Praj Industries Ltd.
|BSE: 522205||Sector: Engineering|
|NSE: PRAJIND||ISIN Code: INE074A01025|
|BSE 00:00 | 09 Dec||372.40||
|NSE 00:00 | 09 Dec||372.30||
|Mkt Cap.(Rs cr)||6,841|
|Mkt Cap.(Rs cr)||6840.99|
Praj Industries Ltd. (PRAJIND) - Auditors Report
Company auditors report
TO THE MEMBERS OF PRAJ INDUSTRIES LIMITED
Report on the Audit of the Standalone Financial Statements
We have audited the Standalone Financial Statements of Praj IndustriesLimited ("the Company") which comprise the Balance Sheet as at March 31 2022and the Statement of Profit and Loss (including Other Comprehensive Income) Statement ofChanges in Equity and Statement of Cash Flows for the year then ended and notes to theFinancial Statements including a summary of Significant Accounting Policies and otherexplanatory information (hereinafter referred to as "the Standalone FinancialStatements")
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid Standalone Financial Statements give theinformation required by the Companies Act 2013 ('the Act') in the manner so required andgive a true and fair view in conformity with the accounting principles generally acceptedin India of the Standalone state of affairs of the Company as at March 31 2022 and itsStandalone profit (including Other Comprehensive Income) Standalone changes in equity andits Standalone cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Act. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theStandalone Financial Statements section of our report. We are independent of the Companyin accordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of theStandalone Financial Statements under the provisions of the Act and the Rules thereunderand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.
The Company's Board of Directors is responsible for the otherinformation. The other information comprises the Management Discussion and Analysis; Boardof Directors' Report along with its Annexures and Corporate Governance Report included inthe Annual Report but does not include the Standalone Financial Statements and ourauditor's report thereon.
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 and in doing so consider whether theother information is materially inconsistent with the Standalone Financial Statements orour knowledge obtained in the audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is amaterial misstatement of this other information; we are required to report that fact. Wehave nothing to report in this regard.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the Standalone Financial Statements of thecurrent period. These matters were addressed in the context of our audit of the StandaloneFinancial Statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bekey audit matters to be communicated in our report.
1) Recognition of Revenue from Contracts with Customers Description ofKey Audit Matters
Revenue from Projects is recognized as per Ind-AS 115 on satisfactionof performance obligation overtime where progress towards complete satisfaction ofperformance obligation is measured under Input Method. For the year ended 31st March 2022project revenue recognized amounted to Rs. 19510.521 Mn opening and closing Contracts inProgress amounted to Rs. 726.742 Mn and Rs. 2023.298 Mn respectively.
Measuring of satisfaction of performance obligation under Input Methodinvolves estimation of budget costs in respect of projects contracted and capturing ofactual costs incurred against such projects. As the revenue is recognized in proportion ofproject costs incurred to the total budgeted cost inaccurate capturing of costs incurredas well as inaccurate budget estimates would result in incorrect recognition of revenue.
Description of Auditors' Response
We have performed the following processes in relation to the accuracyof revenue recognized and accrued:
a) Understood evaluated and tested key controls over the 'Statement ofRevenue Recognition' which is a statement prepared in which data related to Contractprice Budgeted costs Progressive billings raised and Percentage completion of contractis captured and on the basis of which proportionate revenue is recognized under InputMethod.
b) Tested on sample basis the process of estimation / revision ofbudget costs of the projects which are considered in 'Statement of Revenue Recognition'.
c) Checked on sample basis contract values considered in 'Statement ofRevenue Recognition' from the approved contracts with the Customers.
d) Tested on sample basis the process of capturing of costs in'Statement of Revenue Recognition' with respect to the projects in process.
e) Tested on sample basis the provision for Anticipated losses inrespect of projects considered in the financial Statements.
f) Verified revenue to be recognized for the year under audit from'statement of Revenue Recognition'.
Our Audit process did not identify any material incorrect Recognitionof Revenue.
