The Members of
Ujaas Energy Limited
Report on the Financial Statements
We have audited the financial statements of Ujaas Energy Limited ("theCompany") which comprise the balance sheet as at 31st March 2021 and thestatement of Profit and Loss (including other comprehensive income) statement of changesin equity and statement of cash flows for the year then ended and notes to the financialstatements including a summary of significant accounting policies and other explanatoryinformation.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with accountingprinciples generally accepted in India of the state of affairs of the company as at 31stMarch 2021 and its Loss total comprehensive income the changes in equity and its cashflows for the year ended on that date.
Basis for Qualified Opinion Attention is drawn to:
1. Note 45 & 46 of the audited Financial Statement that creditors were called uponto submit their claims in accordance to the Corporate Insolvency Resolution Process.Claims submitted by the Financial creditors and operational creditors are subject toreconciliations. Pending reconciliation and final outcome of the CIRP no accountingimpact in the books of accounts has been made in respect of excess short or non-receipts of claims for operational and financial creditors. Hence consequential impact ifany on the financial results is currently unascertainable.
2. That We have been informed by Resolution Professional the certain informationincluding the minutes of the meeting of the Committee of Creditor and the outcome ofcertain procedures carried out as a part of the CIRP are confidential in nature and couldnot be shared with anyone other than the Committee of Creditor and NCLT. Accordingly weare unable to comment on the possible financial impact presentation and disclosure ifany that may arise if we have been provided access to those information.
3. Note No 47 of the Statement no impairment assessment of property plant andequipment and intangible asset in carrying value as at 31st March 2021 ismade. Therefore we are unable to comment on consequential impairment if any that isrequired to be made in carrying value of property plant and equipment and intangibleassets.
4. Note No. 48 regarding balance confirmations not been received in respect of tradereceivables trade and other payables and loans and advances as a result of whichreconciliation process and consequential adjustments if any has not been carried out.The Company has adjusted / provided significant amounts basis its internal estimatesagainst which necessary supporting documentation has not been made available to us.
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 theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia ("ICAI") together with the ethical requirements that are relevant to ouraudit of the financial statements under the provisions of the Companies Act 2013 and theRules thereunder and we have fulfilled our other ethical responsibilities in accordancewith these requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion on the financialstatements.
Material Uncertainty related to Going Concern
Since the Corporate Insolvency Resolution Process (CIRP) is currently in progress asper the Insolvency & Bankruptcy Code it is required that the Company be managed asgoing concern basis during CIRP. The financial statement is continued to be prepared ongoing concern basis. However there exists material uncertainty about the Company'sability to continue as going concern since same is dependent upon the resolution planapproved by the CoC to be approved by NCLT. The appropriateness of preparation offinancial statement on going concern basis is critically dependent upon outcome of CIRP asspecified in the Code.
Emphasis of Matter
(i) We draw your attention to note 49 of the audited Financial Statements with regardreversal of interest on borrowing by bankers amounting to Rs. 675.56 lacs which has notbeen reversed by the Company.
(ii) We draw attention to the note 50 of the audited Financial Statements with regardsto management's assessment of inter- alia realisability of assets due to COVID 19pandemic outbreak.
(iii) We draw your attention to note 3 of the audited Financial Statements with regardsto management's assessment of inter-alia realisability of Renewable Energy Certificatesamounting to Rs. 1173 lacs which is subject to adjudication of pending litigation at ApexCourt. The management is hopeful of realizing the aforesaid amount considering the legalopinion.
Our report is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.
