To the Members of Patel Engineering Limited,

Your Directors hereby present the 73rd Board's Report on the business, operations and state of affairs of the Company together with the audited financial statements for the year ended March 31, 2022:

FINANCIAL PERFORMANCE

Consolidated:

The Consolidated total income for FY 2022 stood at Rs 34,964.95 million as against Rs 21,039.28 million for the previous year. The Net profit for the year ended March 31, 2022 was at Rs 718.49 million as against Net Loss of Rs 2,907.47 million for the previous year.

Standalone:

On Standalone basis, the total income for FY 2022 stood at Rs 31,624.40 million as against Rs 18,624.32 million for the previous year. The Net Profit for the year ended March 31, 2022 was at Rs 525.06 million as against Net Loss of Rs 1,383.98 million for the previous year.

Dividend

To conserve funds, the Directors have not recommended payment of dividend for the financial year 2021-22.

Pursuant to Regulation 43A of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 ("the Listing Regulations"), the Dividend Distribution Policy is available on the website of the Company at the link: https://tinyurl.com/54cvkwz9.

Share Capital

During the year under review, 1,37,77,470 Equity Shares of the face value of Rs 1 each were allotted on conversion of debt into equity at a conversion price of Rs 14.78. No shares were allotted to the promoter group during the year under review.

Consequently, as at March 31, 2022, the total paid-up share capital of the Company stood at Rs 47,92,30,494 divided into 47,92,30,494 Equity Shares of Rs 1 each.

Information on state of affairs of the Company

Information on the operational and financial performance, among others, is given in the Management Discussion and Analysis Report, forming part of the Annual Report and is in accordance with the Listing Regulations.

Merger of Subsidiaries

During 2020-21, Company filed merger applications with Honorable National Company Law Tribunals (NCLT/Tribunal), Mumbai and Hyderabad for Merger by Absorption of 14 wholly owned subsidiaries viz. Patel Energy Resources Ltd; PEL Power Ltd; PEL Port Pvt Ltd; Patel Energy Projects Pvt Ltd; Patel Energy Assignment Pvt Ltd; Patel Energy Operations Pvt Ltd ; Jayshe Gas Power Pvt Ltd; Patel Thermal Energy Pvt Ltd; Patel Hydro Power Pvt Ltd; Zeus Minerals Trading Pvt Ltd; Patel Concrete & Quarries Pvt Ltd ; Patel Lands Ltd; Patel Engineers Pvt Ltd and Phedra Projects Pvt. Ltd with the Company to combine business interest into one corporate entity, resulting in operational synergies, simpli_cation, streamlining and optimization of the group structure and efficient administration.

Due to the Covid pandemic, the process of merger got delayed. The Company is expecting completion of merger by July 2022.

Borrowing

The total long-term borrowings stood at Rs 19,907.07 million as on March 31, 2022 as against Rs 19,187.38 million as on March 31, 2021.

Subsidiaries & Associates

As on March 31, 2021, the Company has 67 subsidiaries including step down subsidiaries.

During the year under review, Apollo Buildwell Private Limited and Naulo Nepal Hydro Electric Private Limited ceased to be subsidiaries of the Company on account of sale/disinvestment.

Highlights of performance of key subsidiaries/Associates

Michigan Engineers Private Limited (Michigan)_having presence in urban infrastructure Projects, mostly for Municipal Corporation of Greater Mumbai (MCGM) has surpassed revenues of Rs 2,900 million and profit of Rs 219.50 million in FY 2022. It has an order book totaling to about Rs 10,000 million. Michigan successfully completed its first segment tunnel of 1,857 meter in January 2022 under its TBM contract of Rs 1,710 million. The Company is looking to monetize and hive-off its stake in this company at a right valuation.

Raichur Sholapur Transmission Company Private Limited (RSTCPL) commissioned 765 kV single circuit transmission line between Raichur and Sholapur in July 2014. The Project is promoted by the Company along with Simplex Infrastructure Ltd and BS Ltd. The Project achieved transmission line availability of 99.48% in FY 2022, 98.72% in FY 2021, 98.46% in FY 2020. During the FY 2022, the Lenders refinanced the outstanding ECB into Rupee Term Loan (RTL), as envisaged during implementation of the 5/25 scheme as per the RBI guidelines in September 2017. The project is currently under operation and the debt obligation is timely serviced by RSTCPL. The Company along with the other promoters is in final stages of discussion with the potential Buyer for 100% divestment from the project.

