KNR Constructions Ltd Auditor Reports

To

The Members of

KNR Constructions Limited

Report on the Audit of the Standalone Financial Statements

OPINION

We have audited the accompanying Standalone Financial Statements of KNR CONSTRUCTIONS LIMITED (the "Company"), which comprise the Balance Sheet as at March 31, 2025, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date and notes to the financial statements, including a summary of material accounting policies and other explanatory information (hereinafter referred to as the "Standalone 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 seventeen joint operations referred to in the Other Matters paragraph below the aforesaid Standalone Financial Statements give the information required by the Companies Act, 2013 (the "Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under Section 133 of the Act, ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31,2025 and its profit, total comprehensive income, changes in equity and its cash flows for the year ended on that date.

BASIS FOR OPINION

We conducted our audit of the Standalone Financial Statements in accordance with the Standards on Auditing ("SA"s) specified under Section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the Standalone Financial Statements section of this report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India ("ICAI") together with the ethical requirements that are relevant to our audit of the Standalone Financial Statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAIs Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the Standalone 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 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.

Sr. No.	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.
	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.
	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.
	Auditors Response
	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:
	• 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.
	• We assessed the reliability of managements estimates by comparing the actual results of delivered projects to previous estimates.
Sr. No.	Key Audit Matter
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.
	Auditors Response
	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 FINANCIAL STATEMENTS AND AUDITORS REPORT THEREON

The Companys Board of Directors is responsible for the other information. The other information comprises the information included in the Management Discussion and Analysis, Boards Report, including Annexures to Boards Report, Business Responsibility and Sustainability Report, Corporate Governance and Shareholders Information, but does not include the consolidated financial statements, Standalone Financial Statements and our Auditors Report thereon.

Our opinion on the Standalone Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon.

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

When we read the other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE STANDALONE FINANCIAL STATEMENTS

The Companys Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these Standalone Financial Statements that give a true and fair view of the financial position, financial performance, including Other Comprehensive Income, Changes in Equity and Cash Flows of the Company in accordance with the accounting principles generally accepted in India, including Ind AS specified under Section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Standalone Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the Standalone Financial Statements, management and Board of Directors 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 the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Companys Board of Directors is also responsible for overseeing the Companys financial reporting process.

AUDITORS RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

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:

• I dentify and assess the risks of material misstatement of the Standalone Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is 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 control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to Standalone Financial Statements in place and the operating effectiveness of such controls.

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

• Conclude on the appropriateness of 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 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 Financial Statements, including the disclosures, and whether the Standalone Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.

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

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal financial controls that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Standalone 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 financial statements include the audited financial statements of 12 Joint operations, whose financial statements reflect total assets (before consolidation adjustments) of Rs. 97,926.22 Lakhs as at 31 March 2025, total revenue (before consolidation adjustments) of Rs. 26,656.17 Lakhs, total net profit/ (loss) after tax (before consolidation adjustments) of Rs. (1,276.94) Lakhs, total comprehensive income/(loss) (before consolidated adjustments) of Rs. (1,276.94) Lakhs for year ended 31st March, 2025 and net cash flow/ (outflow) Rs. (2,932.60) Lakhs for year ended 31st March 2025, as considered in the standalone financial statement, 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 standalone 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.

Our opinion on the standalone annual financial results 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 financial statements include the unaudited financial results of 5 Joint operations whose financial statements reflect total assets of Rs. 2,543.17 Lakhs (before consolidation adjustments) as at 31st March 2025 and total revenues of Rs. 2,661 .93 (before consolidation adjustments), total net profit/(loss) after tax of Rs. Nil (before consolidation adjustments) and total comprehensive income/(loss) (before consolidated adjustments) of Rs. Nil for the year ended 31st March 2025 and net cash flow/(outflow) Rs. 173.86 lakhs for year ended 31st March 2025, as considered in the standalone financial statements, which have not been audited by us. These financial statements 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, this financial information is not material to the Group.

Our opinion on the standalone financial statements 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, based on our audit 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 account 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, Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the books of account.

d. In our opinion, the aforesaid Standalone Financial Statements comply with the Ind AS specified under Section 133 of the Act.

e. On the basis of the written representations received from the directors as on March 31, 2025 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2025 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 controls with reference to Standalone Financial Statements 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 internal financial controls with reference to Standalone Financial Statements.

g. With respect to the other matters to be included in the Auditors Report in accordance with the requirements of Section 197(16) of the Act, as amended, in our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of Section 197 of the Act.

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, as amended, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its Standalone Financial Statements. Refer to Note 37 to the Standalone Financial Statements.

