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Gammon India Ltd.

BSE: 509550 Sector: Infrastructure
NSE: GAMMONIND ISIN Code: INE259B01020
BSE 00:00 | 10 Sep Gammon India Ltd
NSE 05:30 | 01 Jan Gammon India Ltd
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VOLUME 142636
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OPEN 1.40
CLOSE 1.45
VOLUME 142636
52-Week high 1.54
52-Week low 0.00
P/E
Mkt Cap.(Rs cr) 54
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Gammon India Ltd. (GAMMONIND) - Auditors Report

Company auditors report

To

The Members of Gammon India Limited

Report on the Audit of the Standalone Financial Statements QualifiedOpinion

We have audited the Standalone Financial Statements of Gammon IndiaLimited ("the Company") which comprise the Balance Sheet as at March 31 2022and the Statement of Profit and Loss (including Other Comprehensive Income) Statement ofChanges in Equity and Statement of Cash Flows for the year then ended and notes to thefinancial statements including a summary of Significant Accounting Policies and otherexplanatory information (hereinafter referred to as "the Standalone FinancialStatements").

In our opinion and to the best of our information and according to theexplanations given to us except for the possible effects of the matter described in Basisof Qualified Opinion paragraph the aforesaid Standalone Financial Statements give theinformation required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standardsprescribed under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended ("Ind AS") and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2022the loss (including other comprehensive income) changes in equity and its cash flows forthe year ended on that date.

Basis for Qualified Opinion

a) We invite attention to note no. 7 (a) of the financial statementdetailing the recognition of claims during the earlier years in respect of on-goingcompleted and/or terminated contracts. The aggregate amount of claims outstanding as atMarch 31 2022 is ' 231.69 crores. These claims were recognised only on the basis ofopinion of an expert in the field of claims and arbitration. There are no further updatesfrom the expert on the recovery of the claims. In view of the above-mentionedcircumstances and facts we are unable to comment upon the amounts recognised itsrealisation and the consequent effect on the financial statement for the year ended March31 2022.

b) We invite attention to note no. 7(b) of the financial statementrelating to the claim of CMRL project wherein the Company has retained the claim at anamount of ' 532 crores after writing off the amounts previously estimated and notaccepted. This amount includes an amount of '123.08 crores which is subject matter ofappeal arising from the award. The award is in the name of joint venture as detailed inthe note. Pending the final fructification of the award amount pending and the settlementof the JV proceeds as detailed in the aforesaid note we are unable to opine whether theentire amount will be to the account of the Company.

c) We invite attention to note no. 4(a)(iii) of the financial statementrelating to Trade receivables inventories and loans and advances which includes an amountof ' 321.58 crores in respect of disputes in six projects of the Company and/or its SPVs.The Company is pursuing legal recourse/ negotiations for addressing the disputes in favourof the Company. Pending the conclusion of the matters we are unable to state whether anyprovisions would be required against the Company's exposure

d) We invite attention to note no. 37 of the financial statementrelating to the exposure of the Company to a subsidiary engaged in real estate developmentin Bhopal. The Company has on prudent basis made a provision of ' 100 crores against theexposure of ' 361.93 crores. The subsidiary's RERA registration got cancelled and havesevere liquidity crunch and was also unable to settle One Time Settlement directions fromthe lenders for settlement of the term loan. The subsidiary company is in activediscussion with the lenders for the financial support for completion of the project. Thecompany is also exploring possibilities of restructuring for which it is in discussionwith the lender. The auditor of the subsidiary has also made an Emphasis of Matter on therealisability of its inventory amounting to ' 822 crores as at March 31 2022 and alsohighlighted material uncertainty regarding going concern issue in their report for theyear ended March 31 2022. Considering the liquidity crunch cancelled RERA registrationand pending outcome of the discussion with lenders we are unable to state whether anyfurther provision is required towards the balance exposure of ' 261.93 crores

e) We invite attention to note no 26 of the financial statementrelating to penal interest and charges of '76.07 crores during the year charged by thelenders on its facilities. Total amount of penal interest amount to ' 324.65 crores up toMarch 31 2022. The same has not been debited to profit and loss account as management isdisputing the same and in discussion with the lenders for reversal of the said penalinterest and charges. Pending the conclusion of the aforesaid discussion we are unable tostate whether any provision is required to be made against such penal interest and charges

