knr constructions ltd share price Auditors report

To the Members of

KNR CONSTRUCTIONS LIMITED

REPORT ON THE STANDALONE IND AS FINANCIAL

STATEMENTS

Opinion

We have audited the accompanying Standalone Ind AS Financial Statements of KNR CONSTRUCTIONS LIMITED

("the Company"), which comprise the Balance Sheet as at 31 March, 2023, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and Statement of Cash Flows for the year ended, and notes to the standalone Ind AS financial statements, including a summary of the significant accounting policies and other explanatory information. (Hereinafter referred to as "the standalone Ind AS financial statements").

In our opinion and to the best of our information and according to the explanations given to us, and based on the consideration of reports of other auditors on separate financial statements of joint operations and management certified accounts in respect of ten joint operations referred to in the Other Matters paragraph below, the aforesaid standalone Ind AS financial statements give the information required by the Companies Act 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31,2023, and its profit (including other comprehensive income), changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the standalone Ind AS 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 standalone Ind AS financial statements under the provisions of the Companies Act, 2013 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 opinion on the standalone Ind AS financial statements

Key Audit Matters:

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone Ind AS financial statements of the current period. These matters were addressed in the context of our audit of the standalone Ind AS 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.

Key Audit Matter	How our audit addressed the Key Audit Matter
A) Revenue Recognition of long-term contracts
The Company has significant revenue from construction contracts and long-term operating and maintenance agreements. These long-term contracts are often complex customised solutions and meet the definition of a contract as per Ind AS 115.	Our revenue testing included both testing of the companys controls, as well as substantive audit procedures targeted at selected major long-term projects. Our substantive testing focused on estimates applied by management in the accounting.
	Our procedures included, among others things, the following:
Revenue related to these construction contracts is recognised using the percentage of completion method, where progress is determined by comparing actual costs incurred to date, with the total estimated costs of the project. Revenue recognition for construction contracts includes management judgment in the form of estimates, which are subject to management experience and expectations of future events. The most important judgment relates to the estimated total costs of the project.	• Ensured that the revenue recognition method applied was appropriate based on the terms of the arrangement;
	• Agreed the total project revenue estimates to sales agreements, including amendments as appropriate;
	• We obtained an understanding of the processes and tested relevant controls, which impact the revenue recognition;
Revenue recognition of long-term contracts is a key audit matter in the audit due to the high level of management judgement involved in the project estimates.	• We assessed the reliability of managements estimates by comparing the actual results of delivered projects to previous estimates;
B) Litigation and Claims
Considering the nature of the Companys operations, it can be exposed to a number of litigations and claims. The recognition and measurement of provisions, contingent liabilities and contingent assets as well as making the necessary disclosures in respect of litigation and claims requires significant judgment by the management in assessing the outcome of each legal case which is based on managements discussion with legal advisors. Due to the significance of the litigations and claims and the difficulty in assessing and measuring the resulting outcome, this is considered as a key audit matter.	Our audit procedures included the following:
	• evaluating the Companys policies, procedures and controls in relation to litigation, claims and provision assessments;
	• independent enquiries to understand the background of each case, legal position and the material risks that may impact the Companys standalone Ind AS financial statements; and
	• assessing reasonableness of judgment made by management, determining the adequacy of the level of provisioning or disclosure in the standalone Ind AS financial statements.

INFORMATION OTHER THAN THE STANDALONE IND AS FINANCIAL STATEMENTS AND AUDITORS REPORT THEREON

The Companys Board of Directors 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 standalone Ind AS financial statements and our auditors report thereon.

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

In connection with our audit of the standalone Ind AS financial

statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone Ind AS 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.

MANAGEMENTSRESPONSIBILITYFORTHESTANDALONE IND AS 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 of these standalone

Ind AS 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 Indian Accounting Standards prescribed under section 133 of the Act read with Companies (Indian Accounting standards) Rules, 2015, as amended and other accounting principles generally accepted in India.

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 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 Standalone Ind AS Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone Ind AS 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 RESPONSIBILITY

Our objectives are to obtain reasonable assurance about whether the standalone Ind AS 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 Ind AS financial statements.

