Auditor Report of Garden Reach Shipbuilders & Engineers Ltd.

Mar 31, 2025

We have audited the accompanying financial statements of Garden
Reach Shipbuilders & Engineers Limited ("the Company"), which
comprise the balance sheet as at March 31, 2025, and the statement
of profit and loss (including other comprehensive income), statement
of changes in equity and statement of cash flows for the year then
ended, and notes to the financial statements, including a summary
of significant 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 aforesaid 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
Indian Accounting Standards (Ind AS) prescribed under section 133 of
the Act read with the Companies (Indian Accounting Standards) Rules,
2015 as amended and the accounting principles generally accepted in
India, of the state of affairs of the Company as at March 31, 2025,
profit including other comprehensive income, changes in equity and
its cash flows for the year ended on that date.

Basis for Opinion

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

under 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 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 is
sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter:

We draw attention to note 48 of the financial statements, which
describes the effects of change in estimation of cost to complete in
respect of projects P17A and NGOPV. Our opinion is not modified in
respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment,
were of most significance in our audit of the 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. The key audit matters that we have identified in the current
year are as follows:

Key Audit Matter

How the matter was addressed in our audit

1. Recognition of revenue from ship building contracts

Company''s revenue is mainly derived from ship building. Revenue on
such contracts is recognised over time as performance obligations
are fulfilled over time. The Company recognizes revenue from a
performance obligation in accordance of Ind AS 115 only when it
can reasonably measure its progress towards complete satisfaction
of the obligation. Progress with respect to ship construction is
recognized using input method i.e. by comparing the actual costs
anticipated for the entire contract. As disclosed in Note 20 to the
financial statements, during the year, the Company has earned
'' 4,44,852.57 lakh (''3,06,918.46 lakh) from ship building out of
total revenue from operations of '' 5,07,568.77lakh ('' 3,59,264.23
lakh) during the year.

This area was important to our audit due to the fact that significant
estimates are involved in determination of stage of completion and
measurement of progress towards satisfaction of performance
obligations and estimating costs to complete of each contract.

We obtained an understanding of the Company''s controls over the
revenue and cost recognition process to assess the design of the key
controls in place. Our substantive audit procedures included

â¢ Review of the contracts and service orders to evaluate
management''s assessment of performance obligations in
accordance with Ind AS 115;

â¢ Obtaining cost estimation schedules approved by project teams
and verifying the costs to complete by agreeing to evidence
of committed expenditure, budgeted rates and actual costs
incurred to date;

â¢ Review of correspondences to corroborate management''s
assessment of liquidated damages payable that may arise as
per terms of contract due to probable delivery time overrun.

Key Audit Matter		How the matter was addressed in our audit
2. Inventories	Our audit procedures of inventory included but were not limited to
As at the year end the Company carries inventory valued	the following:
'' 3,55,224.67 lakh ('' 3,98,444.14 lakh) refer Note 9 to financial	â¢	Understanding the basis followed for recognition of purchase
statements. The above includes raw materials and equipment		and issue of materials and ensuring that the same are in
valued at '' 3,41,744.45 lakh ('' 3,86,725.80 lakh) which are mostly		accordance with normally followed accounting principles.
project specific. The Company maintains detailed item wise record of these inventories and the same are classified project wise for	â¢	Review of item wise/ contract wise record of inventories.
management and control of inventories. The Company carries	â¢	Review of reports on physical verification/ technical evaluation
out regular physical verification of inventories, including technical		of inventories carried out by the management and ensuring
evaluation of the condition and usability of the such items and		adequacy of year end provision for slow-moving / non-moving
makes necessary provision in the books for unusable/ obsolete		/ obsolete items identified based on the same.
items identified if any. The basis of valuation of inventories is set out in Note 1.2(h) to the financial statements.	We critically assessed the Company''s inventory provisioning policy, with specific consideration given to aged inventory and their
We have considered inventory management as a key audit matter	movement status;
since inventory constitutes a significant part of the assets of the Company. Moreover, timely recognition of procurement, issue, consumption, accounting of inventory, identification of unusable, obsolete items by way of technical evaluation and physical	We have verified the value of few sample of inventory items to confirm whether they are held at the lower of cost and net realisable value in accordance to Ind AS 2.
verifications have major impact on the profitability of the Company.