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 final dividend proposed in the previous year, declared and paid by the Company during the year is in accordance with Section 123 of the Act, as applicable.

vi. Based on our examination, which included test checks, the Company has used accounting softwares for maintaining its books of account for the financial year ended March 31,2025, which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the softwares. Further, during the course of our audit and on the basis of test checking of selected samples, we did not come across any instance of audit trail feature being tampered with, and the audit trail has been preserved by the Company as per the statutory requirements for record retention.

Annexure ‘1 to the Independent Auditors Report

(Referred to in paragraph 1 under Report on Other Legal and Regulatory Requirements section of our report to the Members of KNR Constructions Limited of even date)

To the best of our information and according to the explanations provided to us by the Company and the books of account and records examined by us in the normal course of audit, we state that:

i. In respect of the Companys property, plant and equipment, right-of-use assets intangible assets and investment property:

(a) A The Company has maintained proper records showing full particulars, including quantitative details and situation of Property, Plant and Equipment.

(a) B Reporting under Clause (i)(a)(B) of the Order is not applicable to the company

(b) 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 account.

(c) 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 favor of the lessee) disclosed in the Note no. 69 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.Narasimha Reddy	Promoter & Managing Director	20-Apr-05
Land	5,36,555	K.Narsimha Reddy	Promoter & Managing Director	20-Oct-16
Land	47,15,240	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 & Relative of 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
	18,85,65,587	Total

Reason for not being held in the name of the company: We were informed that due to regulatory restrictions in the respective states the lands were registered in the name of the Promoters & Directors / Employees of the Company. The Company has taken undertaking from respective parties for having no interest in the lands.

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

(e) 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.

ii. In respect of inventories:

a. 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.

b. 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 account of the Company.

iii. 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. 14,678.96 Lakhs and Rs. 6,547.19 Lakhs respectively.

B. The Company has not provided any loans or any advances in the nature of loans to any other entity other than subsidiaries, joint ventures and associates. The Company has also not provided any security to any other entity other than subsidiaries, joint ventures and associates.

Following is the summary of the loans and advances in the nature of the loans provided by the Company:

(Rs. Lakhs)

	Guarantees	Security	Loans	Advances in the nature of loans
Aggregate amount granted / provided during the year:
Subsidiaries / Joint Ventures / Associates	--	--	--	14,678.96
Others	--	--	--	--
Balance outstanding as at balance sheet date in respect of above cases:
Subsidiaries / Joint Ventures / Associates	--	--	--	6,547.19
Others	--	--	--	--

b. I n 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. I n respect of loans and advances granted by the company, the schedule of repayment of principal and payment of interest has not been stipulated. Accordingly, reporting on regularity of the repayments or receipts does not arise.

d. In respect of loans granted by the Company to its subsidiaries etc., as informed by the management there is no overdue amount remaining outstanding as at the balance sheet date.

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

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. All the loans granted by the Company to its wholly owned subsidiaries or associates are without specifying any terms or period of repayment. Total loans or advances in the nature of loans granted during the year aggregate to Rs. 14,678.96 Lakhs and balance outstanding aggregate to Rs. 6,547.19 Lakhs.

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.

iv. 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.

v. 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.

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

vii. According to the information and explanations given to us, in respect of records of statutory dues:

a. The Company is generally 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. There were no arrears of outstanding statutory dues as on the last day of the financial year concerned for a period of more than six months from the date they became payable.

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 31,2025 for a period of more than six months from the date they became payable, except the following:

