 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 then ended, and a summary of significant accounting policies and other explanatory information for the year then ended in which are incorporated the unaudited branch returns for the year ended on that date of the Companys branch at Kingdom of Saudi Arabia (‘the branch).

3. Managements Responsibility for the Standalone Financial Statements

The Companys Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation and presentation 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 the Indian Accounting Standards specified under Section 133 of the Act, read with relevant Rules issued thereunder. 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. Pursuant to ongoing Corporate Insolvency Resolution Process (CIRP) powers of the board of Directors have been suspended and these Powers are now vested with Resolution Professional (RP).

4. Auditors Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companys preparation of the standalone financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Companys Directors, as well as evaluating the overall presentation of the standalone financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion on the standalone financial statements.

5. Basis for Qualified Opinion

We refer to following notes to standalone financial statements: a. Note 38 to the standalone financial statements, in respect of preparation of financial statements of the Company on going concern basis for the reasons stated therein and expiry of timeline to complete the process of CDR/ SDR. During the year the Company has incurred a Net Loss of Rs 19,910.93 million resulting into accumulated losses of Rs 41,762.43 million and erosion of its Net worth as at March 31, 2018. The Company has obligations towards fund based borrowings aggregating to Rs 77,577.28 million and non-fund based exposure aggregating to Rs 12,831.73 million, operational creditors and statutory dues, subject to reconciliation/verification as stated in Note 43, that have been demanded/recalled by the financial/operating creditors pursuant to ongoing Corporate Insolvency Resolution Process (CIRP). These conditions indicate the existence of a material uncertainty that may cast significant doubt on the Companys ability to continue as going concern and therefore the Company may be unable to realize its assets and discharge its liabilities in the normal course of business. The ultimate outcome of these matters is at present not ascertainable. Accordingly, we are unable to comment on the consequential impact, if any, on the accompanying standalone financial statements.

b. Note 39 to the standalone financial statements, in respect of recognition of deferred tax assets on account of carried forward unused tax losses and other taxable temporary differences aggregating to Rs 9,570.59 million. Based on unexecuted orders on hand, the Management of the Company is confident that sufficient future taxable income will be available against which such deferred tax assets will be realized. However, in our opinion, in absence of convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized, such recognition is not in accordance with Indian Accounting Standard 12 "Income Taxes" (Ind AS 12). Had the aforesaid deferred tax assets not been recognised, loss after tax for the year ended on March 31, 2018 would have been higher by Rs 9,570.59 million and other equity would have been lower by Rs 9,570.59 million.

c. Note 40 to the standalone financial statements, in connection with the existence of material uncertainties over the realisability of bank guarantees encashed by customers, unbilled revenue, trade receivables and withheld amount aggregating to Rs 19,682.35 million included in financial and other assets which are past due/ subject matters of various disputes /arbitration proceedings/ negotiations with the customers and contractors due to termination / foreclosure of contracts and other disputes. The management is yet to assess the change in risk of default and resultant expected credit loss allowance on such assets. Had the aforesaid assets been provided for impairment, loss after tax for the year ended on March 31, 2018 would have been higher by Rs 19,682.35 million, other equity would have been lower by Rs 19,682.35 million.

d. Note 41 to the standalone financial statements, in respect of investment of Rs 12,063.29 million in subsidiaries engaged in BOT and other projects, which are under disputes with the concessionaire, and other subsidiaries that have significant accumulated losses as at March 31, 2018. In absence of fair valuation of these Investments, we are unable to comment upon the carrying value these investments and the consequential impact, if any, on the accompanying standalone financial statements.

e. Note 42 to the standalone financial statements, in respect of loans and advances of Rs 7,142.20 million given to subsidiary Companies, associate, net receivable against development rights, various sub-contractors, vendors and other parties. These advances, having regard to financial position of such subsidiary companies and age of such advances, in our opinion, are doubtful of recovery. The management is yet to assess the change in risk of default and resultant expected credit loss allowance on such loans and advances. Had the aforesaid assets been provided for impairment, loss after tax for the year ended on March 31, 2018 would have been higher by Rs 7,142.20 million, other equity would have been lower by Rs 7,142.20 million.

