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Patel Engineering Ltd.

BSE: 531120 Sector: Infrastructure
NSE: PATELENG ISIN Code: INE244B01030
BSE 00:00 | 24 Apr 2020 Patel Engineering Ltd
NSE 05:30 | 01 Jan 1970 Patel Engineering Ltd

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OPEN 12.29
PREVIOUS CLOSE 12.97
VOLUME 18371
52-Week high 21.90
52-Week low 7.22
P/E 4.51
Mkt Cap.(Rs cr) 505
Buy Price 12.30
Buy Qty 1.00
Sell Price 13.75
Sell Qty 1.00
OPEN 12.29
CLOSE 12.97
VOLUME 18371
52-Week high 21.90
52-Week low 7.22
P/E 4.51
Mkt Cap.(Rs cr) 505
Buy Price 12.30
Buy Qty 1.00
Sell Price 13.75
Sell Qty 1.00

Patel Engineering Ltd. (PATELENG) - Auditors Report


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Company auditors report

TO THE MEMBERS OF PATEL ENGINEERING LIMITED

REPORT ON THE STANDALONE IND AS FINANCIAL STATEMENTS

Opinion

We have audited the accompanying Standalone Ind AS financial statementsof Patel Engineering Limited ("the Company") which comprises the Balance Sheetas at March 31 2019 the Statement of Profit and Loss (including other comprehensiveIncome) the Statement of Change in Equity and the Cash Flows for the year then ended andnotes to the financial statements including a summary of the significant accountingpolicies other explanatory information. These also includes financials of the Jointoperations and Real Estate Division Branch of the company for the year ended on that dateaudited by the branch auditor of the Company's branch located at Mumbai (hereinafterreferred to as "the Standalone Ind AS financial statements").

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid Standalone Ind AS financial statements give theinformation required by the Companies Act2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2019and its Profit (including other comprehensive income) its cash flows and the changes inequity 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 Act. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of theStandalone Ind AS financial statements under the provisions of the Act and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the Standalone Ind AS financial statements ofthe current period. These matters were addressed in the context of our audit of theStandalone Ind AS financial statements as a whole and in forming our opinion thereon andwe do not provide a separate opinion on these matters. We have determined the mattersdescribed below to be the key audit matters to be communicated in our report

Sr. No. Key Audit Matter Auditor's Response
1 Accuracy of recognition measurement presentation and disclosures of revenues and other related balances in view of adoption of Ind AS 115 "Revenue from Contracts with Customers" (new revenue accounting standard) Principal Audit Procedures
Our audit process included to identify the impact of adoption of the new revenue accounting standard.
The application of the new revenue accounting standard involves certain key judgements relating to identification of distinct performance obligations determination of transaction price of the identified performance obligations the appropriateness of the basis used to measure revenue recognized over a period. Additionally new revenue accounting standard contains disclosures which involves collation of information in respect of disaggregated revenue and periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date. Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows:
Refer Notes 1.j and 25 to the Standalone Financial Statements. • Evaluated the design of internal controls relating to implementation of the new revenue accounting standard.
• Selected a sample of continuing and new contracts and tested the operating effectiveness of the internal control relating to identification of the distinct performance obligations and determination of transaction price. We carried out a combination of procedures involving enquiry and observation performance and inspection of evidence in respect of operation of these controls.
• Tested the relevant information technology systems' access and change management controls relating to contracts and related information used in recording and disclosing revenue in accordance with the new revenue accounting standard
• Selected a sample of continuing and new contracts and performed the following procedures:
• Read analyzed and identified the distinct performance obligations in these contracts.
• Compared these performance obligations with that identified and recorded by the Company.
• Considered the terms of the contracts to determine the transaction price including any variable consideration to verify the transaction price used to compute revenue and to test the basis of estimation
• Samples in respect of revenue recorded for time and material contracts were tested using a combination customer acceptances subsequent invoicing and historical trend of collections and disputes.
• Performed analytical procedures for reasonableness of revenues disclosed.

