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Galada Power & Telecommunication Ltd.

BSE: 504697 Sector: Metals & Mining
NSE: GALPOWTEL ISIN Code: INE255C01018
BSE 00:00 | 29 Sep 1.49 0.07
(4.93%)
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NSE 05:30 | 01 Jan Galada Power & Telecommunication Ltd
OPEN 1.49
PREVIOUS CLOSE 1.42
VOLUME 166
52-Week high 2.27
52-Week low 0.52
P/E
Mkt Cap.(Rs cr) 1
Buy Price 1.49
Buy Qty 1.00
Sell Price 1.49
Sell Qty 922.00
OPEN 1.49
CLOSE 1.42
VOLUME 166
52-Week high 2.27
52-Week low 0.52
P/E
Mkt Cap.(Rs cr) 1
Buy Price 1.49
Buy Qty 1.00
Sell Price 1.49
Sell Qty 922.00

Galada Power & Telecommunication Ltd. (GALPOWTEL) - Auditors Report

Company auditors report

TO THE MEMBERS OF GALADA POWER AND TELECOMMUNICATION LIMITED HYDERABAD.

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of GALADA POWER AND TELECOMMUNICATIONLIMITED ("the Company") which comprise the balance sheet as at 31st March2019 the statement of Profit and Loss

(including Other Comprehensive Income) statement of changes in equity statement ofcash flows for the year then ended and notes to the financial statements including asummary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards prescribed under section 133 of the Act readwith the Companies (Indian Accounting Standards) Rules 2015 as amended (Ind AS) of thestate of affairs of the Company as at March 31 2019 its profit the total comprehensiveincome changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the

Auditor’s Responsibilities for the Audit of the Financial Statements section ofour report. We are independent of the Company in accordance with the Code of Ethics issuedby the Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the financial statements under the provisions of the Actand the Rules thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for our opinionon the financial statements.

K.S.Rao& Co.

Material Uncertainty Related to Going Concern

We draw attention to Note 1 to the financial statements which indicates that thecompany has net accumulated losses of Rs. 10311.55 lakhs as at the year ended March 312019 and as of that date the company’s current liabilities exceeded its total assetsby Rs. 4699.64 lakhs. These conditions along with other matters as set forth in the saidNote indicate the existence of a material uncertainty that may cast significant doubtabout the company’s ability to continue as a going concern.

Our opinion is not modified in respect of this matter.

Emphasis of Matter:

We draw attention to the following matters in the Notes to the financial statements:

a. Note 33 to the financial statements regarding the non-provision of interest onworking Capital Loan.

b. Note 34 to the financial statements on non-compliance with the provisions ofSec-205-A (1) of the Companies Act 1956 regarding transfer of unpaid dividend to aspecial Bank Account.

c. Note35 to the financial statements regarding the appointment and payment ofManagerial Remuneration.

Our opinion is not modified in respect of these matters.

Key Audit Matters

Key Audit Matters (‘KAM’) are those matters that in our professionaljudgement were of most significance in our audit of the financial statements of currentperiod. These matters were addressed in the context of our audit of the financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report

KAM Title

Going Concern Assessment

KAM Description

The circumstances as discussed in note 1 to the financial statements and under‘Material Uncertainty Related to Going Concern’ paragraph indicate a conditionthat may cast significant doubt on the Company's ability to continue as a going concern.In preparation of the Company's financial statements management had made an assessment onits working capital sufficiency and also the probability of the positive outcome of thenegotiations with the term lenders regarding OTS and on evaluation of the realizable valueof the non-core/ unused assets has concluded that the Company will have sufficient workingcapital to finance its operations and to meet its financial commitments to the termlenders as and when they fall due for at least next twelve months from the end of thereporting period. Accordingly the financial statements have been prepared on the goingconcern basis. The going concern assessment was based on the cash flow forecast fromoperations and disposal of non-core/ unused assets and the outcome of the negotiationswith term lenders that required significant judgement and assumptions about inherentlyuncertain future outcomes of events and conditions.

Our Response

Our procedures in relation to the management's assessment of going concern includedassessing the appropriateness of the key assumptions adopted by the management inpreparation of the cash flow forecasts reasonableness of key assumptions used based onour knowledge of the business industry and historical data and also the ongoingnegotiations with the term lenders for OTS and the possibility of the sale of non-core/unused assets. We reconciled input data to supporting evidence such as orders on handcommunication letters with term lenders and board resolutions. We also considered theimpact of reasonably possible downside effects in the assumptions underlying the cash flowforecasts and assessed the possible mitigating actions identified by management.