Other Information

The Company''s Board of Directors is responsible for the other
information. The other information comprises the information
contained in Directors'' Report including Annual Report on CSR
Activities, Management Discussion & Analysis Report, Report on
Corporate Governance, Business Responsibility & Sustainability Report
and other information contained in the Annual Report, but does not
include the financial statements and our report thereon. These reports
are expected to be made available to us after the date of this auditors''
report.

Our opinion on the 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 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 financial statements
or our knowledge obtained during the course of audit, or otherwise
appears to be materially misstated.

When we read the other information, if we conclude that there is
material misstatement therein, we are required to communicate the
matter to those charged with governance.

Management''s Responsibility for the 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
and presentation of these financial statements that give a true and
fair view of the financial position, financial performance (changes
in equity) and cash flows of the Company in accordance with the
accounting principles generally accepted in India, including the
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 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.

In preparing the 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 also responsible for overseeing the
Company''s financial reporting process.

Auditor''s Responsibilities for the Audit of the Financial
Statements

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
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 financial statements.

As part of an audit in accordance with SAs, 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 system 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 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 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.

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 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 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" to this report a statement on the matters
specified in paragraphs 3 and 4 of the Order, to the extent
applicable.

2. In compliance to directions of the Comptroller and Auditor
General of India u/s.143(5) of the Act, we give in Annexure "B"
to this report a statement on the matters specified therein.

3. 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, and the Statement
of Changes in Equity and Cash Flow Statement dealt with
by this Report are in agreement with the books of account.

(d) In our opinion, the aforesaid financial statements comply
with the Accounting Standards specified under Section 133
of the Act, read with Rule 7 of the Companies (Accounts)
Rules, 2014 except disclosure under Ind AS 108 Operating
Segments. Ministry of Corporate Affairs vide notification
S.O No 802(E) dated 23rd February 2018 has exempted the
companies engaged in defence production from application
of Segment Reporting and hence no such disclosure is
made by the Company.

(e) Section 164(2) of the Act regarding disqualification of
directors is not applicable to the Company by virtue of
Notification No. G.S.R. 463(E) dated 05.06.2015 issued by
the Ministry of Corporate Affairs, Government of India.

(f) The provisions of Section 197(16) of the Act regarding
payment of managerial remuneration to Company''s
directors are not applicable in view of Notification No.
GSR 463(E) dated 5^th June, 2015 issued by the Ministry of
Corporate Affairs, Government of India.

(g) 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 given in Annexure "C" to this report.

(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, in our opinion
and to the best of our information and according to the
explanations given to us:

i. The Company has pending litigations, the liabilities in
respect of which are either provided for or disclosed as
contingent liabilities - Refer Note 29 to the financial
statements. The impact of these pending litigations
on the financial position of the Company is subject to
their judicial outcome;

ii. The Company did not have any long-term contracts
including derivative contracts for which there were
any material foreseeable losses except Guarantee
Repair and Onerous Contract in respect of which the
Company holds adequate provision - Refer Note 19 to
the financial statements.

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 person(s) or
entity(ies), 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 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 have been received
by the Company from any person(s) or entity(ies),
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 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 such audit procedures as we considered
reasonable and appropriate in the circumstances,
nothing has come to our notice that has caused us to
believe that representations made by the management
in this regard contain any material mis-statement.

v. The dividend declared and paid during the year by the
Company is in compliance of with section 123 of the
Companies Act, 2013.

vi. Based on our examination which included test checks,
the Company has in place 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 is preserved by the
Company as per the statutory requirements for record
retention.

