McNally Bharat Engineering Company Ltd Auditor Reports

To

The Members of

McNally Bharat Engineering Company Limited

Report on the Audit of the Standalone Financial Statements

Adverse Opinion

We have audited the accompanying Standalone Financial Statements of McNally Bharat Engineering Company Limited ("the Company"), which comprise the Standalone Balance Sheet as at 31st March, 2025, the Standalone Statement of Profit and Loss (including Other Comprehensive Income), the Standalone Statement of Changes in Equity and the Standalone Statement of Cash Flows for the year then ended, and notes to the Standalone Financial Statements including a summary of material accounting policies and other explanatory information (hereinafter referred to as "Standalone Financial Statements").

In our opinion and to the best of our information and according to the explanations given to us because of the significance of the matter described in the Basis for Adverse Opinion section of our report, the aforesaid Standalone Financial Statements do not give the information required by the Companies Act, 2013 ("the Act") in the manner so required and also does not give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 as amended (Ind AS) and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2025, its loss including Other Comprehensive Income, its changes in equity and Statement of cash flows for the year ended on that date.

Basis for Adverse Opinion

a) Current Assets and Current Liabilities

i. We draw attention to Note 43 to the Standalone Financial Statements regarding Trade Receivables, Advance to Supplier, Trade Payable, Other Financial Assets and Advance from customers are subject to confirmation and reconciliation from respective parties and consequential reconciliation, outcomes of pending arbitration/ settlements of claims and adjustments arising therefrom, if any. The management, however, does not expect any material variation. Management is also hopeful for recovery/realisation of trade receivables which include Rs. 27,052.24 Lakhs under Arbitration/ Proposed Arbitration in the normal course of business, hence no impairment has been considered at this stage.

ii. We draw attention to Note 6(d) to the Standalone Financial Statements, Claims Recoverable (BG Encashed) amounting to Rs. 36,183.70 Lakhs, out of which specific provision is made of Rs. 32,377.38 Lakhs, including Rs. 3,806.32 Lakhs under arbitration whose fair value is Rs. 2,828.72 Lakhs are doubtful. Recoverability/ Adjustments/ Impacts with respect to these are currently not ascertainable and as such cannot be commented upon by us.

b) Non-adjustment of the Carrying Value of Loan

In earlier years, the Company had given unsecured loan to Vedica Sanjeevani Projects Private Limited ("VSPL"). VSPL vide their letter dated 15th February, 2022 informed the Company that it was unable to service the debt and requested the Company for a moratorium on the repayment of the loan, including interest for two years i.e., Financial Year 2021-22 and Financial Year 2022-23. Subsequently, the Company has stopped recognizing interest income on the same. In absence of any further communication between the Company and VSPL made available to us, we are unable to comment on the realizability of loan and its interest and consequential adjustment to be made in the books.

This constitutes a material departure from the requirements of Indian Accounting Standard - 109 "Financial Instrument".

c) Recognition of Deferred Tax Assets

Note 7 to the Standalone Financial Statements mentions that the Company had recognized deferred tax assets of Rs. 51,706.60 lakhs up to 31st March, 2018, which is being carried forward in the books by the Company expecting adequate future taxable profits after infusion of fresh funds in the Company by the successful Resolution Applicant against which such deferred tax assets would be adjusted.

The Company has been continually incurring losses and its net worth has been fully eroded. We are unable to obtain sufficient appropriate audit evidence with respect to the managements assertions and are therefore, unable to comment on the carrying value of the aforesaid net deferred tax assets on 31st March, 2025.

This constitutes a material departure from the requirements of Indian Accounting Standard 12 "Income Taxes".

Material Uncertainty Related to Going Concern

The Company has reported a net loss in the current year amounting to Rs. 1,71,608.57 Lakhs (previous year Rs. 88,326.28 Lakhs) before other comprehensive income and is unable to meet its financial commitments/covenants to lenders and various other stakeholders. The ability to continue as a going concern is dependent upon many factors including continued support from the financial creditors, operational creditors, customers and the successful implementation of the resolution plan as approved by the Honble National Company Law Tribunal. These events and conditions indicate a material uncertainty that may cast significant doubt on the Companys ability to continue as a going concern.

However, we could not gather sufficient evidence with respect to the managements assertion and in the absence of required documents/evidence are unable to comment on the preparation of the Statement.