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

• Identify and assess the risks of material misstatement of the standalone Ind AS 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 Companies Act, 2013, 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 standalone Ind AS 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 standalone Ind AS financial statements including the disclosures, and whether the standalone Ind AS 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 standalone Ind AS financial statements of the current period 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

a) The standalone Ind AS financial statement include the audited financial results of 12 Joint operations, whose financial statements reflect total assets (before consolidation adjustments) of Rs. 45,332.64 lakhs, total revenue (before consolidation adjustments) of Rs. 80,728.28 lakhs, total net profit/(loss) after tax (before consolidation adjustments) of Rs. 2,178.08 lakhs, total comprehensive income/(loss) (before consolidated adjustments) of Rs. 2,178.08 lakhs and net cash flow/ (outflow) of Rs. (5,158.83) lakhs for year ended 31st March 2023, as considered in the standalone financial results, which have been audited by their respective independent auditors. The independent auditors reports on financial statements of these entities have been furnished to us by the management and our opinion on the financial statements, in so far as it relates to the amounts and disclosures included in respect of these entities, is based solely on the report of such auditors and the procedures performed by us are as stated in paragraph above.

Our opinion on the standalone Ind AS financial statement is not modified in respect of the above matter with respect to our reliance on the work done and the reports of the other auditors.

b) The standalone Ind AS financial statements include the unaudited financial results of 4 Joint operations whose financial information reflect total assets (before consolidation adjustments) of Rs. 893.12 lakhs, total revenues (before consolidation adjustments) of Rs. 118.23, total net profit/(loss) after tax (before consolidation adjustments) of Rs. 5.93 lakhs and total comprehensive income/(loss) (before consolidated adjustments) of Rs.5.93 lakhs and net cash flow/(outflow) Rs. 5.04 lakhs for year ended 31st March 2023, as considered in the standalone financial results, which have not been audited by us. These financial information are unaudited and have been furnished to us by the Management and our opinion and conclusion on the statement, in so far as it relates to the amounts and disclosures included in respect of this entity, is based solely on such unaudited financial information. In our opinion and according to the information and explanations given to us by the Board of Directors, these financial information are not material to the Group.

Our opinion on the standalone Ind AS financials statement is not modified in respect of the above matter with respect to our reliance on the financial information certified by the Board of Directors.

REPORT ON OTHER LEGAL AND REGULATORY

REQUIREMENTS

A. 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 said order.

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

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion, proper books of accounts as required by law have been kept by the Company so far as it appears from our examination of those books.

c) The Balance Sheet, the Statement of Profit and Loss (including other comprehensive income) the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of accounts.

d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards prescribed under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules, 2015, as amended and other accounting principles generally accepted in India.

e) On the basis of the written representations received from the directors as on march 31, 2023 taken on record by the Board of Directors, none of the directors are disqualified as on March 31,2023 from being appointed as a director in terms of Section 164 (2) of the Act.

f) With respect to the adequacy of the internal financial control over financial reporting of the Company and the operating effectiveness of such controls, refer

to our separate Report in "Annexure 2". Our Report expresses an unmodified opinion on the adequacy and operating effectiveness of the Companys financial controls over financial reporting.

g) With respect to the other matters to be included in the Auditors Report in accordance with the requirements of section 197 of the Act, as amended, in our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act, read with Schedule V to the Act.

h) 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 explanations given to us:

i. The Company has disclosed the impact if any, of pending litigations as at March 31, 2023 on its financial position in its Standalone Ind AS Financial Statements - Refer Note No. 37.

ii. The Company did not have any long-term contracts, including derivative contracts, for which there were any material foreseeable losses.

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

iv. (a) The Management has represented that,

to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entity ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like

on behalf of the Ultimate Beneficiaries;

(b) The Management has represented, that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

(c) Based on the audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.

v. The dividend declared or paid during the year by the Company is in compliance with section 123 of the Act.

vi. Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of accounts using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from April 1, 2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31,2023.

	For K.P. Rao & Co.,
	Chartered Accountants
	Firms Registration No. 003135S
	Mohan R Lavi
	Partner
	Membership No. 029340
	UDIN: 23029340BGWHVP4977
Place: Bengaluru
Date: 29th May, 2023

Annexure 1

TO THE INDEPENDENT AUDITORS REPORT OF EVEN DATE ON THE STANDALONE IND AS FINANCIAL STATEMENTS OF KNR CONSTRUCTIONS LIMITED

WE REPORT THAT;

(i) (a) (A) The Company has maintained proper records

showing full particulars, including quantitative details and situation of Property, Plant and Equipment.