2) Trade Receivables Description of Key Audit Matters
Trade Receivables net of impairment allowance amounts to Rs. 4169.398Mn as on 31st March 2022 which constitutes about 20% of the total Assets of the Company.Impairment provision carried in the books as on 31st March 2022 is Rs. 372.364 Mn.
Management's judgment is involved in identifying impairment in thevalue of the receivable as well as in formulating a policy for creating provisioningagainst impairment which has an adverse effect on the profits of the Company.
Description of Auditors' Response
We have performed the following processes in relation to Management'sJudgment in identification of impairment of value of Receivables and adequacy ofimpairment provision:
We have referred to the defined policy in place stipulating themethodology of making impairment provision in respect of overdue Receivable amounts. Wehave also reviewed age-wise analysis in respect of Receivables and ensured that theprovisioning is made according to such policy. The above referred provisioning policystipulates different provisioning norms for Receivables with confirmations and withoutconfirmations.
We have sought information and explanations from the Project Headsregarding the status of receivable for the purpose of ensuring adequate impairmentprovisions.
We have also tested subsequent collections made from the overduereceivables.
Our Audit process did not identify any material inadequate provisioningfor impairment in the value of Receivables.
3) Investment in Subsidiaries Description of Key Audit Matters
In terms of option of Deemed Cost as per Ind-AS 101 'First TimeAdoption of Indian Accounting Standards' the Company has valued its investments inSubsidiaries amounting to Rs.1568.676 Mn as on 31st March 2022 at cost.
As per Ind-AS 36 'Impairment of Assets' Management has to assess at theend of each reporting period whether there is any indication that an Asset may be impairedand if such indication exists the Management has to estimate the recoverable amount andcompare the same with the carrying amount of the investment in order to identify animpairment loss. Impairment loss if any has to be recognized immediately in theStatement of Profit and Loss.
Description of Auditors' Response
We have performed the following processes in relation to Management'sJudgment in identification of impairment of value of Investment in Subsidiaries:
a) We have obtained representation from the Management regardingindication of likely impairment loss in respect of Investments made in Subsidiaries andprocess of estimation of recoverable amount. During the year the management has notidentified any impairment in the value of investment in its subsidiaries.
b) In case of a Subsidiary having material value under Investment inrespect of which no observable inputs were available we have referred to the valuationobtained by the Management from the independent valuer regarding its Value in Use andtested and discussed the assumptions used in the process of valuation with the managementas well as checked the actual financial performance of the subsidiary with the forecastconsidered in the valuation report to ensure that no impairment provision against the sameis required.
Our Audit process did not identify any requirement of provisioning forimpairment in the value of Investment in Subsidiaries.
Responsibilities of Management and Those Charged with Governance forthe Standalone Financial Statements
The Company's Board of Directors is responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these Standalone FinancialStatements that give a true and fair view of the Standalone financial position Standalonefinancial performance including other comprehensive income Standalone changes in equityand Standalone cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) specifiedunder section 133 of the Act read with the Companies (Indian Accounting Standards) Rules2015 as amended.
This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the 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 internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe Standalone Financial Statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
In preparing the Standalone Financial Statements the 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.
Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.
Auditor's 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 auditor's report that includes our opinion.Reasonable assurance is a high level of assurance 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 of these Standalone Financial Statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit.
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 Act we are also responsible for expressing our opinion on whetherthe Company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
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 of the goingconcern basis of accounting 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 auditor's 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 auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of theStandalone Financial Statements including the disclosures and whether the StandaloneFinancial Statements represent the underlying transactions and events in a manner thatachieves fair presentation.
