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A Oneindia Venture

Nifty 25,966.40 +0.58%

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Nifty 25,966.40 +0.58%

22k Gold ₹ 12,300 /gm

Sensex 84,929.36 +0.53%

Nifty 25,966.40 +0.58%

22k Gold ₹ 12,300 /gm

Auditor Report of Hindustan Construction Company Ltd.

Mar 31, 2025

To the Members of Hindustan Construction Company Limited

Report on the Audit of the Standalone Ind AS Financial

Statements

Qualified Opinion

1. We have audited the accompanying standalone Ind AS financial statements of Hindustan Construction Company Limited and its joint operations (together referred to as ''the Company'') (Refer Annexure A for the list of joint operations included in the standalone Ind AS financial statements), which comprise the standalone Balance Sheet as at March 31,2025, the standalone Statement

of Profit and Loss (including Other Comprehensive Income), the standalone Ind AS Statement of Cash Flow and the standalone Statement of Changes in Equity for the year then ended, and notes to the standalone Ind AS financial statements, including material accounting policy information and other explanatory information.

2. In our opinion and to the best of our information and according to the explanations given to us, and based on the consideration of the reports of the other auditors as referred to in paragraph 17 below, except for the possible effects of the matters described in the Basis for Qualified Opinion section of our report, the aforesaid standalone Ind AS 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 (''Ind AS'') specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2025, and its profit (including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.

Basis for Qualified Opinion

3. As stated in:

a) Note 32 to the standalone Ind AS financial statements, the Company''s investments in subsidiaries as at March 31, 2025 includes investment in HCC Infrastructure Company Limited (''HICL), its wholly owned subsidiary amounting to ''1294.33 crore, stated at cost. The subsidiary''s consolidated net worth as at March 31, 2025 is substantially eroded but, the said investment is considered fully recoverable by the management on the basis of factors stated in the aforesaid note including a valuation report obtained from an independent valuer.

However, in the absence of sufficient appropriate audit evidence to support the significant judgements and estimates applied by the management in the aforementioned valuation report, we are unable to comment upon the adjustments, if any, that are required to the carrying value of the aforesaid

investment and consequential impact, if any, on the accompanying standalone Ind AS financial statements.

b) Note 9.5 to the standalone Ind AS financial

statements, the Company has recognised net deferred tax assets amounting to ''204.90 crore as at March 31, 2025, which mainly includes deferred tax assets on carried forward unused tax losses and other taxable temporary differences on the basis of expected availability of future taxable profits for utilization of such deferred tax assets. However, in view of the history of losses recorded by the Company, we are unable to obtain sufficient appropriate audit evidence with respect to the projections for future taxable profits prepared by the management and therefore, are unable to comment on any adjustments that may be required to the carrying value of aforesaid net deferred tax assets as at March 31, 2025.

Audit report of the erstwhile Statutory auditor on the standalone audited financial results of the Company for the year ended March 31,2024 dated May 24, 2024 was also qualified in respect of the above matters.

4. We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act.

Our responsibilities under those standards are further described in the Auditor''s Responsibilities for the Audit

of the Standalone Ind AS 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 Ind AS financial statements under the provisions of the Act and the rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained together with the audit evidence obtained by the other auditors, in terms of their reports referred to in paragraph 17 of the Other Matter section below is sufficient and appropriate to provide a basis for our qualified opinion.

Emphasis of Matter

5. We draw attention to Note 33 to the standalone Ind AS financial statements, regarding the position relating to recoverability of unbilled work-in-progress (contract assets), current trade receivables and non-current trade receivables amounting to ''308.59 crore, ''214.27 crore and ''5752 crore, respectively, as at March 31, 2025, which represent receivables in respect of closed/ substantially closed/ suspended projects. The Company is at various stages of negotiation/ discussion with the clients or under arbitration/ litigation in respect of the aforementioned receivables. Considering the contractual tenability, progress of negotiations/ discussions/ arbitration/ litigations and

as legally advised in certain contentious matters, the management is confident of recovery of these receivables. Our opinion is not modified in respect of the above matter.

Key Audit Matters

6. Key audit matters are those matters that, in our professional judgment, and based on the consideration of the reports of the other auditors as referred to paragraph 17 below, were of most significance in our audit of the standalone Ind AS financial statements of the current period. These matters were addressed in the context of our audit with reference to the standalone Ind AS financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

7 In addition to the matters described in the Basis for Qualified Opinion, we have determined the matters described below to be the key audit matter to be communicated in our report.

Key audit matter	How our audit addressed the key audit matter
Recognition of contract revenue, margin and contract costs (Refer note 22 to the standalone Ind AS financial statements)
The Company''s revenue primarily arises from construction	Our audit procedures to address this key audit matter
contracts which, by its nature, is complex given the significant judgements involved in the assessment of	included, but were not limited to the following:
identification and satisfaction of performance obligations.	â¢ Obtained an understanding of the Company''s revenue recognition processes and evaluated the appropriateness
The Company recognizes contract revenue on the basis of	of the Company''s accounting policy for revenue
stage of completion determined based on the proportion of contract costs incurred till balance sheet date, relative to	recognition in accordance with Ind AS 115 - Revenue
the total estimated costs of the contract at completion. The	from contracts with customers;
recognition of contract revenue and the resultant profit/ loss	â¢ Evaluated the design and tested the operating
therefore rely on estimates in relation to forecasted revenue and contract costs. These contract estimates are reviewed by the management on a periodic basis. In doing so, the	effectiveness of key internal financial controls including those related to estimation of forecasted contract
management is required to exercise significant judgement	revenue and contracts costs;
in its assessment of the transaction price which may also include variable consideration pertaining to additional claims raised by the Company. The management is also required	â¢ For a sample of contracts, performed the following procedures:
to exercise judgement to assess the completeness and	- inspected the underlying documents such as
accuracy of forecasted costs to complete.	customer contract/ agreement and variation orders, if any, for the significant contract terms and
Changes in these estimates as contracts progress can result	conditions;
in material adjustments to revenue and margins. Considering	conditions;
high estimation uncertainty, complexities involved and material impact on the financial statement, this area has been considered a key audit matter in the current year audit.	- evaluated the identification of performance obligations as per the contract; - obtained an understanding of and evaluated the reasonableness of the assumptions applied in determining the forecasted revenue and cost to complete; - tested the existence and valuation of variable consideration with respect to the contractual terms and conditions and inspected the related correspondence with customers; - reviewed the legal and contracting experts'' note and/ or legal opinion from independent legal counsel obtained by the management, if any; - Tested the forecasted cost by obtaining executed purchase orders/ agreements/ relevant documents and evaluated the reasonableness of management judgements/ estimates; and

Key audit matter	How our audit addressed the key audit matter
	- For cost incurred to date, tested samples by verifying underlying supporting documents;
	- Performing analytical procedures including project profitability analysis for reasonableness of revenue recognized; and
	â¢ Evaluated the appropriateness and adequacy of the disclosures related to contract revenue and costs in the standalone Ind AS financial statements in accordance with the applicable accounting standards.

Information other than the Standalone Ind AS financial

statements and Auditor''s Report thereon

8. The Company''s Board of Directors are responsible for the other information. The other information comprises the information included in the Board Report, Report on Corporate Governance, Business Responsibility & Sustainability Report and Management Discussion and Analysis Report but does not include the standalone Ind AS financial statements and our auditor''s report thereon. The Board Report, Report on Corporate Governance, Business Responsibility & Sustainability Report and Management Discussion and Analysis Report are expected to be made available to us after the date of this auditor''s report.

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

In connection with our audit of the standalone Ind AS financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the standalone Ind AS financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

When we read the Board Report, Report on Corporate Governance, Business Responsibility & Sustainability Report and Management Discussion and Analysis Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

Responsibilities of Management and Those Charged with

Governance for the Standalone Ind AS financial statements

9. The accompanying standalone Ind AS financial statements have been approved by the Company''s Board of Directors. The Company''s Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect

to the preparation and presentation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS specified under section 133 of the Act 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 judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

10. In preparing the standalone Ind AS financial statements, the Board of Directors are responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

11. The Board of Directors are also responsible for overseeing the Company''s financial reporting process.

Auditor''s Responsibilities for the Audit of the Standalone

Ind AS financial statements

12. Our objectives are to obtain reasonable assurance about whether the standalone Ind AS financial statements as a whole are free from material misstatement, whether 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 audit conducted

in accordance with Standards on Auditing 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 Ind AS financial statements.

13. As part of an audit in accordance with Standards on Auditing, specified under section 143(10) of the Act we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

â¢ Identify and assess the risks of material misstatement of the standalone Ind AS 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;

â¢ 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 standalone Ind AS financial statements in place and the operating effectiveness of such controls;

â¢ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;

â¢ Conclude on the appropriateness of Board of Directors'' 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 Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the standalone Ind AS 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 auditor''s report. However, future events or conditions may cause the Company to cease to continue as a going concern;

â¢ Evaluate the overall presentation, structure and content of the standalone Ind AS financial statements, including the disclosures, and whether the standalone Ind AS financial statements represent the underlying transactions and events in a manner that achieves fair presentation; and

â¢ Obtain sufficient appropriate audit evidence regarding the standalone Ind AS financial statements of the Company and its joint operations or the business activities within the Company to express an opinion on the standalone Ind AS financial statements. We are responsible for the direction, supervision and performance of the audit of standalone Ind AS financial statements of the Company. For the joint operations included in the standalone Ind AS financial statements, which have been audited by the other auditors, such other auditors remain responsible for the direction, supervision and performance of the audits carried out by them. We remain solely responsible for our audit opinion.

14. 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.

15. 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.

16. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone Ind AS financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor''s 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.

Other Matter

17 We did not audit the Ind AS financial statements of eight (8) joint operations included in the standalone Ind AS financial statements of the Company whose Ind AS financial statements reflects Company''s share of total assets of ''146.24 crore as at March 31, 2025, and Company''s share of total revenues of ''322.10 crore, total net profit after tax of ''4.04 crore, and total comprehensive income of ''4.04 crore, and cash inflow (net) of ''14.64 crore for the year then ended, as considered in the standalone Ind AS financial statements. These Ind AS financial statements have been audited by the other auditors whose reports have been furnished to us by the management, and our opinion on the standalone Ind AS financial statements, in so far as it relates to the amounts and disclosures included in respect of these joint operations, and our report in terms of sub-section (3) of section 143 of the Act in so far as it relates to the aforesaid joint operations, is based solely on the report of such other auditors.

Further, of these joint operations, the financial statements of four (4) joint operations have been prepared in accordance with accounting principles generally accepted in India, including accounting standards issued by the ICAI. The Company''s management has converted the financial statements of such joint operations in accordance with Ind AS. Our opinion on the standalone Ind AS financial statements, in so far as it relates to the amounts and disclosures included in respect of such joint operations, is based on the report of other auditors and the conversion adjustments prepared by the management of the Company.

Our opinion above on the standalone Ind AS financial statements, and our report on other legal and regulatory requirements below, are not modified in respect of the above matters with respect to our reliance on the work done by and the reports of the other auditors.

Report on Other Legal and Regulatory Requirements

18. As required by section 197(16) of the Act based on our audit, and on the consideration of the reports of the other auditors as referred to in paragraph 17 above, we report that the Company has paid remuneration to its directors during the year in accordance with the provisions of and limits laid down under section 197 read with Schedule V to the Act.

19. As required by the Companies (Auditor''s Report) Order, 2020 (''the Order'') issued by the Central Government of India in terms of section 143(11) of the Act we give in the Annexure B a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

20. Further to our comments in Annexure B, as required by section 143(3) of the Act based on our audit, and on the consideration of the reports of the other auditors as referred to in paragraph 17 above, we report, to the extent applicable, that:

a) We have sought and except for the matters described in the Basis for Qualified Opinion section, obtained all the information and explanations which to the best

of our knowledge and belief were necessary for the purpose of our audit of the accompanying standalone Ind AS financial statements;

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, except for the possible effects of the matters described in the Basis for Qualified Opinion section and except for the matters stated in paragraph 20(i)(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 as amended.

c) The standalone Ind AS financial statements dealt with by this report are in agreement with the books of account;

d) Except for the possible effects of the matters described in the Basis for Qualified Opinion section, in our opinion, the aforesaid standalone Ind AS financial statements comply with Ind AS specified under section 133 of the Act;

e) The matters described in paragraph 3 under the Basis for Qualified Opinion section, in our opinion, may have an adverse effect on the functioning of the Company;

f) On the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2025 from being appointed as a director in terms of section 164(2) of the Act;

g) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in paragraph 3 of the Basis for Qualified

Opinion section, paragraph 20(b) above on reporting under section 143(3)(b) of the Act and paragraph 20(i)(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (as amended);

h) With respect to the adequacy of the internal financial controls with reference to standalone Ind AS financial statements of the Company as on March 31, 2025 and the operating effectiveness of such controls, refer to our separate report in Annexure C wherein we have expressed a modified opinion; and

i) With respect to the other matters to be included in the Auditor''s 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 and based on the consideration of the reports of the other auditors as referred to in paragraph 17 above:

i. The Company, as detailed in notes 6.1, 31, 32 and 33 to the standalone Ind AS financial statements, has disclosed the impact of pending litigations on its financial position as at March 31, 2025;

ii. The Company, as detailed in notes 19.1 and 19.2 to the standalone Ind AS financial statements, has made provision as at March 31,2025, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on longterm contracts including derivative contracts;

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company during the year ended March 31, 2025 except for the cases mentioned in the note 18.1 to the standalone Ind AS financial statements.

iv. a. The management has represented that,

to the best of its knowledge and belief, no funds have been advanced or loaned or invested (either from borrowed funds or securities premium or any other sources or kind of funds) by the Company to or in any person or entity, including foreign entities (''the 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 (''the Ultimate Beneficiaries'') or provide any guarantee, security or the like on behalf the Ultimate Beneficiaries;

b. The management has represented that, to the best of its knowledge and belief, other than as disclosed in note 44 to the standalone Ind AS financial statements, no funds have been received by the Company

from any person or entity, including foreign entities (''the 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; and

c. Based on such audit procedures performed as considered reasonable and appropriate

in the circumstances, nothing has come to our notice that has caused us to believe that the management representations under subclauses (a) and (b) above contain any material misstatement.

v. The Company has not declared or paid any dividend during the year ended March 31,2025.

vi. Based on our examination which included test checks, the company has used an accounting software for maintaining its books of account for the financial year ended March 31, 2025, 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. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with other than the consequential impact of the exception given below:

Nature of exception noted	Details of exception
Instances of accounting software for maintaining books of account for which the feature of recording audit trail (edit log) facility was not operated throughout the year for all relevant transactions recorded in the software	The audit trail feature was not enabled at the database level for accounting software to log any direct data changes for the period from April 1, 2024 to May 2, 2024, used for maintenance of all records by the Company.

Pursuant to the proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014, which came into effect from April 1, 2024, and in accordance with the requirements of Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014, we report that, based on our audit procedures and the information and explanations provided to us, the Company has duly maintained and preserved the audit trail, as per the applicable statutory requirements for record retention except for audit trail for database level where log any direct data changes for the period from April 1, 2024 to May 2, 2024 is not available with the company.

For Mukund M Chitale & Co

Chartered Accountants Firm''s Registration No.: 106655W

S. M. Chitale

Partner

Membership No.: 111383 UDIN: 25111383BMKWQO6932

Place: Mumbai Date: May 8, 2025

Mar 31, 2024

1. We have audited the accompanying standalone financial statements of Hindustan Construction Company Limited and its joint operations (together referred to as ''the Company'') (Refer Annexure I for the list of joint operations included in the standalone financial statements), which comprise the Balance Sheet as at 31 March 2024,

the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flow and the Statement of Changes in Equity for the year then ended, and notes to the standalone financial statements, including material accounting policy information and other explanatory information.

of the matters described in the Basis for Qualified Opinion section of our report, 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 (''Ind AS'') specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2024, and its profit (including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.

Basis for Qualified Opinion

3. As stated in:

a) Note 33 to the standalone financial statements, the Company''s investments in subsidiaries as at 31 March 2024 includes non-current investment in HCC Infrastructure Company Limited (''HICL), its wholly owned subsidiary amounting to '' 1,294.45 crore, stated at cost. The subsidiary''s consolidated net worth as at 31 March 2024 is substantially eroded but, the said investment is considered fully recoverable by the management on the basis of factors stated in the aforesaid note including a valuation report obtained from an independent valuer.

investment and consequential impact, if any, on the accompanying standalone financial statements.

b) Note 9.1 to the standalone financial statements, the Company has recognised net deferred tax assets amounting to '' 613.09 crore as at 31 March 2024, which mainly includes deferred tax assets on carried forward unused tax losses, unused tax credits and other taxable temporary differences on the basis of expected availability of future taxable profits for utilization of such deferred tax assets. However, in view of the history of losses recorded by the Company, we are unable to obtain sufficient appropriate audit evidence with respect to the projections for future taxable profits prepared by the management and therefore, are unable to comment on any adjustments that may be required to the carrying value of aforesaid net deferred tax assets as at 31 March 2024.

