To the members of
VA Tech Wabag Limited
REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS
We have audited the accompanying standalone financial statements of VATech Wabag Limited ("the Company") which comprise the Balance Sheet as at 31March 2022 the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of Cash Flows and the Statement of Changes in Equity for the year ended on thatdate and notes to the standalone financial statements including a summary of significantaccounting policies and other explanatory information (hereinafter referred to as"the standalone financial statements").
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standardsprescribed under section 133 of the Act read with Companies (Indian Accounting Standards)Rules 2015 as amended ("Ind AS") and other accounting principles generallyaccepted in India of the state of affairs of the Company as at 31 March 2022 its profitand total comprehensive income its cash flows and changes in equity for the year ended onthat date.
Basis for Opinion
We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing ("Standards") specified under section143(10) of the Act. Our responsibilities under those Standards are further described inthe Auditor?s Responsibilities for the Audit of the Standalone FinancialStatements? section of our report.
We are independent of the Company in accordance with the Code of Ethicsissued by the Institute of Chartered Accountants of India ("ICAI") together withthe ethical requirements that are relevant to our audit of the standalone financialstatements under the provisions of the Act and the rules made thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theICAI?s Code of Ethics. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion on the standalone financialstatements.
Emphasis of Matter
We draw reference to the note 46 of the standalone financial statementswhich describes that the Company has been executing projects for Andhra Pradesh PowerGeneration Corporation Limited and Telangana Power Generation Corporation Limited as partof a consortium. The Company took over the projects as consortium leader in 2014-15 and acorporate insolvency resolution process was ordered against the erstwhile consortium leadmember Tecpro Systems Limited (Tecpro?) in 2017-18. The net receivables onthese projects of INR 38714 Lakhs its status and process of recoverability is explainedin the aforementioned note. Our opinion is not modified in this regard.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significant in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
|Key audit matter description and principal audit procedures |
|1 Revenue recognition |
|Refer Notes 3.4 13 and 23 in standalone financial statements |
|The Company recognises revenue and margin on the stage of completion based on the proportion of contract costs incurred relative to the estimated total costs of each contract (referred to as percentage of completion method?). The recognition of revenue and margin therefore relies on estimates in relation to the estimated total costs on each contract. Cost contingencies may also be included in these estimates to take account of specific uncertain risks arising within each contract. These cost estimates are reviewed by the Company on a regular basis during contract execution and adjusted where appropriate. There is significant judgement by the management of the Company in estimating the amount of revenue and margin to be recognised by the Company up to the balance sheet date and changes to these estimates could give rise to material variances hence revenue recognition has been considered as a key audit matter. |
|Our procedures include the following: |
| Evaluate and test key controls in the management processes in relation to recognition of revenue and margin including: |
|- the preparation review and authorisation of contract review sheets for contracts which contains estimated total costs for the contracts including cost contingencies |
|- the project reviews that are undertaken by the Company?s management |
|- the controls in relation to accrual of cost towards materials and services |
| Recalculate revenue recognised under the percentage of completion method on a test basis |
| Evaluate the financial performance of contracts against budget / earlier year estimates and obtain reasons for significant variances thereto Test the contract value costs incurred to date including the costs accrued for work completed total estimated contract costs for a sample of contracts selected based on factors such as value of contracts material new contracts and contracts where significant risks have been identified by the management of the Company |
| Conduct site visits on a test basis to confirm our understanding of the risks and controls at site level |
|2 Dues from customers (unbilled) and Trade receivables |
|Refer Notes 3.10 6 13 33 and 46 in standalone financial statements |
|The Company measures revenue to be recognised based on the contract costs incurred till the reporting date over the total estimated costs for each contract. Such revenue recognised in excess of progress billing till the reporting date is presented as Dues from customers? which are yet to be billed to the customers. Such Dues from customers are accounted based on the contractual terms and management?s assessment of recoverability from customers. The management of the Company also assesses the recoverability of Trade receivables including those which have remained unsettled beyond contractual credit period using judgement and past collection trends in similar contracts and customers. The management of the Company estimates and recognises allowance for expected credit losses on Trade receivables and Dues from customers which involves estimation of expected default and/or delay in the customers jmaking payment over the duration of the contract and realisability of Dues from customers considering the past trend and its assessment on the reporting date. The valuation of Dues from customers and Trade receivables involves significant management judgement and estimates as stated above and hence it has been considered as a key audit matter. |
|Our procedures include the following: |
| Evaluate management?s processes and controls in respect of Dues from customers and Trade receivables for the following |
|- risk assessment pertaining to invoicing and recoverability |
|- assessment of the probability of default and delay |
|- assessment of the significant increases in credit risk if any |
| Request confirmation of balances from customers having significant outstanding balances as at the reporting date |
| Review the project progress invoicing and collection history of customers with significant Dues from customers or Trade receivables. Discuss with the project team to understand the management?s assessment of risk associated with recoverability |
| Analyse the past trend and inquire into the reasonableness of expected credit loss allowance matrix developed by the management of the Company for estimating the allowance for Trade receivables |
| Consider the subsequent events and collections in assessing the recoverability of Dues from customers and Trade receivables |
| Consult legal counsel wherever necessary for legal disputes to assess the valuation of Trade receivables |
Information other than the Standalone Financial Statements andAuditor?s Report thereon
The Board of Directors of the Company is responsible for thepreparation of the other information. The other information comprises the informationincluded in the Management Discussion and Analysis Board?s Report includingAnnexures to Board?s Report Business Responsibility Report and Report on CorporateGovernance but does not include the standalone financial statements and our reportthereon.
Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained during the course of our audit or otherwise appears to bematerially misstated. If based on the work we have performed we conclude that there is amaterial misstatement of this other information we are required to report that fact. Wehave nothing to report in this regard.
Responsibilities of management and Those Charged with Governance forthe Standalone Financial Statements
The Board of Directors of the Company is responsible for the mattersstated in Section 134(5) of the Act with respect to the preparation and presentation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance including other comprehensive income cash flows andchanges in equity of the Company in accordance with the Ind AS prescribed under Section133 of the Act read with Companies (Indian Accounting Standards) Rules 2015 as amendedand other accounting principles generally accepted in India. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgements and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of accounting recordsrelevant to the preparation and presentation of the standalone financial statements thatgive a true and fair view and are free from material misstatement whether due to fraudand error.
In preparing the standalone financial statements the management of theCompany is responsible for assessing the Company?s ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless management either intends to liquidate the Company orto cease operations or has no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing theCompany?s financial reporting process.
Auditor?s Responsibility for the Audit of the Standalone FinancialStatements
Our objectives are to obtain reasonable assurance whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor?s report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with Standards will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with Standards we exerciseprofessional judgment and maintain professional skepticism throughout the audit. We also:
identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control
obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls with reference to financialstatements and the operating effectiveness of such controls
evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by the management
conclude on the appropriateness of management?s use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company?s ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor?sreport to the related disclosures in the standalone financial statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor?s report. However future events orconditions may cause the Company to cease to continue as a going concern
evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation
obtain sufficient appropriate audit evidence regarding thefinancial information of the Company and its joint operations to express an opinion on thestandalone financial statements
Materiality is the magnitude of misstatements in the standalonefinancial statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the standalone financialstatements may be influenced. We consider quantitative materiality and qualitative factorsin (i) planning the scope of our audit work and in evaluating the results of our work; and
(ii) to evaluate the effect of any identified misstatements in thestandalone financial statements.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor?s report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor?s Report) Order 2020("the Order") issued by the Central Government of India in terms of Section143(11) of the Act we give in Annexure A? to this report a statement on thematters specified in para 3 and 4 of the Order to the extent applicable.
2. As required by Section 143(3) of the Act we report that:
(a) we have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of our audit
(b) in our opinion proper books of accounts as required by law havebeen kept by the Company so far as it appears from our examination of those books
(c) the Balance Sheet the Statement of Profit and Loss including othercomprehensive income the Statement of Cash Flows and Statement of Changes in Equity dealtwith by this report are in agreement with the books of account
(d) in our opinion the aforesaid standalone financial statementscomply with the Indian Accounting Standards prescribed under section 133 of the Act readwith Companies (Indian Accounting Standards) Rules 2015 as amended
(e) on the basis of the written representations received from thedirectors as on 31 March 2022 taken on record by the Board of Directors none of thedirectors is disqualified as on 31 March 2022 from being appointed as a director in termsof Section 164(2) of the Act
(f) with respect to the adequacy of internal financial controls withreference to financial statements of the Company and the operative effectiveness of suchcontrols refer to our separate Report in "Annexure B". Our report expresses anunmodified opinion on the adequacy and operating effectiveness of the Company?sinternal financial controls with reference to financial statements.
(g) with respect to other matters to be included in the Auditor?sReport in accordance with the requirements of Section 197(16) of the Act as amended inour opinion and to the best of our information and according to the explanations given tous the remuneration paid by the Company to its directors during the year is in accordancewith the provisions of section 197 of the Act.
