KSK Energy Ventures Ltd.
|BSE: 532997||Sector: Infrastructure|
|NSE: KSK||ISIN Code: INE143H01015|
|BSE 00:00 | 15 Jan||KSK Energy Ventures Ltd|
|NSE 05:30 | 01 Jan||KSK Energy Ventures Ltd|
|BSE: 532997||Sector: Infrastructure|
|NSE: KSK||ISIN Code: INE143H01015|
|BSE 00:00 | 15 Jan||KSK Energy Ventures Ltd|
|NSE 05:30 | 01 Jan||KSK Energy Ventures Ltd|
The Members of
KSK Energy Ventures Limited
We have audited the accompanying Consolidated Ind AS financial statements of KSKEnergy Ventures Limited ("the Holding Company") and its subsidiaries (theHolding Company and its subsidiaries together referred to as the "Group") whichcomprises of the Consolidated Balance Sheet as at March 31 2019 the ConsolidatedStatement of Profit and Loss (including other Comprehensive income) the Consolidatedstatement of Cash Flows and the Consolidated Statement of Changes in Equity for the yearthen ended and a summary of significant accounting policies and other explanatoryinformation (hereinafter referred to as 'Consolidated Ind AS financial statements').
In our opinion and to the best of our information and according to the explanationsgiven to us and based on the consideration of reports of the other auditors on separatefinancial statements of subsidiaries and associates referred to in the Other Matterssection below except for the effects of the matter described in the Basis for QualifiedOpinion section of our report the aforesaid consolidated 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 principles generallyaccepted in India of the consolidated state of a airs of the Group as at 31st March2019 and their consolidated loss their consolidated total comprehensive income theirconsolidated changes in equity and their consolidated cash flows for the year ended onthat date.
Basis for Qualified Opinion:
We draw your attention towards a. Note no.31(ii) of the Consolidated Ind AS FinancialStatements regarding non-accrual of interest by the parent along with its subsidiaries onvarious credit facilities from bank & Financial Institutions subsequent to accountsbecoming NPA which is not in accordance with generally accepted Accounting principles.
The Estimated interest not provided for from 1st April 2018 to 31st March2019 workedout to an amount of Rs. 2233.81 Million. Due to non-recognition of interest asexpenditure loss for the current financial year and the other current financialliabilities are understated by Rs Rs. 2233.81 million.
b. Note no. 43 of the Consolidated Ind AS Financial Statements regarding invocation ofthe pledged shares of KSK Mahanadi Power Company Limited (KMPCL) an associate of theParent pledged by the Group with Consortium lenders as Security Trustee for the financialassistance granted by lenders to KMPCL.
Consequent to the above the Group has derecognised the related carrying values ofassets and liabilities of KMPCL along with its subsidiaries i.e. KSK Water InfrastructuresPrivate Limited ('KWIPL') Sai Power Pte Ltd ('SPPL') and associate i.e. Raigarh ChampaRail Infrastructure Private Limited ('RCRIPL') with effect from 27th March 2018. Pursuantto this the residual investments retained in KMPCL are recognised in accordance with INDAS 28 - Investments in Associates and Joint Ventures. The Group continue to carryremaining advances and amount receivable amounting to Rs. 26881.65 million pursuant tothe invocation at carrying value and no provision has been considered in these financialstatements by the management as impact if any is currently unascertainable.
c. Note no.45 of the Consolidated Ind AS Financial Statements regarding implementationof change in Management and restructure the debt under Outside Strategic DebtRestructuring Scheme ("OSDR") by lenders of VS Lignite Power Private Limited('VSLPPL') as per the RBI guidelines. However RBI notification dated 12th February 2018repealed all debt restructuring schemes (including OSDR) and directed lenders to implementany debt structuring as per the revised guidelines. VSLPPL is in active discussion withlenders to work out resolution plan by way of change of control.
The Group continues to carry remaining Investment of Rs. 816 million and no provisionhas been considered in these financial statements by the management as impact if any iscurrently unascertainable.
d. Note no. 2.4 of the Consolidated Ind AS Financial Statements wherein the Group hasincurred net loss during the current year as well in the previous years with resultantdefaults in payment of interest and instalment dues to banks and financial institutions.Further as discussed at notes no. 43 and 45 of the Statement the Group has residualinvestments and receivables pursuant to invocation of shares. Further the underlyingpower generation assets also continue to face significant headwinds with resultant lossesand defaulted in payment of interest and instalments dues to banks and financialinstitutions thereby materially a ecting the downstream investments and recoveriesthereto.
