Walchandnagar Industries Ltd Directors Report.

To the Members of

WALCHANDNAGAR INDUSTRIES LIMITED Report on the Audit of the Financial Statements Opinion

We have audited the accompanying financial statements of WALCHANDNAGAR INDUSTRIES LIMITED ("the Company") which comprise the Balance Sheet as at March 31,2021, the Statement of Profit and loss, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information in which are included the Returns for the year ended on that date audited by the independent auditor of the Companys division located in Ethiopia.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with accounting principles generally accepted in India, of the state of affairs of the Company as at March 31,2021, and loss, changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the 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 financial statements under the provisions of the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, whereof 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 financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

a. Expected credit loss on trade receivables is measured through loss allowance. The company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on provision matrix. This area required significant attention since there was a significant amount of management estimates.

We had detailed discussion with respective business heads about the method of estimates. We verified details of Liquidated Damages charged by clients and total sales for the period from 1st April 2016 to 31st March 2021 which were used by the management in their analyses of historical credit loss experience. We also verified the contract documents, correspondences with client pertaining to projects where specific loss provisioning was made. Management estimate is based on such forward information and historical data to derive division-wise provisioning values.

b. Calculation for percentage completion for revenue for projects operating over time under IND AS 115. This area has significant quantum of estimates in calculating Cost to Complete. This area required significant attention since there was a significant amount of estimates.

Management has prepared profitability statements for all the projects which are operating over time as per IND AS 115. We verified total contract values from Signed Contract with customers, total revenue billed with invoices submitted to clients. The company has adopted Input Method for arriving at percentage of completion method. We verified total Cost incurred for each project as per books of accounts, total Cost to Complete each project from Budget as reviewed by projects heads on every reporting date. It was verified that the cost for completing balance work is reviewed and revised wherever necessary based on current scenario and future expectations.

c. IND AS 115 requires variable consideration in form of Liquidated Damages to be recognized either by expected value or most likely value. The Company has adopted expected value by deferring revenue against liquidated damages of all the projects for which contractual delivery date have expired but contractual obligation not met. This area of calculation of deferred revenue due to implication of liquidated damages for the projects required significant auditor attention since there was a significant amount of estimation.

We had detailed discussion with respective business heads about the method of estimates of expected Liquidated Damages. List of projects for which contractual due date has expired and committed extent of work is not completed were reviewed. We verified details of Liquidated Damages charged by clients and total sales for the period from 1st April 2016 to 31st March 2021 which were used by the management in their analyses of historical experience. We also verified the contract documents, correspondence, if any with client pertaining to projects. Based on such estimation and past experience, expected Liquidated Damages were arrived at and adjusted from Revenue.

d. Balance confirmation of Trade receivables could not be received. Further, management has informed us to avoid call for balance confirmation in case of certain trade receivables due to the fact that they operate in sensitive areas such as nuclear, defense, aerospace and missiles wherein the customers follow confidentiality norms from national interest point of view.

We undertook alternative procedures to verify balances of certain trade receivables on sample basis. We examined correspondences after reporting date, certain sales transactions documentation near to year end and subsequent receipts from such party.

Information Other than the Financial Statements and Auditors Report Thereon

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

Our opinion on the 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 financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the 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.

Managements Responsibility for the Financial Statements

The Companys Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the accounting Standards specified under section 133 of the Act. This responsibility also includes the 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 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 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.

The Board of Directors are 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 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 controls.

• Obtain an understanding of internal financial controls 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 system in place and the operating effectiveness of such controls.

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

• Conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the 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 financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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.

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 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.

Emphasis of Matter

We draw attention to the following matters in Notes to Financial Statements:

a. Refer Note 54 which mentions about valuation of work- in-progress inventory of cancelled / put on hold orders amounting to Rs.2194.21 Lakhs on account of orders which have been cancelled/put on hold by various clients. The Company contends that this stock will either be liquidated or diverted to other projects without any loss arising there from.

Our report is not modified in respect of this matter.

Other Matter

We did not audit the financial statements / information of Ethiopia division included in the financial statements of the Company whose financial statements / financial information reflect total assets of Rs.1286.19 lakhs and total liabilities of Rs.1265.96 lakhs as at March 31, 2021 and the total revenue of NIL and total expenses of Rs.9.32 Lakhs for the year ended on that date. The financial statements / information of this division have been audited by the independent auditor whose report has been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of such division, is based solely on the report of such auditor.

