IVRCL Ltd Auditors Report.

To the Members of IVRCL Limited

Report on the Audit of the standalone Financial Statements Disclaimer of Opinion

We were engaged to audit the accompanying standalone financial statements of IVRCL Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2019, and the Statement of Profit and Loss (including Other Comprehensive Income), Statement of Changes in Equity and Statement of Cash Flows for the year then ended, and notes to the standalone financial statements, including 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).

We do not express an opinion on the accompanying standalone financial statements of the Company. Because of the significance of the matters described in the Basis for Disclaimer of Opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these standalone financial statements.

Basis for Disclaimer of 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 15,452.08 million resulting into accumulated losses of Rs 57,217.03 million and erosion of its Net worth as at March 31, 2019. The Company has obligations towards fund based borrowings aggregating to Rs 92,580.77 million and non-fund based exposure aggregating to Rs 8,870.28 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, 2019 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 realizability of bank guarantees encashed by customers, unbilled revenue, trade receivables and withheld amount aggregating to Rs 27,000.76 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, 2019 would have been higher by Rs 27,000.76 million, other equity would have been lower by Rs 27,000.76 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, 2019. 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 7,215.75 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, 2019 would have been higher by Rs 7,215.75 million, other equity would have been lower by Rs 7,215.75 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-

Independent Auditors Report

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, trade receivables including retention, loans and advances, borrowings, trade payable and other payables. 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 1,518.27 million ( Written down value as at March 31, 2019) and Rs 405.81 million respectively as at March 31, 2019 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 2,120.56 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.

In view of the matters stated above except para j of Basis for Disclaimer of Opinion, we are unable to obtain sufficient appropriate audit evidences regarding the extent of the loss allowance/impairment or potential liability to be recognised, if any, and the consequential impact on the standalone financial statements as at and for the year ended March 31, 2019. The matter stated above in para j of Basis for Disclaimer of Opinion give rise to the inappropriateness of use of generally accepted accounting principles that are applicable to the minimum presentation and disclosure requirement as per the schedule III of the Companies Act, 2013. Accordingly, we form a basis of disclaimer of opinion.

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.

Our opinion is not qualified 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 standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

Sl. No. Key Audit Matter Auditors Response
1. Adoption of New Accounting Standard Ind AS 115: Revenue from contracts with customers
The Company has adopted the new accounting standard Ind AS 115 as at April 1, 2018 and accordingly has reviewed its sales contracts for determining the principles for recognizing revenue in accordance with the new standard. Some of the sales contracts contain various performance obligations and management exercises judgement to determine timing of revenue recognition, i.e., over time or a point in time. Principal audit procedures:
a) Obtained an understanding of the various revenue streams and nature of sales contracts entered into by the Company.
b) Evaluated the design of internal controls relating to identification of performance obligations and determining timing of revenue recognition.
c) Selected a sample of contracts and through inspection of evidence of performance of these controls, tested the operating effectiveness of the internal controls relating to the identification of performance obligations and timing of revenue recognition.
d) Selected a sample of contracts and reassessed contractual terms to determine adherence to the requirements of the new accounting standard.

Information Other than the Financial Statements and Auditors Report Thereon

In view of ongoing Corporate Insolvency Resolution Process (CIRP), The Resolution Professional ( RP) is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis, Boards Report including Annexures to Boards Report, Business Responsibility Report, Corporate Governance and Shareholders Information, but does not include the financial statements and our auditors report thereon. These reports are expected to be made available to us after the date of this auditors report.

Our opinion on the 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 financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the 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.

Managements Responsibility for the Standalone Financial Statements

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.

Pursuant to ongoing Corporate Insolvency Resolution Process (CIRP) powers of the board of Directors have been suspended and these responsibilities are now vested with Resolution Professional (RP)

In view of ongoing Corporate Insolvency Resolution Process (CIRP), The Resolution Professional (RP)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.

In preparing the 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. Under section 20 of the Code, it is incumbent upon Interim Resolution Professional to manage the operations of the Company as a going concern and the statements have been prepared on going concern basis.

Auditors Responsibility

Our objectives are to obtain reasonable assurance about whether the 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 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 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 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 system 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 financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the 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 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 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.