Dirang Energy Private Limited (Dirang), a Special Purpose Company for development of 144MW Gongri Hydroelectric Power Project in West Kameng district in Arunachal Pradesh. Pursuant to the termination order for the said project by Govt. of Arunachal Pradesh in earlier years, the Guwahati High Court had passed a stay order dated 29.06.2018 on the said termination notice and also its consequential effects. Further, the Guwahati High Court in its order dated 22.01.2021 has directed the parties to start the Arbitration proceedings in the matter which has commenced subsequently. Meanwhile the parent company has settled the lenders dues of this entity.

The status of Patel KNR Infrastructure Ltd and Patel KNR Heavy Infrastructure Limited continue to remain the same. The Company holds substantial stake in these road project companies. Both the NHAI annuity projects are under operation and the respective companies are receiving the annuity on semi-annual basis. The respective Companies are maintaining the assets as per the contract conditions.

PBSR Developers Private Limited, is developing the project consisting two residential towers (each tower having 20 floors) and one tower of serviced apartments (19 floors). The project offers residential units comprising of 2 BHK, 2.5 BHK and 3 BHK. These residential towers have a total of 12 fiats per floor whereas the service apartment block comprises of 11 apartments per floor. The Company has completed substantial work in the towers except for some finishing works of podium, external painting, amenity block etc. The Company has applied for Occupation Certificate for the said project and the same is being made ready for final possession and some fiat owners have also started fit-outs in their respective fiats.

The Company through a step down subsidiary of its wholly owned subsidiary_Patel Energy Resources Limitedintended to build a thermal coastal power plant project of 1050 MW at Nagapattinam, Tamil Nadu. The said project continues to be on hold. Meanwhile, the Company is studying the technical feasibility and economic viability of any other relavant project so that the land parcel available could be put to a gainful use.

The Company's Mauritius subsidiary Les Salines Development Ltd (LSDL) had lease Agreement for development of 24.6215 hectares of land for residential, commercial, leisure and shopping etc with Government of Mauritius (GOM) for a period of 99 years. In February 2015, suddenly GOM had terminated the lease without assigning any reason. After termination of the project, the Company had issued a notice of arbitration to GOM for expropriation of investment under bilateral treaty between India and Mauritius for promotion and protection of investment in both countries. Currently the arbitration process is going on at permanent court of arbitration Hague. Final hearing was completed in May 2022. The Company is awaiting award from Tribunal.

The salient features of the financial statement of each of the subsidiaries and the associates as required under the Companies Act, 2013 is provided in Annexure I of the Boards' Report. Pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited financial statements in respect of the subsidiaries are available on the website of the Company at www.pateleng.com.

In terms of the Listing Regulations, the Company has formulated a policy for determining ‘material' subsidiaries and the same has been disclosed on Company's website at the following link: https://tinyurl.com/235xsrxw.

Particulars of Loans given, Investment made, Guarantees given and Securities provided

The Members may note that the Company is engaged in providing infrastructural facilities and hence, as per Section 186(11) of Companies Act, 2013, nothing in Section 186 shall apply to the Company except sub-section (1) of Section 186. Accordingly, a separate disclosure has not been given in the financial statements as required under Section 186(4) with regard to particulars of loan given, investment made or guarantee given or security provided and the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient of the loan or guarantee or security.

Related Party Transactions

Particulars of contract and arrangement with the Related Parties as referred to in Sub-Section 1 of Section 188 of the Companies Act, 2013 is forming part of this Report and is provided in Form AOC-2 as Annexure II. All the Related Party Transactions as required under Ind AS-24 are reported in the Notes to the financial statements.

In accordance with the provisions of the Listing Regulations, the Company has formulated the Related Party Transactions policy and the same is uploaded on Company's website at the link: https://tinyurl.com/2p94jfyw.

Directors and Key Managerial Personnel i. Independent Directors

During the year under review, Ms. Geetha Sitaraman ceased to be an Independent Director of the Company effective March 25, 2022 due to completion of her second term as an Independent Director. The Board acknowledged her contribution to the Company arising out of her decades' long rich experience.

The Board appointed Ms. Sunanda Rajendran as an Independent Director effective from March 24, 2022. Her appointment is subject to approval of members for which Postal Ballot Notice date May 13, 2022 was circulated to the members for approval.

The necessary declarations with respect to independence has been received from all the Independent Directors of the Company and that the Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV to the Companies Act, 2013. Further, Board confirms compliance with the Code of Conduct for Directors and senior management personnel formulated by the Company.

ii. Other Directors / Key Managerial Personnel

Ms. Kavita Shirvaikar retires by rotation at the ensuing Annual General Meeting and being eligible, offer herself for reappointment.

The Members of the Company at the 72nd AGM held on September 15, 2021, approved the re-appointment of Ms. Kavita Shirvaikar and Mr. Sunil Sapre as whole time Directors of the Company for a further period of 5 years with effect from April 1, 2022.