For Guha Nandi & Co.

Chartered Accountants
FRN: 302039E

Sd/-

(CA Dipak Kumar Shee)

Partner

Membership No.061728
UDIN: 25061728BMOMXR4525

Place: Kolkata
Date: 13 May, 2025

Mar 31, 2024

We have audited the accompanying financial statements of Garden Reach Shipbuilders & Engineers Limited ("the Company"), which comprise the balance sheet as at March 31, 2024, and the statement of profit and loss (including other comprehensive income), statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant 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 aforesaid 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 Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 as amended and the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2024, profit including other comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under 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 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 is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the 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. The key audit matters that we have identified in the current year are as follows:

Key Audit Matter	How the matter was addressed in our audit
1. Recognition of revenue from ship building contracts	We obtained an understanding of the Company''s controls over the
Company''s revenue is mainly derived from ship building. Revenue on such contracts is recognised over time as performance obligations	revenue and cost recognition process to assess the design of the key controls in place. Our substantive audit procedures included
are fulfilled over time. The Company recognizes revenue from a performance obligation in accordance of Ind AS 115 only when it can reasonably measure its progress towards complete satisfaction of the obligation. Progress with respect to ship construction is recognized using input method i.e.by comparing the actual costs anticipated for the entire contract. As disclosed in Note 20 to the financial statements, during the year, the Company has earned '' 3,06,918.46 Lakh ('' 2,30,196.88 Lakh) from ship building out of	â¢ Review of the contracts and service orders to evaluate management''s assessment of performance obligations in accordance with Ind AS 115; â¢ Obtaining cost estimation schedules approved by project teams and verifying the costs to complete by agreeing to evidence of committed expenditure, budgeted rates and actual costs incurred to date;
total revenue from operations of '' 3,59,264.23 Lakh ('' 2,56,114.51	â¢ Review of correspondences to corroborate management''s
Lakh) during the year.	assessment of liquidated damages payable that may arise as
This area was important to our audit due to the fact that significant estimates are involved in determination of stage of completion and measurement of progress towards satisfaction of performance obligations and estimating costs to complete of each contract.	per terms of contract due to probable delivery time overrun.

Key Audit Matter		How the matter was addressed in our audit
2. Inventories	Our audit procedures of inventory included but were not limited to
As at the year end the Company carries inventory valued	the following:
'' 3,98,444.14 Lakh ('' 291,850.49 Lakh) refer Note 9 to financial	â¢	Understanding the basis followed for recognition of purchase
statements. The above includes raw materials and equipment		and issue of materials and ensuring that the same are in
valued at '' 3,86,725.80 Lakh ('' 278,271.69 Lakh) which are mostly		accordance with normally followed accounting principles.
project specific. The Company maintains detailed item wise record of these inventories and the same are classified project wise for	â¢	Review of item wise/ contract wise record of inventories.
management and control of inventories. The Company carries	â¢	Review of reports on physical verification/ technical evaluation
out regular physical verification of inventories, including technical		of inventories carried out by the management and ensuring
evaluation of the condition and usability of the such items and		adequacy of year end provision for slow-moving / non-moving
makes necessary provision in the books for unusable/ obsolete		/ obsolete items identified based on the same.
items identified if any. The basis of valuation of inventories is set out in Note 1.2(h) to the financial statements.	We critically assessed the Company''s inventory provisioning policy, with specific consideration given to aged inventory and their
We have considered inventory management as a key audit matter	movement status;
since inventory constitutes a significant part of the assets of the Company. Moreover, timely recognition of procurement, issue, consumption, accounting of inventory, identification of unusable, obsolete items by way of technical evaluation and physical	We have verified the value of few sample of inventory items to confirm whether they are held at the lower of cost and net realisable value in same accordance to Ind AS 2.
verifications have major impact on the profitability of the Company.