(B) The Company has maintained proper records showing full particulars of Intangible assets

(a) A major portion of fixed assets have been physically verified by the management in accordance with the programme of verification, which, in our opinion, provides for physical verification of all fixed assets at reasonable interval having regard to the size of

the Company and nature of its assets. According to the information and explanations given to us, no material discrepancies were noticed on such verification of fixed assets and have been properly dealt with in the books of accounts.

(b) According to the information and explanations given to us, the title deeds of the immovable properties (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) disclosed in the Note no. 65 to standalone Ind AS financial statements held by the Company are in the name of the Company except for the following assets.

Description of Property	Gross Carrying Value (In Rs.)	Held in name of	Whether promoter, director or their relative or employee	Period held
Land	38,85,189	K.Narsimha Reddy	Promoter & Managing Director	20-Apr-05
Land	5,36,555	K.Narsimha Reddy	Promoter & Managing Director	20-Oct-16
Land	44,49,615	K.Narsimha Reddy	Promoter & Managing Director	24-Oct-16
Land	2,65,625	K.Narsimha Reddy	Promoter & Managing Director	24-Oct-16
Land	7,57,385	K.Narsimha Reddy	Promoter & Managing Director	20-Oct-16
Land	13,34,965	K.Narsimha Reddy	Promoter & Managing Director	17-May-17
Land	13,34,965	K.Narsimha Reddy	Promoter & Managing Director	17-May-17
Land	1,07,06,074	K.Narsimha Reddy	Promoter & Managing Director	30-Apr-21
Land	1,37,63,347	K.Narsimha Reddy	Promoter & Managing Director	30-Apr-21
Land	1,27,72,920	K.Narsimha Reddy	Promoter & Managing Director	24-Jun-21
Land	91,99,260	K.Narsimha Reddy	Promoter & Managing Director	24-Jun-21
Land	24,54,010	K.Narsimha Reddy	Promoter & Managing Director	26-Jul-21
Land	4,27,245	K.Narsimha Reddy	Promoter & Managing Director	26-Jul-21
Land	21,33,835	K.Narsimha Reddy	Promoter & Managing Director	26-Jul-21
Land	12,07,741	K.Jalandhar Reddy	Promoter & Executive Director	15-Feb-10
Land	5,78,221	K.Jalandhar Reddy	Promoter & Executive Director	15-Feb-10
Land	11,03,051	K.Jalandhar Reddy	Promoter & Executive Director	24-Feb-10
Land	14,63,538	K.Jalandhar Reddy	Promoter & Executive Director	8-Mar-10
Land	5,09,102	K.Jalandhar Reddy	Promoter & Executive Director	23-Mar-10
Land	17,24,915	K.Jalandhar Reddy	Promoter & Executive Director	23-Mar-10
Land	15,31,111	K.Jalandhar Reddy	Promoter & Executive Director	24-Mar-10
Land	24,88,053	K.Jalandhar Reddy	Promoter & Executive Director	26-Mar-10
Land	16,54,935	K.Jalandhar Reddy	Promoter & Executive Director	31-Mar-10
