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CG Power & Industrial Solutions Ltd.

BSE: 500093 Sector: Engineering
NSE: CGPOWER ISIN Code: INE067A01029
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VOLUME 183336
52-Week high 240.15
52-Week low 77.00
P/E 75.68
Mkt Cap.(Rs cr) 36,406
Buy Price 0.00
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Sell Price 0.00
Sell Qty 0.00
OPEN 238.00
CLOSE 235.75
VOLUME 183336
52-Week high 240.15
52-Week low 77.00
P/E 75.68
Mkt Cap.(Rs cr) 36,406
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

CG Power & Industrial Solutions Ltd. (CGPOWER) - Auditors Report

Company auditors report

TO THE MEMBERS OF

CG POWER AND INDUSTRIAL SOLUTIONS LIMITED

Report on the Audit of the Revised Standalone Financial Statements

Opinion

We have audited the accompanying revised standalone financialstatements of CG Power and Industrial Solutions Limited ("the Company") whichcomprise the Revised Standalone Balance Sheet as at March 31 2021 the Revised StandaloneStatement of Profit and Loss including the Revised Standalone Statement of OtherComprehensive Income the Revised Standalone Cash Flow Statement the Revised StandaloneStatement of Changes in Equity for the year then ended and notes to the Revised StandaloneFinancial Statements including a summary of significant accounting policies and otherexplanatory information (hereinafter referred to as the ‘Revised Standalone FinancialStatements').

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid Revised Standalone Financial Statements give theinformation required by the Companies Act 2013 as amended ("the Act") in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2021 its profit including other comprehensive income its cash flows and the changesin equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the Revised Standalone Financial Statementsin accordance with the Standards on Auditing (SAs) as specified under section 143(10) ofthe Act. Our responsibilities under those Standards are further described in the‘Auditor's Responsibilities for the Audit of the Revised Standalone FinancialStatements' section of our report. We are independent of the Company in accordancewith the ‘Code of Ethics' issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rules thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Revised Standalone FinancialStatements.

Emphasis of Matter

(i) We draw attention to note 3A(a) of the Revised Standalone FinancialStatements which describes that there are ongoing investigations by Serious FraudInvestigation Office (‘SFIO') and other regulatory authorities. Pendingcompletion of such investigations adjustments if any have not been considered by themanagement in these Revised Standalone Financial Statements.

(ii) We draw attention to note 1B of the Revised Standalone FinancialStatements as regards completion of recasting and restatements of the standalone financialstatements of the Company for the five years ended March 31 2019 taken on record byNational Company Law Tribunal (the ‘NCLT') and NCLT approval dated December 222021 for voluntary revision under section 131 (1) of the Companies Act 2013 of theStandalone Financial Statements for the year ended March 31 2020 and March 31 2021. Therevised standalone financial statements for the year ended March 31 2020 have beenapproved by the Board of Directors of the Company on December 31 2021. The Company hasnow revised the original standalone financial statements for the year ended March 312021 that were approved by the Board of Directors of the Company on June 11 2021.Consequently our audit report dated June 11 2021 on the original standalone financialstatements which contained a disclaimer of opinion on those original standalone financialstatements stands withdrawn and this report supersedes our audit report dated June 112021.

Our opinion is not modified in respect of these matters.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the Revised Standalone Financial Statements forthe financial year ended March 31 2021. These matters were addressed in the context ofour audit of the Revised Standalone Financial Statements as a whole and in forming ouropinion thereon and we do not provide a separate opinion on these matters. For eachmatter below our description of how our audit addressed the matter is provided in thatcontext.

We have determined the matters described below to be the key auditmatters to be communicated in our report. We have fulfilled the responsibilities describedin the Auditor's responsibilities for the audit of the Revised Standalone FinancialStatements section of our report including in relation to these matters. Accordingly ouraudit included the performance of procedures designed to respond to our assessment of therisks of material misstatement of the Revised Standalone Financial Statements. The resultsof our audit procedures including the procedures performed to address the matters belowprovide the basis for our audit opinion on the accompanying Revised Standalone FinancialStatements.