We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Companies Act 2013. Our responsibilitiesunder those Standards are further described in the Auditor's Responsibilities for theAudit of the Standalone Financial Statements section of our report. We are independent ofthe Company in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India together with the ethical requirements that are relevant to our auditof the Standalone Financial Statements under the provisions of the Companies Act 2013 andthe 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 forour qualified opinion on the Standalone Financial Statements. Material Uncertaintyrelating to Going Concern.

We invite attention to the note no. 36 of the financial statementrelating to the present financial situation of the Company detailing the MaterialUncertainties Relating to Going Concern and the Going Concern assumptions. The lenders hadin the previous years recalled all the loans and facilities and also the Company CurrentLiabilities exceeds Current Assets by ' 8498.12 crores as at March 31 2022. The Companyis finding it difficult to meet its financial obligations and the lenders have still notapproved its further restructuring plan. The liquidity crunch is affecting the Company'soperation with increasing severity. The trading in equity shares of the Company ispresently suspended. Some of the creditors have filed for winding up petitions against theCompany. The company has severe manpower issues and is defaulting on its statutory andregulatory obligations. The Company's resolution plan has found favour with seven lendersas detailed in the note no. 36 but the final approval of all lenders and the execution ofthe plan and its success involves material uncertainties that may cast significant doubtabout the Going Concern Assumption. Our report is not qualified on this account.

Emphasis of Matter

Without qualifying our conclusion we draw attention to the followingmatters;

a) We draw attention to Note no 4 (a) (i) & (ii) of the financialstatement relating to recoverability of an amount of ' 146.64 crores as at March 31 2022under trade receivables in respect of contract revenue where the Company has receivedarbitration awards in its favour in respect of which the client has preferred an appealfor setting aside the said arbitration awards recognition of claims while evaluating thejobs of ' 7.56 crores where the Company is confident of recovery. The recoverability isdependent upon the final outcome of the appeals & negotiations getting resolved infavour of the company.

b) We draw attention to Note no 4 (a) (iv) of the financial statementrelating to the projects of real estate sector where the exposure is ' 44.51 crores. Themanagement is confident of ultimate recovery of the amounts and we have relied on themanagement assertions of recoverability.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the Standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the Standalonefinancial statements as a whole and in forming our opinion thereon we do not provide aseparate opinion on these matters.

Apart from what is mentioned in our paragraph titled Basis of QualifiedOpinion and paragraph titled Material Uncertainty related to Going Concern there are noother matters described to be the key audit matters to be communicated in our report.

Information Other than the Standalone Financial Statements andAuditor's Report thereon

The Company's Board of Directors is responsible for the OtherInformation. The other information comprises the information included in the Board'sreport including the Directors Report Chairman's Statement Management Discussions andAnalysis Summarized Financial Information Corporate Governance and Shareholder'sInformation but does not include the Standalone Financial Statements and our IndependentAuditors' Report thereon. Our opinion on the Standalone Financial Statements does notcover the Other Information and we do not and will not express any form of assurance orconclusion thereon.

In connection with our audit of the Standalone Financial Statementsour responsibility is to read the Other Information identified above and in doing soconsider whether the Other Information is materially inconsistent with the StandaloneFinancial Statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.

The Other Information has not been made available to us till the dateof this report. We will read the Other Information as and when it is made available to usand if conclude that there is a material misstatement we are required to communicate thematter with those charged with governance and take necessary steps as may be requiredthereafter.

Responsibilities of Management and those Charged with Governance forthe Standalone Financial Statements

The Company's Board of Directors is responsible for the matters statedin section 134(5) of the Companies Act 2013 ("the Act") with respect to thepreparation of these Standalone Financial Statements that give a true and fair view of thefinancial position financial performance changes in equity and cash flows of the Companyin accordance with the accounting principles generally accepted in India including theaccounting Standards specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe 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 standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the 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.