Emphasis of Matters

a) Approval of Resolution Plan by the Committee of Creditors/ NCLT

Note 39 to the Statement informs that the Honble National Company Law Tribunal (NCLT), Kolkata Bench admitted the Corporate Insolvency Resolution Process (CIRP) against the Holding Company and appointed Mr. Ravi Sethia (IBBI/IPA-001/IP-P01305/2018- 2019/12052) as the Resolution Professional (RP). The RP received Resolution Plans from 4 applicants. Out of the 4, the Resolution Plan of one of the applicants received approval from the Committee of Creditors by the requisite majority and thereafter the RP submitted the application before the Honble NCLT on 3rd August 2023 for its final approval. On the 19th December 2023, Honble NCLT pronounced its order in favour of one of the successful Resolution Applicants i.e. BTL EPC Limited. Pursuant to the approval of the Plan by the Honble NCLT, the Implementation and Monitoring Committee ("IMC") is duly constituted on 19th December 2023 as per the terms of the plan to oversee the implementation.

Since, the Approved Resolution Plan could not be implemented within the "effective date" i.e 17.02.2024 owing to uncontrollable challenges faced by the SRA, the MC filed an application with the Honble NCLT to seeking appropriate directions and recourse with respect to the approved Resolution Plan. On 3rd December 2024, Honble NCLT passed a subsequent order granting extension of the "effective date" for the implementation of the Resolution Plan up to 21 days from the date of uploading the NCLT Order i.e. up to 06.01.2025.

b) Implementation of Resolution Plan

i. BTL EPC Limited, the SRA nominated Mandal Vyapar Private Limited ("MVPL") as its Special Purpose Vehicle ("SPV") which was noted at the 5th Monitoring Committee meeting held on 16th December, 2024 for the purpose of implementing the approved Resolution Plan.

ii. In terms of the approved Resolution Plan, the SRA was required to disburse payments in three tranches. As of March 31, 2025, the SRA had disbursed the first tranche and a part of the second tranche. These Financial Statements have been prepared basis the payment of tranches mentioned hereinabove. The MC on receipt of

the tranche amount had been distributed the same to the respective claimants in accordance with the approved Resolution Plan as detailed in Note No. 4(f) of the Management Notes to the Financial Statements.

At the 12th MC Meeting held on 12th February 2025, the SRA indicated its inability to honour the 2nd tranche payment on the scheduled date and agreed to make a partial payment immediately, and the balance amount on/ before 10th March 2025 with interest for the delayed payment. However, at the 13th MC Meeting held on 13th March 2025, SRA informed that the funds have not been infused owing to procedural delays at its end.

At the 15th MC Meeting held on 27th March 2025, the SRA reiterated that while it was keen to make balance tranche payments, certain challenges had caused delays in the infusion of funds. Accordingly, the SRA requested the MC Members to allow additional time and extend their support until 30th June 2025 to make the balance payment along with interest. Subsequently, the SRA filed Interlocutory Application No. 1908134/01611/2025 dated 22nd April 2025 before the Honble NCLT seeking extension of time till 30th September 2025 for payment of the outstanding tranches. As on the date of approval of these Financial Statements, the application is under consideration of the Honble NCLT.

iii. Upon implementation of the Resolution Plan, the entire existing share capital of the Company stood extinguished and cancelled to the extent of 95% in accordance with the terms set forth in the Resolution Plan.

Subsequent to such extinguishment, the Company has issued fresh equity shares to Mandal Vyapar Private Limited (acting as the Special Purpose Vehicle nominated by the Successful Resolution Applicant) and the Assenting Financial Creditors. As per plan, SRA has to pay Re. 0.01 per share to all the existing shareholders as a "goodwill gesture" amounting to Rs. 21.16 Lakhs which is transferred to a separate escrow account for payment to existing shareholders. The Companys capital structure as on 31st March 2025 was as follows:

Sl. No.	Name of Allottees	No. of Equity Shares	Amount (Rs. in Lakhs)
1	Mandal Vyapaar Private Limited (SPV nominated by SRA)	3,00,00,000.00	3,000.00
2	Financial Creditors	16,67,000.00	166.67
3	Existing shareholders	16,66,667.00	1,66.66
	Total	3,33,33,334.00	3,333.33

iv. The Company has duly complied with all applicable legal and regulatory requirements, including but not limited to those prescribed under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Company has filed all requisite forms and disclosures with the Bombay Stock Exchange (BSE), National Stock Exchange (NSE) and Ministry of Corporate Affairs relevant to the allotment and listing of the newly issued equity shares. And is awaiting approval from the respective stock exchange.

v. By virtue of implementation of the Resolution Plan, Mandal Vyapar Private Limited as on 31st March 2025 holds 300,00,000 equity shares of nominal value Rs. 10 each of Mcnally Bharat Engineering Company Limited constituting 90% of its paid up share capital and hence, a holding company of the latter.