These conditions along with matters set forth in clauses (a) (b) and (c) aboveindicate the existence of material uncertainties which may cast significant doubt on theParent's ability to continue as going concern. However the statement has not beenprepared with such adjustments and management continues to prepare the financialstatements as going-concern.
Emphasis of Matter paragraph:
We draw your attention towards:
a. Note no. 44 of the Statement regarding invocation of the pledged shares of SaiWardha Power Generation Limited ("SWPGL") pledged by the Group in favour of thelenders of SWPGL. Subsequent to invocation of pledged shares financial creditor of SWPGLhave led the petition for a Corporate Insolvency Resolution process ("CIRP")under the Insolvency and Bankruptcy Code 2016 at National Company Law Tribunal Hyderabad("NCLT") and same has been admitted by NCLT on 9th November 2018.
Pursuant to this Group has lost significant influence over SWPGL and consequently theGroup has impaired remaining amount receivable of Rs. 2163.72 million and disclosed underexceptional item.
b. Note no.8 of the Statement regarding filing of petition for a Corporate InsolvencyResolution Process ("CIRP") by the financial creditors of Sai Regency PowerCorporation Private Limited ("SRPCPL") and the same has been admitted by NCLT on27th March 2019. Consequent to this the Group has lost control over the subsidiary andhas derecognised the related carrying values of assets and liabilities of SRPCPLresulting in Group recording a net loss of Rs. 675.83 million which has been included asan 'exceptional item' in the consolidated financial statements.
Our opinion is not modified in respect of above matters.
Key Audit Matters:
Key Audit Matters ('KAM') are those matters that in our professional judgment were ofmost Significance in our audit of the Consolidated Ind AS financial statements of thecurrent period. These matters were addressed in the context of our audit of the Ind ASfinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.
Except for those matters described in the Basis for Qualified Opinion section we havedetermined that there are no other key audit matters to communicate in our report.
Information Other than the consolidated Ind AS Financial Statements and Auditor'sReport Thereon
? The Holding Company's Board of Directors is responsible for the other information.The other information comprises the information included in the Management Discussion andAnalysis Board's Report including Annexure to Board's Report Business responsibilityreport and Shareholder's Information but does not include the consolidated financialstatements Standalone financial statements and our auditor's report thereon.
? Our opinion on the financial statements does not cover the other information and wedo not express any form of assurance conclusion.
? In connection with our audit of the consolidated financial statements ourresponsibility is to read the other information compare with the financial statements ofthe subsidiaries joint ventures and associates audited by the other auditors to theextent it relates to these entities and in doing so place reliance on the work of theother auditors and consider whether the other information is materially inconsistent withthe consolidated financial statements or our knowledge obtained during the course of ouraudit or otherwise appears to be materially misstated. Other information so far as itrelates to the subsidiaries and associates is traced from their financial statementsaudited by the other auditors.
? If based on the work we have performed we conclude that there is a materialmisstatement of this other information; we are required to report that fact. We havenothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the ConsolidatedInd AS Financial Statements:
The Holding Company's Board of Directors is responsible for the matters stated insection 134(5) of the Companies Act 2013("the Act") with respect to thepreparation of these consolidated financial statements that give a true and fair view ofthe consolidated financial position consolidated financial performance including othercomprehensive income consolidated changes in equity and consolidated cash flows of theGroup including its Associates in accordance with the Ind AS and other accountingprinciples generally accepted in India. The respective Board of Directors of the companiesincluded in the Group and of its associates are responsible for maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Group and its associates and its joint ventures and for preventing anddetecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror which have been used for the purpose of preparation of the consolidated financialstatements by the Directors of the Holding Company as aforesaid.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
The respective Board of Directors of the companies included in the Group and of itsassociates are also responsible for overseeing the financial reporting process of theGroup and of its associates.
Auditor's Responsibilities for the audit of the Consolidated Ind AS FinancialStatements:
Our objectives are to obtain reasonable assurance about whether the consolidated Ind ASfinancial 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 consolidated Ind AS financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated Ind ASfinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
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 ability ofthe Group and its associates and joint ventures to continue as a going concern. If weconclude that a material uncertainty exists we are required to draw attention in ourauditor's report to the related disclosures in the consolidated financial statements orif such disclosures are inadequate to modify our opinion. Our conclusions are based onthe audit evidence obtained up to the date of our auditor's report. However future eventsor conditions may cause the Group and its associates to cease to continue as a goingconcern.