2

Accounting of contract work-in-progress for engineering construction projects

Principal Audit Procedures

Our audit procedures included the following:

The company recognized contract revenue and contract costs from contract work-in-progress for engineering construction projects by reference to the stage of completion of the contract activ'ty at the end of each reporting period. The stage of completion is measured by reference to work performed. The accounting for such engineering construction projects is complex due to high level of estimation in determining the costs to complete. This is due to the nature of the operations which may be impacted by the technological complexity of projects the precision of cost estimation during the budgeting process and the actual progress of each project during the financial year. Accordingly the accounting of contract work-in progress for engineering construction projects is identified as a key audit matter.

• Review of contract terms and conditions and the contractual sums and substantiated project revenues and costs incurred against underlying supporting documents.

• Perused customers and subcontractor correspondences and discussed the progress of the projects with project managers for any potential disputes variation order claims known technical issues or significant events that could impact the estimated contractual costs.

• Analyzed changes in estimates of costs from prior periods and assessed the consistency of these changes with progress of the projects during the year.

Refer Notes 1.i and 10 to the Standalone Financial Statements.

3

Investments and Loans/advances given to subsidiaries joint venture and associates

Principal Audit Procedures

Investments in subsidiaries joint venture and associates account for a significant percentage of the Company's net assets. Management assesses major investments annually whether there are indications of impairment and determines the recoverable amounts of the investments recognized on the balance sheet.

We gained an understanding of the process used by the Company to assess the valuation of Investments and Loans & advances analyze their recoverability and impairment tests performed by the management and verified that the criteria used to perform these tests are consistent with those established in applicable reporting standards.

Determining the recoverable value of these investments is mainly based on estimates of the value of future cash flows. The estimation of future cash flow requires significant judgement by Management including among other things expectations regarding income and future margins etc. Deviations in these estimates trigger significant variations in the calculations performed and therefore in the analysis of the recoverability of investments in group companies and associates.

Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows:

• Consideration and evaluation of company's analyses on its overall exposure to each of these subsidiaries and its potential of return by applying the future cash flows method;

Refer Notes 1.h and 3 to the Standalone Financial Statements

• Analytical procedures on the figures for receivables from these companies in the prev'ous and current years as well as after the end of the reporting period;

• Analyses and assessment of the appropriateness of the key judgements and assumptions used by company's management.

As a result of our analysis and test performed we consider that Management's conclusion concerning the absence of impairment of investments the estimates made and the information disclosed in the accompanying annual accounts are adequately supported and are consistent with the information currently available

4

Litigation matters

Principal Audit Procedures

The Company has certain significant open legal proceedings under arbitration for various complex matters with the Clients and other parties continuing from earlier years which are as under:

Our audit procedures included the following:

• Assessing the procedures implemented by the Company to identify and gather the risks it is exposed to.

• Non acceptance of certain work by the client.

• Obtaining an understanding of the risk analyses performed by the Company with the relating supporting documentation and studying written statements from internal and external legal experts where applicable.

• Cost overrun in certain contracts.

• Reimbursement of the cost incurred by the company for the client.

Due to complexity involved in these litigation matters management's judgement regarding recognition and measurement of provisions for these legal proceedings is inherently uncertain and might change over time as the outcomes of the legal cases are determined.

• Discussion with the management on the development in these litigations during the year ended March 31 2019.

Obtaining representation letter from the management on the assessment of these matters as per SA 580 (revised) - Written representations.

Refer Notes 1.r 45 and 47 to the Standalone Financial Statements

5

IT Systems and control over financial reporting

Principal Audit Procedures

We identified IT systems and controls over financial reporting as a key audit matter for the Company because its financial accounting and reporting systems are fundamentally reliant on IT systems and IT controls to process significant transaction volumes specifically with respect to revenue material consumption and sub contract costs.

Our procedures included to the following:

• Assessment of the complexity of the environment through discussion with the head of It.

Automated accounting procedures and IT environment controls which include IT governance general IT controls over program development and Changes access to programs and data and IT operations IT application controls and interfaces between IT applications are required to be designed and to operate effectively to ensure accurate financial reporting.

• Assessment of the design and evaluation of the operating effectiveness of general IT controls over program development and changes access to programs and data and IT operations.

• Assessment of the design and evaluation of the operating effectiveness of IT application controls in the key processes impacting financial reporting of the Company.

Assessment of the operating effectiveness of controls relating to data transmission through the different IT systems to the financial reporting systems.