vi. As per the approved Resolution Plan read with the NCLT Order dated 3rd December 2024, the SRA was required to pay the agreed consideration in 3 (three) tranches at the scheduled dates. The SRA having paid the first tranche in full and a part of the second tranche, the Monitoring Committee proportionately distributed the amount as under:

Sl. No.	Name of Allottees	Amount (Rs. in Lakhs)	Adjustment in Financial Statements
(i)	Financial Creditors	6,876.08	Borrowings
(ii)	Form B - Operational Creditors	41.54	Trade Payables
(iii)	Form B - Government Creditors	233.67	Exceptional Items
(iv)	Form D - Employee Claims	0.95	Employee benefits
(v)	Form F - Other Claims	10.00	Trade Payables
(vi)	Existing shareholders	21.16	Other Equity
(vii)	CIRP Costs	378.88	Trade Payable
	Total	7,562.28

The above amounts have been adjusted with the existing liabilities admitted by the Resolution Professional.

vii. In accordance with the Resolution Plan, the Company was required to disburse payments against admitted claims to the extent of the funds received. However, the full settlement has not yet been completed and therefore, the balance unutilized funds have been maintained in an escrow account held by the Company. This balance is presented under Other Bank Balances in the Financial Statements.

viii. After the date of approval of the Resolution Plan, a Bank Guarantee amounting to Rs. 275.34 Lakhs was invoked by a customer. The related cost has been duly recognized in the Companys books and funded entirely through internal accruals. In accordance with the provisions of the Plan, this shall be treated as a payment made to secured financial creditors, under the protection extended by the SRA.

c) Non-Assessment of Pending Litigations

Note 41 to the Standalone Financial Statements refers to the Companys receipt of regulatory Enquiries/ Notices/ Summons/ Show-Cause/ Demand/ Orders from various government authorities such as departments of Goods and Services Tax, Income Tax, etc. In view of Companys admission under CIRP, all existing civil / legal proceedings will be kept in abeyance as moratorium is in force under section 14 of the Insolvency and Bankruptcy Code, 2016 till the conclusion of CIRP. Therefore, no impact has been considered in the Standalone Financial Statements as of now.

d) Recognition of Interest Expense

As referred to in Note 42 of the Statement, the Company has recognized interest expense for the year ended 31st March, 2025 on Bank Borrowings, Inter Corporate Deposits, and claim of EIG (Mauritius) Limited under the head Finance Costs amounting to Rs. 83,806.02 Lakhs as estimated by the management.

e) Recognition of interest on outstanding balances of MSME vendors

The company has not provided us with the appropriate audit evidence relating to the identification of balances of MSME parties on which the interest is recognised.

Our opinion on the Standalone Financial Statements is not modified in respect of these matters.

Key Audit Matters

Key Audit matters are those matters that, in our professional judgment, were of most significance in our audit of the 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. In addition to the matters described in the Basis for Adverse Opinion section and Emphasis of Matters section of our report, we have determined the matters described below to be the key audit matters to be communicated in our Report.

Sr. No.	Key Audit Matters	Auditors Response to Key Audit Matters
1.	Estimated Cost to complete the Project / Revenue Recognition: (Refer note 1(d) to the Standalone Financial Statements) The Company recognizes revenue under the percentage of completion method as specified under Indian Accounting Standard 115 \u201cRevenue from Contract with Customers\u201d. Recognition of revenue requires estimation of total contract cost which comprises of the actual cost incurred till date and estimated cost further to be incurred to complete the projects. Estimation of the cost to complete involves the exercise of significant judgment by management including assessment of technical data and hence identified as a Key Audit Matter.	Our audit approach was a combination of test of internal controls and substantive procedures which includes the following: 1. Tested the design, implementation, and operating effectiveness ofthe controls surrounding the determination and approval of estimated cost. 2. Verified the contracts with customers on a check basis including the actual cost incurred and terms and conditions related to the variation of the cost. 3. Discussed with the project management teams for certain selected projects to assess the reasonableness of the estimated cost to be incurred for completing the respective projects. Obtained and relied on the Management Certificate for supporting the accuracy of the estimate of the total cost of the project for selected contracts on test check basis.
2.	Provisions and Contingent Liabilities (Refer note 1(u), 29 and 39 to the Standalone Financial Statements) Prior to the approval of the Resolution Plan, the Company was involved in various tax and other disputes which could potentially result in significant liabilities. Pursuant to the approval of the Resolution Plan by the NCLT, it was determined that no amounts are payable in respect of those litigations as they stand extinguished. The extinguishment of these liabilities depend upon the successful implementation of the Resolution plan. The estimates related to exact outcome of litigations and its possible impact on the financials in respect thereof have high degree of inherent uncertainty due to insufficient judicial precedents in India in respect of disposal of litigations involving companies admitted to Corporate Insolvency Resolution Process.	We have performed the following procedures to test the recoverability of payments made by the Company in relation to litigations instituted against it prior to the approval of the Resolution Plan: 1. Verified the underlying documents related to litigations and other correspondences with the statutory authorities. 2. Reviewed the provisions of the Order passed by the NCLT to understand the requirements of the said order and evaluated the possible impact. 3. Evaluated whether the accounting principles applied by the management fairly present the amounts recoverable from relevant authorities in financial statements in accordance with the principles of Ind AS. 4. Discussed with the management on the development in these litigations during the year ended 31st March, 2025. Obtained representation letter from the management on the assessment of those matters as per SA 580 (revised) - written representations.

