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ENGINEERS INDIA LTD.

07 May 2025 | 12:00

Industry >> Engineering - General

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ISIN No INE510A01028 BSE Code / NSE Code 532178 / ENGINERSIN Book Value (Rs.) 42.38 Face Value 5.00
Bookclosure 14/02/2025 52Week High 304 EPS 7.92 P/E 22.17
Market Cap. 9871.71 Cr. 52Week Low 142 P/BV / Div Yield (%) 4.14 / 1.71 Market Lot 1.00
Security Type Other

AUDITOR'S REPORT

You can view full text of the latest Director's Report for the company.
Year End :2024-03 

1. We have audited the accompanying Standalone Financial Statements of ENGINEERS INDIA LIMITED ("the company"), which comprise the Balance Sheet as at 31st March 2024, the statement of Profit and Loss (including other comprehensive income), the Statement of Changes in Equity and Statement of Cash Flow for the year then ended, and a summary of material accounting policies and other explanatory information (hereinafter referred to as "the Standalone Financial Statements") which include two joint operations accounted for on proportionate basis.

2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Financial Statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind As"), and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2024, the profit and total comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

3. We conducted our audit of Standalone Financial Statements in accordance with the Standards on Auditing ("SAs") specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the 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 Standalone Financial Statements under the provisions of the Act and the Rules made there under, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI's Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the Standalone Financial Statements.

Emphasis of Matter Paragraph

4. We draw reference to Note 51 of Standalone Financial Statements related to contractor's claim H 40960.75 Lakh and counter claim by company H 12907.15 Lakh, in litigation pending with Hon'ble Supreme Court in respect of termination of contract by company in 2016.

Key Audit Matters

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

Sr.

No.

Key Audit Matter

How our audit addressed the key audit matter

A

Revenue Recognition from Construction Contracts

(Refer Note 3B and 24 of Standalone Financial Statements)

The Company's revenue primarily arises from construction contracts which, may be rendered in the form of engineering consultancy services and engineering procurement and construction (EPC) services through design-build contracts, and cost plus forms of construction contracts which by their nature, are complex given the significant judgments involved in the assessment of current and future contractual performance obligations.

Our audit procedures included, but were not limited to the

following:

• Evaluating the appropriateness of the Company's accounting policy for revenue recognition.

• Obtaining an understanding of the Company's processes and evaluating the design and testing the effectiveness of key internal financial controls, including those related to review and approval of contract estimates.

• For a sample of contracts, testing the appropriateness of amount recognized as revenue, basis percentage of completion method by evaluating key management judgments inherent in determining forecasted contract revenue and costs to complete the contract, including:

Sr.

No.

Key Audit Matter

How our audit addressed the key audit matter

The Company recognizes revenue relying on the

Verifying the underlying documents such as original

estimates in relation to forecast contract revenue

contract and its amendments, if any, for reviewing the

and forecast contract costs on the basis of stage

significant contract terms and conditions;

of completion which is determined based on the proportion of contract costs incurred at balance sheet date, relative to the total estimated costs of the

Evaluating the identification of performance obligation of the contract;

Testing the existence and valuation of variable consideration

contract at completion.

with respect to the contractual terms and inspecting the

These contract estimates are reviewed by the

related correspondences with customers; and

management on a periodic basis. In doing so, the

Testing the estimates for consistency with the status

management is required to exercise judgment in its assessment of the valuation of contract variations, claims

of delivery of milestones and customers' acceptance to identify possible delays in achieving milestones, which

and liquidated damages as well as the completeness and accuracy of forecast costs to complete and the ability to deliver contracts within contractually determined

require changes in estimated costs or efforts to complete the remaining performance obligation.

timelines.

The revenue on contracts may also include variable

For cost incurred to date, testing samples to appropriate supporting documents and performing cut-off procedures;

considerations which are recognized when the

Performing analytical procedures for reasonableness of

recovery of such consideration is highly probable.

revenue recognized; and

Changes in these judgments, and the related

Evaluating the appropriateness and adequacy of the

estimates as contracts progress can result in material

disclosures related to contract revenue and costs in the

adjustments to revenue. In view of the involvement of

Standalone Financial Statements in accordance with the

significant estimates by the management and material impact on the Financial Statements, the matter has been determined as Key Audit Matter.

applicable accounting standards.

B

Contingent liabilities (Refer note 40A and 52 of

Our audit procedures included but were not limited to:

Standalone Financial Statements)

Obtaining a detailed understanding processes and controls

The Company is subject to number of commercial claims

of the Management with respect to claims or disputes.

including employees claims and tax & legal disputes,

Evaluation of the design of the controls relating to

which have been disclosed in the financial statements

compilation of the claims, assessment of probability of

based on the facts and circumstances of each case.

outcome, estimates of the timing and the amount of the

Taxation and litigation exposures have been identified

outflows, an appropriate reporting by the management

as a key audit matter due to the complexities involved

and testing implementation and operating effectiveness of

in these matters, time scales involved for resolution

the key controls.

and the potential financial impact of these on the financial statements.

Performing following procedures on sample selected:

Further, significant management judgment is

Understanding the matters by reading the

involved in assessing the exposure of each case and

correspondences, communications, minutes of the Audit

thus a risk that such cases may not be adequately

Committee and or the Board meetings and discussions

provided for or disclosed.

with the appropriate management personnel.

Making corroborative inquiries with appropriate level of the management personnel including status update, expectation of outcomes with the basis, and the future course of action contemplated by the Company, and perusing legal opinions, if any, obtained by the management.

