To the Members of McLeod Russel India Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying Standalone financial statements ofMcLeod Russel India Limited (hereinafter referred to as the "Company") whichcomprise the balance sheet as at March 312022 the statement of profit and Lossstatement of changes in equity and the statement of cash flows for the year then endedand notes to the financial statements including a summary of significant accountingpolicies (hereinafter referred to as the "financial statements").
In our opinion and to the best of our information and according to theexplanations given to us due to the significance of the matters described in the Basisfor Adverse Opinion section below the aforesaid financial statements do not give theinformation required by the Companies Act 2013 ("the Act") in the manner sorequired and also does not give a true and fair view in conformity with the IndianAccounting Standards prescribed under section 133 ofthe Act ('Ind AS') and otheraccounting principles generally accepted in India ofthe state ofaffairs of the Company asat March 312022 and it's loss other comprehensive Income cash flow and the changes inequity for the year ended on thatdate.
Basis for Adverse Opinion
Attention is invited to the following notes of the financial statements
a) Note no. 56(a) dealing with Inter Corporate Deposits (ICDs)aggregating Rs. 277094.87 lakhs and outstanding as on March 312022 (including Interestof Rs. 1933.92 lakhs accrued till March 31 2019) from certain companies which aredoubtful of recovery and considering recoverability etc. are prejudicial to the interestofthe company. In absence of provision there against the loss for the year is understatedto that extent. Impacts in this respect have not been ascertained by the management andrecognised in the financial statements.
b) The Company had given advance in earlier year to a body corporateaggregating to Rs. 1400.00 lakhs (included under "Advances to Suppliers ServiceProviders etc. under Note no. 17") which are outstanding as on March 312022. Inabsence of appropriate audit evidence and status thereof we are unable to comment on thevalidity and recoverability of such advances.
c) Note No. 35.2 regarding non-recognition of Interest of Rs. 6716.79lakhs (Including Rs. 2101.32 lakhs for the year) on Inter Corporate Deposits taken by thecompany and thereby the loss for the year is understated to that extent andnon-determination of interest and other consequential adjustments/disclosures in absenceof relevant terms and conditions and details in respect of short term borrowings andcertain outstanding advances being so claimed by customer included in said note and Noteno. 24.5 for basis of settlement arrived at in case of one such borrowing and detailsadjustments whereof as stated in Note no. 24.4 are currently not available/ determinable.Further as stated in Note no. 57(b) penal/compound interest and other adjustments inrespect of borrowings from lenders/banks/financial institution have not been recognisedand amount payable to lenders banks and financial institutions as recognised in thefinancial statement are subject to confirmation from respective parties and consequentialreconciliation. Pending final determination of amounts with respect to these adjustmentsand impacts arising therefrom have not been ascertained and as such cannot be commentedupon by us;
d) Note no.58 regarding non reconciliation/ disclosure of certain debitand credit balances with individual details and confirmations etc. including borrowingsand interest thereupon dealt with in Note no. 57 and 35. Adjustments/ Impacts/disclosureswith respect to these are currently not ascertainable and as such cannot be commented uponby us; and
e) As stated in Note no. 56(b) ofthe financial statements thepredecessor auditor in respect of loans included under paragraph (a) above have reportedthat it includes amount given to group companies whereby applicability of Section 185could not be ascertained and commented upon by them. They have not been able to ascertainifthe aforesaid promoter companies could in substance be deemed to be related parties tothe Company in accordance with paragraph 10of Ind AS-24 "Related PartyDisclosures". Further certain ICDs as reported were in nature of book entries and/orare prejudicial to the interest of the company. These amounts are outstanding as on thisdate and status thereof have remained unchanged and uncertainty and related concernsincluding being prejudicial to the interest of the company are valid for current yearalso. The promoter companies have not been considered as related parties and thereforetransactions and outstanding from them have not been disclosed separately in the financialstatements. As represented by the management the parties involved are not related partiesrequiring disclosure in terms of said accounting standard and provisions ofCompanies act2013 and concerns expressed as above are not relevant and as such inconsequential to thecompany.The matter as reported is under examination and pending before regulatoryauthorities. Pending final outcome of the matter under examination we are unable toascertain the impact of non-compliances and comment on the consequential impact thereof.
We conducted our audit in accordance with Standards on Auditing (SAs)specified under section 143(10) ofthe Companies Act 2013. Our responsibilities underthose Standards are further described in the Auditors' Responsibilities for the Audit ofthe Financial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics and provisions of the Companies Act 2013 that arerelevant to our audit of the financial statements in India under the Companies Act 2013and we have fulfilled our other ethical responsibilities in accordance with the Code ofEthics and the requirements under the Companies act 2013. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for our adverseopinion.
Material Uncertainty Related to Going Concern
Attention is drawn to Note no. 57(a) of the financial statementsdealing with going concern assumption for preparation of the accounts of the Company. TheCompany's current liabilities exceeded its current assets. The matters forming part ofanddealt with under Basis for Adverse Opinion Section of our report may have significantimpact on the net worth of the company. Loans given to promoter group and certain othercompanies have remained unpaid. Amount borrowed and interest thereupon could not be repaidas stipulated and other obligations could not be met as well due to insufficiency ofresources.These conditions indicate the existence of a material uncertainty about theCompany's ability to continue as a going concern. However the financial statement of theCompany due to the reasons stated in the said Note has been prepared by management ongoing concern basis based on the management's assessment of the expected successfuloutcome of the steps and measures including those concerning restructuring/reduction ofborrowings and interest thereon in terms of resolution plan under considerations oflenders and restructuring/adjustment of outstanding loans receivables and other proposalsunder evaluation as on this date. The ability to continue as a going concern is dependentupon formulation and approval of the resolution plan and in the event of the management'sexpectation in this respect and estimation etc. not turning out to be true validity ofassumption for going concern and possible impact thereof including on carrying value oftangible and intangible assets even though expected to be material as such presentlycannot be commented upon by us. Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the 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. In addition to the matter described in the Basis for Adverse Opinionsection of our report we have determined the matters described below to be the key auditmatters to be communicated in our report.
