TO THE MEMBERS OF
INDOWIND ENERGY LIMITED
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of Indowind Energy Limited("the Company") which comprise the balance sheet as at 31March 2020 and thestatement of Profit and Loss (including other comprehensive income) statement of changesin equityand 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 usexcept for the effectsof the matters described in the Basis for QualifiedOpinion section of our reportthe 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 theIndian 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 2020and its profit total other comprehensive income the changes in equity and its cash flowsfor the year ended on that date.
Basis for Qualified Opinion
i) a) We draw attention regarding impact on the Profit for the quarter and year endedMarch 31 2020 where there is a legal dispute between the Company and the Exim Bank onnon-release of the balance loan of $12.11million as per the initial agreed terms and thematter is pending before Honourable High Court of Bombay. The Company has provided for theinterest on the EXIM loan @4.4% (quarterly rests) after adjusting the fixed depositdifferential interest on fixed deposit and excess processing fee as against the 16%(monthly rests) rate of interest charged by the bank. The entire interest including thepenal and additional interest for the year ended March 312020 amounts to 1480.03 lakhswhich is determined based on the closing balance confirmation of EXIM bank. Accordinglyhad the interest including the penal and additional interest been provided in line withthe bank in the financial results the loss before exceptional items and tax for the yearended March 312020 would have been higher by 1169.02 lakhs. Our opinion dated May 302019on the standalone financial results for the year ended March 312019 and our review reportdated February 142020 on the standalone and consolidated financial results for thequarter ended December 312019 was also qualified in respect of this matter.
b) We refer to Note 28 to the accompanying Statement the Company has recognisedinterest income to the tune of 564.47 lakhs and the same was adjusted in EXIM loanoutstanding in the financial results for the year ended March 312020. As the outcome ofthe case as referred above in point number (i)(a) is uncertain at this stage therecognition of Contingencies in financial results is not in accordance with recognitionand measurement principles laid down in the applicable Indian Accounting Standardsprescribed under section 133 of the Companies Act 2013. Accordingly had the interestincome not been recognised the profit before tax for the year ended March 312020 wouldhave been lower by 564.47 lakhs.
c) We refer to Note 16 to the accompanying Statement the Company's Long-termborrowings includes 7116.66 lakhs as at March 312020 representing the loan outstanding(principal and interest dues) obtained from EXIM bank. However the closing balanceconfirmation of EXIM bank reflects 9505.97 lakhs as the total outstanding (principal andinterest dues) as at March 312020.The Company has adjusted the fixed deposits chargedagainst the loan from EXIM bank to the tune of 401.24 lakhs towards the principaloutstanding during the year ended March 312020 whereas the bank had adjusted for 365.35lakhs on February 222019 against the interest overdues. The derecognition of financialliability in part is not in accordance with the requirements of Ind AS 109 FinancialInstruments'. The Long term borrowings reflected under the Non-Current liabilities hasbeen understated in the Statement to the tune of 2389.31 lakhs as at March 312020.
d) We refer to Note 7 to the accompanying Statement the Company has accounted forreduction in the unamortized interest expense reflected under Other non-current financialassets to the extent of 46.74 lakhs which was adjusted in EXIM loan outstanding in thefinancial results for the year ended March 312020.The Company has taken a stand that theprocessing fees booked at the time of initial sanction of loan was based on the totalamount sanctioned by the EXIM bank and 50% of the same has to be reversed since the entiresanctioned amount has not been released by the EXIM bank. However there is no such clausementioned in the terms and conditions stipulated in the sanction letter of the EXIM bank.Hence the stand taken by the Company for reversal of the processing fees by 50% is notcorrect.The Company has accounted for amortization of processing fee under finance costwhich is less by 12.42 lakhs due to this reversal. Accordingly had the reversal not beendone the loss before exceptional items and tax would have been more by 12.42 lakhs andother non-current financial assets is understated by 46.74 lakhs.