Considering their opinions of attorney wherever available on probability assessment of the outcomes.

Evaluating the evidence supporting the judgment of the management about possible outcomes and the reasonableness of the estimates.

Evaluating appropriateness of adequate disclosures in accordance with the applicable accounting standards.

Information Other than the Standalone Financial Statements and Auditor's Report Thereon

6. The Company's Board of Directors is responsible for the preparation of other information. The other information comprises the information included in the Management Discussion and Analysis, Board's report including annexures to Board's Report, Business Responsibility & Sustainability Report, Corporate Governance and Shareholders' Information, but does not include the Standalone Financial Statements and our auditor's report thereon.

7. Our opinion on the Standalone Financial Statements does not cover the other information and we do not express any form of assurance thereon.

8. In connection with our audit of the Standalone Financial Statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Standalone Financial Statements or our knowledge obtained during the course of audit, or otherwise appears to be materially misstated.

9. 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 to those charged with governance and review the steps taken by the management to communicate to those in receipt of the other information, if previously issued, to inform them of the revision.

The Other information is expected to be made available to us after the date of this auditor's report and if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

Management Responsibility for the Standalone Financial Statements

10. The Company's Board of Directors is responsible for the matters stated in section 134(5) of 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 including other comprehensive income, changes in equity and cash flows of the company in accordance with the Ind AS and 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 Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

11. In preparing the Standalone Financial Statements, Management is 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 management either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.

12. 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

13. Our objectives are to obtain reasonable assurance about whether the Standalone 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 SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Standalone Financial Statements.

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

• Identify and assess the risks of material misstatement of the Standalone Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

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

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

• Conclude on the appropriateness of Management’s 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 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.

• Evaluate the overall presentation, structure and content of the Standalone Financial Statements, including the disclosures, and whether the Standalone Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.

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

16. 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.

17. 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.

18. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Standalone Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our 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 Matters

19. We did not audit the financial information of 2 joint operations which are unincorporated entities, whose financial information reflect total assets of H 165.49 Lakh as at 31st March, 2024, total revenue of H 85.20 Lakh and net cash inflow of H 14.65 Lakh for the year ended on that date, as considered in the Standalone Financial Statements. The financial information of these joint operations is unaudited and has 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 joint operations, is based solely on such unaudited financial information certified by management. In our opinion and according to the information and explanations given to us by the Management, this financial information is not material to the Company.

Our opinion is not modified in respect of the above said matter.

Report on Other Legal and Regulatory Requirements

20. As required by the Companies (Auditor's Report) Order, 2020 ("the Order"), issued by the Central Government of India in

terms of sub-section (11) of section 143 of the Act, we give in the "Annexure A", a statement on the matters specified in

paragraphs 3 and 4 of the Order, to the extent applicable.

21. As required by Section 143(5) of the Act, we give in "Annexure B", a statement on the matters specified by the Comptroller

and Auditor General of India for the company.

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

a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

b. In our opinion, proper books of account as required by law have been kept by the company so far as it appears from our examination of those books.

c. The Balance Sheet, the Statement of Profit and Loss including other comprehensive income, the Statement of Changes in Equity and the Cash Flow Statement dealt with by this Report are in agreement with the relevant books of account.

d. In our opinion, the aforesaid Standalone Financial Statements comply with the Indian Accounting Standards specified in the Companies (Indian Accounting Standards) Rules, 2015 (as amended) under Section 133 of the Act.

e. As per notification number G.S.R. 463(E) dated 5 June, 2015 issued by Ministry of Corporate Affairs, section 164(2) of the Act regarding the disqualifications of Directors is not applicable to the company, since it is a Government Company.

f. With respect to the adequacy of the internal financial controls with reference to financial statements of the company and the operating effectiveness of such controls, refer to our separate Report in "Annexure C".

g. With respect to the other matters to be included in the Auditor's Report, as per notification number G.S.R. 463(E) dated 5 June, 2015 issued by Ministry of Corporate Affairs, section 197 of the Act regarding the Managerial remuneration is not applicable to the company, since it is a Government Company.

h. 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 has disclosed the impact of pending litigations on its financial position in its Standalone Financial Statements - Refer Note 40A to the Standalone Financial Statements;

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

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the company.

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 share premium or any other sources or kind of funds) by the Company to or in any other persons or entities, including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever ("Ultimate Beneficiaries") by or on behalf of the Company or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(b) The Management has represented that, to the best of its knowledge and belief no funds have been received by the Company from any persons or entities, including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever ("Ultimate Beneficiaries") by or on behalf of the Funding Parties or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(c) Based on the audit procedures performed that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e) contain any material mis-statement.

v) The final dividend paid by the Company during the current year in respect of the same declared for the previous year is in accordance with section 123 of the Companies Act 2013 to the extent it applies to payment of dividend. The interim dividend declared and paid by the Company during the year and until the date of this report is in compliance with Section 123 of the Act. As stated in note 37 to the financial statements, the Board of Directors of the Company have proposed final dividend for the current year which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend declared is in accordance with section 123 of the Act to the extent it applies to declaration of dividend.

vi) Based on our examination which included test checks, the company 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 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.

As proviso to Rule 3(1) of the Companies (Accounts) Rule 2014 is applicable from April 2023, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 on preservation of audit trail as per statutory requirement for record retention is not applicable for the financial year ended 31st March, 2024.

For Datta Singla & Co.

Chartered Accountants Firm's Registration No.: 006185N

Sd/-

VISHAKHA HARIT Partner

Place: New Delhi Membership No.:096919

Date : 28th May 2024 UDIN: 24096919BKGXUL7500