Key audit matters How our audit addressed the key audit matter
Revision of standalone financial statements (as described in note 1B of the Revised Standalone Financial Statements)
On March 5 2020 basis application from Ministry of Corporate Affairs (‘MCA') the National Company Law Tribunal (‘NCLT') had allowed for reopening and recasting of books of accounts of the Company and its subsidiary companies for the 5 years ending March 31 2019 under section 130 of the Companies Act 2013. Our audit procedures amongst others included the following:
Recasting of those financial statements have been completed and taken on record by NCLT on October 26 2021. • We obtained and read the order passed by NCLT for reopening and recasting of books of accounts of the Company and its subsidiary companies for the past 5 years ending March 31 2019 under section 130 of the Companies Act 2013.
The Company had also made an application to the NCLT for voluntary revision of books of accounts of the Company for the financial years 2019-20 and 2020-21 under section 131(1) of the Companies Act 2013 to give consequential impact of the above recasting and reauditing of such prior years' financial statements. The NCLT approved such application on December 22 2021. • We obtained and read the NCLT order for taking on record the re-casted standalone financial statements for 5 years ending March 31 2019.
In accordance with the above subsequent to year end revision of the standalone financial statements for the five years ended March 31 2019 and also March 31 2020 have been completed. The effect of these revisions on the opening balances as on April 1 2020 are described in note 3B of the Revised Standalone Financial Statements. • We obtained and read the application to and order of the NCLT for voluntary revision of books of accounts of the Company for the financial years 2019-20 and 2020-21 under section 131(1) of the Companies Act 2013.
The Revision of Standalone Financial Statements is identified as key audit matter considering consequential changes in opening balances as on April 1 2020. • We obtained the reconciliation prepared by the management in respect of impact of revision on the amounts reported in the approved standalone financial statements for the year ended March 31 2021.
• We tested reconciliations and treatment of the effect of changes in the books of accounts.
• We have assessed the disclosures made in note 3B of the Revised Standalone Financial Statements.
Restructuring of Debts (as described in note 3A(b) of the Revised Standalone Financial Statements)
During the year on November 20 2020 the Company executed the Master Implementation cum Compromise Settlement Agreement (‘Settlement Agreement') with lenders and the Company has discharged and settled the existing credit facilities including corporate guarantees. Our audit procedures amongst others included the following:
Further the lenders and the Company received a binding offer from Tube Investments of India Limited (‘TII') for resolving the debts of the Company and to infuse capital in the Company. • We obtained and read the Master Implementation cum Compromise Settlement and Corporate guarantee settlement agreements.
During the year the Company lenders and TII executed the required binding agreement for one time settlement and restructuring of funded and unfunded credit facilities. After receiving necessary regulatory approvals and fulfilment of Conditions Precedents the Board of the Company allotted securities to TII and discharged the liability of the lenders. • We obtained and read the minutes of the board meeting providing approvals in relation to restructuring of debt
Consequent to the settlement of outstanding debt and corporate guarantees the Company recognised cessation of liability arising on settlement and restructuring of borrowings including interest thereon as per resolution plan amounting to Rs. 1426.89 crores and provision towards corporate guarantee obligation settlement amounting to Rs. 306.01 (including foreign exchange gain of Rs. 1.75 crores) respectively as an exceptional item in the statement of profit and loss during the year. • We tested the accounting entries in relation to debt restructuring and settlement of corporate guarantees and exceptional gain on the debt restructuring.
The Restructuring of Debt is identified as key audit matter considering the significance of amounts involved. • We tested the computation prepared by the management of the Company in relation to debt restructuring and settlement of corporate guarantees.
• We traced the payment made to lenders and capital infusion in the bank statements of the Company.
• We obtained and read the No Objection Certificates provided by the lenders for settlement of the existing debts.
• We obtained direct bank confirmation for balance outstanding as on March 31 2021.
• We assessed the disclosures in the revised standalone financial statements in relation to restructuring of debt and settlement of corporate guarantees as exceptional items.
Recognition of Deferred Tax Asset (as described in note 24 of the Revised Standalone Financial Statements)
