To The Members of SRM Energy Limited
Report on the Audit of the Standalone Ind AS Financial Statements Opinion
We have audited the accompanying standalone Ind AS financial statements of SRMEnergy Limited ("the Company") which comprise the Balance Sheet as at March31 2019 the statement of Profit and Loss (including other Comprehensive Income) theCash Flow Statement and the Statement of Changes in Equity for the year then ended andnotes to the financial statement including a summary of the significant accountingpolicies and other explanatory information. In our opinion and to the best of ourinformation and according to the explanations given to us the aforesaid standalonefinancial statements give the information required by the Act in the manner so requiredand give a true and fair view in conformity with the accounting principles generallyaccepted in India of state of affairs of the Company as at March 2019 and loss Changes inequity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the standards on Auditing specified undersection 143 (10) of the Companies Act 2013. Our responsibilities under those Standardsare further described in the auditor's responsibilities for the audit of the financialstatements section of our report. We are independent of the Company in accordance with thecode of ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the financial statements under theprovisions of the Act and the rules there under and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the code of ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.
Material Uncertainty Related to Going Concern
Attention of the matters is invited to note no.28 of the notes to accounts regardingthe financial statements of the Company having been prepared on a Going Concern basis theCompany's net worth has been significantly reduced and it has been incurring cash lossesand the promoters have infused funds by way of unsecured loan and are committed to providenecessary funding to meet the liabilities and future running expenses of the Company.Further the Board of Directors of the Company have decided to sell/dispose off the powerplant transferred in its wholly owned subsidiary subject to necessary approvals from theshareholders and the statutory authorities if any. In view of above developments theaccounts have been prepared under going concern basis.
Our opinion is not modified in respect to this matter. Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Standalone Financial Statements of the current period.These matters were addressed in the context of our audit of the Standalone FinancialStatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
Information Other than the financial statements and auditors' report thereon
The Company's board of directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the Board'sReport including Annexures to Board's Report Business Responsibility Report but does notinclude the financial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the standalone financial statements or our knowledge obtainedduring the course of our audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
Management's responsibility for the financial statements
The Company's Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these financial statements that give atrue and fair view of the financial position financial performance and cash flows of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the accounting standards specified under section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statement that givea true and fair view and are free from material misstatement whether due to fraud orerror.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so. The Board of Directors are also responsible for overseeing theCompany's financial reporting process.
Auditor's responsibilities for the audit of the financial statements Our objectives areto obtain reasonable assurance about whether the financial statements as a whole are freefrom material misstatement whether due to fraud or error and to issue an auditor'sreport that includes our opinion. Reasonable assurance is a high level of assurance butis not a guarantee that an audit conducted in accordance with SAs will always detect amaterial misstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if individually or in the aggregate they could reasonably beexpected to influence the economic decisions of users taken on the basis of thesefinancial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness of such controls
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the Standalone Financial Statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the Standalone Financial Statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the Standalone Financial Statements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act based on our audit we report that: a) Wehave sought and obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit. b) In our opinionproper books of account as required by law have been kept by the Company so far as itappears from our examination of those books. c) The Balance Sheet the Statement of Profitand Loss including Other Comprehensive Income the Cash Flow Statement and Statement ofChanges in Equity dealt with by this Report are in agreement with the books of account. d)In our opinion the aforesaid standalone Ind AS financial statements comply with theIndian Accounting Standards prescribed under section 133 of the Act read with rule 7 ofthe Companies (Accounts) Rule 2014. e) On the basis of the written representationsreceived from the directors as on March 31 2019 taken on record by the Board ofDirectors none of the directors are disqualified as on March 31 2019 from beingappointed as a director in terms of Section 164(2) of the Act. f) With respect to theadequacy of the internal financial controls over financial reporting of the Company andthe operating effectiveness of such controls refer to our separate report in"Annexure A". Our report expresses an unmodified opinion on the adequacy andoperating effectiveness of the Company's internal financial controls over financialreporting. g) In our opinion and to the best of our information and according to theexplanations given to us we report as under with respect to other matters to be includedin the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014:-(i) The Company has disclosed the impact of pending litigations on itsfinancial position in its financial statements-Refer Note 18 on Contingent Liabilities;(ii) The Company did not have any long-term contracts including derivative contracts; assuch the question of commenting on any material foreseeable losses thereon does not arise;and (iii) There has not been an occasion in case of the Company during the year underreport to transfer any sums to the Investor Education and Protection Fund.
The question of delay in transferring such sums does not arise.
2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in the"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.
For VATSS & Associates Regn. No.017573N
Partner(M/N: 90862) Place: New Delhi Dated: 28/05/2019
TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 1 (f) under 'Report on Other Legal and RegulatoryRequirements' of our Report of even date)
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of SRMENERGY LIMITED ("the Company") as of March 31 2019 in conjunction with ouraudit of the financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance or adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to Company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation or reliable financial information as required underthe Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") issued by the Institute of Chartered Accountants of Indiaand the Standards on Auditing prescribed under section 143(10) of the Companies Act 2013to the extent applicable to an audit of internal financial controls. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting were established and maintained and if such controlsoperated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment or the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A Company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A Company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the Company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the Company are being made only in accordance with authorizations ofmanagement and directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of theCompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting Because ofthe inherent limitations of internal financial controls over financial reportingincluding the possibility of collusion or improper management override of controlsmaterial misstatements due to error or fraud may occur and not be detected. Alsoprojections of any evaluation of the internal financial controls over financial reportingto future periods arc subject to the risk that the internal financial control overfinancial reporting may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedures may deteriorate.
