We have audited the accompanying Standalone Financial
Statements of KNR CONSTRUCTIONS LIMITED (the
"Company"), which comprise the Balance Sheet as at
March 31, 2026, the Statement of Profit and Loss (including
Other Comprehensive Income), the Statement of Changes
in Equity and the Statement of Cash Flows for the year
ended on that date and notes to the financial statements,
including a summary of material accounting policies and
other explanatory information (hereinafter referred to as the
"Standalone Financial Statements") which includes 17 joint
operations accounted on proportionate basis.
In our opinion and to the best of our information and according
to the explanations given to us, and based on the consideration
of reports of other auditors on separate financial statements
of joint operations and management certified accounts in
respect of seventeen joint operations referred to in the Other
Matters paragraph below the aforesaid Standalone Financial
Statements give the information required by the Companies
Act, 2013 (the "Act") in the manner so required and give a
true and fair view in conformity with the Indian Accounting
Standards prescribed under Section 133 of the Act, ("Ind AS")
and other accounting principles generally accepted in India, of
the state of affairs of the Company as at March 31,2026 and
its profit, 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 ("SA"s) specified
under Section 143(10) of the Act. Our responsibilities under
those Standards are further described in the Auditor’s
Responsibilities for the Audit of the Standalone Financial
Statements section of our report. We are independent of the
Company in accordance with the Code of Ethics issued by the
Institute of Chartered Accountants of India ("ICAI") together
with the ethical requirements that are relevant to our audit of
the Standalone Financial Statements under the provisions of
the Act and the Rules made 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 obtained by us is sufficient and appropriate
to provide a basis for our audit opinion on the Standalone
Financial Statements.
EMPHASIS OF MATTER
We draw attention to Note 55 of the standalone financial
statements, regarding the dues aggregating to Rs. 1,36,331.90
Lakhs relating to the Kaleswaram Package 4 were considered
as good for recovery by the management, based on the
contractual terms of the respective agreement with the
customer and internal assessments by the management. We
were informed by the management that it is fully confident of
recovery of such dues. 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
Standalone Financial Statements of the year ended 31st
march 2026. 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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A
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Revenue Recognition of long-term contracts
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Key audit matter
Description
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The Company has significant revenue from construction contracts and long-term operating and maintenance
agreements. These long-term contracts are often complex customized solutions and meet the definition of
a contract as per Ind AS 115.
Revenue related to these construction contracts is recognized using the percentage of completion method,
where progress is determined by comparing actual costs incurred to date, with the total estimated costs
of the project. Revenue recognition for construction contracts includes management judgment in the form
of estimates, which are subject to management experience and expectations of future events. The most
important judgment relates to the estimated total costs of the project.
Revenue recognition of long-term contracts is a key audit matter in the audit due to the high level of
management judgement involved in the project estimates.
(Refer note no. 42)
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How the Key
Audit Matters was
addressed in our audit
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Our revenue testing included both testing of the company’s controls, as well as substantive audit procedures
targeted at selected major long-term projects. Our substantive testing focused on estimates applied by
management in the accounting.
Our procedures included, among others things, the following:
Ensured that the revenue recognition method applied was appropriate based on the terms of the arrangement;
Agreed the total project revenue estimates to sales agreements, including amendments as appropriate;
We obtained an understanding of the processes and tested relevant controls, which impact the revenue
recognition;
We assessed the reliability of management’s estimates by comparing the actual results of delivered projects
to previous estimates;
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B
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Litigation and Claims:
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Key audit matter
Description
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Considering the nature of the Company’s operations, it can be exposed to a number of litigations and claims.
The recognition and measurement of provisions, contingent liabilities and contingent assets as well as
making the necessary disclosures in respect of litigation and claims requires significant judgment by the
management in assessing the outcome of each legal case which is based on management’s discussion
with legal advisors.
Due to the significance of the litigations and claims and the difficulty in assessing and measuring the
resulting outcome, this is considered as a key audit matter.
(Refer note no. 37(i))
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How the Key
Audit Matters was
addressed in our audit
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Our audit procedures included the following:
evaluating the Company’s policies, procedures and controls in relation to litigation, claims and provision
assessments;
independent enquiries to understand the background of each case, legal position and the material risks that
may impact the Company’s standalone Ind AS financial statements; and
assessing reasonableness of judgment made by management, determining the adequacy of the level of
provisioning or disclosure in the standalone Ind AS financial statements.
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INFORMATION OTHER THAN THE FINANCIAL STATEMENTS
AND AUDITOR'S REPORT THEREON
The Company’s Board of Directors is responsible for 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 and Sustainability Report, Corporate
Governance and Shareholder’s Information, but does not
include the Standalone Financial Statements and our Auditor’s
Report thereon.
