TO THE MEMBERS OF SUNEDISON INFRASTRUCTURE LIMITED REPORT ON THE STANDALONE IND ASFINANCIAL STATEMENTS
We have audited the accompanying standalone Ind AS financial statements of SunEdisonInfrastructure Limited ("the Company") which comprises the Balance Sheet as atMarch 31 2020 the Statement of Profit and Loss (including Other Comprehensive income)the Statement of Changes in Equity and the Statement of Cash Flows for the year thenended and Notes to the financial statements including a summary of significantaccounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Companies Act 2013 ("the Act") in the manner so required andgive a true and fair view in conformity with the Indian Accounting Standards prescribedunder section 133 of the Act read with the Companies (Indian Accounting Standards) Rules2015 as amended ("Ind AS") and other accounting principles generally acceptedin India of the state of affairs of the Company as at March 31 2020 and loss changesin equity 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 (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of thestandalone Ind AS Financial Statements section of our report. We are independent of theCompany in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India together with the ethical requirements that are relevant to our auditof the standalone Ind AS financial statements under the provisions of the Companies Act2013 and the Rules thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for our opinionon the standalone Ind AS financial statements.
MATERIAL UNCERTAINTY RELATING TO GOING CONCERN
We draw your attention to Note 38 of the standalone financial statements annexed tothis report which states that the Company has incurred losses during the year ended 31stMarch 2020 due to which the net worth has been fully eroded as at such date. We also drawyour attention to Note 39 of the standalone financial statements annexed to this reportwherein a substantial portion of the Company's business is proposed to be restructured andtransferred on a slump sale basis. The notes referred to in this paragraph in conjunctiongive rise to a material uncertainty that may cast significant doubt on the Company'sability to continue as a going concern. As more fully explained in such Note 38 of thestandalone financial results it is considered appropriate by the management to prepare thefinancial statements on a going concern basis. Our opinion is not modified in respect ofthis matter.
EMPHASIS OF MATTER
1) We draw your attention to Note 39 of the standalone financial statements annexed tothis report which more fully describes the transaction which the Company has entered intovide a Framework agreement dated June 23 2020 wherein the proposed restructuring isbeing undertaken to primarily separate the completed projects from the under-developmentprojects and transfer such under-development projects along with the engineeringprocurement and construction ("EPC") business and the Trademark"SunEdison" by way of a slump sale on a going concern basis to an entity whichis incorporated along with the participation of certain identified external investors.
2) We draw your attention to Note 40 of the standalone financial statements annexed tothis report wherein management has assessed that there is no material impact in thefinancial statements due to lockdown and related restrictions imposed towards COVID 19pandemic. Management continues to monitor all material changes to the Company's internaland external environment due to the Covid-19 pandemic.
OUR OPINION IS NOT MODIFIED IN RESPECT OF THESE MATTERS.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone Ind AS financial statements of the currentperiod. These matters were addressed in the context of our audit of the standalone Ind ASFinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. In addition to the matter described in the MaterialUncertainty Related to Going Concern section of our report we have determined the mattersdescribed below to be the key audit matters to be communicated in our report.