f. Note 38 and 43 to the standalone financial statements, in respect of various claims, submitted by the financial creditors (including claims towards fund based and non-fund based exposure and claims on behalf of subsidiary companies and other parties) , operational creditors, workmen or employee and authorized representative of workmen and employees of the Company to Resolution Professional pursuant to the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulation 2016, that are currently under consideration/reconciliation. Pending reconciliation/admission of such claims by the RP, we are unable to comment on the consequential impact, if any, on the accompanying statement;

g. Note 44 to the standalone financial statements, in respect of non-availability of confirmations of bank balances aggregating to Rs 24.84 million, trade receivables including retention, advances, trade payable. In absence of alternative corroborative evidence, we unable to comment on the extent to which such balances are recoverable.

h. Note 45 to the standalone financial statements, in respect of non-availability of physical verification reports of fixed assets and inventories aggregating to Rs 210.35 million as at March 31, 2018 and no provision for impairment has been made for the reasons stated therein. In absence of any alternative corroborative evidence, we are unable to comment on the recoverability of the same.

i. Note 46 to the standalone financial statements, in respect of balances available with statutory authorities and input credits aggregating to Rs 2,003.47 million that are subject to reconciliation, filing of return and admission by the respective statutory authorities and no provision has been made thus, we are unable to comment whether any provision for impairment in the value of advances is required.

j. Note 23 to the standalone financial statement, in respect of periods of default in repayment of borrowing and interest have not been provided to compliance the minimum presentation and disclosure requirement as per the schedule III of the Companies Act, 2013.

6. Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in para 5(b), 5(c), 5(e) {i.e. Had our observation been considered the net loss for the period would have been Rs 56,307.27 million, Net worth as at March 31, 2018 would have been Rs (55,012.49) million and Earning per share for the period would have been Rs (71.92)} and possible effects of matters described in para 5(a), 5(d), 5(f), 5(g), 5(h), 5(i) & 5(j) in the basis for qualified opinion, the aforesaid standalone financial statements give the information required by 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, 2018, and its losses ( including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.

7. Emphasis of matters

Attention is invited to: a. Note 47 to the standalone financial statements, in respect of notice received by the company U/s 276 (B) of the Income tax Act, 1961 and by certain banks and customers of the company U/s 226(3) of the Income Tax Act, 1961 regarding failure to deposit the tax deducted at source for the financial year 2016-17 and 2017-18 aggregating to Rs 292.52 million. b. Note 48 to the standalone financial statements, in respect of summon received by the company of levy of damages U/s 14 B of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 aggregating to Rs 61.27 million for the period from 10/1999 to 02/2009 and 07/2009 to 03/2015 and the matter is presently sub-judice.

8. Other Matters

a. We did not audit the separate financial statements of 28 joint ventures included in standalone financial statements, whose financial results reflects companys share in net profit of joint venture aggregating to Rs 20.59 million for the year ended March 31, 2018. Out of the 28 joint ventures, financial information/statements of 5 joint ventures, have been presented solely based on the information compiled by the management.

In our opinion and according to the information and explanations given to us by the Management, these financial statements /financials information, in aggregate, are not material to the Company and have not been subjected to audit hence, we are unable to comment on the consequential impact, if any, on the accompanying statements.

b. We did not audit the financial statements/ information of a branch at Kingdom of Saudi Arabia included in the Standalone financial statements of the company whose financial statements/financial information reflects total assets of Rs 0.01 Million as at March 31, 2018 and total revenue is NIL for the year ended on that date as considered in standalone financial statements.

