Petron Engineering Construction Ltd Auditor Reports

To the Members of Petron Engineering Construction Limited Report on the Audit of the Financial Statements Qualified Opinion

We have audited the financial statements of Petron Engineering Construction Limited ("the Company"), which comprise the Balance Sheet as at 31st March 2019, the Statement of Profit and Loss (including Other Comprehensive Income), Statement of Changes in Equity and the Statement of Cash Flows for the year then ended and notes to the Financial Statements including a summary of the significant accounting policies and other explanatory information statements").

In our opinion and to the best of our information and according to the explanations given to us, except for the effects effects of our observations stated in "Basis for Qualified Opinion" paragraph below, the the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2019, and its loss (including Other Comprehensive income), changes in equity and its cash flows for the year ended on that date.

Basis for Qualified Opinion

Attention is drawn to:

i) Note No. 35 of the accompanying financial statements in respect of certain suspended / delayed contracts, as of 31st March 2019, trade receivable of Rs. 246 lakhs (net of mobilization advance and provisions of Rs. 11 lakhs) (trade receivable as of 31st March 2018 of Rs. 331 lakhs, net of mobilization advance and provisions of Rs. 3 lakhs) are doubtful of recovery confirmation/negotiatio. We are unable to comment about the status of amount receivables / payables and pending for on the reported loss for the year ended 31 as at that date. March2019and its corresponding impact on assets / liabilities This matter was also qualified in our audit report on the financial statements for the year ended 31 st March 2018.

ii) Note No. 33 of the accompanying financial statements regarding various claims submitted by the financial creditors {including claims filed by Arcelor Mittal India Private Limited (AMIPL) as stated in Note No. 34b)}, operational creditors, other creditors and employees of the Company to the Resolution Professional pursuant to the Insolvency and Bankruptcy Code, 2016 are currently under reconciliation. Pending reconciliation by the company, we are unable to comment on the consequential impact, if any, on the financial statements as at that date. This matter was also qualified in our audit report on the financial statements for the year ended 31 st March 2018.

iii) Note No. 37 of the accompanying financial statements regarding balances of certain trade receivable (including from related parties), unbilled revenue, trade payables (including MSME and interest payable thereon), secured loans (including Banks and NBFC), bank guarantees and unsecured loans (including from related parties), bank balances, current liabilities, other liabilities (including statutory dues and returns thereof) and loan & advances are subject to where we are unable to comment on the same and its corresponding impact on the financial statements as at that date. This matter was also qualified in our audit report on the financial statements for the year ended 31 st March 2018.

iv) Note No. 43 of the accompanying financial statements regarding certain expenses {including finance statements)}/ liabilities/employee benefit expenses have been accounted for as approved by the No.44offinancial management based on vouchers and for which contracts, supportingrecords and agreements could not be made available to the auditors for verification as the same are under process of compilation/updation. As per the management, expenses were incurred for business purposes only. Further, in respect of certain contract sites, the Company is in process of compiling / updating the records with respect to employees/labour, where we are unable to comment on the same and its corresponding impact on financial statements as at that date. This matter was also qualified in our audit report on the financial statements for the year ended 31 st March 2018.

v) Note No. 40 of the accompanying financial statements regarding non provision against carry over Deferred tax assets as on 31st March 2019 of Rs. 5,991.31 lakhs for the reasons stated in the said note that sufficient future taxable income will be available against which the aforesaid deferred tax asset (net) can be realized and our inability to comment thereon. This matter was also qualified in our audit report on the financial statements for the year ended 31 st March 2018.

vi) Note No. 46(a) of the accompanying financial statements regarding delays in payment of certain statutory dues and non- submission /delay in filing of certain statutory returns (including PF, ESIC, TDS. GST etc.), statutory dues written off and pending reconciliation between books and returns filed, where we are unable to comment on the impact on financial statements as at that date. This matter was also qualified in our audit report on the financial ended 31st March 2018.

