We have audited the accompanying Standalone financial
statements of POWER MECH PROJECTS 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 the Statement of Cash Flows for the year ended on that
date, and a summary of the material accounting policies and
other explanatory information (hereinafter referred to as "the
financial statements”).
In our opinion and to the best of our information and
according to the explanations given to us, the accompanying
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 31st 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
We conducted our audit of the 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 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 thereunder, 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 audit opinion on the Standalone financial statements.
Key Audit Matters
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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SI.
No
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Key Audit matter
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How the matter was addressed in our audit
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1
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Revenue recognition of long-term contracts
The Company has revenue from construction contracts
and long-term operating and maintenance agreements.
Revenue related to these construction contracts is
recognised using the percentage completion method,
where progress is determined with reference to
completion of physical proportion of the work to the
extent of work certified by the customer and revenue is
also recognised in case of works pending certification as
on date of balance sheet. The Company raised invoices
on monthly basis based on the physical proportion of the
work completed.
We focussed this area because of significant management
judgement required in:
Estimation of the physical proportion of the contract
work completed for the contracts and particularly in case
of those works which were pending for certification by
the customer as on date of balance sheet which may lead
to over or understatement of revenues and profit.
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Our procedures in respect of recognition of construction contract
revenue and related portion of work completed included the
following: (a) Tested the design, implementation and operating
effectiveness of key internal financial controls, including
those related to measurement sheets to confirm portion of
work completed for recognition of contract revenue and review
and approval thereof. (b) Assessed the appropriateness of the
revenue recognition accounting policies in accordance with Ind
AS 115 "Revenue from Contracts with Customers”.
As part of our audit, we obtained an understanding of the
methodology applied, the internal process and controls used
for determination of the physical proportion of work completed.
We evaluated the process and systems used to record the
quantum of work completed against which invoices were raised.
In respect of construction projects, for selected samples
of contracts, we obtained work completion certificates,
measurement work sheets from project engineers and also
obtained certificate of confirmations of work completed from
customers to assess the appropriateness of management
estimates of the physical proportion of work completed.
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SI.
No
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Key Audit matter
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How the matter was addressed in our audit
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Further we also examined the payment advices received
subsequent to the balance sheet date which confirms the
extent of work completed and certified for which revenue
was recognised. In case of those works which were pending
certification as on date of balance sheet, we obtained payment
advices from the customers related to the said works, post
balance sheet date.
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2
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Trade receivables
The Company has significant amount of trade receivables
(Including retention and security deposits) and their
recoverability requires management judgement due to
the specific risks associated with these receivables.
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Our audit procedures in relation to the recoverability of trade
receivables included
• Understood and tested the Company's credit control
procedures and tested key controls over granting
credit to customers.
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There is an element of management judgement in
assessment of extent of the recoverability of long
outstanding trade receivables after the end of the
contractual credit period and determination of allowance
for expected credit loss.
Management assessed the recoverability of trade
receivables by reviewing customers ageing profile, credit
history, nature and ownership of organisation and status
of subsequent settlements and determined whether an
impairment provision is required.
We considered this matter to be significant to our audit
due to the quantum of the receivables and their period
of outstanding.
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• Tested ageing of trade receivables at the year ended on
a sample basis.
• Obtained list of long outstanding receivables and identified
any debtors with financial difficulty through discussion
with management.
• Assessed the recoverability of these outstanding receivables
through our discussion with management and with reference
to detailed receivables listings for the subsequent period.
• Also examined the arrangements/correspondences with
customers to assess the payment arrangement agreed
with the customers and assessed the recoverability of the
significant outstanding receivables.
• Assessed the recoverability of the balances by comparing
the outstanding amounts as at year end against
subsequent recoveries.
• The status and their organisational structure was also
examined with reference to the credit risk and their
creditability in making payments since most of the
customers are public sector organisations.
Assessed the information used by the Management to
determine the expected credit losses by considering credit risk
profile of the customer, contractual terms, project status, past
collection experience, uncertainties and delays in recoveries,
subsequent realisation, correspondence with the customers,
ongoing litigations and disputes, if any. Reviewed the key
assumptions and data sources used by Management in the
provision matrix model to calculate the probability of default and
estimate the expected credit losses in respect of trade receivables.
Assessed the adequacy of presentation and related disclosures in
the financial statements are in line with the accounting standards
and Schedule III. Considering all these, we found that the judgment
made by the management in assessment of recoverability of
receivables are found to be appropriate.
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3.
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Advances with sub-contractors
The Company has significant amount of Trade advances
with Sub-contracts and their recoverability/adjustment
against subsequent works carried requires management
judgement due to the specific risks associated with these
recoveries.
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Our audit procedures in relation to the recoverability of trade
advances to sub-contractors provided while execution of sub¬
contracts awarded included
• Understood and tested the Company's policies of providing
advances and tested the design and operating effectiveness
of key controls over granting of advances to sub-contractors.
• Tested ageing of advances recoverable at the year ended
on a sample basis.
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SI.