e) The EXIM bank has recalled the loan vide letter reference No: EXIM: ChRO:408:2018-19 dt: Jan 232019 for total of USD 12.12 million towards Principal outstandingInterest overdue and liquidated damages as on December 312018. In the event of theCompany not able to repay the loan recalled then the bank can recover from the 8 MW WEGsmovable fixed assets on which the bank is having first charge by way of hypothecationagainst the loan sanctioned. These assets are the one which generate the income to servicethe loan and accordingly will have impact on the company's ability to continue as a goingconcern. Our opinion dated May 302019 on the standalone financial results for the yearended March 312019 was also qualified in respect of this matter.
ii) We refer to Note 4 to the accompanying Statement the Company's Capital advancesshown under Property Plant & Equipment under Non-Current Asset of 3398.99 lakhs whichis related to the compensation claim from Suzlon Energy Ltd for non-performance of themachines purchased by the Company. The Honourable High Court of Madras (Single bench) haspassed an order on 26.11.2019 setting aside the Arbitral Award dated 22.07.2017 which waspassed in favour of the Company. The Company has filed an appeal with the Honourable HighCourt of Madras (Division bench) against the order referred above. In view of theuncertainty associated with the outcome of the case we are unable to comment on therecoverability of the claim made by the Company. Our opinion dated May 302019 on thestandalone financial results for the year ended March 312019 was also qualified inrespect of this matter.
iii) We refer to Note 8 to the accompanying Statement the Company has othernon-current assets with related parties of 1547.52 lakhs receivable in respect of sale ofmachines (2.50 MW consisting of 9 Machines) and expenses incurred with respect to makechange / repowering of the 1.5 MW capacity. The repowering of the balance 1 MW is stillpending and the Company has estimated that an amount of 250 lakhs is required to completethe repowering of the same. A condition was also stipulated in the agreement that thisamount will be paid in 2 to 3 years' time without any interest from the date of theCompany completing the repowering of the 2.5 MW project. Hence the provision is required.However the management is of the view that the repowering of balance 1 MW will be carriedout to make them in working condition and also collect part of the amount in the comingfinancial year. Our opinion dated May 302019 on the standalone financial results for theyear ended March 312019 was also qualified in respect of this matter.
iv) We refer to Note 10 to the accompanying Statement the Company has tradereceivables to the tune of 394.59 lakhs out of which 228.96 lakhs relates to Interestrecoverable from TNEB Thirunelveli and BESCOM. The amount is lying as receivable for morethan 3 years. As both are the Government entities the collection of the said amount wasexpected to be certain. The Company has filed the petition before the Honourable TamilNadu Electricity Regulatory Commission claiming the interest recoverable from TNEBThirunelveli for which the outcome is unascertainable at this stage. In our opinion thechance of recoverability is low and the provision shall be made for the same. Had theprovision been made in the financial results the loss before exceptional items and taxfor the year ended March 312020 would have been higher by 228.96 lakhs and the tradereceivables is overstated by 228.96 lakhs. We conducted our audit in accordance with theStandards on Auditing (SAs) specified under section 143(10) of the Companies Act 2013.Our responsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport.
We are independent of the Company in accordance with the Code of Ethics issued by theInstitute of Chartered Accountants of India together with the ethical requirements thatare relevant to our audit of the financial statements under the provisions of the Act 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 for ourqualified opinion.
Material Uncertainty related to Going Concern
We draw attention to the Note 16 of the accompanying Statement which reflects the FCCBEquity portion. The company is the defendant in a legal case filed vide C.P.No.172 of 2011by the Trustees of the Foreign Currency Bond Holders (FCCB) for winding up of the Companybefore the Honourable High court of Madras. It is pertinent to note that the HonourableHigh Court of Madras has passed an order dated 20.05.2020 admitting the winding uppetition and also the Company is restrained from transferring alienating encumbering ordealing with its immovable assets. The Company has filed an appeal with the Division Benchof the Honourable High Court of Madras with the Prayer for order of Interim Stay of allfurther proceedings in pursuance to the Judgment passed on 20.05.2020.
The above indicates that a material uncertainty exists that may cast significant doubton the Company's ability to continue as a going concern. However based on the appealfiled as referred abovemanagement is of the view that going concern basis of accountingis appropriate.
Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters. We have determined the matters described below to be the key audit mattersto be communicated in our report.
|Key Audit Matters ||Auditor's Response |
|Evaluation of key tax matters ||Principal Audit Procedures |
|The Company has material uncertain tax positions including matters under dispute which involves significant judgement to determine the possible outcome of these disputes. ||Our audit procedures include the following substantive procedures: |
| || Obtained an understanding of key tax matters; and |
|Refer Note.36to the financial statements. || The audit team along with our internal tax experts - Read and analysed select key correspondences consultations obtained by the management for key tax matters; |
| || Discussed with appropriate senior management and evaluated management's underlying key assumptions in estimating the tax provisions; and |
| || Assessed the management's estimate of the possible outcome of the disputed cases by considering legal precedence and other judicial rulings. |
|Recoverability of Indirect tax receivables || |
|As at March 312020 other non-current financial assets in respect of cenvat credit recoverable amounting to Rs.13.17 lakhs. ||We have involved our internal experts to review the nature of the amounts recoverable the sustainability and the likelihood of recoverability of the same. |
|Refer Note.7 to the Standalone financial statements. || |
Emphasis of Matter
We draw attention to:
Note 11 to the accompanying Statement in the absence of confirmations from theconcerned banks we are unable to comment about the correctness of balances grouped underbalance with banks to the extent of 3.78 lakhs.
Our opinion is not modified in respect of this matter.
Information other than the financial statements and auditor's report thereon
The Company's Board of directors are responsible for the other information. The otherinformation comprises Board's Report Report on Corporate governance and Businessresponsibility report but does not include the standalone financial statements and ourauditor's 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 during the course of our 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.
Management's responsibility for the financial statements
The Company'sBoard of Directors is responsible for the matters stated in section 134(5)of the Act with respect to the preparation of these standalone financial statements thatgive a true and fair view of the financial position financial performance including othercomprehensive income changes in equityand cash flows of the Company in accordance withtheaccounting principles generally accepted in India including the Indian accountingStandards (Ind AS)prescribed 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 orerror. In preparing the standalone financial statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters relatedto 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 doso. The Board of Directors are alsoresponsible for overseeing the Company's financial reporting process.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financialstatements. As part of an audit inaccordance with SAs we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness of suchcontrols.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made bymanagement.
Conclude on the appropriateness of management's use of the going concern basisofaccounting 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 goingconcern.
Evaluatetheoverallpresentationstructureandcontentofthefinancialstatementsincluding the disclosures and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fairpresentation.
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 relatedsafeguards. From the matters communicated withthose charged with governance we determine those matters that were of most significancein the audit of the financial statements of the current period and are therefore the keyaudit matters. We describe these matters in our auditor's report unless law or regulationprecludes public disclosure about the matter or when in extremely rare circumstances wedetermine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interestbenefits 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 Section 143(11) of the Act we givein "Annexure A" a statement on the matters specified in paragraphs 3 and 4 ofthe Order.
2) As required by Section 143(3) of the Act based on our audit we reportthat:
(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 ouraudit.
(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 including other comprehensiveincomethe statement of changes in Equity and the Statement of Cash Flows dealt with bythis Report are in agreement with the books of account.
(d) In our opinion the aforesaid standalone financial statements comply with the IndAS specified under Section 133 of the Act.
(e) On the basis of the written representations received from the directors as on31March 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31March 2020 from being appointed as a director in terms of Section 164(2) of the Act.
(f) With respect to the adequacy of the internal financial controls over financialreporting of the Companyand the operating effectiveness of such controls refer to ourseparate Report in "Annexure B". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
(g) With respect to the other matters to be included in the Auditor's Report inaccordance withrequirements of Section 197(16) of the Act as amended in our opinion andto the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe provisions of section 197 of the Act.
(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 tous:
i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements Refer Note 36to the financial statements.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
Further to the continuous spreading of COVID -19 across India the Indian Governmentannounced a strict 21-day lockdown on March 24 2020 which was further extended till June30 2020 across the India to contain the spread of the virus. This has resulted inrestriction on physical visit to the client locations and the need for carrying outalternative audit procedures as per the Standards on Auditing prescribed by the Instituteof Chartered Accountants of India (ICAI).
As a result of the above the part of the audit was carried out based on remote accessof the data as provided the management. This has been carried out based on the advisory on"Specific Considerations while conducting Distance Audit/ Remote Audit/ Online Auditunder current Covid-19 situation" issued by the Auditing and Assurance StandardsBoard of ICAI. We have been represented by the management that the data provided for ouraudit purposes is correct complete reliable and are directly generated by the accountingsystem of the Company without any further manual modifications.