Our audit report dated 18 May 2023 on the standalone financial results of the Company for the year ended 31 March 2023 was also qualified in respect of the above matters.

4. We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act.

Our responsibilities under those standards are further described in the Auditor''s 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 financial statements under the provisions of the Act and the

rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained together with the audit evidence obtained by the other auditors, in terms of their reports referred to in paragraph 16 of the Other Matter section below is sufficient and appropriate to provide a basis for our qualified opinion.

Key Audit Matters

5. Key audit matters are those matters that, in our professional judgment, and based on the consideration of the reports

of the other auditors as referred to paragraph 16 below, 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 financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

6. In addition to the matters described in the Basis for Qualified Opinion, we have determined the matters described below to be the key audit matters to be communicated in our report.

Key audit matter		How our audit addressed the key audit matter
(a)	Assessment of control in Prolific Resolution Private Limited pursuant to the terms of investment agreement
	[Refer note 38A(iii) to the standalone financial statements]
	Pursuant to the successful implementation of the	Our audit procedures to address this key audit mater included
	resolution plan during the previous year, the Company	but were not limited to the following:
	novated specified debt of lenders to Prolific Resolution Private Limited (''PRPL), its wholly owned subsidiary,	â¢	Evaluated the design and tested the operating
	with the consideration being the assignment of		effectiveness of the key internal controls relating to
	beneficial interest in the specified arbitration awards		assessment of controlover investee companies.
	and claims in favor of PRPL. Further, PRPL also entered	â¢	Obtained and reviewed the terms of the Investment
	into a Service Agreement with the Company to avail		Agreement and Service Agreement to understand the
	services for efficient management and realisation of		rights of the parties with respect to directing the relevant
	monies due under the specified awards and claims.		activities of PRPL.
	During the year, the Company, PRPL and Jadeja Investment Management Private Limited (''JIPL) entered into an Investment Agreement pursuant to which PRPL has issued 52,040 equity shares to JIPL on preferential basis for a consideration of '' 25 crore resulting in dilution of interest of the Company in PRPL	â¢	Assessed the reasonability of judgements exercised by the management with respect to the assessment of control over relevant activities of PRPL in accordance with the criteria given under Ind AS 111, ''Joint Arrangements''; and
	and JIPL acquiring 51% share of PRPL.	â¢	Evaluated the appropriateness and adequacy of the
	Based on the evaluation of the terms of the Investment Agreement and Service Agreement, the Company and JIPL are assessed to have joint control over the relevant activities of PRPL and consequently, PRPL ceased to be a subsidiary of the Company.		disclosures in the standalone financial statements in accordance with the applicable accounting standards.



	Considering the complexities involved and significant management judgement in assessing control over relevant activities of PRPL, this transaction has been considered as a key audit matter for the current year audit.

Key audit matter		How our audit addressed the key audit matter
(b)	Recognition of contract revenue, margin and contract costs (Refer note 23 to the standalone financial
	statements)
	The Company''s revenue primarily arises from	Our audit procedures to address this key audit matter
	construction contracts which, by its nature, is	included, but were not limited to the following:
	complex given the significant judgements involved in the assessment of identification and satisfaction of performance obligations.	â¢	Obtained an understanding of the Company''s revenue recognition processes and evaluated the appropriateness of the Company''s accounting policy for revenue
	The Company recognizes contract revenue on the		recognition in accordance with Ind AS 115 - Revenue
	basis of stage of completion determined based on the proportion of contract costs incurred till balance sheet		from contracts with customers;
	date, to the total estimated costs of the contract at	â¢	Evaluated the design and tested the operating
	completion. The recognition of contract revenue and		effectiveness of key internal financial controls including
	the resultant profit/ loss therefore rely on estimates in		those related to estimation of forecasted contract
	relation to forecasted revenue and contract costs. These		revenue and contracts costs;
	contract estimates are reviewed by the management on a periodic basis. In doing so, the management is required to exercise significant judgement in its	_â¢	For a sample of contracts, performed the following procedures:
	assessment of the transaction price which may also		- inspected the underlying documents such as
	include variable consideration pertaining to additional		customer contract/ agreement and variation
	claims raised by the Company. The management is		orders, if any, for the significant contract terms and
	also required to exercise judgement to assess the		conditions;
	completeness and accuracy of forecasted costs to complete.		- evaluated the identification of performance
			obligations as per the contract;

Key audit matter How our audit addressed the key audit matter
Changes in these estimates as contracts progress can - obtained an understanding of and evaluated the result in material adjustments to revenue and margins. reasonableness of the assumptions applied in Considering high estimation uncertainty, complexities determining the forecasted revenue and cost to involved and material impact on the financial statement, complete; this area has been considered a key audit matter in the - tested the existence and valuation of variable ^{current year audit.} consideration with respect to the contractual terms and conditions and inspected the related correspondence with customers; - reviewed the legal and contracting experts'' note and/ or legal opinion from independent legal counsel obtained by the management, if any; - Tested the forecasted cost by obtaining executed purchase orders/ agreements/ relevant documents and evaluated the reasonableness of management judgements/ estimates; and - For cost incurred to date, tested samples by verifying underlying supporting documents; - Performing analytical procedures including project profitability analysis for reasonableness of revenue recognized; and â¢ Evaluated the appropriateness and adequacy of the disclosures related to contract revenue and costs in the standalone financial statements in accordance with the applicable accounting standards.

Key audit matter How our audit addressed the key audit matter
(c) Uncertainties relating to recoverability of unbilled work-in-progress (contract assets), current trade receivables and non-current trade receivables (Refer Note 34 of the standalone financial statements) The Company, as at 31 March 2024, has unbilled work- Our audit procedures included, but were not limited to, the in-progress (contract assets), current trade receivables following: and non-current trade receivables amounting to â¢ Obtained an understanding of the management process '' 528.81 crore, '' 245.54 crore and '' 57.52 crore, , . , . , , , . ,, . and evaluated the design and tested the effectiveness respectively, which represent various receivables in of key internal financial controls for assessing the respect of closed/ substantially closed/ suspended/ recoverability of unbilled work-in-progress (contract terminated projects. The Company is at various stages assets) and trade receivables. of negotiations/ discussions / arbitration/ litigation with the customers in respect of the aforementioned â¢ Assessed the reasonability of judgements exercised receivables. and estimates made by management with respect to the recoverability of these receivables and validated Management, based on contractual tenability, them with corroborating evidence; progress of the negotiations/ discussions/ arbitration/ litigation and relying on the legal opinion obtained â¢ Verified contractual arrangements to support from independent legal counsel in certain cases, management''s position on the tenability and has determined that no provision is required to be ^{recoverability of these receivables;} ^{recognised for the aforementioned receivables}. â¢ obtained an understanding of the current period Considering the materiality of the amounts involved, developments for respective receivables pending at uncertainty associated with the outcome of the various stages of negotiations/ discussions/ arbitration/ negotiations/ discussions/ arbitration/ litigation and litigation and corroborated the updates with relevant significance of management judgement involved in underlying documents. ^{assessing the recoverability}, ^{this was considered to} â¢ Reviewed the legal and contractual experts'' note and/ or ^{be a key audit matter in the audit of the standalone} legal opinion from independent legal counsel obtained ^{financial statements.} by the management with respect to certain contentious Further, the aforementioned matter as fully explained matters; and ^{in Note}34 to the standalone financial statements â¢ Evaluated the appropriateness and adequacy of the ^{is also considered fundamental to the user}''^s disclosures in the standalone financial statements in ^{understanding of the standalone financial statements}. accordance with the applicable accounting standards.

Information other than the Financial Statements and

Auditor''s Report thereon

7 The Company''s Board of Directors are responsible for the other information. The other information comprises the information included in the Board Report, Report on Corporate Governance and Management Discussion and Analysis Report but does not include the standalone financial statements and our auditor''s report thereon.

The Board Report, Report on Corporate Governance and Management Discussion and Analysis Report are expected to be made available to us after the date of this auditor''s report.

Our opinion on the standalone financial statements does not cover the other information and we will 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 identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

When we read the Board Report, Report on Corporate Governance and Management Discussion and Analysis Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

Responsibilities of Management and Those Charged with

Governance for the Standalone Financial Statements

8. The accompanying standalone financial statements have been approved by the Company''s Board of Directors. The Company''s Board of Directors are 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, changes in equity and cash flows of the Company in accordance with the Ind AS specified under section 133 of the Act 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 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.

9. In preparing the financial statements, the Board of Directors are responsible for assessing the Company''s

ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

10. The Board of Directors are also responsible for overseeing the Company''s financial reporting process.

Auditor''s Responsibilities for the Audit of the Standalone

Financial Statements

11. 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 auditor''s 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 Standards on Auditing 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.

12. As part of an audit in accordance with Standards on Auditing, specified under section 143(10) of the Act we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

â¢ 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 control;

â¢ Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3) (i) of the Act we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls;

â¢ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;

â¢ Conclude on the appropriateness of Board of Directors'' use of the going concern basis of accounting and, based on the audit evidence obtained, whether

are required to draw attention in our auditor''s 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 auditor''s report. However, future events or conditions may cause the Company to cease to continue as a going concern;

â¢ 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; and

â¢ Obtain sufficient appropriate audit evidence regarding the financial statements of the Company and its joint operations or the business activities within

the Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the audit of financial statements of the Company. For the joint operations included in the financial statements, which have been audited by the other auditors, such other auditors remain responsible for the direction, supervision and performance of the audits carried out by them. We remain solely responsible for our audit opinion.

13. 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.

14. 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.

15. 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 auditor''s 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.

Other Matter

16. We did not audit the financial statements of eight (8) joint operations included in the standalone financial statements of the Company whose financial statements reflects Company''s share of total assets of '' 152.61 crore as at

31 March 2024, and the Company''s share of total revenues of '' 475.19 crore, total net profit after tax of '' 740 crore,

total comprehensive income of '' 740 crore, and cash outflows (net) of '' 0.20 crore respectively for the year ended on that date, as considered in the standalone financial statements. These financial statements have been audited by the other auditors whose reports have been furnished to us by the management, and our opinion on the standalone financial statements, in so far as it relates to the amounts and disclosures included in respect of these joint operations, and our report in terms of sub-section (3) of section 143 of the Act in so far as it relates to the aforesaid joint operations, is based solely on the report of such other auditors.

Further, of these joint operations, the financial statements of five (5) joint operations have been prepared in accordance with accounting principles generally accepted in India, including accounting standards issued by the ICAI. The Company''s management has converted the financial statements of such joint operations in accordance with Ind AS. We have audited these conversion adjustments made by the Company''s management. Our opinion on the standalone financial statements, in so far as it relates to the amounts and disclosures included in respect of such joint operations, is based on the report of other auditors and the conversion adjustments prepared by the management of the Company and audited by us.

Our opinion above on the standalone financial statements, and our report on other legal and regulatory requirements below, are not modified in respect of the above matters with respect to our reliance on the work done by and the reports of the other auditors.

Report on Other Legal and Regulatory Requirements

17 As required by section 197(16) of the Act based on our audit, and on the consideration of the reports of the other auditors as referred to in paragraph 16 above, we report that the Company has paid remuneration to its directors during the year in accordance with the provisions of and limits laid down under section 197 read with Schedule V to the Act.

18. As required by the Companies (Auditor''s Report) Order, 2020 (''the Order'') issued by the Central Government of India in terms of section 143(11) of the Act we give in the Annexure II a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

19. Further to our comments in Annexure II, as required by section 143(3) of the Act based on our audit, and on the consideration of the reports of the other auditors as referred to in paragraph 16 above, we report, to the extent applicable, that:

a) We have sought and except for the matters described in the Basis for Qualified Opinion section, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit of the accompanying standalone financial statements;

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, except for the possible effects of the matters described in the Basis for Qualified Opinion section and except for the matters stated in paragraph 19(i)(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 as amended.

c) The standalone financial statements dealt with by this report are in agreement with the books of account;

d) Except for the possible effects of the matters described in the Basis for Qualified Opinion section, in our opinion, the aforesaid standalone financial statements comply with Ind AS specified under section 133 of the Act;

e) The matters described in paragraph 3 under the Basis for Qualified Opinion section, in our opinion, may have an adverse effect on the functioning of the Company;

f) On the basis of the written representations received from the directors and 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;

g) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in paragraph 3 of the Basis for Qualified Opinion section, paragraph 19(b) above on reporting under section 143(3)(b) of the Act and paragraph 19(i)(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (as amended);

h) With respect to the adequacy of the internal financial controls with reference to financial statements of the Company as on 31 March 2024 and the operating effectiveness of such controls, refer to our separate report in Annexure III wherein we have expressed a modified opinion; and

i) With respect to the other matters to be included

in the Auditor''s 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 and based on the consideration of the reports of the other auditors as referred to in paragraph 16 above:

i. The Company, as detailed in notes 6.1, 32, 33 and 34 to the standalone financial statements, has disclosed the impact of pending litigations on its financial position as at 31 March 2024;

ii. The Company, as detailed in notes 20.1 and 20.2 to the standalone financial statements, has made provision as at 31 March 2024, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts;

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company during the year ended 31 March 2024;

iv. a. The management has represented that,

to the best of its knowledge and belief, as disclosed in note 44 to the standalone financial statements, no funds have been advanced or loaned or invested (either from borrowed funds or securities premium or any other sources or kind of funds) by the Company to or in any person or entity, including foreign entities (''the 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 (''the Ultimate Beneficiaries'') or provide any guarantee, security or the like on behalf the Ultimate Beneficiaries;

b. The management has represented that, to the best of its knowledge and belief, other than as disclosed in note 45 to the standalone financial statements, no funds have been received by the Company from any person or entity, including foreign entities (''the 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; and

c. Based on such audit procedures performed as considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the management representations under subclauses (a) and (b) above contain any material misstatement.

v. The Company has not declared or paid any dividend during the year ended 31 March 2024.

vi. As stated in note 46 to the standalone financial statements and based on our examination which included test checks, except for instance mentioned below, the Company, in respect of financial year commencing on 1 April 2023, has used an accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has been operated throughout the year for all relevant transactions recorded in the software. Further, during the course of our audit we did not come

across any instance of audit trail feature being tampered with, other than the consequential impact of the exception given below:

Nature of exception noted	Details of exception
Instances of accounting software for maintaining books of account for which the feature of recording audit trail (edit log) facility was not operated throughout the year for all relevant transactions recorded in the software.	The audit trail feature was not enabled at the database level for accounting software to log any direct data changes, used for maintenance of all records by the Company.

For Walker Chandiok & Co LLP

Chartered Accountants Firm''s Registration No.: 001076N/N500013

Shashi Tadwalkar

Partner

Membership No.: 101797 UDIN: 24101797BKCPCS1042

Place: Mumbai Date: 24 May 2024

Mar 31, 2023

Hindustan Construction Company Limited

Report on the Audit of the Standalone Financial Statements

Qualified Opinion

1. We have audited the accompanying standalone financial statements of Hindustan Construction Company Limited

and its joint operations (together referred to as ''the Company''), as listed in Annexure I, which comprise the Balance Sheet as at 31 March 2023, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flow and the Statement of Changes in Equity for the year then ended, and notes to the standalone financial statements, including a summary of the significant accounting policies and other explanatory information.

of the matters described in the Basis for Qualified Opinion section of our report, 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 (''Ind AS'') specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2023, and its profit (including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.

Basis for Qualified Opinion

3. As stated in:

a) Note 34 to the standalone financial statements, the

Company''s investments in subsidiaries as at 31 March 2023 includes non-current investment and current investment in HCC Infrastructure Company Limited (''HICL), its wholly owned subsidiary, amounting to '' 1,214.65 crore and '' 220 crore, respectively, stated at cost. The subsidiary''s consolidated net-worth as at 31 March 2023 is substantially eroded but, the said investment is considered fully recoverable by the management on the basis of factors stated in the aforesaid note including a valuation report obtained from an independent valuer.

However, in the absence of sufficient appropriate audit evidence to support the significant judgements and estimates relating to underlying assumptions applied by the management in the aforementioned valuation report, we are unable to comment upon the adjustments, if any, that are required to the carrying value of the aforesaid investment and consequential impact, if any, on the standalone financial statements.

Our audit report dated 12 May 2022 on the standalone financial statements for the year ended 31 March 2022 was also qualified in respect of this matter.

b) Note 9.1 to the the standalone financial statements, the Company has recognised net deferred tax assets amounting to '' 741.93 crore as at 31 March 2023, which includes deferred tax assets on carried forward unused tax losses, unused tax credits and other taxable temporary differences on the basis of expected availability of future taxable profits for utilization of such deferred tax assets. However, in view of the history of losses recorded by the Company, we are unable to obtain sufficient appropriate audit evidence with respect to the projections for future taxable profits prepared by the management and therefore, are unable to comment on any adjustments that may be required to the carrying value of aforesaid net deferred tax assets as at 31 March 2023.