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 the StandaloneFinancial Statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2020("the Order") issued by the Central Government of India in terms of sub-section(11) of section 143 of the Act we give in the Annexure A; a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
2. As required by Section 143(3) of the Act we report that:
a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.
b) In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss (including othercomprehensive income) the Statement of Changes in Equity and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.
d) In our opinion the aforesaid Standalone Financial Statements complywith the Indian Accounting Standards specified under Section 133 of the Act read withCompanies (Indian Accounting Standards) Rules 2015 as amended.
e) On the basis of the written representations received from thedirectors as on March 31 2022 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2022 from being appointed as a director in termsof Section 164 (2) of the Act.
f) With respect to the adequacy of the internal financial controls overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate Report in "Annexure B".
g) As required by section 197 (16) of the Act; in our opinion andaccording to information and explanation provided to us the remuneration paid by thecompany to its directors is in accordance with the provisions of section 197 of the Actand remuneration paid to directors is not in excess of the limit laid down under thissection.
h) With respect to the other matters to be included in the Auditor'sReport 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 Company has disclosed the impact of pending litigations on itsfinancial position in its Financial Statements - Refer Note 26 to the FinancialStatements.
(ii) The Company has made provision as required under the applicablelaw or Indian Accounting Standards for the material foreseeable losses on the long termcontracts as at 31st March 2022 .
(iii) There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.
(iv) (a) The management has represented to us that to the best of itsknowledge and belief no funds have been advanced or loaned or invested (either fromborrowed funds or share premium or any other sources or kind of funds) by the Company toor in any other person(s) or entity(ies) including foreign entities("Intermediaries") with the understanding whether recorded in writing orotherwise that the Intermediary shall whether directly or indirectly lend or invest inother persons or entities identified in any manner whatsoever by or on behalf of thecompany ("Ultimate Beneficiaries") or provide any guarantee security or thelike on behalf of the Ultimate Beneficiaries. (Refer Note No. 40)
(b) the management has represented to us that to the best of itsknowledge and belief no funds have been received by the Company from any person(s) orentity(ies) including foreign entities ("Funding Parties") with theunderstanding whether recorded in writing or otherwise that the Company shall whetherdirectly or indirectly lend or invest in other persons or entities identified in anymanner whatsoever by or on behalf of the Funding Party ("UltimateBeneficiaries") or provide any guarantee security or the like on behalf of theUltimate Beneficiaries. (Refer Note No. 40)
(c) Based on the information and explanation given to us and auditprocedures performed as considered reasonable and appropriate in the circumstancesnothing has come to our notice that has caused us to believe that the representations madeby the management and as mentioned under sub-clause (iv)(a) and (iv)(b) above contain anymaterial misstatement.
(v) As stated in Note 11 and 12 to the Standalone financial statements;
(a) The final dividend proposed in the previous year declared and paidby the Company during the year is in accordance with Section 123 of the Act.
(b) The Board of Directors of the Company have proposed final dividendfor the year which is subject to the approval of the members at the ensuing Annual GeneralMeeting. The amount of dividend proposed is in accordance with section 123 of the Act asapplicable.
(vi) The requirement to the use of accounting software for maintainingCompany's books of account which has a feature of recording audit trail (edit log)facility is deferred to financial years commencing on or after April 12023 thereforereporting under Rule 11(g) of Companies (Audit & Auditors) Rules 2014 is notapplicable for financial year ended on March 31 2022.
Annexure A to Independent Auditors' Report
Referred to in paragraph 1 under the heading "Report on Otherlegal and Regulatory Requirements" of our report on even date:
i. (a) (A) The Company is maintaining proper records showing fullparticulars including quantitative details and situation of Property Plant &Equipment.
(B) The Company is maintaining proper records showing full particularsof intangible assets;
(b) The Property Plant & Equipment are physically verified by theManagement according to a phased program designed to cover all the items 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 the program a portion of the Property Plant& Equipment has been physically verified by the Management during the year and nomaterial discrepancies have been noticed on such verification.
(c) The title deeds of immovable properties (other than propertieswhere the company is the lessee and the lease agreements are duly executed in favour ofthe lessee) as disclosed in Note 3 on Property Plant & Equipment InvestmentProperty to the financial statements are held in the name of the Company.