vii) Note No. 48 of the accompanying financial statements regarding all the directors (including Woman Director) and Company secretary resigned by 31st March 2018. Further CFO also resigned during the year. Consequently, all committees of Directors (including Nomination and Remuneration Committee, Audit Committee etc.) were not present during the year in compliance to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended). Regarding non-availability of secretarial forms (including application for extension of AGM) and compliances thereof and our inability to comment on related party transactions, compliances related to appointment /resignation of Directors, compliances with respect to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended), Corporate Governance , submission of annual return with the appropriate authorities and other related regulations and our inability to comment thereon. This matter was also qualified in our audit report on the financial statements for the year ended 31 st March 2018.

viii) Note No. 41 of the accompanying financial statements, regarding pending adjustment of impact of physical verification of property, plant and equipment (PPE) in the financial books and reconciliation of the same with the books & records, where we are unable to comment on the same. In view of the management impact of final adjustment shall not be material over in our audit report on the result for the year. This matter was also qualified financial statements for the year ended 31 st March 2018.

ix) Note No. 39 of the accompanying financial statements, regarding liability /provision against performance guarantee to Rs. 3,634.80 lakhs have not been provided for in the books, encashed by the certain parties where the management is confident about settlement in its favour.

x) Note No. 36 of the accompanying financial statements, regarding certain pending/ delayed projects estimated costs completion are based upon management estimates and where the management is confident that there will not be material impact on completion of work in future.

xi) Note No. 3 & 8 of the accompanying financial statements, regarding no provision against overdue Debtors outstanding for more than six months amounting to Rs. 9,606 lakhs (net of mobilisation advances of Rs. 301 lakhs and excluding of unbilled revenue of Rs. 1,486 lakhs and excluding performance guarantee encashed by the certain parties) have been made, which are doubtful for recovery considering non confirmation of outstanding balances, short closure of running projects, encashment of performance bank guarantee and demand raised for counter claim /liquidated damages by the parties (customers).

xii) Note No. 42 of the accompanying financial statements, given the current operations of the Company and the Company being under CIR process, the future impairment, if any, in the realizability of the economic value of property, plant and equipment cannot be determined and our inability to comment thereon.

xiii) Note No. 34 (d) of the accompanying financial statements, we have been informed by the Resolution Professional that certain information including the minutes of the meetings of the Committee of Creditors and the outcome of certain specific/ routine procedures carried out as part of the IBC process could not be shared with anyone, other than the Committee of Creditors and NCLT. Accordingly, we are unable to comment on the possible financial, presentation and disclosure impacts, if any, that may arise if we have been provided access to review that information.

xiv) In view of our comments under para (i) to (xi) above and otherwise, the Companys internal control systems needs to be further strengthened to be made the same commensurate with the size of the company and nature of its business.

We conducted our audit in accordance with the Standards on Auditing (SAs) 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 Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.

Material Uncertainty related to Going Concern

As stated in Note No. 38 of the accompanying financial statements, regarding preparation of the financial statements on ‘going concern basis notwithstanding the fact that the Company is having negative net worth, continuous losses, lower level of operations effecting cash flows and going concern, short closure in certain projects, current liabilities are in excess of current assets and default in repayment of loan installments and payment of due interest, both on term loans and working capital. These conditions indicate the existence of material uncertainty that may cast significant doubt about the Companys ability to continue as a going concern. As company is under corporate insolvency resolution process (CIR process) (as stated in Note No. 32 of the accompanying financial statements), the Committee of Creditors (CoC) at its meeting have resolved that the Company may be liquidated under liquidation as a "Going Concern". In this regard the Resolution Professional has filed necessary application with the NCLT Court, Mumbai and final decision is pending before the NCLT. The management and the RP have continued its practice to prepare financial statements on going concern basis.

Emphasis of Matters

Attention is drawn to: i) Pending necessary approvals of the secured creditors and shareholders for the payment of managerial remuneration to the erstwhile Managing Director (ceased w.e.f. February 14, 2018) as stated in Note No. 45 of accompanying financial statements. ii) Revenue for the year includes Rs. 1,677 lakhs, as stated in Note No. 58 of accompanying financial statements in respect of certain contracts work /invoices which have not been certified by the parties/customers. Management is confident that there would not be any material variation on final billing / acceptance of work by the customers and amount is fully realisable. iii) In case of short closure of certain projects during the year, the management is confident that there shall not be any liability on account of liquidated damages or performance failure. iv) Margin money (Fixed Deposit) deposit by AMIPL in the name of Petron Engineering Construction Limited against outstanding bank guarantees shown under other bank balances, where company is not entitled to receive due interest and accordingly the company has not recognized accrued/due interest income (note no. 10).