Our audit report dated 12 May 2022 on the standalone financial statements for the year ended 31 March 2022 was also qualified in respect of this matter.

4. We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act.

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 together with the audit evidence obtained by the other auditors, in terms of their reports referred to in paragraph 16 of the Other Matter section below, is sufficient and appropriate to provide a basis for our qualified opinion.

Key Audit Matters

5. Key audit matters are those matters that, in our professional judgment, and based on the consideration of the reports

6. In addition to the matters described in the Basis for Qualified Opinion section, we have determined the matters described below to be the key audit matters to be communicated in our report.

Key audit matter	How our audit addressed the key audit matter
(a) Accounting of novation of specified debt and assignment of specified arbitration awards and claims pursuant
to implementation of debt resolution plan as per the terms of Master Framework Agreement (''MFA'') (Refer note
31.1 to the standalone financial statements)
During the current year, the Company has successfully	Our audit procedures included but were not limited to the
implemented its debt resolution plan as per the terms of	following in relation to accounting of debt resolution plan and
Master Framework Agreement (''MFA'') in relation to its	the treatment of resultant difference arising from such debt
Facilities, Guarantees and Put Obligations in accordance	resolution:
with the Reserve Bank of India (Prudential Framework for
Resolution of Stressed Assets) Directions, 2019 dated	_â¢	Obtained an understanding of the terms of the MFA from
7 June 2019. Consequent to the aforementioned debt		the management.
resolution plan, effective 1 July 2022:
	_â¢	Evaluated the design and implementation and tested
â¢ The Company has novated specified debt of lenders		the operating effectiveness of the key internal controls
aggregating '' 2,855.69 crore to Prolific Resolution		relating to accounting, measurement and de-recognition
Private Limited (''PRPL), a wholly owned subsidiary		of specified debt and specified arbitration awards and
of the Company, with the consideration being the		claims as per the terms of MFA.
assignment of beneficial interest in the specified
arbitration awards and claims of '' 6,508.44 crore with a	_â¢	Reviewed the terms of the MFA to assess whether the
carrying value of '' 2,894.11 crore in favor of PRPL;		derecognition of specified debt and specified awards and
		claims was in accordance with the criteria given under
â¢ The Company has also furnished a Corporate Guarantee		Ind AS 109, ''Financial Instruments'' (''Ind AS 109'');
in favor of lenders for debt novated to PRPL;
	_â¢	Verified that the resultant net difference between debts
â¢ The specified terms of facilities have also been revised		novated and specified awards and claims assigned in
with respect to the repayment terms, rates of interest		favour of PRPL has been recognised in accordance with
and waiver of penal interest by lenders, including		Ind AS 109;
lenders of Lavasa Corporation Limited (''LCL), an
erstwhile subsidiary of the Company, whose liabilities	_â¢	Verified the accounting treatment for revision in the
were taken over in earlier years by the Company		terms of original facilities by the lenders is in accordance
pursuant to put options and corporate guarantees		with Ind AS 109; and
issued by the Company to LCL lenders.
	_â¢	Evaluated the appropriateness and adequacy of the
Accordingly, effective 1 July 2022, the aforementioned		disclosures in the standalone financial statements in
assets aggregating '' 2,894.11 crore and aforementioned		accordance with the applicable accounting standards
liabilities aggregating '' 2,855.69 crore have been
derecognised by the Company. The net assets
transferred to PRPL represents Company''s investment
in PRPL and consequently the resultant net difference
between assets and liabilities of '' 38.42 crore has been
recognised as Deemed Investment in PRPL. Further,
the revision in the specified term of facilities resulted
in reduction of liabilities to lenders and a resultant gain
of '' 223.30 crore, was recognised in the Statement of
Profit and Loss and presented as an exceptional item.
The accounting treatment with respect to the
derecognition of the novated debt and assigned
assets as well as the recognition of the deemed
investment and resulting gain due to revision of terms
of facilities involved exercise of significant judgement by
management and managements expert.
Considering the complexities involved and material
impact on the standalone financial statement for the
current year, this area has been considered as key audit
matter.

Key audit matter	How our audit addressed the key audit matter
(b) Recognition of contract revenue, margin and contract costs (Refer note 24 to the standalone financial statements)
The Company''s revenue primarily arises from construction	Our audit procedures to address this key audit matter
contracts which, by its nature, is complex given the significant judgements involved in the assessment of current	included, but were not limited to the following:
and future contractual performance obligations.	â¢ Obtained an understanding of the Company''s revenue recognition processes and evaluated the appropriateness
The Company recognizes contract revenue and the resultant	of the Company''s accounting policy for revenue
profit/ loss on the basis of stage of completion determined	recognition in accordance with Ind AS 115 - Revenue
based on the proportion of contract costs incurred at balance sheet date, relative to the total estimated costs of the	from contracts with customers;
contract at completion. The recognition of contract revenue	â¢ Evaluated the design and tested the operating
and the resultant profit/ loss therefore rely on estimates in	effectiveness of key internal financial controls including
relation to forecast revenue and forecast contract costs.	those related to estimation of forecasted contract
These contract estimates are reviewed by the management on a periodic basis. In doing so, the management is	revenue and contracts costs;
required to exercise judgement in its assessment of the	â¢ For a sample of contracts, performed the following
transaction price (i.e., revenue on contracts) which may also include variable considerations that are recognised when	procedures:
the recovery of such consideration is highly probable. The	- inspected the underlying documents such as
judgment is also required to be exercised to assess the	customer contract/ agreement and variation
completeness and accuracy of forecast costs to complete. Changes in these judgements, and the related estimates	orders, if any, for the significant contract terms and conditions;
as contracts progress can result in material adjustments to	- evaluated the identification of performance
revenue and margins. As a result of the above judgments, complexities involved and material impact on the related	obligations of the contract;
financial statement elements, this area has been considered	- obtained an understanding of and evaluated the
a key audit matter in the audit of the standalone financial	reasonableness of the assumptions applied in
statements.	determining the forecasted revenue and cost to complete; - tested the existence and valuation of variable consideration with respect to the contractual terms and conditions and inspected the correspondence with customers; and - reviewed the legal and contracting experts'' note and/ or legal opinion from independent legal counsel obtained by the management, if any; - For cost incurred to date, tested samples to appropriate supporting documents and performed cut-off procedures; - Tested the forecasted cost by obtaining executed purchase orders/ agreements/ relevant documents and evaluated the reasonableness of management judgements/ estimates; and â¢ Evaluated the appropriateness and adequacy of the disclosures related to contract revenue and costs in the standalone financial statements in accordance with the applicable accounting standards.

Key audit matter	How our audit addressed the key audit matter
(c) Uncertainties relating to recoverability of unbilled work-in		progress (contract assets), current trade receivables
and non-current trade receivables (Refer Note 35 of the standalone financial statements)
The Company, as at 31 March 2023, has unbilled work-	Our audit procedures included, but were not limited to, the
in-progress (contract assets), current trade receivables	following:
and non-current trade receivables amounting to '' 602.33 crore, '' 255.69 crore and '' 5752 crore, respectively,	â¢	Obtained an understanding of the management process
which represent various receivables in respect of closed/		and evaluated the design and tested the effectiveness
substantially closed/ suspended/ terminated projects. The		of key internal financial controls for assessing the
Company is at various stages of negotiations/ discussions		recoverability of unbilled work-in-progress (contract
/ arbitration/ litigation with the customers in respect of the		assets) and trade receivables.
aforementioned receivables.	_â¢	Assessed the reasonability of judgements exercised and
Management, based on contractual tenability, progress		estimates made by management with respect to the
of the negotiations/ discussions/ arbitration/ litigation and		recoverability of these receivables and validated them
relying on the legal opinion obtained from independent legal counsel in certain cases, has determined that no provision		with corroborating evidence;
is required to be recognised for the aforementioned	_â¢	Verified contractual arrangements to support
receivables.		management''s position on the tenability and recoverability of these receivables;
Considering the materiality of the amounts involved, uncertainty associated with the outcome of the negotiations/	_â¢	Obtained an understanding of the current period
discussions/ arbitration/ litigation and significance of		developments for respective receivables pending at
management judgement involved in assessing the recoverability, this was considered to be a key audit matter in the audit of the standalone financial statements.		various stages of negotiations/ discussions/ arbitration/ litigation and corroborated the updates with relevant underlying documents.
	_â¢	Reviewed the legal and contractual experts'' note and/ or
Further, the aforementioned matter as fully explained in Note 35 to the standalone financial statements is also considered fundamental to the user''s understanding of the standalone financial statements.		legal opinion from independent legal counsel obtained by the management with respect to certain contentious matters; and
	_â¢	Evaluated the appropriateness and adequacy of the disclosures in the standalone financial statements in accordance with the applicable accounting standards.
Key audit matter	How our audit addressed the key audit matter
(d) Assessment of going concern basis of accounting (Refer Note 2(iv)(a) to the standalone financial statements)
The Company has incurred continued losses in the previous	Our audit procedures included but were not limited to, the
years, resulting in substantial erosion of its net worth.	following in relation to assessment of appropriateness of
Further, the Company was also in continued default on	going concern basis of accounting:
payment to its lenders and had overdue payments to operational creditors of which certain creditors also applied	_â¢	Obtained an understanding of the process followed
before the National Company Law Tribunal (''NCLT'') for debt		by management for assessing the Company''s ability
resolution under the Insolvency and Bankruptcy Code, 2016,		to continue as a going concern. Also, obtained an
however, none of which have been admitted so far.		understanding around the methodology adopted by the Company to assess their future business performance
During the current year, the Company has successfully		including the preparation of a cash flow forecast for the
implemented the debt resolution plan as explained in Note 31.1 to the standalone financial statements. Consequently,		business;
the Company is no longer in default in repayment of dues to	_â¢	Evaluated the design and tested the operating
its lenders as at 31 March 2023. Management has prepared		effectiveness of key controls relating to management''s
future cash flow forecasts to assess the Company ability to		assessment of going concern;
operate as a going concern for a period of at least 12 months from the date of financial statements and concluded that the	_â¢	Obtained from management, the projected cash flows for
going concern basis of accounting used for preparation of the accompanying standalone financial statements is appropriate		the next twelve months basis their future business plans;
with no material uncertainty over going concern.	_â¢	Inspected the relevant underlying documents for assessing the appropriateness of projected cash flow for the next 12 months;

Key audit matter

How our audit addressed the key audit matter

We have considered the assessment of management''s evaluation of Company''s ability to continue as a going concern as a key audit matter for the current year audit due to the pervasive impact thereof on the standalone financial statements and the significant management judgements and assumptions that are inherently subjective and dependent on future events, involved in preparation of cash flow projections and determination of the overall conclusion by the management.

â¢ Tested the appropriateness of the key assumptions used by the management that had the most material impact on the cash flow forecasts and discussed these assumptions with the management and with those charged with governance;

â¢ Performed independent sensitivity analysis to test the impact of the variations on the cash flows due to change in the key assumptions; and

â¢ Assessed the appropriateness and adequacy of the disclosures, in respect of use of going concern assumption for preparation of standalone financial statement in accordance with the applicable accounting standards.

Information other than the Financial Statements and

Auditor''s Report thereon

7 The Company''s Board of Directors are responsible for the other information. The other information comprises the information included in the Board Report, Report on Corporate Governance and Management Discussion and Analysis Report, but does not include the standalone financial statements and our auditor''s 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 in the 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. As described in the Basis for Qualified Opinion section above, the modifications pertain to recoverability of exposure in a wholly owned subsidiary and realisability of deferred tax assets. Accordingly, we are unable to conclude whether or not the other information is materially misstated with respect to these matters.

Responsibilities of Management and Those Charged with

Governance for the Standalone Financial Statements

under section 133 of the Act 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 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.

9. In preparing the financial statements, the Board of Directors are responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intend to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

10. Those Board of Directors are also responsible for overseeing the Company''s financial reporting process.

Auditor''s Responsibilities for the Audit of the Standalone

Financial Statements

12. As part of an audit in accordance with Standards on

Auditing, specified under section 143(10) of the Act we

exercise professional judgment and maintain professional

skepticism throughout the audit. We also:

â¢ Identify and assess the risks of material misstatement of the financial statements, whether due to fraud

â¢ Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference

to financial statements in place and the operating effectiveness of such controls;

â¢ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;

â¢ Conclude on the appropriateness of Board of Directors'' 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 Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s 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 auditor''s report. However, future events or conditions may cause the Company to cease to continue as a going concern;

â¢ Obtain sufficient appropriate audit evidence regarding the financial statements of the Company and its joint operations or the business activities within

the Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the audit of financial statements of the Company and such joint operations included in the financial statements, of which we are the independent auditors, if any. For the joint operations included in the financial statements, which have been audited by other auditors, such other auditors remain responsible for the direction, supervision and performance of the audits carried out

by them. We remain solely responsible for our audit opinion.

so would reasonably be expected to outweigh the public interest benefits of such communication.

Other Matter

16. We did not audit the financial statements of eight (8) joint operations included in the standalone financial statements of the Company, whose financial statements reflects total assets and net assets of '' 265.14 crore and '' 66.65 crore, respectively, as at 31 March 2023, and the total revenues of '' 362.09 crore, total net loss after tax of '' 0.57 crore, total comprehensive loss of '' 0.57 crore, and cash outflows (net) of '' 8.08 crore for the year ended on that date, as considered in the standalone financial statements. These financial statements have been audited by other auditors, whose audit reports have been furnished to us by the management, and our opinion on the standalone financial statements, in so far as it relates to the amounts and disclosures included in respect of these joint operations, and our report in terms of sub-section (3) of section 143

of the Act in so far as it relates to the aforesaid joint operations, is based solely on the reports of such other auditors.

Further, of these joint operations, the financial statements of five (5) joint operations have been prepared in accordance with accounting principles generally accepted in India, including accounting standards issued by the ICAI. The Company''s management has converted the financial statements of such joint operations in accordance with Ind AS. We have audited these conversion adjustments made by the Company''s management. Our opinion, in so far as it relates to the amounts and disclosures included in respect of these joint operations, is based on the audit report of other auditors and the conversion adjustments prepared by the management of the Company and audited by us.

Report on Other Legal and Regulatory Requirements

17 As required by section 197(16) of the Act, based on our audit, we report that the Company has paid remuneration to its directors during the year in accordance with the provisions of and limits laid down under section 197 read with Schedule V to the Act.

18. As required by the Companies (Auditor''s Report) Order, 2020 (''the Order'') issued by the Central Government of India in terms of section 143(11) of the Act, we give in the Annexure II a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

19. Further to our comments in Annexure II, as required by section 143(3) of the Act based on our audit and on the consideration of the reports of other auditors as referred to in paragraph 16 above, we report, to the extent applicable, that:

a) We have sought and except for the matters described in the Basis for Qualified Opinion section, obtained all the information and explanations which to the best

of our knowledge and belief were necessary for the purpose of our audit of the accompanying standalone financial statements;

b) Except for the possible effects of the matters described in the Basis for Qualified Opinion section, in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

c) The standalone financial statements dealt with by this report are in agreement with the books of account;

e) The matters described in paragraph 3 under the Basis for Qualified Opinion section, in our opinion, may have an adverse effect on the functioning of the Company;

f) On the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors are disqualified as on 31 March 2023 from being appointed as a director in terms of section 164(2) of the Act;

g) The qualification relating to the maintenance of accounts and other matters connected therewith are

as stated in the Basis for Qualified Opinion section;

h) With respect to the adequacy of the internal financial controls with reference to financial statements of the Company as on 31 March 2023 and the operating effectiveness of such controls, refer to our separate Report in Annexure III wherein we have expressed a modified opinion; and

i) With respect to the other matters to be included in the Auditor''s 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 and based on the consideration of the reports of other auditors as referred to in paragraph 16 above:

i. The Company, as detailed in note 6.1,33, 34 and 35 to the standalone financial statements, has disclosed the impact of pending litigations on its financial position as at 31 March 2023;

ii. The Company, as detailed in note 20.1 to the standalone financial statements, has made provision as at 31 March 2023, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts;

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company during the year ended 31 March 2023;

iv. a) The management has represented that,

to the best of its knowledge and belief, as disclosed in note 46(v) to the standalone financial statements, no funds have been advanced or loaned or invested (either from borrowed funds or securities premium or any other sources or kind of funds) by the Company to or in any person or entity, including foreign entities (''the 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 (''the Ultimate Beneficiaries'') or provide any guarantee, security or the like on behalf the Ultimate Beneficiaries;

b) The management has represented that, to the best of its knowledge and belief, as disclosed in note 46(vi) to the standalone financial statements, no funds have been received by the Company from any person or entity, including foreign entities (''the 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; and

c) Based on such audit procedures performed as considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the management representations under subclauses (a) and (b) above contain any material misstatement.

v. The Company has not declared or paid any dividend during the year ended 31 March 2023.

vi. Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 requires all companies which use

accounting software for maintaining their books of account, to use such an accounting software which has a feature of audit trail, with effect from the financial year beginning on 1 April 2023 and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 (as amended) is not applicable for the current financial year.