The Company has Deferred Tax Asset (DTA) of Rs. 727.27 crores as at March 31 2021 on tax losses based on availability of future taxable profits against which DTA will be utilized. The tax losses were primarily on account of write off of receivable balances in relation to various transactions which are under investigations by regulatory authorities. Our audit procedures amongst others included the following:
Basis legal opinion management has considered these written-offs as an allowable expense under the Income tax and recognized deferred tax assets on such losses. • We obtained an understanding assessed and tested the operating effectiveness of internal control relating to the measurement and recognition of deferred tax.
The recognition of deferred tax asset is identified as key audit matter considering the significance of amounts and judgements involved. • We involved internal experts to assess tax computation as per the local fiscal regulations in India
• We tested on a sample basis the identification and quantification of differences between the recognition of assets and liabilities according to tax law and financial reporting in accordance with Indian Accounting Standards.
• We obtained and verified the budgeted forecast approved by the senior management which was in line with the projections approved by the Board of the Company for recoverability of deferred tax asset.
• We performed reasonability testing in relation to assumptions and estimates considered by the management for assessing recoverability of deferred tax asset
• We obtained and read the legal opinion considered by the management for recognisation of deferred tax assets on losses
• We assessed the disclosures in the Revised Standalone Financial Statements in accordance with the requirements of Ind AS 12 "Income Taxes".
Revenue recognition (as described in note 30 of the Revised Standalone Financial Statements)
The Company has two operating segments namely Power and Industrial Segment. Our audit procedures amongst others included the following:
The type of customers varies across these segments ranging from Large Government companies to Original Equipment Manufacturers and Industrial Customers etc. • We read and understood the Company's accounting policy for timing of revenue recognition.
The Company has major revenue from sale of goods which is recognized at a point in time based on the terms of the contract with customers which may vary case to case further revenue from construction contracts is recognized over period of time. Terms of sales arrangements with various customers within each of the operating segments including Incoterms determine the timing of transfer of control and require judgment in determining timing of revenue recognition. • We understood the Company's revenue processes including design and implementation of controls which vary based on product segment and customer and tested the operating effectiveness of such controls in relation to revenue recognition.
Due to the judgement relating to determination of point of time in satisfaction of performance obligations with respect to sale of products this matter is considered as Key Audit Matter. • On a sample basis we tested contracts with customers purchase orders issued by customers and sales invoices raised by the Company to determine the timing of transfer of control along with pricing terms and the timing of revenue recognition in respect of such contracts.
• Compared revenue with historical trends and where appropriate conducted further enquiries and testing.
• On a sample basis we analyzed revenue transactions near the reporting date and tested whether the timing of revenue was recognized in the appropriate period with reference to shipping records sales invoices etc. for those transactions
• We evaluated the Company's accounting policies pertaining to revenue recognition and assessed compliance with the policies in terms of Ind AS 115 - Revenue from Contracts with Customers.
• We assessed the disclosures for compliance with applicable accounting standards.
Claims and exposures relating to taxation and litigation (as described in note 39 of the Revised Standalone Financial Statements)
The Company has disclosed contingent liabilities of Rs. 34.83 crores in respect of disputed claims/ levies under tax and legal matters. Our audit procedures included the following:
Taxation and litigation exposures have been identified as a key audit matter due to significant outstanding matters with authorities and management assessment towards potential financial impact of these matters will involve significant judgement and assumptions. • We understood the process and assessed the internal control environment relating to the identification recognition and measurement of provisions for disputes potential claims and litigation and contingent liabilities.
• We obtained details of legal and tax disputed matters from management and assessed management's position through discussions on both the probability of success in significant cases and the magnitude of any potential loss.
• We involved tax specialists to assist us in evaluating tax positions taken by management.
• We circulated legal confirmation for material litigations to external legal counsel and review their assessment and had a discussion on their assessment with the senior management of the Company.
• We assessed the relevant disclosures made in the Revised Standalone Financial Statements for compliance with the requirements of Ind AS 37.

