Va Tech Wabag Ltd Auditor Reports

To

The members of

VA Tech Wabag Limited

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the accompanying standalone financial statements of VA Tech Wabag Limited (‘the Company), which comprise the Balance Sheet as at 31 March 2024, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flows and the Statement of Changes in Equity for the year ended on that date, and notes to the standalone financial statements, including a summary of material accounting policies and other explanatory information (hereinafter referred to as ‘the standalone financial statements).

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 (‘the Act) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with 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 31 March 2024, its profit and total comprehensive income, its cash flows and changes in equity for the year ended on that date.

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

Key audit matter description and principal audit procedures

Revenue recognition

Refer Notes 2.1, 13 and 23 in the standalone financial statements.

The Company recognises revenue and margin on the stage of completion based on the proportion of contract costs incurred relative to the estimated total costs of each contract (referred to as ‘percentage of completion method). The recognition of revenue and margin therefore is dependent on estimates in relation to the total costs on each contract. Cost contingencies may also be included in these estimates to take into account specific uncertainties within each contract. These cost estimates are reviewed by the Company on a regular basis during contract execution and adjusted where appropriate. There is significant judgement used by the management of the Company in estimating the amount of revenue and margin to be recognised by the Company and changes to these estimates could give rise to material variances, hence revenue recognition has been considered as a key audit matter.

Our procedures include the following:

Evaluate and test key controls in the management processes in relation to recognition of revenue and margin including:

- the preparation, review and authorisation of contract review sheets for contracts which contains the estimated total costs for the contracts including cost contingencies

 

Key audit matter description and principal audit procedures

- the project reviews that are undertaken by the Companys management

- the controls in relation to the accrual of cost towards materials and services

Recalculate revenue recognised under the percentage of completion method on a test basis

Evaluate the financial performance of contracts against budget / earlier year estimates and obtain reasons for significant variances thereto

Test the contract value, costs incurred to date including the costs accrued for work completed, total estimated contract costs for a sample of contracts selected based on factors such as value of contracts, material new contracts and contracts where significant risks have been identified by the management of the Company

Undertake site visits on a test basis to confirm our understanding of the risks and controls at site level

 

Dues from customers (unbilled) and Trade receivables

Refer Notes 2.1, 2.2, 2.3, 2.4, 6, 13 and 33 in the standalone financial statements

The Company measures revenue to be recognised based on the contract costs incurred till the reporting date over the total estimated costs for each contract. Such revenue recognised in excess of progress billing till the reporting date is presented as ‘Dues from customers which are yet to be billed to the customers. Such Dues from customers are accounted based on the contractual terms and managements assessment of recoverability from customers.

The management of the Company also assesses the recoverability of Trade receivables including those which have remained unsettled beyond contractual credit period using judgement and past collection trends in similar contracts and customers.

The management of the Company estimates and recognises allowance for expected credit losses on Trade receivables and Dues from customers which involves estimation of expected default and/or delay in the customers making payment as per the contractual terms and realisability of Dues from customers, considering the past trend and its assessment on the reporting date.

The valuation of Dues from customers and Trade receivables involves significant management judgement and estimates as stated above, and hence it has been considered as a key audit matter.

 

Our procedures include the following:

Evaluate managements processes and controls in respect of Dues from customers and Trade receivables for the following

- risk assessment pertaining to invoicing and recoverability

- assessment of the probability of default and delay

- assessment of the significant increases in credit risk, if any

Seek confirmation of balances from customers having significant outstanding balances as at the reporting date

Review the project progress, invoicing and collection history of customers with significant Dues from customers or

Trade receivables. Discuss with the project team to understand the managements assessment of risk associated with recoverability

Analyse the past trend and inquire into the reasonableness of expected credit loss allowance matrix developed by the management of the Company for estimating the allowance for Trade receivables and Due from Customers

Consider the subsequent events in assessing the recoverability of Dues from customers and Trade receivables as on reporting date

Consult legal counsel wherever necessary for legal disputes to assess the valuation of Trade receivables

Information other than the Standalone Financial Statements and Auditors Report thereon

The Board of Directors of the Company is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis, Boards Report including Annexures to Boards Report, Business Responsibility and Sustainability Report and Report on Corporate Governance, but does not include the standalone financial statements and our report thereon.