|Key Audit Matters ||Addressing the Key Audit Matters |
|Valuation of Biological Assets and Agricultural produce ||Our Audit procedures based on which we arrived at the conclusion regarding reasonableness of valuation includes the following: |
|Biological assets of the Company comprising of unharvested green tea leaves on tea bushes and the agricultural produce comprising of harvested green leaves are valued at fair value less cost to sell at the point of harvest. Unharvested tea leaves on tea bushes at the year end are determined on the basis of normal cycle for plucking. || Obtaining an understanding of the production cycle fairvalue measurement methodologies used and assessing the reasonableness and consistency of the significant assumptions used for determination and valuation thereof; |
|In respect of harvested or unharvested green leaves since there is no active market for own leaves estimates are used by management in determining the valuation. || Evaluating the design and implementation of Company's controls concerning the valuation of biological assets and agricultural produce; |
|Finished goods produced from agricultural produce i.e. Black Tea are valued at lower of cost arrived at by adding the cost of conversion to the fair value of agricultural produce and the net realisable value. || Assessing the basis reasonableness and accuracy of adjustments made to prices of green leaves purchased from outside suppliers considering the quality differential of the Company's production. |
|The principal assumptions and estimates in the determination of the fair value include assumptions with respect to production cycle yields prices of green leaf purchased from third parties and the stage of transformation. These assumptions and estimates require careful evaluation by management. || Assessing the yields and cycle of production to analyse the stage oftransformation considered forthe determination and fair valuation of biological assets; |
|Given the nature of Industry these assets and valuation thereof are significant to the operation ofthe company. || Due to multiple location of estates it was not possible to participate in the physical verification of inventory and therefore the following alternate procedures confirming the year end determination of Inventory were applied: |
| ||- In respect of the stock of BlackTea held at certain tea estates and warehouses services of Independent firm of Chartered Accountants were engaged for carrying out physical verification; |
| ||- In respectofwarehouses in Kolkata and Guwahatiwewere presentto overviewthe entire process being undertaken by Independentfirm ofChartered Accountants; |
| ||- In all other locations verifications were undertaken by the management; |
| ||- We reviewed the reports submitted for the verification along with workings and supporting details and obtained reasons/explanation for variations observed with respect to book stock; |
| ||- The stock at the year end were derived by rolling back the quantities of subsequent dispatches and production; and |
| ||- Reliance has been placed on management's representation and evidences provided for subsequent production dispatches and collections thereagainst. |
| || We examined the valuation process/methodology and checks being performed at multiple levels with due recognition of principle of materiality to ensure that the valuation is consistent with and as per the policy followed in this respect. |
|Impairment of Property Plant and Equipment (PPE) Capital Work in Progress (CWIP) and Intangible Assets (Note no. 4(a) of the Standalone financial statements) ||Our Audit procedures based on which we arrived at the conclusion regarding reasonableness of Impairment includes the following: |
|Evaluation of the impairment involves assessment of value in use of the Cash Generating Units (CGUs) and requires significant judgements and assumptions about the forecast for cash flows production volume of operations prices and discount rate. || Critical evaluation of internal and external factors impacting the entity and indicators ofimpairment (or reversal thereof) in linewith Ind AS 38; |
|Theexercise requiresassessment of fair valuation of tea estates and other items of property plant and equipments || Reviewing the valuation report by independent technical consultants for arriving at value in use and fair value ofvarious tea estates and other assets less cost to sale and necessary updation thereof by the management based on current indicators and prevailing situation and this being a technical matter reliance has been placed on management's contention and representation in this respect; |
|This exercise has gained significance considering the available indicators under the current situation and circumstances amidst management's expected outcome ofthe resolution plan under consideration of the lenders and other conditions under which the company is operating. || Review of impairment valuation models used in relation to CGU to determine the recoverable amount and the key assumptions used by management in this respect including: |
| ||- Management's contention for restructuring the debt to make it sustainable and recoverability/restructuring of amount of loan given to various companies; |
| ||- Consistency with respect to forecast for arriving at the valuation and assessing the potential impact of any variances; |
| ||- Price assumptions used in the models; and |
| ||- The assumptions/estimations for the weighted average cost of capital and rate of discount for arriving at the value in use. |
| || Reliance has been placed on management's assumptions for possible outcome vis-a-vis resolution plan under consideration oflenders. |
|Recognition of Deferred Tax Assets (Note no.22.1ofthe Standalonefinancial statements) ||Our Audit procedures based on which we arrived at the conclusion regarding reasonableness ofthe accounting effect and disclosures ofthe Deferred Tax Assets include the following: |
|Deferred tax Asset include MAT Credit Entitlement of Rs. 2110.37 lakhs being carried forward in the Standalone financial statements as at March 312022. || Utilisation of Deferred tax assets have been tested on the basis of internal forecasts prepared by the Companyand probability offuture taxable income; |
|Further Deferred Tax Assets in respect of MAT Credit Entitlement amounting to Rs. 2622.22 lakhs pending determination of the amount thereof considering the principle of prudence has not been recognized in the Standalone financial statements. Deferred Tax reversal during the tax holiday period has been ignored for the purpose computation. || Critical review of the underlying assumptions for consistency for arriving at reasonable degree of probability on the matters; |
| || Due consideration of principle of prudence especially amidst the Debt restructuring process and other group level restructuring and related uncertainties;and |
| || Requirement of Ind AS 12 "Income Taxes" and application thereof and disclosures made in the financial statements for ensuring the compliances on the matter. |
| || Reliance has been placed on management's assumptions for possible outcome vis-a-vis resolution plan under consideration oflenders. |
|Going Concern Assumption (Note no. 57 ofthe Standalonefinancial statements) ||Our audit procedures included testing management's assumptions on the appropriateness of the going concern assumptions and reasonableness of the assumptions usedfocusing in particularthe business projections of Companyrestructuring of borrowings and ICD's given by the company and other sources of funding and among others following procedures were applied in this respect: |
|The Company's current liabilities have exceeded current assets by Rs. 244445.12 lakhs as on March 312022.Funds obtained by borrowing and utilized for providing funds to other companies have become unserviceable primarily due to non-repayment of outstanding amounts by those companies.Further adjustments arising in respect of the matters dealt with under Basis for Adverse Opinion Section may have significant impact on the net worth of the company. The Company was unable to discharge its obligations for repayment of loans and settlement of financial and other liabilities. || Review of the Debt Restructuring process and steps so far taken by lenders in this respect which inter-alia includes approving Inter-Creditor Agreement re-vetting of Techno Economic Viability (TEV) study valuation of tea estates and other assets of the company and recommending the possible credit rating on the resolution plan for implementation.This includes review of: |
|The availability of sufficient fund and the company's ability to continue meeting it's financial statutory and other obligations as and when falling due for payment are important for the going concern assumption and as such are significant aspects of our audit. ||- Core operations of the company and management expectation of sustainability thereof; |
| ||- Minutes of the meetings of the Company with the consortium oflenders; |
| ||- Compliances vis-a-vis debt covenants associated with loans obtained; |
| ||- Consistency with respect to assumptions etc. for possible valuation of the business and tea estates system and operating results and efficiencies and management's forecast and outlook;and |
| ||- Management's report to gain an understanding of the various costs and realisations supporting the cash flow projections of the companyand sustainability there of. |
| || Placing reliance on management's assumptions and expectation of possible outcome of resolution plan under consideration of lenders;and |
| || Review of disclosures made by the management in the financial statement to ensure compliances in this respect. |
Information Otherthan the Standalone Financial Statements and Auditors'Report Thereon
The Company's Board of Directors is responsible for the otherinformation. The other information comprises the Report ofthe Directors and the annexuresthereto (namely Management Discussion and Analysis Corporate Governance Report AnnualReport on CSR Activities Form MGT - 9 Conservation of energytechnology absorptionforeign exchange earnings and outgo and remuneration and other specified particulars ofemployees) but does not include the Standalone financial statements and our auditors'report thereon.The other information as stated above is expected to be made available tous after the date ofthis Auditors' Report.
Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statementsour responsibility is to read the other information identified above when it becomesavailable and in doing so consider whether the other information is materiallyinconsistent with the standalone financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated.
Responsibilities of Management and Those Charged with Governance forthe Standalone Financial Statements
The Company's Board ofDirectors is responsibleforthe matters stated insection 134(5) oftheCompanies Act 2013 ("the Act") with respect to thepreparation of these standalone financial statements that give a true and fair view of thestate of affairs (financial position) Total Comprehensive Income (financial performancecomprising of Profit/Loss and other comprehensive income) changes in equity and cashflows of the Company in accordance with the accounting principles generally accepted inIndia including the accounting Standards specified under section 133 of the Act.
This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions ofthe Act for safeguarding of the assets of theCompany and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of
adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness ofthe accounting records relevant to thepreparation and presentation of the standalone financial statement that give a true andfair view and are free from material misstatement whether due to fraud or error.
In preparing the standalone financial statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
The Company's Board of Directors are also responsible for overseeingthe Company's financial reporting process.
Auditors' Responsibilities for the Audit of the Standalone FinancialStatements
Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditors' report that includes our opinion.Reasonable assurance is a high level ofassurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis ofthese standalone financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. Wealso:
Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control;
Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Companies Act 2013 we are also responsible for expressing ouropinion on whether the company has adequate internal financial controls system withreference to financial statements in place and the operating effectiveness ofsuchcontrols;
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management;
Conclude on the appropriateness of management's use ofthe goingconcern basis ofaccounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditors' report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditors' report. However future events or conditions maycause the Company to cease to continue as a going concern; and
Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the financialstatements that individually or in aggregate makes it probable that the economicdecisions ofa reasonably knowledgeable user ofthe financial statements may be influenced.We consider quantitative materiality and qualitative factors in (i) planning the scope ofour audit work andin evaluating the results of our work; and (ii) to evaluate the effectof any identified misstatements in the financial statements.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of thestandalonefinancial statements of the current period and are therefore the keyauditmatters. We describethese matters in our auditors' 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 ofsuch communication.
We did not audit the financial statement/ information of one overseasoffice included in the financial results of the Company whose financialstatement/financial information comprising of expenses to the extent of Rs. 1.21 lakhs hasbeen incorporated therein based on Statement of Accounts audited by an Independent firm ofChartered Accountants. The impact in this respect is not material since this reflectstotal assets of Rs. 7.32 lakhs as at March 312022 and the total revenue of Nil for theyear ended on that date. Our opinion in so far as it relates to the amounts anddisclosures included in respect of said office is based solely on the report of CharteredAccountant.
Report on Other Legal and Regulatory Requirements
a) As regards to the matters to be inquired by the auditors in terms ofSection 143(1) of the Act we report that Inter corporate Deposits as stated in Para (a)of Basis for Our Adverse Opinion Section of this report due to reasons stated therein areprejudicial to the interest of the company. This includes ICDs aggregating to Rs.77575.00 Lakhs (included under Para (e) of Basis for Adverse Opinion) as reported bypredecessor auditor which were initially given as capital advances in the earlier year andwere subsequently converted to ICDs and had been considered by them to be in the nature ofbook entries and prejudicial to the interest of the company. These amounts are outstandingas on March 312022. The matter as stated in Para (e) of Basis for Adverse Opinion Sectionofthis report is under examination by relevant authorities and final outcome thereof isawaited as on this date.
1. As required by Section 143(3) ofthe Act based on our audit wereport to the extent applicable that:
a) We have sought and except for the effects/ possible effects ofthematters described in the Basis for Adverse Opinion section above obtained all theinformation and explanations which to the best of our knowledge and belief were necessaryfor the purposes ofouraudit ofthe aforesaid financial statements;
b) Except for the effects/ possible effects of the matters described inthe Basis for Adverse Opinion section above in our opinion proper books of account asrequired by law have been kept by the Company so far as it appears from our examination ofthose books returns and the reports of the other auditors;
c) The Balance Sheet the Statement of Profit and Loss including OtherComprehensive Income the Cash Flow Statement and the Statement of Changes in Equity dealtwith by this Report are in agreement with the relevant books of account maintained for thepurpose of preparation of the financial statements;
d) Due to the significance of the matters described in the Basis forAdverse Opinion section above in our opinion the aforesaid financial statements do notcomply with the requirement and provisions of Ind AS specified under Section 133 of theAct;
e) The matters described in the Basis for Adverse Opinion section aboveespecially that relating to non-provision of intercorporate deposits as stated in Para(a)and (e) of that sectionprovision/non-determination for interest and other terms andconditions in respect of the borrowings etc. as the basis stated in Para (c) of Basis forAdverse Opinion section of this report pending confirmation of lenders and MaterialUncertainty Related to Going Concern assumption pending approval of resolution plan inour opinion may have an adverse effect on the functioning of the Company;
f) Based on the legal opinion obtained by the Company and on the basisof the written representations received from the directors as on March 31 2022 taken onrecord by the Board of Directors of the Company none of the directors of the Company aredisqualified as on March 312022 from being appointed as a director in terms of Section164 (2) of the Act;
g) The adverse remarks relating to the maintenance of accounts andother matters connected therewith are as stated in the Basis for Adverse Opinion sectionabove; and
h) With respect to the adequacy ofthe internal financial controls withreference to financial statements and the operating effectiveness of such controls referto our separate Report in "Annexure A". Our report expresses qualified opinionon the adequacy and operating effectiveness of internal financial controls with referenceto financial statements of the Company's internal financial controls with reference tofinancial statements.