Key Audit matter
No
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How the matter was addressed in our audit
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There is an element of management judgement in
assessment of extent of the recoverability of long
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•
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Examined management assessment of recoverability
of the advances
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outstanding trade advances after the end of the
contractual credit period.
Management assessed the recoverability of these trade
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•
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Obtained list of long outstanding advances and identified
any sub-contractors with financial difficulty through
discussion with management.
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advances by reviewing the contractors ageing profile,
credit history, subsequent orders proposed to be placed
with them, nature and ownership of organisation and
status of subsequent settlements and determined whether
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•
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Assessed the recoverability of these outstanding advances
through our discussion with management and with reference
to detailed recoveries made for the subsequent period.
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an impairment provision is required.
We considered this matter to be significant to our audit
due to the quantum of the advances and their period of
outstanding.
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• Also examined the arrangements/correspondences with
sub-contractors to assess the arrangement agreed with
the sub-contractors and assessed the recoverability of the
significant outstanding advances.
• The status and their organisational structure was also
examined with reference to the credit risk and their
creditability in making payments since most of the sub¬
contractors are from unorganised sectors.
• Also discussed with the management about the probability
of providing new works to the sub-contractors and the
chances of recoverability of the outstanding advances
against the works to be executed.
Considering all these, we found that the judgment made by the
management in assessment of recoverability of receivables are
found to be appropriate.
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Information Other than the Standalone Financial
Statements and Auditor's Report thereon
The Company's Board of Directors is responsible for the
preparation of the other information. The other information
comprises the information included in the Management
Discussion and Analysis, Board's Report including Annexures
to Board's Report, Business Responsibility Report, Corporate
Governance and Shareholder's Information, but does not
include the Standalone financial statements and our auditor's
report thereon which are expected to be made available to us
at a later date.
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,
which is not available to us as on the date of this report. In
the absence of the said other information, we are unable to
comment upon whether the other information is materially
misstated or not.
Management's Responsibility for the Standalone
Financial Statements
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, total comprehensive income, changes in equity
and cash flows of the Company in accordance with the Ind AS
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 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.
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.
The Board of Directors are responsible for overseeing the
Company's financial reporting process.
Auditor's Responsibilities for the Audit of the
Standalone Financial Statements
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.
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.
Materiality is the magnitude of misstatements in the Standalone
financial statements that, individually or in aggregate, makes
it probable that the economic decisions of a reasonably
knowledgeable user of the Standalone 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 Standalone
financial statements.
We communicate with those charged with governance
regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify
during our audit.
We also provide those charged with governance with a
statement that we have complied with relevant ethical
requirements regarding independence, and to communicate
with them all relationships and other matters that may
reasonably be thought to bear on our independence, and
where applicable, related safeguards.
From the matters communicated with those charged with
governance, we determine those matters that were of
most significance in the audit of the 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.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act, based on our
audit 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 accounts 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, Statement
of Changes in Equity and the Statement of Cash
Flow 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 Ind AS specified under
Section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014.
e) On the basis of the written representations received
from the directors as on 31st March, 2026 taken
on record by the Board of Directors, none of the
directors is disqualified as on 31st March, 2026 from
being appointed as a director in terms of Section
164 (2) of the Act.
f) With respect to the adequacy of the internal
financial controls over financial reporting of the
Company and the operating effectiveness of such
controls, refer to our separate Report in "Annexure
B” Our report expresses an unmodified opinion
on the adequacy and operating effectiveness of
the Company's internal financial controls over
financial reporting.
g) With respect to the other matters to be included
in the Auditor's Report in accordance with the
requirements of section 197(16) of the Act, as
amended, in our opinion and to the best of our
information and according to the explanations given
to us, the remuneration paid by the Company to its
directors during the year is in accordance with the
provisions of section 197 of the Act.
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.
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 (which are material either
individually or in the aggregate) 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
person or entity, including foreign entity
("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 ("Ultimate Beneficiaries”) 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 (which are material
either individually or in the aggregate)
have been received by the Company
from any person or entity, including
foreign entity ("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;
(c) Based on the audit procedures 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),
as provided under (a) and (b) above,
contain any material misstatement.
v. The final dividend proposed in the previous
year, declared and paid by the Company
during the year is in accordance with section
123 of the Act, as applicable. As stated in note
48 to the financial statements, the Board of
Directors of the Company have proposed final
dividend for the year which is subject to the
approval of the members at the ensuing Annual
General Meeting. The amount of dividend
proposed is in accordance with section 123 of
the Act, as applicable.
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 and the audit trail has
been preserved by the Company as per the
statutory requirements for record retention.
2. As required by the Companies (Auditor's Report) Order,
2020 ("the Order”) issued by the Central Government
in terms of Section 143(11) of the Act, we give in
"Annexure-A” a statement on the matters specified in
paragraphs 3 and 4 of the Order.
For Brahmayya & Co,
Chartered Accountants,
Firm Regn. No. 000513S
Place: Hyderabad Karumanchi Rajaj
Date: 20th May, 2026 Partner
UDIN: 26202309KFMTDH2741 Membership No. 202309
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