Other Information

The Company''s Board of Directors is responsible for the other information. The other information comprises the information contained in Directors'' Report including Annual Report on CSR Activities, Management Discussion & Analysis Report, Report on Corporate Governance, Business Responsibility & Sustainability Report and other information contained in the Annual Report, but does not include the financial statements and our report thereon. These reports are expected to be made available to us after the date of this auditors'' report.

Our opinion on the 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 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 financial statements or our knowledge obtained during the course of audit, or otherwise appears to be materially misstated.

When we read the other information, if we conclude that there is material misstatement therein, we are required to communicate the matter to those charged with governance.

Management''s Responsibility for the 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 and presentation of these financial statements that give a true and fair view of the financial position, financial performance (changes in equity) and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the 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 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.

In preparing the 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 also responsible for overseeing the Company''s financial reporting process.

Auditor''s Responsibilities for the Audit of the Financial Statements

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 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 financial statements.

As part of an audit in accordance with SAs, 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 system 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 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 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.

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 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 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" to this report a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2. In compliance to directions of the Comptroller and Auditor General of India u/s.143(5) of the Act, we give in Annexure "B" to this report a statement on the matters specified therein.

3. 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, and the Statement of Changes in Equity and Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

(e) Section 164(2) of the Act regarding disqualification of directors is not applicable to the Company by virtue of Notification No. G.S.R. 463(E) dated 05.06.2015 issued by the Ministry of Corporate Affairs, Government of India.

(f) The provisions of Section 197(16) of the Act regarding payment of managerial remuneration to Company''s directors are not applicable in view of Notification No. GSR 463(E) dated 5th June, 2015 issued by the Ministry of Corporate Affairs, Government of India.

(g) 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 given in Annexure "C" to this report.

(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, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has pending litigations, the liabilities in respect of which are either provided for or disclosed as contingent liabilities - Refer Note 29 to the financial statements. The impact of these pending litigations on the financial position of the Company is subject to their judicial outcome;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses except Guarantee Repair and Onerous Contract in respect of which the Company holds adequate provision - Refer Note 19 to the financial statements.

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 person(s) or entity(ies), 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 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 have been received by the Company from any person(s) or entity(ies), 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 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 such audit procedures as we considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that representations made by the management in this regard contain any material misstatement.

v. The dividend declared and paid during the year by the Company is in compliance of with section 123 of the Companies Act, 2013.

vi. Based on our examination which included test checks, the Company has in place 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 is preserved by the Company as per the statutory requirements for record retention.

For Guha Nandi & Co.

Chartered Accountants FRN: 302039E

Sd/-

(CA Dr. B. S. Kundu)

Partner

Membership No. 051221 UDIN: 24051221BKJSKS1004

Place: Kolkata Date: 22 May, 2024

Mar 31, 2023

Garden Reach Shipbuilders & Engineers Limited

Report on the Audit of the Financial Statements

Opinion

We have audited the accompanying financial statements of Garden Reach Shipbuilders & Engineers Limited ("the Company") [The audit covered the Corporate Office and all units across India.] which comprise the Balance Sheet as at March 31, 2023, and the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Cash Flow Statement for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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 accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2023 and its profit (including other comprehensive income), changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

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 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 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.

Emphasis of Matter

1) Attention is invited to note no 50 with respect to redrafting of accounting policies in respect of Revenue Recognition, Inventory, Provisions, Contingent Liabilities and Contingent Assets during the financial year 2022-23 for further clarity on these aspects. There is no financial impact in the books of accounts on such redrafting.

Our opinion is not modified in respect of the above matter

Key Audit Matters

Key Audit Matters (KAM) are those matters that, in our professional judgment, were of most significance in our audit of the 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. We have determined the matter described

below to be the key audit matter to be communicated in our report.

Sl. No. Key Audit Matter

Our Response

1 Contract revenue from shipbuilding

Referred to in Note no. 1.2 (i)(A)(i) and no. 20 of the financial statements.