2. As required by the Companies (Auditors' Report) Order 2020("the Order") issued by the Central Government of India in terms of subsection(11) of section 143 ofthe Companies Act 2013 we give in the "Annexure B" astatement on the matters specified in paragraphs 3 and 4 ofthe Order to the extentapplicable which is subject to the possible effect ofthe matters described in the Basisfor Adverse Opinion paragraph of our Audit Report and the material weakness described inBasis for Qualified Opinion in our separate Report on the Internal Financial Controls withreference to financial statements.
3. With respect to the other matters to be included in the Auditors'Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 inour opinion and to the best of our information and according to the explanations given tous:
i. The financial statements has disclosed the impact of pendinglitigations on its financial position of the Company - Refer Note no. 41 to the financialstatements;
ii. The Company has made provision as required under the applicablelaw or accounting standards for material foreseeable losses if any on long-termcontracts.
iii. There were no amounts which were required to be transferred to theInvestor Education and Protection Fund by the Company;
iv. (a) The Management has represented that to the best of itsknowledge and belief no funds (which are material either individually
or in the aggregate) have been advanced or loaned or invested (eitherfrom borrowed funds or share premium or any other sources or kind of funds) by the Companytoorinany other person or entity including foreign entity ("Intermediaries")with the understanding whether recorded in writing or otherwise that the Intermediaryshall whether directly or indirectly lend or invest in other persons or entitiesidentified in any manner whatsoever by or on behalf of the Company ("UltimateBeneficiaries") or provide any guarantee security or the likeon behalf of theUltimate Beneficiaries;
(b) The Management has represented that to the best of its knowledgeand belief no funds (which are material either individually or in the aggregate) havebeen received by the Company from any person or entity including foreign entity("Funding Parties") with the understanding whether recorded in writing orotherwise that the Company shall whether directly or indirectly lend or invest inother persons or entities identified in any manner whatsoever by or on behalf oftheFunding Party ("Ultimate Beneficiaries") or provide any guarantee security orthe like on behalf ofthe Ultimate Beneficiaries; and
(c) Based on the audit procedures and generally accepted auditingpractices followed in terms of SAs that have been considered reasonable and appropriate inthe circumstances nothing has come to our notice that has caused us to believe that therepresentations under sub-clause (i) and (ii) of Rule 11 (e) as provided under (a) and(b) above contain any material misstatement. However in respect of the earlier yearstransactions dealing with loans and advances securities guarantees etc. as stated inthose years which are forming part ofthe Basis for Adverse Opinion as given above we areunable to ascertain and/or comment as required under this para; and
v. The company has not declared any dividend during the year therebyreporting under Section 143(11)(f) is not applicable for the company.
4. With respect to the other matters to be included in the Auditors'Report in accordance with the requirements of section 197(16) of the Act as amended inour opinion and to the best of our information and according to the explanations given tous the remuneration paid by the Company to its Managing and Whole-time Directors are notin accordance with provisions of Section 197 of the Act and accordingly such remunerationspaid pending necessary approval etc. as given in Note no. 8.1 has been held by them underTrust and disclosed under Loans and Advances in the financial statement.
| ||ForLodha&Co |
| ||Chartered Accountants |
| ||Firm's ICAI Registration No.:301051E |
|Place: Kolkata ||R. P. Singh |
|Date : 30th May 2022 ||Partner |
| ||Membership No:52438 |
| ||UDIN: 22052438AJWKDV6607 |
ANNEXURE "A" TO THE INDEPENDENT AUDITORS' REPORT TO THEMEMBERS OF MECLEOD RUSSEL INDIA LIMITED
(Referred to in paragraph 2(h) under 'Report on Other Legal andRegulatory Requirements' of our report of even date)
Report on the Internal Financial Controls with reference to Standalonefinancial statements under Clause (i) of Sub-section 3 of Section 143 of the CompaniesAct 2013 ("the Act")
In conjunction with our audit ofthe Standalone financial statementsofthe Company as of and for the year ended March 312022 we have audited the internalfinancial controls with reference to financial statements of McLeod Russel India Limited(hereinafter referred to as "the Company") as of that date.
Management's Responsibilityfor Internal Financial Controls
The Board of Directors of the Company is responsible for establishingand maintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") issued by the Institute of CharteredAccountants of India ("the ICAI").These responsibilities includethe designimplementation and maintenance ofadequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of its business includingadherence to the Company's policies the safeguarding of its assets the prevention anddetection offrauds and errors the accuracy and completeness ofthe accounting records andthe timely preparation of reliable financial information as required under the CompaniesAct 2013.
Our responsibility is to express an opinion on the Company's internalfinancial controls with reference to financial statements based on our audit. We conductedour audit in accordance with the Guidance Note and the Standards on Auditing prescribedunder Section 143(10) of the Companies Act 2013 to the extent applicable to an audit ofinternal financial controls. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls with reference to financial statementswas established and maintained and if such controls operated effectively in all materialrespects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy ofthe internal financial controls system with reference to financialstatements and their operating effectiveness. Our audit of internal financial controlswith reference to financial statements included obtaining an understanding of internalfinancial controls with reference to financial statements assessing the risk that amaterial weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditors'judgement including the assessment ofthe risks of materialmisstatement ofthe financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols system with reference to financial statements.