KAM Title

Valuation of Deferred Tax Assets

KAM Description

The company has not recognised deferred tax asset for deductible temporary differencesand unused tax losses. As the utilisation of deferred tax assets is dependent on thecompany’s ability to generate future taxable profits sufficient to utilise deductibletemporary differences and tax losses before they expire. We determined this to be a keyaudit matter due to the inherent limitations in estimation and uncertainty in forecastingthe amount and timing of future taxable profits and the reversal of temporary differencesand utilisation of tax losses.

Management has supported the non-recoverability of the deferred tax assets mainly withtaxable income projections which contain estimates of and tax strategies for futuretaxable income. Changes in the industrial scenario the business and its markets andchanges in regulations may impact these projections.

Our Response

Our audit procedures included among others evaluating the projected tax computationsprepared by the company to assess the recognition and measurement of the current anddeferred tax assets and liabilities and evaluate the compliance with the tax legislation.We paid attention to the long-term forecasts and critically assessed the assumptions andjudgments underlying these forecasts by considering the historical accuracy of forecastsand the sensitivities of the profit forecasts. We assessed the adequacy and the level ofestimation involved.

Other Information

The Company’s Board of Directors is responsible for the other information. Theother information comprises the information included in the company’s annual reportbut does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether such other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the FinancialStatements

The Company’s Board of Directors is responsible for the matters stated in section134(5) of the Companies

Act 2013 ("the Act") with respect to the preparation of these financialstatements that give a true and fair view of the financial position financialperformance total comprehensive income changes in equity and cash flows of the Companyin accordance with theaccounting principles generally accepted in India including theIndian Accounting Standards specified under section 133 of the Act. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.

In preparing the financial statements management is responsible for assessing theCompany’s ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

Those Board of Directors are also responsible for overseeing the Company’sfinancial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor’s report that includes our opinion. Reasonable assurance is ahigh level of assurance but is not a guarantee that an audit conducted in accordance withSAs will always detect a material misstatement when it exists. Misstatements can arisefrom fraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.

Report on Other Legal and Regulatory Requirements:

1. As required by the Companies (Auditor’s Report) Order 2016 ("theOrder") issued by the Central

Government of India in terms of sub-section (11) of section 143 of the Companies Act2013 we give in the ‘Annexure A’ a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.

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

(a) We have sought and obtained all the information and explanations which tothe best of our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books

(c) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.

(d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.

K.S.Rao& Co.

(e) On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in terms of Section164 (2) of the Act.

(f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".

(g) With respect to the other matters to be included in the auditor’s report inaccordance with the requirements of section 197(16) of the Act as amended refer to ourcomment made in clause

(c ) under ‘Emphasis of Matter’ paragraph.

(h) With respect to the other matters to be included in the Auditor’s Report inaccordance with Rule

11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to the best ofour information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements Refer Note 21 to the financial statements

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.

iii. According to the information and explanations given to us there were no amountswhich were required to be transferred to the Investor Education and Protection Fund by theCompany. (Refer Note 34 to the Financial statements)

for K.S.RAO& CO.
Chartered Accountants
Firm’s Registration Number: 003109S
(T. SUKESH KUMAR)
Place : Hyderabad Partner
Date : May28 2019 Membership Number: 229963

Annexure -A to the Auditor’s Report:

The Annexure referred to in Para 1 under the heading of "Report on Other Legal andRegulatory

Requirements" of our report of even date to the members of GALADA POWER ANDTELECOMMUNICATION LIMITED HYDERABAD for the year ended March 312019

1. a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

b. As explained to us the management has physically verified the fixed assets duringthe year and there is a regular programme of physical verification which in our opinionis reasonable having regard to the size of the Company and the nature of the assets. Nodiscrepancies were noticed on such verification.

c. According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.

2. The inventory has been physically verified during the year by the management. In ouropinion the frequency of verification is reasonable. No material discrepancies werenoticed on such verification between the physical stocks and book records.

3. a. During the year the Company has not granted any loans secured or unsecured toCompanies firms limited liability partnerships or other parties covered in the registermaintained under Section 189 of the Companies Act 2013.

b. In view of our comment in para (a) above Clause (III) (a) (b) and (c) of paragraph3 of the

Companies (Auditor’s Report) Order 2016 are not applicable to the Company.

4. In our opinion and according to the information and explanations given to us theCompany has not advanced any loan to any Director and no investments were made during theyear as referred to in sections 185 and 186 of the Act. Therefore the provisions ofParagraph 3(iv)of the of the

Companies (Auditor’s Report) Order 2016 are not applicable to the Company.

5. The Company has not accepted any deposits from the public. Hence the provisions ofSections 73 to 76 or any other relevant provisions of the Companies Act 2013 and therules framed there under do not apply to this Company.

