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 TELECOMMUNICATION LIMITED("the Company") which comprise the balance sheet as at 31st March 2022 thestatement of Profit and Loss (including Other Comprehensive Income) statement of changesin equity statement of cash flows for the year then ended and notes to the financialstatements including a summary of significant accounting policies and other explanatoryinformation.
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 2022 its loss 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 theFinancial Statements section of our report. We are independent of the Company inaccordance with 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 opinion on the financial statements.
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 ^ 11136.65 lakhs as at the year ended March 312022 and as of that date the company's current liabilities exceeded its total assets by ^5520.56 lakhs. These conditions along with other matters as set forth in the said Noteindicate the existence of a materia! uncertainty that may cast significant doubt about thecompany's ability to continue as a going concern. Our opinion is not modified in respectof this matter.
Emphasis of Matter:
We draw attention to the following matters in the Notes to the financial statements:
a. Note 32 to the financial statements regarding the Claims received by ResolutionProfessional
b. Note 36 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. Note 37 to the financial statements regarding the appointment and payment ofManagerial Remuneration.
d. Note 35 the financial statements regarding the utilisation of available GST credits.
Our opinion is not modified in respect of these matters.
Key Audit Matters
Key Audit Matters ('KAM') are those matters that in our professional judgement wereof most significance in our audit of the financial statements of current period. Thesematters were addressed in the context of our audit of the financial statements as a wholeand in forming our opinion thereon and we do not provide a separate opinion on thesematters. In addition to the matter described in the Material Uncertainty Related to GoingConcern section we have determined the matters described below to be the key auditmatters to be communicated in our report
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 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.
The Company's Resolution Professional is responsible for the other information. Theother information comprises the information included in the company's annual report butdoes 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 thefinancial statements our responsibility is to read the other information and in doingso consider whether such other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated. If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the FinancialStatements
The Company's Resolution Professional is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance total comprehensive income changes in equity and cash flows of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards specified under section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation 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.
The Resolution Professional is also responsible for overseeing the Company's financialreporting 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 a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud 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.
As part of an audit in accordance with Standards on Auditing we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
> Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal controls relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.
> Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements:
1. As required by the Companies (Auditor's Report) Order 2020 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the 'Annexure A' a statement on the matters specifiedin paragraphs 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 to the bestof 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 the statement of changes inequity and the Cash Flow Statement dealt with by this Report are in agreement with thebooks 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.
(e) The Board of Directors of the Company is suspended by NCLT vide its Order dated 14August 2019.and the Company is in Corporate Insolvency Resolution Process under IBC 2016Hence Comment relating to Director's disqualification as per Sub-Section (2) of Section164 is not applicable.
(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) As the Company did not pay any remuneration to its Directors during the yearother matters to be included in the auditor's report in accordance with the requirementsof section 197(16) of the Act as amended are not applicable to the company.
(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 opinionand to the best of our 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 19 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 36 to the financial statements)
iv. a. The Management has represented that to the best of its knowledge and belief nofunds (which are material either individually or in the aggregate) have been advanced orloaned or invested (either from borrowed funds or share premium or any other sources orkind of funds) by the Company to or in any other person or entity including foreignentity ("Intermediaries") with the understanding whether recorded in writingor otherwise that the Intermediary shall whether directly or indirectly lend or investin other persons or entities identified in any manner whatsoever by or on behalf of theCompany ("Ultimate Beneficiaries") or provide any guarantee security or thelike on behalf of the Ultimate Beneficiaries;
b. The Management has represented that to the best of its knowledge and belief nofunds (which are material either individually or in the aggregate) have been received bythe Company from any person or entity including foreign entity ("FundingParties") with the understanding whether recorded in writing or otherwise that theCompany shall whether directly or indirectly lend or invest in other persons orentities identified in any manner whatsoever by or on behalf of the Funding Party("Ultimate Beneficiaries'') or provide any guarantee security or the like on behalfof the Ultimate Beneficiaries;
c. Based on the audit procedures that have been considered reasonable and appropriatein the circumstances nothing has come to our notice that has caused us to believe thatthe representations under sub-clause (i) and (ii) of Rule 11(e) as provided under (a) and(b) above contain any material misstatement.
v. During the year the company has neither declared nor paid any dividend.