The Board of Directors is also responsible for overseeing the Company'sfinancial reporting process.

Auditor's Responsibilities for the Audit of the Standalone FinancialStatements

Our objectives are to obtain reasonable assurance about whether theStandalone Financial Statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted 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 Standalone Financial Statements.

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

1. Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate 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.

2. Obtain an understanding of internal control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Companies Act 2013 we are also responsible for expressing our opinionon whether the company has adequate internal financial controls system in place and theoperating effectiveness of such controls.

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

4. Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.

5. Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

Materiality is the magnitude of misstatements in the standalonefinancial statements that individually or in aggregate make it probable that theeconomic decisions of a reasonably knowledgeable user of the standalone financialstatements may be influenced. We consider quantitative materiality and qualitative factorsin (i) planning the scope of our audit work and in evaluating the results of our work; and(ii) to evaluate the effect of any identified misstatements in the standalone financialstatements We communicate with those charged with governance regarding among othermatters 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 financialstatements of the current period and are therefore the Key Audit Matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.

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 of the Companies Act 2013 we give in the attached Annexure"A" a statement on the matters specified in paragraphs 3 and 4 of the Order tothe 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 explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.

b. In our opinion except for the possible effects of the matterdescribed in Basis of Qualified Opinion paragraph proper books of account as required bylaw have been kept by the Company so far as it appears from our examination of thosebooks.

c. The Balance Sheet the Statement of Profit and Loss (including OtherComprehensive Income) the Cash Flow Statement and Statement of Changes in Equity dealtwith by this Report are in agreement with the books of account.

d. In our opinion except for the possible effects of the matterdescribed in Basis of Qualified Opinion paragraph the aforesaid Standalone FinancialStatements comply with the Accounting Standards specified under Section 133 of the Actread with Rule 7 of the Companies (Accounts) Rules 2014.

e. The matters described in paragraphs under the Basis for QualifiedOpinion and the Material Uncertainty related to Going Concern paragraph in our opinionmay have an adverse effect on the functioning of the Company.

f. On the basis of the written representations received from thedirectors as on March 31 2022 taken on record by the Board of Directors all thedirectors are disqualified as on March 31 2022 from being appointed as a director interms of Section 164 (2) of the Act.

g. With respect to the adequacy of the internal financial controls withreference to financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure B". Our report expresses amodified opinion on the adequacy and operating effectiveness of the Company's internalfinancial controls with reference to financial statements.

h. With respect to the other matters to be included in the Auditor'sReport in accordance with the requirements of section 197(16) of the Act as amended:

In our opinion and to the best of our information and according to theexplanations given to us the remuneration paid by the Company to its directors during theyear is in accordance with the provisions of Section 197 of the Act.

i. With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies

(Audit and Auditors) Rules 2014 in our opinion and to the best of ourinformation and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone financial statements - Refer Note 33 to thestandalone financial statements

ii. The Company did not have any long-term contracts includingderivative contracts for which there were material foreseeable losses

HI. The Company has to transfer amount of ' 0.54 Cr to the InvestorEducation and Protection Fund.

iv. a. The management has represented that to the best of theirknowledge and belief other than as disclosed

In the notes to the accounts no funds have been advanced or loaned orInvested (either from borrowed funds or share premium or any other sources or kind offunds) by the company to or in any other person or entity(ies) including foreign entities("intermediaries") with the understanding whether recorded in writing orotherwise that the intermediary shall whether directly or indirectly lend or invest inother 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 knowledgeand belief other than as disclosed in the notes to the accounts no funds have beenreceived by the company from any person(s) or entity(ies) including foreign entities("Funding Parties") with the understanding whether recorded in writing orotherwise that the company shall whether directly or indirectly lend or invest in otherpersons or entities identified in any manner whatsoever by or on behalf of the FundingParty ("Ultimate Beneficiaries") or provide any guarantee security or the likeon behalf of the Ultimate Beneficiaries

c. Based on such audit procedures considered reasonable and appropriatein the circumstances nothing has come to our notice that has caused us to believe thatthe representations under sub-clause (iv)(a) and (iv) (b) above contain any materialmisstatement.

v. No dividend is declared or paid during the year by the company.