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Except for the matters described in the Basis for Qualified Opinion section and Material Uncertainty section, we have determined that there are no other key audit matters to be communicated in our report.

Information Other than the Financial Statements and Auditors Report Thereon

The Companys management is responsible for the.The other information comprises the information included in the Annual report, but does not include the financial statements and our auditors report thereon. The Annual Report is expected to be made available to us after the date of this Auditors Report. Our opinion on the financial does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the inconsistent with the financial statements or our knowledge obtained in consider whether the other information the audit or otherwise appears to be materially misstated.

Responsibility of Management and Those Charged with Governance for the Financial Statements

The Companys Resolution Professional is responsible for the matters stated in Section 134(5) of preparation of these financial statements that give a true and fair view of the state of affairs, equity and cash flows of the Company accounting principles generally accepted in India, including the accordance with the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act. This responsibility also includes maintenance of adequate accounting records with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate implementation accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Resolution Professional is also responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the Audit of the Financial Statements

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

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

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and 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, 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 the Company has adequate internal financial controls system in place and the operating effectiveness of. controls such

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

• Conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Company to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Company to cease to continue concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation

We communicate with those charged with governance regarding, among other matters, the planned scope and timingof 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 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.

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

Report on Other Legal and Regulatory Requirements

1. 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 A" a statement on the matters specified 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 obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit except as stated in Note No. 43 & 34 (d ).

b) Except for the effect / possible effect of the matter described in the ‘Basis for Qualified Opinion paragraph 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 Balance Sheet, the Statement of Profit and Loss including other comprehensive income, the Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the books of account (read with our comment in (b) above.

d) In our opinion, except for the effect / possible effect of the matters described in ‘Basis for Qualified Opinion paragraph above, the aforesaid financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014

e) The matters described in ‘Basis for Qualified Opinion paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

f) As stated in Note No. 48, there are no directors in the Company as on 31st March 2019, and therefore our inability to comment thereon as required under the provisions of Section 143(3)(g) of the Companies Act, 2013 with respect to disqualifications of directors as on 31st March, 2019 from being appointed as a director in terms of Section (2) of the Act;

g) With respect to the adequacy of the internal financial controls over financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B". Our report expresses an modified opinion on the adequacy and operating effectiveness of the Companys internal financial controls over financial statements.

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial Refer Note No. 49 to the financial statements;

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

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company. i) The company has not paid / provided any managerial remuneration during the year accordingly provision of section 197 of the Act are not applicable on the company. (Refer Note No. 45 & 48 to the financial statements.)

For LODHA & CO.

Chartered Accountants

Firm Registration No.: 301051E

(Gaurav Lodha)

Partner

Membership No. 507462

Place : Mumbai

Dated : 28nd May, 2019

Annexure "A" referred to in paragraph 1 under the heading "Report on other legal and regulatory requirements" of our report of even date on the Financial Statements of PETRON ENGINEERING CONSTRUCTION LIMITED for the year ended 31st March 2019

1. (a) The Company has maintained proper records in respect of its fixed assets showing full particulars including quantitative details and situation of fixed assets except in respect of certain fixed assets where these records are in the process of compilation / updation in respect of location/ situation (read with note no. 41).

(b) The Company has a regular programme of Physical Verification of its Fixed assets by which fixed asset are verified in a phased manner over a period of three years. Currently with respect to certain sites, physical verification is in process and reconciliation with the book records will be done on completion of physical verification, as stated in note No. 41. Physical verification process needs to be further strengthened to be commensurate with the size of the company and nature of its assets.

(c) The title deeds of the immovable properties held in the name of the company has been pledged with the banks/ lenders, as explained for securing the borrowings and loan raised by the company, pending confirmation of the same from the bank / lenders, we are unable to comment under clause 3(i)(c) of the order.

2. The Company does not have any inventory and hence provisions of clause 3 (ii) of the order are not applicable.

3. According to the records and information and explanations made available to us, the Company has not granted any loans, secured or unsecured to companies, firms, LLP and other parties covered in the register maintained under section 189 of the Companies Act, 2013.

