Your Directors take pleasure in presenting the Thirty Second Annual Report along with the Audited Financial Statements for the financial year ended March 31,2021

(I) STANDALONE FINANCIAL RESULTS :

The Financial performance highlights of the Company are as under:

FINANCIAL RESULTS:

The Company s financial statements have been prepared in accordance with the provisions of the Companies Act, 2013 and the Indian Accounting Standards (“Ind AS”) notified under the Companies (Indian Accounting Standards) Rules, 2015 read with Section 133 of the Companies Act, 2013 (as amended from time to time).

(II) FINANCIAL PERFORMANCE REVIEW :

During the year ended March 31,2021, your Company achieved a turnover of Rs 377.76 crore on standalone basis as against Rs 607.89 crore during the previous year ended March 31,2020. The Net Loss for the year amounted to Rs. (284.93) crore as against Net Loss of Rs (406.26) crore during year ended March 31, 2020. As a result of the various events during previous year the financial year 2019-20 which are more fully discussed in the notes to the Financial Statements, there was significant uncertainties on recovery of carrying value of certain trade receivable, retention money, contract assets and loans given to ultimate investee entities. We have completed 8 projects in the FY 21 and 5 in FY 20 and major portion of the 16 existing projects being executed by the Company are nearing completion / or approaching their end of term, which is likely to result in significant reduction in the Company's operating revenue thereafter. During the current and earlier year, the Company has defaulted on various loans to the lenders of the Company, including borrowings from promoter group entities.

Efforts have also been put in to reduce the Non fund liabilities by Rs.93 Crore in FY'21. The same were reduced by Rs.215 Crores in FY' 20.

Your Board has followed a conservative approach by making prudent provisions to the best of its judgement with a view to ensure that the Financial Statements reflect the asset values close to the recoverable values. Accordingly, the Board has made a provision on account of credit risk and impairment of investments, resulting into loss during the year. But for these provisions your Company has been able to breakeven even at such times of crisis. The actual realisable values may differ from the estimates assumed.

(III) DIVIDEND :

Due to accumulated losses of the Company from the previous years, your Directors express their inability to recommend any dividend for the year on Preference as well as on Equity Shares. As your Company has been defaulting in servicing its debt obligations and the reconstituted Board is in the process of finalising a comprehensive approach to manage the current situation including sale of existing equity share holding by IL&FS Group. In this process, the reconstituted Board, as part of resolution process for the Company, has invited expression of interest for acquiring the equity stake in the Company.

Your Company is unable to pay dividend to preference and equity shareholders until the satisfaction of all its dues. Considering the magnitude of loss incurred in the financial year, the Board does not recommend any dividend for the year ended March 31,2021.

(IV) RESERVES :

No amount is recommended for transfer to Reserves of the Company for financial year ended March 31,2021.

(V) STATE OF AFFAIRS OF THE COMPANY :

During the year under review, your Company has not bagged any orders. The Company already had orders worth Rs.1370.22 crore (approx.) at the beginning of the year. Out of the total orders in hand, the unexecuted order value stands at Rs. 880.30 crore (approx.) at the end of the financial year. The detailed position on the order book and financial performance of the Company is provided under Management Discussions & Analysis Report.

IL&FS Engineering & Construction Company Limited (IECCL) is part of the Infrastructure Leasing and Financial Services Limited (“IL&FS”) group. The board of directors of IL&FS has been reconstituted pursuant to the orders passed by the National Company Law Tribunal, Mumbai Bench (“NCLT”) in Company Petition No. 3638 of 2018 filed by the Union of India, acting through the Ministry of Corporate Affairs under Sections 241 and 242 of the Companies Act, 2013, as amended (“Companies Act”) on the grounds of mismanagement of public funds by the erstwhile board of IL&FS and the affairs of IL&FS being conducted in a manner prejudicial to the public interest.

Further, the National Company Law Appellate Tribunal (“NCLAT”) by way of its order on October 15, 2018 (“Interim Order”) in the Company Appeal (AT) 346 of 2018 by way of which the NCLAT after taking into consideration the nature of the case, larger public interest and economy of the nation and interest of IL&FS and its group companies (including IECCL) has stayed certain coercive and precipitate actions against IL&FS and its group companies including IECCL. IL&FS and its group companies are currently undergoing resolution process under the aegis of the NCLAT and NCLT

The developments at the IL&FS Group have had negative impact on IECCL and its brand equity. These developments severely impacted the ongoing projects and order book and pending the Resolution process, no new bidding for new projects have been undertaken.