ANNEXUREA

To the Independent Auditors' Report on the Standalone FinancialStatements of Gammon India Limited

(i) a. (A) The Company has generally maintained proper records showingfull particulars including quantitative details and situation of its Property Plant andEquipment.

(B) The company does not have any intangible asset therefore clause3(i)(a)(B) is not applicable.

a. Property Plant and Equipment have been physically verified by themanagement at reasonable intervals and no material discrepancies were noticed on suchverification except assets at some of their terminated sites where the access to theassets are presently restrained and the matter is under dispute. The total value of assetsat such sites is ' 2.02 crores (Net WDV).

b. We are informed by the management that all the title deeds ofimmovable properties are in custody of IDBI trusteeship Services Limited as part ofCorporate Debt Restructuring norms with the lenders. We have therefore not verified thephysical documents of immovable property and relied on the management representation andcorrespondence of the IDBI trustees as on the date of submission of documents by theCompany with them..

c. The company has not revalued its Property Plant and Equipment(including Right of Use assets) or intangible assets or both during the year.

d. On the basis of information and explanation given no proceedingshave been initiated or are pending against the Company for holding any benami propertyunder the Benami Transactions (Prohibition) Act1988 (45 of 1988) and rules madethereunder..

(ii) (a) The management has conducted physical verification ofinventory at reasonable intervals during the year except for inventories at terminatedsites valued at ' 3.63 crores. In our opinion the frequency of such verification isreasonable On the basis of examination of records we are of the opinion that the coverageand procedure of such verification is appropriate and discrepancy noted were in excess of10% in aggregate for each class of inventory and have been properly dealt with in thebooks of accounts of the Company.

(b) In our opinion and on the basis of examination of books and recordsand on the basis of information and explanation given to us the Company has beensanctioned working capital limits in excess of five crores rupees in aggregate frombanks or financial institutions on the basis of security of current assets. However thecompany has not filed quarterly returns or statements of current assets with banks orfinancial institutions as the entire facilities from the lenders have become NonPerforming Assets in the month June'17 and the Lenders have recalled all the loans andduring the year no new working capital limit was sanctioned.

(iii) (a) In our opinion and on the basis of examination of books andrecords and on the basis of information and explanation given to us the Company has madeinvestments in companies firms Limited Liability Partnerships. The Company has alsoprovided guarantee or security or granted loans or advances in the nature of loanssecured or unsecured to companies firms Limited Liability Partnerships or any otherparties details of which are given hereunder:

Particulars Guarantees Security Loans Advances in nature of loans
Aggregate amount granted /provided during the year ' 36.29 Cr
- Subsidiaries - - ' 36.29 Cr -
- Joint Ventures - -
- Associates - -
- Others - -
Balance outstanding as at balance sheet date in respect of such cases
- Subsidiaries '1651.58 Cr - ' 3138.86 Cr -
- Joint Ventures - - ' 406.63 Cr -
- Associates ' 223.56 Cr - ' 1.54 Cr -
- Others - - ' 52.40 Cr -

(b) According to the information and explanations given to us and basedon the audit procedures performed by us we are of the opinion that the investments madeguarantees provided security given and the terms and conditions of the grant of all loansand advances in the nature of loans and guarantees provided are not prejudicial to thecompany's interest.

(c) According to the information and explanations given to us and basedon the audit procedures performed by us we are of the opinion that in respect of theloans and advances in the nature of loans the schedule of repayment of principal andpayment of interest have not been stipulated.

(d) According to the information and explanations given to us and basedon the audit procedures performed by us we are of the opinion that no amount is overduefor more than ninety days since there are no stipulated repayment schedule for loans andadvances.

