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 2019 and the statementof Profit and Loss (including other. comprehensive income) statement of changes in equityand 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 om* information and according to the explanationsgiven to us the aforesaid Standalone financial statements give the information requiredby the Act in the manner so required and give a true .and fair view in conformity withaccounting principles generally accepted in India of the state of affairs of the companyas at 31st March. 2019 and its profit total comprehensive income the changes in equity'and its cash flows for fee 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 Cornpaiii.es 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 fee Company inaccordance 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 thefinancial statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fiil.fi lied our other ethical responsibilities in accordance withthese 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.
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 isrecognized using the . percentage of completion computed as per the input method based onmanagement's estimate of contract costs.
We identified revenue recognition of fixed price . development contracts as aKAMconsidering-
Application of revenue recognition accounting standard is complex and involvesa 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 ofthe relevant performance obligation;
There is an inherent risk around the accuracy of revenues and cost estimationgiven the customized and complex nature these contracts;
These contracts may involve onerous obligations on the Company that requirecritical estimates to be made by management: and
Auditor's Response -
Our audit procedures on revenue recognized from fixed price development contractsincluded
Obtaining an understanding of the systems processes and controls implemented bymanagement for recording and calculatingrevenue and the associated cost
Involving specialists to assess the design and operating effectiveness ofcontrols:
On selected samples of contracts we tested that the revenue recognized is inaccordance with the accounting standard by-
Evaluating the identification of performance obligation;
Testing management's calculation of the estimation of contract cost and onerousobligation if any. We:
Observed that the estimates of cost io complete were reviewed and approved byappropriate levels of management; .
Performed a retrospective review of costs incurred with estimated costs toidentify significant variations and verify whether those variations have been consideredin estimating the remaining costs to complete the contract;
Assessed the appropriateness of work in progress (contract assets) on balancesheet by evaluating the underlying documentation to identity possible delays in achievingmilestones which may require change in estimated costs to complete the remainingperformance obligations: and '
Performed test of details including analytics to determine reasonableness ofcontract costs
2. Accuracy of recognition measurement presentation and disclosures of revenues andother related balances in view of adoption of lad AS 115 "Revenue from Contracts withCustomers" (new revenue accounting standard)
The application of the new revenue accounting standard involves some key points whichincludes Identification of contract with customer identification of distinct performanceobligations determination of transaction price of the identified performance obligationsthe . appropriateness of the basis used to measure revenue recognized. Additionally newrevenue accounting standard contains disclosures which involves collation of informationin respect of disaggregated revenue and periods over which the remaining performance 'obligations will be satisfied subsequent to the balance sheet date.
Auditor's Response Principal Audit Procedures
We assessed the Company's process to identify the impact of adoption of the new revenueaccounting standard. Our audit approach consisted testing of the design and operatingeffectiveness of the internal controls and substantive testing as follows:
Evaluated the design of internal controls relating to implementation of the new revenueaccounting standard.
Sample selected from continuing and new contracts and. tested the operatingeffectiveness of the internal control. relating to identification of the distinctperformance obligations and determination of transaction price.
We have performed the following procedures: Read analysed and identified the distinctperformance obligations in these contracts. Compared these performance obligations withthat identified and recorded by the Company. Considered the terms of the contracts todetermine the transaction price including any variable consideration to verify' thetransaction price used to compute revenue and to test the basis of estimation of thevariable consideration.
Sample of revenues disaggregated by type and service offerings was tested with theperformance obligations specified in the underlying contracts. Performed analyticalprocedures for reasonableness of revenues disclosedby type and service offerings. Wereviewed the collation of information and the logic of the report generated from thebudgeting system used to prepare the disclosure relating to the periods over which theremaining performance obligations will be satisfied subsequent to the balance sheet date.
3. Evaluation of uncertain tax positions
The Company operates in multiple jurisdictions and is subject to periodic challenges bylocal tax authorities on a range of tax matters during the normal course of businessincluding direct and indirect tax matters. These involve significant management judgmentto determine the possible outcome of the uncertain tax positions consequently having animpact on related accounting anddisc-losures in the financial statements.
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'sunderlying key assumptions in estimating the tax provisions: and
Assessed management's estimate of the possible outcome of the disputed cases
4. Recoverability from Renewable Energy Certificates
The Company has material balance of renewable energy certificates included in"Other Financial Asset"- Note 11 which is subject to adjudication of pendinglitigation at Apex.Court
Our audit procedures include the following substantive procedures:
Obtained understanding of key uncertain positions; and
Analysed earlier / preceeding judgements in the related matters
Analysed select key correspondences external legal ' opinions / consultationsby management for key uncertain positions
Discussed with appropriate senior management . and evaluated management'sunderlying key assumptions in estimating the provisions; and
Assessed management's estimate of the possible outcome of the disputed cases .
Information Other than the Financial Statements and Auditor's ReportThereon
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 standalone financial statements and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon. .
In connection with our audit of the standalone financial statements ourresponsibility 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 during 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 in formation 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 .^i&ted-in section134(5) of the Companies Act 2013 ("the Act") with respect: to the preparationof these financial statements that give a true and fair view of the financial positionfinancial performance changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the accounting Standardsspecified under section 133 of the Act This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities: selec tion and application of appropriate implementation and maintenanceof accounting policies; making judgments and estimates that are reasonable and prudent;and design implementation and maintenance of adequate internal financial controls thatwere operating 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 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 mi sstatement 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 provideabasis 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 overide 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 standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
e. Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified 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 alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships 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 standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or 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.