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

In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

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

The Board of Directors of the Company is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation and presentation of these standalone financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the Ind AS prescribed under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgements 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 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 and error.

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

Those Board of Directors are 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 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 the Standards 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 the Standards, we exercise professional judgment and maintain professional skepticism 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 and the operating effectiveness of such controls evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Company to cease to continue as a going concern evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation obtain sufficient appropriate audit evidence regarding the financial information of the Company and its joint operations to express an opinion on the standalone financial statements Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the standalone financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the standalone financial statements. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal 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 of India in terms of Section 143

(11) of the Act, we give in Annexure ‘A to this report, a statement on the matters specified in para 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

(b) in our opinion, proper books of accounts as required by law have been kept by the Company so far as it appears from our examination of those books except for the matters stated in paragrapRs 2

(i) (vi) below on reporting under Rule 11

(g) of the Companies (Audit and Auditors) Rules, 2014 (as amended)

(c) the Balance Sheet, the Statement of Profit and Loss including other comprehensive income, the Statement of Cash Flows and Statement of Changes in Equity dealt with by this report are in agreement with the books of account

(d) in our opinion, the aforesaid standalone financial statements comply with the Indian Accounting Standards prescribed under section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended

(e) on the basis of the written representations received from the directors as on 31 March 2024 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2024 from being appointed as a director in terms of Section 164 (2) of the Act

(f) the modifications relating to the maintenance of accounts and other matters connected therewith are as stated in the paragrapRs 2

(b) above on reporting under Section 143 (3)

(b) of the Act and paragrapRs 2

(i) (vi) below on reporting under Rule 11

(g) of the Companies (Audit and Auditors) Rules, 2014

(g) with respect to the adequacy of internal financial controls with reference to financial statements of the Company and the operative effectiveness of such controls, refer to our separate report in Annexure ‘B. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Companys internal financial controls with reference to the standalone financial statements

(h) with respect to other matters to be included in the Auditors Report in accordance with the requirements of Section 197

(16) of the Act, as amended, in our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act

(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. the Company, as detailed in Note 41 to the standalone financial statements, has disclosed the impact of pending litigations on its financial position; i

i. the foreseeable losses on the long-term contracts of the Company are not material; ii

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

i v. a) the management has represented that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entity (‘Intermediaries), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (‘Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; b) the management has represented, that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity (‘Funding Parties), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (‘Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; c) based on the audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause

(i) and

(ii) of Rule 11

(e), as provided under

(a) and

(b) above, contain any material misstatement.

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

i. the reporting under Rule 11

(g) of the Companies (Audit and Auditors) Rules, 2014 is applicable from

1 April 2023. 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 (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software except for an accounting software where the audit trail (edit log) facility was not operated for part of the year for all relevant transactions recorded in that software. Further, during the course of our audit, we did not come across any instance of audit trail feature being tampered with, when it was operated. Also, refer to managements assessment of audit trail in note 45(f) of the standalone financial statements.

Annexure A to the Independent Auditors Report

With reference to paragrapRs 1 under ‘Report on Other Legal and Regulatory Requirements section of our report to the members of the Company of even date, we report the following: (i) (a) (A) the Company has maintained proper records showing full particulars, including quantitative details and situation of its property, plant and equipment and relevant details of right of use assets; (B) the Company has maintained proper records showing full particulars of intangible assets; (b) the Company has a regular programme of physical verification of its property, plant and equipment under which all property, plant and equipment are physically verified 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 property, plant and equipment. In accordance with this programme, certain property, plant and equipment were physically verified by the management during the year and no material discrepancies were noticed on such verification; (c) according to the information and explanations given to us and the records examined by us, we report that, the title deeds of all the immovable properties of land and buildings which are freehold and included under the head ‘Property, plant and equipment are held in the name of the Company; (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) no proceedings have been initiated during the year or are pending against the Company as at 31 March 2024 for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder; (ii) (a) in our opinion, the management of the Company has conducted physical verification of inventories at reasonable intervals during the year and the coverage and procedures of such verification by the management is appropriate. No material discrepancies between physical inventories and book records were noticed on such physical verification; (b) the Company has been sanctioned working capital limits in excess of Rupees Five crore, in aggregate, during the year, from banks on the basis of security of current assets and the quarterly returns or statements filed by the Company with such banks are in agreement with the books of account of the Company;

(iii) based on our audit procedures and according to the information and explanation given to us, (a) the Company has not provided advances in the nature of loans, or stood guarantee, or provided security to any other entity. The Company has granted unsecured loans to subsidiary company during the year.