Land	5,34,316	K.Jalandhar Reddy	Promoter & Executive Director	31-Mar-10
Land	7,12,255	K.Jalandhar Reddy	Promoter & Executive Director	31-Mar-10
Land	7,88,464	K.Jalandhar Reddy	Promoter & Executive Director	9-Apr-10
Land	8,64,415	K.Jalandhar Reddy	Promoter & Executive Director	19-Apr-10
Land	4,85,450	K.Jalandhar Reddy	Promoter & Executive Director	26-May-10
Land	11,20,850	K.Jalandhar Reddy	Promoter & Executive Director	26-May-10
Land	4,38,505	K.Jalandhar Reddy	Promoter & Executive Director	3-Jan-11
Land	6,99,290	K.Jalandhar Reddy	Promoter & Executive Director	3-Mar-11
Land	3,33,456	K.Jalandhar Reddy	Promoter & Executive Director	5-Mar-11
Land	55,52,450	K.Jalandhar Reddy	Promoter & Executive Director	30-Apr-21
Land	1,51,77,110	K.Jalandhar Reddy	Promoter & Executive Director	30-Apr-21
Land	21,80,868	K.Jalandhar Reddy	Promoter & Executive Director	30-Apr-21
Land	67,57,682	K.Jalandhar Reddy	Promoter & Executive Director	30-Apr-21
Land	1,26,91,905	K.Jalandhar Reddy	Promoter & Executive Director	24-Jun-21
Land	51,74,005	K.Jalandhar Reddy	Promoter & Executive Director	27-Jun-22
Land	8,22,895	K.Jalandhar Reddy	Promoter & Executive Director	27-Jun-22
Land	10,85,446	V.Venu Gopal Reddy	Employee	7-Aug-10
Land	11,74,860	V.Venu Gopal Reddy	Employee	14-Sep-10
Land	8,59,220	V.Venu Gopal Reddy	Employee	28-Sep-10
Land	5,47,602	V.Venu Gopal Reddy	Employee	27-Dec-10
Land	3,27,925	V.Venu Gopal Reddy	Employee	18-Mar-11
Land	2,99,310	V.Venu Gopal Reddy	Employee	29-Mar-11
Land	1,38,063	V.Venu Gopal Reddy	Employee	14-Jun-11
Land	1,43,457	V.Venu Gopal Reddy	Employee	14-Jun-11
Land	5,12,940	V.Venu Gopal Reddy	Employee	30-Apr-12
Land	10,38,580	V.Venu Gopal Reddy	Employee	1-Dec-16
Land	3,23,59,314	K.Jalandhar Reddy & K.Smitha Reddy	Promoter & Executive Director	31-Mar-13
Land	5,36,987	J.Anudeep	Employee	19-Jun-17
Land	5,36,988	J.Anudeep	Employee	19-Jun-17
Land	13,91,075	J.Anudeep	Employee	17-Oct-17
Land	8,59,610	J.Anudeep	Employee	25-May-18
Land	7,48,625	J.Anudeep	Employee	17-Sep-18
Land	10,68,575	J.Anudeep	Employee	17-Sep-18
Land	21,39,080	J.Anudeep	Employee	17-Nov-18
Land	12,84,645	J.Anudeep	Employee	28-Dec-18
Land	2,15,915	J.Anudeep	Employee	16-Mar-19
Land	16,05,311	J.Anudeep	Employee	9-Apr-19
Land	12,85,561	J.Anudeep	Employee	9-Apr-19
Land	9,00,135	J.Anudeep	Employee	3-Aug-19
Land	9,00,135	J.Anudeep	Employee	3-Aug-19
Land	1,10,145	J.Anudeep	Employee	8-Jul-19
Land	9,63,510	J.Anudeep	Employee	4-Sep-19
Land	8,55,520	J.Anudeep	Employee	7-Feb-20
Land	10,67,300	J.Anudeep	Employee	29-Sep-20
Land	10,68,100	J.Anudeep	Employee	29-Sep-20
Land	6,41,370	J.Anudeep	Employee	19-Apr-21
Land	12,84,710	K.Yashoda	Promoter & Non-Executive Director	24-Jan-19
Land	10,72,535	K.Yashoda	Promoter & Non-Executive Director	3-Jul-19