(e) According to the information and explanations given to us and basedon the audit procedures performed by us we are of the opinion that no loan or advance inthe nature of loan granted which has fallen due during the year has been renewed orextended or fresh loans granted to settle the overdues of existing loans given to the sameparties.

(f) According to the information and explanations given to us and basedon the audit procedures performed by us we are of the opinion that the company has notgranted any loans or advances in the nature of loans either repayable on demand or withoutspecifying any terms or period of repayment except as under:

All Parties Promoters Related Parties
Aggregate amount of loans/ advances in nature of loans
- Repayable on demand (A)
- Agreement does not specify any terms or period of repayment (B) - - ' 3547.03 crores
Total (A+B) ' 3547.03 crores
Percentage of loans/ advances in nature of loans to the total loans 98.54%

(iv) In our opinion and according to the information and explanationsgiven to us the company has complied with the provisions of section 185 and 186 of theCompanies Act 2013 with respect of loans given investment made guarantees and securitygiven.

(v) The Company has not accepted deposits from the public or amountsthat are deemed to be deposits pursuant to sections 73 to 76 or any other relevantprovisions of the Companies Act 2013 and rules framed thereunder. As informed to usthere is no order that has been passed by Company Law Board or National Company LawTribunal or Reserve Bank of India or any Court or any other tribunal in respect of thesaid sections.

(vi) As informed to us the maintenance of the cost records under thesub-section (1) of section 148 of the Companies Act 2013 has been prescribed and we areof the opinion that prima facie the prescribed accounts and records have been made andmaintained. We have not however carried out a detailed examination of the records toascertain whether they are accurate or complete.

(vii) (a) The Company has several instances of delay in depositingundisputed statutory dues including Goods and Services

Act Provident fund Employees State Insurance Income Tax Sales TaxService Tax duty of Customs duty of Excise Value Added Tax Cess and other statutorydues to the appropriate authorities during the year. On the basis of the audit proceduresfollowed test checks of the transaction and the representation from the Management thereare no undisputed amount which were outstanding as at March 312022 for a period of morethan six months from the date they became payable except as given below:

Name of the statute Nature of dues Amount (' in crores) Period to which the amount relates Due date Date of payment
Professional Tax act Profession Tax 0.13 Prior to April 21 Prior to April 21 -
Professional Tax act Profession Tax 0.06 Prior to Sep 21 Prior to Sep 21
Goods and service tax act 2017 Custom Duty Draw Back 2.07 Prior to April 21 Prior to April 21
Goods and service tax act 2017 Works Contract Tax 0.67 Prior to April 21 Prior to April 21
Goods and service tax act 2017 Sales tax payables 0.05 Prior to April 21 Prior to April 21
Employee provident fund act 1952 Provident fund 0.13 Prior to April 21 Prior to April 21
Employee provident fund act 1952 Provident fund 0.06 Prior to Sep 21 Prior to Sep 21
Income tax act 1961 Tax Deducted at source 0.72 Prior to Sep 21 Prior to Sep 21
Income tax act 1961 Tax Collected at source 0.01 Prior to Sep 21 Prior to Sep 21
Goods and service tax act 2017 Goods and Service tax 1.03 Prior to Sep 21 Prior to Sep 21

(b) According to the information and explanations given to us thereare no statutory dues referred to in sub-clause (a) which have not been deposited onaccount of any dispute except as given below:

Name of statute State Nature of dues Amount (' in Cr) Period to which the amount relates Forum where dispute is pending
The Income Tax Act 1961 Income Tax Assessment Order u/s 271(1)(c) 44.26 A.Y 2007-08 to A.Y 2011-12 CIT Appeal
The Income Tax Act 1961 Income Tax Assessment Order U/s 143(3) 63.32 A.Y 2007-08 to A.Y 2011-12 ITAT Appeal
The Income Tax Act 1961 Income Tax Assessment Order U/s 143(3) 15.00 AY 2012-13 CIT Appeal
The Income Tax Act 1961 Income Tax Assessment Order U/s 143(3) 1.14 AY 2017-18 CIT Appeal
The Income Tax Act 1961 Income Tax Assessment Order U/s 271AAA 11.94 AY 2010-11 CIT Appeal
The Income Tax Act 1961 Income Tax Assessment Order U/s 143(1) 0.03 AY 2019-20 CIT Appeal
The Income Tax Act 1961 Income Tax Assessment Order U/s 143(3) 2.13 AY 2013-14 CIT Appeal
The Income Tax Act 1961 TDS Intimation U/s 200A 9.00 AY 2007-08 to AY 2021-22 Not yet filed
The Income Tax Act 1961 TDS Intimation U/s 200A 0.07 A.Y 2008-09 to A.Y 2021-22 Not yet filed
Total 146.89
Sales Tax Act Andhra Pradesh Reassessment matter 0.04 2001-02 High Court
Sales Tax Act Andhra Pradesh Tax levied. Rule 6(3)(i) 2.10 2002-03 Tribunal / High Court
Sales Tax Act Andhra Pradesh Tax levied. Rule 6(3)(i) 1.64 2003-04 Tribunal / High Court
Sales Tax Act Andhra Pradesh Disallowance of Interstate purchase 0.24 2005-07 High Court
Sales Tax Act Andhra Pradesh Levy of Penalty 1.89 2005-07 High Court
Sales Tax Act Uttar Pradesh Taxes levied and denial of benefit of sec 3G and 3F2 b (1) 1.83 2003-04 Hon'ble High Court of Allahabad
Sales Tax Act Uttar Pradesh Taxes Levied and denial of Benefit of sec 3G and 3F2 b (1) 1.89 2004-05 Hon'ble High Court of Allahabad
Sales Tax Act Uttar Pradesh Taxes Levied and denial of Benefit of sec 3G and 3F2 b (1) 7.06 2005-06 Hon'ble High Court of Allahabad
Sales Tax Act Uttar Pradesh Taxes Levied and denial of Benefit of sec 3G and 3F2 b (1) 1.79 2006-07 Hon'ble High Court of Allahabad
Sales Tax Act Uttar Pradesh Taxes Levied and denial of Benefit of sec 3G and 3F2 b (1) 0.29 2007-08 AC Appeal
Sales Tax Act Maharashtra Denial of deduction on Pre cost component 0.06 1993-94 to 1994-95 Tribunal / A C Appeal
Sales Tax Act Maharashtra Rate Difference - WCT 0.03 2000-01 Tribunal
Sales Tax Act Maharashtra Sales-In-Transit (I.E. 6(2) Sales disallowed) 4.72 2013-14 Jt. Appeal I
Sales Tax Act Maharashtra Disallowance of WCT & BST 5.81 2000 to 2002 Jt. Appeal / Tribunal
Name of statute State Nature of dues Amount (' in Cr) Period to which the amount relates Forum where dispute is pending
Sales Tax Act Orissa Lab. and Service Charges disallowed 0.11 1992-93 to 1999-00 A C Appeal
Sales Tax Act Orissa Various disallowance 0.11 2001-02 A C Appeal
Sales Tax Act West Bengal Tax demand 6.24 1997-98 2009-10 2010-11 and 2011-12 Sr. JCT (Appellate)
Sales Tax Act West Bengal Tax demand 0.38 2008-09 Revision Board
Sales Tax Act West Bengal Tax demand 2.39 2007-08 Tribunal
Sales Tax Act West Bengal Tax Demand 0.63 2007-08 (CST) Tribunal
Sales Tax Act Rajasthan Increase in EC Fees 0.05 2007-08 Tax Law Board - Ajmer
Sales Tax Act Assam Tax demand 0.60 2004-05 Revisional Board
Total 39.89
The Finance Act 1994 Service Tax 1.73 August 2012 to January 2016 CESTAT Mumbai
The Finance Act 1994 Service Tax 0.51 April 2010 to March 2015 CESTAT Mumbai
Total 2.24

(viii) According to the information and explanations given to us and tothe best of our knowledge and belief there are no transactions that were not recorded inthe books of account and which has been surrendered or disclosed as income during theyear in the tax assessments under the Income Tax Act 1961 (43 of 1961)..