Other Matters

a. We did not audit the separate financial statements of 3 joint ventures included in standalone financial statements, whose financial results reflects companys share in net profit of joint venture aggregating to Rs 6.17 million for the year ended March 31, 2019. 29 joint ventures were not considered in standalone financial statement. 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, 2019 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

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 all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit. However, as described in the Basis for

Disclaimer of Opinion paragraph, we are unable to obtain all the information and explanations which to the best of our knowledge and belief were necessary for the audit;

b) Due to the effects/possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph, we are unable to state whether 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) Due to the effects/possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph, we are unable to state whether the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act.

e) Due to the effects/possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph, we are unable to state whether they have any 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 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, 2019 from being appointed as a director in the terms of Section 164 (2) of the Act.

g) The qualification relating to the maintenance of accounts and other matters connected there with are as stated in the Basis for Qualified 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, 2019;

iv. In our opinion and according to the information and explanation given to us, the remuneration paid during the current year by the Company is in accordance with the provisions of Section 197 of the Act. The Ministry of Corporate Affairs has not prescribed other details under Section 197(16) which are required to be commented upon by us

For CHATURVEDI & CO.
Chartered Accountant
Firm Registration No. 302137E
PANKAJ CHATURVEDI
Hyderabad Partner
May 30, 2019 Membership No. 091239

"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, 2019:

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 inventories 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 6,156.34 million as at March 31,2019, 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 580.61 million has been stipulated and the repayment commences in the year 202627. In case of interest free unsecured loan to 7 companies aggregating to Rs 5,575.73 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 580.61 million, no amount is overdue. In case of interest free unsecured loan to 7 companies aggregating to Rs 5,575.73 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 31,2019 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, 2019, 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 39,058.30 4,320.79
Working Capital Term Loan 14,850.61 10,015.59
Priority Debt 1,226.48 788.00
Term Loan 5,954.17 3,739.89
Project Specific Loan 434.50 478.90
Funded Interest on Term Loan 51.95 321.78
12.15% Redeemable, Non Convertible Debentures 2,000.00 1,909.94
Others 1,645.20 -
Working Capital Demand Loan & Other Facilities from Bank 5,359.68 425.01

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
Hyderabad Partner
May 30, 2019 Membership No. 091239

Annexure "B" to the Independent Auditors Report of even date on the Standalone Financial Statements of IVRCL Limited

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 IVRCL Limited ("the Company") as of March 31, 2019 in conjunction with our audit of the 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. 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 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 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, to the extent applicable to an audit of internal financial controls, 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 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 system over financial reporting and their operating effectiveness.

Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, 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 judgment, 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 qualified audit opinion on the Companys internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A companys internal financial control over financial reporting 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 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

Because of the inherent limitations of internal financial controls over financial reporting, 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 to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Basis for Qualified Opinion

In our opinion and according to the information and explanations given to us and based on our audit, the following material weaknesses have been identified as at March 31, 2019:

The Company did not have appropriate internal financial controls over (a) Assessment of recoverability of deferred tax assets (b) Assessment of expected credit loss/loss allowance of bank guarantees encashed by customers, unbilled revenue, trade receivables and withheld amounts which are subject matters of various disputes /arbitration proceedings/ negotiations with the customers and contractors due to termination / foreclosure of contracts and other disputes. (c) Assessment of expected cash shortfall and resultant loss allowance that may be required in respect of invocation of corporate guarantees and demand against the Company in respect of such guarantees extended / executed for its subsidiaries and other parties in favour of the lender

(d) Assessment of impairment in value of long term equity investment and assessment of impairment in value of loans and advances to various subsidiary companies and other parties. (e) Control over reconciliation of subcontractors work bills with the work bills submitted to the clients and physical progress of works completed, which could potentially result into inaccurate estimation of percentage of work completed and consequently delay in the realization of unbilled revenue/ receivables. (f) Controls over projects costs estimation and review of balance costs to complete in respect of work projects, which could potentially result into inaccurate estimation of foreseeable losses on works contracts. (g) physical verification of fixed assets and inventories. Further the company did not have any internal audit system during the year.

The inadequate supervisory and review control over Companys process in respect of aforesaid assessment in accordance with the accounting principles generally accepted in India could potentially result in a material misstatement in preparation and presentation of financial statement including the profit/ loss after tax.

A material weakness is a deficiency, or a combination of deficiencies, in internal financial control over financial reporting, such that there is a reasonable possibility that a material misstatement of the companys annual or interim financial statements will not be prevented or detected on a timely basis.

Qualified opinion

In our opinion, except for the possible effects of material weaknesses described in "basis of qualified opinion" paragraph above, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2019, 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.

We have considered the material weaknesses identified and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the standalone financial statements of the Company for the year ended on March 31, 2019, and these material weaknesses have affected our opinion on the standalone financial statements of the Company and we have issued a qualified opinion on the standalone financial statements.

For CHATURVEDI & CO.
Chartered Accountant
Firm Registration No. 302137E
PANKAJ CHATURVEDI
Hyderabad Partner
May 30, 2019 Membership No. 091239