(e) According to the information and explanations provided to us thereare no proceedings have been initiated or are pending against the company for holding anybenami property under the Prohibition of Benami Property Transactions Act 1988 (asamended in 2016) and rules made thereunder. Hence reporting under clause 3(i) (e) of theOrder is not applicable.
ii. (a) The physical verification of inventory excluding stocks withthird parties have been conducted at reasonable intervals by the Management during theyear. In respect of inventory lying with third parties these have substantially beenconfirmed by them. In our opinion and based on the policy adopted by the management thecoverage and procedure of such verification is appropriate. The discrepancies noticed onphysical verification of inventory as compared to book records were not 10% or more inaggregate for each class of inventory.
(b) According to the information and explanations provided to us thecompany has been sanctioned working capital limits in excess of five crore rupees duringthe year in aggregate from banks or financial institutions on the basis of security ofcurrent assets though there is no utilization of funded limits during the year. Themanagement of the company has provided us with the quarterly returns or statements whichthey have represented to us have been filed by the company with their banks or financialinstitutions. In our opinion these quarterly returns or statements are in agreement withthe books of account of the Company after taking into consideration the detailed notegiven in the returns / statements.
iii. (a) The company during the year has stood guarantee to a company.The Company has not made investments in or provided any security or granted any loans oradvances in the nature of loans secured or unsecured to companies firms LimitedLiability Partnerships or any other parties.
The aggregate amount of such guarantee given during the year andbalances thereof as at balance sheet date are as under -
(b) In terms of the information and explanations given to us and thebooks of account and records examined by us and considering the fact that there is noutilization of fund based limit and position of net current asset as at 31st March 2022of the subsidiary guarantees provided during the year is not prima facie prejudicial tothe Company's interest.
(c) The Company has not provided loans and advances in the nature ofloans during the year hence reporting under clause 3(iii) (c) is not applicable.
(d) There are no loan having overdue amount outstanding for more thanninety days.
(e) There are no loans or advances in the nature of loan granted whichhave fallen due during the year and the same has been renewed or extended or fresh loansgranted to settle overdues of such existing loans.
(f) The Company has not granted any loans or advances in the nature ofloans either repayable on demand or without specifying any terms or period of repayment.
iv. In our opinion and according to the information and explanationsgiven to us the Company has not given any loans under Section 185 and the company hascomplied with section 186 of the Companies Act 2013 in respect of the loans andinvestments made and guarantees and security provided by it.
v. The Company has not accepted any deposits or amounts which aredeemed to be deposits from the public within the meaning of Sections 73 74 75 and 76 ofthe Act and the Rules framed there under to the extent notified. According to theinformation and explanations given to us no Order has been passed by The Company LawBoard or National Company Law Tribunal or Reserve Bank of India or any Court or any otherTribunal.
vi. Pursuant to the rules made by the Central Government of India theCompany is required to maintain cost records as specified under Section 148(1) of the Actin respect of its products. We have broadly reviewed the relevant cost records datamaintained in SAP ERP as integrated common database system which is capable of beingextracted by setting the required parameters and therefore are of the opinion that primafacie the prescribed accounts and records have been made and maintained. We have nothowever made a detailed examination of the data / records with a view to determinewhether they are accurate or complete.
vii. (a) According to the information and explanations given to us andthe records of the Company examined by us in our opinion the Company is regular indepositing the undisputed statutory dues including Goods and Service Tax provident fundemployees' state insurance income tax sales tax service tax duty of customs duty ofexcise value added tax cess and other material statutory dues as applicable with theappropriate authorities. According to the information and explanation provided to us noundisputed amounts payable in respect of statutory dues were in arrears as at March 31st 2022 for a period more than six months from the date they became payable.
(b) According to the information and explanations given to us and therecords of the Company examined by us there are no statutory dues of Goods and ServiceTax provident fund employees' state insurance service tax duty of customs duty ofexcise value added tax cess and other material statutory dues which have not beendeposited on account of any dispute. The particulars of sales tax and Income tax as atbalance sheet date which have not been deposited on account of a dispute are as follows:
viii. In terms of the information and explanations given to us and thebooks of account and records examined by us the Company has not surrendered or disclosedas income during the year in the tax assessments under the Income Tax Act 1961. Hencereporting under clause 3(viii) of the Order is not applicable.
ix. (a) As the Company does not have any loans or other borrowings fromany lender during the year hence the provisions of Clause 3(ix)(a) of the Order are notapplicable to the Company.