We bring to the attention of the users that the audit of the Statement has beenperformed in the aforesaid conditions.
Our audit opinion is not modified in respect of the above.
|For Sanjiv Shah & Associates || |
|Chartered Accountants || |
|Firm's Registration Number: 003572S || |
| ||Membership Number: 209035 |
|Place: Chennai || |
|Date: 07August 2020 || |
Annexure "A" to Independent Auditors' Report
(Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements' section of our report to the members of Indowind Energy Limited of evendate)
a. The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant & equipment.
b. The Company has a regular programme of physical verification of its property plant& equipment under which property plant & equipment are verified in a phasedmanner over a period of three years. In accordance with this programme certain propertyplant & equipment were verified during theyearandnomaterial discrepancies were noticedon such verification. In our opinion this periodicity of physical verification isreasonable having regard to the size of the company and the nature of its assets.
c. According to the information and explanations given to us the records examined byus and based on the examination of the conveyance deeds provided to us we report thatthe title deeds comprising allthe immovable properties of land and buildings which arefree hold are held in the name of the Company as at the balance sheet date.
ii. According to the information and explanation given to us the physical verificationof the inventory has been conducted at the reasonable intervals by the management andthere have been no material discrepancies noticed during such verification.
iii. According to the information and explanation given to us the Company has notgranted any loan secured or unsecuredto Companies Firms Limited Liability Partnershipsor other parties covered in the register required under section 189 of the Companies Act2013 .Accordingly the provisions of Clause 3(iii)(a)(b) and (c) of the order are notapplicable to the Company.
iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act with respectto the loans and investments made.
v. In our opinion and according to the information and explanations given to us theCompany has not accepted any deposit from the public in accordance with the provisions ofsection 73 to 76 or any other relevant provisions of the Act and the rules framed thereunder. Accordingly paragraph 3(v) of the Order is not applicable to the Company.
vi. The Central Government has not prescribed the maintenance of cost records undersection 148(1) of the Act for any of the services rendered by the Company.
vii. According to the information and explanations given to us in respect of statutorydues:
a. According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/accrued in the books ofaccount in respect of undisputed statutory dues including Provident fund Employees StateInsuranceIncome-tax Goods and Service tax Customs Dutycessand other material statutorydues have been generally regularly deposited during the year by the Company with theappropriate authorities taking into account the extended due dates notified by therespective authorities in view of Covid'19 impact.
b. According to the information and explanations given to us no undisputed amountspayable in respect of Provident fund Employees State Insurance Income-tax Goods andService tax Customs Duty cess and other material statutory dueswere in arrears as at31March2020for a period of more than six months from the date they became payable takinginto account the extended due dates notified by the respective authorities in view ofCovid'19 impact.
c. Details of dues of Income Tax which have not been deposited as on 31stMarch 2020 on account of disputes are given below:
|Statute ||Nature of dues ||Amount (Rs.) in Lakhs ||Period to which the amount relates ||Forum where the dispute is pending |
| || ||27.00 ||A.Y. 1998 1999 ||First appellate authority Commissioner of income tax appeals |
| || ||144.95 ||A.Y. 2006 2007 ||Third appellate authority High Court of Madras |
|Income Tax Act1961 ||IT Matters under dispute ||449.62 ||A.Y. 2007 2008 ||Third appellate authority High Court of Madras |
| || ||31.33 || || |
| || ||1.81 || ||First appellate authority |
| || ||(S.14A-under regular and mat) ||A.Y. 2009 2010 ||Commissioner of income tax appeals |
| || || || ||Second appellate authority |
| || ||310.89* ||A.Y. 2013 2014 ||Income Tax |
| || ||(Tax effect-NIL) || ||Appellate tribunal |
* Additions amount made in the assessment
There are no dues of Sales Tax Service Tax Excise Duty Customs Duty Value Added Taxand Goods and Service Tax which have not been deposited on account of disputes.
viii. According to the information and explanations given to us and records examined byus the details of default as claimed by the EXIM bankin repayment of borrowings as atMarch 312020 are given below.