There is no change in the Key Managerial Personnel (KMPs). Some of the KMPs of the Company are also the Directors/KMPs of the subsidiaries.

Number of Board Meetings

During the year ended March 31, 2022, the Board met 5 times. The meeting of the Board of Directors of the Company were held on June 11, 2021, August 6, 2021, November 1, 2021, December 20, 2021 and February 9, 2022.

Nomination and Remuneration Policy

The Company has formulated a Nomination and Remuneration Policy pursuant Section 178 of the Companies Act, 2013 and the Listing Regulations. The salient features of the Policy is enclosed as Annexure III to the Boards' Report.

Evaluation of the performance of the Board

Based on Boards' Evaluation Policy, the performance of the Board Directors, its Committees, Chairman, Executive Directors,

Independent Directors and Non–executive Directors were evaluated pursuant to the Provisions of Companies Act, 2013 and the Listing Regulations.

A separate meeting of Independent Directors was held during the year under review wherein, the Independent Directors evaluated the performance of the non-independent directors, the Board as a whole and the Chairman of the Company.

Internal Financial Controls and Risk Management

The Company has in place adequate internal financial control with reference to financial statement. The Company ensures operational efficiency, protection and conservation of resources, accuracy in financial reporting and compliance with laws and regulations. The internal control system is supported by an internal audit process.

Pursuant to SEBI (Listing Obligation and Disclosure Requirements) (Second Amendment) Regulations, 2021, the Risk Management Committee was reconstituted to frame, implement and monitor the risk management policy for the Company. The Committee shall be responsible for monitoring and reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. The major risks identified by the businesses and functions shall be systematically addressed through mitigating actions on a continuing basis.

Audit Committee

The Audit Committee presently comprises of:

Mr. K. Ramasubramanian- Independent Director (Chairman of the Committee) Mrs. Geetha Sitaraman- Independent Director (till March 25, 2022) Mr. Rupen Patel – Chairman & Managing Director Mr. Barendra Bhoi – Independent Director (from March 25, 2022)

Whistle Blower Policy

The Company has adopted a Whistle Blower Policy to comply with the principles of Business Responsibility and Sustainability

Reporting (BRSR) as amended by SEBI. The Policy provides a formal mechanism for director(s) /stakeholder(s) to report concerns about unethical behavior, actual or suspected fraud or violation of the Company's Ethics and Code of Conduct. The Policy is uploaded on the Company's website at the link https://tinyurl.com/2sxkrt7t.

This Policy provides for adequate safeguards against victimization of Director(s) /stakeholder(s) and provides opportunity to director(s)/ stakeholder(s) to access in good faith, to the ABMS (Anti Bribery Management System) Committee in case they observe Unethical and Improper Practices or any other wrongful conduct in the Company.

The vigil mechanism is overseen by the Audit Committee. There are no complaints / grievances received from any Directors/ stakeholders of the Company under this policy.

Corporate Social Responsibility

In accordance with the provisions of Section 135 of the Companies Act, 2013, the Board of Directors of the Company has constituted the Corporate Social Responsibility Committee (CSR Committee) comprising of the following Directors as its members:

The Ministry of Corporate Affairs has notified the Companies (CSR_Policy) Amendment Rules, 2021 vide a notification dated January 22, 2021, which seeks to amend the Companies (Corporate Social Responsibility Policy) Rules, 2014. Pursuant to the notification, the Company amended its CSR Policy as uploaded on the Company's website at the link: https://tinyurl.com/ptvdfbs3.

Pursuant to Clause (o) of Sub-Section (3) of Section 134 of the Companies Act, 2013 and Rule 8 of Companies (Corporate Social Responsibility Rules, 2014, the CSR Report forms part of the Board Report as Annexure IV. The Company has initiated spending on CSR activities as detailed in the CSR Report.

Statutory Audit

M/s T.P. Ostwal Associates LLP (FRN: 124444W/W100150), the Statutory Auditors of the Company hold office until the conclusion of the 73rd AGM to be held in the year 2022.

The Notes on financial statement referred to in the Auditors' Report are self-explanatory and do not call for any further comments. The Auditors' Report does not contain any qualification, reservation, adverse remark or disclaimer.

Branch Audit

In accordance with the provisions of Section 139 and 143(8) of the Companies Act, 2013 M/s. N. H. Karnesh & Associates has been appointed as Branch Auditor for the Realty Division of the Company for a term of 5 years to hold office until the conclusion of the 77th AGM to be held in the year 2026.

The Company has appointed M/s. R K Agrawal & Associates, as Branch Auditor of the Company for Arun 3 H.E. Project, Nepal for 2021-22.