For Walker Chandiok & Co LLP

Chartered Accountants Firm''s Registration No.: 001076N/N500013

Shashi Tadwalkar

Partner

Membership No.: 101797 UDIN: 23101797BGXFAB9892

Place: Mumbai Date: 18 May 2023

Mar 31, 2018

INDEPENDENT AUDITOR''S REPORT

To the Members of Hindustan Construction Company Limited

Report on the Standalone Financial Statements

1. We have audited the accompanying standalone financial statements of Hindustan Construction Company Limited (''the Company''), which comprise the Balance Sheet as at 31 March 2018, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Standalone Financial Statements

2. The Company''s 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 standalone financial statements that give a true and fair view of the state of affairs (financial position), profit or loss (financial performance including other comprehensive income), cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (''Ind AS'') specified under Section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and

for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

3. Our responsibility is to express an opinion on these standalone financial statements based on our audit.

4. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

5. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether these standalone financial statements are free from material misstatement.

6. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial controls relevant to the Company''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the financial statements.

7. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion on these standalone financial statements.

Basis for Qualified Opinion

8. As stated in Note 33(a) to the standalone financial statements, the Company''s non-current investments as at 31 March 2018 include investments aggregating Rs, 630.83 crore in two of its subsidiaries; and non-current loans, other non-current financial assets and other current financial assets as at that date include dues from such subsidiaries aggregating Rs, 580.75 crore, Rs, 43.42 crore and Rs, 6.63 crore, respectively, being considered good and recoverable by the management considering the factors stated in the aforesaid note including valuation report from an independent valuer. However, these subsidiaries have accumulated losses and their consolidated net worth is fully eroded. Further, these subsidiaries are facing liquidity constraints due to which they may not be able to realize projections made as per their respective business plans. In the absence of sufficient appropriate evidence, we are unable to comment upon

the carrying value of these non-current investments and recoverability of the aforesaid dues and the consequential impact, if any, on the accompanying standalone financial statements. Our audit opinion on the standalone financial statements for the year ended 31 March 2017 was also qualified in respect of this matter.

Qualified Opinion

9. In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including Ind AS specified under Section 133 of the Act, of the state of affairs (financial position) of the Company as at 31 March 2018, and its profit (financial performance including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.

Emphasis of Matters

10. We draw attention to:

a) Note 33(b) to the standalone financial statements regarding the Company''s non-current investment in a subsidiary company, non-current loans and other non-current financial assets due from such subsidiary aggregating Rs, 2.24 crore, Rs, 1,281.40 crore, Rs, 158.18 crore, respectively, as at 31 March 2018. The consolidated net-worth of the aforesaid subsidiary has been fully eroded; however, based on certain estimates and other factors, including subsidiary''s future business plans, growth prospects and valuation report from an independent valuer, as described in the said note, management believes that the realizable amount is higher than the carrying value of the non-current investments, noncurrent loans and other non-current financial assets due to which these are considered as good and recoverable. Our opinion is not qualified in respect of this matter.

Rs, 686.24 crore, Rs, 123.29 crore and Rs, 214.38 crore, respectively, as at 31 March 2018, which represent various claims raised in the earlier years in respect of projects substantially closed or suspended and where the claims are currently under negotiations/discussions/arbitration/ litigation. Pending the ultimate outcome of these matters, which is presently unascertainable, no adjustments have been made in the accompanying standalone financial statements. Our opinion is not qualified in respect of this matter.

c) Note 26.1 and 26.3 to the standalone financial statements regarding remuneration of Rs, 10.66 crore paid for each of the financial years ended 31 March 2014 and 31 March 2016 to the Chairman and Managing Director (CMD), which is in excess of the limits prescribed under the provisions

of the erstwhile Companies Act, 1956/ Companies Act,

2013, respectively and for which the Company has filed an application for review / an application, respectively with the Central Government; however approval in this regard is pending till date. Our opinion is not qualified in respect of this matter.

Other Matters

11. We did not audit the separate financial statements of six joint operations, included in these standalone financial statements, whose financial statements reflect total assets of Rs, 29.73 crore and net liabilities of Rs, 38.57 crore as at 31 March 2018, and total revenues of Rs, 19.90 crore for the year ended on that date, as considered in these standalone financial statements. The Company had prepared separate set of statutory financial statements of these joint operations for the years ended 31 March 2018 in accordance with accounting principles generally accepted in India and which have been audited by other auditors under generally accepted auditing standards applicable in India. Our opinion in so far as it relates to the amounts and disclosures in respect of these joint operations is solely based on report of the other auditors and the conversion adjustments prepared by the management of the Company, which have been audited by us. Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

12. As required by the Companies (Auditor''s Report) Order, 2016 (''the Order'') issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the Annexure I, a statement on the matters specified in paragraphs 3 and 4 of the Order.

13. Further to our comments in Annexure I, as required by Section 143(3) of the Act, we report that:

a) We have sought and except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b) Except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

c) The standalone financial statements dealt with by this report are in agreement with the books of account;

d) Except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, in our opinion, the aforesaid standalone financial statements comply with Ind AS specified under Section 133 of the Act;

e) The matters described in paragraphs 8, 10(a) and 10(b) under the Basis for Qualified Opinion/Emphasis of Matters paragraphs, in our opinion, may have an adverse effect on the functioning of the Company;

f) On the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as at 31 March 2018 from being appointed as a director in terms of Section 164(2) of the Act;

g) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph;

h) We have also audited the internal financial controls over financial reporting (IFCoFR) of the Company as at 31 March 2018 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date and our report dated May 3, 2018 as per Annexure

II expressed a qualified opinion;

i) With respect to the other matters to be included in the Auditor''s 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 Notes 6.1, 32 A(i) to

(iii) and 34 to the standalone financial statements, has disclosed the impact of pending litigations on its financial position;

ii. Except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, the Company, as detailed in Note 18.1 to the standalone financial statements, has made provision, as required under the applicable law or Ind AS, 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;

iv. The disclosure requirements relating to holdings as well as dealings in specified bank notes were applicable for the period from 8 November 2016 to 30 December 2016 which are not relevant to these standalone financial statements. Hence, reporting under this clause is not applicable.

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, and to the best of our knowledge and belief, we report that:

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

b) The fixed assets have been physically verified by the management during the year and no material discrepancies were noticed on such verification. In our opinion, the frequency of verification of the fixed assets is reasonable having regard to the size of the Company and the nature of its assets.

c) The title deeds of all the immovable properties (which are included under the head ''Property, plant and equipment'') are held in the name of the Company.

ii. In our opinion, the management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies between physical inventory and book records were noticed on physical verification.

iii. The Company has granted unsecured loans to four companies covered in the register maintained under Section 189 of the Act; and with respect to the same:

a) In our opinion the terms and conditions of such loans are not, prima facie, prejudicial to the Company''s interest;

b) The schedule of repayment of the principal and the payment of the interest has not been stipulated and hence we are unable to comment as to whether repayments/receipts of the principal amount and the interest are regular;

c) In the absence of stipulated schedule of repayment of principal and payment of interest, we are unable to comment as to whether there is any amount which is overdue for more than 90 days and whether reasonable steps have been taken by the Company for recovery of the principal amount and interest.

iv. In our opinion, the Company has complied with the provisions of Sections 185 and 186 of the Act, to the extent applicable, in respect of loans, investments, guarantees and security.

v. In our opinion, the Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.

vi. We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under sub-section (1) of Section 148 of the Act in respect of Company''s products/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) Undisputed statutory dues including provident fund,

employees'' state insurance, income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax, goods and service tax (GST), cess and other material statutory dues, as applicable, have not been regularly deposited with the appropriate authorities and there have been significant delays in a large number of cases. Undisputed amounts payable in respect thereof, which were outstanding at the year-end for a period of more than six months from the date they became payable are as follows:

Statement of arrears of statutory dues outstanding for more than six months

Name of the statute

Nature of dues

Amount Rs, crore

Period to which the

amount

relates

Due

Date

Date of Payment

The Sales Tax Act

Sales Tax/

Value

Added

Tax/Entry

Tax

0.17

April 2016 to August 2016

Various

due

dates

Not paid till date

Name of the statute

Nature of dues

Amount Rs, crore

Period to

which the

amount

relates

Due

Date

Date of Payment

Employees'' Provident Funds & Miscellaneous Provisions Act, 1952

Provident

Fund

1.44

April 2017 to August 2017

Various

due

dates

Not paid till date

(b) There are no dues in respect of duty of customs and duty of excise that have not been deposited with the appropriate authorities on account of any dispute. The dues outstanding in respect of income-tax, sales-tax, service-tax and value added tax on account of disputes, are as follows:

Statement of Disputed Dues

Name	Nature of	Amount	Amount	Period to	Forum where
of the	dues	Rs, crore	Paid	which the	dispute is
statute			Under Protest Rs, crore	amount relates	pending
The	Income	15.54	15.54	A.Y 2006-	Income Tax
Income	Tax			07 to	Appellate
Tax Act,				2010-11	Tribunal
1961		2.47	2.47	A.Y 2015-16	Commissioner of Income Tax (Appeals)
The	Sales	4.70	-	A.Y 1997-98 High Court
Sales	Tax/ Value			and A.Y
Tax Act	Added			2012-13
	Tax/ Entry	56.36	0.49	A.Y 1996-	Tribunal
	Tax			97 to A.Y. 2000-01, A.Y 200506, A.Y 2006-07 and A.Y 2013-14 to 2015-16
		92.96	2.88	A.Y. 200203 and A.Y 2004-05 to	Commissioner level up to Appellate
				A.Y. 2013-14 Authority
The	Service	314.44	-	January	Taxation
Finance	tax			2006 to	Tribunal
Act,	including			March 2015
1994	interest and penalty, as applicable	56.76	1.73	April 2011 to March 2013	Commissioner level up to Appellate Authority

viii. There are no loans or borrowings payable to government. The Company has defaulted in repayment of following dues to the financial institution, banks and debenture holders during the year, which were paid on or before the Balance Sheet date.

Debenture Holders	Days	Principal	Interest	Total
AXIS - Non-	0-30	5.33	2.92	8.25
Convertible Debentures	31-90	2.67	1.54	4.21
Convertible Debentures	91-180	2.67	1.47	4.14
Rs, crore
Banks	Days	Principal	Interest	Total
Axis Bank	0-30	1.33	7.74	9.07
	31-90	3.33	3.09	6.43
	91-180	3.33	0.24	3.58
Bank of Baroda	0-30	1.39	1.67	3.06
	31-90	0.69	0.15	0.85
Bank of	0-30	-	1.01	1.01
Maharashtra	31-90	0.67	0.33	1.01
	91-180	0.67	0.33	1.00
Canara Bank	0-30	-	6.08	6.08
	31-90	17.20	6.76	23.97
	91-180	8.60	6.42	15.02
	181-365	-	1.11	1.11
Central Bank of	0-30	1.11	2.76	3.87
India	31-90	2.97	0.37	3.33
Development	0-30	-	1.05	1.05
Bank of	31-90	2.54	0.59	3.12
Singapore	91-180	2.54	0.94	3.47
	181-365	2.54	0.04	2.58
Federal Bank	0-30	0.55	1.12	1.67
	31-90	-	0.03	0.03
IDBI Bank	0-30	18.03	12.06	30.09
	31-90	6.01	3.71	9.72
Indian Overseas	0-30	2.12	4.18	6.30
Bank	31-90	-	0.89	0.89
	91-180	2.12	-	2.12
Oriental Bank of	0-30	-	0.44	0.44
Commerce	31-90	1.67	0.13	1.80
	91-180	3.34	-	3.34
Punjab National	0-30	1.01	0.95	1.97
Bank	31-90	3.04	1.18	4.21
	91-180	-	0.30	0.30
State Bank of	0-30	1.06	1.75	2.81
Hyderabad	31-90	-	0.65	0.65
State Bank of	0-30	2.21	3.20	5.41
Mysore	31-90	-	1.88	1.88
State Bank of	0-30	0.32	0.57	0.89
Travancore	31-90	-	0.18	0.18
Syndicate Bank	0-30	8.62	734	15.96
	31-90	4.31	2.02	6.33
	91-180	-	1.13	1.13
Union Bank of	0-30	2.16	2.20	4.36
India	31-90	-	0.03	0.03
United Bank of	0-30	6.66	8.59	15.25
India	31-90	6.66	4.55	11.21
	91-180	6.66	3.23	9.89

Financial Institutions	Days	Principal	Interest	Total
Export Import	0-30	11.13	14.97	26.10
Bank of India	31-90	3.57	8.90	12.47
	91-180	7.56	2.53	10.09
Industrial	0-30	-	4.55	4.55
Finance	31-90	6.76	2.20	8.95
Corporation of India	91-180	3.38	1.48	4.86
National Bank of	0-30	-	0.87	0.87
Agriculture and	31-90	2.10	0.87	2.97
Development	91-180	2.10	0.85	2.95
SREI Equipment	0-30	2.54	4.21	6.76
Finance Limited	31-90	2.54	1.14	3.69
	91-180	-	1.12	1.12

The Company has defaulted in repayment of following dues to the financial institutions, banks and debenture holders during the year, which were not paid as at the Balance Sheet date.

Rs, crore

ix. The Company did not raise moneys by way of initial public offer or further public offer (including debt instruments) during the year. In our opinion, the term loans were applied for the purposes for which the loans were obtained.

x. No fraud by the Company or on the Company by its officers

Banks	Days	Principal	Interest	Total
Standard	0-30	48.35	0.15	48.50
Chartered Bank	31-90	3.38	0.92	4.30
	91-180	3.38	-	3.38
	181-365	6.77	1.83	8.60
	>365	-	2.64	2.64
Export Import	0-30	-	0.63	0.63
Bank of United States	31-90	3.23	-	3.23
Bank of United States	91-180	3.23	-	3.23
	181-365	6.45	-	6.45
	>365	15.36	-	15.36

or employees has been noticed or reported during the period covered by our audit.

xi. Managerial remuneration has been paid and provided by the Company in accordance with the requisite approvals mandated by the provisions of Section 197 of the Act read with Schedule V to the Act.

xii. In our opinion, the Company is not a Nidhi Company. Accordingly, provisions of clause 3(xii) of the Order are not applicable.

xiii. In our opinion, all transactions with the related parties are in compliance with Sections 177 and 188 of Act, where applicable, and the requisite details have been disclosed in the standalone financial statements, as required by the applicable Ind AS.

xiv. During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures except for allotment of equity shares and optionally convertible debentures during the year to a lender pursuant to the Scheme for Sustainable Structuring of Stressed Assets (S4A Scheme) adopted by the Joint Lender''s Forum as stated in notes 15(g) and 16.1 to the standalone financial statements. In respect of the same, in our opinion, the Company has complied with the requirements of Section 42 of the Act and Rules framed there under.

xv. In our opinion, the Company has not entered into any noncash transactions with the directors or persons connected with them covered under Section 192 of the Act.

xvi. The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditor''s Responsibility

3. Our responsibility is to express an opinion on the Company''s IFCoFR based on our audit. We conducted our audit in accordance with the Standards on Auditing, issued by the ICAI and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of IFCoFR, and the Guidance Note issued by the ICAI. 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 IFCoFR were established and maintained and if such controls operated effectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the IFCoFR and their operating effectiveness. Our audit of IFCoFR included obtaining an understanding of IFCoFR, 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 auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion on the Company''s IFCoFR.

Meaning of Internal Financial Controls over Financial

Reporting

6. A company''s IFCoFR 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 company''s IFCoFR include 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 company''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over

Financial Reporting

7. Because of the inherent limitations of IFCoFR, 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 IFCoFR to future periods are subject to the risk that IFCoFR may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Basis for Qualified opinion

8 In our opinion, according to the information and explanations given to us and based on our audit procedure performed, the following material weakness has been identified in the operating effectiveness of the Company''s IFCoFR as at 31 March 2018:

The Company''s internal financial controls in respect of supervisory and review controls over process of determining of (a) carrying value of the Company''s non-current investments in its subsidiaries; and (b) recoverability of noncurrent loans, other non-current financial assets and other current financial assets due from such subsidiaries were not operating effectively. Absence of aforesaid assessment in accordance with the accounting principles generally accepted in India could potentially result in a material misstatement in the carrying value of investments in such subsidiaries and the aforesaid dues from such subsidiaries and consequently, could also impact the profit (financial performance including other comprehensive income) after tax.

9. A ''material weakness'' is a deficiency, or a combination of deficiencies, in IFCoFR, such that there is a reasonable possibility that a material misstatement of the company''s annual or interim financial statements will not be prevented or detected on a timely basis.

Qualified Opinion

10. In our opinion, except for the possible effects of the material weakness described above in the Basis for Qualified Opinion paragraph, the Company has, in all material respects, maintained adequate IFCoFR as at 31 March 2018, based on internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note issued by the ICAI and the Company''s IFCoFR were operating effectively as at 31 March 2018.

