Auditor Report of Sattva Engineering Construction Ltd.

Mar 31, 2025

Sattva Engineering Construction Limited, {CIN: U45201TN2005PLC058383)

(Formerly known as "Sattva Engineering Construction Private Limited")

Old No. 149, New No.64,4^th Floor, Creams Road, Chennai 600006

Report on the Audit of the Financial Statements

Opinion:

We have audited the financial statements of Sattva Engineering Construction Limited, (CIN: U45201TN2005PLC058383) ("the Company"), which comprise the Balance Sheet as at 31^st March 2025, and the statement of Profit and Loss, Statement of Changes in Equity and Statement of Cash Flows for the period from 1^st April 2024 to 31^st March 2025, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information. In our opinion, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31^st March 2025, profit, changes in equity and cash flows for the period from 1^st April 2024 to 31^st March 2025.

Basis for Opinion:

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. 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 together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics.

In our opinion and to the best of our information and according to the explanations given to us, the accompanying financial statements give a true and fair view.

Key Audit Matters

Recognition of Contract Revenue, Work In Progress, and Contract Costs:

All contracts of the company are fixed price contracts. Revenue for the reporting period comprises of actual work done, certified and billed plus the actual work done and uncertified (Work in Progress) at the accepted contract price. WIP is measured based on percentage completion method, the proportion being the actual cost incurred till the reporting period to the total cost incurred / to be incurred to complete the contract. The unbilled work in progress for the period ended 31^st March 2025 amounts to Rs. 33,16,11,827.30/-. The recognition of contract revenue and the resultant profit/ loss therefore rely on estimates in relation to the computation of Work In Progress. In doing so, the management is requij^Uo exercise judgement in its assessment of the costs to complete the projects. The companyX^^^^^s.

primarily arises from construction contracts and hence the changes in these estimates can result in materia! adjustments to revenue. Considering this element of uncertainty, this area has been considered a key audit matter for the current period of audit

The audit procedures performed by us to address this key audit matter included, but were not limited to the following:

• Evaluated the design and tested the operating effectiveness of key internal financial controls including those related to estimation of forecasted contract revenue and contracts costs;

• For cost incurred to date, tested samples by verifying underlying supporting documents

• Evaluated the appropriateness and adequacy of the disclosures related to contract revenue and costs in the financial statements in accordance with the applicable accounting standards.

Notes relating to recoverability of current trade receivables and non-current trade receivables:

Trade receivables for the period ended 31^st March 2025 are Rs 32,35,36,276.00 and retention money amounting to Rs 16,31,08,537.7 respectively are based on bills raised which are certified and accepted by customers. And hence the company management has determined that no provision is required to be recognised for the aforementioned receivables. The Balance of Trade Receivables & Retention money includes an amount of Rs.2,37,28,953/- and Rs.72,63,401/- due from M/s BGR Energy Systems Limited against whom the company has approached NCLT and filed petition for winding up in order to recover the dues. The ageing of trade receivables for BGR outstanding: >3years = Rs 1,97,25,565 /-; & 1 - 2 years = Rs 40,03,388/-.

Considering the materiality of the amounts involved, and significance of management judgement involved in assessing the recoverability, this was considered to be a key audit matter in the audit of the financial statements.

The audit procedures performed by us to address this key audit matter included, but were not limited to the following:

• Obtained an understanding of the management process and evaluated the design and tested the effectiveness of key internal financial controls for assessing the recoverability of unbilled work-in-progress {contract assets) and trade receivables

• Assessed the reasonability of judgments exercised and estimates made by management with respect to the recoverability of these receivables and validated them with corroborating evidence;

• Verified contractual arrangements to support management''s position on the tenability and recoverability of these receivables;

• Evaluated the appropriateness and adequacy of the disclosures in the financial statements in accordance with the applicable accounting standards.

Responsibility of Management for Financial Statements

The Company''s Board of Directors is responsible for the matter stated in section 134(5} of the Companies Act, 2013 ("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 judgements 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 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. Those 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 aggregate, they could reasonably be expected to influence the economics decisions of users taken based on these financial statements. As part of an audit in accordance with SAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• 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 is 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. ¹

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and relative 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 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 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 we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

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 statement on the matters specified in paragraphs 3 and 4 of the Said Order.

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, 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 Accounting Standards 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 Margh^025 taken

on record by the Board of Directors, none of the directors is disqualified as on 31st ''²Q¹|v ^rom

being appointed as a director in terms of Section 164 (2) of the Act. . Ljzj

PARTICULARS OF EMPLOYEES PURSUANT TO SECTION 197(12) OF THE COMPANIES ACT, 2013 READ WITH RULE 5 (1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014:

The total remuneration paid to the Whole-time Directors of the company is within the limits prescribed U/s 197 of the Companies Act 2013. The percentage of the remuneration of each director to the median remuneration of the employees of the company for the period ended 31^st March 2025 is as under:

Name of the Director	Percentage
Mr. S. Seshadri	7.39
Mr. R. Sekar	7.39

(f) A separate report on the internal financial controls over financial reporting of the Company as required under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 is issued in Annexure II to this report.

(g) 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 Note 1 to the financial statements;

il. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

iii. There were no amounts which were required to be transferred to the investor Education and Protection Fund by the Company.

i. The management has represented that, to the best of its knowledge and belief, other than as disclosed in the notes to the accounts, 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 entitles ["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 tike on behalf of the Ultimate Beneficiaries:

II. The management has represented, that, to the best of its knowledge and belief, other than as disclosed in the notes to the accounts, no funds have been received by the company from any persons or entitles, including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the company shall, whether, directly or indirectly, lend or invest in entities identified in any manner whatsoever by or on behalf of the Funding Part^ Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate BenOT^f3rie^2S45s/jr/

ill. Based on such audit procedures that we have 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 Clause (e) of Rule 11 contain any material mis-statement.

IV. No dividend has been declared or paid by the company during the year.

V. Based on our examination carried out in accordance with the Implementation Guidance on Reporting on

Audit Trail under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (Revised 2024 Edition) Issued by the Institute of Chartered Accountants of India, which included test checks, we report that 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, Our examination of the audit trail was in the context of an audit of financial statements carried out in accordance with the Standard of Auditing and only to the extent required by Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014. We have not carried out any audit or examination of the audit trail beyond the matters required by the aforesaid Rule 11(g) nor have we carried out any audit or examination of the audit trail."

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Obtain an understanding of internal control relevant to the audit to design audit procedures that are

appropriate in the circumstances. Under section 143{3){i) of the Companies Act,2013, we are also responsible for expressing our opinion on whether the company has adequate internaly^^j^fl^lfi^otrols system in place and the operating effectiveness of such controls. f^f ctarteredA^Y