Meaning of Internal Financial Controls with reference to financialstatements
A company's internal financial control with reference to financialstatements is a process designed to provide reasonable assurance regarding the reliabilityoffinancial reporting and the preparation offinancial statementsforexternal purposes inaccordance with generallyaccepted accounting principles. A company's internal financialcontrol with reference to financial statements includes those policies and procedures that(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions ofthe assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparationoffinancial statements in accordance with generally accepted accounting principles andthat receipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.
Inherent Limitations of Internal Financial Controls with reference tofinancial statements
Because ofthe inherent limitations ofinternal financial controlswithreference to financial statements including the possibility ofcollusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to financial statements to future periods are subject to the riskthat the internal financial control with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.
Basis for Qualified Opinion
According to the information and explanations given to us and based onour audit the following material weaknesses have been identified in the Company'sinternal financial controls over financial reporting with reference to financialstatements as at March 31 2022:
The Company did not have an appropriate internal control systemin relation to the granting of loans and advances/ other advances to promoter groupcompanies and/or other companies including ascertaining economic substance and businessrationale ofthe transactions establishing segregation ofduties and determiningcredentials ofthe counter parties;
With respect to inter Corporate Deposits (ICDs) the Company didnot have appropriate system to evaluate the credit worthiness of the parties andrecoverability of monies given including interest thereon and also ensuring thecompliances with respect to provisions of the Companies Act 2013so that these are notconsidered to be prejudicial to the interest of the Company;
Certain individual details of debit and credit balances andreconciliation thereof with control balances of receivable/payable/stock includingsupporting evidencefor movementthereofas given in Note no. 58 ofthefinancial statementwere not available. IT Control systems and procedures needs strengthening in terms offramework for Internal Control over financial reporting with reference to financialstatements taking into account related controls and procedures as stated in the GuidanceNote on Audit of Internal Financial ControlsOver Financial Reporting issued bytheInstitute ofChartered Accountants ofIndia sothat tofacilitate required reconciliations andprovide details for documentation with respect to internal financial controls in therespective areas; and
Supporting audit evidence with respect to certain interCorporate Deposits (ICDs) short-term borrowings and advances for repayment/adjustmentagainst execution of securities by lenders to determine the basis and terms and conditionsfor the same as given in Note no. 24.424.5 and 27.2 are not available.
A 'material weakness' is a deficiency or a combination ofdeficiencies in internal financial control over financial reporting with reference tofinancial statements such that there is a reasonable possibility that a materialmisstatement ofthe company's annual or interim financial statements will not be preventedor detected on a timely basis.
In our opinion to the best of our information and according to theexplanations given to us except for the effects/possible effects of the materialweaknesses described in Basis for Qualified Opinion Section above on the achievement oftheobjectives ofthe control criteria the Company has maintained in all material respectsadequate and effective internal financial controls with reference to the financialstatements as of March 312022 based on the internal control over financial reportingcriteria established bythe Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute ofChartered Accountants ofIndia'.
We have considered the material weaknesses identified and reportedabove in determining the nature timing and extent of audit tests applied in our audit ofthe financial statements of the Company for the year ended March 312022 and thesematerial weaknesses have affected our opinion on the said financial statements of theCompany and we have issued an adverse opinion on the financial statements oftheCompany.
| ||ForLodha&Co |
| ||Chartered Accountants |
| ||Firm's ICAI Registration No.:301051E |
|Place: Kolkata ||R. P. Singh |
|Date : 30th May 2022 ||Partner |
| ||Membership No:52438 |
| ||UDIN: 22052438AJWKDV6607 |
ANNEXURE "B" TO THE AUDITORS' REPORT OF EVEN DATE TO MEMBERSOF MCLEOD RUSSEL INDIA LIMITED:
(Referred to in paragraph 3 under 'Report on Other Legal and RegulatoryRequirements' section of our report of even date and except for the effects / possibleeffects of the matters described in the Basis for Adverse Opinion Section of our AuditReport and the material weaknesses described in the Basis for Qualified Opinion in ourseparate Report on the Internal financial Controls with reference to financial statement)
i) a. The Company has maintained proper records showing fullparticulars including quantitative details and situations in case of
Property Plant and Equipments and Intangible Assets.
b. The Company has a program ofverification of property plant andequipment (other than bearer plants existence ofwhich are ascertained through requiredyield and output therefrom) to cover all the items in a phased manner over a period ofthree years which in our opinion is reasonable having regard to the size of the Companyand the nature of its assets. Pursuant to this program a comprehensive and detailedverification of Property plant and Equipment and Capital Work in Progress was carried outby engaging the services ofan Independent firm of professional for the purpose. Accordingto the information and explanations given to us no material discrepancies to the extentverified during the years were noticed on such verification.
c. According to the information and explanations given to us and therecords examined by us and based on the examination of the registered sale deed / transferdeed / conveyance deed / court orders approving schemes of arrangements / amalgamationsand other documents provided to us we report that the title deeds comprising all theimmovable properties of land and buildings which are freehold are held in the name oftheCompany as at the balance sheet date.
In respect of immovable properties of land and buildings bearer plantetc. attached thereto that have been taken on lease or on patta (other than the propertieswhere the company is the lessee and the lease agreements are duly executed in favour ofthelessee) including in respect of tea estates ofthe company according to the informationand explanations given to us and the records examined by us and based on the examinationof the court orders approving schemes of arrangements/ amalgamations and other documentsprovided to us having regard to the note 5.3 we report that the agreements and/or otherdocuments confirming such arrangement are in the name of the respective tea estates of thecompany and/or in the name oftheCompany.