4. According to the information, explanations and representations provided by the management and based upon audit procedures performed, the Company has not granted any loans, investments, guarantees and security; accordingly, the provisions of Clause 3(iv) of the Order are not applicable.

5. According to the information and explanations given to us, the Company has not accepted any deposits from the public within the provisions of Section 73 to76 of the Act or any other relevant provisions of the Act and the rules framed there under. According to the information and explanations given to us, no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or other tribunal in this regard.

6. According to the information and explanation given to us, during the year, no production activity was undertaken by the company related to manufacture of Machinery and Mechanical appliances and parts thereof and execution of projects having application of Mechanical Engineering, Fabrication, Construction of cost records as prescribed in the rules made by the central government for the maintenance of cost records under section 148(1) of the act are not applicable.

7. (a) According to the records of the Company (read with note no. 46) and information and explanation made available the Company has delayed/ defaulted in depositing undisputed statutory dues including provident fund, employees state insurance, income-tax, service tax, Goods & Services Tax, Duty of Excise, Value Added Tax, cess and any other statutory dues (except duty of custom) with the appropriate authorities and undisputed statutory dues payable for a period of more than six months from the date they became payable as at 31st March, 2019 are Provident Fund Rs. 467.62 Lacs, Tax Deducted as Source Rs. 274.18 Lacs, Service Tax Rs. 681.36 Lacs, Goods and Services Tax Rs. 725.88 Lacs, Excise Duty Rs. 3.36 Lacs, VAT Rs. 62.75 Lacs. (This is to be read with the matters described in para (vi) under basis for Qualified Opinion paragraph)

(b) According to the records and information & explanations given to us, there are no dues in respect of Duty of Custom, Goods and Services Tax that have not been deposited with the appropriate authorities account of any dispute and the dues in respect of Income Tax, Sales Tax, Service Tax, Duty of Excise, Value added Tax, or Cess that have not been deposited with the appropriate authorities on account of dispute and the forum where the dispute is pending are given below:

Name of Statute	Nature of Dues	Period	Amount	Forum where dispute is pending
			(in Rs.)
Finance Act, 1994	Service Tax	2005-09	4,68,22,758	CESTAT, Ahmedabad
		2007-08	2,51,566	Deputy Commissioner (Appeals) Central Excise, Panipat
		2008-09	1,84,672	Commissioner (Appeals) of Central Excise, Haldia
Finance Act, 1994	Service Tax	2006-07	24,75,194	CESTAT, New Delhi
Central Excise Act, 1944	Excise Duty	2001-02	2,52,640	CESTAT, Navi Mumbai
Central Excise Act, 1944	Excise Duty	2004-05	2,19,156	CESTAT, Vadodara

 

Name of Statute	Nature of Dues		Period	Amount (in Rs.)	Forum where dispute is pending
Central Sales Tax, 1956	Central	Sales	2006-07	8,07,261	Joint Commissioner Sales Tax, West Bengal
	Tax
Bombay Sales Tax Act, 1959	Sales Tax		2004-05	1,69,822	Joint Commissioner of Sales Tax (Appeals)
West Bengal Value Added Tax Act, 2003	VAT		2009-10	1,74,83,088	Joint Commissioner of Sales Tax
Central Sales Tax (West Bengal) Rules, 1958	Central	Sales	2009-10	15,14,805	Joint Commissioner of Sales Tax
	Tax
West Bengal Value Added Tax Act, 2003	VAT		2010-11	1,66,94,017	Joint Commissioner of Sales Tax
Gujarat Value Added Tax Act, 2003	VAT		2012-13	1,45,52,760	Appeal Tribunal Ahmedabad
Central Sales Tax, 1956	CST		2012-13	5,26,48,259	Appeal Tribunal Ahmedabad
U.P. Value Added Tax Act, 2008	VAT		2010-11, 2011-12 & 2012-13	1,97,20,989	Addl. Commissioner Gr-2 (Appeal)-I Bareilly
U.P. Value Added Tax Act, 2008	Entry Tax		2010-11, 2011-12 & 2012-13	1,40,11,416	Addl. Commissioner Gr-2 (Appeal)-I Bareilly
Building and Other Construction Workers Welfare Cess Act, 1996	Labour Welfare Cess		2007-08	39,70,102	Bihar Building and Other Construction Workers Welfare Board
Orissa Value Added Tax, 2004	VAT		2009-14	4,27,69,428	Comm. Of Sales Tax, cuttack, Orissa
Orissa Value Added Tax, 2004	VAT		2002-03	2,44,655	Sales Tax Authority, Angul, Orissa