(b) According to the information and explanations given to us and onthe basis of our audit procedures we report that the company has not been declared wilfuldefaulter by any bank or financial institution or government or any government authority.
(c) According to the information and explanations given to us and onthe basis of our audit procedures the Company has not availed any term loan.
(d) According to the information and explanations given to us and onthe basis of our audit procedures the funds on short term basis have not been utilizedfor long term purposes by the company.
(e) According to the information and explanations given to us and on anoverall examination of the financial statements of the company we report that the companyhas not taken any funds from any entity or person on account of or to meet the obligationsof its subsidiaries. The company does not have any associates or joint ventures.
(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. The company does not have anyassociates or joint ventures.
x. (a) The Company has not raised any moneys by way of initial publicoffer further public offer (including debt instruments) during the year. Accordingly theprovisions of Clause 3(x)(a) of the Order are not applicable to the Company.
(b) The Company has not made any preferential allotment or privateplacement of shares or fully or partly or optionally convertible debentures during theyear. In respect of ESOP's allotted during the year the company has complied with therequirements of applicable sections of the Companies Act 2013 / 1956.
xi. (a) During the course of our examination of the books and recordsof the Company carried out in accordance with the generally accepted auditing practicesin India and according to the information and explanations given to us we have neithercome across any instance of fraud by the Company or on the Company noticed or reportedduring the year nor have we been informed of any such case by the Management.
(b) During the course of our examination of the books and records ofthe Company carried out in accordance with the generally accepted auditing practices inIndia and according to the information and explanations given to us report in the formADT-4 as specified under sub-section (12) of section 143 of the Companies Act has not beenfiled. Accordingly reporting under clause 3(xi)(b) of the Order is not applicable.
(c) During the course of our examination of the books and records ofthe Company carried out in accordance with the generally accepted auditing practices inIndia and according to the information and explanations given to us and as represented tous by the management there are no whistle blower complaints received by the companyduring the year.
xii. As the Company is not a Nidhi Company and the Nidhi Rules 2014are not applicable to it accordingly the provisions of Clause 3(xii) (a) (b) (c) of theOrder are not applicable to the Company.
xiii. The Company has entered into transactions with related parties incompliance with the provisions of Sections 177 and 188 of the Act. The details of relatedparty transactions have been disclosed in the financial statements as required under IndAS 24 Related Party Disclosures specified under Section 133 of the Act read with Rule 7of the Companies (Accounts) Rules 2014. Refer Note 29
xiv. (a) In our opinion and based on our examination the company hasan internal audit system commensurate with the size and nature of its business.
(b) We have considered the internal audit reports of the company issuedtill date for the period under audit.
xv The Company has not entered into any non-cash transactions with itsdirectors or persons connected with him.
Accordingly the provisions of Clause 3(xv) of the Order are notapplicable to the Company.
xvi. (a) The Company is not required to be registered under Section45-IA of the Reserve Bank of India Act 1934. Accordingly the provisions of Clause3(xvi)(a) of the Order are not applicable to the Company.
(b) According to the information and explanations given to us andprocedures performed by us we report that the Company has not conducted any Non-BankingFinancial or Housing Finance activities during the year. Therefore reporting under clause3(xvi)(b) of the Order is not applicable.
(c) According to the information and explanations given to us andprocedures performed by us the Company is not Core Investment Company (CIC) as defined inthe regulations made by the Reserve Bank of India hence reporting under clause 3(xvi)(c)of the Order is not applicable.
(d) Based on information and explanation given to us and as representedby the management the Group does not have any Core Investment Company (CIC) as part ofthe Group hence reporting under clause 3(xvi)(d) of the Order is not applicable.
(xvii) The Company has not incurred cash losses during currentfinancial year and had not incurred cash losses during immediately preceding financialyear.
(xviii) There has been no resignation by statutory auditors during theyear hence reporting under clause 3(xviii) of the Order is not applicable.