Your Company is having overseas subsidiary viz. Maytas Infra Saudi Arabia Company LLC (MISA), (Incorporated in Saudi Arabia), there being no employees at Saudi Arabia. The Company has filed letter to the Reserve Bank of India seeking approval to write-off its investment held in MISA. Once the approval is in place, will initiate steps for writing off the investment and followed by closure of the MISA in Saudi Arabia as well.

The future business outlook of the Company is solely dependent on the approval of the Resolution Plan by all the stakeholders.

Covid 19:

During March 2020, the COVID pandemic further increased rapidly forcing Governments of most countries to enforce a partial lockdown of all activities. Heeding to the various guidelines issued in India by the Central and State Governments and abroad by various agencies on the Covid-19 pandemic, all establishments, offices & factories of the Company had shut down operations from March 25, 2020. Your Company immediately took several measures to ensure health and safety of its workers and other employees and thereafter, steps were taken to ensure business continuity of essential services including Security and IT lights-on operations. Special permissions were also taken for ensuring that very critical operations, dewatering in Metro projects, etc. continued with all the precautionary measures. This response has reinforced customer confidence in IECCL and many of them have expressed their appreciation and gratitude for keeping their businesses running under most challenging conditions. Your Company gradually resumed the normal operations from June / July-2020 by following the strict Covid norms.

(VI) SHARE CAPITAL

During the year under review, there was no change in the share capital of the Company Shares held by Directors:

None of the Directors of the Company holds any Shares or convertible instruments of the Company.

(VII) DEPOSITS :

During the year under review, your Company had not accepted any deposit from public under Chapter V of the Companies Act, 2013

(VIII) DIRECTORS:

As on March 31,2021, the following directors were on the Board of the Company

During the year, Mr. Bijay Kumar had resigned as Director w.e.f. 21st Dec-2020 and the Board took note of his resignation with a vote of appreciation for his services during his tenure.

During the year, Mr. Manish Kumar Agarwal was appointed as Nominee Director of the Promoter on January 15, 2021. Dr. Jagadip Narayan Singh and Mr. Subrata Kumar Mitra were appointed as Additional Directors under independent category on January 15, 2021 whose appointment as Director of the Company is recommended by the Board of Directors for the approval of Members in the ensuing Annual General Meeting.

None of the Directors of the Company are inter-se related to each other.

Declaration by the Independent Director(s) - Dr. Jagadip Narayan Singh and Mr. Subrata Kumar Mitra were obtained as required under the provisions of the Companies Act, 2013.

Status on compliance of having Independent Directors and Women Directors on the Board of Directors of the Company:

The Board of Directors appointed two Independent Directors on the Board on January 15, 2021 and is in the process of identifying suitable One Woman Independent Director for appointment on the Board. As you are aware that the newly appointed directors of IL&FS, who exercise control, directly or indirectly, over the Company have been appointed by the National Company Law Tribunal (“NCLT”) on the recommendation of Central Government, and are performing function similar to that of the independent directors by discharging an important public duty of resolving the financial problems and other issues. Further, NCLT vide order dated April 26, 2019 (“April Order”) has granted dispensation in relation to the requirement for appointment of independent directors and woman director in light of the difficulties faced by the new board of IL&FS, during the pendency of stay order granted on October 15, 2018 by National Company Law Appellate Tribunal (“NCLAT) on the institution or continuation of suits or any other proceedings by any party/ person/bank/company etc. against ‘IL&FS' and its group companies in any Court of Law/Tribunal/Arbitration Panel or Arbitration Authority (“October 2018 Order”).