[This is to be read with Note No. 46 & 49]

8. In our opinion, on the basis of audit procedures and according to the information and explanations given to us, the company has defaulted in repayment of dues (including interest) to banks and financial institutions at various days during the year [maximum delay (no. of days) noticed was 517 Days]. The lender wise detail of overdue payable as on March 31, 2019, read with Note No. 34, 44 and 37 of the financial statements, is as follows:

			(Rs. in Lakhs)
Name of Banks / FIs	Default Period	Principal / Interest	For the year ended 31st March 2019
1 Karur Vysya Bank	Less than 469 days	Principal	325.00
Karur Vysya Bank	Less than 486 days	Interest	19.34
Mahindra & Mahindra Financial Services Ltd	Less than 331 days	Principal & Interest	8.62
Axis Bank	Less than 518 Days	Principal & Interest	2330.46

9. On the basis of information and explanation given to us, no moneys have been raised during the year by way of initial public offer or further public offer (including debt instruments) and term loans. Accordingly, the provisions of Clauses 3(ix) of the Order are not applicable.

10. Based on the audit procedure performed and on the basis of information and explanations provided by the management, no material fraud by the Company and on the Company by its officersor employees, (this is to be read with note no. 37, 41 & 43) has been noticed or reported during the course of the audit.

11. On the basis of records and information and explanations made available and based on our examination of the records of the company, no managerial remuneration (covered by the provision of Section 197 of the Companies Act 2013) has been paid or provided during the year. Accordingly, paragraph 3(xi) of the Order is not applicable.

12. In our opinion and according to the information and explanations given to us, the Company is not a nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.

13. As per the information and explanations and records made available by the management of the Company and audit procedure performed, for the related parties transactions entered during the year, the Company has complied with the provisions of Section 177 and 188 of the Act, where applicable. As explained and as per records / details the related parties transactions have been disclosed as per the applicable Accounting Standards. (this is to be read with note no. 48 and 56) 14. According to the information and explanations given to us, the Company has not made any preferential allotment or private placement of shares or fully / partly convertible debentures during the year in terms of provisions of Section 42 of the Act.

15. On the basis of records made available to us and according to information and explanations given to us, the Company has not entered into non-cash transactions with the directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.

16. The company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934, as the provision of section is not applicable to the company.

For LODHA & CO.

Chartered Accountants

Firm Registration No.: 301051E

(Gaurav Lodha)

Partner

Membership No. 507462

Place : Mumbai

Dated : 28nd May, 2019

ANNEXURE ‘B TO THE INDEPENDENT AUDITORS REPORT

(Refer to in paragraph 2 (g) under ‘Report on Other Legal and Regulatory Requirements section of our report of even date) Report on the Internal Financial Controls overFinancialReportingunder Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls over financial reporting of Company") as of March 31,2019 financial statements of the Company for the year ended conjunction with our audit of the on that date.

Managements Responsibility for Internal Financial Controls

The Companys management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI).These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the adherence to Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") issued by the ICAI and the Standards on Auditing prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

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

Companys internal financial controls system over financial reporting

Meaning of Internal Financial Controls Over Financial Reporting

A companys internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with 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 Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, risk over projections become inadequate because of changes in conditions, or that the that the internal financial control over financial degree of compliance with the policies or procedures may deteriorate.