Details of default in payment of dues to banks:
|Name of the Bank ||Nature of default ||Amount of default (in lakhs) ||Period of default ||Remarks |
|EXIM bank ||Principal and interest outstanding (including penal additional and interest) ||9505.97 ||April 2019 to March 2020 ||As claimed by the company the entire income from the project funded by the bank is remitted towards the loan account as per TRA. The company has also filed an application vide suit No. COMSL 118/2019 before the Honourable High Court of Bombay with prayers which include release of balance undisbursed sanctioned loan amount of $ 12.11 million to declare the bank letter dated 19.11.2018 categorizing the plaintiff loan account as NPA as illegal and bad in law to direct that the terms relating to repayment of part disbursal contained in the loan agreement dated 18.01.2011 are to be restructured /rescheduled/brought in line with receivables being credited in the TRA account created under TRA dated 15.10.2013 to restrain the bank by an Order from recalling the loan and proceeding pursuant to bank's letter dated 19.11.2018 and 23.01.2019. The matter being sub-judice we are unable to offer any comments. |
The company has not availed any loans/borrowings from financial institutionsgovernment and has not issued any debentures during the year.
ix. The Company has not raised any money by way of initial public offer or furtherpublic offer (including debt instruments) and has not taken any term loans during theyear. Accordingly paragraph 3(ix) of the Order is not applicable.
x. To the best of our knowledge and according to the information and explanations givento us no fraud by the Company or no material fraud onthe Company by its officers oremployees has been noticed or reported during the year.
xi. According to the information and explanations give to us the Company haspaid/provided managerial remuneration in accordance with the requisite approvals mandatedby the provisions of section197read with Schedule V to the Act.
xii. In our opinion the Company is not a Nidhi company. Accordingly paragraph3(xii)of the Order is not applicable.
xiii. 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 sections177and188 of the Actwhere applicable andthe details of suchtransactions have been disclosed in the standalone IndAS financial statements as requiredby the applicable Indian accounting standards.
xiv. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly paragraph 3(xiv) of the Order is not applicable.
xv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered in to non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv)ofthe Order is not applicable.
xvi. According to the information and explanations given to us and based on ourexamination of the records of the Company the company is not required to be registeredunder section 45-IA of the Reserve Bank of India Act1934.
| ||For Sanjiv Shah & Associates |
| ||Chartered Accountants |
| ||Firm's Registration Number: 003572S |
| ||CA G Ramakrishnan |
| ||Partner |
| ||Membership Number: 209035 |
|Place: Chennai || |
|Date: 07 August 2020 || |
Annexure "B" to the Independent Auditors' Report
(Referred to in paragraph 2 (f) under Report on other legal and regulatoryrequirements' section of our report to the Members of Indowind Energy Limited of evendate)
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of IndowindEnergy Limited ("the Company") as of March 31 2020 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.
Management's Responsibility for Internal Financial Controls
The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India ("theICAI"). These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.
Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of
Internal Financial Controls Over Financial Reporting (the "Guidance Note")issued by the Institute of Chartered Accountants of India and the standards on auditingprescribed under Section 143 (10) of the Companies Act 2013 to the extent applicable toan audit of internal financial controls. 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 over financialreportingwere established and maintained and if such controls operated effectively in allmaterial respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the
Standalone financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles.A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3)Provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion and according to the information and explanations given to us thecompany has in all material respects an adequate internal financial controls system overfinancial reportingand such internal financial controls over financial reportingwereoperating effectively as at March 31 2020 based on the internal control over financialreportingcriteria 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.
We bring to the attention of the users that the audit of the internal financial controlsystem over financial reporting and the operating effectiveness of such internal financialcontrols over financial reporting has been performed remotely in the conditions more fullyexplained in the Other Matters paragraph of our Independent Audit Report on the audit ofthe Standalone financial statements.
Our opinion on the internal financial control system over financial reporting is notmodified in respect of the above.
| ||For Sanjiv Shah & Associates |
| ||Chartered Accountants |
| ||Firm's Registration Number: 003572S |
| ||CA G Ramakrishnan |
|Place: Chennai ||Partner |
|Date: 07 August 2020 ||Membership Number: 209035 |