Annexure -A to the Auditor's Report:
Statement on the matters specified in paragraphs 3 and 4 of the Companies (Auditor'sReport) Order2020 as referred to in Para 1 under the heading of "Report on OtherLegal and Regulatory Requirements" of our report of even date to the members ofGALADA POWER AND TELECOMMUNICATION LIMITED HYDERABAD for the year ended March 312022
1. a. The Company is maintaining proper records showing full particulars includingquantitative details and situation of Property Plant and Equipment.
B. The Company does not have any Intangible assets. Therefore the provisions ofparagraph 3 (i)(a)(B) of the Order is not applicable.
b. it is Informed to us the management has not physically verified the Property Plantand Equipment during the year. In view of that we are unable to comment on thediscrepancies between the books of account and physically available Property Plant andEquipment.
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 all the immovable properties(other than Properties where the company is the lessee and the lease agreements are dulyexecuted in favour of the lessee) are held in the name of the Company.
d. The company did not revalue its Property Plant and Equipment (including right ofuse assets) during the year. Therefore the provisions of paragraph 3 (i)(d) of the Orderare not applicable.
e. According to the information and explanations given to us and on our verification ofrecords of the Company no proceedings have been initiated or are pending against thecompany for holding any benami property under the Benami Transactions (Prohibition) Act1988. (45 of 1988) and rules made thereunder.
2- a. The inventory has not been physically verified during the year by the managementand does not have timelines for such verification. Hence we are unable to comment on thediscrepancies between the physical stocks and book of account.
b. The company did not obtain any working capital limits during the year. Thereforethe provisions of paragraph 3 (ii)(b) of the Order are not applicable.
3. During the year the Company has not made investments in provided any guarantee orsecurity or granted any loans or advances in the nature of loans secured or unsecured tocompanies firms. Limited Liability Partnerships or any other parties. Therefore theprovisions of paragraph 3 (iii) of the Order are not applicable.
4. The Company has not given any loans or made any investments or given any guaranteesor security to the parties covered under Sections 185 and 186 of the Act. Therefore theprovisions of paragraph 3 (iv) of the Order are not applicable.
5. The Company has not accepted any deposits and also there were no amounts which aredeemed to be the deposits. Hence the directives issued by the Reserve Bank of India andthe provisions of Sections 73 to 76 or anv other relevant provisions of the Companies Act2013 ancLthe rules framed there under do not apply to this Company.
6. During the year the Company did not carry out any manufacturing or servicesactivity. Therefore the provisions of paragraph 3 (vi) relating to Cost records of theOrder are not applicable.
7. a. According to the records the company is generally regular in depositingundisputed statutory dues including Goods and service tax provident fund employees'state insurance income-tax sales-tax service tax duty of customs duty of excisevalue added tax cess and all other material statutory dues with the appropriateauthorities and there were no arrears of statutory dues as at March 31 2022 for a periodof more than six months from the date they became payable except the following:
|Name of the Statute ||Nature of the dues ||Amount 3 ||Period to which the amount relates ||Due Date ||Date of payment |
|The Companies Act1956 ||Investor Education and Protection Fund # ||11556699 ||1996 ||30.12.2003 ||Not yet paid |
| ||IFST Loan ||311190 ||1988 ||25.07.1997 ||Not yet paid |
|APGST Act ||Differed Sales Tax ||6710843 ||1996 ||01.04.2001 |
| ||Sales Tax ||100000 ||2000 ||01.08.2001 |
|The Goods and Services Tax Act2017 ||GST ||43632 ||March 2021 1 ||20.04.2021 ||Not yet paid |
|The Dadra and Nagar Haveli VAT Regulation 2005 ||CST ||13500 ||May2017 ||20.06.2017 ||Not yet paid |
# Refer note 36 to the financial Statements
b. According to the records of the Company and the information and explanations givento us there were no statutory dues referred to in subclause (a) have not been depositedon account of any dispute.