Information Other than the Standalone Financial Statements and Auditors Report Thereon (Other Information)

In view of ongoing Corporate Insolvency Resolution Process (CIRP), the management under Monitoring Committee is responsible for the preparation of the Other Information. The Other Information comprises of the information included in the Management Discussion and Analysis, Boards Report including Annexures thereto, Corporate Governance and Shareholders Information but does not include the 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 or conclusion thereon.

In connection with our audit of the Standalone Financial Statements, our responsibility is to read the other information identified 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.

If we conclude, based on the work we have performed, and on the other information obtained prior to the date of the auditors report, that there is a material misstatement in this other information, we are required to report that fact.

Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements

The Honble National Company Law Tribunal (NCLT), Kolkata Bench admitted the Corporate Insolvency Resolution Process (CIRP) against the Company and appointed Mr. Ravi Sethia (IBBI/IPA-001/IP-P01305/2018- 2019/12052) as the Resolution Professional (RP). The RP received Resolution Plans from 4 applicants. Out of the 4, the Resolution Plan of one of the applicants received approval from the Committee of Creditors by the requisite majority and thereafter the RP submitted the application before the Honble NCLT on 3rd August 2023 for its final approval. On the 19th December 2023, Honble NCLT pronounced its order in favour of one of the successful Resolution Applicants i.e. BTL EPC Limited. Pursuant to the approval of the Plan by the Honble NCLT, the Implementation and Monitoring Committee ("IMC") is duly constituted on 19th December 2023 as per the terms of the plan to oversee the implementation.

However, until the implementation of the Resolution Plan submitted by the Successful Resolution Applicant as per the conditions set out in the NCLT order, the management under the Monitoring Committee is responsible for the preparation of these Standalone Financial Statements that give a true and fair view of the financial position, financial performance, including total comprehensive loss, changes in equity, and cash flows of the Company in accordance with the accounting principles generally accepted in India including the Indian Accounting Standards prescribed 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, the management under the Monitoring Committee 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 management either intends to liquidate the Company or to cease operations or has no realistic alternative but to do so. The management under the Monitoring Committee is also responsible for overseeing the Companys financial reporting process.

Auditors Responsibility 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 scepticism throughout the audit. We also:

?€? Identify 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 control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.

?€? Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management under the Monitoring Committee.

?€? Conclude on the appropriateness of management under the Monitoring Committees 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.

?€? 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 the 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 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 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.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors Report) Order, 2020 ("the Order") issued by the Central Government in terms of section 143(11) of the Act, we give in the "Annexure A" a statement on the matters specified in the paragraphs 3 and 4 of the Order to the extent applicable.

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

a) we have sought and except for possible effects of the matters described in the basis for Adverse Opinion section above, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid financial statements;

b) except for the possible effects of the matter described in the Basis for Adverse Opinion Section above, 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 Standalone Balance Sheet, the Standalone Statement of Profit and Loss including Other Comprehensive Income, the Standalone Statement of Changes in Equity and the Standalone Statement of Cash Flows dealt with by this Report are in agreement with the relevant books of account maintained for the purpose of preparation of the financial statement.

d) considering the significance of the matter described in the Basis for Adverse Opinion Section above, in our opinion, the aforesaid Standalone Financial Statements do not comply with the Indian Accounting Standards specified under Section 133 of the Act;

e) on the basis of the written representations received from the directors of the Company, none of the directors is disqualified as on 31st March, 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 over financial reporting of the Company with reference to these Standalone Financial Statements and the operating effectiveness of such controls, refer to our separate report in "Annexure B". Our report expresses Adverse Opinion on the adequacy and operating effectiveness of internal financial control with reference to the financial statements.

g) The adverse remarks on the maintenance of accounts and other matters connected therewith are as stated in the Basis for Adverse Opinion section above.

h) The matters described in the Basis for Adverse Opinion section above, specially that relating to Non Adjustment of the carrying value of loan stated in para (b) of that section, adjustment of balances of Current Assets and current liabilities as per the basis stated in para (a) about pending confirmations and adjustments and Material uncertainty relating to going concern assumption pending implementation of Resolution Plan, in our opinion, may have adverse effect on the functioning of the company.

