We have audited the accompanying standalone
financial statements of SEPC Limited ("the Company"),
which comprise the Balance Sheet as at March 31,
2026, and 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 then ended, and notes to the standalone
financial statements, including material accounting
policy information and other explanatory information
(hereinafter referred to as the "standalone financial
statements").
In our opinion and to the best of our information and
according to the explanations given to us, except for
the effects of the matters described in the Basis for
Qualified Opinion section of our report, 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 read with
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, 2026, and its profit (including
other comprehensive income), changes in equity and
its cash flows for the year ended on that date.
Basis for Qualified Opinion
i. The carrying value of Deferred Tax Asset (DTA) as
on March 31, 2026, include an amount of Rs.28,187.76
Lakhs (March 31, 2025 Rs. 29,548.46 lakhs), which
was recognized on carried forward business losses
of Rs.80,665.52 Lakhs (March 31, 2025 Rs. 84,559.48
lakhs). Due to non-availability of sufficient
appropriate audit evidence to corroborate
management's assessment that sufficient taxable
profits will be available in the future against which
such carried forward business losses can be
utilised as required by Ind AS 12: "Income taxes",
we are unable to comment on adjustments, if any,
that may be required to the carrying value of the
aforesaid DTA as on March 31, 2026. (Refer Note 42
(b) of the Standalone financial Statement).
ii. Non-Current Contract Assets include overdue
balances of Rs.9,037.98 lakhs as at March 31, 2026
(March 31, 2025 Rs.6,959.44 Lakhs), which are net of
provisions of Rs. 1,036.37 lakhs as at March 31, 2026
(March 31, 2025: Rs.926.98 lakhs) and Non-Current
Trade Receivables include overdue balances Rs
5,844.92 Lakhs as on March 31, 2026 (March 31,
2025 Rs. 495.18 lakhs) [net of provisions amounting
to Rs. 538.77 Lakhs (March 31, 2025: Rs.82.99
lakhs)], relating to dues on projects which have
been stalled due to delays in obtaining approvals
from the regulatory authorities and on account of
disputes. Due to the non-availability of sufficient
appropriate audit evidence to corroborate
management's assessment of the recoverability
of the said balances on these projects, we are
unable to comment on the carrying value of these
non- current Contract Assets and non-current
Trade Receivables and the consequential impact
if any, on the Statement of the Company for the
year ended March 31, 2026. (Refer Note 8.1 and 11.1
of the Standalone financial statement).
Our audit report on the standalone financial statements
for the year ended March 31, 2025 were qualified in
respect of the matters stated above.
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 SAs 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 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 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 qualified opinion.
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. In addition to the matters described in the Basis for Qualified Opinion
section, we have determined the matters described below to be the key audit matters to be communicated in our
report.
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Sr.No Key Audit Matters
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How the Key Audit Matters was addressed in our audit
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1 Provision for Expected Credit Loss
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Our
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audit procedures in respect of this area included:
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Refer to Note no 8,10,11,12, 16,17,20,21 in the standalone
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1.
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Obtained an understanding of the Company's
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financial statements
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process relating to allowance for credit loss
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Contract Assets are accounted based on the
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and assessed the management's estimate and
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contractual terms and management's assessment
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related policies used in the credit loss analysis.
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of recoverability from customers. The recoverability
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2.
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Verified design, implementation and operating
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of the same is mainly based on certification of the
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effectiveness of controls over development of the
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work done as certified by the engineer/expert of
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methodology for the computation of provision for
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the customers as per the specific requirements of
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expected credit losses including completeness
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the contracts.
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and accuracy of information used in such
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Expected credit losses are measured based
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estimation and computation.
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on the present value of cash shortfalls over the
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3.
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Examined, on a test check basis, the objective
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remaining expected lives of the trade receivables
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evidence relating to the impairment of trade
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and contract assets. The Company estimates and
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receivables and Contract Assets and the key
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recognises allowance for expected credit losses on
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assumptions used in the determination of
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these trade receivables and contract assets which
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expected credit loss.