Information Other than the Standalone Financial Statements andAuditor's Report Thereon

The Company's Board of Directors is responsible for the preparation ofthe "Other Information". The Other Information comprises the informationincluded in the Management Discussion and Analysis Board's Report including Annexures toBoard's Report Business Responsibility Report Corporate Governance and Shareholder'sInformation but does not include the standalone financial statements and our auditor'sreport thereon. The Management Discussion and Analysis Board's Report including Annexuresto Board's Report Business Responsibility Report Corporate Governance and Shareholder'sInformation are expected to be made available to us after the date of this auditor'sreport.

Our opinion on the financial statements does not cover the OtherInformation and we will not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements ourresponsibility is to read the Other Information identified above when it becomes availableand in doing so consider whether the other information is materially inconsistent withthe financial statements or our knowledge obtained in the audit or otherwise appears tobe materially misstated.

As and when we receive and read the Other Information identified abovein the event we conclude that there is a material misstatement therein we willcommunicate the matter to those charged with governance in the manner required.

Management's Responsibility for the Standalone Ind AS FinancialStatements

The Company's Board of Directors is responsible for the matters statedin Section 134(5) of the Companies Act 2013 ("the Act") with respect to thepreparation of these Standalone Ind AS financial statements to give a true and fair viewof the state of affairs (financial position) Profit and Loss(financial performanceincluding other comprehensive income)cash flows and change in equity of the Company inaccordance with the accounting principles generally accepted in India including theaccounting standards specified under section 133 of the Act.

This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding of the assets of theCompany and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe Standalone Ind AS financial statements that give a true and fair view and are freefrom material misstatement whether due to fraud or error.

In preparing the financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

The Board of Directors are also responsible for overseeing thecompany's financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether thestandalone Ind AS financial statements as a whole are free from material misstatementwhether due to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these financial statements.

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

• Identify and assess the risks of material misstatement of thefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the company has adequate internal financial controls system in place and theoperating effectiveness of such controls.

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

• Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on thecompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the companyto cease to continue as a going concern.

• Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.

Emphasis of Matter We invite attention to:

a) As per Section 71 of Companies Act 2013 the Company has createdadequate Debenture Redemption Reserve for the Secured Redeemable Non-Convertible Debentureissued by the Company. However in terms of Section 71 read with Rule 18(7)(C) ofCompanies Share Capital and Debentures Rules 2014 the Company has not made the requireddeposit/investment to secure the repayment of debentures. Our opinion is not qualified inrespect of this matter.

b) The independent Branch Auditors of the Real Estate Division havewithout qualifying their audit report on the Standalone Ind AS financial statement for theyear ended March 31 2019 have drawn attention with respect to Note No. 46regardingCompany's investment and loans and advances in Waterfront Developers Limited (Mauritius)where notice dated 04th June 2015 was received from Government of Mauritiusfor the termination of Lease Agreement entered on 11th December 2009 with LesSalines Development Limited (a step down subsidiary of Waterfront). In this case theprocess of Arbitration has been initiated with the Government of Mauritius. Our report isnot modified with respect to above matter.

Other Matters

a) We did not audit the financials statements of a branch included inthe Standalone financial statements of the Company whose financial statement reflect totalassets of Rs 4609.93 million as at March 31 2019 and the total revenue of the Rs1722.88 million for the year ended on that date as considered in the standalonefinancial statement of this branch have been audited by the Branch Auditor whose reporthas been furnished to us and our opinion in so far as it relates to the amounts anddisclosures included in respect of branch is based solely on the report of such

Branch Auditor. Our report is not modified in respect of these matter.

b) The standalone financial results include the financial results of 9unincorporated joint operations which have not been audited by their auditors whosefinancial results reflect the Net Total Assets of Rs 1041.59 million as at March 312019 Company's Share in Total revenue after elimination is

' 1587.39 million Total Profit (net) after tax of Rs 28.42 millionand total comprehensive income (net) of Rs Nil for the year ended on that date asconsidered in these standalone financial results. The separate set of financials of thesejoint operations for the year ended March 31 2019 are prepared by the management inaccordance with accounting principle generally accepted in India including Ind AS. Ouropinion in so far it relates to the amounts and disclosure in respect of these jointoperations is solely based on the report of the management certified accounts. Our opinionis not modified in respect of this matter.