Our opinion is not modified in respect of this matter.

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 Companies Act, 2013, we give in the Annexure A, a statement on the matters specified in 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.

b. In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books and proper returns adequate for the purpose of our audit have been received from overseas division not visited by us.

c. The reports on the accounts of the overseas Ethiopia division of the Company audited by independent auditor have been sent to us and have been properly dealt with by us in preparing this report.

d. The Balance Sheet, the Statement of Profit and loss, changes in equity and the Cash Flow Statement dealt with by this Report are in agreement with the books of account and with the returns received from the division not visited by us.

e. In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

f. On the basis of the written representations received from the directors as on March 31, 2021 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2021 from being appointed as a director in terms of Section 164 (2) of the Act.

g. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B".

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 statements - Refer Note 50 to the 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 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.

For Jayesh Sanghrajka & Co. LLP
Chartered Accountants
ICAI Firm Registration Number: 104184W/W100075
Ashish Sheth
Place: Mumbai Designated Partner Membership Number: 107162
Date: June 29, 2021 UDIN: 21107162AAAABF7083

ANNEXURE A TO THE INDEPENDENT AUDITORS REPORT

(Referred to in paragraph 1 under Report on Other Legal and Regulatory Requirements section of our report to the Members of WALCHANDNAGAR INDUSTRIES LIMITED of even date)

i. In respect of the Companys fixed assets:

(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) The Company has a program of verification to cover all the items of fixed assets in a phased manner which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the program, certain fixed assets were physically verified by the management during the year. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us, the records examined by us and based on the examination of the conveyance deeds provided to us, we report that, the title deeds, comprising all the immovable properties of land and buildings which are freehold, are held in the name of the Company as at the balance sheet date except in respect of land Survey Nos. 317/1B, 303 A/2 and 337, whose records are not available.

ii. The Management has conducted physical verification of inventory at reasonable intervals during year. According to the information and explanations given to us, no material discrepancies were noticed on such verification. Since our attendance was not possible due to lockdown restrictions, we have relied upon management representation of physical verification of inventory.

iii. The Company has not granted any secured or unsecured loans to companies, firms or other parties covered in the Register maintained under section 189 of the Companies Act, 2013. Therefore, clause 3 (iii) of the said Order is not applicable.

iv. In our opinion and according to the information and explanations given to us, the company doesnt have any loans, investments, guarantee or security to which the provisions of section 185 and 186 of the Companies Act 2013 apply.

v. The Company has not accepted any deposits during the year to which the provisions of section 73 to 76 of the Companies Act, 2013 and Companies (Acceptance of deposits) Rules, 2014 apply. According to the information and explanation given to us no order has been received from Company Law Board, National Company Law Tribunal or Reserve Bank of India or any court or tribunal by the Company.

vi. We have broadly reviewed the cost records maintained by the Company specified by the Central Government under section 148(1) of the Companies Act, 2013 and are of the opinion that, prima facie, the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

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

(a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees State Insurance, Income Tax, Goods and Service Tax, Customs Duty, and other material statutory dues applicable to it with the appropriate authorities

(b) There were no undisputed amounts payable in respect of Provident Fund, Employees State Insurance, Income Tax, Goods and Service Tax, Customs Duty and other material statutory dues in arrears as at March 31,2021 for a period of more than six months from the date they became payable.

(c) Details of dues of Income Tax, Sales Tax, Service Tax, Excise Duty and Value Added Tax which have not been deposited as at March 31,2021 on account of dispute are given below:

