Hindustan Construction company

Auditor's Responsibility
1. Our responsibility is to express an opinion on these standalone financial statements based on
our audit.

2. We have considered the provisions of the Act the accounting and auditing standards and
matters which are required to be included in the audit report under the provisions of the Act and
the Rules made thereunder.

4. We conducted our audit in accordance with the Standards on Auditing specified under Section
143(10) of the Act. Those Standards require that we comply with ethical requirements and plan
and perform the audit to obtain reasonable assurance about whether these standalone financial
statements are free from material misstatement.

5. An audit involves performing procedures to obtain audit evidence about the amount sand the
disclosures in the financial statements. The procedures selected depend on the auditor's
judgment including the assessment of the risks of material misstatement of the financial
statements whether due to fraud or error. In making those risk assessments the auditor considers
internal financial controls relevant to the Company's preparation of the financial statements that
give a true and fair view in order to design audit procedures that are appropriate in the
circumstances. An audit also includes evaluating the appropriateness of the accounting policies
used and the reasonableness of the accounting estimates made by the Company's Directors as
well as evaluating the overall presentation of the financial statements.

6. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our qualified audit opinion on these standalone financial statements.

Basis for Qualified Opinion

7. As stated in Note 33(a) to the standalone financial statements the Company's non-current
investments as at 31 March 2018 include investments aggregating Rs.630.83crore in two of its
subsidiaries; and non-current loans other non-current financial assets and other current financial
assets as at that date include dues from such subsidiaries aggregating Rs.580.75 crore Rs.43.42
crore and Rs.6.63 crore respectively being considered good and recoverable by the management
considering the factors stated in the aforesaid note including valuation report from an
independent valuer. However, these subsidiaries have accumulated losses and their consolidated
net worth is fully eroded. Further these subsidiaries are facing liquidity constraints due to which
they may not be able to realize projections made as per their respective business plans. In the
absence of sufficient appropriate evidence, we are unable to comment upon the carrying value
of these non-current investments and recoverability of the aforesaid dues and the consequential
impact if any on the accompanying standalone financial statements. Our audit opinion on the
standalone financial statements for the year ended 31 March 2017 was also qualified in respect
of this matter.
Qualified Opinion
8. In our opinion and to the best of our information and according to the explanations given to us
except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph
the aforesaid standalone financial statements give the information required by the Act in the
manner so required and give a true and fair view inconformity with the accounting principles
generally accepted in India including Ind AS specified under Section 133 of the Act of the state of
affairs (financial position) of the Company as at 31 March 2018 and its profit (financial
performance including other comprehensive income) its cash flows and the changes in equity for
the year ended on that date.

Emphasis of Matters
9. We draw attention to:

a) Note 33(b) to the standalone financial statements regarding the Company's non-current
investment in a subsidiary company non-current loans and other non-current financial assets due
from such subsidiary aggregating Rs.2.24 crore Rs.1281.40 croreRs.158.18 crore respectively as
at 31 March 2018. The consolidated net-worth of the aforesaid subsidiary has been fully eroded;
however based on certain estimates and other factors including subsidiary's future business plans
growth prospects and valuation report from an independent valuer as described in the said note
management believes that the realizable amount is higher than the carrying value of the non-
current investments noncurrent loans and other non-current financial assets due to which these
are considered as good and recoverable. Our opinion is not qualified in respect of this matter.

b) Note 34 to the standalone financial statements regarding uncertainties relating to

recoverability of unbilled work-in progress (other current financial assets) non-current trade
receivables and current trade receivables aggregating' 686.24 crore Rs.123.29 crore and
Rs.214.38 crore respectively as at 31 March 2018which represent various claims raised in the
earlier years in respect of projects substantially closed or suspended and where the claims are
currently under negotiations/discussions/arbitration/ litigation. Pending the ultimate outcome of
these matters which is presently unascertainable no adjustments have been made in the
accompanying standalone financial statements. Our opinion is not qualified in respect of this
matter.

c) Note 26.1 and 26.3 to the standalone financial statements regarding remuneration ofRs.10.66
crore paid for each of the financial years ended 31 March 2014 and 31 March 2016to the
Chairman and Managing Director (CMD) which is in excess of the limits prescribed under the
provisions of the erstwhile Companies Act 1956/ Companies Act 2013respectively and for which
the Company has filed an application for review/an application respectively with the Central
Government; however approval in this regard is pending till date. Our opinion is not qualified in
respect of this matter.