c) The standalone financial results also include the financial resultsof 5 unincorporated joint operations which have been audited by other auditors whosefinancial results reflect the Net Total Assets of Rs (33.89) million as at March 31 2019Company's Share in Total revenue after elimination is Rs 674.51 million Total Profit(net) after tax of Rs 18.45 million and total comprehensive income (net) of Rs Nil for theyear ended on that date as considered in these standalone financial results. The separateset of financials of these joint operations for the year ended March 31 2019 are inaccordance with accounting principles generally accepted in India including IndianAccounting Standards (Ind AS) and which have been audited for the year by the otherauditors under generally accepted auditing standards applicable in India.

Our opinion in so far it relates to the amounts and disclosure inrespect of these joint operations is solely based on the report of the other auditors. Ouropinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1) As required by 'the Companies (Auditor's Report) Order

2016 issued by the Central Government of India in terms of sub-section(11) of section 143 of the Act (hereinafter referred to as the "Order") and onthe basis of such checks of the books and records of the Company as we consideredappropriate and according to the information and explanations given to us we give in theAnnexure A a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit;

b) In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books and properreturns adequate for the purposes of our audit have been received from the branch notvisited by us;

c) The report on the accounts of the branch office of the companyaudited under section 143(8)of the Act by branch auditor have been sent to us and havebeen properly dealt with by us in preparing this report;

d) The Balance Sheet the statement of Profit and Loss including theStatement of Other Comprehensive Income the Cash Flow Statement and Statement of Changesin Equity dealt with by this report are in agreement with the books of account and withthe returns received from the branch not visited by us;

e) In our opinion the aforesaid Standalone Ind AS financial statementscomply with the Accounting Standards specified under Section 133 of the Act read withRule 7 of the Companies (Accounts) Rules 2014.

f) On the basis of the written representations received from thedirectors as on March 31 2019 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2019 from being appointed as a director in termsof Section 164 (2) of the Act;

g) With respect to the adequacy of the internal financial controls overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate report in "Annexure B" to this report;

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 inour opinion and to the best of our knowledge and belief and according to the informationand explanations given to us:

i. the Company has disclosed the impact of pending litigations as atMarch 31 2019 on its financial position in its Standalone Ind AS financial statements tothe extent determinable/ascertainable - Refer Note 47 to the Standalone Ind AS financialstatements;

ii. the Company has made provision as at March 312019 as requiredunder the applicable law or accounting standard for material foreseeable losses if anyon long term contract.

iii. There has been no delay in transferring amount required to betransferred to the Investor Education and Protection Fund by the Holding Company.

For T. P. Ostwal & Associates LLP
Chartered Accountants
(Registration No. 124444W/W100150)
Anil A. Mehta
Mumbai Partner
April 30 2019 Membership Number: 030529

ANNEXURE A TO INDEPENDENT AUDITORS' REPORT ON THE STANDALONE IND ASFINANCIAL STATEMENT OF PATEL ENGINEERING LIMITED

Referred to in paragraph lunder "Report on Other Legal andRegulatory requirement"section of our report of even date

i (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets.

(b) During the year fixed assets have been physically verified by themanagement at regular intervals and no material discrepancies were noticed on suchverification.

(c ) According to the information and explanations given to us by themanagement the title deeds of immovable properties included in property plant andequipment's/investment properties are held in the name of the Company except for Freeholdlands with gross block and net block of Rs 7.09millions.

ii As explained to us the Inventories were physically verified duringthe year by the Management at reasonable intervals and no material discrepancies werenoticed on physical verification.

iii According to information and explanation given to us the Companyhas not granted any loan secured or unsecured to companies firms Limited LiabilityPartnership firm or other parties covered in the register maintained under section 189 ofthe Companies Act 2013.Accordingly Paragraph 3 (iii)(a) 3 (iii)(b) and 3(iii)(c) of theOrder are not applicable to the Company.

iv In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of Section 185 and 186 of theCompanies Act 2013 to the extent applicable in respect of the loans investmentsguarantees and security.

v The Company has not accepted any deposits from the public within themeaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules2014 (as amended). Accordingly Paragraph 3(v) of the Order is not applicable to theCompany.