Name of the Statue	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	Honourable High Court of Telangana	Paid under protest Rs. 244.21 Lakhs
Income Tax Act, 1961	Income Tax	1,822.09	FY 2006-07	Commissioner of Income Tax (Appeals)-12, Hyderabad
Income Tax Act, 1961	Income Tax	2,913.64	FY 2015-16	Commissioner of Income Tax (Appeals), Faceless, Delhi	Net of Rs. 323.74 Lakhs paid
Income Tax Act, 1961	Income Tax	Nil	FY 2016-17	Commissioner of Income Tax (Appeals)-12, Hyderabad
Income Tax Act, 1961	Income Tax	Nil	FY 2017-18	Income Tax Appellate Tribunal, Hyderabad
Income Tax Act, 1961	Income Tax	2,583.92	FY 2017-18	Commissioner of Income Tax (Appeals)-12, Hyderabad
Income Tax Act, 1961	Income Tax	9668.40	FY 2018-19	Commissioner of Income Tax (Appeals)-12, Hyderabad	Net of Rs. 375.54 Lakhs paid
Income Tax Act, 1961	Income Tax	-	FY 2019-20	Commissioner of Income Tax (Appeals)-12, Hyderabad
Income Tax Act, 1961	Income Tax	1,438.23	FY 2020-21	Commissioner of Income Tax (Appeals)-12, Hyderabad	Net of Rs. 420.16 Lakhs paid
Income Tax Act, 1961	Income Tax	748.35	FY 2020-21	Commissioner of Income Tax (Appeals)-12, Hyderabad	Net of Rs. 187.08 Lakhs paid
Income Tax Act, 1961	Income Tax	1392.12	FY 2021-22	Writ filed before High Court of Telangana
Income Tax Act, 1961	Income Tax	183.90	FY 2022-23	Assistant Commissioner of Income Tax, CC-(2), Hyderabad
Andhra Pradesh Value Added Tax Act, 2005	VAT	Nil	FY 2010-11	Telangana Value Added Tax Appellate Tribunal	Paid under protest Rs. 51.82 lakhs
APVAT/TVAT Act, 2005	VAT	1.94	FY 2014-15	Honourable Supreme Court of India. Order received infavour of company, awaiting for effectual order
Andhra Pradesh Value Added Tax Act, 2005	VAT	29.09	FY 2015-16	Honourable Supreme Court of India. Order received infavour of company, awaiting for effectual order
Telangana Tax on Entry of Goods into Local Areas Act, 2001	Entry Tax	80.38	FY 2017-18	Honorable 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	Honorable High Court of Telangana.	Net of Rs. 61.14 Lakhs paid
GST Telangana	GST	1049.37	FY 01-04-16 to 3006-17	We prefer to file an appeal before GST Tribunal, till now the Tribunals were not formed by the Government.	Net of Rs. 55.21 Lakhs paid
GST Telangana	GST	2202.70	FY 01-04-17 to 3006-18	We prefer to file an appeal before GST Tribunal, till now the Tribunals were not formed by the Government.	Net of Rs. 578.52 Lakhs paid
GST Telangana	GST	128.19	FY 2017-18	Commissioner of Appeals, Hyderabad	Net of Rs. 14.24 Lakhs paid
GST Andhra Pradesh	GST	521.05	FY 2019-20	Joint Commissioner (Appeals) Guntur	Net of Rs. 20.17 Lakhs paid
GST Andhra Pradesh	GST	11.10	FY 2020-21	Joint Commissioner (Appeals) Guntur
GST Karnataka	GST	32.44	FY 2018-19 to 201920	We prefer to file an appeal before GST Tribunal, till now the Tribunals were not formed by the Government.	Net of Rs. 3.60 Lakhs paid
GST Karnataka	GST	445.51	FY 2017-18	We prefer to file an appeal before GST Tribunal, till now the Tribunals were not formed by the Government.	Net of Rs. 49.50 Lakhs paid
Madhya Pradesh Value Added Tax Act, 2002	Entry Tax	41.13	FY 2010-11	Commissioner (Appeals) Gwalior	Net of Rs. 4.56 Lakhs paid
Madhya Pradesh Value Added Tax Act, 2002	Entry Tax	40.68	FY 2013-14	VAT Appellate Tribunal, Bhopal	Net of Rs. 2.14 Lakhs paid
Madhya Pradesh Value Added Tax Act, 2002	Entry Tax	12.27	Apr17 to Jun17	Asst. Commissioner Gwalior
Madhya Pradesh GST	GST	5.63	FY 2020 - 21	Appellate Commissioner Bhopal, MP	Net of Rs. 0.62 Lakhs paid
GST Tamil Nadu	GST	462.49	FY 2016-17 to 17-18	We prefer to file an appeal before GST Tribunal, till now the Tribunals were not formed by the Government.	Net of Rs. 157.92 Lakhs paid
GST Tamil Nadu	GST	106.56	FY 2016-17	Honorable High Court of Tamil Nadu
GST Tamil Nadu	GST	556.32	FY 2017-18	Appellate Commissioner, Salem	Net of Rs. 18.90 Lakhs paid
GST Tamil Nadu	GST	409.40	FY 2018 -19	Appellate Commissioner, Salem	Net of Rs. 20.54 Lakhs paid
GST Tamil Nadu	GST	50.14	FY 2019-20	Appellate Commissioner, Salem	Net of Rs. 2.81 Lakhs paid
GST Tamil Nadu	GST	530.39	FY 2018-19	Honorable High Court of Madras
GST Tamil Nadu	GST	798.18	FY 2019-20	Honorable High Court of Madras
GST Tamil Nadu	GST	959.11	FY 2020-21	Honorable High Court of Madras
GST Tamil Nadu	GST	912.73	FY 2021-22	Honorable High Court of Madras
Odisha Sales Tax and VAT laws	Entry Tax	28.87	FY 2009-10 to 11-12	Honorable Odisha High Court	Net of Rs. 5.00 Lakhs paid
Odisha Sales Tax and VAT laws	Entry Tax	22.00	FY 2012-13 to 14-15	Sales Tax Tribunal, Cuttack, Odisha	Net of Rs. 2.50 Lakhs paid
Odisha Sales Tax and VAT laws	VAT	166.85	FY 2012-13 to 14-15	Sales Tax Tribunal, Cuttack, Odisha	Net of Rs. 11.96 Lakhs paid
Odisha Sales Tax and VAT laws	CST	6.03	FY 2012-13 to 14-15	Sales Tax Tribunal, Cuttack, Odisha	Net of Rs. 0.50 Lakhs paid
CGST Act, 2017 and Kerala SGST Act, 2017	GST	7.04	FY 2017-18	Additional Commissioner (Appeals), Cochin	Net of Rs. 0.70 Lakhs paid
Finance Act, 1994	Service Tax	584.29	01-04-16 to 30-0617	Customs, Excise and Service Tax Appellate Tribunal	Net of Rs. 22.76 Lakhs paid
Customs Act, 1962	Customs	1,509.52	FY 2004-09	High Court at Telangana	Net of Rs. 25.00 Lakhs paid