Non-Executive Directors:

The Non-Executive Directors are entitled for sitting fee and the details of the same are as follows;

(i) . Board Meeting : Rs 15,000/- per meeting

(ii) Audit Committee Meeting : Rs 10,000/- per meeting

(iii) Other Committees of the Board : Rs 5,000/- per meeting

Additionally, the actual out of pocket expenses incurred by the Non-Executive Directors for attending the meetings are also borne by the Company. Except as mentioned above, no other payments were made by the Company to NonExecutive Directors and the Company does not have any pecuniary relationship or transactions with the Non-Executive Directors. The details of amount paid to the Directors of the Company towards Sitting Fee are mentioned in the Form MGT-9 annexed to the Directors' Report as well as the Corporate Governance Section of this Annual Report

(IX) Managerial Remuneration Policy :

In terms of the provisions of Section 178 of the Companies Act, 2013 read with Rules made thereunder and Regulation 19 of Listing Regulations, the Board of Directors of the Company had framed Managerial Remuneration Policy which includes the criteria for determining qualifications, positive attributes, independence of directors and other matters as specified under Section 178(3) of the Companies Act, 2013 and Regulation 19 read with Part D of Schedule II of Listing Regulations. The policy is available on the website of the Company at http://www.ilfsengg.com/html/policies.php

(X) KEY MANAGERIAL PERSONNEL :

In terms of the provisions of Section 203 of the Companies Act, 2013, Mr Kazim Raza Khan, Chief Executive Officer, Mr Naveen Kumar Agrawal, Chief Financial Officer and Mr Srinivasa Kiran Sistla, Company Secretary are the Key Managerial Personnel of the Company.

During the year, there was no change in Key Managerial Personnel of the Company.

(XI) DIRECTORS RESPONSIBILITY STATEMENT :

In terms of Section 134 (5) of the Companies Act, 2013, the Board of Directors wish to state that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis, however IL&FS and its group companies are currently undergoing resolution process under the aegis of the NCLAT and NCLT which may impact the going concern status of the Company;

(e) the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively

(XII) DETAILS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGSANDOUTGO:

(XII) BOARD AND ITS COMMITTEES :

(a) Board of Directors :

During the year under review the Board of Directors of the Company met 5 (Five) times on June 29, 2020, September 03, 2020, November 11,2020, January 15, 2020, February 13, 2021. The attendance, along with such other details as required, of each of the Directors is mentioned in the Corporate Governance Report section of this Annual Report

Ministry of Corporate Affairs vide its General Circular Number 11/2020 dated March 24, 2020 provided that the mandatory requirement of holding meetings of the Board of the companies within the intervals provided in section 173 of the Companies Act, 2013 (120 days) stands extended by a period of 60 days till next two quarters i.e., till

30th September 2020. Accordingly, as a onetime relaxation the gap between two consecutive meetings of the Board may extend to 180 days till the next two quarters, instead of 120 days as required in the Companies Act, 2013.

(b) Audit Committee :

The Audit Committee of the Board of Directors of the Company currently consists of three Members. During the year under review, there were changes in the composition of the Committee. The dates of meetings of Audit Committee held during FY 2021, attendance of Members in the Meetings and other details are mentioned in the Corporate Governance Report section of this Annual Report

During the year under review, all the recommendations of the Audit Committee were accepted by the Board of Directors. Further, the Committee comprises of Non-Executive Directors and Independent Directors, all of whom have the ability to read and understand the Financial Statements

(c) Corporate Social Responsibility Committee :

The Board of Directors of the Company constituted Corporate Social Responsibility (CSR) Committee on March 18, 2014 and the last re-constituted date was January 15, 2021. The policy on CSR which is available on the website of the Company athttp://www.ilfsengg.com/html/policies/CSR_Policy.pdf.

For details relating to composition of CSR Committee, number of meetings held during the year under review and other details, the Members are requested to refer the Corporate Governance Report which forms part of this Annual Report

As per Section 135(5) of the Companies Act, 2013, the Company was required to spend two percent of the average net profits calculated on the basis of preceding three financial years. However, no CSR activities have been conducted during the year due to negative average net profits of the Company for the preceding three financial years. The details of CSR policy and other details as per Rule 9 of Companies (Corporate Social Responsibility) Rules, 2014 are enclosed as Annexure1 to this Report

(d) Other Committees :

The details of composition, number of Meetings and such other information as required regarding Nomination and Remuneration Committee, Stakeholders Relationship Committee and other Committees are mentioned in the Corporate Governance section of this Annual Report

(XIII) RISK MANAGEMENT:

The Board of Directors in its Meeting held on February 11, 2015 formulated a Risk Management Policy consisting of various elements of risk and mitigation measures