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 requiredbv Section 143(3) oftheActwereportthat:
a. We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes o f our audit.
b. In our opinion proper books of account as required by lawr 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 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 standalone financial statements comply with theAccounting Standards specifiedundef Section 133 of the Act read with Rule 7 offaeCompanies (Accounts) Rules 2014:
e. On the bas is' of the written representations received from the directors as on 31st March 201.9 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 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 the Auditor's Report inaccordance with Rule 11 of the rCompanies (Audit and'Auditors) Rules12014 inour opinion and to the best of our' information and according to theexplanations given tous:
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 material foreseeable losses;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fun d by the Company.
ANNEXURE A TO INDEPENDENT AUDITOR'S ' REPORT
Referred to in paragraph (i) under the heading ofReport on Other Legal andRegulatory Requirements" of our report of even date to the members of UjaasEnergyLimited on the Ind AS financial statements for the year ended 31st March 2019.
i. In respect of its Fixed Assets:
a. The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets
b. As explained to us the fixed assets of the Company- have been physically verifiedby the management during the year which in our opinion is reasonable having regard tothe size of the Company and the nature of its assets. No material discrepancies betweenthe book records and the physical inventory have been.noticed.In. our opinion thefrequency of verification is reasonable. . .
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
ii. In res ppct of its inventories:
The inventories has been physically verified by tbe Management during the year. In ouropinion the frequency-.of verification is.reasonable.and no material di screpanci es werenoticed.
iii. According to the information and explanations given to us the Company hasgranted unsecured loans to one company covered in. the register maintained under section189 of the Companies Act 2013 'ITe company has not granted any loans secured orunsecured to firms LLPs or other parties covered in the register maintained under section 189 o f the Companies Act 2013. In respect of the aforesaid loans granted:
a. The- terms and conditions of the grant of such loans are in our opinion primafacie not prejudicial to the Company's interest;
b. The loan has been repaid and there is no amount outstanding at the end of the year.
iv. In our opinion and according to the information and . explanations given to us theCompany has complied with tbe provisions of section 185 and 186 of the Act with respectto the loans and investments made. The company has not given any guarantee or provided anysecurity in terms of section 185 and 186 of the Act.
v. In our opinion and according to the information and explanations given to us the-Company 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 Rulesframed there under. As informed to us no Order has been passed by the Company Law Board orNational Company Law Tribunal or Reserve Batik of India or any court or any otherTribunal.
vi. 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 wh.etl.ier they are accurate or complete.
vii. In respect of Statutory dues:
a) According to the information and explanationsgiven 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 sales tax goods and sendee tax sendee tax duty . of customs duty of excise valueadded tax cess and any other statutory dues with the appropriate authori ties. There wereno undisputed statutory dues in arrears as at 31 st March 2019 for a period of more thansix months from the date they became payable.
b) According to the information and explanations given to us there are no dues ofsales tax value added tax income tax service tax goods and service -tax duties ofcustoms duties of excise which have not been deposited with appropriate authorities onacco unt: of any dispute except as follows;
|Name of the Statute ||Nature of Liability ||(Amount in Lacs) ||Related Period ||Forum where dispute is pending |
|Income Tax Act 1961 ||Income tax Act 1961 ||2.57 ||FY 2005-06 ||CIT (Appeals) |
viii. 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 bank or government as on the balance sheet date.The Company has not issued any debenture.
ix. 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.
x. During the course of our examination of the books of account and records of theCompany carried out in accordance with the generally accepted auditing practices in.India and according to the information and explanations given to us we have neither comeacross any instance of material fraud by the Company or on the company by the officers oremployees noticed or reported during the year nor have we been informed of such case bythe management
xi. 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 to the Act.
xii. 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! the company.
xiii. According to the information and explanations given to us and based on ourexamination of die 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 applicable accounting standards.
xiv. 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 provisi on of para 3 (xiv) of the Order is not applicable to thecompany'.
xv. In our opinion and according to the information and explanations given to us thecompany has not entered into any non-cash transactions with directors or personsconnected .with him during the year hence the provision of para 3 (xv) of the Order isnot applicable to the company.
xvi. 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 not.applicable to the company for the year under audit.
ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON -THE FINANCIALSTATEMENTS OFUJAAS ENERGY LIMITED
Report on the Internal Financial Controls under Clause
(i) of Sub-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 3.1.2019 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 of adequate internal financial controls thatwere operating1 effectively for ensuringthe orderly and efficient conductof its business . including-adherence to company's policies the safeguarding of itsassets the prevention and detection of frauds and errors the accuracy and completenessof the accounting records and the timely preparation of reliable financial informationas required under the CompaniesAct 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 OverFinancial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 201.3 to the extentapplicable to an audit of internal financial controls. Thos e Standards and the GuidanceNole require that we comply with ethical requirements and plan and perform tire 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- adequacyof the 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 thedesign and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material 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 accotrnting principles and that receiptsia'iidexpenditures 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 Interna! Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting ineluding 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 2019 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
| ||For SMAK & Co. |
| ||Chartered Accountants |
| ||(FRN. O2O120C) |
| ||CA ShridharMandhanya |
|Place: Indore ||(Partner) |
|Date: 29/05/2019 ||M.No.421425 |