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KSK Energy Ventures Ltd.

BSE: 532997 Sector: Infrastructure
NSE: KSK ISIN Code: INE143H01015
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VOLUME 308003
52-Week high 2.31
52-Week low 0.40
P/E 0.45
Mkt Cap.(Rs cr) 18
Buy Price 0.41
Buy Qty 4301.00
Sell Price 0.42
Sell Qty 1.00
OPEN 0.45
CLOSE 0.44
VOLUME 308003
52-Week high 2.31
52-Week low 0.40
P/E 0.45
Mkt Cap.(Rs cr) 18
Buy Price 0.41
Buy Qty 4301.00
Sell Price 0.42
Sell Qty 1.00

KSK Energy Ventures Ltd. (KSK) - Auditors Report

Company auditors report

To

The Members of KSK Energy Ventures Limited

Report on the Standalone Fifinancial Statements

We have audited the accompanying standalone Ind AS financial statements of KSK EnergyVentures Limited ("the Company") which comprises the Balance Sheet as at March31 2018 the Statement of Pro t and Loss (including other Comprehensive income) thestatement of Cash Flows and the Statement of Changes in Equity for the year then ended anda summary of significant accounting policies and other explanatory information(hereinafter referred to as 'Standalone Ind AS financial statements').

Management's Responsibility for the Standalone Fifinancial 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 standalone Ind AS financial statements that give a true and fair view of thefinancial position financial performance including other Comprehensive income cash owsand changes in Equity of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) prescribedunder Section 133 of the Act read with relevant Rule issued there under.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalone IndAS financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under. We conducted our audit in accordancewith the Standards on Auditing specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the standalone Ind AS financial statements are freefrom material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the standalone Ind AS financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the standalone Ind ASfinancial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone Ind AS financial statements.

Basis for Quali ed Opinion a. We draw attention to note no. 35 of the statementregarding invocation of the pledged shares of KSK Mahanadi Power Company Limited("KMPCL'') a subsidiary of the company pledged by the Company in favour of thelenders of KMPCL. The company holds an amount of Rs. 411.22 Crores as Investments and Rs.2465.92 crores as receivable consequent to invocation of pledge referred above in theFifinancial Statements.

Pending disposal/transfer of shares by the Lenders no provision has been considered inthese financial statements by the management as impact if any is currentlyunascertainable b. We draw your attention to note no. 36 of the Statement regardinginvocation of the pledged shares of Sai Wardha Power Generation Limited("SWPGL") pledged by the Company in favour of the lenders of SWPGL. The companyholds an amount of Rs. 164.90 crores as Investments and Rs. 134.42 crores as receivableconsequent to invocation of pledge referred above in the Fifinancial Statements.

Pending disposal/transfer of shares and pending debt restructuring/ change inmanagement by the Lenders no provision has been considered in these financial statementsby the management as impact if any is currently unascertainable.

Quali ed Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effect of the matters described in "basis forquali ed opinion" paragraph the aforesaid Ind AS financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India including Ind AS: a.in the case of the Balance Sheet of the state of affairs of the Company as at March 312018; b. in the case of the Pro t and Loss Statement including other comprehensive incomeof the loss for the year ended on that date; c. in the case of the Cash Flow Statement ofthe cash ows for the year ended on that date; and d. in the case of the changes in equityfor the year ended on that date.

Emphasis of Matters

We draw your attention towards: a. Note no. 2.6 of the financial statement which statethat "the company has incurred a net loss during the year ended 31st March 2018 andduring the previous years with resultant defaults in payment of interest and instalmentsdues to banks and financial institutions. Further as discussed in Note no. 35 and 36 tothe financial statements the company has residual investments and receivables pursuant toinvocation of shares. However the company continues to prepare the financial statementsas a going concern as the Company is making appropriate representation and is indiscussion with the respective lenders to nd an appropriate resolution plan at each of theassets". In the absence of any contrary information our opinion is not modified inthis matter. b. Note no. 16.4 of the statement stating that "some of the lendershave recalled the loan given to the Company and has issued notice for possession ofunderlying securities on account of non-payment of overdue amount. The Company would seekto take appropriate steps for addressing the same. Notwithstanding of above pendingresolution classification of borrowings into non-current and current is done based onoriginal terms of sanction".