The Board of Directors of the Company is responsible for overseeing the implementation of the Policy. In the opinion of the Board, the policy on Risk Management addresses the risks associated with the business including identification of elements of risk which may threaten the existence of the Company. The Board of Directors/Audit Committee reviews the risk assessment and mitigation procedures across the entity from time to time. The critical enterprise level risks of the Company and the mitigation measures being taken are provided in the Management Discussion and Analysis Report

(XIV) SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES :

As per Section 129 (3) of the Companies Act, 2013 and Regulation 34 of the Listing Regulations, the Consolidated Financial Statements of the Company forms part of this Report. The copies of Audited Financial Statements of the Subsidiaries are available on the website of the Company at www.ilfsengg.com and a copy of the same will be provided upon written request to the Company Secretary

SUBSIDIARY ENTITIES:

Following are the Subsidiaries of your Company

1. Angeerasa Greenfields Private Limited

2. Ekadanta Greenfields Private Limited

3. Saptaswara Agro-farms Private Limited

4. Maytas Infra Assets Limited

5. Maytas Metro Limited

6. Maytas Vasishta Varadhi Limited; and

7. Maytas Infra Saudi Arabia Company (Foreign Subsidiary)

INVESTING PARTY IN RESPECT OF WHICH THE REPORTING ENTERPRISE IS AN ASSOCIATE

1 SBG Projects Investments Limited

Joint Ventures (Association of Persons):

1 NCC - Maytas (JV)

2 NEC - NCC - Maytas (JV)

3 Maytas - NCC (JV)

4 NCC - Maytas (JV) (Singapore Class Township)

5 Maytas - CTR (JV)

6 NCC - Maytas - ZVS (JV)

7 ITNL - IECCL JV

The Company has the following joint ventures which are in the nature of jointly operations:

1. Maytas KBL (JV)

2. Maytas KCCPL Flow more (JV)

3. Maytas MEIL KBL (JV)

4. Maytas MEIL ABB AAG (JV)

5. MEIL Maytas ABB AAG (JV)

6. MEIL Maytas KBL (JV)

7. MEIL Maytas WIPL (JV)

8. MEIL Maytas AAG (JV)

9. MEIL - SEW - Maytas - BHEL (JV)

10. L&T KBL Maytas (JV)

11. Maytas - Rithwik (JV)

12. Maytas Sushee (JV)

13. Maytas Gayatri (JV)

14. IL&FS Engg - Kalindee (JV)

15. AMR-Maytas-KBL-WEG (JV)

16. ITDC-Maytas (JV)

17. IL&FS Engg.-GPT (JV)

18. ITNL IECCL (JV)

Further, none of the entities have been associated / disassociated as Joint Ventures of your Company during the year under review

The performance and financial position of the Subsidiaries, Joint Venture and Associate Companies are enclosed as Annexure 2 to this Report

Note: Changes in the status of Hill County Properties Limited (HCPL) as associate is made based on the changes to group structure by the Infrastructure Leasing & Financial Services Limited, HCPL is considered as subsidiary of Infrastructure Leasing & Financial Services Limited and accordingly classified as fellow subsidiary of IECCL in the year 2020 and the same status is continuing in the current year.

Note: Changes in the status of IL&FS Financial Services Ltd (IFIN) is made based on changes to the group structure by the Infrastructure Leasing and Financial Services Limited, pursuant to Rule 8(5) of the Companies (Accounts) Rules 2014 and as per published financial statements of IL&FS Financial Services Ltd, IFIN is considered as subsidiary of Infrastructure Leasing & Financial Services Limited and accordingly classified as fellow subsidiary of IECCL in the year 2020 and the same status is continuing in the current year.

(XV) HOLDING COMPANY :

During the year under review, in terms of the provisions of section 2 (81) (i) of the Companies Act, 2013 which says that subsidiary company means a company in which the holding company controls the composition of the Board of Directors, your Company is the subsidiary of M/s. Infrastructure Leasing & Financial Services Ltd.