11. We have considered the material weakness identified and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the standalone financial statements of the Company as at and for the year ended 31 March 2018, and the material weakness has affected our opinion on the standalone financial statements of the Company and we have issued a qualified opinion on the standalone financial statements.

For Walker Chandiok & Co LLP

Chartered Accountants

Firm''s Registration No.: 001076N/N500013

per Rakesh R. Agarwal

Partner

Membership No.: 109632

Place : Mumbai

Date : May 3, 2018

Mar 31, 2017

Report on the Standalone Financial Statements

1. We have audited the accompanying standalone financial statements of Hindustan Construction Company Limited (''the Company''), which comprise the Balance Sheet as at 31March 2017, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Standalone

Financial Statements

2. The Company''s 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 standalone financial statements that give a true and fair view of the state of affairs (financial position), profit or loss (financial performance including other comprehensive income), cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (''Ind AS'') specified under Section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

3. Our responsibility is to express an opinion on these standalone financial statements based on our audit.

7 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion on these standalone financial statements.

Basis for Qualified Opinion

8. As stated in Note 33(a) to the standalone financial statements, the Company''s non-current investments as at 31 March 2017 include investments aggregating Rs. 630.83 crore in two of its subsidiaries; and non-current loans, other non-current financial assets and other current financial assets as at that date include dues from such subsidiaries aggregating Rs.512.42 crore, Rs.38.17 crore and Rs.4.77 crore, respectively, being considered good and recoverable by the management considering the factors stated in the aforesaid note including valuation report from an independent valuer. However, these subsidiaries have accumulated losses and their net worth is fully eroded. Further, these subsidiaries are facing liquidity constraints due to which it may not be possible to realize projections made as per business plans. In the absence of sufficient appropriate evidence, we are unable to comment upon the carrying value of these investments and recoverability of the aforesaid dues and the consequential impact, if any, on the accompanying standalone financial statements. Our audit opinion on the standalone financial statements for the year ended 31 March 2016 was also qualified in respect of this matter.

Qualified Opinion

9. In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including Ind AS specified under Section 133 of the Act, of the state of affairs (financial position) of the Company as at 31March 2017, and its profit (financial performance including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.

Emphasis of Matters

10. We draw attention to:

a) Note 33(b) to the standalone financial statements regarding the Company''s non-current investment in a subsidiary company, non-current loans, other non-current financial assets and other current financial assets due from such subsidiary aggregating Rs.2.24 crore, Rs.1,124.36 crore, Rs.141.14 crore and Rs.2.47 crore, respectively, as at 31 March 2017 The consolidated net-worth of the aforesaid subsidiary has been fully eroded; however, based on certain estimates and other factors, including subsidiary''s future business plans, growth prospects and valuation report from an independent valuer, as described in the said note, management believes that the realizable amount is higher than the carrying value of the investment, non-current loans, other non-current financial assets and other current financial assets due to which these are considered as good and recoverable. Our opinion is not qualified in respect of this matter.

b) Note 34 to the standalone financial statements regarding uncertainties relating to recoverability of unbilled work-in-progress (other current financial assets), non-current trade receivables and current trade receivables aggregating Rs.911.80 crore, Rs.123.39 crore and Rs.90.30 crore, respectively, as at 31 March 2017, raised in the earlier years in respect of projects suspended or substantially closed and where the claims are currently under negotiations / discussions / arbitration. Pending the ultimate outcome of these matters, which is presently unascertainable, no adjustments have been made in the accompanying standalone financial statements. Our opinion is not qualified in respect of this matter.

c) Note 26.1 and 26.3 to the standalone financial statements regarding remuneration of Rs.10.66 crore paid for each of the financial years ended 31 March 2014 and 31 March 2016 to the Chairman and Managing Director (CMD), which is in excess of the limits prescribed under the provisions of the erstwhile Companies Act, 1956/ the Companies Act, 2013, respectively and for which the Company has filed an application for review / an application, respectively with the Central Government; however approval in this regard is pending till date. Our opinion is not qualified in respect of this matter.

Other Matters

11. a) The Company had prepared separate sets of statutory financial statements for the year ended 31 March 2016 and 31 March 2015 in accordance with Accounting Standards prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended) on which we issued auditor''s reports to the shareholders of the Company dated 28 April 2016 and 30 April 2015, respectively. These financial statements have been adjusted for the differences in the accounting principles adopted by the Company on transition to Ind AS, which have also been audited by us. Our opinion is not qualified in respect of this matter.

b) We did not audit the separate financial statements of six joint operations, included in these standalone financial statements, whose financial statements reflect total assets of Rs.53.93 crore and net assets of Rs.16.14 crore as at 31 March 2017, total revenues of Rs.45.58 crore and net cash inflows amounting to Rs.4.23 crore for the year ended on that date, as considered in these standalone financial statements. The Company had prepared separate set of statutory financial statements of these joint operations for the years ended 31 March 2017, 31 March 2016 and 31 March 2015 in accordance with accounting principles generally accepted in India and which have been audited by other auditors under generally accepted auditing standards applicable in India. These financial statements have been adjusted for the differences in the accounting principles adopted by the Company on transition to Ind AS. Our opinion in so far as it relates to the amounts and disclosures in respect of these joint operation is solely based on report of the other auditors and the conversion adjustments prepared by the management of the Company, which have been audited by us. Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

13. Further to our comments in Annexure I, as required by Section 143(3) of the Act, we report that:

a) we have sought and except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b) except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

c) the standalone financial statements dealt with by this report are in agreement with the books of account;

d) except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, in our opinion, the aforesaid standalone financial statements comply with Ind AS specified under Section 133 of the Act;

e) the matters described in paragraphs 8, 10(a) and 10(b) under the Basis for Qualified Opinion/ Emphasis of Matters paragraphs, in our opinion, may have an adverse effect on the functioning of the Company;

f) on the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as at 31 March 2017 from being appointed as a director in terms of Section164(2) of the Act;

g) the qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph;

h) we have also audited the internal financial controls over financial reporting (IFCoFR) of the Company as at 31 March 2017 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date and our report dated 4 May 2017 as per Annexure II expressed a qualified opinion;

i) with respect to the other matters to be included in the Auditor''s 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 Notes 6.1, 32 A(i) to (iii)and 34 to the standalone financial statements, has disclosed the impact of pending litigations on its financial position;

ii. except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, the Company, as detailed in Note 18.1to the standalone financial statements, has made provision, as required under the applicable law or Ind AS, 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;

iv. the Company, as detailed in Note 13.1 to the standalone financial statements, has made requisite disclosures in these standalone financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8 November 2016 to 30 December 2016. Based on the audit procedures performed and taking into consideration the information and explanations given to us, in our opinion, these are in accordance with the books of account maintained by the Company.

Annexure I

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

(b) The fixed assets have been physically verified by the management during the year and no material discrepancies were noticed on such verification.

In our opinion, the frequency of verification of the fixed assets is reasonable having regard to the size of the Company and the nature of its assets.

(c) The title deeds of all the immovable properties (which are included under the head ''Property, plant and equipment'') are held in the name of the Company.

(ii) In our opinion, the management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies between physical inventory and book records were noticed on physical verification.

(iii) The Company has granted unsecured loans to six companies covered in the register maintained under Section 189 of the Act; and with respect to the same:

(a) in our opinion the terms and conditions of such loans are not, prima facie, prejudicial to the Company''s interest;

(b) the schedule of repayment of the principal and the payment of the interest has not been stipulated and hence we are unable to comment as to whether repayments/receipts of the principal amount and the interest are regular;

(c) in the absence of stipulated schedule of repayment of principal and payment of interest, we are unable to comment as to whether there is any amount which is overdue for more than 90 days and whether reasonable steps have been taken by the Company for recovery of the principal amount and interest.

(iv) In our opinion, the Company has complied with the provisions of Sections 185 and 186 of the Act, to the extent applicable, in respect of loans, investments, guarantees and security.

(v) In our opinion, the Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under sub-section (1) of Section 148 of the Act in respect of Company''s products/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) Undisputed statutory dues including provident fund, employees'' state insurance, income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax, cess and other material statutory dues, as applicable, have not been regularly deposited with the appropriate authorities and there have been significant delays in a large number of cases. Undisputed amounts payable in respect thereof, which were outstanding at the year-end for a period of more than six months from the date they became payable are as follows:

Statement of arrears of statutory dues outstanding for0020more than six months

Name of the statute	Nature of dues	Amount (Rs. in Crore)	Period to which the amount relates	Due Date	Date of Payment
The	Sales	1.99	December	20	Not paid
Sales	Tax/ Value		2015	January	till date
Tax Act	Added			2016
	Tax/		March to	various
	Entry Tax		August	due
			2016	dates

Statement of Disputed Dues

Name of the statute	Nature of dues	Amount (Rs. in Crore)	Amount Paid Under Protest (Rs. in Crore)	Period to which the amount relates	Forum where dispute is pending
The Income Tax Act, 1961	Income Tax	24.63	24.63	A.Y 2006-07 to 2010-11	Income Tax Appellate Tribunal
The Sales Tax Act	Sales Tax/ Value Added Tax/ Entry Tax	0.16	0.15	A.Y 2008-09, 2010-11	Supreme Court
		4.70	-	A.Y 1997-98 and 2012-13	High Court
		45.76	0.49	A.Y 1996-97 to A.Y 2000-01, A.Y 2005-06, A.Y 2006-07 and A.Y 2013-14	Taxation Tribunal
		91.82	3.28	A.Y 2002-03, A.Y 2004-05 to A.Y. 2013 to A.Y 201314	Commissioner level up to Appellate Authority
The Finance Act, 1994	Service tax including interest and penalty, as applicable	2.84		April 2003 to December 2003	High Court
		2.97		January 2006 to March 2006	Taxation Tribunal
		313.94		December 2008 to March 2013	Commissioner level up to Appellate Authority

(viii) The are no loans or borrowings payable to government. The Company has defaulted in repayment of following dues to the financial institution, banks and debenture holders during the year, which were paid on or before the Balance Sheet date.

(Rs. in crore)

Debenture Holders	Days	Principal	Interest	Total
AXIS - Non-	0 to 30 days	-	0.77	0.77
Convertible	31 to 90 days	4.78	3.06	784
Debentures	91 to 180 days	4.78	4.52	9.30
LIC - Non-	0 to 30 days	-	0.83	0.83
Convertible	31 to 90 days	2.50	1.70	4.20
Debentures	91 to 180 days	-	0.03	0.03
	181 to 365 days	-	0.04	0.04

(Rs. in crore)

Banks	Days	Principal	Interest	Total
Axis Bank	0 to 30 days	-	1.51	1.51
	31 to 90 days	8.36	6.06	14.42
	91 to 180 days	8.36	757	15.93
Bank of Baroda	0 to 30 days	-	0.26	0.26
	31 to 90 days	1.24	0.06	1.30
	91 to 180 days	0.78	0.65	1.43
Bank of Maharashtra	0 to 30 days	-	0.22	0.22
	31 to 90 days	2.01	0.39	2.40
	91 to 180 days	-	0.77	0.77
Canara Bank	0 to 30 days	-	2.47	2.47
	31 to 90 days	9.63	3.15	12.78
	91 to 180 days	9.63	732	16.95
Central Bank of India	0 to 30 days	-	0.51	0.51
	31 to 90 days	5.62	0.85	6.47
	91 to 180 days	4.51	1.31	5.82
Federal Bank	0 to 30 days	-	0.16	0.16
	31 to 90 days	0.99	0.24	1.23
	91 to 180 days	0.63	0.10	0.73
IDBI Bank	0 to 30 days	-	1.97	1.97
	31 to 90 days	10.76	786	18.62
	91 to 180 days	10.76	9.83	20.59
Indian Overseas Bank	0 to 30 days	-	0.72	0.72
	31 to 90 days	3.81	0.32	4.13
	91 to 180 days	2.40	1.89	4.29
Oriental Bank of Commerce	31 to 90 days	6.92	0.43	735
Punjab National Bank	0 to 30 days	-	0.62	0.62
	31 to 90 days	2.50	1.44	3.94
	91 to 180 days	0.67	0.62	1.29
State Bank of Hyderabad	0 to 30 days	-	0.39	0.39
	31 to 90 days	2.61	1.56	4.17
	91 to 180 days	1.19	1.95	3.14
State Bank of Mysore	0 to 30 days	-	0.83	0.83
	31 to 90 days	5.44	3.41	8.85
	91 to 180 days	2.50	4.07	6.57
State Bank of Travancore	0 to 30 days	0.38	0.02	0.40
	31 to 90 days	0.80	0.05	0.85
	91 to 180 days	-	0.03	0.03
Syndicate Bank	0 to 30 days	-	1.83	1.83
	31 to 90 days	12.87	4.65	1752
	91 to 180 days	-	4.05	4.05
Union Bank of India	0 to 30 days	1.25	0.37	1.62
	31 to 90 days	1.97	0.19	2.16
	91 to 180 days	-	1.00	1.00

(Rs. in crore)

Banks: Contd.	Days	Principal	Interest	Total
United Bank of India	0 to 30 days	-	2.49	2.49
	31 to 90 days	750	2.79	10.29
	91 to 180 days	750	766	15.16
Export Import Bank of United States	31 to 90 days	0.77		0.77
Standard Chartered Bank	31 to 90 days	4.59		4.59
Development Bank of Singapore	31 to 90 days	3.38	0.23	3.61
Development Bank of Singapore	91 to 180 days	-	0.45	0.45
Financial Institution
Industrial Finance Corporation of India	0 to 30 days	-	1.20	1.20
	31 to 90 days	3.75	2.42	6.17
	91 to 180 days	3.75	4.40	8.15
Export Import Bank of India	0 to 30 days	-	3.72	3.72
	31 to 90 days	19.94	14.89	34.83
	91 to 180 days	19.94	18.61	38.55
Life Insurance Corporation of India	31 to 90 days	-	0.03	0.03
	91 to 180 days	-	0.02	0.02
	181 to 365 days	-	0.03	0.03
National Bank of Agricultural and Development	0 to 30 days	-	0.57	0.57
	31 to 90 days	3.90	1.50	5.40
	91 to 180 days	-	0.19	0.19
SREI Equipment Finance Limited	0 to 30 days	-	0.95	0.95
	31 to 90 days	5.78	1.19	6.97
	91 to 180 days	-	3.10	3.10

The Company has defaulted in repayment of following dues to the financial institutions, banks and debenture holders during the year, which were not paid as at the Balance Sheet date.

(Rs. in crore)

Debenture Holders	Days	Principal	Interest	Total
LIC - Non Convertible Debentures	31 to 90 days	2.50	2.44	4.94
	91 to 180 days	2.50	1.63	4.13
	181 to 365 days	2.50	2.44	4.94

(Rs. in crore)

Banks	Days	Principal	Interest	Total
Bank of Baroda	31 to 90 days	0.46	0.98	1.44
	91 to 180 days	0.00	0.65	0.65
	181 to 365 days	2.50	0.00	2.50
Bank of Maharashtra	31 to 90 days	0.45	0.49	0.94
Bank of Maharashtra	91 to 180 days	0.00	0.32	0.32
Canara Bank	31 to 90 days	5.73	704	12.77
Canara Bank	91 to 180 days	5.73	4.69	10.42
Central Bank of India	31 to 90 days	2.60	1.17	3.77
Central Bank of India	91 to 180 days	0.00	1.22	1.22
Federal Bank	31 to 90 days	0.37	0.39	0.76
Federal Bank	91 to 180 days	0.00	0.68	0.68
Indian Overseas Bank	31 to 90 days	1.41	2.55	3.96
Indian Overseas Bank	91 to 180 days	0.00	1.70	1.70
Oriental Bank of Commerce	31 to 90 days	1.67	0.21	1.88
Oriental Bank of Commerce	91 to 180 days	0.00	0.39	0.39
Punjab National Bank	31 to 90 days	0.67	0.42	1.09
Syndicate Bank	31 to 90 days	2.87	3.62	6.49
Syndicate Bank	91 to 180 days	0.00	2.41	2.41
Union Bank of India	31 to 90 days	0.72	1.30	2.02
Union Bank of India	91 to 180 days	0.00	0.87	0.87
United Bank of India	31 to 90 days	4.44	716	11.60
United Bank of India	91 to 180 days	4.44	4.77	9.21
Export Import Bank of United States	31 to 90 days	3.21	0.25	3.46
	91 to 180 days	3.21	0.17	3.38
	181 to 365 days	8.75	0.50	9.25
Standard Chartered Bank	31 to 90 days	2.29	0.83	3.12
	91 to 180 days	2.29	0.56	2.85
	181 to 365 days	0.00	1.67	1.67
Development Bank of Singapore	31 to 90 days	1.69	0.68	2.37
	91 to 180 days	1.69	0.45	2.14
	181 to 365 days	0.00	0.68	0.68

(Rs. in crore)

Financial Institution	Days	Principal	Interest	Total
Industrial Finance Corporation of India	31 to 90 days	2.25	2.36	4.61
Industrial Finance Corporation of India	91 to 180 days	2.25	1.57	3.82
Life Insurance Corporation of India	31 to 90 days	0.00	0.34	0.34
	91 to 180 days	0.00	0.23	0.23
	181 to 365 days	0.00	0.34	0.34
National Bank of Agricultural and Development	91 to 180 days	0.00	0.81	0.81
SREI Equipment Finance Limited	31 to 90 days	1.70	2.76	4.46
SREI Equipment Finance Limited	91 to 180 days	1.70	1.84	3.54

(ix) The Company did not raise moneys by way of initial public offer or further public offer (including debt instruments) during the year. In our opinion, the term loans were applied for the purposes for which the loans were obtained.