Qualified Opinion

According to the information and explanations given to us and based on our audit, the following material weaknesses has identified in the operating effectiveness of the Companys internal financial controls over financial reporting as at 31st March 2019:

i) In respect of certain suspended / delayed contracts, as of 31st March 2019, trade receivable of Rs. 246 lakhs (net of mobilization advance and provisions of Rs. 11 lakhs) (trade receivable as of 31st March 2018 of Rs. 331 lakhs, net of doubtful of recovery and pending for confirmation/negotiation mobilizationadvanceandprovisionsofRs.3lakhs)are We are unable to comment about the status of amount receivables / payables on the reported loss for the year ended 31st March 2019 and its corresponding impact on assets / liabilities as at that date. (Read with 35) Note No.

ii) Regarding balances of certain trade receivable (including from related parties), unbilled revenue, trade payables (including MSME and interest payable thereon), secured loans (including Banks and NBFC), bank guarantees and unsecured loans (including from related parties),bank balances, current liabilities, thereof) and loan & advances are subject to confirmation/ reconciliation. (Read with Note No. 37 & 49)

iii) Regarding certain expenses {including finance costs (refer note no. 44 of financial statements)}/ liabilities/employee benefit expenses have been accounted for as approved by the management based on vouchers and for which contracts, supporting records and agreements could not be made available to the auditors for verification as the same are under process of compilation/updation. As per the management, expenses were incurred for business purposes only. Further, in respect of certain contract sites, the Company is in process of compiling / updating the records with respect to employees/ labour. (Read with Note No. 43)

iv) Regarding delays in payment of certain statutory dues and non- submission /delay in filing of certain statutory returns (including PF, ESIC, TDS, GST etc.), statutory dues written off and pending reconciliation between books and returns filed. Presently due tax has been accounted for on best estimated basis as the reconciliation between the financial books and statutory returns filed are in process. {Read with Note(a)} No. 46

v) Regarding all the directors (including Woman Director) and Company secretary resigned by 31st March 2018. Further CFO also resigned during the year. Consequently, all committees of Directors (including Nomination and Remuneration Committee, Audit Committee etc.) were not present during the year in compliance to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended). Regarding non- availability of secretarial forms (including application for extension of AGM) and compliances thereof and our inability to comment on related party transactions, compliances related to appointment /resignation of Directors, compliances with Disclosure Requirements) Regulations, 2015 (as amended), Corporate Governance, respecttoSEBI(Listing submission of annual return with the appropriate authorities and other related regulations. (Read with Note No. 48)

vi) Regarding pending adjustment of impact of physical verification of property, plant and equipment (PPE) in the financial books and reconciliation of the same with the books & records, where we are unable to comment on the same. In view of then management impact of final adjustment shall not be material over result for the year. (Read with Note No. 41)

vii) Regarding various claims submitted by the financial creditors {including claims filed by Arcelor Mittal India Private Limited (AMIPL) as stated in note no. 34b)}, operational creditors, other creditors and employees of the Company to the Resolution Professional (RP) pursuant to the Insolvency and Bankruptcy Code, 2016 are currently under consideration/verification/ reconciliation. Pending completion of exercise of final verification / reconciliation and admission and claims by RP. (Read with Note No. 33)

viii) Regarding certain pending/ delayed projects estimated costs to completion are based upon where the management is confident that there will not be any material impact on completion of work in future. (Read with Note No. 36)

The matters reported in point (i) and (vi) were also qualified in our report on the financial

March 2018.

A ‘material weakness is a deficiency, or a combination of deficiencies, in internal financial financial reporting, such control over 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.

In our opinion, except for the effects / possible effects of the material weaknesses described above in (i) and (viii) under Qualified Opinion paragraph on the achievement of the objectives of the control criteria, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2019, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. determining the nature, timing, and extent of audit We have considered material weakness identified tests applied in our audit of the 31st March, 2019 financial statements of the Company and these material weaknesses affect our opinion on financial statements of the Company for the year ended 31st March 2019 [our Audit Report dated 28th May, 2019, which expressed an qualified opinion on those financial statements of the Company].

Emphasis of Matters

Attention is drawn to: -

Revenue for the year includes Rs. 1,677 lakhs in respect of certain contracts work /invoices which have not been certified by the parties/customers. Management is confident that there would not be any material variation on final billing / acceptance of work by the customers and amount is fully realizable. (Read with Note No. 60) Our opinion is not modified in respect of matter stated above

For LODHA & CO.

Chartered Accountants

Firm Registration No.: 301051E

(Gaurav Lodha)

Partner

Membership No. 507462

Place : Mumbai

Dated : 28nd May, 2019