(XVI) AUDITORS AND AUDITORS’ REPORT :

(a). Statutory Auditors:

On recommendation of the Audit Committee and Board, the members accorded their approval for the appointment of M Bhaskara Rao & Co., Chartered Accountants, (Firm Registration Number 000459S) in the Extra-Ordinary General Meeting of the Company held on Monday, September 9, 2019, one of the Joint Statutory Auditors of the Company

as Sole Statutory Auditor of the Company pursuant to the resignation of the other Joint Statutory Auditor, M/s.BSR & Associates LLP! Chartered Accountants (Firm Registration Number: 116231W/W-100024). Pursuant to their appointment M/s. M. Bhaskara Rao & Co, Chartered Accountants (Firm Registration Number: 0004595) have been conducting the Statutory Audit of the Company for the Financial Years: 2019, 2020 & 2021

The Board noted that there were following qualifications in the Auditor's Report for the Standalone and Consolidated Financial Statements for the Year Ended March 31,2021

Standalone Financial Statement

a) Note 52 relating to non-recognition of interest expense for the period amounting to Rs. 428.17 Crores (excluding penal interest) on the borrowings availed by the Company considering the process initiated for submission of a resolution proposal to lenders for restructuring of existing debt.

i. Consequently, interest expense, loss for the year are understated by Rs. 428.17 Crores approximately;

ii. Retained earnings (accumulated loss) and Interest Payable is understated by Rs. 862.67 Crores approximately

b) Note 56: Deferred tax asset classified as part of non current assets and forming part of stand alone finance statements amounting to Rs. 242.99 Crores as at March 31,2021 represents amounts recognised by the Company in earlier years. Considering the material uncertainty related to going concern that exists in the Company, the threshold of reasonable certainty for recognising the deferred tax assets as per Ind AS 12- Income Taxes has not been met. Consequently, deferred tax assets are overstated and loss for the year and retained earnings (accumulated losses) are under stated by Rs. 242.99 Crores.

Consolidated Financial Statement

c) Note 51 relating to non-recognition of interest expense for the period amounting to Rs. 428.17 Crores (excluding penal interest) on the borrowings availed by the Company considering the process initiated for submission of a resolution proposal to lenders for restructuring of existing debt.

i. Consequently, interest expense, loss for the year are understated by Rs. 428.17 Crores approximately;

ii. Retained earnings (accumulated loss) and Interest Payable is understated by Rs. 862.67 Crores approximately.

d) Note 55: Deferred tax asset classified as part of non current assets and forming part of stand alone finance statements amounting to Rs. 242.99 Crores as at March 31,2021 represents amounts recognised by the Company in earlier years. Considering the material uncertainty related to going concern that exists in the Company, the threshold of reasonable certainty for recognising the deferred tax assets as per Ind AS 12- Income Taxes has not been met. Consequently, deferred tax assets are overstated and loss for the year and retained earnings (accumulated losses) are under stated by Rs. 242.99 Crores.

Internal Financial Controls :

According to the information and explanations given to us and based on our audit, the following material weaknesses has been identified in the operating effectiveness of the company's internal financial controls over financial reporting as at March 31,2021:

a) The company's internal financial control system over estimation of reasonable certainty with regard to reversal of deferred tax asset recognised was not operating effectively. This could potentially result in misstatement in the financial statement by way of company not providing for adjustments if any that may be required.

b) The company's internal financial control system with regard to non-recognition of interest expense on the borrowings without a formal approval from lenders was not operating effectively of deferred tax asset recognised was not operating effectively. This could potentially result in misstatement in the financial statement by way of company not providing for interest expenses that may be required.

The Board of Directors explanations on the aforementioned qualification are given below:

i. Qualification on Standalone Financial Statements :

Non-recognition of Interest Expenses:

Consequent to the matters referred in note no 30 and 31(v) above and in terms of the resolution framework process, the proposal made is that liabilities relating to the relevant IL&FS Group Entity, including interest, default interest, indemnity claims and additional charges, whether existing at or relating to a period after the Cut-Off Date (October 15, 2018) should not continue to accrue. Ongoing resolution process is in line with the orders issued by Hon'ble National Company Law Tribunal Appellate Tribunal. The Company is in anticipation of obtaining necessary approval for concession/waivers from lenders has neither paid nor recognized interest, aggregating to Rs. 428.17 approximately (excluding penal interest etc.) for year ended March 31,2021. Interest so far not recognized as payable as at March 31, 2021 aggregates to Rs 862.67 approximately (excluding penal interest etc.).