(ix) (a) According to the information and explanations given to us andbased on the audit procedures performed by us the company has defaulted in servicinginterest and principal repayment due to debenture holders financial institutions andbanks. The borrowings have become Non-Performing Assets (NPA) and lenders have recalledall the loans. The total amount of recalled debts are disclosed as current liabilitiesaggregating to ' 3813.58 crores. Details are disclosed in statement 1. The amounts ofdelays in interest servicing in respect of Rupee Term Loan FITL Priority Loan WorkingCapital Term Loan Short term Loan NCD NCD FITL CC and OD are shown in statement 2.

(b) According to the information and explanations given to us and onthe basis of our audit procedures we report that the company has not been declared wilfuldefaulter by any bank or financial institution or government or any government authority.

(c) In our opinion and according to the information and explanationsgiven to us During the year the company has not obtained any money by way of term loansduring the year.

(d) According to the information and explanations given to us and theaudit procedures performed by us and on an overall examination of the financialstatements of the company we report that no fresh funds were raised on short-term basisduring the year and therefore clause 3(ix)(d) of the Companies (Auditors Report) Order2020 is not applicable to the company.

(e) According to the information and explanations given to us and on anoverall examination of the financial statements of the company we report that the companyhas not taken any funds from any entity or person on account of or to meet the obligationsof its subsidiaries associates or joint ventures.

(f) According to the information and explanations given to us and auditprocedures performed by us we report that the company has not raised loans during theyear on the pledge of securities held in its subsidiaries joint ventures or associatecompanies.

(x) (a) The company has not raised any money by way of initial publicoffer / further public offer (including debt instruments) during the year.

(b) According to the information and explanations given to us and basedon the audit procedures performed we report that the Company has not made any preferentialallotment / private placement of shares / fully / partly / optionally convertibledebentures during the year under review.

(xi) (a) According to the information and explanations given to us andto the best of our knowledge and belief no fraud by the Company or any fraud on theCompany has been noticed or reported during the year.

(b) No report under sub-section (12) of section 143 of the CompaniesAct has been filed by us in Form ADT-4 as prescribed under rule 13 of Companies (Audit andAuditors) Rules 2014 with the Central Government and hence clause 3(xi)(b) of theCompanies (Auditors Report) Order 2020 is not applicable to the company.

(c) According to the information and explanations given to us and tothe best of our knowledge and belief no whistle-blower complaints have been receivedduring the year by the company.

(xii) The Company is not a Nidhi Company and hence clauses 3(xii)(a)3(xii) (b) and 3(xii)(c) of the Companies (Auditors Report) Order 2020 is not applicableto the Company.

(xiii) All transactions with the related parties are in compliance withsections 177 and 188 of the Companies Act 2013 in so far as our examination of theproceedings of the meetings of the Audit Committee and Board of Directors are concerned.The details of related party transactions have been disclosed in the Financial Statementsas required by the applicable Accounting Standards.

(xiv) (a) In our opinion and based on our examination the company'sinternal audit system is not commensurate with the size and nature of it business.

(b) We have considered the internal audit reports for the year underaudit issued to the company by the in-house internal audit department during the year andtill the date of the report in determining the nature timing and extent of our auditprocedures.

(xv) According to the information and explanations given to us in ouropinion during the year the company has not entered into any non-cash transactions withits directors or persons connected with its directors and hence clause 3(xv) of theCompanies (Auditor's Report) Order 2020 is not applicable to the Company .

(xvi) (a) The nature of business and the activities of the Company aresuch that the Company is not required to obtain registration under section 45-IA of theReserve Bank of India Act 1934 and hence sub-clause 3(xvi)(a) 3(xvi)(b) and 3(xvi)(c) ofthe Companies (Auditors Report) Order 2020 is not applicable to the company.