In our opinion to the best our information and according to the explanation given tous the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2019 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
For VATSS & Associates Regn. No.017573N
Place: New Delhi Dated: 28/05/2019
ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT
The Annexure referred to in our Independent Auditors' Report of even date to themembers of SRM ENERGY LIMITED on the accounts of the company for the year ended31st March 2019 (i) The Company does not have fixed assets. Hence clause 3(i)(a) to3(i)(c) of the order are not applicable to the Company; (ii) The nature of business of theCompany does not require it to have any inventory. Hence the requirement of clause (ii)of paragraph 3 of the said Order is not applicable to the Company; (iii) As informed tous the Company has not granted loans secured or unsecured to companies firms or otherparties covered in the register maintained under section 189 of the Companies Act2013.Hence clauses 3(iii) (a) to (c) of the order are not applicable to the Company.
(iv) In our opinion and according to the information and explanations given to us thecompany has compiled with the provisions of section 185 and 186 of the Companies Act2013in respect of loans investments guarantees and security.
(v) The Company has not accepted any deposits from the public and hence the directivesissued by the Reserve Bank of India and the provisions of Section 73 to 76 or any otherrelevant provisions of the Act and the Companies(Acceptance of Deposit) Rules2015 withregard to the deposits accepted from the public are not applicable.
(vi) As informed to us the maintenance of cost records has not been specified by theCentral Government under sub-section (1) of Section 148 of the Act in respect of theactivities carried on by the company.
(vii) (a) According to the information and explanations given to us and based on therecords of the company examined by us the company is regular in depositing the undisputedstatutory dues including Provident Fund Employees' State Insurance Income-taxSales-tax Wealth Tax Service Tax Custom Duty Excise Duty Value added Tax Cess andany other statutory dues applicable to it though there has been a slight delay in fewcases. According to the information and explanations given to us no undisputed amountspayable in respect of the above were in arrears as at March 31 2019 for a period of morethan six months from the date on when they become payable; (b) According to theinformation and explanations given to us and based on the records of the Company examinedby us the dues outstanding with respect to Income Tax Wealth Tax Service Tax SalesTax Customs Duty and Excise Duty or cess as applicable to it on account of any disputeare as follows:
|Name of the statute ||Nature of dues ||Amount *Rs* in million ||Period to which the amount relates ||Forum where dispute is pending |
|Income Tax ||TDS ||0.02 ||AY 2008-09 ||CIT |
|Act1961 || || ||to 2014-15 ||(Appeals) |
|Income Tax ||IncomeTax ||5.943 ||AY 2008-09 ||CIT |
|Act'1961 ||Due u/s 143(3) || ||& AY 2013-14 ||(Appeals) |
(viii) According to the records of the company examined by us and as per theinformation and explanations given to us the company has not taken any loans from anyfinancial institutions banks or debenture holder and hence the question of defaulting inrepayment of dues does not arise.
(ix) According to the records of the company examined by us and as per the informationand explanations given to us the company has not raised moneys by way of initial publicoffer or further public offer including debt instruments and term Loans. Accordingly theprovisions of clause 3 (ix) of the Order are not applicable to the Company and hence notcommented upon.
(x) According to the records of the company examined by us and as per the informationand explanations given to us we report that no fraud by the Company or on the company byits officers or employees has been noticed or reported during the year.
(xi) In our opinion the Company has not paid any managerial remuneration. Thereforethe provisions of clause 4 (xi) of the Order are not applicable to the Company.
(xii) In our opinion the Company is not a Nidhi Company.
Therefore the provisions of clause 4 (xii) of the Order are not applicable to theCompany.
(xiii) According to the records of the company examined by us and as per theinformation and explanations given to us all transactions with the related parties are incompliance with section 177 and 188 of Companies Act 2013 and the details have beendisclosed in the Financial Statements as required by the applicable accounting standards.
(xiv)According to the records of the company examined by us and as per the informationand explanations given to us the company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review. Accordingly the provisions of clause 3 (xiv) of the Order are notapplicable to the Company and hence not commented upon.
(xv) According to the records of the company examined by us and as per the informationand explanations given to us the company has not entered into any non-cash transactionswith directors or persons connected with him.
Accordingly the provisions of clause 3 (xv) of the Order are not applicable to theCompany and hence not commented upon.
(xvi)In our opinion the company is not required to be registered under section 45 IAof the Reserve Bank of India Act 1934 and accordingly the provisions of clause
3 (xvi) of the Order are not applicable to the Company and hence not commented upon.
For VATSS & Associates Regn. No.017573N
Partner(M/N: 90862) Place: New Delhi Dated: 28/05/2019