We have audited the accompanying Standalone financial
statements of POWER MECH PROJECTS LIMITED (“the
Company”), which comprise the Balance Sheet as at March
31, 2025, 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 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 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 March 31, 2025, 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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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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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, 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. 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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Key Audit matter
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How the matter was addressed in our audit
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2
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Trade receivables
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Our audit procedures in relation to the recoverability of
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The Company has significant amount of trade receivables
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trade receivables included
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(Including retention and security deposits) and their
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Understood and tested the Company's credit control
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recoverability requires management judgement due to the
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procedures and tested key controls over granting
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specific risks associated with these receivables.
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credit to customers.
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There is an element of management judgement in assessment
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Tested ageing of trade receivables at the year ended
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of extent of the recoverability of long outstanding trade
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on a sample basis.
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receivables after the end of the contractual credit period.
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•
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Obtained list of long outstanding receivables and
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Management assessed the recoverability of trade receivables
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identified any debtors with financial difficulty through
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by reviewing customers ageing profile, credit history, nature
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discussion with management.
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and ownership of organisation and status of subsequent
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•
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Assessed the recoverability of these outstanding
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settlements and determined whether an impairment provision
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receivables through our discussion with management
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is required.
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and with reference to detailed receivables listings for
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We considered this matter to be significant to our audit due to
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the subsequent period.
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the quantum of the receivables and their period of outstanding.
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•
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Also examined the arrangements/correspondences
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with customers to assess the payment arrangement
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agreed with the customers and assessed the
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recoverability of the significant outstanding receivables.
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•
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Assessed the recoverability of the balances by
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comparing the outstanding amounts as at year end
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against subsequent recoveries.
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•
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The status and their organisational structure was also
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examined with reference to the credit risk and their
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creditability in making payments since most of the
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customers are public sector organisations.
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Considering all these, we found that the judgment made
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by the management in assessment of recoverability of
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receivables are found to be appropriate.
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3
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Advances with sub-contractors
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Our audit procedures in relation to the recoverability
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The Company has significant amount of Trade advances with
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of
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trade advances to sub-contractors provided while
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Sub-contracts and their recoverability/adjustment against
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execution of sub-contracts awarded included
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subsequent works carried requires management judgement
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•
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Understood and tested the Company's policies
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due to the specific risks associated with these recoveries.
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of providing advances and tested the design and
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There is an element of management judgement in assessment
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operating effectiveness of key controls over granting
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of extent of the recoverability of long outstanding trade
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of advances to sub-contractors.
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advances after the end of the contractual credit period.
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Tested ageing of advances recoverable at the year
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Management assessed the recoverability of these trade
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ended on a sample basis.
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advances by reviewing the contractors ageing profile, credit
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•
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Examined management assessment of recoverability
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history, subsequent orders proposed to be placed with them,
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of the advances
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nature and ownership of organisation and status of subsequent
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Obtained list of long outstanding advances and
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settlements and determined whether an impairment provision
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identified any sub-contractors with financial difficulty
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is required.
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through discussion with management.
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We considered this matter to be significant to our audit due to
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•
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Assessed the recoverability of these outstanding
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the quantum of the advances and their period of outstanding.
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advances through our discussion with management
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and with reference to detailed recoveries made for the
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subsequent period.
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•
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Also examined the arrangements/correspondences
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with sub-contractors to assess the arrangement
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agreed with the sub-contractors and assessed the
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recoverability of the significant outstanding advances.
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Key Audit matter
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How the matter was addressed in our audit
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• 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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Other matters
The financial statements of the Company for the year
ended 31st March, 2024 was audited by another auditor who
expressed an unmodified opinion on those statements vide
report dt. 20.5.2024. The said report has been furnished to us
by the management and which has been relied upon by us for
the purpose of audit of the financial statements. Our opinion is
not modified in respect of this matter.
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 March 31, 2025 taken
on record by the Board of Directors, none of the
directors is disqualified as on March 31, 2025 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.
Sd/-
For Brahmayya & Co,
Chartered Accountants,
Firm Regn. No. 000513S
Karumanchi Rajaj
Partner
Place: Hyderabad Membership No. 20230
Date: 22nd May, 2025 UDIN: 25202309BMIMBR1025
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