vi We have broadly reviewed the books of accounts maintained by thecompany pursuant to the Rules made by the Central Government for the maintenance of costrecords under sub section (1) of section 148 of the Companies Act in respect to company'sproducts/services and are of the opinion that prima facie the prescribed accounts andrecords have been made and maintained. However we have not made a detailed examination ofthe cost records.

vii (a) According to the information and explanations given to us andfor the records of the Company examined by us undisputed statutory dues includingProvident Fund Employees' State Insurance Income Tax Sales tax Service Tax duty ofCustom duty of excise Value Added Tax Cess Goods and Service Tax (GST) and othermaterial statutory duesas applicable have been generally regularly deposited with theappropriate authorities except for the Sales Tax Entry Tax Service Tax and MunicipalityTax amounting to Rs 198.14 million outstanding as at March 31 2019 for a period of morethan six months from the date they become payable.

(b) According to the information and explanations given to us and therecords of the Company examined by usthe disputed statutory dues that have not beendeposited on account of disputed matters pending before appropriate authorities are asunder:

Particulars Financial Year to which amount relates Amounts in Million Forum where dispute is pending
(Rs)
The Sales Tax Act 2003-2004 1.31 Appellate Tribunal
2005-2006 2006-2007 and 20122013 19.16 Appellate Tribunal Kolkata
2007-2008 to 2011-12 41.92 W.B.C.T. Appellate and Revisional Board Kolkata
2007-2008 10.69 Deputy Commissioner Appellate -III Mumbai
Entry Tax 2015-2016 6.95 Joint Commissioner of Commercial Tax (Appeals)-Central division Patna
The Finance Act 1994 2007-2008 to 2012-2013 323.20 Custom Excise and Service Tax Appellate Tribunal (CESTAT)
April 2003 to July 2006 2.54
October 2009 to September 2010 108.31
June 2007 to September 2009 651.88
April 2010-March 2013 623.22
April 2013 to March 2015 17.96
September 2015 71.52
The Income Tax Act1961 2003-04 to 2006-07 220.33 Hon'ble High Court
Particulars Financial Year to which amount relates Amounts in Million Forum where dispute is pending
(Rs)
2011-12 to 2016 -17 1059.27 Commissioner of Income Tax (Appeals)
2017-18 to 2018 - 19 27.99 Commissioner of Income Tax (Appeals) TDS
Provident fund 2008-09 2009-10 & 2010-11 7.14 Hon'ble High Court
Custom Duty 2011-2012 9.16 CESTAT Chennai
With respect to Independent Branch Patel Engineering Ltd (Real Estate Division)
The Finance Act 1994 November 2009 to June 2012 404.69 Custom Excise and Service Tax Appellate Tribunal
July 2012 to March 2014 41.49
April 2014 to March 2015 14.05
April 2015 to June 2017 54.14 Commissioner of Service Tax
Income Tax Act 1961 2012- 13 to 2013-14 6.10 Income Tax Appellate Tribunal
2013-14 to 2016-17 196.87 Commissioner of Income Tax (Appeals)
2015-2016 to 2016-17 38.82 The DirectorObjections Appeals and Dispute Resolutions
Dept. Mauritius

viii There are no loans or borrowings payable to government. TheCompany has not defaulted in repayment of loans or borrowings to any financial institutionor banks during the year. The Company has defaulted in repayment of following dues to thedebenture holders during the year. However these balances were paid / converted toOptionally Convertible Debentures before the balance sheet date.

Debenture Holders

Particulars Days Principal Amount in Interest
Million (Rs.)
LIC >90 Days - 473.27
GIC >90 Days 100 14.40

ix According to the information and explanations given to us the termloans have been applied for the purposes for which they were obtained. The Company did notraise any money by way of initial public offer or further public offer (including debtinstruments).

x Based upon the audit procedures performed for the purpose ofreporting the true and fair view of the Financial Statements and according to theinformation and explanations provided by the management we report that no fraud by theCompany or no material fraud on the Company by the officers and employees of the Companyhas been noticed or reported during the year.

xi According to the information and explanations given to us theCompany has paid / provided for managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of Section 197 read with Schedule V to the Act.

xii In our opinion and according the information and explanation givento us the Company is not a Nidhi Company. Accordingly paragraph 3(xii) of the Order isnot applicable to the Company.