Reason for not being held in the name of the company: Due to regulatory restrictions in

the respective state. The Company has taken undertaking from respective parties for having no interest in the lands.

(c) The company has not revalued its Property, Plant and Equipment (including Right of Use assets) or intangible assets or both during the year.

(d) According to the information and explanations given to us, no proceedings have been initiated or are pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.

(i) (e) According to the information and explanations given

to us, inventories have been physically verified at regular intervals by the Management during the year. In our opinion, the frequency of such verification is reasonable. No material discrepancies were noticed on such physical verification.

(f) According to the information and explanations given to us, the company has been sanctioned working capital limits in excess of five crore rupees, in aggregate, from banks or financial institutions on the basis of security of current assets. The quarterly returns filed by the company with such banks or financial institutions are in agreement with the books of accounts of the Company.

(ii) According to the information and explanations given to us, the company has during the year granted loans or advances in the nature of loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or any other parties,

(a) The company has provided loans and advances in the nature of loans, or stood guarantee, or provided security to any other entity,

(A) The aggregate amount during the year, and

balance outstanding at the balance sheet date with respect to such loans or advances and guarantees or security to subsidiaries, joint ventures and associates were Rs. 7,077.89 Lakhs and Rs. 5,058.55 Lakhs respectively.

(B) No such loans or advances and guarantees or security to parties other than subsidiaries, joint ventures and associates.

(b) In our opinion, the investments made, guarantees provided and the terms and conditions of the grant of all loans and advances in the nature of loans and guarantees provided are not prejudicial to the companys interest.

(c) In respect of loans and advances granted by the company, the schedule of repayment of principal and payment of interest has been stipulated and the repayments of principal amounts and receipts of interest are generally been regular as per stipulation.

(d) In respect of loans granted by the Company, there is no overdue amount remaining outstanding as at the balance sheet date.;

(e) No loan granted by the company which has fallen due during the year, has been renewed or extended or fresh loans granted to settle the over dues of existing loans given to the same parties.

(f) The company has granted loans without specifying any terms which are repayable on demand. The Balance outstanding and percentage thereof to total loan during the year is Rs. 589.64 Lakhs and 11.660/ %.

These loans have been given on "On Account" basis. In the absence of agreements for these loans, the terms and conditions and their impact on the interest of the Company cannot be ascertained. Hence the question of regularity of payment of principal and interest does not arise.

(iii) In our opinion and according to the information and

explanations given to us, the Company has not advanced any loan to any director, given any guarantee, provided any security in connection with any loan taken by any director or made investment through more than two layers of investment companies as per the provisions of section 185 and 186 of the Act. Accordingly, reporting under clause (iv) of paragraph 3 of the Order is not applicable.

(iv) In our opinion and according to the information and explanation given to us, the Company has not accepted deposits to which directives issued by the Reserve Bank of India and the provisions of section 73 to 76 or any other relevant provisions of the Companies Act, 2013 were applicable. Accordingly, reporting under clause (v) of paragraph 3 of the Order is not applicable.

(v) The maintenance of cost records has been specified by the Central Government under section 148(1) (d). We have broadly reviewed the books of accounts maintained by the company pursuant to the Rules made by the Central Government for the maintenance of cost records

under section 148 of the Act, 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 the cost records with a view to determine whether they are accurate and complete.

(vi) According to the information and explanations given to us, in respect of records of statutory dues:

a) The Company is regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Goods and Services Tax, Duty of Customs, Duty of Excise, Cess and other statutory dues applicable to it with the appropriate authorities.

b) There were no disputed amounts payable in respect of Provident Fund, Employees State Insurance, Income Tax, Duty of Customs, Duty of Excise, Cess and other statutory dues in arrears as at March 31, 2023 for a period of more than six months from the date they became payable, except the following.