Deferred Tax Asset:

Deferred Tax: amounting to Rs. 242.99 as at March 31, 2021 (Rs. 242.99 as at March 31, 2020), recognized by the Company in earlier years. The same is being retained as the Company is in the process of finalizing resolution plan which if approved and implemented is likely to generate enough profits in subsequent years which can set-off deferred tax asset.

ii. Qualification on Consolidation Financial Statements:

Non-recognition of Interest Expenses:

Consequent to the matters referred in note no 30 and 31(v) above and in terms of the resolution framework process, the proposal made is that liabilities relating to the relevant IL&FS Group Entity, including interest, default interest, indemnity claims and additional charges, whether existing at or relating to a period after the Cut-Off Date (October 15, 2018) should not continue to accrue. Ongoing resolution process is in line with the orders issued by Hon'ble National Company Law Tribunal Appellate Tribunal. The Company is in anticipation of obtaining necessary approval for concession/waivers from lenders has neither paid nor recognized interest, aggregating to Rs. 428.17 approximately (excluding penal interest etc.) for year ended March 31,2021. Interest so far not recognized as payable as at March 31, 2021 aggregates to Rs 862.67 approximately (excluding penal interest etc.).

Deferred Tax Asset:

Deferred Tax: amounting to Rs. 242.99 as at March 31, 2021 (Rs. 242.99 as at March 31, 2020), recognized by the Company in earlier years. The same is being retained as the Company is in the process of finalizing resolution plan which if approved and implemented is likely to generate enough profits in subsequent years which can set-off deferred tax asset.

iii. Internal Financial Controls :

The Company has institutionalized internal control in the form of standard operating procedures with an objective of orderly and efficient conduct of its business, safeguarding the Company's assets, prevention and detection of frauds, accuracy and completeness of accounting records and compliance with applicable statutory requirements. The Company is having Oracle e-Business Suite as Enterprise Resource Planning (ERP) System for recording transactions in an integrated way with complete audit trail.

The Company has also deployed an external firm of Chartered Accountants and the combined Internal Audit team consists of technical auditors (Engineers), Chartered Accountants and Cost Accountants.

(b) Cost Auditors :

In terms of the provisions of the Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 as amended, Company maintains cost records and accounts in respect of the Roads and other infrastructure projects

The Board of Directors appointed Narasimha Murthy& Co as the Cost Auditors for FY 2021 for conducting the Cost Audit of the Company at a remuneration of Rs.4,50,000/- (Rupees Four Lacs Fifty Thousand only) was approved by the Members at the Thirty-first AGM of the Company held on September 30, 2020. The Cost Auditors submitted their report for FY 2021 to the Board of Directors.

Further, on the recommendation of Audit Committee, the Board of Directors in its Meeting held on September 02, 2021 re-appointed Narasimha Murthy & Co, Cost Accountants as the Cost Auditors of the Company for FY: 2020-22 at a remuneration Rs.4,50,000/- (Rupees Four Lacs Fifty Thousand only). Necessary resolution for ratification of their remuneration in terms of the provisions of the Companies Act, 2013 read with Rules made there under is included in the 32nd Notice of AGM for the approval of the Members

(c) Secretarial Auditors :

In terms of the provisions of Section 204 of the Companies Act, 2013, the Board of Directors had appointed M/s. RPR & Associates, Company Secretaries, Hyderabad to conduct the Secretarial Audit for FY 2021. The Secretarial Audit Report for the Financial Year Ended March 31, 2021 is enclosed as Annexure 3 to this report. The Secretarial Audit Report contains the following observations and the replies thereon given below;

The Board of Directors of the Company had in its Meeting held on September 02, 2021, re-appointed RPR & Associates, Company Secretaries as the Secretarial Auditor of the Company for FY 2022.

(XVII) CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES :

It is the endeavor of the Company to enter its contracts/arrangements/ transactions with the related parties in the ordinary course of business and on arms' length basis. In terms of the provisions of Section 188 of the Companies Act, 2013 read with Rules made thereunder, all transactions with Related Parties were in ordinary course of business and on arm's length basis. Accordingly, details of related party transactions as per section 188 of Companies Act, 2013 in Form AOC-2 is not required. All contracts / arrangements / transactions entered by the Company were in compliance with the applicable provisions of the Companies Act, 2013 and Listing Regulations

The Company had framed Related Party Transaction Policy for the purpose of approval and identification of Related Party Transactions. All Related Party Transactions entered into by the Company in terms of the Policy were placed before the Audit Committee for its review and approval from time to time. The Related Party Transaction Policy approved by the Board of Directors is uploaded on the website of the Company at www.ilfsengg.com

(XVIII) EMPLOYEES STOCK OPTION SCHEME :

The Company's Employee Stock Option Scheme 2018 (ESOP Scheme 2018) had not been implemented as on date and hence no Certificate from the Statutory Auditors of the Company is required to be obtained for the FY 2021 as required by the SEBI Guidelines and the resolution passed by the Members.