Information Other than the Financial Statements and Auditor'sReport Thereon

The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the Annualreport but does not include the Revised Standalone Financial Statements and ourauditor's report thereon.

Our opinion on the Revised Standalone Financial Statements does notcover the other information and we do not express any form of assurance conclusionthereon.

In connection with our audit of the Revised Standalone FinancialStatements our responsibility is to read the other information and in doing so considerwhether such other information is materially inconsistent with the financial statements orour knowledge obtained in the audit or otherwise appears to be materially misstated. Ifbased on the work we have performed we conclude that there is a material misstatement ofthis other information we are required to report that fact. We have nothing to report inthis regard.

Responsibilities of Management and Those Charged with Governance forthe Revised Standalone Financial Statements

The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these RevisedStandalone Financial Statements that give a true and fair view of the financial positionfinancial performance including other comprehensive income cash flows and changes inequity of the Company in accordance with the accounting principles generally accepted inIndia including the Indian Accounting Standards (Ind AS) specified under section 133 ofthe Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and the design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the RevisedStandalone Financial Statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the Revised Standalone Financial Statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

Those charged with governance are also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibilities for the Audit of the Revised StandaloneFinancial Statements

Our objectives are to obtain reasonable assurance about whether theRevised Standalone Financial Statements as a whole are free from material misstatementwhether due to fraud or error and to issue an auditor's report that includes ouropinion. Reasonable assurance is a high level of assurance but is not a guarantee that anaudit conducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these Revised Standalone FinancialStatements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of theRevised Standalone Financial Statements whether due to fraud or error design and performaudit procedures responsive to those risks and obtain audit evidence that is sufficientand appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.

• Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls with reference to financialstatements in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditionsmay cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of theRevised Standalone Financial Statements including the disclosures and whether theRevised Standalone Financial Statements represent the underlying transactions and eventsin a manner that achieves fair presentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the RevisedStandalone Financial Statements for the financial year ended March 31 2021 and aretherefore the key audit matters. We describe these matters in our auditor's reportunless law or regulation precludes public disclosure about the matter or when inextremely rare circumstances we determine that a matter should not be communicated in ourreport because the adverse consequences of doing so would reasonably be expected tooutweigh the public interest benefits of such communication.

Other Matters

I. The comparative figures for the year ended March 31 2020 of theCompany included in these Revised Standalone Financial Statements are as per the revisedstandalone financial statements of the Company for the year ended March 31 2020 whichhave been audited by the Independent firm of Chartered Accountants approved by the NCLTvide its order dated December 22 2021 who have issued an unmodified opinion on thoserevised standalone financial statements.

II. As mentioned in Note 1B to the Revised Standalone FinancialStatements the recasting of the standalone financial statements of the Company for thefive years ended March 31 2019 has been completed in accordance with the Section 130 ofthe Act and taken on record by National Company Law Tribunal (the ‘NCLT').

Report on Other Legal and Regulatory Requirements

Read with the matters related to revision of financial statements asstated in paragraph (ii) of the Emphasis of Matter section of this report and paragraph Iof the Other Matters section of this report as above we report as follows;

1. As required by the Companies (Auditor's Report) Order 2016("the Order") issued by the Central Government of India in terms of sub-section(11) of section 143 of the Act we give in the "Annexure 1" a statement on thematters specified in paragraphs 3 and 4 of the Order.