Our opinion is not modified in this matter. c. Note no. 37 of the Statement statingthat "the Impairment loss amounting to Rs. 188.88 Crores incurred by the company onaccount of Impairment of Property Plant and Equipment (PPE) investments and other assetsrelated to subsidiaries. The same has been disclosed as exceptional item in the Statementof Pro t and Loss for the year ended 31st March 2018". Our opinion is not modified inthis matter

Other Matters

The comparative financial information of the company for the year ended March 31 2017included in these standalone financial statements have been audited by the predecessorauditor. The report of the predecessor auditor on comparative financial information dated27May 2017 expressed an unmodified opinion.

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 Act we give in the Annexure A a statement on the matters specified in paragraphs 3and 4 of the Order.

2. 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 Statement of Pro t and Loss thestatement of Cash Flow and the Statement of changes in equity dealt with by this Reportare in agreement with the books of account. d. In our opinion the aforesaid standaloneInd AS financial statements comply with the Accounting Standards referred to in section133 of companies act 2013 read with relevant Rules issued there under. e. We have notreceived written representation from one of the directors of the company for non-disqualication under Section 164(2). As far as other directors are concerned on the basis ofwritten representations received from such directors as on March 31 2018 and taken onrecord by the Board of Directors none of the remaining directors are disquali ed as onMarch 31 2018 from being appointed as a director in terms of sub-section (2) of section164of the Companies Act 2013. f. With respect to the adequacy of the internal financialcontrols over financial reporting of the company and the operating effectiveness of suchcontrols refer to our separate report in 'Annexure B'; and g. With respect to the othermatters to be included in the Auditor's Report in accordance with Rule 11 of the Companies(Audit and Auditors) Rules 2014 in our opinion and to the best of our information andaccording to the explanations given to us: i. The Company has disclosed the impact ofpending litigations on its financial position in its standalone Ind AS financialstatements-Refer Note 27 to the standalone Ind AS financial statements. ii. The Companyhas made provision as required under the applicable law or accounting standards formaterial foreseeable losses if any on long-term contracts including derivativescontracts. Refer to Note 17 to the standalone Ind AS financial statements. iii. There wereno amounts which were required to be transferred to the Investor Education and ProtectionFund by the Company.

For Jawahar and Associates.
Chartered Accountants
Firm Registration No: 001281S
Sd/-
M. Chandramouleswara Rao
Place: Hyderabad Partner
Date: 14 June 2018 Membership No: 024608

Referred to in paragraph 1 of "Report on Other Legal and Regulatory Requirements"in our report of even date:

According to the information and explanations given to us:

i. (a) The company has maintained proper records showing full particulars includingquantitative details and situation of xed assets.

(b) The Company has a xed programme of Physical veri cation of its xed assets which inour opinion is reasonable having regard to the size of the Company and the nature of itsassets. Management has physically veri ed the xed assets during the year. No materialdiscrepancies were noticed on such veri cation.

(c) According to the information and explanation given to us and on the basis of ourexamination of the records of the Company the title deeds of the immovable properties areheld in the name of the Company. In respect of immovable properties of land and buildingthat have been taken on lease and disclosed as xed assets in the standalone financialstatements the lease agreements are in the name of the company

ii. The Company is primarily engaged in the development of private sector powerprojects. The Company does not have any inventory and accordingly reporting under Clause 3(ii) of the Order is not applicable.

iii. According to the information and explanations given to us the Company has grantedunsecured loans to ten companies covered in the register maintained under section 189 ofthe Companies Act 2013.

(a) In our opinion terms and conditions on which the Loans had been granted to thebodies corporate listed in the register maintained under section 189 of the Act were notprima facie prejudicial to the interest of the Company.

(b) The terms of arrangement do not stipulate any repayment schedule and loans arerepayable on demand. Accordingly paragraph 3(iii)(b) & (c) of the order is notapplicable to the company in respect of repayment of principal amount.