Evaluate the overall presentation structure and content of the Ind AS financialstatements including the disclosures and whether the Ind AS financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
Obtain sufficient appropriate audit evidence regarding the financial information of theentities or business activities within the Group of which we are the independent auditorsand whose financial information we have audited to express an opinion on the consolidatedInd AS financial statements. We are responsible for the direction supervision andperformance of the audit of the financial statements of such entities included in theconsolidated Ind AS financial statements of which we are the independent auditors. For theother entities included in the consolidated Ind AS financial statements which have beenaudited by other auditors such other auditors remain responsible for the directionsupervision and performance of the audits carried out by them. We remain solelyresponsible for our audit opinion.
We communicate with those charged with governance of the Holding Company and such otherentities included in the consolidated Ind AS financial statements of which we are theindependent auditors regarding among other matters the planned scope and timing of theaudit and significant audit findings including any significant deficiencies in internalcontrol that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the Consolidated Ind AS 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.
The consolidated Ind As financial statement includes financial statement of 19subsidiaries and financial information of 3 associates.
We did not audit the financial statements of 16 subsidiaries whose financial statementsreflect total assets of Rs. 14310.13 million as at 31st March 2019 total Net assets ofRs. (6937.26) million as at 31st March 2019 total revenues of Rs.2322.08 million andtotal net profit / (loss) after tax of Rs.(5879.70) million as considered in thestatement. The statement also include the Group's share of total comprehensive income(comprising of loss and other comprehensive income) of Rs.(5877.38) million for the yearended 31st March 2019. Those financial Statements have been audited by other auditorswhose reports have been furnished to us by the Management and our opinion on statement inso far as it relates to the amounts and disclosures included in respect of thesesubsidiaries and associate is based solely on the reports of the other auditors.
The consolidated financial results includes the unaudited financial statements of 3foreign subsidiaries whose financial statements reflect total assets of Rs. 1189.10million as at 31st March 2019 total net assets of Rs. (15.52) million as at 31st March2019 total revenue of Rs. 3.8 million and total net profit/(loss) after tax of Rs.3.33million for the year ended on that date and total comprehensive income of Rs.3.33 millionas considered in the consolidated financial results. These financial statements areunaudited and have been furnished to us by the Management and our opinion on theStatement in so far as it relates to the amounts and disclosures included in respect ofthese subsidiaries associates and joint ventures is based solely on such unauditedfinancial statements. In our opinion and according to the information and explanationsgiven to us by the Management these financial statements are not material to the Group.
Our opinion on the consolidated financial statements above and our report on OtherLegal and Regulatory Requirements below is not modified in respect of the above matterswith respect to our reliance on the work done and the reports of the other auditors.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act based on our audit and on theconsideration of the reports of the other auditors on the separate financial statements ofthe subsidiaries associates and joint ventures referred to in the Other Matters sectionabove we report to the extent applicable that:
a. Except for the matter described in the Basis for Quali ed Opinion paragraph we /the other auditors whose reports we have relied upon have sought and obtained all theinformation and explanations which to the best of our knowledge and belief were necessaryfor the purpose of our audit of the aforesaid consolidated Ind AS financial statements.
b. Except for the matter described in the Basis for Qualified Opinion paragraph in ouropinion proper books of account as required by law relating to preparation of theaforesaid consolidated Ind AS financial statements have been kept so far as it appearsfrom our examination of those books and the reports of the other auditors.
c. The consolidated Balance Sheet consolidated Statement of Profit and Loss includingother comprehensive Income the consolidated statement of Cash Flow and the consolidatedStatement of changes in equity dealt with by this Report are in agreement with the booksof account.
d. Except for the effects of the matter described in the Basis for Qualified Opinionparagraph in our opinion the aforesaid consolidated Ind AS financial statements complywith the Accounting Standards specified under section 133 of the Act read with theCompanies (Indian Accounting Standard) Rules 2015 as amended.
e. On the basis of written representations received from such directors as on March 312019 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 from being appointed as a director in terms of subsection (2) ofsection 164 of the Companies Act 2013.
f. With respect to the adequacy of the internal financial controls over financialreporting of the company and the operating effectiveness of such controls refer to ourseparate report in 'Annexure A'; and
g. With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended:
In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Holding Company to its directors during the yearis in accordance with the 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 as amended inour opinion and to the best of our information and according to the explanations given tous and based on the consideration of the report of the other auditors on separatefinancial statements as also the other financial information of the subsidiaries as notedin 'Other matters' paragraph:
i. The consolidated Ind AS financial statements disclosed the impact of pendinglitigations on its financial position in its consolidated Ind AS financial statements -Refer note 34 to the consolidated Ind AS financial statements.
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivatives contracts. Refer to Note 24 to the Consolidated Ind AS financial statements
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.