Name of the Statute	Nature of the Dues	Rs. In Lakhs	Period to which the amount relates	Forum where dispute is pending	Remarks
Income Tax Act, 1961	Income Tax	Nil	FY 2006-07	Income Tax Appellate Tribunal, Hyderabad	Paid under protest - Rs. 244.21 Lakhs
Income Tax Act, 1961	Income Tax	22.99	FY 2010-11	Commissioner of Income Tax (Appeals), Hyderabad
Income Tax Act, 1961	Income Tax	2,913.64	FY 2015-16	Commissioner of Income Tax (Appeals), Faceless, Delhi
Income Tax Act, 1961	Income Tax	Nil	FY 2015-16	Commissioner of Income Tax (Appeals), Faceless, Delhi	Paid under protest - Rs.10 Lakhs
Income Tax Act, 1961	Income Tax	6,465.98	FY 2017-18	Income Tax Appellate Tribunal, Hyderabad
Income Tax Act, 1961	Income Tax	22.75	FY 2018-19	Deputy Commissioner of Income Tax, Hyd.
Income Tax Act, 1961	Income Tax	2,979.39	FY 2019-20	Deputy Commissioner of Income Tax, Hyd.
Income Tax Act, 1961	Income Tax	531.45	FY 2020-21	Assistant Commissioner of Income Tax, CC 2(2) - Hyd
Income Tax Act, 1961	Income Tax	104.85	FY 2021-22	Assistant Commissioner of Income Tax, CC 2(2) - Hyd
Income Tax Act, 1961	Income Tax	9.86	FY 2009-10	Deputy Commissioner of income Tax-TDS, Hyd.
Andhra Pradesh Value Added Tax Act, 2005	VAT	Nil	FY 2010-11	Telangana Value Added Tax Appellate Tribunal	Paid under protest - 51.82 Lakhs
Andhra Pradesh Value Added Tax Act, 2005/ Telangana Value Added Tax Act 2005	VAT	1.94	FY 2014-15	Honourable Supreme Court of India.
Telangana Value Added Tax Act 2005	VAT	29.09	FY 2015-16	Honourable Supreme Court of India.
Telangana Tax on Entry of Goods into Local Areas Act, 2001	Entry Tax	80.38	FY 2017-18	Honourable High Court of Telangana.
Telangana Tax on Entry of Goods into Local Areas Act, 2001	Entry Tax	183.45	FY 2014-15 to 15-16	Honourable High Court of Telangana.
Karnataka GST ACT 2017	GST	32.44	FY 2018-19 to 19-20	Commissioner Appeal-II, Bangalore
Madhya Pradesh Value Added Tax Act, 2002	VAT	64.20	FY 2017-18	Asst.Commissioner, Gwalior
Madhya Pradesh Value Added Tax Act, 2002	Entry Tax	41.13	FY 2010-11	Commissioner (Appeals) Gwalior
Madhya Pradesh Value Added Tax Act, 2002	Entry Tax	40.68	FY 2013-14	Additional Commissioner (Appeals) Gwalior
Madhya Pradesh Value Added Tax Act, 2002	Entry Tax	41.06	FY 2016-17	Additional Commissioner (Appeals) Gwalior
Madhya Pradesh Value Added Tax Act, 2002	Entry Tax	1.88	FY 2017-18	Asst.Commissioner Gwalior
Tamil Nadu GST Act,2017	GST	507.61	FY 2016-17 to 17-18	Commissioner of Appeals, Salem Tamil Nadu
Tamil Nadu GST Act,2017	GST	57.95	FY 2016-17	Honorable High Court of Tamil Nadu
Odisha Entry Tax 1999	Entry Tax	28.87	FY 2009-10 to 11-12	Honorable High Court of Odisha
Odisha Entry Tax 1999	Entry Tax	22.00	FY 2012-13 to 14-15	Sales Tax Tribunal, Cuttack, Odisha
Odisha Value Added Tax 1999	VAT	166.85	FY 2012-13 to 14-15	Sales Tax Tribunal, Cuttack, Odisha
Odisha Value added Tax 2004	CST	6.03	FY 2012-13 to 14-15	Sales Tax Tribunal, Cuttack, Odisha
CGST Act, 2017 and Kerala SGST Act, 2017	GST	7.04	FY 2017-18	Additional Commissioner (Appeals), Cochin
Finance Act, 1994	Service Tax	607.05	01-04-16 to 30-06-17	Customs, Excise and Service Tax Appellate Tribunal
Customs Act, 1962	Customs	1,509.52	FY 2004-09	Honaourable High Court of Telangana

(vii) With respect to the search operation conducted by the Income Tax Department under Section 132 of the Income- tax Act, 1961 in March 2022, the Company has disclosed that the Assessing Officer has initiated the proceedings for re assessment of income, as is relevant for each of the financial years from 2016-17 to 2021-22 under the applicable provisions of the Income tax Act, 1961 in Note no. 48.

(viii) (a) According to the information and explanations given to us, the company has not defaulted in repayment of dues to banks, financial institutions and debenture holders.

(b) According to the information and explanations given to us, the company is not a declared wilful defaulter by any bank or financial institution or other lender.

(c) According to the information and explanations given to us, Term loans were applied for the purpose for which the loans were obtained.

(d) According to the information and explanations given to us, and the procedures performed by us, and on an overall examination of the standalone Ind AS financial statements of the company, we report that no funds raised on short-term basis have been used for long-term purposes by the company.

(e) According to the information and explanations given to us and procedures performed by us, the company has not taken any funds from any entity or person on account of or to meet the obligations of its subsidiaries, associates or joint ventures.

(f) According to the information and explanations given to us and procedures performed by us, the company has not raised any loans during the year on the pledge of securities held in its subsidiaries, joint ventures, or associate companies.