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involves consideration of ageing status, historical
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4.
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Reviewed the appropriateness of management's
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payment records, the likelihood of collection
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ageing analysis based on days past due by
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based on the terms of the contract and the credit
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examining the original documents (such as
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information of its customers.
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invoices and bank deposit advice) on test check
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We have identified provisioning for expected credit
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basis.
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loss as a key audit matter as the calculation of
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5.
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Evaluated the competence, capabilities and
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expected credit loss is a complex area and requires
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objectivity of management's expert engaged for
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management to make significant assumptions
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the determination of provision for expected credit
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and estimations on customer payment trends and
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loss, obtained an understanding of the work of the
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behaviour in order to determine the amounts and
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expert, and evaluated the appropriateness of the
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timing of expected future cash flows.
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6.
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expert's work as audit evidence.
Assessed whether the adequacy and
appropriateness of the disclosures in the financial
statements with respect to expected credit losses
in accordance with the requirements of applicable
Indian Accounting Standards.
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2 Revenue Recognition
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Our audit procedures to address this key audit matter
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Refer to Note no 34 in the standalone financial
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included, but were not limited to the following:
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statements
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1.
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Obtained an understanding of the Company's
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The Company's revenue primarily arises from
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revenue recognition processes and evaluated the
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construction contracts which, by its nature, is
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appropriateness of the Company's accounting
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complex given the significant judgements involved
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policy for revenue recognition in accordance
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in the assessment of identification and satisfaction
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with Ind AS 115 - Revenue from contracts with
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of performance obligations.
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customers.
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2.
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Tested the design, implementation and
operating effectiveness of key internal financial
controls, including those related to estimation of
construction contract costs, contract revenue and
review and approval thereof.
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3.
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For selected sample of contracts with customers,
performed the following procedures:
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Sr.No Key Audit Matters
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How the Key Audit Matters was addressed in our audit
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The Company recognizes contract revenue on the
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a)
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Tested the calculation of percentage of
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basis of stage of completion determined based
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completion as per input method adopted
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on the proportion of contract costs incurred till
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by the Management including the testing
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balance sheet date, relative to the total estimated
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of costs incurred and recorded against the
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costs of the contract at completion. The recognition
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contracts.
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of contract revenue and the resultant profit/ loss
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b)
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Evaluated the reasonableness of key
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therefore rely on estimates in relation to forecasted
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assumptions included in the estimated total
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revenue and contract costs. These contract
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construction contract costs by performing
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estimates are reviewed by the management on
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retrospective review of Management's
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a periodic basis. In doing so, the management is
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forecasting process by reviewing past trends
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required to exercise significant judgement in its
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of estimated costs to actual costs over time,
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assessment of the transaction price which may
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discussed variances with project teams.
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also include variable consideration pertaining
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4. Assessed whether the adequacy of presentation
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to additional claims raised by the Company.
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and related disclosures in the standalone financial
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The management is also required to exercise
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statements are in line with the Indian accounting
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judgement to assess the completeness and
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standards and Schedule III.
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accuracy of forecasted costs to complete.
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Changes in these estimates as contracts progress
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can result in material adjustments to revenue and
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margins. Considering high estimation uncertainty,
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complexities involved and material impact on the
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financial statement, this area has been considered
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a key audit matter in the current year audit.
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Information Other than the Standalone 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 report,
Director's report along with annexures, along with
annexures but does not include the standalone
financial statements and our auditor's report thereon.
The Management report, Director's report along with
annexures is expected to be made available to us after
the date of this auditor's report.
Our opinion on the standalone 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 standalone 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 standalone financial
statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
When we read the Management report, Director's
report along with annexures, if we conclude that there
is a material misstatement therein, we are required
to communicate the matter to those charged with
governance under SA 720 'The Auditor's responsibilities
Relating to Other Information.
Responsibilities of Management and Board of
Directors for the Standalone Financial Statements
The Company's Management and Board of Directors
are 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,
changes in equity and cash flows of the Company in
accordance with the accounting principles generally
accepted in India, including the Indian 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; the selection and application
of appropriate accounting policies; making judgments
and estimates that are reasonable and prudent;
and the 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 statement 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, the
Board of Directors of the Company 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 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.