i) with respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended in our opinion and to the best of our information and according to the explanations given to us:

i. except for the possible effect of the matter described in the Basis for Adverse Opinion section above, the Company has disclosed the impact of pending litigations on its financial position in the Standalone Financial Statements (Refer Note 29 to the Standalone Financial Statements);

ii. the Company has made provision as required under the applicable law or accounting standards for material foreseeable losses if any on long term contract including derivative contracts; and

iii. there were no amounts which were 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 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 entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend to 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 have been received by the company from any person or entity, including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the company shall, whether, directly or indirectly, lend to 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; and

c) Based on our audit procedure that has 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 (a) or (b) contain any material misstatement. However, in respect of the earlier year transactions dealing with loans and advances, securities, guarantees etc. as stated in those years which are forming part of the Basis for Adverse Opinion as given above, we are unable to ascertain and/or comment as required under this para.

v. The Company has not declared or paid any dividend during the financial year.

vi. Based on our examination, which included test checks, the company has used accounting software for maintaining its books of account which has a feature of recording audit trail in the software, except that the audit log is not maintained in case of modification by certain users with specific access and that the audit trail features has not been enabled at the database level to log any direct data changes. During the course of performing our procedures, other than the aforementioned instances where the question of our commenting on the audit trail feature being tampered with did not arise, we did not come across any instances of the audit trail feature being tampered with.

3. With respect to the matter to be included in the Auditors Report under Section 197(16) of the Act:

In our opinion and according to the information and explanations given to us, the Company has paid/ provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V of the Act.

	For V. Singhi & Associates
	Chartered Accountants
	Firm Registration No. 311017E
	(Aniruddha Sengupta)
	Partner
Place: Kolkata	Membership No. 051371
Date: 22nd May 2025	UDIN: 25051371BMUIZS6564

Referred to in Paragraph-1 under Report on Other Legal and Regulatory Requirements section of even date and except for the effects/possible effects of the matters described in the Basis of Adverse Opinion Section of our audit report and material weaknesses described in the Basis for Adverse Opinion in our separate report on the Internal Financial control with reference to Standalone Financial Statement.

(i) (a) (A) The Company is maintaining 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.

(b) The Company has a program of physical verification of Property Plant and Equipment to cover all the items in a phased manner over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. However, Property Plant and Equipment have not been physically verified by the Management during the year.

(c) The Company does not own any immovable property as disclosed in Note 3 on Property, Plant & Equipment to the Standalone Financial Statements. Accordingly, clause 3(i)(c) of the Order is not applicable.

(d) The Company has not revalued any of its Property, Plant and Equipment (including right-of-use-assets) and intangible assets during the year.

(e) As per the information and explanation given to us and as represented by the management no proceedings have been initiated during the year or are pending against the Company as at 31st March, 2025 for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (as amended in 2016) and Rules made thereunder.

(ii) (a) The inventories (excluding stocks with third parties), have been physically verified during the year by the

Management at reasonable intervals and no discrepancies of 10% or more in aggregate for each class of inventory were noticed. In respect of inventory lying with third parties, these have substantially been confirmed by them. Keeping in view, the nature of operations, in our opinion, the procedure for physical verification of inventory followed by the management is reasonable and adequate in relation to the size of the company and nature of its business.

(b) Due to the reasons stated in Note No 39 Initiation of implementation of the Approved Resolution Plan as stated there in, no working capital limit in excess of Rs 5 crore has been sanctioned or renewed at any point of time during the year. In respect of such limit sanctioned in earlier years, pending regularization thereof based on the resolution plan is under the finalization by the lender. All the loans taken by the Company are classified under non-performing assets hence, the Company has not filed any quarterly returns with the banks.

(iii) (a) During the year the company has not made investments, provided any guarantee or security, granted any loans

or advances in the nature of loans, secured or unsecured, to companies, firms, LLP or any other parties. Hence, reporting under clause 3(iii)(a) is not applicable.

(b) Considering the uncertainties of recovery of loan, the terms and conditions of the loans granted amounting to Rs. 1,744.38 Lakhs and guarantees given by the company amounting to Rs. 8,000 Lakhs as at the balance sheet date are prejudicial to the Companys interest.

(c) According to the information and explanations given to us, the loans as described in Note 6(c) to the Financial Statements are repayable on demand and accordingly, the schedule of repayment of principal and payment of interest has not been stipulated and the receipts are not regular.

(d) In case of loans given, the schedule for repayment of principal or payment of interest have not been stipulated and therefore we are unable to comment on the amount overdue for more than ninety days.