|SR. NO. KEY AUDIT MATTER ||AUDITOR'S RESPONSE |
|1 Accuracy of recognition measurement presentation and disclosure of revenues and other related balances in view of adoption of Ind AS 115 "Revenue from Contracts with Customers" The application of the revenue accounting standard involves certain key judgements relating to identification of distinct performance obligations determination of transaction price of the appropriateness of the basis used to measure revenue recognized over a period; estimation of costs to complete determining the stage of completion and the timing of revenue recognition ||Our procedures included among others obtaining an understanding of contract execution processes and relevant controls relating to the accounting for customer contracts. We tested the relevant internal controls used to ensure the completeness accuracy and timing of revenue recognized including controls over the degree of completion of service contracts at year-end. |
|Further revenue comprises of at a point in time' types of contracts where revenue is recognized on transfer of control in relation to sale of solar water pumps (supply-only and supply-and-installation) and over a period of time' types of contracts which involves assessing the degree of completion for Ground Solar Power Plants and Rooftop projects. The Company recognizes revenue and profit/loss based on stage of completion which is computed based on the proportion of contract costs incurred at the balance sheet date in relation to the total estimated costs of the contract at completion. The recognition of revenue and profit/loss therefore rely on estimates in relation to the total estimated costs of each contract. ||We read a sample of contracts to assess whether the method for recognition of revenue was relevant and consistent with Ind AS 115 and has been applied consistently. We focused on contract classification allocation of income and cost to individual performance obligations and timing of transfer of control. Where a contract contained multiple elements we considered Management's judgements as to whether they comprised performance obligations that should be accounted for separately and in such cases challenged the judgements made in the allocation of consideration to each performance obligation. |
|Refer Note 3(c) of the standalone Ind AS financial statements. ||We evaluated and challenged the significant judgements and estimates made by Management in applying the Company's accounting policy to a sample of specific contracts and separable performance obligations of contracts and we obtained evidence to support them including details of contractual agreements delivery records cost estimations budget approvals and cash receipts. For the contracts selected we inspected original signed contracts and reconciled the revenue recognized to the underlying accounting records. |
|2 Warranty Provisions ||We tested the relevant internal controls regarding completeness of warranty provisions and how Management assesses valuation of provisions. We challenged the assumptions underlying the valuation of provisions by checking and corroborating the inputs used to calculate the provisions including interviewing Management regarding individual cases. We assessed specific warranty provisions held for individual cases to evaluate whether the warranty provisions were sufficient to cover expected costs at year-end. Further we assessed the level of historical warranty claims to assess whether the total warranty provisions held at year-end were sufficient to cover expected costs in light of known and expected cases and standard warranty periods provided. |
|The Company's product warranties primarily cover expected costs to repair or replace components with defects or functional errors and financial losses suffered by the Company's customers in connection with unplanned suspension of operations. || |
|Warranties are usually granted for a period of five to ten years from legal transfer of the solar water pumps. This area is complex as the completeness and valuation of the expected outcome of warranty provisions requires a high degree of judgement and the use of estimates giving rise to inherent uncertainty in the amounts recorded in the standalone Ind AS financial statements. || |
|Refer Note 17 of the standalone Ind AS financial statements. || |
INFORMATION OTHER THAN THE STANDALONE IND AS FINANCIAL STATEMENTS AND AUDITOR'S REPORTTHEREON
The Company's Board of Directors is responsible for the other information. The otherinformation obtained at the date of this auditor's report is information included in theDirector's report but does not include the standalone Ind AS financial statements and ourauditor's report thereon.
Our opinion on the standalone Ind AS financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone Ind AS financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone Ind AS financialstatements or our knowledge obtained during the course of our audit or otherwise appearsto be materially misstated.to be communicated in our report.
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 STANDALONE IND AS FINANCIAL STATEMENTS
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone Ind AS financial statements that give a true and fair view of thefinancial position financial performance changes in equity and cash flows of the Companyin accordance with the Indian Accounting Standards (Ind AS) and accounting principlesgenerally accepted in India. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the Ind AS financial statements that give a true and fair view and arefree from material misstatement whether due to fraud or error.
In preparing the standalone Ind AS financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the company's financialreporting process
AUDITOR'S RESPONSIBILITY FOR THE AUDIT OF THE STANDALONE IND AS FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these standalone Ind AS financial 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 standalone Ind ASfinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal financial controls relevant to the audit in orderto design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the 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 standalone Ind AS financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.
Evaluate the overall presentation structure and content of the standalone Ind ASfinancial statements including the disclosures and whether the standalone Ind ASfinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
Materiality is the magnitude of misstatements in the standalone Ind AS financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the 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 Ind AS financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about the matteror when 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.
The financial statements of the Company for the year ended March 31 2019 included inthese standalone financial statements have been audited by the predecessor auditor whoexpressed an unmodified opinion on those statements on May 30 2019
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) We have sought and obtained all the information and explanations which to the bestof ourknowledge and belief were necessary for the purposes of our audit.
b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the relevant books of account.
d) In our opinion the aforesaid standalone Ind AS financial statements comply with theAccounting Standards specified under Section 133 of the Act.
e) The matter described in the Material uncertainty related to Going Concern sectionabove in our opinion may have an adverse effect on the functioning of the Company.
f) On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 from being appointed as a director in terms of Section 164 (2) of theAct.
g) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure A". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
h) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended in our opinionand to the best of our information and according to the explanations given to us theCompany being a private company section 197 of the Act related to the managerialremuneration not applicable.
i) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company does not have any pending litigations which would impact its financialposition.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the "Annexure B" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
For V K A N & Associates
ICAI Firm Registration No 014226S
ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT
(REFERRED TO IN PARAGRAPH 1(H) UNDER
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS' SECTION OF OUR REPORT TO THEMEMBERS OF
SUNEDISON INFRASTRUCTURE LIMITED 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 SunEdisonInfrastructure Limited ("the Company") as of March 31 2020 in conjunction withour audit of the standalone Ind AS financial statements of the Company for the year endedon 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 (ICAI'). 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 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") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to the explanations givento us 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 2020 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 V K A N & Associates
ICAI Firm Registration No 014226S
Membership No. 222070 Place: Chennai Date: October 12 2020
ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT
(REFERRED TO IN PARAGRAPH 2 UNDER REPORT ON
OTHER LEGAL AND REGULATORY REQUIREMENTS' SECTION OF OUR REPORT TO THE MEMBERS OF
SUNEDISON INFRASTRUCTURE LIMITED OF EVEN DATE)
(i) In respect of its fixed assets:
(a) The Company has maintained proper records showing full particulars includingquantitative details and location of fixed assets
(b) The Company has a regular program of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner over a period of three years. In ouropinion this periodicity of physical verification is reasonable having regard to the sizeof the company and nature of its assets.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company there are no immovable properties are held inthe name of the Company.
(ii) In respect of inventories:
(a) Inventories have been physically verified by the management during the year. In ouropinion the frequency of such interval is reasonable.
(b) The procedures for physical verification of inventories followed by the managementare reasonable and adequate considering the nature and size of the Company and the natureof its business.
(c) The Company is maintaining proper records of inventory. The discrepancies noticedon verification between the physical stocks and the book records were not material.
(iii) According to the information and explanations given to us and on the basis of ourexamination of books of accounts the Company has not granted any loan secured orunsecured to companies firms limited liability partnerships or other parties covered inthe register required under Section 189 of the Companies Act 2013 and hence paragraph3(iii) of the order is not applicable.
(iv) The Company has complied with provisions of section 185 and 186 of the Act inrespect of loans. The Company does not have any investments and guarantees which requirescompliance under Sections 185 and 186 of the Act.
(v) According to the information and explanations made available to us the Company hasnot accepted deposits from the public.
(vi) The Central Government has not prescribed the maintenance of cost records undersection 148(1) of the Act.
(vii) According to the information and explanations given to us and on the basis of ourexamination of books of accounts in respect of statutory dues a) There were delays indepositing undisputed statutory dues including income tax goods and services tax customsduty and other material statutory dues ranging from 1 94 days with the appropriateauthorities. There are no undisputed amounts payable in respect of income tax goods andservices tax and other material statutory dues as at 31 March 2020 for a period of morethan six months from the date they became payable.
b) The company has no material dues of duty of income tax or goods and services tax orcess which have not been deposited with the appropriate authorities on account of anydispute as on 31st March 2020.
(viii) According to the information and explanations given to us and on the basis ofour examination of books of accounts the Company has not defaulted in repayment ofborrowings to a financial institution.
(ix) According to the information and explanations given to us and on the basis of ourexamination of books of accounts the Company did not raise any money by way of initialpublic offer or further public offer (including debt instruments) and term loans duringthe year.
(x) According to the information and explanations given to us no fraud by the Companyor no fraud on the Company by its officers or employees has been noticed or reportedduring the year.
(xi) In our opinion and according to the information and explanations given to us theCompany has made paid the managerial remuneration in compliance with the the provisions ofSection 197 read along with Schedule V to the Act.
(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.
(xiii) In our opinion and according to the information and explanations given to usthe Company is in compliance with Section 177 and 188 of the Act where applicable forall transactions with related parties and the details of such related party transactionshave been disclosed in the financial statements as required by the applicable accountingstandards.
(xiv) According to the information and explanations give to us and on the basis of ourexamination of books of accounts the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the year
(xv) According to the information and explanations given to us and on the basis of ourexamination of books of accounts the Company has not entered into non-cash transactionswith directors or persons connected with him. Accordingly paragraph 3(xv) of the Order isnot applicable.
(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
For V K A N & Associates
ICAI Firm Registration No 014226S
Membership No. 222070
Date: October 12 2020