We give in "Annexure A" a detailed description of
Auditor's responsibilities for Audit of the Standalone
Financial Statements.
Other Matter:
The standalone financial statements include the
financial statements/information of 4 joint operations
which are not subject to audit whose financial
statements/ information reflect total revenue of
Rs. 60.46 lakhs, total net loss after tax of Rs. (137.34)
lakhs and total comprehensive loss of (137.34) lakhs
for the year ended March 31, 2026 as considered in
the standalone financial statements. These financial
statements/ information 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
joint operations is based solely on such management
prepared unaudited financial statements/ information.
According to the information and explanations given
to us by the Management, the financial statements/
information of these joint operations are not material
to the Company.
Our opinion on the standalone financial statements
is not modified with respect to the above matter in
so far as our reliance on the financial statements/
information certified by the management.
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 "Annexure B" 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 except for the possible
effects of the matters described in the Basis
for Qualified Opinion section above, obtained
all the information and explanations which
to the best of our knowledge and belief were
necessary for the purposes of our audit of the
aforesaid standalone financial statements.
(b) Except for the possible effects of the matter
described in the Basis of Qualified Opinion
section above, 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, except that
back-up of the books of account and other
books and papers maintained in electronic
mode has not been kept in servers physically
located in India on a daily basis since such
backups are not taken on Sundays and, except
for the matters stated in the paragraph 2(i)
(vi) below on reporting under rule 11(g).
(c) The Balance Sheet, the Statement of Profit
and Loss (including other comprehensive
income), the Statement of Changes in Equity
and the Statement of Cash Flows dealt with
by this Report are in agreement with the
books of account maintained for the purpose
of preparation of the standalone financial
statements.
(d) Except for the possible effects of the matters
described in Basis for Qualified Opinion
section above, in our opinion, the aforesaid
standalone financial statements comply with
the Ind AS specified under Section 133 of the
Act.
(e) The matters described in Basis of Qualified
Opinion section of our report, in our opinion, may
have an adverse effect on the functioning of
the Company.
(f) 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 are disqualified as on
March 31, 2026 from being appointed as a
director in terms of Section 164 (2) of the Act.
(g) The qualification relating to the maintenance
of accounts and other matters connected
therewith are as stated in Basis for Qualified
Opinion section and paragraph 2(b) above
and paragraph 2(i)(vi) below on reporting
under Rule 11(g).
(h) 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 C".
(i) 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 standalone financial statements -
Refer Note 57 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 are no amounts which are required
to be transferred to the Investor Education
and Protection Fund by the Company
during the year ended March 31, 2026.
iv. (a) The Management has represented
that, to the best of it's knowledge and
belief, as disclosed in the note 65 to
the standalone financial statements,
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 it's knowledge and belief, as
disclosed in the note 65 to the standalone
financial statements, 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 the audit procedures performed
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 mis¬
statement.
(v) The Company has neither declared nor
paid any dividend during the year.
(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,
except that no audit trail feature was
enabled at the database level in respect
of the accounting software to log any
direct data changes.
Further, where enabled, audit trail feature has
been operated for all relevant transactions
recorded in the accounting software. Also,
during the course of our audit, we did not come
across any instance of audit trail feature being
tampered with in respect of such accounting
software. Additionally, the audit trail of prior
years has been preserved by the Company
as per the statutory requirements for record
retention to the extent it was enabled and
recorded in respective years.
3. In our opinion, according to information,
explanations given to us , the remuneration paid or
provided by the Company to its directors is within
the limits laid prescribed under Section 197 read
with Schedule V of the Act.
For M S K A & Associates LLP
(Formerly known as M S K A & Associates)
Chartered Accountants
ICAI Firm Registration No. 105047W/W101187
T.V. Ganesh
Partner
Place: Chennai Membership No. 203370
Date: May 25, 2026 UDIN: 26203370MJNFFE5159
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