2. As required by Section 143(3) of the Act we report that:

i. we have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit;

ii. in our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books;

iii. the Revised Standalone Balance Sheet the Revised StandaloneStatement of Profit and Loss including the Revised Standalone Statement of OtherComprehensive Income the Revised Standalone Cash Flow Statement and Revised StandaloneStatement of Changes in Equity dealt with by this Report are in agreement with the booksof account;

iv. in our opinion the aforesaid Revised Standalone FinancialStatements comply with the Accounting Standards specified under Section 133 of the Actread with Companies (Indian Accounting Standards) Rules 2015 as amended;

v. on the basis of the written representations received from thedirectors as on March 31 2021 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2021 from being appointed as a director in termsof Section 164(2) of the Act;

vi. with respect to the adequacy of the internal financial controlswith reference to these Revised Standalone Financial Statements and the operatingeffectiveness of such controls refer to our separate Report in "Annexure 2" tothis report;

vii. in our opinion remuneration of the Managing Director for the yearended March 31 2021 is in excess of the limits applicable under section 197 of the Actread with Schedule V thereto. Subsequent to year the management has obtained approval ofthe shareholders for remuneration paid to the Managing Director in the extraordinarygeneral meeting held on June 7 2021 by way of a special resolution;

viii. with respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 as amended in our opinion and to the best of our information and according tothe explanations given to us:

(i) the Company has disclosed the impact of pending litigations on itsfinancial position in its Revised Standalone Financial Statements - Refer Note 39 to theRevised Standalone Financial Statements;

(ii) the Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses; and

(iii) other than amount stated in Note 27(a) of the Revised StandaloneFinancial Statements there has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.

ANNEXURE 1 REFERRED TO IN PARAGRAPH 1 OF THE HEADING "REPORT ONOTHER LEGAL AND REGULATORY REQUIREMENTS" OF OUR REPORT OF EVEN DATE READ WITHPARAGRAPH II OF THE OTHER MATTERS SECTION OF OUR REPORT OF EVEN DATE

(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets.

(b) All fixed assets have not been physically verified by themanagement during the year but there is a regular programme of verification which in ouropinion is reasonable having regard to the size of the Company and the nature of itsassets. No material discrepancies were noticed on such verification.

(c) According to the information and explanations given by themanagement and audit procedures performed by us the title deeds of immovable propertiesincluded in property plant and equipment are held in the name of the Company except

(i) the title deeds of immovable properties included in property plantand equipment amounting to Rs 149.98 crores are pledged with the banks. The same has beenindependently confirmed by the Trustee of the bank;

(ii) Original title deeds of immovable properties included in propertyplant and equipment amounting to Rs 11.96 crores are not available with the Company andhence we are unable to comment on the same.

(iii) The land and building aggregating to Rs 188.62 crores for whichland lease deed have been expired. As explained to us the Company is in the process ofrenewal of expired lease deed.

(ii) The inventory has been physically verified by the managementduring the year. In our opinion the frequency of verification is reasonable. No materialdiscrepancies were noticed on such physical verification. Inventories lying with thirdparties have been confirmed by them as at March 31 2021 and no material discrepancieswere noticed in respect of such confirmations.

(iii) According to the information and explanations given to us andaudit procedures performed by us during the year ended March 31 2021 the Company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013.

(iv) According to the information and explanations given to us duringthe year ended March 31 2021 (i) the Company has not given any loans investmentsguarantees and securities in respect of which provisions of section 185 of the CompaniesAct 2013 are applicable; (ii) the Company has made investments given loans and guaranteesexceeding limits specified under section 186 of the Companies Act 2013 hence Company hasnot complied with the provisions of Section 186 of the Companies Act 2013.

(v) The Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable.

(vi) According to the information and explanations given to us and acertificate by cost accountant provide by the management we have broadly reviewed thebooks of account maintained by the Company pursuant to the rules made by the CentralGovernment for the maintenance of cost records under section 148(1) of the Companies Act2013 related to the manufacture or service of Power and Industrial products and are ofthe opinion that prima facie the specified accounts and records have been made andmaintained. We have not however made a detailed examination of the same.

(vii) According to the information and explanations given to us duringthe year ended March 31 2021;

(a) undisputed statutory dues including provident fund employees'state insurance income-tax sales-tax service tax duty of custom duty of excise valueadded tax goods and service tax cess and other statutory dues have generally beenregularly deposited with the appropriate authorities though there has been a slight delayin a few cases.