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 investments made and providing guarantees and securities as applicable

v. The Company has not accepted any deposits from the public and consequently thedirectives issued by Reserve Bank of India; the provisions of Section 73 to 76 of theCompanies Act 2013 and the rules framed there under are not applicable.

vi. The maintenance of cost records under Section 148(1) of the Act has not beenspecified by the Central Government for the business activity carried out by the Company.Thus reporting under Clause 3(vi) of the Order is not applicable to the Company.

vii. According to the information and explanations given to us in respect of statutorydues:

(a) the Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income tax Sales Tax Excise dutyValue Added Tax Service Tax Custom Duty Cess and other material statutory duesapplicable to it with the appropriate authorities.

(b) According to the information and explanations given to us no undisputed amountspayable in respect of Provident Fund Employees' State Insurance Income tax Sales TaxExcise duty Value Added Tax Service Tax Custom Duty Cess and other material statutorydues were in arrears as at 31 March 2018 for a period of more than six months from thedate they became payable.

(c) According to the information and explanations given to us there are no dues ofduty of customs Sales Tax Income Tax Service Tax duty of excise and Value Added Taxwhich have not been deposited with the appropriate authorities on account of any disputeaccept disclosed below.

S.no Name of the Statue Nature of Dues Amount (in Crores) Period to which it relates Forum where the dispute is pending
1. Finance Act 1994- Service Tax Availment of Cenvat Credit 50.56 April 2008- September 2010 CESTAT (Hyderabad)
2. Income Tax Act 1961 Income tax 24.90 AY 2014-15 CIT (Appeals)
3. Income Tax Act 1961 Income tax 20.45 AY 2015-16 CIT (Appeals)

*in respect of S.no. 1 above an amount of Rs 2.68 Crores has been deposited for grantof stay.

*in respect of S.no. 2 above entire demand amount has been adjusted from refundrelating to subsequent years. *in respect of S.no. 3 above an amount of Rs 5.15 Croreshas been adjusted from refund relating to subsequent years.

viii. In our opinion and according to the information and explanations given to us theCompany has defaulted in repayment of loans or borrowings to financial institutions andbanks as per the details given below:

Name of the Lender Amount of Default in Principal Amount of Default in Interest Period of Default
(Rs. In Crores) (Rs. In Crores)
IFCI 5.00 2.99 September 2017 to March 2018
LIC 90.03 136.66 October 2015 to March 2018
L&T - 2.01 October 2017 to March 2018
Axis Bank - 12.52 March 2018

ix. The company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Accordinglyparagraph 3(ix) of the Order is not applicable.

x. According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.

xi. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.

xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.

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 sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

xiv. The company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review. Accordinglyparagraph 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 into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.

xvi. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

For Jawahar and Associates.
Chartered Accountants
Firm Registration No: 001281S
Sd/-
M. Chandramouleswara Rao
Place: Hyderabad Partner
Date: 14 June 2018 Membership No: 024608

Annexure - B to Auditors' Report

Report on the Internal Fifinancial Controls under Clause (i) of Sub-section 3 ofSection 143 of the Companies Act 2013 ("the Act"):

We have audited the internal financial controls over financial reporting of KSK EnergyVentures Limited ("the Company") as of March 31 2018 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.

Management's Responsibility for Internal Fifinancial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Fifinancial Controls over Fifinancial Reportingissued by the Institute of Chartered Accountants of India ('ICAI'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and Efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation and presentation of reliable financialinformation as required under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Fifinancial Controls over FifinancialReporting (the "Guidance Note") and the Standards on Auditing issued by ICAIand deemed to be prescribed under section 143(10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls both applicable to an auditof Internal Fifinancial Controls and both issued by the Institute of CharteredAccountants of India. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material 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 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 Fifinancial Controls over Fifinancial 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 re ect 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 unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Fifinancial Controls Over Fifinancial 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.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2018 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Fifinancial Controls Over Fifinancial Reporting issued by the Institute ofChartered Accountants of India.

For Jawahar and Associates.
Chartered Accountants
Firm Registration No: 001281S
Sd/-
M. Chandramouleswara Rao
Place: Hyderabad Partner
Date: 14 June 2018 Membership No: 024608