Secretarial Audit

The Board of Directors appointed M/s. MMJB & Associates LLP, Company Secretaries to conduct Secretarial Audit of the Company for the financial year ended March 31, 2022. The Report of the Secretarial Auditor is provided as Annexure V to this Report. The Secretarial Audit Report does not contain any qualification, reservation, adverse remarks or disclaimer.

In terms of Regulation 24A of Listing Regulations, the Secretarial Audit Report of Michigan Engineers Private Limited, the Material Unlisted Subsidiary of the Company for the year ended March 31, 2022 also forms part of this Report.

Cost Audit

As per Section 148 of the Act, the Company is required to have the audit of its cost records conducted by a Cost Accountant. The Board of Directors of the Company has on the recommendation of the Audit Committee, approved the appointment of M/s. Vaibhav M Gandhi & Associates., a firm of Cost Accountants in Practice (Registration No.003399) as the Cost Auditors of the Company to conduct cost audits under the Companies (Cost Records and Audit) Rules, 2014 for the year ending March 31, 2022. The Board on recommendations of the Audit Committee have approved the remuneration payable to the Cost Auditor subject to rati_cation of their remuneration by the Members at the forthcoming AGM. M/s Vaibhav M Gandhi & Associates have, under Section 139(1) of the Act and the Rules framed thereunder furnished a certificate of their eligibility and consent for appointment.

The cost accounts and records of the Company are duly prepared and maintained as required under Section 148(1) of Act.

Prevention of sexual harassment of Women at workplace

The Company has a Policy on Prevention of Sexual Harassment of Women at Workplace. No cases were reported during the year under review. The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings/ Outgo

The particulars prescribed under Section 134 of the Companies Act, 2013 read with Rule 8 (3) of the Companies (Accounts) Rules, 2014, relating to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings / Outgo is provided as Annexure VI to this Report.

Annual Return

Pursuant to Section 92 and 134 of the Act, the Annual Return as at March 31, 2022 in Form MGT-7, is available on the website of the Company at https://tinyurl.com/5aazu6md.

Disclosure under Section 197 of the Companies Act, 2013

In accordance with the provisions of Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the particulars of the employees are set out in the annexure to this Report. In terms of the provisions of Section 136 of the Act, the Report is being sent to the Members of the Company excluding the annexure. Any member interested in obtaining a copy of the annexure may write to the Company Secretary at the Registered Office of the Company.

Further, disclosures on managerial remuneration as required under Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided as Annexure VII to this Report.

Corporate Governance

Pursuant to the Listing Regulations, the Report on Corporate Governance together with the certificate issued by M/s. T. P Ostwal Associates LLP, the Statutory Auditors of the Company, on compliance in this regard forms part of the Annual Report.

Employee Stock Option / General Benefits Scheme

The Company currently has two Schemes for its employees viz. Patel Engineering Employee Stock Option Plan 2007 and Patel Engineering General Employee Benefits Scheme 2015.

The applicable disclosure under SEBI (Share Based Employee Benefits) Regulations, 2014 ("the ESOP Regulations") as at March 31, 2022 is uploaded on the Company's website at the link https://tinyurl.com/y98ezsj5.

A Certificate from the Secretarial Auditors of the Company in terms of Regulation 13 of ESOP Regulations would be available at the ensuing AGM.

Other Disclosures

i) There are no_material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the Boards' report.

ii) No orders have been passed by any Regulator or Court or Tribunal which can have impact on the going concern status and the Company's operations in future during the year under review.

iii) The Company has not accepted or renewed any amount falling within the purview of provisions of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposit) Rules, 2014 during the year under review. Hence, the requirement for furnishing of details relating to deposits covered under Chapter V of the said Act or the details of deposits which are not in compliance with the Chapter V of the said Act is not applicable.

iv) The Company has complied with the Secretarial Standard issued by the Institute of Company Secretaries of India. v) No fraud has been reported by the Auditors, to the Audit Committee and the Board. vi) There is no Corporate Insolvency Resolution Process initiated under the Insolvency and Bankruptcy Code, 2016.

Directors' Responsibility Statement

Pursuant to Section 134 of the Companies Act, 2013, the Directors confirm that:

i. in preparation of the annual accounts, the applicable accounting standards have been followed;

ii. such accounting policies have been applied consistently and judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company and of the Profit and Loss of the Company for the year ended March 31, 2022;

iii. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. the annual accounts have been prepared on a going concern basis; v. internal financial controls were followed by the Company and the same are adequate and were operating effectively; and

vi. proper systems has been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Acknowledgements

The Board of Directors wish to place on record their appreciation for continued support and co-operation by Shareholders, Financial Institutions, Banks, Government Authorities and other Stakeholders. Your Directors would also like to take this opportunity to express their appreciation for the dedicated efforts of the employees of the Company.