(A) the aggregate amount of such loans given during the year is RS236 Million, and the balance outstanding is nil as at the balance sheet date since such loans were converted into investments in non-convertible debentures of the subsidiary company; (B) the Company has not provided loans to parties other than subsidiaries and associates.

(b) in our opinion, the investments made and loans given during the year are, prima facie, not prejudicial to the Companys interest; (c) in respect of loans provided during the year, the schedule of repayment of principal and payment of interest has been stipulated in the loan agreement and no repayments are due before its conversion into investments in non-convertible debentures of the subsidiary company during the year; (d) the loans provided by the Company were converted into investments during the year and hence reporting under paragrapRs 3(iii)(d) of the Order is not applicable to the Company; (e) The loans granted by the Company during the year has been converted into investments in non-convertible debentures of the subsidiary company before it has fallen due; (f) The Company has not granted any loans either repayable on demand or without specifying any terms or period of repayment.

(iv) according to the information and explanations given to us, the Company has not advanced any loan, made any investment, given any guarantee or provided any security to which the provisions of Sections 185 and 186 of the Companies Act, 2013 are applicable. Accordingly, reporting on paragrapRs 3 (iv) of the Order does not arise; (v) according to the information and explanations given to us, the Company has not accepted any deposits from public during the year and does not have any unclaimed deposits as at 31 March 2024. Accordingly, reporting under paragrapRs 3(v) of the Order does not arise;

(vi) the Central Government has specified maintenance of cost records under section 148

(1) of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 (as amended) for the operations of the Company. We have broadly reviewed the books of account maintained by the Company in respect of Companys services and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete

(vii) (a) according to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company has been generally regular in depositing undisputed statutory dues including goods and services tax, provident fund, employees state insurance, income-tax, duty of customs, professional tax, cess and any other material statutory dues applicable to the Company during the year with appropriate authorities. According to the information and explanations given to us, there were no undisputed amounts payable in respect of goods and services tax, provident fund, employees state insurance, income-tax, duty of customs, professional tax, cess and any other material statutory dues outstanding as at 31 March 2024 for a period of more than six months from the date they became payable;

(b) according to the information and explanations given to us and the records of the Company examined by us, the particulars of income-tax, sales tax, service tax, value added tax, customs duty and goods and service tax as at 31 March 2024 which have not been deposited with statutory authorities on account of a dispute pending are as under:

Name of the statute	Nature of disputed dues	Amount involved in dispute (Rs. in Millions)	Unpaid disputed amount (Rs. in Millions)	Period to which amount relates	Forum where disputes are pending
Rajasthan Sales Tax Act, 1994	Tax & Penalty	0.89	0.89	2003-04, 2009-10 & 2010-11	Rajasthan High Court
Rajasthan Value Added Tax Act, 2003	Tax & Penalty	3.31	3.31	2007-08 & 2008-09	Rajasthan High Court
Karnataka Value Added Tax Act, 2003	Tax & Penalty	2.41	2.41	2007-08 to 2010-11	Various Forums
Kerala Value Added Tax Act, 2003	Tax & Penalty	9.06	6.19	2008-09, 2010-11 & 2011-12	Appellate Tribunal
Odisha Value Added Tax Act, 2005	Tax & Penalty	88.53	81.45	2016-17 & 2017-18	Deputy Commissioner – Appeals
West Bengal Value Added Tax Act, 2003	Tax & Penalty	67.44	67.40	2007-08, 2009-10, 2011-12 to 2013-14	Appellate Tribunal; Senior Joint Commissioner
Gujarat Value Added Tax Act, 2003	Tax & Penalty	80.62	79.80	2010-11, 2016-17 & 2017-18	VAT Tribunal Deputy Commissioner (Appeals)
Delhi Value Added Tax Act, 2004	Tax & Penalty	4.61	4.61	2012-13	Additional Commissioner
Telangana Value Added Tax Act	Tax	23.23	17.42	2010-11	High Court
Maharashtra Value Added Tax Act, 2005	Tax & Penalty	7.58	7.26	2013-14	Deputy Commissioner Sales Tax (Nodal Division)
Central Sales Tax Act, 1956 read with Gujarat Value Added Tax Act, 2003	Tax & Penalty	114.32	114.03	2011-12, 2016-17, 2017-18	Deputy Commissioner (Appeals)
Central Sales Tax Act, 1956 read with West Bengal Value Added Tax Act, 2003	Tax & Penalty	63.21	63.21	2010-11 to 2012-13	West Bengal Appellate Tribunal Senior Joint Commissioner
Service tax under	Tax	1.46	1.46	Oct 2011 to Mar14	Central Excise and Service Tax
Finance Act, 1994					Appellate Tribunal, Chennai
Tamil Nadu SGST Act	Tax & Penalty	13.90	13.90	2017-18	High Court
Gujarat GST Act	Tax Interest & Penalty	43.15	42.23	FY 2019-20 & 2017-18	Sales Tax Officer – Jamnagar Deputy Commissioner - Division - 11
Assam GST Act	Tax & Interest	3.77	3.59	2017-18	Asst.Commssioner of State Tax Guwhati, A-10, Guwahati Zone
Karnataka Central Tax Act	Tax & Penalty	22.42	22.42	2017-18	Karnataka High Court
Chattisgarh GST Act	Tax Interest & Penalty	2.30	2.12	2019-20 & 2017-18	Assistant Commissioner of State Tax Raipur – 5 State Tax Officer - Raipur - 5
Haryana Value Added Tax	Tax	1.21	1.21	2010-11	High Court of Punjab and Haryana
Chattisgarh VAT entry Tax and CST	Tax	2.32	2.19	2013-14	Deputy Commissioner
Jharkhand GST Act	Tax Interest & Penalty	2.70	2.70	2022-23	Assistant Commissioner Bokaro
Karnataka GST Act	Tax Interest & Penalty	35.40	35.40	2018-19	Karnataka High Court
Maharastra GST Act	Tax Interest & Penalty	0.97	0.97	2018-19	Deputy Commissioner of State Tax
Telangana GST Act	Tax	2.82	2.54	2017-18	Assistant Commissioner Tarnaka -Secunderabad
Uttar Pradesh -	Tax Interest &	629.99	629.99	2017-18, 2018-19,	Deputy Commissioner – Noida
GST Act	Penalty			2021-22, 2022-23
West Bengal GST Act	Tax & Interest	6.32	6.18	2017-18 to 2022-23	Assistant Commissioner Salt Lake:24 Parganas
Commission of Customs	Tax	8	-	2014-15	Appellate Tribunal
Income Tax Act, 1961	Tax & Interest	11.49	11.49	AY 2010-11 & 2011-12	Income Tax Appellate Tribunal
Income Tax Act, 1961	Tax & Interest	121.92	121.92	AY 2017-18, AY 2018-	Commissioner of Income Tax
				19 AY 2020-21 to AY	(Appeals)
				2022-23

There are no dues in respect of duty of excise as at 31 March 2024 which have not been deposited with the statutory authorities on account of a dispute;

(viii) based on our audit procedures and as per the information and explanations given by the management of the Company, no amount has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961. Accordingly, reporting under paragrapRs 3(viii) of the Order is not applicable to the Company.

(ix) (a) according to the records of the Company examined by us and the information and explanations given to us, the Company has not defaulted in the repayment of loans or borrowings and in payment of interest to any bank during the year. With respect to debentures issued, there is no repayment due during the year and no default in payment of interest. The Company did not have any loans or borrowing from financial institutions or government during the year;

(b) the Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority;

(c) according to the information, explanation and representation given to us, term loans were applied for the purpose for which the loans were obtained;

(d) on an overall examination of the standalone financial statements of the Company, funds raised on short term basis have, prima facie, not been used during the year for long-term purposes by the Company;

(e) on an overall examination of the standalone financial statements of the Company, the Company has not taken any funds from any entity or person on account of or to meet the obligations of its subsidiaries;