(x) No fraud by the Company or on the Company by its officers or employees has been noticed or reported during the period covered by our audit.

(xi) Managerial remuneration has been paid and provided by the Company in accordance with the requisite approvals mandated by the provisions of Section 197 of the Act read with Schedule V to the Act.

(xii) In our opinion, the Company is not a Nidhi Company. Accordingly, provisions of clause 3(xii) of the Order are not applicable.

(xiii) In our opinion, all transactions with the related parties are in compliance with Sections 177 and 188 of the Act, where applicable, and the requisite details have been disclosed in the standalone financial statements, as required by the applicable Ind AS.

(xiv) During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures except for allotment of equity shares and optionally convertible debentures during the year to the lenders pursuant to the Scheme for Sustainable Structuring of Stressed Assets (S4A Scheme) adopted by the Joint Lender''s Forum as stated in notes 15(h)(iii) and 16.1 to the standalone financial statements. In respect of the same, in our opinion, the Company has complied with the requirements of Section 42 of the Act and Rules framed there under. Further, in our opinion, the amounts so raised have been used for the purposes for which the funds were raised.

(xv) In our opinion, the Company has not entered into any non-cash transactions with the directors or persons connected with them covered under Section 192 of the Act.

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

For Walker Chandiok & Co LLP

Chartered Accountants

Firm''s Registration No.: 001076N/N500013

per Adi P. Sethna

Partner

Membership No.:108840

Place : Mumbai

Date : 4 May 2017

Mar 31, 2016

1. We have audited the accompanying standalone financial statements of Hindustan Construction Company Limited ("the Company"), which comprise the Balance Sheet as at 31 March 2016, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Standalone Financial Statements

2. The Company''s 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 standalone financial statements, that give a true and fair view of the financial position, financial performance 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, read with Rule 7 of the Companies(Accounts) Rules, 2014 (as amended). This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act; safeguarding the assets of the Company; 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.

Auditor''s Responsibility

3. Our responsibility is to express an opinion on these standalone financial statements based on our audit.

4. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

5. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone financial statements are free from material misstatement.

6. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial controls relevant to the Company''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the financial statements.

7. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion on the standalone financial statements.

Basis for Qualified Opinion

8. As stated in Note 32 (a) to the standalone financial statements, the Company''s long term investments as at 31 March 2016 include investments aggregating Rs. 474.37 crore in its subsidiaries, namely, HCC Real Estate Limited and Lavasa Corporation Limited; and the long term loans and advances, other non-current assets and other current assets as at that date include dues from such subsidiaries aggregating Rs. 554.17 crore, Rs. 32.51 crore and Rs. 13.35 crore, respectively, being considered good and recoverable by the management. However, these subsidiaries have accumulated operational losses and their net worth is fully/ substantially eroded as at 31 March 2016. Further, such subsidiaries are facing liquidity constraints due to which they may not be able to realize projections made as per their business plans. In the absence of sufficient appropriate evidence, we are unable to comment upon the carrying value of these investments and recoverability of the aforesaid dues and the consequential impact, if any, on the accompanying standalone financial statements.

Qualified Opinion

9. In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2016, and its profit and its cash flows for the year ended on that date.

Emphasis of Matters

10. We draw attention to:

a) Notes 26.1 and 26.3 to the standalone financial statements regarding remuneration of Rs. 10.66 crore paid for each of the financial years ended 31 March 2014 and 31 March 2016 to the Chairman and Managing Director (CMD), which is in excess of the limits prescribed under the provisions of the erstwhile Companies Act, 1956/ the Companies Act, 2013, respectively and for which the Company has filed an application for review / an application, respectively with the Central Government; however approval in this regard is pending till date. Our opinion is not qualified in respect of this matter.

b) Note 32 (b) to the standalone financial statements regarding the Company''s investments in a subsidiary, long term loans and advances, other non-current assets and other current assets due from such subsidiary Rs. 0.25 crore, Rs. 984.82 crore, Rs. 127.48 crore and Rs. 18.31 crore, respectively, as at 31 March 2016. The consolidated net-worth of aforesaid subsidiary have been fully eroded; however, based on certain estimates and the other factors, including subsidiary''s future business plans and growth prospects, as described in the said note, management considers the decline in the value of investment as temporary in nature and believes that long-term loans and advances, other non-current assets and other current assets are good and recoverable. Our opinion is not qualified in respect of this matter.

c) Note 33 to the standalone financial statements regarding uncertainties relating to recoverability of uncompleted contracts and value of work done (inventory) and long-term trade receivables aggregating Rs. 978 crore and Rs. 206 crore, respectively, recognised in the earlier years in respect of projects which were suspended or substantially closed and where the claims are currently under negotiations/ arbitration/ litigation. Pending the ultimate outcome of these matters, which is presently unascertainable, no adjustments have been made in the accompanying standalone financial statements. Our opinion is not qualified in respect of this matter.

Other Matters

11. We did not audit the financial statements of six unincorporated integrated joint ventures, included in the standalone financial statements, whose financial statements reflect Company''s share in net loss of Rs. 13.66 crore for the year ended 31 March 2016. These financial statements have been audited by other auditors whose audit reports have been furnished to us, by the management, and our opinion on the standalone financial statements of the Company for the year then ended, to the extent they relate to the financial statements not audited by us as stated in this paragraph, is based solely on the audit reports of the other auditors. Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

12. As required by the Companies (Auditor''s Report) Order, 2016 ("the Order") issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the Annexure 1 a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

a. we have sought and except for the possible effects of the matter described in the Basis for Qualified opinion paragraph, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. except for the possible effects of the matter described in the Basis for Qualified opinion paragraph,in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

c. the standalone financial statements dealt with by this report are in agreement with the books of account;

d. except for the possible effects of the matter described in the Basis for Qualified opinion paragraph, in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended);

e. the matters described in paragraphs 8, 10(b) and 10(c) under the Emphasis of Matters/ Basis for Qualified Opinion paragraph, in our opinion, may have an adverse effect on the functioning of the Company;

f. on the basis of the written representations received from the directors as on 31 March 2016and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2016 from being appointed as a director in terms of Section164(2) of the Act;

g. the qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph;

h. we have also audited the internal financial controls over financial reporting (IFCoFR) of the Company as of 31 March 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date and our report dated 28 April 2016 as per Annexure 2 expressed a qualified opinion.

i. with respect to the other matters to be included in the Auditor''s 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. as detailed in Notes 31A (i) to (iii),33 and 43 to the standalone financial statements, the Company has disclosed the impact of pending litigations on its standalone financial position;

ii. except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, the Company has made provisions as detailed in Note 10 (b) to the standalone financial statements, 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.

Annexure 1

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, we report that:

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

(b) The fixed assets have been physically verified by the management during the year and no material discrepancies were noticed on such verification. In our opinion, the frequency of verification of the fixed assets is reasonable having regard to the size of the Company and the nature of its assets.

(c) The title deeds of all the immovable properties (which are included under the head ''fixed assets'') are held in the name of the Company.

(ii) The management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies between physical inventory and book records were noticed on physical verification.

(iii) The Company has granted unsecured loan to six companies covered in the register maintained under Section 189 of the Act; and with respect to the same:

(a) in our opinion, the terms and conditions of grant of such loans are not, prima facie, prejudicial to the Company''s interest.

(b) the schedule of repayment of the principal and the payment of the interest has not been stipulated and hence we are unable to comment as to whether repayments/receipts of the principal amount and the interest are regular;

(c) since the schedule of repayment has not been stipulated, the provisions of clause 3 (iii) (c) of the Order are not applicable to the Company.

(iv) In our opinion, the Company has complied with the provisions of sections 185 and 186 of the Act,to the extent applicable,in respect of loans, investments, guarantees, and security.

(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable to the Company.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under sub-section (1) of Section 148 of the Act in respect of Company''s products/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) Undisputed statutory dues including provident fund, employees'' state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues, as applicable, have generally been regularly deposited with the appropriate authorities, though there have been delays in few cases. Further, no undisputed amounts payable in respect thereof were outstanding at the year-end for a period of more than six months from the date they became payable.

(b) There are no dues in respect of duty of customs and duty of excise that have not been deposited with the appropriate authorities on account of any dispute. The dues outstanding in respect of income-tax, sales-tax, service tax and value added tax on account of any dispute, are as follows:

Name Nature of Amount Amount Period to Forum where of the dues (Rs. in Paid which the dispute is statute Crore) Under amount pending Protest relates (Rs. in Crore)

The Income 24.63 24.63 A.Y 2006- Income Tax Income Tax 2007 to Appellate Tax Act, 2010-2011 Tribunal 1961

The Sales Sales 0.08 0.08 A.Y 2010- Supreme Tax Act Tax/ Value 2011 Court Added 4.70 - A.Y. 1997- High Court Tax/ Entry 1998 and Tax 2012-2013

7.57 1.00 A.Y 1996- Taxation 97 to 2000- Tribunal 01, 2005- 2008, A.Y 2007-08 to 2009-10 and 2012-13

93.78 3.33 A.Y 2002- Appellate 2003, A.Y Authority- 2004-2005 up to to 2012- Commissioner 2013 level

The Service 289.10 - January Custom, Finance tax 2004 to Excise and Act, 1994 including March 2012 Service Tax interest Appellate and Tribunal

penalty, as 0.18 - A.Y. 2004 Commissioner applicable -2007 -Appeal

(viii) There are no loans or borrowings payable to government. The Company has defaulted in repayment of following dues to the financial institutions, banks and debenture holders during the year,which were paid on or before the Balance Sheet date.

(Rs. in crore)

Debenture - Holders_

Days Principal Interest Total Amount

AXIS Non-Convertible 0 - 30 days - 1.10 1.10

31 - 90 days - 6.60 6.60

91 - 180 days 6.00 2.18 8.18

LIC Non-Convertible 0 - 30 days - 0.92 0.92

31 - 90 days 2.50 6.39 8.89

91 - 180 days 2.50 0.90 3.40

Banks

Axis Bank 0 - 30 days - 3.35 3.35

31 - 90 days 1.50 10.26 11.76

91 - 180 days 11.48 3.82 15.30

Bank of Baroda 0 - 30 days - 0.58 0.58

31 - 90 days 180 1.99 3.79

Bank of Maharashtra 0 - 30 days - 0.29 0.29

31 - 90 days 1.02 1.72 2.74

91 - 180 days 0.78 0.56 1.34

Canara Bank 0 - 30 days - 6.72 6.72

31 - 90 days 12.25 19.96 32.21

91 - 180 days 9.63 3.26 12.89

Central Bank of India 0 - 30 days - 0.22 0.22

31 - 90 days 2.40 1.26 3.66

91 - 180 days 1.85 0.40 2.25

Federal Bank 0 - 30 days - 0.65 0.65

31 - 90 days 0.77 1.30 2.07

91 - 180 days 0.63 - 0.63

IDBI Bank 0 - 30 days - 7.45 7.45

31 - 90 days 14.56 14.73 29.29

(Rs. in crore)

Banks: Contd.

Days Principal Interest Total Amount

Indian Overseas Bank 0 - 30 days - 0.89 0.89

31 - 90 days 3.15 5.28 8.43

91 - 180 days 2.40 1.72 4.12

Oriental Bank of 0 - 30 days 1.25 - 1.25

Commerce 31 - 90 days - 1.06 1.06

91 - 180 days - 0.42 0.42

Punjab National Bank 0 - 30 days - 1.38 1.38

31 - 90 days 2.99 2.74 5.73

State Bank of 0 - 30 days - 0.88 0.88

Hyderabad 31 - 90 days 2.39 3.04 5.43

State Bank of Mysore 0 - 30 days - 0.93 0.93

31 - 90 days 5.75 6.40 12.15

91 - 180 days - 0.90 0.90

Syndicate Bank 0 - 30 days - 1.86 1.86

31 - 90 days 6.50 11.03 17.53

91 - 180 days 5.00 3.59 8.59

Union Bank of India 0 - 30 days - 0.93 0.93

31 - 90 days 2.88 3.20 6.08

United Bank of India 0 - 30 days - 2.79 2.79

31 - 90 days 9.75 19.21 28.96

91 - 180 days 7.50 2.69 10.19

State Bank of 0 - 30 days - 0.27 0.27

Travancore 31 - 90 days 0.86 0.96 1.82

Toronto Dominion 0 - 30 days - 0.45 0.45

Bank 31 - 90 days - 0.59 0.59

Standard Chartered 31 - 90 days - 1.64 1.64

Bank 91 - 180 days - 0.81 0.81

Development Bank of 0 - 30 days - 0.71 0.71

Singapore 31 - 90 days 3.26 1.34 4.60

Financial Institutions_

SREI Equipment 0 - 30 days - 1.08 1.08

Finance Limited 31 - 90 days 0.87 3.20 4.07

91 - 180 days 5.78 5.31 11.09

National Bank of 0 - 30 days - 0.44 0.44

Agricultural and 31 - 90 days 2.26 2.62 4.88

Development 91 - 180 days 1.98 0.83 2.81

Life Insurance 0 - 30 days - 0.03 0.03

Corporation of India 31 - 90 days 0.75 0.06 0.81

Export Import Bank 0 - 30 days - 4.64 4.64

of India 31 - 90 days 27.86 36.56 64.42

Industrial Finance 0 - 30 days - 1.35 1.35

Corporation of India 31 - 90 days 1.62 1.37 2.99

91 - 180 days 7.50 7.93 15.43

The Company has defaulted in repayment of following dues to the financial institutions, banks and debenture holders during the year, which were not paid as at the Balance Sheet date.

(Rs. in crore)

Financial Institutions

Days Principal Interest Total Amount

SREI Equipment 0 - 30 days - 1.01 1.01

Finance Limited 31 - 90 days 1.98 - 1.98

Export Import Bank 0 - 30 days - 4.8 4.8

of India 31 - 90 days 12.51 4.3 16.81

Industrial Finance Corporation of India 0 - 30 days - 1.27 1.27

Banks

Days Principal Interest Total Amount

Development Bank 31 - 90 days - 0.23 0.23

of Singapore 91 - 180 days - - -

Standard Chartered 0 - 30 days - 1.15 1.15

Bank 31 - 90 days 2.29 0.56 2.85

91 - 180 days 2.29 - 2.29

(Rs. in crore)

Banks: Contd.

Days Principal Interest Total Amount

Toronto Dominion 0 - 30 days 3.28 - 3.28

Bank 31 - 90 days - 0.15 0.15

United Bank of India 0 - 30 days - 2.70 2.70

Union Bank of India 0 - 30 days 0.43 0.43

31 - 90 days 1.25 0.43 1.68

State Bank of 0 - 30 days - 0.27 0.27

Travancore 31 - 90 days - 0.13 0.13

State Bank of 0 - 30 days - 0.04 0.04 Mysore

State Bank of 0 - 30 days - 0.57 0.57 Hyderabad

Punjab National 0 - 30 days - 0.43 0.43

Bank 31 - 90 days 1.26 0.43 1.69

IDBI Bank 0 - 30 days - 2.43 2.43

31 - 90 days 6.75 4.66 11.41

Federal Bank 0 - 30 days - 0.25 0.25

31 - 90 days - 0.20 0.20

Debenture - Holders

LIC Non-Convertible 0 - 30 days - 0.88 0.88

31 - 90 days 2.50 0.88 3.38

(ix) The Company did not raise moneys by way of initial public offer or further public offer (including debt instruments). In our opinion, the term loans availed during the year were applied for the purposes for which the loans were obtained.

(x) No fraud by the Company or on the Company by its officers or employees has been noticed or reported during the period covered by our audit.

(xi) In our opinion, managerial remuneration for the year ended 31 March 2016 has been paid and provided in accordance with the requisite approvals mandated by the provisions of section 197 of the Act, read with Schedule V to the Act, except for remuneration paid/payable Rs. 10.66 crore for which the Company''s application for approval, in excess of the limit prescribed by Rs. 8.71 crore is pending with the Central Government. Pending such approval, excess remuneration paid by the Company is held under trust.

(xii) In our opinion, the Company is not a Nidhi Company. Accordingly, the provisions of clause 3(xii) of the Order are not applicable to the Company.

(xiii) In our opinion all transactions with the related parties are in compliance with sections 177 and 188 of Act, where applicable, and the requisite details have been disclosed in the financial statements, etc., as required by the applicable accounting standards.