Sr. No Name of Statute Nature of Dues Amount (Rs.in Lakhs) Period to which amount relates Forum where the dispute is pending
1 Maharashtra Land Revenue Code NA Tax 16.18 1982 to 2003 Tahsildar, Indapur
NA Tax 58.58 1994 to 2003
2 Pune Municipal Corporation Municipal Taxes 99.02 2008-09 to 2012-13 Court of Small Causes, Pune
3 Central Sales Tax,1956 Central Sales Tax 159.83 2005-06 Sales Tax (Appellate Tribunal), Mumbai
4 Central Sales Tax,1956 Central Sales Tax 92.92 2011-12 Joint Commissioner of Sales Tax, (Appeals) Pune
5 Central Sales Tax,1956 Central Sales Tax 367.14 2013-14 Joint Commissioner of Sales Tax, (Appeals) Pune
6 Central Sales Tax,1956 Central Sales Tax 224.93 2014-15 Joint Commissioner of Sales Tax, (Appeals) Pune.
7 Central Sales Tax,1956 Central Sales Tax 80.81 2015-16 Joint Commissioner of Sales Tax, (Appeals) Pune.
8 Central Sales Tax,1956 Central Sales Tax 104.86 FY 2016-17 Deputy Commissioner of Sales Tax, Pune.
9 Central Sales Tax,1956 Central Sales Tax 279.53 FY 2017-18 Deputy Commissioner of Sales Tax, Pune.
10 Customs Act,1962 Customs Duty 64.50 July,2008 Honble High Court, Madras
11 Service Tax Service Tax 362.65 2006 to 2010 CESTAT, Kolkata
12 Service Tax Service Tax & Penalty 1334.66 March 2013 to December 2015 CESTAT, Mumbai
13 Andhra Pradesh General Sales Tax Act, 1957 Value Added Tax 100.2 June 2014 to March 2016 Additional Commissioner (Appeal), Vijayawada
14 APGST Act SGST and CGST 348.17 July 2017 to June 2018 Additional Commissioner (Appeal), Vijayawada
15 Andhra Pradesh General Sales Tax Act, 1957 Value Added Tax 313.66 2011 Honble High Court, Hyderabad
16 The Employees Provident Funds and Miscellaneous Provisions Act, 1952 Employee Provident Fund 50.68 2006-07 Honble High Court, Mumbai

viii. To the best of our knowledge and according to the information and explanations given to us, the Company has defaulted in repayment of loans from financial institutions and dues from debenture holders. Details of defaults are as follows:

Name of Lender Nature of Borrowing Amount of default (including Interest) Period of default (in days)
KKR India Financial Services Pvt Ltd Corporate Loan 19,14,57,331 1
KKR India Debt Opportunity Fund II Non Convertible Debenture 6,84,01,018 1

ix. The company has not raised money by way of Initial Public Offer or further public offer (including debt instruments) during the year. In respect of term loans taken by the Company, in our opinion and according to the information and explanations given to us, the same have been applied for the purposes for which they were raised.

x. To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company or no material fraud on the Company by its officers or employees has been noticed or reported during the year.

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

xii. The Company is not a Nidhi Company and hence reporting under clause 3 (xii) of the Order is not applicable to the Company.

xiii. In our opinion and according to the information and explanations given to us, the Company is in compliance with Section 177 and 188 of the Companies Act, 2013 where applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the financial statements as required by the applicable accounting standards.

xiv. During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly paid convertible debentures and hence reporting under clause 3 (xiv) of the Order is not applicable to the Company.

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

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

For Jayesh Sanghrajka & Co. LLP
Chartered Accountants
ICAI Firm Registration Number: 104184W/W100075
Ashish Sheth
Place: Mumbai Designated Partner Membership Number: 107162
Date: June 29, 2021 UDIN: 21107162AAAABF7083

ANNEXURE "B" TO THE INDEPENDENT AUDITORS REPORT

(Referred to in paragraph 1(f) under Report on Other Legal and Regulatory Requirements section of our report to the Members of WALCHANDNAGAR INDUSTRIES LIMITED of even date) Report on the Internal Financial Controls Over Financial Reporting under 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 WALCHANDNAGAR INDUSTRIES LIMITED ("the Company") as of March 31, 2021 in conjunction with our audit of the 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 control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, 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 internal financial controls over financial reporting of the Company 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 Institute of Chartered Accountants of India 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 requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

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

Limitations of Internal Financial Controls over Financial Reporting

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

Opinion

In our opinion, 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 system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2021, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For Jayesh Sanghrajka & Co. LLP
Chartered Accountants
ICAI Firm Registration Number: 104184W/W100075
Ashish Sheth
Place: Mumbai Designated Partner Membership Number: 107162
Date: June 29, 2021 UDIN: 21107162AAAABF7083