The disclosure as required under SEBI (Share Based Employee Benefits) Regulations, 2014 relating to ESOP 2018 scheme of the Company is available on the website of the Company at www.ilfsengg.com.

(XIX) MANAGEMENT DISCUSSION AND ANALYSIS :

A separate section titled “Management Discussion and Analysis” consisting of details as required under Regulation 34 read with Schedule V of the Listing Regulations forms part of this Annual Report

(XX) CORPORATE GOVERNANCE:

A separate section titled “Report on Corporate Governance” including a certificate from the Practicing Company Secretary confirming compliance with the conditions of Corporate Governance as stipulated under Listing Regulations is enclosed to the Report on Corporate Governance and forms part of this Annual Report

Further, the declaration signed by the Chief Executive Officer affirming the compliance with Code of Conduct for Board of Directors and Senior Management Personnel is also enclosed to the Report on Corporate Governance

(XXI) DISCLOSURES :

(a) Extract of Annual Return :

The extract of Annual Return as per Section 92(3) of the Companies Act, 2013 and Rule 12 (1) of the Companies (Management and Administration) Rules, 2014 is enclosed as Annexure 4 to this Report

(b) Vigil Mechanism :

In terms of the provisions of the Section 177 of the Companies Act, 2013 and Listing Regulations, the Company had established a Vigil Mechanism through its Whistle Blower Policy for directors and employees to report concerns about unethical behavior, actual/suspected frauds and violation of Company's Code of Conduct. Please refer to the Corporate Governance section of the Annual Report for further details

(c) Policy on Prevention of Sexual Harassment :

In terms of the provisions of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company had formulated and implemented a policy for Prevention of Sexual Harassment of Women at workplace. The Company from time to time conducts workshops or awareness programmes against sexual harassment at workplace

The Company had also constituted an Internal Committee comprising of employees of the Company and an Independent NGO representative. The scope of the Internal Committee encompasses all incidents / occurrences of sexual harassment which take place at the workplace and where either of the party (aggrieved / accused) is an employee of the Company. During the year under review, the Company has not received any complaints under the policy

Further, the Company has many systems, processes and policies to ensure professional ethics and harmonious working environment. The Company follows Zero Tolerance towards Corruption and unethical conduct. These are ensured through Whistle Blower Policy, Sexual Harassment Policy and Redressal Guidelines. There are no Sexual Harassment cases reported during the FY: 2020-21.

(d) Particulars of Loans, Guarantees or Investments under Section 186 :

Your Company is into the business of providing Infrastructure Facilities. Accordingly, the provisions of Section 186 pertaining to providing Loan or Guarantee to other corporates are exempted. All information regarding Loans, Guarantees and Investments are mentioned in the notes to financial statements for FY 2021 which are selfexplanatory

(e) Particulars of employees and related disclosures :

The disclosures relating ratio of remuneration of each directors to the median employee's remuneration and other details as per Section 197 (12) of the Companies Act, 2013 read with Rule 5 (1) of the Companies (Appointment and remuneration of Managerial Personnel) Rules, 2014 is enclosed as Annexure 5 to this Report

(f) Material changes and comments, if any, affecting the financial position of the Company :

The disclosure pertaining to remuneration and other details as required under Section 197(12) of the Act read with rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as Annexure 6 to this Report.

Due to the latest developments in the IL&FS Group and the Company, the debt burden has increased in a manner that is not commensurate with the size of its operations and there has been severe stress in terms of cash flows.

(g) Reporting of Fraud :

The Auditors of the Company have reported one instance of suspected fraud committed against the Company by its officers or employees as specified under section 143(12) of the Companies Act, 2013. A case / FIR # 08/2021 has been registered with Economic Offense Wing (EOW), Hyderabad in this regard and further investigation is being conducted by the Asst. Commissioner of Police, Hyderabad, TS.