Our opinion is not qualified in respect of these matters

9. Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors Report) Order, 2016 ("the Order"), as amended, issued by the Central Government of India in terms of section 143 (11) of the Act, we give in the "Annexure A" 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:

a. We have sought and except for the effects/possible effects of the matters described under "Basis for qualified opinion" paragraph, have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. Except for the effects/possible effects of matters described in the "Basis for qualified opinion" paragraph, 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 and unaudited accounts/returns adequate for the purpose of our audit have been received from the branch not visited by us.

c. The Balance Sheet, the Statement of Profit and Loss (including other comprehensive income), the Cash Flow Statement and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account and the unaudited accounts/returns of the branches not visited by us.

d. in our opinion, except for the effects/ possible effects of the matters described in the "Basis for qualified opinion" paragraph, the aforesaid standalone financial statements comply with the Indian Accounting Standards specified under section 133 of the Act.

e. The matters described under "Basis for Qualified Opinion" and "Emphasis of Matters" paragraph, in our opinion, may have an adverse effect on the functioning of the Company;

f. In the term of section 17 (1) (b) of the Insolvency and Bankruptcy Code, 2016 ("the Code"), the powers of the board of directors have been suspended and be exercised by the interim resolution professional. Hence, written representation from directors have not been taken on record by the Board of Directors. Accordingly, we are unable to comment whether none of the director is disqualified as on March 31, 2018 from being appointed as a director in the terms of Section 164 (2) of the Act.

g. The quali cation relating to the maintenance of accounts and other matters connected there with are as stated in the Basis for Quali ed Opinion paragraph;

h. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B". Our report expresses a qualified opinion on the adequacy and operating effectiveness of the Companys internal financial control over financial reporting.

i. 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, in our opinion and to the best of our information and according to the information and explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position to the extent ascertained, in its standalone financial statements (Refer note 35);

ii. Except for the effects/possible effects of matters described under basis of qualified opinion paragraph, the Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts. The Company did not have any derivative contracts;

iii. There has been no delay in transferring the amounts that were due to be transferred to the Investor Education and Protection Fund by the Company during the year ended March 31, 2018;

For CHATURVEDI & CO.

Chartered Accountant

Firm Registration No. 302137E

PANKAJ CHATURVEDI

Partner

Membership No. 091239

Hyderabad

June 29, 2018

"Annexure A" to the Independent Auditors Report

Referred to in paragraph 1 under the heading ‘Report on Other Legal & Regulatory Requirement of our report of even date to the standalone financial statements of the Company for the year ended March 31, 2018:

i. (a) Subject to our comments in para i (b) below, the Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets;

(b) Except for certain locations (including locations where physical access to the fixed assets is restricted by the contractee/clients), the fixed Assets were physically verified during the year by the Management in accordance with a regular program of verification. Further, wherever physical verification of fixed assets was performed, the management is in process of reconciliation of quantities as per verification reports with fixed assets records. Pending such reconciliation and physical verification of certain locations, we are unable to comment on the reasonableness of the physical verification program and discrepancies that may arise on such reconciliation and physical verification of fixed assets that are lying on those locations where physical verification could not be performed.

(c) According to the information and explanation given to us, title deeds of the immovable properties have been mortgaged as security with lenders i.e. banks, financial institutions and others for security of the borrowings raised by the Company. On the basis of our examination of the records of the Company and the copies of the title deeds available with the Company, the title deeds of immovable properties are held in the name of the Company except for the details given in Appendix -1;

ii According to the information and explanations given to us, Except for certain locations (including locations where physical access to the fixed assets is restricted by the contractee/clients), the management has conducted physical verification of inventory at reasonable intervals during the year. We are unable to comment on the discrepancies that may arise on the physical verification of inventories that are lying on those locations where physical verification could not be performed.

iii The company has granted interest free unsecured loans to Companies covered in the register maintained under section 189 of the Act, in respect of such loans;

(a) In our opinion, the terms and conditions of the loans granted by the Company to 8 subsidiaries, aggregating to Rs. 6,113.32 million as at March 31,2018, having regard to the cost of funds to the company, are prejudicial to the interest of the company.

(b) In respect of one company the schedule of repayment of the principal amount aggregating to Rs. 537.60 million has been stipulated and the repayment commences in the year 2026-27. In case of interest free unsecured loan to 7 companies aggregating to Rs. 5,575.72 million, the schedule of repayment is not stipulated and considered by the Company as repayable on demand, hence, we are unable to comment as to whether repayments are regular.