(h) with respect to the other matters to be included in theAuditor?s Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 as amended in our opinion and to the best of our information and accordingto the explanations given to us:
i. the Company as detailed in Note 41 to the standalone financialstatements has disclosed the impact of pending litigations on its financial position;
ii. the Company did not have any long-term contracts includingderivative contracts with material foreseeable losses;
iii. there has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company;
iv. a) the management has represented that to the best of itsknowledge and belief no funds (which are material either individually or in theaggregate) have been advanced or loaned or invested (either from borrowed funds or sharepremium or any other sources or kind of funds) by the Company to or in any other person orentity including foreign entity ("Intermediaries") with the understandingwhether recorded in writing or otherwise that the Intermediary shall whether directlyor indirectly lend or invest in other persons or entities identified in any mannerwhatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provideany guarantee security or the like on behalf of the Ultimate Beneficiaries;
b) the management has represented that to the best of its knowledgeand belief no funds (which are material either individually or in the aggregate) havebeen received by the Company from any person or entity including foreign entity("Funding Parties") with the understanding whether recorded in writing orotherwise that the Company shall whether directly or indirectly lend or invest inother persons or entities identified in any manner whatsoever by or on behalf of theFunding Party ("Ultimate Beneficiaries") or provide any guarantee security orthe like on behalf of the Ultimate Beneficiaries;
c) based on the audit procedures that have been considered reasonableand appropriate in the circumstances nothing has come to our notice that has caused us tobelieve that the representations under sub-clause (i) and (ii) of Rule 11(e) as providedunder (a) and (b) above contain any material misstatement.
With reference to paragraph 1 under Report on Other Legal andRegulatory Requirements? section of our report to the members of the Company of evendate we report the following:
(i) (a) (A) The Company has maintained proper records showing fullparticulars including quantitative details and situation of its property plant andequipment and relevant details of right of use assets
(B) the Company has maintained proper records showing full particularsof intangible assets;
(b) The Company has a regular programme of physical verification of itsproperty plant and equipment under which all property plant and equipment are physicallyverified in a phased manner over a period of three years which in our opinion isreasonable having regard to the size of the Company and the nature of its property plantand equipment. In accordance with this programme certain property plant and equipmentwere physically verified by the management during the year and no material discrepancieswere noticed on such verification;
(c) according to the information and explanations given to us and therecords examined by us we report that the title deeds of all the immovable properties ofland and buildings which are freehold and included under the head Property plantand equipment? are held in the name of the Company;
(d) the Company has not revalued any of its Property Plant andEquipment (including right-of-use assets) and intangible assets during the year;
(e) no proceedings have been initiated during the year or are pendingagainst the Company as at 31 March 2022 for holding any benami property under the BenamiTransactions (Prohibition) Act 1988 (as amended in 2016) and rules made thereunder;
(ii) (a) I n our opinion the management has conducted physicalverification of inventories at reasonable intervals during the year and the coverage andprocedures of such verification by the management is appropriate. No materialdiscrepancies between physical inventories and book records were noticed on such physicalverification;
(b) the Company has been sanctioned working capital limits in excess ofINR 5 crore in aggregate during the year from banks or financial institutions on thebasis of security of current assets and the quarterly returns or statements filed by thecompany with such banks or financial institutions are in agreement with the books ofaccount of the Company;
(iii) (a) the Company has not provided any loans or advances in thenature of loans or stood guarantee or provided security to any other entity during theyear and hence reporting under clause 3(iii)(a) of the Order is not applicable;
(b) in our opinion the investments made during the year are primafacie not prejudicial to the Company?s interest;
(c) in respect of the only loan granted by the Company to a subsidiarythe schedule of repayment of principal and payment of interest has been stipulated in theloan agreement however the repayment has not taken place during the year and therepayment period has been extended;
(d) there are no overdue of loan granted by the Company as at 31 March2022;
(e) the loan granted by the Company to a subsidiary amounting to INR205 Lakhs has fallen due during the year which has been extended. The Company has notgranted any other loan during the year and hence reporting on the percentage requirementsdoes not arise;