(h) Investigations etc. by Regulatory/Investigative Agencies:

Subsequent to adverse developments at Infrastructure Leasing and Financial Services Limited (“IL&FS”) and IL&FS group level, as stated in earlier years, various regulatory and investigatory authorities are seeking information from the company as part of their investigations since 2018-19 onwards. Company and the present management are cooperating with the respective authorities and submitting the information as sought from time to time.

Further, as per the directions of the Reconstituted Board of IL&FS, forensic audit also has been initiated for select entities including this Company. The forensic auditors submitted their final reports during May 2021 detailing certain potential anomalies in the financial statements and operations of the Company. The report has been hosted on the Company's websites and also filed with stock exchanges, submitted to SFIO etc. Based on the said report SFIO is seeking additional information from the Company and also requested the statutory auditors of the Company past and present to submit their audit working files.

(i) Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status of the Company :

The National Company Law Appellate Tribunal (“NCLAT”) by way of its order on October 15, 2018 (“Interim Order”) in the Company Appeal (AT) 346 of 2018, after taking into consideration the nature of the case, larger public interest and economy of the nation and interest of IL&FS and its group companies (including IECCL) has stayed certain coercive and precipitate actions against IL&FS and its group companies including IECCL.

IL&FS and its group companies are currently undergoing resolution process under the aegis of the NCLAT and NCLT which will impact the going concern status of the Company.

(j) Details in respect of adequacy of internal financial controls :

The details of internal financial controls and their adequacy is given in Management Discussion and Analysis Report.

(k) Business Responsibility Report (BRR) :

Since your company doesn't fall under the top 500 companies by market capitalization for the F.Y ended March 31,2021, it is not applicable to your company.

(l) Forensic Audit:

The promoters' of the Company viz. Infrastructure Leasing and Financial Services Limited (IL&FS) had ordered for a Forensic Audit to be conducted on the affairs of the Company on by M/s. Grant Thornton Bharat LLP Mumbai in the year 2019. The Company has received a detailed Forensic Audit Report and the same was submitted to various stakeholders and investigating agencies and further made available to investors through Stock Exchange on 20th May-2021.

(m) Publication of Creditors List by Claims Management Agency M/s. Grant Thornton Bharat LLP, appointed by the reconstituted Board of IL&FS:

The Claims Management Agency M/s. Grant Thornton Bharat LLP, had crystalized the first list of Operational Creditors & Financial Creditors and the process for balance creditors is going on.

(n) Performance Evaluation Of The Board, Committees And Directors :

The purpose and intent of Board evaluation is in essence linked to extension or continuation of the term of the Directors appointed by the Members of the Company, based on the process of evaluation carried out by the Independent Directors and the Board. You are aware that on October 1, 2018, Union of India (“UOI”) (acting through the Ministry of Corporate Affairs) had filed a petition with Hon'ble NCLT seeking immediate suspension of the Board of Directors of IL&FS and appointment of a new Board of Directors, amongst others, on the grounds of mismanagement and compromise in corporate governance norms and risk management by the erstwhile Board of IL&FS and that the affairs of the Company being conducted in a manner prejudicial to the public interest. Pursuant to the above developments, the New Board of IL&FS also initiated reconstitution of the Board of Directors of the Group companies including your Company and nominated 3 Directors on the Board of your Company.

The New Board members appointed by the NCLT are akin to Independent Directors and not Independent Directors. Further, the requirement of appointing Independent Directors has been dispensed by NCLT order dated April 26, 2019 for IL&FS and the group companies. In view thereof, the Board has not followed the process of performance evaluation of the Board, Committees and the Directors during the FY 2020-21.

However, an application is being filed to MCA with a view to seek appropriate dispensation from the NCLT seeking exemption from the applicability of the provisions of Section 178 (2) and Schedule IV (VII & VIII) of the Companies Act, 2013 and the SEBI (LODR) Regulation, 2015

(XXII) ACKNOWLEDGMENTS:

Your Directors place on record their gratitude to the Bankers, Media, Financial Institutions, various agencies of the State and the Central Government Authorities, Clients, Consultants, Suppliers, Sub-Contractors, Members and the Employees for their valuable support and co-operation and look forward to continued enriched relationships in the years to come

By order of the Board of Directors For IL&FS Engineering and Construction Company Limited

Sd/- Sd/-

Chandra Shekhar Rajan Dilip Lalchand Bhatia

Place: Hyderabad Chairman Director

Date: September 02, 2021 DIN: 00126063 DIN: 01825694