|Key Audit Matters |
|1. Revenue recognition - Fixed price development contracts |
|The Group inter alia engages in Fixed-price development contracts where revenue is recognized using the percentage of completion computed as per the input method based on management's estimate of contract costs |
|We identified revenue recognition of fixed price development contracts as a KAM considering - |
| Application of revenue recognition accounting standard is complex and involves a number of key judgments and estimates including estimating the future cost-to-completion of these contracts which is used to determine the percentage of completion of the relevant performance obligation; |
| There is an inherent risk around the accuracy of revenues and cost estimation given the customized and complex nature these contracts; |
| These contracts may involve onerous obligations on the Company that require critical estimates to be made by management; and |
|Auditor's Response |
|Our audit procedures on revenue recognized from fixed price development contracts included |
| Obtaining an understanding of the systems processes and controls implemented by management for recording and calculating revenue and the associated cost |
| Involving specialists to assess the design and operating effectiveness of controls: |
| On selected samples of contracts we tested that the revenue recognized is in accordance with the accounting standard by- |
|- Evaluating the identification of performance obligation; |
|- Testing management's calculation of the estimation of contract cost and onerous obligation if any. We: |
|- Observed that the estimates of cost to complete were reviewed and approved by appropriate levels of management; |
|- Performed a retrospective review of costs incurred with estimated costs to identify significant variations and verify whether those variations have been considered in estimating the remaining costs to complete the contract; |
|- Assessed the appropriateness of work in progress (contract assets) on balance sheet by evaluating the underlying documentation to identify possible delays in achieving milestones which may require change in estimated costs to complete the remaining performance obligations; and |
|Performed test of details including analytics to determine reasonableness of contract costs |
|2. Evaluation of uncertain tax positions |
|The Company operates in multiple jurisdictions and is subject to periodic challenges by local tax authorities on a range of tax matters during the normal course of business including direct and indirect tax matters. These involve significant management judgment to determine the possible outcome of the uncertain tax positions consequently having an impact on related accounting and disclosures in the financial statements. |
|Auditor's Response |
|Our audit procedures include the following substantive procedures: |
| Obtained understanding of key uncertain tax positions; and |
| We along with our internal tax experts - |
|- Read and analysed select key correspondences external legal opinions / consultations by management for key uncertain tax positions; |
|- Discussed with appropriate senior management and evaluated management's underlying key assumptions in estimating the tax provisions; and |
|- Assessed management's estimate of the possible outcome of the disputed cases |
Information Other than the Financial Statements and Auditor's 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 ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information 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 financial statements or our knowledge obtained during thecourse 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 is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance including other comprehensive income changes in equity and cashflows of the Company in accordance with the accounting principles generally accepted inIndia including the accounting Standards specified under section 133 of the Act.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate implementation and maintenance of accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statement that give a true and fair view andare free from material misstatement whether due to fraud or error.
In preparing the Ind AS financial statements management is responsible for assessingthe Company'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.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the 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 financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
a. Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
b. Obtain an understanding of internal financial controls relevant to the audit inorder to 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.
c. Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
d. 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 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.
e. 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.
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
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 A a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
As required by Section 143(3) of the Act we report that:
a. We have sought and obtained all the information and explanations which to the bestof our knowledge 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 books of account.
d. In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Companies (Indian AccountingStandard) Rules 2015 as amended.
e. On the basis of the written representations received from the directors as on 31stMarch 2021 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2021 from being appointed as a director in terms of Section164 (2) of the Act.
f. 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 B".
g. With respect to the other matters to be included in theAuditor'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 has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer Note 33 to the financial statements;
ii. The Company did not have any long term contract including derivative contract forwhich there were any material foreseeable losses.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
h. With respect to the matter to be included in the Auditors' Report under Section197(16) of the Act in our opinion and according to the information and explanations givento us the remuneration paid by the Company to its directors during the current year is inaccordance with the provisions of Section 197 read with Schedule V to the Act.
Annexure A to Independent Auditor's Report
Referred to in paragraph (1) under the heading of "Report on Other Legal andRegulatory Requirements" of our report of even date to the members of Ujaas EnergyLimited on the financial statements for the year ended 31st March 2021.
1. In respect of its Fixed Assets :
a. The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.
b. The company has a program of verification to cover all the items of fixed assets ina phased manner which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets. Pursuant to the program certain fixed assets werephysically verified by the management during the year and no material discrepancies havebeen noticed on such verification.
c. According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.
2) In respect of its Inventories:
The inventories has been physically verified by the Management during the year. In ouropinion the frequency of verification is reasonable and no material discrepancies werenoticed.
3) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to Company firms LLPs or other parties covered inthe register maintained under section 189 of the Companies Act 2013. Accordinglyprovisions of Para 3(iii) of the order are not applicable.
4) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act with respectto the investments made and guarantee given. The company has not granted any loan givenany guarantee or provided any security in terms of section 185 and 186 of the Act.
5) In our opinion and according to the information and explanations given to us theCompany has not accepted deposits from the public within the meaning of Section 73 to 76or any other relevant provisions of the Companies Act 2013 and the Rules framed thereunder. As informed to us no Order has been passed by the Company Law Board or NationalCompany Law Tribunal or Reserve Bank of India or any court or any other Tribunal.
6) We have broadly reviewed the cost records maintained by the Company pursuant to therules made by the Central Government under sub-section (1) of Section 148 of the CompaniesAct 2013 and are of the opinion that prima facie the prescribed records have been madeand maintained. We have however not made a detailed examination of the cost records witha view to determine whether they are accurate or complete.
7) In respect of Statutory dues :
a) According to the information and explanations given to us and the records of theCompany examined by us in our opinion the Company is generally regular in depositingundisputed statutory dues including provident fund employee's state insurance incometax goods and service tax duty of customs cess and other statutory dues applicable toit with the appropriate authorities. There were no undisputed statutory dues in arrearsas at 31st March 2021 for a period of more than six months from the date theybecame payable.
b) According to the information and explanations given to us the dues of sales taxvalue added tax income tax sen ice tax goods and service tax which have not beendeposited with appropriate authorities on account of any dispute are as follows:
|Name of the Statute ||Nature of Liability ||Amount ||Related Period ||Forum where dispute is pending |
|Finance Act/ Central Goods and Service Tax Act ||Valuation method for calculation of Service tax ||Rs. 8798 lacs ||FY 2014-15 to FY 2017-18 ||Commissioner Central Excise & CGST Indore |
|Income Tax Act ||Appeal against the order of Tribunal in Company's favor ||Rs.109.08 Lacs* ||FY 2005-06 ||High Court Indore |
8) According to the records of the company examined by us and as per the informationand explanations given to us the Company has not defaulted in repayment of loans andborrowings to a financial institution or government. The Company has not issued anydebenture. However as mentioned in Note 45 of Financial Statements the
Company has been admitted under Corporate Insolvency Resolution Process by NCLT videorder dated 17th September 2017 the Company has not paid any installments along with theinterest due on since the CIRP initiation date. The details of principal and interest thatwere due and not paid by the Company is as follows :-
|S.No Name of Lending Bank ||Amount due including interest (in lacs) |
|1. Bank of Baroda ||199.39 |
|2. Union Bank of India ||455.26 |
|3. Indian Overseas Bank ||508.27 |
|4. FITLfrom Axis Bank ||214.15 |
|5. FITLfrom SBI ||50.85 |
|Total ||1427.92 |
9) In our opinion and according to the information and explanations given to us thecompany has not raised money by way of initial public offer or further public offer(including debt instruments) and In our opinion and according to the information andexplanations given to us the company has not raised any term loan during the year.
10) According to the information and explanations given to us and to the best of ourknowledge no material fraud by the Company or on the company by the officers or employeeshas been noticed or reported during the year.
11) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid / provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.
12) In our opinion and according to information and explanation given to us thecompany is not a Nidhi Company therefore the provision of para 3 (xii) of the Order isnot applicable to the company.
13. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
14) According to the information and explanations given to us and based on ourexamination of the records of the company the company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year therefore the provision of para 3 (xiv) of the Order is not applicable to thecompany.
15) In our opinion and according to the information and explanations given to us thecompany has not entered into any noncash transactions with directors or persons connectedwith him during the year hence the provision of para 3 (xv) of the Order is notapplicable to the company.
16) The company is not required to be registered under section 45-IA of the ReserveBank Of India Act 1934 therefore the provision of para 3 (xvi) of the Order is notapplicable to the company for the year under audit.
Annexure B To the Independent Auditor's Report of even date on the Financial Statementsof Ujaas Energy Limited
Report on the Internal Financial Controls over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of UjaasEnergy Limited ("the Company") as of March 31 2021 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 of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to respective company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired 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 Financiat 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. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls overfinancial reporting was established and maintained and if such controls operatedeffectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal 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 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 the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2021 based on thecriteria for internal financial control over financial reporting established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India.