xiii According to the information and explanation given to us and basedon our verification of the records of the Company and on the basis of review and approvalby the Board and Audit Committee the transactions with related parties are in compliancewith Section 177 and 188 of the Act where applicable and the details of such transactionshave been disclosed in the Standalone Ind AS financial statements as required by theapplicable accounting standards.

xiv During the year the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debenture exceptfor allotment of optionally convertible debentures during the year to lenders pursuant tothe Scheme for Sustainable Structuring of Stressed Assets (S4A Scheme) adopted by theJoint Lender's Forum as stated in notes 27(d) to the standalone financial statements. Inrespect of the same in our opinion the Company has complied with the requirements ofsection 42 of the Act and Rules framed there under.

xv According to the information and explanation given to us and basedon our examination of the records of the Company the Company has not entered into anynon-cash transactions with its directors or persons connected with them during the year.Accordingly paragraph 3(xv) of the Order is not applicable to the Company.

xvi The Company is not required to be registered under Section 45-IA ofthe Reserve Bank of India Act 1934. Accordingly paragraph 3(xvi) of the Order is notapplicable to the Company.

For T. P. Ostwal & Associates LLP
Chartered Accountants
(Registration No. 124444W/W100150)
Anil A. Mehta
Mumbai Partner
April 30 2019 Membership Number: 030529

ANNEXURE B TO INDEPENDENT AUDITORS' REPORT ON THE STANDALONE IND ASFINANCIAL STATEMENT OF PATEL ENGINEERING LIMITED

Referred to in paragraph 2(f) under "Report on Other Legal andRegulatory requirement" section of our report of even date

Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013.

1. We have audited the internal financial controls over financialreporting of Patel Engineering Limited ("the Company") as of March 312019 inconjunction with our audit of the Standalone Ind AS financial statements of the Companyfor the year ended on that date.

Management's Responsibility for Internal Financial Controls

2. The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting (the "Guidance Note")issued by the Institute of CharteredAccountants of India (ICAI). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.

Auditors' Responsibility

3. Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting based on our audit. We conducted ouraudit in accordance with the Guidance Note and the Standards on Auditing issued by ICAIand deemed to be prescribed under section 143(10) of the Act to the extent applicable toan audit of internal financial controls both issued by the ICAI. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsover financial reporting was established and maintained and if such controls operatedeffectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidenceabout the adequacy of the internal financial controls system over financial reporting andtheir operating effectiveness. Our audit of internal financial controls over financialreporting included obtaining an understanding of internal financial controls overfinancial reporting assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgment including theassessment of the risks of material misstatement of the Standalone Ind AS financialstatements whether due to fraud or error.

5. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

6. A company's internal financial control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of Standalone Ind AS financial statements for externalpurposes in accordance with generally accepted accounting principles. A company's internalfinancial control over financial reporting includes those policies and procedures that

i. Pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;

ii. Provide reasonable assurance that transactions are recorded asnecessary to permit preparation of Standalone Ind AS financial statements in accordancewith generally accepted accounting principles and that receipts and expenditures of thecompany are being made only in accordance with authorizations of management and directorsof the company; and

iii. Provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition use or disposition of the company's assets thatcould have a material effect on the Standalone Ind AS financial statements.

Inherent Limitations of Internal Financial Controls over

Financial Reporting

7. Because of the inherent limitations of internal financial controlsover financial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Alsoprojections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.

Opinion

8. In our opinion the Company has in all material respects anadequate internal financial controls system over financial reporting and such internalfinancial controls over financial reporting were operating effectively as at March 312019 based on the internal control over financial reporting criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India.

Other Matter

9. We did not audit the internal financial controls over financialreporting of the Independent Branch "Patel Engineering Limited (Real EstateDivision). The internal financial control over financial reporting of this Branch has beenaudited by their independent auditor whose report has been furnished to us and ouropinion in so far as it relates to the internal financial control over financial reportingincluded in respect to Branch is based solely on the report of their auditor.

Our opinion is not modified in respect of this matter.

For T. P. Ostwal & Associates LLP
Chartered Accountants
(Registration No. 124444W/W100150)
Anil A. Mehta
Mumbai Partner
April 30 2019 Membership Number: 030529


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