(xix) According to the information and explanations given to us and onthe basis of the financial ratios ageing and expected dates of realization of financialassets and payment of financial liabilities other information accompanying the financialstatements our knowledge of the Board of Directors and management plans and based on ourexamination of the evidence supporting the assumptions nothing has come to our attentionwhich causes us to believe that any material uncertainty exists as on the date of theaudit report that the company is not capable of meeting its liabilities existing at thedate of balance sheet as and when they fall due within a period of one year from thebalance sheet date. We however state that this is not an assurance as to the futureviability of the company. We further state that our reporting is based on the facts up tothe date of the audit report and we neither give any guarantee nor any assurance that allliabilities falling due within a period of one year from the balance sheet date will getdischarged by the company as and when they fall due.
(xx) (a) There are no unspent amounts towards Corporate SocialResponsibility (CSR) on other than ongoing projects requiring a transfer to a Fundspecified in Schedule VII to the Companies Act in compliance with second proviso tosub-section (5) of Section 135 of the Act. Accordingly reporting under clause 3(xx)(a) ofthe Order is not applicable for the year.
(b) There are no unspent amounts towards Corporate SocialResponsibility (CSR) in respect of ongoing projects requiring a transfer to a SpecialAccount in compliance with sub-section (6) of Section 135 of the Act. Accordinglyreporting under clause 3(xx)(b) of the Order is not applicable for the year.
(xxi) There have been no qualifications or adverse remarks by therespective auditors in the Companies (Auditor's Report) Order (CARO) reports of thecompanies included in the consolidated financial statements during the year hencereporting under clause 3(xxi) of the Order is not applicable.
I Annexure B to the Independent Auditors' Report
Referred to in paragraph 2 (f) under the heading "Report on Otherlegal and Regulatory Requirements" of our report on even date: Report on the InternalFinancial Controls with reference to Standalone Financial Statements under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls with reference to theStandalone Financial Statements of Praj Industries Limited ("the Company") as ofMarch 312022 in conjunction with our audit of the Standalone Financial Statements of theCompany for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal controls over financialreporting criteria established by the Company considering the essential components ofinternal controls stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Act.
Our responsibility is to express an opinion on the Company's internalfinancial controls with reference to the Standalone Financial Statements based on ouraudit. We conducted our audit in accordance with the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting (the "Guidance Note") and theStandards on Auditing to the extent applicable to an audit of internal financialcontrols both issued by the Institute of Chartered Accountants of India. Those Standardsand the Guidance Note require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to the Standalone FinancialStatements and their operating effectiveness. Our audit of internal financial controlswith reference to the Standalone Financial Statements included obtaining an understandingof internal financial controls with reference to the Standalone Financial Statementsassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal controls based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks of material misstatement of the Standalone Financial Statements whether due tofraud 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 with reference to the Standalone Financial Statements.
Meaning of Internal Financial controls with reference to the StandaloneFinancial Statements
A company's internal financial controls with reference to theStandalone Financial Statements is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of StandaloneFinancial Statements for external purposes in accordance with generally acceptedaccounting principles. A company's internal financial controls with reference to theStandalone Financial Statements includes those policies and procedures that (1) pertain tothe maintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of StandaloneFinancial Statements in accordance with generally accepted accounting principles and thatreceipts 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 StandaloneFinancial Statements.
Inherent Limitations of Internal Financial Controls with reference tothe Standalone Financial Statements
Because of the inherent limitations of internal financial controls withreference to the Standalone Financial Statements including the possibility of collusionor improper management override of controls material misstatements due to error or fraudmay occur and not be detected. Also projections of any evaluation of the internalfinancial controls with reference to the Standalone Financial Statements to future periodsare subject to the risk that the internal financial controls with reference to theStandalone Financial Statements may become inadequate because of changes in conditions orthat the degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects adequateinternal financial controls with reference to the Standalone Financial Statements and suchinternal financial controls with reference to the Standalone Financial Statements wereoperating effectively as at March 31 2022 based on the internal controls over financialreporting criteria established by the Company considering the essential components ofinternal controls stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India.