(e) According to the information and explanations given to us and based on our examination of the records of the Company, there is no loan or advance in the nature of loans granted, has fallen due during the year, which has been renewed or extended or fresh loans granted to settle the overdue of existing loans given to the same parties.

(f) The loans or advances in the nature of loans granted in earlier years without specifying any term or period of repayment or repayable on demand as stated above Rs. 1,744.38 Lakhs is outstanding as on 31st March, 2025. The details in respect of these loans are as follows:
Particulars	All Parties
The aggregate amount of loans/advances in nature of loans	1,744.38 Lakhs
Total Loans	3,169.50 lakhs
Percentage of loans/ advances in nature of loans to the total loans	55.04%

(iv) According to the information and explanation given to us and on the basis of our examination of the records of the company, the Company has neither granted any loans nor provided any guarantee or security as specified in Section 185 of the Act. The Company has complied with the Section 186 of the Act in respect of loans, investments, guarantees and security, as applicable.

(v) The Company has neither accepted any deposit nor accepted any amount which are deemed to be deposits from the public during the year within the meaning of directives issued by the Reserve Bank of India under sections 73 to 76 of the Act and the rules framed there under to the extent notified. Accordingly, clause 3(v) of the Order is not applicable.

(vi) The maintenance of cost records has been specified by the Central Government under Section 148(1) of the Act. We have broadly reviewed the same as maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended prescribed by the Central Government under sub-section (1) of Section 148 of the Act and are of the opinion that, prima facie, the prescribed cost records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether the same are accurate or complete.

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

a) There were certain delays during the year in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Goods and Services Tax as applicable to it. There were no such delays in respect of amount payable towards Custom Duty, Sales Tax, and other material statutory dues as applicable to it.

The following undisputed statutory dues were unpaid as at 31st March, 2025 for more than six months from the date the same became payable:

Name of the Statute	Nature of Dues	Amount	Period to which the amount Relates	Due Date
		( in Lakhs)
Income Tax Act, 1961	TDS/s194A	7.15	November,2017	7th December, 2017
		13.59	December,2017	7th January, 2018
		6.61	January, 2018	7 th February, 2018
		14.30	February, 2018	7th March, 2018
		43.05	March, 2018	7th April, 2018
		41.21	March, 2019	7th April, 2019
	TDS U/s 194J	7.50	December, 2017	7 th January, 2018
		25.00	March, 2018	30th April, 2018

b) Details of dues of Sales Tax, Value Added Tax, Service Tax, Central Excise Duty, Goods and Services Tax, Entry Tax and Income Tax which have not been deposited as on 31st March, 2025 on account of disputes are given below:

Name of the Statute	Forum where dispute is pending	Nature of Dues	Financial year to which the amount relates	Amount involved (Rs. in Lakhs)
Income Tax Act, 1961	CIT (Appeal)	TDS	2014-15	111.87
		Income Tax	2015-16	4,776.28
		TDS	2015-16	302.82
		Income Tax	2019-20	57.52
		TCS	2015-16	6.35
	AO	TDS	2016-17	322.10
		TDS	2018-19	111.60
		Income Tax	2016-17	2.55
Sales Tax/Value Added Tax Acts	Assistant Commissioner/ Additional Commissioner/ Deputy Commissioner/ Commissioner	Sales Tax and VAT	2008-09 to 2017-18	12,020.98
	Appellate Tribunal and Revisional Board	Sales Tax and VAT	2006-07 to 2017-18	5,739.17
	Supreme Court/ High Court	Sales Tax and VAT	2005-06 to 2017-18	21,054.25
The Central Excise Act, 1944	Custom Excise and Service Tax Appellate Tribunal	Central Excise	2018-19, 2020-21	315.01
	High Court	Central Excise	2016-2017	25.00
The Finance Act, 1994	Custom Excise and Service Tax Appellate Tribunal	Service Tax	2003-04 to 2011-12	1,810.53
Entry Tax Act	High Court, Supreme Court, Appellate Tribunal, Commissioner Appeal	Entry Tax	2005-08, 2010-11 to 2017-18	975.27
Goods and Service Tax Act, 2017	Additional Commissioner	GST	2020-21	457.94
	DGGI Maharashtra	GST	2017-18, 2018-19	2,137.14
	Audit Cell Telangana	GST	2017-18 to 2019-20	339.61
	Audit Cell Tamil Nadu	GST	2017-18 to 2019-20	324.61

(viii) There were no transactions relating to previously unrecorded income that have been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961. Accordingly, clause 3(viii) of the Order is not applicable.