8. According to the information and explanations given to us and based on ourverification there were no transactions which are not recorded in the books of accounthave been surrendered or disclosed as income during the year in the tax assessments underthe Income Tax Act 1961 (43 of 1961). Therefore the provisions of paragraph 3 (viii) ofthe Order are not applicable.
9. a. As the Company is in Corporate Insolvency Resolution Process under IBC 2016 theprovisions of paragraph 3 (ix) (a) of the Companies (Auditor's Report) Order 2016 are notapplicable.
b. The Company has not been declared wilful defaulter by any bank or financialinstitution or any other lender.
c. The Company has not taken any term loan during the year. Therefore the provisionsof Paragraph 3(ix)(c) of the Order are not applicable
d. On an overall examination of the financial statements of the Company funds raisedon short- term basis have prima facie not been used during the year for long-termpurposes by the Company.
e. The Company has not taken any funds from any entity or person on account of or tomeet the obligations of associates.
f. The Company has not raised any loans during the year. Therefore the provisions ofParagraph (ix)(f) of the Order are not applicable
10. a. The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) during the year. Therefore the provisions ofparagraph 3 (x)(a) of the Order are not applicable.
b. The Company has not made any Preferential allotment or Private placement of sharesor convertible debentures during the year. Therefore the provisions of paragraph 3 (x)(b)of the Order are not applicable.
11. a. According to the information and explanations given to us we report that duringthe year the management of the Company has not come across any fraud and consequently3(xi)(b) is not applicable.
b. No report under sub-section (12) of section 143 of the Companies Act has been filedin Form ADT-4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules 2014with the Central Government during the year and up to the date of this report;
c. According to the information and explanations given to us and based on ourverification during the year the Company has not received any Whistle-blower complaints.Therefore the provisions of paragraph 3 (xi)(c) of the Order are not applicable.
12. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Therefore the provisions of paragraph 3(xii) of the Orderare 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. a In our opinion and based on our examination though the company is required tohave an internal audit system under section 138 of the Act it does not have the sameestablished for the year - In view of our comment above the provisions of paragraph 3(xii)of the Order is not applicable
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. Therefore the provisions ofparagraph 3(xv) of the Order are not applicable.
16. a. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934. Therefore the provisions of paragraph 3(xvi) (a) and (b) of theOrder are not applicable
b. The company is not a Core Investment Company (CIC) as defined in the regulationsmade by the Reserve Bank of India. Therefore the provisions of paragraph 3(xvi)(c) of theOrder are not applicable.
c. The Group has no Core Investment Company (CIC). Therefore the provisions ofparagraph 3(xvi)(d) of the Order are not applicable.
17 The company has incurred cash losses in the financial year and also in theimmediately preceding financial year.
18. There is no resignation of statutory auditors during the year. Therefore theprovisions of paragraph 3(xviii) of the Order are not applicable.
19. The financial Ratios are not Computed which are not relevant as the Company is inCorporate Insolvency Resolution Process (CIRP). Hence we can't Comment on the sane asrequired under the provisions paragraph 3(xix) of the Order.
20. The Provisions of Section 135 of the Companies Act 2013 relating to CorporateSocial Responsibility are not applicable to the Company. Therefore the provisions ofparagraph 3(xx) of the Order are not applicable.
21. As the Company is not required to present the consolidated financial statementsthe provisions of paragraph 3(xxi) of the Order are not applicable.
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 2022 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 Companys 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 and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.
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 wasestabiished 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 materia! misstatement of thefinancial 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.
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 to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance 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.
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 2022 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.