To the Members of
HPL Electric & Power Ltd.
Report on the Audit of the Standalone Financial Statements Opinion
We have audited the financial statements of HPL ELECTRIC & POWER LIMITED ("theCompany") which comprise the balance sheet as at 31st March 2019 and the statementof Profit and Loss(including other comprehensive income) Statement of Changes in Equityand Statement of Cash Flows for the year then ended and notes to the standalone financialstatements including a summary of significant accounting policies and other explanatoryinformation (hereinafter referred to as "the standalone financial statements").
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 the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31stMarch 2019 its profit/loss 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 Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.
|The key audit matters ||How the matter was addressed in our audit |
|Revenue recognition Fixed price development contracts ||Principal Audit Procedures |
|Estimated effort is a critical estimate to determine revenue and liability for onerous obligations. This estimate has a high inherent uncertainty as it requires consideration of progress of the contract efforts incurred till date and efforts required to complete the remaining contract performance obligations. ||Our audit approach was a combination of test of internal controls and substantive procedures which included the following: |
|Refer note no 2(H) of the standalone financial statements ||Evaluated the design of internal controls relating to recording of efforts incurred and estimation of efforts required to complete the performance obligations. |
| ||Tested the access and application controls pertaining to time recording allocation and budgeting systems which prevents unauthorized changes to recording of efforts incurred. |
| ||Selected a sample of contracts and through inspection of evidence of performance of these controls tested the operating effectiveness of the internal controls relating to efforts incurred and estimated. |
| ||Selected a sample of contracts and performed a retrospective review of efforts incurred with estimated efforts to identify significant variations and verify whether those variations have been considered in estimating the remaining efforts to complete the contract. |
| ||Reviewed a sample of contracts with unbilled revenues to identify possible delays in achieving milestones which require change in estimated efforts to complete the remaining performance obligations. |
| ||Performed analytical procedures and test of details for reasonableness of incurred and estimated efforts. |
|Adoption of Ind AS 115 Revenue from Contracts with Customers ||Principal Audit Procedures |
|As described in Note 2(H) to the standalone financial statements the Company has adopted Ind AS 115 Revenue from Contracts with Customers (Ind AS 115') which is the new revenue accounting standard. The application ||Our audit procedures on adoption of Ind AS 115 Revenue from contracts with Customers (Ind AS 115') which is the new revenue accounting standard include |
|and transition to this accounting standard is complex and is an area of focus in the audit. ||Evaluated design and implementation of the processes and internal controls relating to implementation of the new revenue accounting standard; |
|The revenue standard establishes a comprehensive framework for determining whether how much and when revenue is recognized. This involves certain key judgments relating to identification of distinct ||Evaluated the detailed analysis performed by management on revenue streams by selecting samples for the existing contracts with customers and considered revenue recognition policy in the current period in respect of those revenue streams; |
|performance obligations determination of transaction price of identified performance obligation the appropriateness of the basis used to measure revenue recognized over a period. Additionally the standard mandates robust disclosures in respect of revenue and periods over which the remaining performance ||Evaluated changes made IT systems to reflect the to changes required in revenue recognition as per the new accounting standard; |
| ||Evaluated the cumulative effect adjustments as at 1 April 2018 for compliance with the new revenue standard; and |
|obligations will be satisfied subsequent to the balance sheet date. ||Evaluated the appropriateness of the disclosures provided under the new revenue standard and assessed the completeness and mathematical accuracy of the relevant disclosures. |
|The Company adopted Ind AS 115 and applied the available exemption provided therein to not restate the comparative periods. || |
|Evaluation of uncertain tax positions ||Principal Audit Procedures |
|The Company operates in multiple jurisdictions and is subject to periodic challenges by local tax authorities on a range of tax matters during the normal course of business including indirect tax matters. These involve significant management judgment to determine the possible outcome of the uncertain tax positions consequently having an impact on related accounting and disclosures in the standalone financial statements. ||Our audit procedures include the following substantive procedures: |
| ||Obtained understanding of key uncertain tax positions; and |
| ||We along with our internal tax experts - |
| ||Read and analyzed select key correspondences external legal opinions / consultations by management for key uncertain tax positions; |
| ||Discussed with appropriate senior management and evaluated management's underlying key assumptions in estimating the tax provisions; and |
| ||Assessed management's estimate of the possible outcome of the disputed cases; |
The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the standalone financial statements and our auditors'report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.
Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial Statements
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 ofthese financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the accounting Standards specified undersection 133 of the Act. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error. In preparing the financialstatements management is responsible for assessing the Company's ability to continue as agoing concern disclosing as applicable matters related to going concern and using thegoing concern basis of accounting unless management either intends to liquidate theCompany or to cease operations or has no realistic alternative but to do so.
Boards of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone 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 SAs weexercise professional judgment and maintain professional skepticism throughout the audit.We also:
Identify and assess the risks of material misstatement of the
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.
Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theCompanies Act 2013 we are also responsible for expressing our opinion on whether thecompany has adequate internal financial controls system in place and the operatingeffectiveness of such 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 financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the
financial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation. We communicate with those charged with governance regarding among othermatters the planned scope and timing of the audit and significant audit findingsincluding any significant defficiencies in internal control that we identify during ouraudit. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards. From the matters communicatedwith those charged with governance we determine those matters that were of mostsignificance in the audit of the financial statements of the current period and aretherefore the key audit matters. We describe these matters in our auditor's report unlesslaw or regulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the Annexure A' a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
(A) As required by Section 143 (3) of the Act we report that: a) We have sought andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purposes of our audit. b) In our opinion proper books ofaccount as required by law have been kept by the Company so far as it appears from ourexamination of those books. c) The Balance Sheet the Statement of Profit and Loss and theCash Flow Statement dealt with by this Report are in agreement with the books of account.d) In our opinion the aforesaid financial statements comply with the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. e) On the basis of the written representations received from the directors ason 31st March 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 controlsover financial reporting of the Company and the operating effectiveness of such controlsrefer to our separate Report in Annexure B'.
(B) 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. TheCompany has disclosed pending litigations and the impact on its financial position - refernote 44 to the Standalone Financial Statements. ii. The Company has made provision asrequired under the applicable law or accounting standards for material foreseeablelosses if any on long-term contracts including derivative contracts. iii. There has beenno delay in transferring amounts required to be transferred to the Investor Educationand Protection Fund by the Company.
(C) With respect to the matter to be included in the Auditors' Report under section197(16):
In our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under Section 197(16) which arerequired to be commented upon by us.
| ||For Kharabanda Associates |
| ||Chartered Accountants |
| ||FRN: 003456N |
| ||Sunil Kharabanda |
|Place : Noida ||Proprietor |
|Date : 20th May 2019 ||M. No. 082402 |