(c) In case of interest free unsecured loan to one company aggregating to Rs. 537.60 million, no amount is overdue. In case of interest free unsecured loan to 7 companies aggregating to Rs. 5,575.72 million, the schedule of repayment is not stipulated and considered by the Company as repayable on demand, we are unable to comment whether any amount is overdue and whether reasonable steps have been taken by the company for recovery of the principal.

iv According to information and explanation given to us and having regard to the legal opinion obtained by the company in an earlier year that the company being a company engaged in the business of providing infrastructure facilities in terms of Section 186, the company has complied with the provisions of section 185 and 186 of the Companies Act, 2013, in respect of grant of loans, making investments and providing guarantees and security as applicable. v According to the information and explanations given to us, the Company has not accepted any deposits during the year within the meaning of Sections 73 to 76 of the Companies Act, 2013, and the rules framed there under to the extent notified.

vi We have broadly reviewed the cost records maintained by the Company pursuant to the Rules made by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of these records with a view to determining whether they are accurate or complete.

vii (a) According to information and explanations given to us and records of the Company examined by us, the Company has not been regular in depositing undisputed statutory dues in respect of provident fund, employees state insurance, income-tax, sales tax, service tax, duty of excise, value added tax and cess and any other statutory dues with the appropriate authorities. There have been significant delays in a large number of cases in depositing these dues with the appropriate authorities. Further, no undisputed amounts payable in respect of these statutory dues were outstanding as on March 31,2018 for a period of more than six months from the date they became payable except as given in Appendix -2 to this report.

(b) According to the information and explanations given to us and records of the Company examined by us, particulars of dues outstanding in respect of income tax, sales tax, service tax, duty of excise and value added tax which have not been deposited on account of any dispute are given in Appendix-3 to this report. viii As matters described in Note 36 and 37 to the financial statement and pursuance of repayment schedule stipulated in the sanction letter, the entire amount of borrowing including interest are overdue and continuing default as on March 31, 2018, therefore, we are unable to provided periods of default. Details of defaults in repayment of borrowing and interest are given below;

(Rs. in Million)
Particulars Principal Interest
Cash Credit 32,992.10 4,082.73
Working Capital Term Loan 14,676.37 5,781.19
Priority Debt 1,226.48 647.45
Term Loan 5,906.01 2,634.86
Project Specific Loan 434.50 48.86
Funded Interest on Term Loan 51.95 226.16
12.15% Redeemable, Non Convertible Debentures 2,000 1,667.01
Others 1,645.20 -
Working Capital Demand Loan & Other Facilities from Bank 3,246.34 310.07

ix According to the information and explanations given to us, the Company has not raised moneys by way of initial public offer or further public offer (including debt instruments) and term loans have been applied by the Company during the year for the purposes for which they were obtained.

x According to the information and explanations given to us, no fraud by the Company or on the Company by its officers or employees have been noticed or reported during the year.

xi According to the information and explanations given to us and based on the audit procedures conducted by us, Managerial Remuneration paid or provided was in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.

xii In our opinion and according to the information and explanation given to us, the Company is not a Nidhi Company. Therefore, the provisions of Para 3 (xii) of the Order are not applicable to the Company.

xiii In our opinion and according to the information and explanations given to us, we are unable to obtain sufficient and appropriate audit evidence to comment whether all transactions with the related parties as disclosed in Note 64 to the financial statements are in compliance with section 177 and 188 of Companies Act, 2013. Further, where applicable the details have been disclosed in the Financial Statements as required by the applicable accounting standards.

xiv According to the information and explanations given to us, the Company has not made any preferential allotment. Accordingly, provisions of para 3 (xiv) of the order are not applicable to the Company.

xv According to the information and explanations given to us, the company has not entered into any non-cash transactions with directors or persons connected with them. The provisions of clause 3 (XV) of the Order are not applicable to the company.

xvi In our opinion, the Company is not required to be registered under section 45 IA of the Reserve Bank of India Act, 1934.

For CHATURVEDI & CO.

Chartered Accountant

Firm Registration No. 302137E

PANKAJ CHATURVEDI

Partner

Membership No. 091239

Hyderabad

June 29, 2018