(ix) (a) The Company did not raise any money by way

of initial public or further public offer (including debt instruments) and term loans during the year. Accordingly, paragraph 3 (ix)(a) of the Order is not applicable.

(b) The Company has not made any preferential allotment or private placement of shares or convertible debentures (fully, partially, or optionally convertible) during the year. Accordingly, paragraph 3 (ix)(b) of the Order is not applicable.

(x) (a) According to the information and explanations given

to us, no material fraud by the company or on the Company by its officers or employees has been noticed or reported during the course of our audit.

(b) We have not filed any report under sub-section (12) of section 143 of the Companies Act in Form ADT-4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules, 2014 with the Central Government.

(c) As represented to us by the Management, there are no whistle-blower complaints received by the company during the year.

(xi) The company is not a Nidhi Company and therefore the provisions of Para 3(xii) of the Companies (Auditors Report), 2020 are not applicable.

(xii) According to the information and explanations given to us and based on our examination of the records of the

Company, transactions with the related parties are in compliance with sections 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the standalone Ind AS financial Statements etc., as required by the applicable accounting standards.

(xiii) (a) In our opinion, the company has an adequate internal audit system commensurate with the size and nature of its business;

(b) We have considered the reports of the Internal Auditors for the period under audit.

(xiv) In our opinion and according to the information and explanations given to us, during the year the Company has not entered into any non-cash transactions with any of its directors or directors of its subsidiary companies, associate companies or persons connected with such directors and hence provisions of section 192 of the Companies Act, 2013 are not applicable to the Company.

(xv) (a) The Company is not required to be registered under

Section 45-IA of the Reserve Bank of India Act, 1934.

(b) According to the information and explanations given to us, the company has not conducted any NonBanking Financing or Housing Finance activities during the year.

(c) The company is not a Core Investment Company (CIC) as defined in the regulations made by the Reserve Bank of India. Accordingly, the provisions of Para 3(xvi)(c) are not applicable to the company.

(d) As per the information and explanations given to us, there are no Core Investment Companies as part of the Group. Accordingly, the provisions of Para 3(xvi)

(d) is not applicable to the company.

(xvi) The Company has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.

(xvii) There has been no resignation of the statutory auditors during the year and accordingly clause (xviii) is not applicable.

(xviii) On the basis of the financial ratios, ageing and expected dates of realization of financial assets and payment of financial liabilities, other information accompanying the standalone Ind AS financial statements and our knowledge of the Board of Directors and Management plans and based on our examination of the evidence supporting the assumptions, nothing has come to our attention, which causes us to believe that any material uncertainty exists as on the date of the audit report indicating that Company is not capable of meeting its liabilities existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date.

(xix) (a) In respect of other than ongoing projects, the company has transferred unspent amounts to a fund specified in Schedule VII of the Companies Act (the Act), within six months of the expiry of the financial year in compliance with second proviso to sub section (5) of section 135 of the Act. This matter has been disclosed in note no.31.1 to the financial statements.

	For K.P. Rao & Co.,
	Chartered Accountants
	Firms Registration No. 003135S
	Mohan R Lavi
	Partner
	Membership No. 029340
	UDIN: 23029340BGWHVP4977
Place: Bengaluru
Date: 29th May, 2023

Annexure 2

TO THE INDEPENDENT AUDITORS REPORT OF EVEN DATE ON THE STANDALONE IND AS FINANCIAL STATEMENTS OF KNR CONSTRUCTIONS LIMITED

REPORTONTHEINTERNALFINANCIALCONTROLSUNDER 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 KNR CONSTRUCTIONS LIMITED ("the Company") as of March 31, 2023 in conjunction with our audit of the standalone Ind AS 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, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both 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 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 judgement, including the assessment of the risks of material misstatement of the standalone Ind AS 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 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 standalone Ind As 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 standalone Ind As 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 standalone Ind AS 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.

OPINION

In our opinion, 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, 2023, 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".

	For K.P. Rao & Co.,
	Chartered Accountants
	Firms Registration No. 003135S
	Mohan R Lavi
	Partner
	Membership No. 029340
	UDIN: 23029340BGWHVP4977
Place: Bengaluru
Date: 29th May, 2023