In respect of Immovable properties of land and buildings (includingleasehold properties) whose title deeds have been pledged as security for loansguarantees etc. the above verification has been based on the confirmations received byus from lenders.
d. The company is not following revaluation model of accounting and hasnot revalued any of its Property Plant and Equipment (including Right-of-Use Assets) andIntangible Assets during the year. Accordingly the reporting under Clause 3 (i)(d) oftheOrder is not applicable to the Company.
e. As per the information and explanation given to us and asrepresented by the management no proceedings have been initiated during the year or arepending against the Company as at March 312022 for holding any benami property under theBenami Transactions (Prohibition) Act 1988 (as amended in 2016) and rules madethereunder. Accordingly further reporting under Clause 3 (i)(e) ofthe Order is notapplicable to the Company.
ii) a. As informed the physical verification of inventories werecarried out at reasonable intervals during the year. The year-end
verification of tea stock is carried out by the management in presenceand supervision of Independent firms of chartered accountant entrusted with suchresponsibility.The discrepancies noticed on physical verification between the physicalstock and book stock of inventories to the extent verified during the year were not 10%or more in aggregate for each class of inventory and the same have been properly dealtwith in the books of account.
b. Due to the reasons stated in note no. 57(a) pending finalizationofthe resolution as stated therein no working capital limit in excess of Rs. 5 crores hasbeen sanctioned or renewed at any point oftime during the year. In respect of such limitsanctioned in earlier years pending regularization there of based on the resolution planunder finalization by the lender as stated above statement of stocks and debtors havebeen submitted to the banks which are in agreement with the then unaudited books andrecords ofthe company.
iii) a. The company has not made any investments in provided anysecurity or guarantee or granted any loan or advances in nature
of loan (other than to employees in normal course ofthe business andpayment of managerial remuneration pending necessary approval being considered recoverableand shown under advances (Note no. 8.1)and as such reporting under clause 3(iii)(a) and(b) are not applicable to the company.
b. In respect of loans and advances in the nature of loan Rs.275160.95 lakhs given in earlier year as stated in note no. 56(a) remained outstandingas on March 312022. Certain amount as stated in note no. 56 (b) which initially given ascapital advances were converted to inter corporate deposits. The amount outstanding haveeither been given without specifying any terms and conditions or were stated to berepayable on demand and even advances in the nature of loans given earlier no terms andconditions for repayment thereof have been specified. In respect of amounts repayble ondemand even though approached the timeline and terms of settlement/repayment etc. withthe respecttive parties have not yet been crystalised. Accordingly it is not possible onour part to comment on the regularity of payment in respect of such amount and alsowhether these have become overdue for payment. These loan and advances have neither beenrenewed nor extended or no fresh loan has been granted to settle these amounts. Howeverconsidering the period for which these amounts are outstanding and considering thepossibility of recoverability etc. these as stated in para (a) of the Basis of adverseopinion section have been considered doubtful of recovery. In absence of required termsand conditions including interest thereof period of default and determination of amountultimately recoverable thereagainst it is not possible for us to comment further withrespect to reporting required under clause 3(iii)(c) (d) & (e).
c. The loans or advances in the nature of loan were granted in earlieryear which were without specifying any term or period of repayment or repayable on demandand as stated above Rs. 275160.95 lakhs is outstanding as on March 312022.The detailsin respect ofthese loans are as follows:
|Particulars ||All Parties ||Promoters |
|Aggregate amount of loans/ advances in nature ofloans ||Rs 275160.95 ||Rs. 146961.64 |
|Total(A + B) ||Rs 275160.95 ||Rs. 146961.64 |
|Percentage of loans/ advances in nature of loanstothetotal loans || ||53.00% |
The above amount has been disclosed as provided to us by themanagement. The above promoters and certain other companies as stated in Para (e) of theBasis of Adverse opinion section the status of the Party whatever related or otherwise assuch is notascertainable. Furtherthe above does not include advances of Rs. 1400.00lakhs given in earlieryears in respect ofwhich as stated in Para (b) ofthe Basis ofAdverseOpinion section necessary details are not available.
Also terms and conditions and other details in respect of Rs. 2000.00lakhs paid to a lender in settlement oftheir dues as stated in Note no. 24.5 have alsocurrently not been specified and disclosed above. The comments as required to be reportedunder clause 3(iii)(f) with respect to above as such cannot be given.
iv) In our opinion and according to the information and explanationsgiven to us; the Company has complied with the provisions of section 186 of the CompaniesAct 2013 in respect of loans investments and guarantees and securities as applicablegiven in earlier years. However in view ofthe matter described in paragraph (e) of Basisfor Adverse Opinion section it is not possible to ascertain and comment on the complianceofSection 185 ofthe Companies Act 2013. The company has however not given any such loansguarantees or provided securities during the year.
v) During the year as stated in Note No. 24.5 certain individuals havedirectly settled the loan of one of the financial creditors and the amount payable to themhas been so recognized in the financial statement. In absence of details with respect tothe nature of the receipt terms and conditions the amount so recognized even though inthe nature of deposit the applicability of provisions of section 73 to 76 or any otherprovisions of Companies Act 2013 or any other rules thereunder and nature ofcontravention as such are not determinable and as such cannot be commented upon by us.Other than this the Company has not accepted any deposits during the year and does nothave any unclaimed deposits as at March 312022 from public covered under Sections 73 to76 or any other relevant provisions ofthe Act and rules framed thereunder.
vi) We have broadly reviewed the books of account maintained by thecompany pursuant to the Rules made by the Central Government for the maintenance of costrecords under Section 148 (1) of the Act in respect of the Company's products to which thesaid rules are made applicable and are ofthe opinion that prima facie the prescribedrecords have been maintained. We have however not made a detailed examination of the saidrecords with a view to determine whether they are accurate orcomplete.
vii) a. According to the information and explanations given to usthere were certain delays during the year in depositing with
appropriate authorities undisputed statutory dues including ProvidentFund Income Tax Goods and Service Tax as applicable to it. There were no such delays inrespect of amount payable towards Investor Education Protection fund Employees' StateInsurance Sales Tax Wealth Tax Service tax Custom Duty Excise Duty Value Added TaxCess and other material statutory duesasapplicableto it.
