Page 106 - KRCL ENglish

audit opinion on the standalone nancial statement.

Emphasis of Matter
A) We draw attention to Note No. 7.2 of the standalone nancial statements and
independent auditors report of associate company wherein the auditor have given
emphasis on the material uncertainty related to going concern due to invocation of
Bank guarantee by the company due to failure in attaining the milestone of nancial
closure and due to unavoidable change in basic assumptions of the project, whereby
the lenders have asked to submit the revised project report & market study for
nancing arrangement. Till then the project was kept on hold for further development.
However the management of Associate Company as well as the Management of the
Company are optimistic of revival and completion of the project, due to which
provision for impairment of investment in associate company has not been
considered and accounts are drawn on going concern basis.

B) We draw attention to Note No. 13.2 of the standalone nancial statements related to
amount due from Udupi Power Corporation Ltd (UPCL) of Rs. 12.08 Crores for
Railway siding work wherein the amount is outstanding since long with no
development. After entering in to contract with Corporation, the UPCL had appointed
LANCO Infratech Ltd. as their EPC Contractor / agent to deal with the company in
relation with this work whereby all the bills / claim are raised on and settled by them.
However the LANCO Infratech Ltd. has gone into Corporate Insolvency Resolution
Proceedings under National Company Law Tribunal, due to which recovery of amount
due from LANCO Infratech Ltd. is extremely remote. The company has led the Civil
Recovery Suit against UPCL (Principal Employer) and LANCO (its agent).

The Management of the Company are optimistic for recovery of amount due from
UPCL.

C) We draw attention to Note No. 53 of the standalone nancial statements related to
effect of Covid- 19 on the Company's standalone nancial statement due to outbreak
of Corona virus (COVID-19) pandemic in India which has signicantly impacted
operation of the Corporation. Passenger trains were cancelled since 22nd March
2020 across entire Indian Railway System.

As per the Board note, the company has lost Trafc revenue to the tune of
Approximately Rs 70 crore in March'2020. Further during April'20 to July'20, the travel
restrictions continued with partial relief which also severely impacted the nancial
position during that period and consequently may have nancial impact during
Financial Year 2020-21. However considering the partial relief in travel restrictions,
running of special trains and earnings through other segment; projects, the Company

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