The Company has adopted Ind AS 115, "revenue from contract with customers", which is a new accounting standard effective from April, 2018. The Company recognizes revenue for a performance obligation satisfied over time only when it can reasonably measure its progress towards complete satisfaction of performance obligation. Progress with respect to ship construction is recognized over time using input method i.e. by comparing the actual costs anticipated for the entire contract. The application of the accounting standard is complex and is an area of focus in the audit. We identified revenue recognition of shipbuilding contracts as a KAM considering:

(a) The revenue standard establishes a comprehensive framework for determining whether, how much and when revenue is recognized. This involves certain key judgments relating to identification of distinct performance obligations, determining transaction price of identified performance obligation, determining variable consideration and to measure variable consideration, the appropriateness of the basis used to measure revenue recognized over a period.

Our audit procedures on revenue recognized from shipbuilding contracts included:

a) Understanding of the systems, processes and control implemented by management for recording and calculating revenue based on input cost method, deriving the associated contract assets,

b) Assessment of the operating effectiveness of Key IT Controls, including:

i) Treating the IT Controls over the completeness and accuracy of the cost and revenue reports generated by the systems.

ii) On selected samples of contracts, we tested that the revenue recognized is in accordance with the applicable accounting standards.

c) Evaluated the appropriateness of the disclosures provided under the new accounting standard.

Recognition of work-in-progress in the Balance Sheet has been checked with the relevant Statement of Computation of Work-inprogress as on the reporting date and other relevant records of the Company

Sl. No. Key Audit Matter		Our Response
(b) The standard mandates robust disclosures in respect of revenue and periods over which the remaining performance obligations will be satisfied subsequent to balance sheet date.
(c) There is significant involvement of IT systems.
At the year-end, a significant amount of work-in-progress related to these contracts is recognized in the balance sheet.
2 Onerous Contract Referred to in Note No 19 of the financial statements. The Company has assessed contracts of Bangladesh Boat and Guyana Ferry as "onerous" in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The Company has provided the required estimated loss in the books of account in the current financial year.	Our audit procedures on "onerous contracts" included the following 1) Evaluating the reason as why the contract appears to be onerous from the records and estimates given by the management. 2) Evaluating the details of unavoidable costs from the records provided by the management. 3) Understanding the terms of the contract and communication with the customer.
	4)	Evaluation of the same possibility in case of other existing contracts.

Information Other than the financial statements and Auditor''s Report Thereon

The Company''s Board of Directors is responsible for the preparation of other information. The other information comprises the information included in the Annual Report, but does not include the financial statements and our auditor''s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance or conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained during the course of our 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. We have nothing to report in this regard.

Responsibility of Management and Those Charged with Governance for the 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 financial statements that give a true and fair view of the financial position, financial performance, changes in equity 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. 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 Ind AS financial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the 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 is also responsible for overseeing the Company''s financial reporting process.

Auditor''s Responsibilities for the Audit of the financial statements

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 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 financial statements.

As part of an audit in accordance with SAs, 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 financial 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 system 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 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 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.

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 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

(i) Amount shown in Note no. 30 (A) (Contingent Liabilities) does not include interest/ penalty that may be payable on final settlement of claims.

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

Report on Other Legal and Regulatory Requirements

1. 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 Companies Act, 2013, we give in the Annexure-A a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2. 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 books of account.

(d) In our opinion, the aforesaid financial statements comply with the Ind AS specified under Section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015 as amended.

(e) In our opinion, provisions under section 164(2) of the Act, regarding disqualification of Directors are not applicable to a Government Company in terms of Notification No. G.S.R. 463(E) dated June 5, 2015 issued by Ministry of Corporate Affairs.

(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.

(g) In our opinion, reporting requirements under provisions under section 197 of the Act, regarding the remuneration paid by the Company to its directors during the year are not applicable to a Government Company in terms of Notification No. G.S.R. 463(E) dated June 5, 2015 issued by Ministry of Corporate Affairs.