There were no undisputed amounts payable in respect of Provident FundInvestor Education and Protection fund Employees' State Insurance Income Tax Sales TaxGoodsand Service Tax Wealth TaxService tax Custom Duty Excise DutyValueAdded TaxCess and other material statutory dues in arrear as at March 312022 for a period of morethan six months from the date they become payable except as detailed below:
|NameoftheStatute ||Nature of Dues ||Amount (Rs. In Lakhs) ||Period to which they relate |
|Income Tax Act' 1961 ||Corporate Dividend Tax (Refer Note no. 28.1 ofthe financial Statements) ||344.77* ||2005-2006 to 2007-2008 |
|Assam Tea Plantations Provident Fund SchemeAct1955 ||Provident Fund ||240.18 ||2021-22 |
|Assam Tea Plantations Employees' Welfare Fund Act 1959 ||Unclaimed Wages of labours ||34.36 ||2010-11 to 2017-18 |
|Assam Tea Employee Welfare Fund Act1959 ||Labour Welfare Fund ||1.57 ||2012-13 to 2020-21 |
|The Assam Tax on Professions Trades Callings and Employment Act 1947 ||Professional Tax ||0.07 ||2012-13 |
| || ||1.47 ||2020-21 |
| || ||1.01 ||2021-22 |
|NameoftheStatute ||Nature of Dues ||Amount (Rs. In Lakhs) ||Period to which they relate |
|Assam Electricity Duty Act 1964 ||Electricity Duty ||5.75 ||2018-19 |
| || ||18.56 ||2019-20 |
| || ||18.20 ||2020-21 |
| || ||10.09 ||2021-22 |
* Excluding Rs. 343.37 lakhs being adjusted by Income Tax Authoritiesagainst refund of Assessment Year 2007-2008
b. According to the information and explanations given to us thedetails of disputed statutory dues as given in sub-clause (a) above as at March 312022are as follows:
|Name ofthe Statute ||Nature of Dues ||Amount (Rs. in Lakhs) ||Period to which the amount relates ||Forum where dispute is pending |
|Income Tax Act' 1961 ||Income Tax ||1855.17 ||2016-2017 ||Dispute Resolution Panel (DRP) |
|Income Tax Act' 1961 ||Income Tax ||1568.97 ||2017-2018 ||Commissioner (Appeals) |
|Income Tax Act' 1961 ||Income Tax ||138.05 ||2015-2016 ||Commissioner (Appeals) |
|Finance Act' 1944 ||Service Tax ||131.61 ||2004-2005 to 2007-2008 ||Commissioner (Appeals)/ CESTAT |
|Finance Act' 1944 ||Service Tax ||373.72 ||2008-2009 to 2012-2013 ||Principal Commissioner of Service Tax |
|Central Excise Act' 1944 ||Excise Duty ||42.30 ||1999 to 2003 ||Commissioner (Appeals) |
viii) In our opinion and on the basis ofinformation and explanationsgiven to us and as represented by the management we have neither come across nor havebeen informed of transactions which were previously not recorded in books of account andthat have been surrendered or disclosed as income during the year in the tax assessmentsunder the Income Tax Act 1961 (43 of 1961).
ix) a. In our opinion and on the basis of information and explanationsgiven to us by the management the Company has defaulted in repayment of dues to thefollowing banks and financial institutions:
|Name ofthe Bank/ Financial Institution ||Principal ||Interest ||Period of Default |
|Term Loans from Banks || || || |
|ICICI Bank Limited ||4649.54 ||1227.54 ||June 2019toMarch312022 |
|HDFC Bank Limited ||6800.00 ||1922.04 ||June 2019to March 312022 |
|RBL BankLimited ||4752.33 ||1485.97 ||July 2019to March 312022 |
|Yes Bank Limited ||4375.00 ||1186.80 ||March 2019toMarch312022 |
|Short Term Loan from Banks || || || |
|Axis BankLimited ||25000.00 ||7480.17 ||July 2019to March 312022 |
|RBL Bank Limited ||23500.00 ||7088.37 ||July 2019to March 312022 |
|HDFC Bank Limited ||17901.97 ||4904.25 ||May 2019 to March 312022 |
|IndusInd BankLimited ||7484.81 ||2835.96 ||December2019to March 312022 |
|Yes Bank Limited ||33026.61 ||9056.39 ||May 2019 to March312022 |
|Term Loan from Others || || || |
|Housing Development Finance Corporation Limited ||894.82 ||201.95 ||January 2020 to March 312022 |
|Short Term Loan from Others || || || |
|Ragini Finance Limited ||950.00 ||- ||October2019to March 312022 |
|Digvijay Finlease Limited ||1950.00 ||- ||October2019to March 312022 |
|PDK Impex Private Limited ||975.00 ||- ||March 312020 to March 312022 |
|Cash Credit || || || |
|Axis Bank Limited ||480.53 ||128.14 ||October 2019 to March 312022 |
|HDFC Bank Limited ||5579.49 ||1114.97 ||May 2019 to March312022 |
|State Bank of India Limited ||8987.41 ||1897.29 ||June 2019 to March 312022 |
|Punjab National Bank Limited (Erstwhile United BankofIndia) ||6842.02 ||1224.73 ||February 2020 to March 312022 |
|ICICI BankLimited ||7763.34 ||2178.37 ||June 2019 to March 312022 |
|Name of the Bank/ Financial Institution ||Principal ||Interest ||Period of Default |
|Indian BankLimited || |
February 292020 to March 312022
|(Erstwhile Allahabad Bank Limited) |
|Yes Bank Limited ||900.00 ||- ||May 2019 to March312022 |
|RBL BankLimited ||1839.00 ||1180.17 ||July 2019to March 312022 |
|UCO BankLimited ||2426.53 ||480.21 ||May312020 to March312022 |
The above amounts have been disclosed on the basis as described in Noteno. 57(b) of the financial statement. The above defaults and amount due are howeversubject to confirmation and reconciliation with respective parties and finalisation of theresolution plan under consideration by lenders (Refer Note no. 57(a)).