viii. As detailed in Note No 48 to these financial statements, during the year under report, the Company has not disclosed any transactions to the Income tax authorities as undisclosed income.

ix. According to the information and explanations given to us

a. The company has not defaulted in repayment of dues to banks, financial institutions and debenture holders.

b. The company is not a declared willful defaulter by any bank or financial institution or other lender.

c. No term loans were availed by the Company.

d. No funds raised on short-term basis have been used for long-term purposes by the company.

e. 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. The company has not raised any loans during the year on the pledge of securities held in its subsidiaries, joint ventures, or associate companies.

x. The Company did not raise any money by way of initial public or further public offer (including debt instruments) during the year. Accordingly, paragraph 3 (ix)(a) of the Order is not applicable.

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.

xi. a. 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.

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

xiii. 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.

xiv. 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.

xv. 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.

xvi. a. The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.

b. The company has not conducted any Non-Banking 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. 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.

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

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

xix. 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 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.

xx. In respect of the ongoing projects, amount remaining unspent under sub-section (5) of section 135 of the Companies Act, pursuant ongoing project, has been transferred to special account in compliance with the provision of sub-section (6) of section 135 of the said Act; This matter has been disclosed in note no.31.1 to the financial statements.

Annexure "A" to the Independent Auditors Report

(Referred to in paragraph 2 (f) under Report on Other Legal and Regulatory Requirements section of our report to the Members of KNR Constructions Limited of even date)

Report on the Internal Financial Controls with reference to Standalone Financial Statements under Clause (i) of subsection 3 of Section 143 of the Companies Act, 2013 (the “Act”)

We have audited the internal financial controls with reference to Standalone Financial Statements of KNR CONSTRUCTIONS LIMITED (the "Company") as of March 31,2025 in conjunction with our audit of the Standalone Financial Statements of the Company for the year ended on that date.

MANAGEMENTS RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

The Companys Management is responsible for establishing and maintaining internal financial controls with reference to Standalone Financial Statements 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 (the "ICAI"). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to 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 Act.

AUDITORS RESPONSIBILITY

Our responsibility is to express an opinion on the Companys internal financial controls with reference to Standalone Financial Statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") issued by the ICAI and the Standards on Auditing prescribed under Section 143(10) of the Act, to the extent applicable to an audit of internal financial controls with reference to Standalone Financial Statements. 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 with reference to Standalone Financial Statements was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls with reference to Standalone Financial Statements and their operating effectiveness. Our audit of internal financial controls with reference to Standalone Financial Statements included obtaining an understanding of internal financial controls with reference to Standalone Financial Statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors 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 audit opinion on the Companys internal financial controls with reference to Standalone Financial Statements.

MEANING OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO STANDALONE FINANCIAL STATEMENTS

A Companys internal financial control with reference to Standalone Financial Statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Companys internal financial control with reference to Standalone Financial Statements includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation

of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Companys assets that could have a material effect on the financial statements.

INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO STANDALONE FINANCIAL STATEMENTS

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 with reference to Standalone Financial Statements to future periods are subject to the risk that the internal financial control with reference to Standalone Financial Statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

OPINION

In our opinion, to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls with reference to Standalone Financial Statements and such internal financial controls with reference to Standalone Financial Statements were operating effectively as at March 31, 2025, based on the criteria for internal financial control with reference to Standalone Financial Statements 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 ICAI.

For K.P Rao & Co.,

Chartered Accountants

Firms Registration No. 003135S

Mohan R Lavi

Partner

Membership No. 029340

UDIN: 25029340BMKTLC3521

Place: Bengaluru

Date: 29th May, 2025