(ix) (a) (i) Based on our Audit procedures and according to the information and explanation given to us, The Company

has defaulted in repayment of loans or other borrowings or in the payment of interest thereon in earlier years which was classified as NPA and the company is under CIRP. The details of the Company overdue outstanding dues to financial institutions, banks as at 31st March 2025 is as follows:-

Nature of borrowing including debt securities	Bank Name	Amount (Rs in Lakhs)*
External Commercial Borrowing	ICICI Bank	567.77
Working Capital Demand Loan	Axis Bank Limited	12,660.41
	Standard Chartered Bank	3,415.90
	Indian Bank	20,308.93
	Axis Bank Limited	68,193.32
	Bank of Baroda	11,000.40
	Bank of India	1,02,624.63
	Canara Bank	6,536.06
	DCB Bank	591.38
	ICICI Bank	49,521.80
Cash Cieu.il hom Banks	IDBI Bank	47,453.67
	Karur Vysya Bank	22,167.37
	Lakshmi Vilas Bank	243.38
	Punjab National Bank	39,358.37
	Standard Chartered Bank	9,812.17
	State Bank of India	74,229.60
	UCO Bank	2,124.11
	Union Bank	34,472.07

(ii) According to the information and explanations given to us, the loans and interest thereon that have been demanded for repayment by the other lenders during the year are provided below: Nature of borrowing, including debt securities

	Name of Lenders	Amount (Rs in Lakhs)*
Inter Corporate Borrowings	Other Lenders	1,47,310.52

*The above figures are inclusive of interest accrued on the principle of the respective banks.

(b) The Company has not taken any loan from the Financial Institution or Government nor issued any debentures during the year.

(c) According to the information, explanation and representation given to us by the management, the Company has not been declared wilful defaulter by any bank or financial institution or government or government authority.

(d) The Company has taken term loan from Mandal Vyapar Pvt. Ltd amounting to Rs. 5,707.78 during the year and loan is utilized for the same purpose, for which it is taken. There are no unutilized term loans at the beginning of the year

(e) On an overall examination of the financial statements, the Company has not raised any funds on short-term basis during the year. Accordingly, clause 3(ix)(d) of the Order is not applicable.

(f) The company has not taken any funds from any entity or person on account of or to meet the obligations of its subsidiaries, associates and joint ventures. Accordingly, clause 3(ix)(e) of the Order is not applicable.

(g) The company has not raised any loans during the year on the pledge of securities held in its subsidiaries, joint ventures or associate companies. Accordingly, clause 3(ix)(f) of the Order is not applicable.

(x) (a) The Company has not raised moneys by way of initial public offer or further public offer (including debt

instruments) during the year. Accordingly, clause 3(x)(a) of the Order is not applicable.

(b) According to the information and explanations given to us and based on our examination of the records of the Company, the Company was under the Corporate Insolvency Resolution Process (CIRP). As per the resolution plan approved vide NCLT Order dated 19th December 2023, it has issued 30,000,000 equity shares amounting to Rs 30,00,00,000 to Mandal Vyapaar Private Limited and 16,66,667 equity shares amounting to Rs 1,66,66,670 to the Secured financial creditors on a preferential basis, in respect of which the Company is exempt from the compliance requirements of Sections 42 and 62 of the Act. The funds so raised have been utilised in accordance with the NCLT Order. Further, 16,66,667 equity shares amounting to ^1,66,66,670 were issued to the erstwhile shareholders of MBECL pursuant to the Scheme.

(xi) (a) Based on our examination of the books and records of the Company and according to the information and

explanations given to us, no case of fraud by the Company or on the Company has been noticed or reported during the year.

(b) During the year, no report under sub-section (12) of section 143 of the Companies Act has been filed 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. Accordingly, clause 3(xii)(a), (b) and (c) of the Order is not applicable.

(xiii) According to the information and explanations given to us and based on our examination of the books and records, we report that the Company has complied with the provisions of Sections 177 and 188 of the Act, where applicable for transactions with the related parties and the details of related party transactions have been disclosed in the Standalone Financial Statements as required by the applicable accounting standards.

(xiv) (a) In our opinion and according to the information and explanations given to us and based on the examination of

records we considered necessary, the company has an internal audit system commensurate with the size and nature of its business, subject to the observation set out in point no. (b) herein below:

(b) Internal audit was conducted by the company during the financial year 2024-25 but the report issued by the internal auditors for the period is incomplete as it did not include the responses received from the management. Hence, the report is not considered by us during the course of our audit.

(xv) According to the information and explanations given to us and based on our examination of records, the Company has not entered into any non-cash transactions specified under section 192 of the Act with directors or persons connected with directors during the year. Accordingly, Clause 3(xv) of the Order is not applicable.