6. In view of theoverall turnover of the Company from all its products and services isless than the stipulated amount the provisions relating to maintenance of cost recordsunder sub-section (1) of 148 section of the Companies Act 2013 are not applicable to theCompany.

7. a. According to the records the company is generally regular in depositingundisputed statutory dues including provident fund employees’ state insuranceincome-tax sales-tax service tax duty of customs duty of excise value added tax cessand all other material statutory dues with the appropriate authorities. However theextent of the arears of outstanding statutory dues as at March 31 2019 for a period ofmore than six months from the date they became payable are as follows.

Nature of Statute Nature of the Dues Amount Period to which the amount relates Due date Date of payment
Rs.
The Investor
Companies Education and 11556699 1996 30.12.2003 Not yet paid
Act 1956 Protection Fund #
IFST Loan 311190 1988 25.07.1997
APGST Act Differed Sales Tax 6710843 1996 01.04.2001 Not yet paid
Sales tax 100000 2000 01.08.2001
The Dadra
and Nagar
Haveli VAT CST 13500 May 2017 20.06.2017 Not yet paid
Regulation
2005

# refer note 34 to the financial Statements

b. According to the records of the Company and the information and explanations givento us there were no dues of income tax or sales tax or service tax orduty of customs orduty of excise or value added tax have not been deposited on account of any dispute.

8. In our opinion the company has defaulted in repayment of loans to financialinstitutions and banks. The details of such defaults are

i. Working Capital loan from Syndicate Bank - Rs. 264135400/- due from year 2000

ii. Stressed Assets Stabilisation Fund Rs. 149700000/- Period of default 31 Months

iii. Edelweiss Asset Reconstruction Company Limited - Rs. 1056000/- Period of default2Months

iv. Unit Trust of India - Rs. 50000000/ Period of default 18 Months

9. The Company did not raise any money by way of initial public offer or further publicoffer (including debt instruments) and term loans during the year. Accordingly paragraph3 (ix) of the Companies

(Auditor’s Report) Order 2016 is not applicable.

10. According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.

11. According to the information and explanations give to us and based on ourexamination of the records the Company has paid/provided for remuneration during theyear to the Managing Director and to the Executive Director amounting to Rs. 654549/-and Rs. 542080/-respectively which is subject to the approval of the Central Governmentas the company has defaulted in repayment of its debts in the preceding financial yearbefore the date of their appointment. As such the payment of remuneration is not inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Act.

12. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly paragraph 3(xii) of the Companies(Auditor’s Report) Order 2016 is not applicable

13. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

14. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.

15. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Companies (Auditor’s Report) Order 2016 is not applicable.

1 6. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

for K.S.RAO& CO;
Chartered Accountants
Firm’s Registration Number: 003109S
(T. SUKESH KUMAR)
Place : Hyderabad Partner
Date : May 28 2019 Membership Number: 229963

Annexure B to the Auditors’ Report

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the

Companies Act 2013 ("the Act")

We have audited the internal financial controls with reference to the financialstatements of GALADA POWER AND TELECOMMUNICATION LIMITED HYDERABAD ("theCompany") as of 31 March 2019 in conjunction with our audit of the 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 and maintaining internalfinancial controls based on the internal control with reference to the financialstatements 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 tocompany’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.

Auditors’ Responsibility:

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to the financial statements based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") and the Standards on Auditing to theextent applicable to an audit of internal financial controls both applicable to an auditof Internal Financial Controls and both issued by the Institute of Chartered Accountantsof India. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls with reference to the financial statements wasestablished and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to the financial statements andtheir operating effectiveness. Our audit of internal financial controls with reference tothe financial statements included obtaining an understanding of internal financialcontrols with reference to the financial statements assessing the risk that a materialweakness exists and testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk. The procedures selected depend on theauditor’s judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion.

K.S.Rao& Co.

Meaning of Internal Financial Controls with Reference to the Financial Statements:

A company's internal financial control with reference to the financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control withreference to the financial statements includes those policies and procedures that:

1. pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

2. provide reasonable assurance that transactions are recorded as necessary topermit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of management and directors of the company; and

3. provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.

Inherent Limitations of Internal Financial Controls with Reference to the FinancialStatements:

Because of the inherent limitations of internal financial controls with reference tothe financial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to the financial statements to future periods are subject to the risk that theinternal financial control with reference to the financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

Opinion:

In our opinion the Company has in all material respects an adequate internalfinancial controls system with reference to the financial statements and such internalfinancial controls with reference to the financial statements were operating effectivelyas at 31 March 2019 based on the internal control with reference to the financialstatements 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.

for K.S.RAO& CO.
Chartered Accountants
Firm’s Registration Number: 03109S
(T. SUKESH KUMAR)
Place : Hyderabad Partner
Date : May 28 2019 Membership Number: 229963