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
and, in doing so, consider whether the other information
is materially inconsistent with the Standalone Financial
Statements or our knowledge obtained during the course of
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.
RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED
WITH GOVERNANCE 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, including Other Comprehensive Income, Changes
in Equity and Cash Flows of the Company in accordance with
the accounting principles generally accepted in India, including
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 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
and Board of Directors are 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 the Board of
Directors either intends to liquidate the Company or to cease
operations, or has no realistic alternative but to do so.
The Company’s Board of Directors is also 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:
• I dentify 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 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 with reference to Standalone
Financial Statements 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 the 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.
• Obtain sufficient appropriate audit evidence regarding
the financial statements of the Company and its joint
operations to express an opinion on the standalone
financial statements. For the other joint operations
included in the standalone financial statements, which
have been audited by the other auditors, such other
auditors remain responsible for the direction, supervision
and performance of the audits carried out by them. We
remain solely responsible for our audit opinion.
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 financial controls 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.
OTHER MATTERS
a) The standalone financial statements include the
audited financial statements of 12 Joint operations,
whose financial statements reflect total assets (before
consolidation adjustments) of Rs. 92,152.84 Lakhs as
at 31 March 2026, total income (before consolidation
adjustments) of Rs. 43,899.96 Lakhs, total net profit/
(loss) after tax (before consolidation adjustments) of Rs.
58.69 Lakhs, total comprehensive income/(loss) (before
consolidation adjustments) of Rs. 58.69 Lakhs for year
ended 31st March, 2026 and net cash flow/(outflow)
Rs. (206.62) Lakhs for year ended 31st March 2026, as
considered in the standalone financial statement, which
have been audited by their respective independent
auditors. The independent auditors’ reports on financial
statements of these entities have been furnished to us
by the management and our opinion on the standalone
financial statements, in so far as it relates to the amounts
and disclosures included in respect of these entities, is
based solely on the report of such auditors.
Our opinion on the standalone financial statements is not
modified in respect of the above matter with respect to
our reliance on the work done and the reports of the other
auditors.
b) The standalone financial statements include the
unaudited financial statements of 5 Joint operations
whose financial statements reflect total assets of Rs.
1,628.77 Lakhs (before consolidation adjustments) as
at 31st March 2026 and total income of Rs. 2,285.43
lakhs (before consolidation adjustments), total net
profit/(loss) after tax of Rs. 67.92 (before consolidation
adjustments) and total comprehensive income/(loss)
(before consolidation adjustments) of Rs. 67.92 lakhs
for the year ended 31st March 2026 and net cash flow/
(outflow) Rs. Nil lakhs for year ended 31st March 2026, as
considered in the standalone financial statements, which
have not been audited by us. These financial statements
are unaudited and have been furnished to us by the
Management and our opinion on the statement, in so far
as it relates to the amounts and disclosures included in
respect of these entity, is based solely on such unaudited
financial statements. In our opinion and according to the
information and explanations given to us by the Board of
Directors, this financial information is not material to the
Company.
Our opinion on the standalone financial statements is not
modified in respect of the above matter with respect to
our reliance on the financial statements certified by the
Board of Directors.
REPORT ON OTHER LEGAL AND REGULATORYREQUIREMENTS
A. 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 1" a statement on the matters
specified in paragraphs 3 and 4 of the said Order.
B. 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 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, Statement
of Changes in Equity and the Statement of Cash
Flows dealt with by this Report are in agreement
with the books of account.
d. I n our opinion, the aforesaid Standalone Financial
Statements comply with the Ind AS specified under
Section 133 of the Act.
e. On the basis of the written representations received
from the directors as on March 31, 2026 taken
on record by the Board of Directors, none of the
directors is disqualified as on March 31, 2026 from
being appointed as a director in terms of Section
164(2) of the Act.
f. With respect to the adequacy of the internal financial
controls with reference to Standalone Financial
Statements of the Company and the operating
effectiveness of such controls, refer to our separate
Report in "Annexure 2".
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-Refer to Note
37 to the Standalone Financial Statements.
ii. The Company did not have any long-term
contracts, including derivative contracts, for
which there were any material foreseeable
losses.
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, as
disclosed in note no. 62 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,
as disclosed in note no. 62 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. a) 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.
b) As stated in note no. 15 to the standalone
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 declared of dividend.
vi. Based on our examination which included test
checks, performed by us on the Company have
used accounting software for maintaining their
respective books of account for the financial
year ended March 31,2026 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 and on
the basis of test checking of selected samples,
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.
K.P.Rao & Co.,
Chartered Accountants
(Firm Regn. No.003135S)
H N Anil
Partner
Place: Bangalore Membership No. 225120
Date: 29th May 2026. UDIN: 26225120ENUOST2271
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