(xiv) During the year, the Company has made a private placement of equity shares. In respect of the same, in our opinion, the Company has complied with the requirement of section 42 of the Act and the amounts raised have been used for the purposes for which the funds were raised.

(xv) The Company has not entered into any non-cash transactions with directors or persons connected with them.

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

For Walker Chandiok & Co LLP

(Formerly Walker, Chandiok & Co)

Chartered Accountants

Firm''s Registration No.: 001076N/N500013

per Adi P. Sethna

Partner

Membership No.:108840

Place : Mumbai

Date : 28 April 2016

Mar 31, 2014

We have audited the accompanying financial statements of Hindustan Construction Company Limited. (''the Company''), which comprise the Balance Sheet as at March 31, 2014 , the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 (''the Act'') which shall continue to apply in respect of section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated September 13, 2013 issued by the Ministry of Corporate Affairs. This responsibility includes the design, implementation and maintenance of internal control 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.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entities internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

1) In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

(ii) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

2) We did not audit the financial statements of certain Integrated Joint Ventures reflecting Company''s share in Profit of Rs. 1.58 crore in these financial statements. These financial statements have been audited by other auditors whose reports have been furnished to us by the Management, and our opinion, in so far as it relates to the amounts included in respect of the said audited Joint Ventures, is based solely on the Reports of the other auditors. Our opinion is not qualified in respect of this matter.

Emphasis of Matter

3) We draw attention to:

(a) Note No. 35 and 36 of the Notes to financial statements regarding Company''s exposure in the nature of long-term investments and loans advances of Rs. 866.13 crore and Rs. 843.01 crore in its subsidiaries namely HCC Real Estate Ltd. and HCC Infrastructure Ltd. On the basis of the book value of these companies, there is a diminution in the value of these investments and advances, which in the opinion of the Management is of temporary in nature.

(b) Note No. 37 of the Notes to financial statements regarding Company''s claims of Rs. 518.36 crore outstanding for more than 5 years under ''Uncompleted Contracts and Value of Work Done'', ''Long Term Trade Receivables'' and ''Short Term Loans and Advances'' amounting to Rs. 445.53 crore, Rs. 34.33 crore and Rs. 38.50 crore respectively. Considering the contractual tenability, progress of negotiation with clients and based on its past experience, management is reasonably confident of the recovery of the same.

(c) Note No. 38 of the Notes to financial statements regarding ''Long Term Trade Receivables'' and ''Uncompleted Contracts and Value of Work Done'' as at March 31, 2014 of Rs. 1,056.57 crore and Rs. 243.11 crore respectively, representing favorable arbitration awards (including interest thereon) which have subsequently been challenged by the clients in courts. Of the above, awards amounting to Rs. 105.44 crore have been set aside by District/High Courts against which the Company has preferred appeals at High Courts/Supreme Court and is legally advised that it has a good case on merit. The recoverability of these amounts is dependent upon the final outcome of the appeals getting resolved in the favour of the Company.

(d) Note No. 39 of the Notes to financial statements regarding ''Trade receivables'' and ''Uncompleted Contracts and Value of Work Done (net of client advances)'' of Rs. 20.96 crore and Rs. 48.19 crore respectively which have been outstanding for projects where work has been suspended by the client or has been projects have handed over to clients. Based on the continuous dialogue with the Clients, management is reasonably confident of the recovery of these amounts.

(e) Note No. 28.1 of the financial statement regarding managerial remuneration paid to Chairman and Managing Director which is in excess by Rs. 10.18 crore per annum in respect of financial year 2012-13 and 2013-14 for which Company has made an application to the Central Government; approvals in this regard are under consideration / pending till date.

Report on Other Legal and Regulatory Requirements

4) As required by the Companies (Auditor''s Report) Order, 2003 (as amended) (''the Order'') issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act, we enclose in the annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

5) As required by section 227(3) of the Act, we report that:

a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b) In our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

c) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account;

d) In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956 which shall continue to apply in respect of section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated September 13, 2013 issued by the Ministry of Corporate Affairs.

e) On the basis of the written representations received from the directors, as on March 31, 2014, and taken on record by the Board of Directors, none of the directors of the Company is disqualified as on March 31, 2014 from being appointed as a director, in terms of clause (g) of sub-section (1) of Section 2 74 of the Companies Act, 1956;

(Referred to in paragraph 1 under the heading ''Report on Other Legal and Regulatory Requirements'' of our Report of even date on the financial statements for the year ended on March 31, 2014 of Hindustan Construction Company Limited.)

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

(b) A substantial portion of the fixed assets have been physically verified by the management during the year. In our opinion the frequency of verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) Fixed assets disposed off during the year were not substantial. According to the information and explanations given to us, we are of the opinion that the disposal of fixed assets has not affected the going concern status of the Company.

(ii) (a) The inventories have been physically verified by the management at reasonable intervals during the year. In our opinion, the frequency of verification is reasonable.

(b) The procedure of physical verification of inventories followed by the management is reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanation given to us, the Company is maintaining proper records of inventory. The discrepancies noticed on verification between physical stocks and the book records were not material and have been properly dealt with in the books of account.

(iii) (a) The company has not granted unsecured loans and

Inter-Corporate Deposits to companies covered in the Register maintained under Section 301 of the Act. Hence the provisions of clause (iii) (a), (b), (c), (d) of paragraph 4 are not applicable to the company.

(b) The company has taken an unsecured loan from two companies covered in the Register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved in the current year amounted to Rs. 64 crore and the year-end balance of loans taken from such parties are Rs. 48 crore.

(c) Based on the information and explanations given to us, we are of the opinion that the rate of interest and other terms and conditions of loans taken from such parties covered in the Register maintained under Section 301 are not prima facie prejudicial to the interests of the company.

(d) According to the information and explanations given to us, repayments of the principal and interest have been regularly made as stipulated.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and the nature of its business, for purchase of inventory and fixed assets and for the Work Done. However the internal controls over accounting of consumption, wastages, material reconciliation, need further strengthening.

(v) (a) The company has taken unsecured loans from two companies which are covered in the Register maintained under Section 301 of the Companies Act, 1956. The same has been entered in the register. The maximum amount involved in the current year amounted to Rs. 64 crore and the balance at the year end is Rs. 48 crore.

(b) In our opinion and according to the information and explanation given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Sec 301 of the Companies Act,1956 have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under. Therefore, the provisions of Section 58A, 58AA and any other relevant provisions of the Companies Act, 1956 and the rules framed there under with regard to deposits accepted from the public are not applicable to the Company.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business. However the scope needs to be enlarged to cover project related cost-to-complete workings and certain areas of head office accounting.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government of India, regarding the maintenance of cost records under clause (d) of subsection (1) of Section 209 of the Act and are of the opinion that prima facie, the prescribed accounts and records have been maintained. We have, however not made a detailed examination of the records with a view to determine whether they are accurate or complete.

(ix) (a) According to the records of the Company, Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it have been generally regularly deposited during the year with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of above were in arrears, as at March 31, 2014 for a period of more than six months from the date on which they became payable.

(b) According to the records of the Company, sales tax, income tax, customs duty, wealth tax, service tax, excise duty or cess which have not been deposited on account of dispute are given below:

Nature Year Amount Forum where dispute is of (Rs.in pending dues crore)

1996-97 & 1.35 High Courts 1998-99

Sales 1997-98 to 5.97 Taxation Tribunal Tax/ 2000-01 VAT 2002-03 to 63.27 AC/DC/Add. 2009-10 Commissioners & ACTO

2004-07 & 0.31 Central Excise Appeal/ 2005-06 Service Tax Commissioner

Service Tax 2005 to 2006 2.97 Central Excise and Service

2004-05 to 741.51 Tax Appellate Tribunal 2011-12

(x) The Company does not have any accumulated losses at the end of the financial year. The Company has not incurred cash losses during the financial year covered by our audit but has incurred cash losses in the immediately preceding financial year.

(xi) The details of principal and interest not paid on due dates i.e. the last dates specified in loan documents or debenture trust deed, to the Financial Institutions and Banks during the year are as follows

Amount of Principal Period of Delays (fin crore) (in Days)

41.54 0 to 30

Amount of Interest Period of Delays (fin crore) (in Days)

157.39 1 to 30

50.97 31 to 60

These dues have been paid by the end of the year and there is no overdue as of 31st March, 2014

(xii) Based on our examination of the records and the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities

(xiii) In our opinion the Company is not a chit fund or a nidh / mutual benefit fund / society. Therefore the provisions of clause 4(xiii) of the Companies (Auditor''s Report) (Amendment) Order, 2004 are not applicable to the Company

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

(xv) In our opinion, the terms and conditions on which the Company has given guarantees for loans taken by others from banks or financial institutions are not prejudicial to the interest of the Company.

(xvi) In our opinion the term loans have been applied for the purpose for which they were raised.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that funds raised on short-term basis have not been used for long-term investment.

(xviii) During the year under audit the Company has not made preferential allotment of equity shares. However the Company has made preferential allotment of warrants to companies covered in the register maintained under Section 301 of the Companies Act, 1956. The price at which the warrants have been issued has been determined as per the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirement) Regulations, 2009, which in our opinion is not prejudicial to the interest of the Company.

(xix) According to the information and explanations given to us, no debentures were issued during the period.

(xx) The Company has not raised any money by way of public issue during the year.

(xxi) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

For K.S. Aiyar & Co,

Chartered Accountants

ICAI Firm Registration No: 100186W

Raghuvir M. Aiyar Place: Mumbai Partner

Date: 2nd May, 2014 Membership No.: 38128

Mar 31, 2013

We have audited the accompanying financial statements of Hindustan Construction Company Limited.(''the Company''), which comprise the Balance Sheet as at March 31, 2013, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 (''the Act''). This responsibility includes the design, implementation and maintenance of internal control 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.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.

The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

1) In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Company Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

(ii) in the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

2) We did not audit the financial statements of certain Integrated Joint Ventures reflecting Company''s share in Loss of Rs. 6.54 crore in these financial statements. These financial statements have been audited by other auditors whose reports have been furnished to us by the Management, and our opinion, in so far as it relates to the amounts included in respect of the said audited Joint Ventures, is based solely on the Reports of the other auditors.

Emphasis of Matter

3) We draw attention to:

(a) Note No. 14.1 and 14.2 of the Notes to Accounts regarding Company''s exposure in the nature of long-term investments and loans and advances of Rs. 821.65 crore and Rs. 736.33 crore in its subsidiaries namely HCC Real Estate Ltd. and HCC Infrastructure Ltd. On the basis of the book value of these companies, there is a diminution in the value of these investments and advances, which in the opinion of the management is of temporary in nature.

(b) Note No. 16.1 of the Notes to Accounts regarding litigations amounting to Rs. 35.50 crore, which are more than one year old as on 31.03.2013, where claims favourably awarded in arbitration have been subsequently rejected by Courts of Law. The recoverability is dependent upon the final outcome of the appeals getting resolved in favor of the Company.

(c) Company''s claims of Rs. 189.46 crore, Rs. 21.28 crore and Rs. 418.06 crore being included under "Long Term Trade Receivables" "Short Term Loans and Advances" and "Uncompleted Contracts and Value of Work Done" respectively, which have been outstanding for over 5 years. The Company has assessed the recoverability of these claims based on favourable arbitration awards, court orders and legal opinion. Considering the contractual tenability and legal advice from Company''s counsel in the matter, the management is confident of recovery of the same.

(d) Note No. 27.1 of the Notes to Accounts regarding application seeking approval from Central Government for the excess remuneration paid to managerial personnel.

Our opinion is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements

4) As required by the Companies (Auditor''s Report) Order, 2003 (as amended) (''the Order'') issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act, we enclose in the annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order,

5) As required by section 227(3) of the Act, we report that:

a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b) In our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

c) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account;

d) In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956.

e) On the basis of the written representations received from the directors, as on March 31, 2013, and taken on record by the Board of Directors, none of the directors of the Company is disqualified as on March 31, 2013 from being appointed as a director, in terms of clause (g) of sub- section (1) of Section 274 of the Companies Act, 1956;

(Referred to in paragraph 1 under the heading ''Report on Other Legal and Regulatory Requirements'' of our Report of even date on the financial statements for the year ended on March 31, 2013 of Hindustan Construction Company Limited.)

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

(b) A substantial portion of the fixed assets have been physically verified by the management during the year.

In our opinion the frequency of verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) Fixed assets disposed off during the year were not substantial. According to the information and explanations given to us, we are of the opinion that the disposal of fixed assets has not affected the going concern status of the Company.

(ii) (a) The inventories have been physically verified by the management at reasonable intervals during the year. In our opinion, the frequency of verification is reasonable.

(b) The procedure of physical verification of inventories followed by the management is reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanation given to us, the Company is maintaining proper records of inventory. The discrepancies noticed on verification between physical stocks and the book records were not material and have been properly dealt with in the books of account.

(iii) (a) The Company has not granted unsecured loans and Inter- Corporate Deposits to companies covered in the Register maintained under Section 301 of the Act. Hence the provisions of clause (iii) (a), (b), (c), (d) of paragraph 4 are not applicable to the Company,

(b) The Company has taken an unsecured loan from two companies covered in the Register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved in the current year amounted to Rs. 32 crore and the year-end balance of loans taken from such parties are Rs. 32 crore.

(c) Based on the information and explanations given to us, we are of the opinion that the rate of interest and other terms and conditions of loans taken from such parties covered in the Register maintained under Section 301 are not prima facie prejudicial to the interests of the Company.

(d) According to the information and explanations given to us, repayments of the principal and interest have been regularly made as stipulated.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for purchase of inventory and fixed assets and for the Work Done. However the internal controls over accounting of consumption, wastages, material reconciliation, need further strengthening.

(v) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have so been entered.

(b) In our opinion and according to the information and explanation given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Sec 301 of the Companies Act,1956 have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under. Therefore, the provisions of Section 58A, 58AA and any other relevant provisions of the Companies Act, 1956 and the rules framed there under with regard to deposits accepted from the public are not applicable to the Company,

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business. However the scope needs to be enlarged to cover project related cost-to-complete workings and certain areas of head office accounting.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government of India, regarding the maintenance of cost records under clause (d) of subsection (1) of Section 209 of the Act and are of the opinion that prima facie, the prescribed accounts and records have been maintained. We have, however not made a detailed examination of the records with a view to determine whether they are accurate or complete.

(ix) (a) According to the records of the Company, Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it have been generally regularly deposited during the year with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of above were in arrears, as at March 31, 2013 for a period of more than six months from the date on which they became payable.

(b) According to the records of the Company, sales tax, income tax, customs duty, wealth tax, service tax, excise duty or cess which have not been deposited on account of dispute are given below :

Nature Year Amount Forum where dispute is of (Rs. in pending dues crore)

1996-97 & 1.35 High Courts 1998-99 Sales Tax 1997-98 to 5.97 Taxation Tribunal VAT 2002-03 to 18.17 AC/DC/Add. 2008-09 Commissioners & ACTO

2005-06 0.31 Central Excise Appeal/ Service Service Tax Commissioner

Tax June 04 to 2.97 Central Excise and Service March 06 Tax Appellate Tribunal

(x) The Company does not have any accumulated losses at the end of the financial year. The Company has incurred cash loss during the financial year covered by our audit.

(xi) The details of principal and interest not paid on due dates i.e. the last dates specified in loan documents or debenture trust deed, to the Financial Institutions and Banks during the year are as follows:

Amount of Principal Period of Delays (Rs. in crore) (in Days)

44.68 0 to 90

8.88 91 to 180

11.84 181 to 365

Amount of Interest Period of Delays (Rs. in crore) (in Days)

132.70 1 to 30

0.79 31 to 60

0.94 61 to 90

These dues have been paid by the end of the year and there is no overdue as of March 31, 2013.

(xii) Based on our examination of the records and the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore the provisions of clause 4(xiii) of the Companies (Auditor''s Report) (Amendment) Order, 2004 are not applicable to the Company,

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company

(xv) In our opinion, the terms and conditions on which the Company has given guarantees for loans taken by others from banks or financial institutions are not prejudicial to the interest of the Company,

(xvi) In our opinion the term loans have been applied for the purpose for which they were raised.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that funds raised on short-term basis have not been used for long-term investment.

(xviii)According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix) According to the information and explanations given to us, no debentures were issued during the period.

(xx) The Company has not raised any money by way of public issue during the year.

(xxi) To the best of our knowledge and belief and according to the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year except for frauds on the Company for an amount of Rs. 62.19 Lacs by employees of the Company, out of which Rs. 3.40 Lacs have been recovered. The matter has been investigated by management and action for recovery of balance amount of Rs. 58.79 Lacs is being continued. We are informed that internal controls have been further strengthened to avoid recurrence of such cases.