(xvi) The Company is not required to be registered under section 45- IA of the Reserve Bank ofIndia Act, 1934. Accordingly reporting under clause 3(xvi)(a),(b),(c) and (d) of the Order is not applicable.

(xvii) Based on the examination of records, the Company has incurred cash losses of Rs 1,71,311.96 Lakhs in the current financial year and Rs 87,927.97 Lakhs in the immediately preceding financial year.

(xviii) There has been no resignation of the Statutory Auditors of the Company during the year and accordingly clause 3 (xviii) of the Order 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 financial statements, our knowledge of the Management under Monitoring Committee and Management plans and based on our examination of the evidence supporting the assumptions, we are of the opinion that material uncertainty exists that may cast a significant doubt on the Companys ability to continue as a going concern.

We further state that our reporting is based on the facts up to the date of the audit report and we neither give any guarantee nor any assurance that all the liabilities falling due within a period of one year from the balance sheet date, will get discharged by the Company as and when they fall due.

(xx) Based on our examination of records of the Company and information and explanations given to us, the requirement of Section 135 of the Act is not applicable to the company. Hence, paragraph 3(xx) (a) and (xx) (b) of the Order is not applicable.

	For V. Singhi & Associates
	Chartered Accountants
	Firm Registration No. 311017E
	(Aniruddha Sengupta)
	Partner
Place: Kolkata	Membership No. 051371
Date: 22nd May 2025	UDIN: 25051371BMUIZS6564

Annexure B to the Independent Auditors Report

Referred to in Paragraph 2(f) on Other Legal and Regulatory Requirements of our Report to the members of McNally Bharat Engineering Company Limited of even date

Report on the Internal Financial Controls with reference to the aforesaid Standalone Financial Statements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

In connection with our audit of the Standalone Financial Statements of McNally Bharat Engineering Company Limited ("the Company") as of and for the year ended 31st March, 2025, we have audited the internal financial controls with reference to Standalone Financial Statements of the Company.

Managements Responsibility for Internal Financial Controls

The respective management under the Monitoring Committee of the Company is responsible for establishing and maintaining internal financial controls based on the internal financial controls with reference to financial statements 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 Act.

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 the ICAI and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls with reference to 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 financial statements were established and maintained and whether such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls over financial reporting 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 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 financial statements.

Meaning of Internal Financial Controls with reference to Standalone Financial Statements

A Companys internal financial controls over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A Companys internal financial controls 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 the Standalone 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 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 fraud or error may occur and not

be detected. Also, projections of any evaluation of the internal financial controls with reference to financial statements of future periods are subject to the risk that the internal financial controls with reference to financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Basis for Adverse Opinion

According to the information and explanations given to us and based on our audit, material weaknesses have been identified in the companys internal financial control over financial reporting with reference to financial statements as at 31st March, 2025:

(i) with respect to the Company not establishing an internal control framework relating to all components of internal control, consequently controls have not been designed to evaluate the appropriateness of the carrying amount of deferred tax, Impairment of trade receivable and other financial assets and recognition of gain on fair valuation of financial assets.

(ii) with respect to receivables appropriate provisioning did not operate effectively which resulted in non-ascertainment of adequate provisioning against the receivables.

(iii) with respect to loan given, the company did not have appropriate system to evaluate the credit worthiness of the party and recoverability of monies given including interest thereon and also ensuring due compliances with respect to provisions of the Companies Act, 2013 so that these are not considered to be prejudicial to the interests of the Company.

(iv) Certain individual details of debit and credit balances and reconciliation thereof with control balances of receivable/ payable, identification of MSME vendors, including supporting evidence for movement thereof as given in Note no. 31 of the financial statement were not available. IT Control systems and procedures need strengthening in terms of framework for Internal Control over financial reporting with reference to financial statements taking into account related controls and procedures as stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India so as to facilitate required reconciliations and provide details for documentation with respect to internal financial controls in the respective areas.

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

Adverse Opinion

In our opinion as well as to the best of our information and according to the explanation given to us, because of the effects of the material weakness as described above on the achievement of the objectives of the control criteria, the Company has not maintained adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were not operating effectively as at 31st March 2025 based on the criteria for internal financial control over financial reporting 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 ICAI.

We have considered the material weaknesses identified and reported in determining the nature, timing, and extent of audit tests applied in our audit of the financial statements of the company for the year ended 31st March 2025, and these material weaknesses have affected our opinion on the said financial statements of the company.

	For V. Singhi & Associates
	Chartered Accountants
	Firm Registration No. 311017E
	(Aniruddha Sengupta)
	Partner
Place: Kolkata	Membership No. 051371
Date: 22nd May 2025	UDIN: 25051371BMUIZS6564