(b) no undisputed amounts payable in respect of provident fundemployees' state insurance income-tax service tax sales-tax duty of custom dutyof excise value added tax goods and service tax cess and other statutory dues wereoutstanding at the year end for a period of more than six months from the date theybecame payable.

(c) the dues of income-tax sales-tax service tax duty of customduty of excise value added tax and cess on account of any dispute are as follows:

Name of the Statute Nature of Dues Amount Unpaid (Rs. in crores) Period to which Amount relates Forum where the dispute is pending
Income Tax Act 1961 Income Tax and interest 607.50* 2015-2017 Commissioner of Income Tax (Appeals)
Central Sales Tax Act 1956 and Sales Tax Acts of various states Sales Tax VAT Penalty Interest and Pending sales tax forms including related entry tax 308.29# 1994-2017 Additional Commissioner/ Deputy Commissioner/ Joint Commissioner/ Commissioner (Appeals)
6.49# 1992-2017 Appellate Tribunal High Court
1.11# 1989-2007
Central Excise Act 1944 Excise Duty Penalty and Interest 3.98 2002-2016 Additional Commissioner/ Deputy Commissioner/ Joint Commissioner/ Commissioner (Appeals)
4.50 1999-2015 Appellate Tribunal
0.14 2001-2002 High Court
Finance Act 1994 Service Tax Penalty and Interest 13.12 2013-2014 Additional Commissioner/ Deputy Commissioner/ Joint Commissioner/ Commissioner (Appeals)
0.05 2005-2007 Appellate Tribunal

* Bombay High Court has stayed the demand of Rs. 606.30 crores. Thereis a stay from jurisdictional assessing officer on balance amount of Rs. 1.20 crores.

# The Company has collected ‘C' Forms aggregating Rs. 243.79Crores which it expects the authorities to accept to reduce total unpaid amount to Rs.72.10 crores and further the liability will reduce to Rs. 36.66 crores after consideringrelated entry tax impact. Further there is stay on these demands in terms of appellateforums procedures.

(viii) During the year the Company executed the Master Implementationcum Compromise Settlement (‘Settlement Agreement') with lenders and under thesaid agreement the Company has discharged and settled the existing credit facilities. Inrelation to the borrowings made post restructuring in our opinion an according to theinformation and explanations given by the management the Company has not defaulted inrepayment of loans or borrowing to a bank and financial institution.

(ix) According to the information and explanations given by themanagement the Company has not raised any money by way of initial public offer / furtherpublic offer / debt instruments. According to the information and explanations given bythe management and audit procedures performed by us the Company has utilized the moniesraised by term loan for the purposes for which they were raised.

(x) Based upon the audit procedures performed for the purpose ofreporting the true and fair view of the Revised Standalone Financial Statements andaccording to the information and explanations given by the management we report that nofraud by the Company or no fraud on the Company by the officers and employees of theCompany has been noticed or reported during the year. We draw attention to note 3A of theRevised Standalone Financial Statements which describes ongoing regulatory investigationsin progress in respect of certain transactions with erstwhile promoters group etc.

(xi) According to the information and explanation given by themanagement and audit procedures performed by us we report that remuneration of theManaging Director for the year ended March 31 2021 is in excess of the limits applicableunder section 197 of the Act read with Schedule V thereto. Subsequent to year themanagement has obtained approval of the shareholders for remuneration paid to the ManagingDirector in the extraordinary general meeting held on June 07 2021 by way of a specialresolution.

(xii) In our opinion the Company is not a nidhi company. Thereforethe provisions of clause 3(xii) of the order are not applicable to the Company and hencenot commented upon.

(xiii) According to the information and explanations given by themanagement and audit procedures performed by us transactions entered with the relatedparties during the year ended March 31 2021 are in compliance with section 177 and 188 ofCompanies Act 2013 where applicable and the details have been disclosed in the notes tothe Revised Standalone Financial Statements as required by the applicable accountingstandards.