For K.S. Aiyar & Co,

Chartered Accountants

Registration No: 100186W

Raghuvir M. Aiyar

Place: Mumbai Partner

Date: May 3, 2013 Membership No.: 38128

Mar 31, 2012

1. We have audited the attached Balance Sheet of Hindustan Construction Company Limited, as at March 31, 2012 and also the Statement of Profit and Loss for the year ended on that date annexed thereto and the cash flow statement for the year ended on that date. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We did not audit the financial statements of certain Integrated Joint Ventures reflecting Company's share in Loss of Rs 3.81 crore in these financial statements. These financial statements have been audited by other auditors whose reports have been furnished to us, and our opinion, in so far as it relates to the amounts included in respect of the said audited Joint Ventures, is based solely on the Reports of the other auditors.

The financial statements of integrated joint ventures reflecting total assets of Rs 33.43 crore, share in revenue of Rs 11.65 crore.

4. Without qualifying our opinion, we draw attention to:

(a) Note No 4.4 of the Notes to Accounts regarding admission of the Company's proposal by CDR Empowered Group for Corporate Debt Restructuring of Company's debt.

(b) Note No. 271 of the Notes to Accounts regarding application seeking approval from Central Government for the excess remuneration paid to managerial personnel.

5. As required by the Companies (Auditor's Report) Order, 2003 as amended by Companies (Auditor's Report) (Amendment) Order, 2004 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

6. Further to our comments in the Annexure referred to above, we report that:

(a) We have 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 appears from our examination of those books;

(c) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 to the extent applicable;

(e) On the basis of written representations received from the Directors / Companies, as on March 31, 2012, and taken on record by the Board of Directors we report that none of the directors are disqualified as on March 31, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

(f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2012;

(ii) In the case of the Statement of Profit and Loss, of the Loss for the year ended on that date; and

(iii) In the case of Cash Flow Statement, of the cash flows for the year ended on that date.

(Referred to in paragraph 4 of our Report of even date on the Accounts for the year ended on March 31, 2012 of Hindustan Construction Company Limited)

(i) The Company is maintaining proper records showing full particulars including quantitative details and situation of Fixed Assets.

(ii) A substantial portion of the fixed assets have been physically verified by the management during the year and in our opinion the frequency of such verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such physical verification.

(iii) Fixed assets disposed off during the year were not substantial. According to the information and explanations given to us, we are of the opinion that the disposal of fixed assets has not affected the going concern status of the Company.

(iv) The inventories have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(v) The procedure of physical verification of inventories followed by the management is reasonable and adequate in relation to the size of the Company and the nature of its business.

(vi) In our opinion and according to the information and explanation given to us, the Company is maintaining proper records of inventory. The discrepancies noticed on verification between physical stocks and the book records were not material and have been properly dealt with in the books of account.

(vii) The Company has not granted unsecured loans and Inter-Corporate Deposits to companies covered in the Register maintained under Section 301 of the Act. Hence the provisions of clause (iii)(b),(c),(d) of paragraph 4 are not applicable to the Company.

(viii) The Company has taken unsecured loans in the form of inter-corporate deposit from three companies covered in the Register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved in the current year amounted to Rs 29.16 crore and the balance at the year end is NIL.

(ix) Based on the information and explanations given to us, we are of the opinion that the rate of interest and other terms and conditions of loans taken from such parties covered in the Register maintained under Section 301 are not prima facie prejudicial to the interests of the Company.

(x) According to the information and explanations given to us, repayments of the principal and interest have been regularly made as stipulated.

(xi) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for purchase of inventory and fixed assets and for the Work Done. During the course of our audit, we have not observed any major weakness in internal control system.

(xii) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section. The transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(xiii) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under. Therefore, the provisions of Section 58A, 58AA and any other relevant provisions of the Companies Act, 1956 and the rules framed there under with regard to deposits accepted from the public are not applicable to the Company.

(xiv) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business. However the scope needs to be enlarged to cover project related cost-to-complete workings and certain areas of head office accounting.

(xv) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government of India, regarding the maintenance of cost records under clause (d) of subsection (1) of Section 209 of the Act and are of the opinion that prima facie, the prescribed accounts and records have been maintained. We have, however not made a detailed examination of the records with a view to determine whether they are accurate or complete.

(xvi) According to the records of the Company, Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it have been generally regularly deposited during the year with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of above were in arrears, as at March 31, 2012 for a period of more than six months from the date on which they became payable.

(xvii) According to the records of the Company, sales tax, income tax, customs duty, wealth tax, service tax, excise duty or cess which have not been deposited on account of dispute are given below :

Nature Year Amount Forum where of dues (Rs in dispute is crore) pending 1996-97 1.27 High Courts & 1998- 99

Sales 1997-98 0.53 Taxation Tribunal - to 2000- Cuttack

Tax/ VAT 01

2002-03 28.41 AC/DC/Add. to 2008- Commissioners & 09 ACTO 2005-06 0.23 Central Excise Appeal/Service Service Tax Commissioner

Tax Jan 04 to 2.87 Central Excise Mar 06 and service Tax Appellate Tribunal

(xviii) The Company does not have any accumulated losses at the end of the financial year. The Company has incurred cash loss during the financial year covered by our audit. The Company has not incurred cash loss during the immediately preceding financial year.

(xix) The Company has defaulted in repayment of dues to Financial Institutions & Banks. Details are as follows:

Amount of Principal Period of Delays Default (in Days) (Rs in crore)

306.17 1 to 30

81.70 31 to 60

133.75 61 to 90

173.75 90 to 101

Amount of Principal Period of Delays Default (in Days) (Rs in crore)

26.91 1 to 30

20.57 31 to 60

21.17 61 to 90

(xx) Based on our examination of the records and the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xxi) In our opinion the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore the provisions of clause 4(xiii) of the Companies (Auditor's Report) (Amendment) Order, 2004 are not applicable to the Company.

(xxii) In our opinion the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Companies (Auditor's Report) (Amendment) Order, 2004 are not applicable to the Company.

(xxiii) In our opinion, the terms and conditions on which the Company has given guarantees for loans taken by others from banks or financial institutions are not prejudicial to the interest of the Company.

(xxiv) In our opinion, the term loans have been applied for the purpose for which they were raised.

(xxv) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that Rs 623 crore of short-term funds have been used for long-term investments (upon excluding the current maturities of Rs 1,056 crore of long term loans raised, this is not the case).

(xxvi) According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xxvii) The Company has created a security / charge in-respect of secured debentures issued and outstanding at the year end.

(xxviii) The Company has not raised any money by way of public issue during the year.

(xxix) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For K.S. Aiyar & Co

Chartered Accountants FRN: 100186W

Raghuvir M. Aiyar

Partner

Membership No.38128

Place: Mumbai

Date: April 27, 2012

Mar 31, 2011

1. We have audited the attached Balance Sheet of Hindustan Construction Company Limited, as at 31st March, 2011 and also the Profit and Loss Account for the year ended on that date annexed thereto and the cash flow statement for the year ended on that date. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We did not audit the financial statements of certain Integrated Joint Ventures reflecting Companys share in Loss of Rs. 0.76 crores in these financial statements. These financial statements have been audited by other auditors whose reports have been furnished to us, and our opinion, in so far as it relates to the amounts included in respect of the said audited Joint Ventures, is based solely on the Reports of the other auditors. The financial statements of an integrated joint ventures reflecting total assets of Rs. 19.61 crores, share in revenue of Rs. 19.12 crores and share in loss of Rs. 15.30 crores included in these financial statements are unaudited.

4. Without qualifying our opinion, we draw attention to Note 27 (i) and (ii) of Schedule Q regarding the value of investments and loans and advances to certain subsidiaries.

5. As required by the Companies (Auditors Report) Order, 2003 as amended by Companies (Auditors Report) (Amendment) Order, 2004 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

6. Further to our comments in the Annexure referred to above, we report that:

(a) We have 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 appears from our examination of those books;

(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 to the extent applicable;

(e) On the basis of written representations received from the directors / companies, as on 31st March, 2011, and taken on record by the Board of Directors we report that none of the directors are disqualified as on 31st March 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

(f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2011;

(ii) In the case of the Profit and Loss Account, of the profit for the year ended on that date; and

(iii) In the case of Cash Flow Statement, of the cash flows for the year ended on that date.

Annexure to the Auditors Report ANNEXURE TO THE AUDITORS REPORT (Referred to in paragraph 4 of our Report of even date on the Accounts for the year ended on 31st March, 2011 of Hindustan Construction Company Limited)

(i) The Company is maintaining proper records showing full particulars including quantitative details and situation of Fixed Assets.

(ii) A substantial portion of the fixed assets have been physically verified by the management during the year and in our opinion the frequency of such verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such physical verification.

(iii) Fixed assets disposed off during the year were not substantial. According to the information and explanations given to us, we are of the opinion that the disposal of fixed assets has not affected the going concern status of the Company.

(iv) The inventories have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(v) The procedure of physical verification of inventories followed by the management is reasonable and adequate in relation to the size of the Company and the nature of its business.

(vi) In our opinion and according to the information and explanation given to us, the Company is maintaining proper records of inventory. The discrepancies noticed on verification between physical stocks and the book records were not material and have been properly dealt with in the books of account.

(vii) The Company has not granted unsecured loans and Inter-Corporate Deposits to companies covered in the Register maintained under Section 301 of the Act. Hence the provisions of clause (iii)(b),(c),(d) of paragraph 4 are not applicable to the Company.

(viii) The Company has taken unsecured loans in the form of inter-corporate deposit from three companies covered in the Register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved was Rs. 23.51 crores and the balance at the year end was Rs. 2 crores.

(ix) Based on the information and explanations given to us, we are of the opinion that the rate of interest and other terms and conditions of loans taken from such parties covered in the Register maintained under Section 301 are not prima facie prejudicial to the interests of the Company.

(x) According to the information and explanations given to us, repayments of the principal and interest have been regularly made as stipulated.

(xi) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for purchase of inventory and fixed assets and for the Work Done. During the course of our audit, we have not observed any major weakness in internal control system.

(xii) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section. The transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(xiii) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under. Therefore, the provisions of Section 58A, 58AA and any other relevant provisions of the Companies Act, 1956 and the rules framed thereunder with regard to deposits accepted from the public are not applicable to the Company.

(xiv) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(xv) The Central Government has not prescribed the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956.

(xvi) According to the records of the Company, Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it have been generally regularly deposited during the year with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of above were in arrears, as at March 31, 2011 for a period of more than six months from the date on which they became payable.

(xvii) According to the records of the Company, sales tax, income tax, customs duty, wealth tax, service tax, excise duty or cess which have not been deposited on account of dispute are given below :

Nature of Year Amount Forum where dispute is dues (Rs. in pending Crs)

Income Tax 2008-09 92.65 Commissioner of Income Tax (Appeals)

Sales Tax/ VAT 1996-97 & 1.27 High Courts 1998-99

1997-98 to 0.53 Taxation Tribunal Ã Cuttak 2000-01

2002-03 to 12.20 AC/DC/Add. Commissioners 2008-09 & ACTO

Service Tax 2005-06 0.23 Central Excise Appeal/ Service Tax Commissioner

Jan 04 to 2.87 Central Excise and Service Mar 06 Tax Appellate Tribunal

(xviii) The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.

(xix) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

(xx) Based on our examination of the records and the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xxi) In our opinion the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore the provisions of clause 4(xiii) of the Companies (Auditors Report) (Amendment) Order, 2004 are not applicable to the Company.

(xxii) In our opinion the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Companies (Auditors Report) (Amendment) Order, 2004 are not applicable to the Company.

(xxiii) In our opinion, the terms and conditions on which the Company has given guarantees for loans taken by others from banks or financial institutions are not prejudicial to the interest of the Company.

(xxiv) In our opinion, the term loans have been applied for the purpose for which they were raised.

(xxv) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

(xxvi) According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xxvii) The Company has created a security / charge in- respect of secured debentures issued and outstanding at the year end.

(xxviii)The Company has not raised any money by way of public issue during the year. The monies raised on account of Bonds / GDS issue in the previous year have been utilised for the purpose for which it was raised.

(xxix) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For K.S. Aiyar & Co Chartered Accountants FRN: 100186W

Raghuvir M. Aiyar Partner Membership No.38128 Place: Mumbai Date : 29th April, 2011

Mar 31, 2010

1. We have audited the attached Balance Sheet of Hindustan Construction Company Limited, as at 31st March, 2010 and also the Profit and Loss Account for the year ended on that date annexed thereto and the Cash Flow statement for the year ended on that date. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We did not audit the financial statements of certain Integrated Joint Ventures reflecting Companys share in Loss(Net) of Rs.2.88 Crore in these financial statements. These financial statements have been audited by other auditors whose report(s) have been furnished to us, and our opinion, in so far as it relates to the amounts included in respect of the said audited Joint Ventures, is based solely on the Report of the other auditors.

4. As required by the Companies (Auditors Report) Order, 2003 as amended by Companies (Auditors Report) (Amendment) Order, 2004 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

5. Further to our comments in the Annexure referred to above, we report that:

(a) We have 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 appears from our examination of those books;

(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 to the extent applicable;

(e) On the basis of written representations received from the directors / companies, as on 31st March, 2010, and taken on record by the Board of Directors we report that none of the directors are disqualified as on 31st March, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

(f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010;

(ii) In the case of the Profit and Loss Account, of the profit for the year ended on that date; and

(iii) In the case of Cash Flow Statement, of the cash flows for the year ended on that date.

Annexure to the Auditors Report (Referred to in paragraph 4 of our Report of even date on the Accounts for the year ended on 31st March, 2010 of Hindustan Construction Company Limited)

(i) The Company is maintaining proper records showing full particulars including quantitative details and situation of Fixed Assets.

(ii) A substantial portion of the fixed assets have been physically verified by the management during the year and in our opinion the frequency of such verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such physical verification.

(iii) Fixed assets disposed off during the year were not substantial. According to the information and explanations given to us, we are of the opinion that the disposal of fixed assets has not affected the going concern status of the Company.

(iv) The inventories have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(v) The procedure of physical verification of inventories followed by the management is reasonable and adequate in relation to the size of the Company and the nature of its business.

(vi) In our opinion and according to the information and explanation given to us, the Company is maintaining proper records of inventory. The discrepancies noticed on verification between physical stocks and the book records were not material and have been properly dealt with in the books of account.

(vii) The company has not granted unsecured loans and Inter-Corporate Deposits to companies covered in the Register maintained under Section 301 of the Act. Hence provisions of clause (iii)(b),(c),(d) of paragraph 4 are not applicable to the Company.

(viii) The company has taken unsecured loans in the form of inter-corporate deposits from three companies covered in the Register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved was Rs16.48 crores and the balance at the year end was Rs.15.17 crores

(ix) Based on the information and explanations given to us, we are of the opinion that the rate of interest and other terms and conditions of loans taken from such parties covered in the Register maintained under Section 301 are not prima facie prejudicial to the interests of the company.

(x) According to the information and explanations given to us, repayments of the principal and interest have been regularly made as stipulated.

(xi) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for purchase of inventory and fixed assets and for the Work Done. During the course of our audit, we have not observed any major weakness in internal control system.

(xii) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section. The transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(xiii) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under. Therefore, the provisions of Section 58A, 58AA and any other relevant provisions of the Companies Act, 1956 and the rules framed thereunder with regard to deposits accepted from the public are not applicable to the Company.

(xiv) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(xv) The Central Government has not prescribed the maintenance of cost records under section 209(1 )(d) of the Companies Act, 1956.

(xvi) According to the records of the Company, Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it have been generally regularly deposited during the year with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of above were in arrears, as at March 31, 2010 for a period of more than six months from the date on which they became payable.

(xvii) According to the records of the Company, sales tax, income tax, customs duty, wealth tax, service tax, excise duty or cess which have not been deposited on account of dispute are given below :

Name of Nature of dues Year Amount Forum where the Statute Rs. crores dispute is pending

Orissa Sales Reassessment of 2000-01 0.53 Sales Tax Tax Turnover for Appellate 1997-98 to Tribunal 2000-01

(xviii) The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.

(xix) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

(xx) Based on our examination of the records and the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xxi) In our opinion the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore the provisions of clause 4(xiii) of the Companies (Auditors Report) (Amendment) Order, 2004 are not applicable to the Company.

(xxii) In our opinion the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Companies (Auditors Report) (Amendment) Order, 2004 are not applicable to the Company.

(xxiii) In our opinion, the terms and conditions on which the Company has given guarantees for loans taken by others from banks or financial institutions are not prejudicial to the interest of the Company.

(xxiv) In our opinion, the term loans have been applied for the purpose for which they were raised

(xxv) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

(xxvi) According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xxvii) The Company has created a security / charge in- respect of secured debentures issued and outstanding at the year end.

(xxviii)The Company has not raised any money by way of public issue during the year. The monies raised on account of Bonds / GDS issue in the earlier year have been utilised for the purpose for which it was raised as disclosed in Note III (20) of Notes forming part of the Accounts.

(xxix) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For K.S.Aiyar & Co Chartered Accountants

Registration Number;100186 W

Raghuvir M. Aiyar

Partner

Membership No.38128

Place: Mumbai Date: 30th April, 2010

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