(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, 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 financial statements (Refer to Note no. 30A - Contingent Liabilities to the financial statements );

ii. The Company did not have any long term contract including derivative contracts for which there were any material foreseeable losses except provision for loss on onerous contract for Rs. 279.07 lakh has been provided as stated in Note no. 19;

iii. There were no amounts which were 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) contain any material misstatement.

v. The final dividend paid by the Company during the 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 is in accordance with section 123 of the Companies Act 2013.

As stated in Note no. 36 (b) 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 dividend declared is in accordance with section 123 of the Act to the extent it applies to declaration of dividend.

vi. Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from April 1, 2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31, 2023.

3. As required by Section 143(5) of the Act, we give in Annexure-C a statement on the matters specified in directions issued by the Comptroller & Auditor General of India in respect of the Company.

For Mookherjee Biswas & Pathak

Chartered Accountants Firm''s Registration Number 301138E

Sd/-

(Sudersan Mukherjee)

Partner

Membership No. 059159 ICAI UDIN: 23059159BGXHQH4368

Place: Kolkata

Date: 24 May, 2023

Mar 31, 2022

Act and the Rules 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 opinion.

Emphasis of Matters

1) We draw attention to note no 48 of the accompanying financial statements as at March 31, 2022 regarding impact of the pandemic (COVID 19) on the operations of the Company, which affected the revenue and financial performance of the Company for the reporting period. Management has assessed the potential impact of COVID 19 based on the current circumstances and expects no significant impact on the continuity of operation of the business on long term basis. However, the actual impact may be different from the estimate as at the date of approval of the financial statements.

2) Attention is invited to the treatment of '' 768.54 lakh shown as Exceptional Item (Note no 49) due to loss of production hours and non-usage of Plant and Machinery during the days of nonoperation due to COVID 19 during the year.

Our opinion is not modified in respect of these matters.

Key Audit Matters

Opinion

We have audited the accompanying financial statements of Garden Reach Shipbuilders & Engineers Limited ("the Company") [The audit covered the Corporate Office and all units across India.] which comprise the Balance Sheet as at March 31 2022, and the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Cash Flow Statement for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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 accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2022 and its profit (including other comprehensive income), changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

Sl. No. Key Audit Matter

Our Response

1 Contract revenue from shipbuilding

Referred to in Note No.1.2(i)(A)(i) and No.20 of the financial statements.

Our audit procedures on revenue recognized from shipbuilding contracts included:

a) Understanding of the systems, processes and control implemented by management for recording and calculating revenue based on input cost method, deriving the associated contract assets,

b) Assessment of the operating effectiveness of Key IT Controls, including:

i) Treating the IT Controls over the completeness and accuracy of the cost and revenue reports generated by the systems.

ii) On selected samples of contracts, we tested that the revenue recognized is in accordance with the applicable accounting standards.

In preparing the 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 is also responsible for overseeing the Company''s financial reporting process.

Auditor''s Responsibilities for the Audit of the financial statements

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 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 financial statements.

As part of an audit in accordance with SAs, 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.

Sl. No.	Key Audit Matter	Our Response
(a)	The revenue standard establishes a comprehensive framework for determining whether, how much and when revenue is recognized. This involves certain key judgments relating to identification of distinct performance obligations, determining transaction price of identified performance obligation, determining variable consideration and to measure variable consideration, the appropriateness of the basis used to measure revenue recognized over a period.	c) Evaluated the appropriateness of the disclosures provided under the new accounting standard. Recognition of work-in-progress in the Balance Sheet has been checked with the relevant Statement of Computation of Work-inprogress as on the reporting date and other relevant records of the Company.
(b)	The standard mandates robust disclosures in respect of revenue and periods over which the remaining performance obligations will be satisfied subsequent to balance sheet date.
(c)	There is significant involvement of IT systems.
At the year-end, a significant amount of work-in-progress related to these contracts is recognized in the balance sheet.