Other than this there are certain inter corporate deposits andadvances amounting to Rs. 11065.19 lakhs outstanding pending finalization ofterms andconditions as stated in note no. 24.5 and thereby disclosure ifany under this clause assuch could not be given.
b. According to the information explanations and representation givento us by the management we report that the Company has not been declared wilful defaulterby any bank or financial institution or government or any government authority.
c. In our opinion and on the basis ofinformation and explanations givento us by the management the Company has not taken any term loan during the year andhence reporting under clause 3(ix)(c) of the Order is not applicable to the company.
d. According to the information and explanations given to usand theprocedures performed by us and on an overall examination of the financial statementsofthe company we report that the company has used funds raised on short-term basisaggregating to Rs. 244445.12 lakhs for long-term purposes.
e. According to the information and explanations given to us and as perthe audit procedure performed by us we report that the company has not taken any fundsfrom any entity or person on account of or to meet the obligations of its subsidiariesorassociates.
f. According to the information and explanations given to us andprocedures performed by us we report that the Company has not raised loans during theyear on the pledge of securities held in its subsidiaries joint ventures or associatecompanies. However details on the pledge of securities held in it's subsidiaries wherethe company has defaulted in repayment thereof areasfollows:
|Nature of loan taken ||Nameoflender ||Name ofthe subsidiary ||Details of security pledged |
|Term Loan ||Yes Bank Limited ||Borelli Tea Holdings Limited ||Pledge of Investment in Phuben Tea Company Limited |
x) a. The Company has not raised moneys by way of initial public offeror further public offer (including debt instruments) during
the year.Accordingly reporting under Clause 3(x)(a) ofthe Order is notapplicable to the Company.
b. According to the information and explanations given to us and basedon our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year. Accordingly clause 3 (x)(b) of the Order is not applicable tothe Company.
xi) a. During the course of our examination of books of account carriedout in accordance with generally accepted auditing practices
in India we have neither come across incidence of any material fraudby the company or on the company nor have we been informed of any such case by themanagement.
In respect of matters involving fraud suspected by predecessor auditorin the earlier years and reported upon by them final outcome of inspection or othercourse of action by regulatory authorities as stated in Para (e) of Basis for AdverseOpinion Section is awaited and as such cannot be commented upon by us.
b. During the course of our examination of the books and records of theCompany carried out in accordance with the generally accepted auditing practices inIndia and according to the information and explanations given to us and representationreceived from the management a report under Section143(12) of the Act in Form ADT-4 asprescribed under rule 13 of Companies (Auditand Auditors) Rules 2014 has not been filedwith the Central Government. Such report was howeverfiled in the earlier years by thepredecessor auditor for which as stated in Para (e) of the Basis for Adverse Opinionsection above final outcome is awaited.
c. As represented to us by the management there were no whistle blowercomplaints received by the company during the year.
xii) The Company is not a Nidhi company and hence reporting underparagraph 3(xii) of the Order is not applicable to the Company.
xiii) Due to the effects/ possible effects ofthe matters described inparagraph (e) ofthe Basis for Adverse Opinion Section ofour report whereby transactionsand outstanding from certain promoter companies have not been considered as related partytransaction. We are unable to state whether the Company is in compliance with Sections 177and 188 of the Companies Act 2013 where applicable for all transactions with therelated parties and the completeness / correctness of the disclosures / details of relatedparty transactions in the standalone financial statements as required by the applicableIndian Accounting Standards as such cannot be ascertaind and commented upon by us;
xiv) a. The Internal audit of the Company has been carried out by afirm of Chartered Accountants. The system followed in our opinion
is generally commensurate with the size and nature of its business.
b. Further we have considered during the course of our audit thereports ofthe internal auditor for the period under audit issued to the Company duringthe year and till date in determining the nature timing and extent of our auditprocedures in accordance with the guidance provided in SA 610 "Using the work ofInternal Auditors".
xv) According to the information and explanations given to us and asrepresented to us by the management and based on our examination of the records theCompany has not entered into non-cash transactions with directors or persons connectedwith him. Accordingly paragraph 3(xv) ofthe Order is not applicable to the Company.
xvi) a. In our opinion the Company is not required to be registeredunder section 45-IA ofthe Reserve Bank of India Act 1934. Hencereporting under clause3(xvi)(a) of the Order is not applicable to the company.
b. The Company has not conducted any Non-Banking Financial or HousingFinance Activities without a valid certificate of registration as required under ReserveBank of India Act 1934. Hence reporting under clause 3(xvi)(b) of the Order is notapplicable to the company.
c. The Company is not a Core Investment Company (CIC) as defined in theregulations made by the Reserve Bank of India. Hence reporting under clause 3(xvi)(c)ofthe Order is not applicable to the company.
d. In our opinion and based on the representation received by us fromthe management there is no core investment company within the Group (as defined in theCore Investment Companies (Reserve Bank) Directions 2016) and accordingly reporting underclause 3(xvi)(d) of the Order is not applicable to the company.
xvii) Onthe basisofoverall examination ofthefinancialstatementtheCompanyhas notincurred cash lossesduringthefinancial year covered by ouraudit and in the immediately preceding financial year and therefore further reporting asrequired in this respect under clause 3(xvii) ofthe Order is not applicable to thecompany.
xviii) There has been no resignation ofthe statutory auditors oftheCompany during the year and accordingly reporting under clause 3(xviii) ofthe Order is notapplicable to the company.
xix) As stated in Note no. 57(a) there is a material uncertainty withrespect to going concern for which resolution process is being undertaken by the lenders.The ability to continue as a going concern is dependent upon formulation and approval ofthe resolution plan and in the event of the management's expectation in this respect andestimation etc. not turning out to be true validity of assumption for going concern andpossible impact thereof including on carrying value of tangible and intangible assets eventhough expected to be material as such presently cannot be ascertained. Having regard tothis and other information accompanying the financial statements and our knowledge of theBoard of Directors and in absence of any Management plans pending completion of theresolution process and required evidence supporting the assumptions there is materialuncertainty as on the date of the Audit Report with respect to company's capabilitymeeting its liabilities existing at the date of balance sheet as and when they fall duewithin a period of one year from the balance sheet date and as such were unable to commenton the matter required to be reported under this clause.
xx) The provisions relatingtoCorporateSocial ResponsibilityunderSection135 oftheActare notapplicabletotheCompany. Accordingly reporting under clause 3(xx) oftheOrder is not applicable to the Company.
xxi) The reporting under Clause 3(xxi) ofthe Order is not applicable inrespect of audit of standalone financial statements. Accordingly no comment in respectofthe said clause has been included in this report.
| ||ForLodha&Co |
| ||Chartered Accountants |
| ||Firm's ICAI Registration No.:301051E |
|Place: Kolkata ||R. P. Singh |
|Date : 30th May 2022 ||Partner |
| ||Membership No:52438 |
| ||UDIN: 22052438AJWKDV6607 |