(d) According to the information and explanations given to us in ouropinion during the year the Group does not have any CICs as part of the Group

(xvii) On an examination of the Statement of Profit and Loss accountwe are of the opinion that the Company has incurred cash losses of ' 1206.94 crores incurrent financial year and ' 795.84 crores in the immediate previous financial year.

(xviii) There has been no resignation of the statutory auditors duringthe year and accordingly clause (3)(xviii) Companies (Auditors Report) Order 2020 is notapplicable to the Company.

(xix) According to the information and explanations given to us and onthe basis of the financial ratios ageing and expected dates of realization of financialassets and payment of financial liabilities other information accompanying the financialstatements our knowledge of the Board of Directors and management plans and based on ourexamination of the evidence supporting the assumptions and also our paragraph on materialuncertainty relating to going concern casting significant doubts we are of the opinionthat there exists material uncertainties in the management assumptions relating to thecompany's capability of meeting the financial liabilities existing as at the Balance sheetdate as and when they fall due within next 12 months which casts significant doubts on themanagement ability to meet the liabilities as and when they fall due.

(xx) The Company is not required to spend towards Corporate SocialResponsibility (CSR) for the year under audit and hence sub-clauses (3)(xx)(a) and3(xx)(b) of The Companies (Auditors Report) Order 2020 is not applicable to the Company.

Annexure - B to the Auditors' Report

Report on the Internal Financial Controls with reference to FinancialStatements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013("the Act")

We have audited the internal financial controls with reference toStandalone Financial Statements of Gammon India Limited ("the Company") as ofMarch 312022 in conjunction with our audit of the Standalone Financial Statement of theCompany 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 with reference tofinancial statements criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls over Financial Reporting issued by the Institute of Chartered Accountants ofIndia (‘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 of fraudsand 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 internalfinancial controls with reference to Standalone Financial Statements based on our audit.We conducted our audit in accordance with the Guidance Note on Audit of Internal FinancialControls over Financial Reporting (the "Guidance Note") and the Standards onAuditing issued by ICAI and deemed to be prescribed under section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controlsboth applicable to an audit of Internal Financial Controls and both issued by theInstitute of Chartered Accountants of India. Those Standards and the Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference toFinancial 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 system with reference to FinancialStatements and their operating effectiveness. Our audit of internal financial controlswith reference to Standalone Financial Statements included obtaining an understanding ofinternal financial controls with reference to Financial Statements assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the financial statements 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 Company's internal financialcontrols system with reference to Financial Statements.

Meaning of Internal Financial Controls with reference to FinancialStatements

A company's internal financial control with reference to FinancialStatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. A company's internalfinancial control with reference to 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 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 of unauthorisedacquisition use or disposition of the company's assets that could have a material effecton the financial statements.

Inherent Limitations of Internal Financial Controls with reference toFinancial Statements.

Because of the inherent limitations of Financial controls withreference to Financial Statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to Financial Statements to future periods are subject to the riskthat the internal financial control with reference to Financial Statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

Basis of Qualified Opinion

a) The Company has laid down internal financial controls with referenceto financial statements however its implementation and effectiveness in certain areasare affected due to severe manpower issues affecting timely preparation of financialstatements.

b) Our test of transactions revealed instances of control weaknesseswhich have inter-alia resulted from manpower and liquidity issues.

c) Internal Audit carried out by the Company was not adequateconsidering the size and operations of the Company and was required to be more extensivewith timely follow up and actions to correct the issues promptly. The internal audit hasalso revealed weaknesses in the systems and processes.

Qualified Opinion

In view of what is stated in our basis of Qualified Opinion we cannotstate that the Company has in all material respects an adequate internal financialcontrols system with reference to financial statements and such internal financialcontrols with reference to financial statements were operating effectively as at March 312022 based on the internal control over financial reporting criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India.

For Nayan Parikh & Co.

Chartered Accountants

Firm Registration No- 107023W

K N Padmanabhan

Partner

M. No. - 036410

Mumbai Dated: June 21 2022

UDIN: 22036410ALJMXT7953

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