(xiv) According to the information and explanations given by themanagement and procedures performed by us the Company has complied with provisions ofsection 42 of the Companies Act 2013 in respect of the preferential allotment of sharesand warrants during the year. According to the information and explanations given by themanagement we report that the amounts raised have been used for the purposes for whichthe funds were raised.

(xv) According to the information and explanations given by themanagement during the year ended March 31 2021 the Company has not entered into anynon-cash transactions with directors or persons connected with him as referred to insection 192 of Companies Act 2013.

(xvi) According to the information and explanations given to us theprovisions of section 45-IA of the Reserve Bank of India Act 1934 are not applicable tothe Company.

ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THEREVISED STANDALONE FINANCIAL STATEMENTS OF CG POWER AND INDUSTRIAL SOLUTIONS LIMITED READWITH PARAGRAPH III OF THE OTHER MATTERS SECTION OF OUR REPORT OF EVEN DATE

Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financialreporting of CG Power and Industrial Solutions Limited ("the Company") as ofMarch 31 2021 in conjunction with our audit of the Revised Standalone financialstatements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India(‘ICAI'). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence to theCompany's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting with reference to these RevisedStandalone Financial Statements based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing specified under section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls and both issued by the Institute of Chartered Accountants of India.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting with reference to these Revised StandaloneFinancial Statements was established and maintained and if such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls over financial reporting with reference tothese Revised Standalone Financial Statements and their operating effectiveness. Our auditof internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting with reference tothese Revised Standalone Financial Statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgement including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the internal financial controlsover financial reporting with reference to these Revised Standalone Financial Statements.

Meaning of Internal Financial Controls Over Financial Reporting WithReference to these Standalone Financial Statements

A company's internal financial control over financial reportingwith reference to these Revised Standalone Financial Statements is a process designed toprovide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting with reference to standalone financial statements includes those policies andprocedures that

(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;

(2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; and

(3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the company's assetsthat could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over FinancialReporting with reference to these Revised Standalone Financial Statements

Because of the inherent limitations of internal financial controls overfinancial reporting with reference to these Revised Standalone Financial Statementsincluding the possibility of collusion or improper management override of controlsmaterial misstatements due to error or fraud may occur and not be detected. Alsoprojections of any evaluation of the internal financial controls over financial reportingwith reference to these Revised Standalone Financial Statements to future periods aresubject to the risk that the internal financial control over financial reporting withreference to these Revised Standalone Financial Statements may become inadequate becauseof changes in conditions or that the degree of compliance with the policies or proceduresmay deteriorate.

Opinion

In our opinion the Company has in all material respects adequateinternal financial controls over financial reporting with reference to these RevisedStandalone Financial Statements and such internal financial controls over financialreporting with reference to these Revised Standalone Financial Statements were operatingeffectively as at March 31 2021 based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India.

Emphasis of Matter

We draw attention to note 1B of these Revised Standalone FinancialStatements as regards completion of recasting and restatements of the standalone financialstatements of the Company for the five years ended March 31 2019 taken on record byNational Company Law Tribunal (the ‘NCLT') and NCLT approval dated December 222021 for voluntary revision under section 131 (1) of the Companies Act 2013 of thestandalone financial statements for the year ended March 31 2020 and March 31 2021. Therevised standalone financial statements for the year ended March 31 2020 have beenapproved by the Board of Directors of the Company on December 31 2021. The Company hasnow revised the original standalone financial statements for the year ended March 312021 that were approved by the Board of Directors of the Company on June 11 2021.Consequently our audit report dated June 11 2021 on the original standalone financialstatements which contained a disclaimer of opinion on those original standalone financialstatements stands withdrawn and this report supersedes our audit report dated June 112021.

For S R B C & CO LLP
Chartered Accountants
ICAI Firm Registration Number: 324982E/E300003
per Bharath N S
Partner
Membership Number: 210934
UDIN: 21210934AAAAIS2966
Place of Signature: Chennai
Date: December 31 2021

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