(f) on an overall examination of the standalone financial statements of the Company, the Company has not raised any loans during the year on the pledge of securities held in its subsidiaries or associate companies;

(x) (a) the Company has not raised moneys by way of initial public offer or further public offer (including debt instruments) during the year and hence reporting under paragrapRs 3

(x)

(a) of the Order is not applicable;

(b) during the year, the Company has not made any preferential allotment or private placement of shares or convertible debentures (fully or partly or optionally) and hence reporting under paragrapRs 3

(x) (b) of the Order is not applicable;

(xi) (a) to the best of our knowledge and according to the information and explanations given to us, no material fraud by the Company and no material fraud on the Company by its officers or employees has been noticed or reported during the year;

(b) 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, during the year and up to the date of this report;

(c) we have taken into consideration the whistle-blower complaints received by the Company during the year, while determining the nature, timing and extent of our audit procedures;

(xii) the Company is not a Nidhi Company. Accordingly, reporting on paragrapRs 3

(xii) of the Order does not arise;

(xiii) in our opinion and according to the information and explanations given to us, the Company is in compliance with sections 177 and 188 of the Act, where applicable, for all transactions with related parties undertaken during the year and the details of such related party transactions have been disclosed in the standalone financial statements as required by the applicable Indian accounting standards;

(xiv) (a) in our opinion, the Company has an adequate internal audit system commensurate with the size and the nature of its business;

(b) we have considered, the internal audit reports of the Company issued till date for the year under audit.

(xv) according to the information and explanations given to us, the Company has not entered into any non-cash transactions with directors or persons connected with the directors during the year and hence provisions of Section 192 of the Act is not applicable to the Company;

(xvi)

(a) in our opinion, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. Hence, reporting under paragrapRs 3

(xvi) (a),

(b) and

(c) of the Order is not applicable;

(b) in our opinion, there is no core investment company within the Group (as defined in the Core Investment Companies (Reserve Bank) Directions, 2016) and accordingly reporting under paragrapRs 3

(xvi) (d) of the Order is not applicable;

(xvii)the Company has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year;

(xviii)there has been no resignation of the statutory auditors of the Company during the year;

(xix) on the basis of the financial ratios, ageing and expected dates of realisation of financial assets and payment of financial liabilities, other information accompanying the standalone financial statements and our knowledge of the Board of Directors and management plans and based on our examination of the evidence supporting the assumptions, nothing has come to our attention, which causes us to believe that any material uncertainty exists as on the date of the audit report indicating that Company is not capable of meeting its liabilities existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date. We, however, state that this is not an assurance as to the future viability of the Company. 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 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) the Company has fully spent the required amount towards Corporate Social Responsibility (‘CSR) and there are no unspent CSR amount for the year requiring a transfer to a fund specified in Schedule VII to the Act or special account in compliance with the provision of sub-section (6) of section 135 of the Act. Accordingly, reporting under paragrapRs 3(xx) of the Order is not applicable for the year.

Annexure B to the Independent Auditors Report

(Referred to in paragrapRs 2(g) under ‘Report on Other Legal and Regulatory Requirements section of our report to the members of VA Tech Wabag Limited of even date)

Independent Auditors Report on the Internal Financial Controls with reference to financial statements under clause (i) of sub-section 3 of Section 143 of the Companies Act, 2013 (‘the Act)

We have audited the internal financial controls with reference to financial statements of VA Tech Wabag Limited (‘the Company) as of 31 March 2024 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Managements Responsibility for Internal Financial Controls

The Board of Directors 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 (‘the Guidance Note) 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 orderly and efficient conduct of its business, including adherence to companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls with reference to financial statements based on our audit. Our audit is conducted in accordance with 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 with reference to financial statements was established and maintained and if such controls operated effectively in all material respects.

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

Meaning of Internal Financial Controls with reference to Financial Statements

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

Because of the inherent limitations of internal financial controls with reference to financial statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls with reference to financial statements to 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.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls with reference to financial statements and such internal financial controls with reference to financial statements were operating effectively as of 31 March 2024, 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.

for SHARP & TANNAN

Chartered Accountants

(Firms Registration No. 003792S)

V. Viswanathan

Partner

Membership No. 215565

UDIN: 24215565BKGRMQ2645

Place: Chennai

Date: 21 May 2024