1. We have audited the accompanying Standalone Financial Statements of ENGINEERS INDIA LIMITED ("the Company"), which
comprise the Balance Sheet as at 31st March 2026, 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 2026, 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. a) We draw reference to Note 49 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.
b) We draw reference to Note 48(b) of Standalone Financial Statements related to revenue accounted for in FY 2024-25 H
128.91 crores related to variable consideration which includes H 86.33 crores in respect of a Job. The Company recognized
revenue of H 86.33 Crores against a change order claim raised by the Company on HRRL (Client) towards additional
site efforts for the period 01.04.2024 to 31.12.2024 amounting to H 98.82 Crore, based on management's assessment
and correspondence received from the client indicating that the claim had been taken cognizance of and was under
consideration, subject to necessary approvals. The related costs were already incurred and included in the project cost
estimates. The said amount recognised as revenue has been included under Unbilled Revenue / Contract Asset, and since
the change order has not been formally issued/approved by the client, no bill has been raised by the Company in respect
of the said claim. During the year, company has recognized revenue of H 5.01 crores in respect of variable consideration
which includes H 3.10 crores in respect of this Job.
As per Ind AS 115 - Revenue from Contracts with Customers, paragraph 18, a contract modification exists only when the
parties approve a modification that creates new or changes existing enforceable rights and obligations, and where such
modification is not approved, the entity is required to continue applying the Standard to the existing contract until the
contract modification is approved.
Earlier the client has stated that the claim will be reviewed as per contractual provisions through an empowered committee
and shall be suitably addressed and settled based on recommendations and budget approvals. Latest, the client has
agreed in-principle to claim and issue revised purchase order in due course. However, as on date, the said change order
claim remains unapproved and unsettled and no formal contract modification / change order approval has been received
from the client.
Additionally, the Company's earlier change order claims pertaining to prior periods have also not been approved, which
continues to increase the uncertainty regarding ultimate acceptance and realization of the change order claim.
Since approval and settlement of the change order is dependent on the client's review and decision, which is outside the
Company's control, the uncertainty relating to acceptance and collectability continues to remain unresolved.
Accordingly, the collectability / realisation of the aforesaid unbilled revenue (contract asset) continues to be subject to
significant uncertainty and remains dependent upon final approval, receipt of formal change order and settlement of the
change order claim by the client. The non confirmation/ non receipt of change order has not been disclosed appropriately
in notes to financial statements.
c) We draw attention to Note No. 14 to the Standalone Financial Statements related to Trade Receivable which includes H
59.43 crores (including foreign exchange gain of H 17.05 crores) relating to an overseas client (Angola). The company issued
invoice during FY 2016-17 for H 42.38 crores and recognized corresponding Contract Liability (Income received in advance)
of H 42.38 crores. The amount has remained outstanding for more than three years. The said amount was classified as
"Undisputed Trade Receivables - considered good". Till date, company has recognized foreign currency translation gain of
H 17.05 crore on above said amount and created allowance for expected credit loss of equivalent amount.
During the year, the Company has reclassified the aforesaid trade receivable from 'considered good' to 'doubtful' and
created allowance for expected credit losses of H 42.38 crores against the same by offsetting / adjusting the corresponding
contract liability.
Further, the Comptroller and Auditor General of India (CAG), in its supplementary audit report for FY 2024-25, had highlighted
that as per the Expected Credit Loss (ECL) methodology followed by the Company, trade receivables outstanding for more
than three years are considered credit impaired and require 100% provisioning in accordance with Ind AS 109. The CAG had
also observed that invoicing indicates that the performance obligation has likely been satisfied and the trade receivable
represents an unconditional right to consideration and accordingly, revenue should be recognized in compliance with Ind
AS 115, and recognition of contract liability in absence of any further obligation is not appropriate.
In view of the above, the accounting treatment adopted by the Company continues to have a significant impact on
presentation and disclosure of revenue and allowance for expected credit losses (expense) and remains subject to
appropriate accounting and disclosure in accordance with applicable Ind AS.
Our opinion is not modified in respect of above matters.
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:
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Sr.
No.
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Key Audit Matter
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How our audit addressed the key audit matter
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A
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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.
The Company recognizes revenue relying on the estimates
in relation to forecast contract revenue and forecast
contract costs on the basis of stage 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 contract at completion.
These contract estimates are reviewed by the management
on a periodic basis. In doing so, the management is required
to exercise judgment in its assessment of the valuation
of contract variations, claims and liquidated damages as
well as the completeness and accuracy of forecast costs
to complete and the ability to deliver contracts within
contractually determined timelines.
The revenue on contracts may also include variable
considerations which are recognized when the recovery of
such consideration is highly probable.
Changes in these judgments, and the related estimates as
contracts progress can result in material adjustments to
revenue. In view of the involvement of significant estimates
by the management and material impact on the Financial
Statements, the matter has been determined as Key Audit
Matter.
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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:
• verifying the underlying documents such as original contract
and its amendments, if any, for reviewing the significant
contract terms and conditions;
• evaluating the identification of performance obligation
of the contract;
• testing the existence and valuation of variable consideration
with respect to the contractual terms and inspecting the
related correspondences with customers; and
• testing the estimates for consistency with the status of
delivery of milestones and customers' acceptance to identify
possible delays in achieving milestones, which require
changes in estimated costs or efforts to complete the
remaining performance obligation.
• for cost incurred to date, testing samples to appropriate
supporting documents and performing cut-off procedures;
• Performing analytical procedures for reasonableness of
revenue recognized; and
• Evaluating 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.
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B
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Contingent liabilities (Refer note 40A and 50 of Standalone
Financial Statements)
The Company is subject to number of commercial claims
including employees claims and tax & legal disputes, which
have been disclosed in the financial statements based on
the facts and circumstances of each case.
Taxation and litigation exposures have been identified as a
key audit matter due to the complexities involved in these
matters, time scales involved for resolution and the potential
financial impact of these on the financial statements.
Further, significant management judgment is involved in
assessing the exposure of each case and thus a risk that
such cases may not be adequately provided for or disclosed
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Our audit procedures included but were not limited to:
• Obtaining a detailed understanding processes and controls
of the Management with respect to claims or disputes.
• Evaluation of the design of the controls relating to
compilation of the claims, assessment of probability of
outcome, estimates of the timing and the amount of the
outflows, an appropriate reporting by the management
and testing implementation and operating effectiveness of
the key controls.
Performing following procedures on sample selected:
• Understanding the matters by reading the correspondences,
communications, minutes of the Audit Committee and or
the Board meetings and discussions with the appropriate
management personnel.
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Sr.
Key Audit Matter
No.
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How our audit addressed the key audit matter
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• 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
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contemplated by the Company, and perusing legal opinions,
if any, obtained by the management.
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• 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.
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• Evaluating appropriateness of adequate disclosures in
accordance with the applicable accounting standards.
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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's 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 H72.40 Lakh as at 31st March, 2026, total revenue of H28.96 Lakh and net cash outflow of H 13.17 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. Additionally, the audit trail has been preserved
by the company as per the statutory requirements for record retention.
For Datta Singla & Co.
Chartered Accountants
Firm's Registration No.: 006185N
sd/-
Vishakha Harit
Partner
Place: New Delhi Membership No.:096919
Date: 21st May 2026 UDIN: 26096919WDQNJL3311
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