(f) the Company has not granted any loans or advances in the nature ofloans either repayable on demand or without specifying any terms or period of repaymentand hence reporting under clause 3(iii)(f) of the Order is not applicable;
(iv) According to the information and explanations given to us theCompany has not advanced any loan made any investment given any guarantee or providedany security to which the provisions of Sections 185 and 186 of the Companies Act 2013are applicable. Accordingly reporting on clause 3 (iv) of the Order does not arise;
(v) According to the information and explanations given to us theCompany has not accepted any deposits from public during the year and does not have anyunclaimed deposits as at 31 March 2022. Accordingly reporting under clause 3 (v) of theOrder does not arise;
(vi) The Central Government has specified maintenance of cost recordsunder section 148(1) of the Companies Act 2013 read with the Companies (Cost Records andAudit) Rules 2014 (as amended) for the operations of the Company. We have broadlyreviewed the books of account maintained by the Company in respect of Company?sservices and are of the opinion that prima facie the prescribed accounts and recordshave been made and maintained. However we have not made a detailed examination of thecost records with a view to determine whether they are accurate or complete;
(vii) (a) According to the information and explanations given to us andthe records of the Company examined by us in our opinion the Company has been generallyregular in depositing undisputed statutory dues including goods and services taxprovident fund employees? state insurance income-tax duty of customs professionaltax cess and any other material statutory dues applicable to the Company during the yearwith appropriate authorities except for dues in respect of goods and service tax of INR115.60 Lakhs and tax collected at source of INR 0.31 Lakhs. According to the informationand explanations given to us there were no undisputed amounts payable in respect of goodsand services tax provident fund employees? state insurance income-tax duty ofcustoms professional tax cess and any other material statutory dues outstanding as at 31March 2022 for a period of more than six months from the date they became payable;
(b) According to the information and explanations given to us and therecords of the Company examined by us the particulars of income tax sales tax servicetax value added tax customs duty and goods and service tax at 31 March 2022 which havenot been deposited with statutory authorities on account of a dispute pending are asunder:
|Name of the statute ||Nature of disputed dues ||Amount involved in dispute (INR in Lakhs) ||Unpaid disputed amount (INR in Lakhs) ||Period to which amount relates ||Forum where disputes are pending |
|Rajasthan Sales Tax Act 1994 ||Tax & Penalty ||9 ||9 ||2003-04 200910 & 2010-11 ||Rajasthan High Court |
|Rajasthan Value Added Tax Act 2003 ||Tax & Penalty ||33 ||33 ||2007-08 & 2008-09 ||Rajasthan High Court |
|Karnataka Value Added Tax Act 2003 ||Tax & Penalty ||299 ||217 ||2007-08 to 2010112015-16 ||Deputy Commissioner Appellate Tribunal |
|Kerala Value Added Tax Act 2003 ||Tax & Penalty ||91 ||62 ||2008-09 201011 & 2011-12 ||Appellate Tribunal |
|Odisha Value Added Tax Act 2005 & Central Sales Tax Act 1956 ||Tax Interest & Penalty ||940 ||864 ||2012-13 to 201415 2016-17 & 2017-18 ||Deputy Commissioner - Appeals |
|Odisha Entry Tax Act 1999 ||Tax & Penalty ||16 ||15 ||2012-13 to 201415 ||Deputy Commissioner |
|West Bengal Value Added Tax Act 2003 ||Tax & Interest ||1387 ||1387 ||2007-08 200910 2011-12 to 2017-18 ||Appellate Tribunal Senior Joint Commissioner |
|Gujarat Value Added Tax Act 2003 ||Tax Interest & Penalty ||821 ||809 ||2010-11201314 2016-17 & 2017-18 ||VAT Tribunal Deputy Commissioner (Appeals) |
|Delhi Value Added Tax Act 2004 ||Tax & Penalty ||46 ||46 ||2012-13 ||Additional Commissioner |
|Andhra Pradesh Value Added Tax Act 2005 ||Tax Interest & Penalty ||474 ||387 ||2010-11201213 2013-14 2015-16 to 201718 ||High Court Appeal Pending |
|Maharashtra Value added Tax Act 2005 ||Tax Interest & Penalty ||584 ||562 ||2011-12 to 2016-17 ||Deputy Commissioner Sales Tax (Nodal Division) Deputy Commissioner of State Tax (MUM- VAT-E-810) |
|Central Sales Tax Act 1956 read with Gujarat Value Added Tax Act 2003 ||Tax Interest & Penalty ||1214 ||1192 ||2011-12 to 201718 ||Deputy Commissioner (Appeals) |
|Central Sales Tax Act 1956 read with West Bengal Value Added Tax Act 2003 ||Tax Interest & Penalty ||632 ||632 ||2010-11 to 201213 ||West Bengal Appellate Tribunal Senior Joint Commissioner |
|Haryana Value added Tax 2003 ||Tax Interest & Penalty ||33 ||33 ||2016-17 ||Excise and Taxation Commissioner |
|Chhattisgarh Value Added Tax Act 2005 Entry Tax Act & Central Sales Act 1956 ||Tax & Interest ||23 ||22 ||2013-14 ||Deputy Commissioner |
|Service tax under Finance Act 1994 ||Tax Interest & Penalty ||15 ||15 ||Oct 2011 to Mar14 ||Central Excise and Service Tax Appellate Tribunal Chennai |
|Tamil Nadu SGST Act ||Tax Interest & Penalty ||139 ||139 ||2017-18 ||High Court |
|Commissioner of Customs ||Tax ||81 ||0 ||2014-15 ||Appellate Tribunal |
|Income Tax Act 1961 ||Tax & Interest ||17 ||17 ||AY 2011-12 ||Income Tax Appellate Tribunal |
|Income Tax Act 1961 ||Tax & Interest ||396 ||396 ||AY 2017-18 and AY 2018-19 ||Commissioner of Income Tax Appeals |
There are no dues in respect of duty of excise as at 31 March 2022which have not been deposited with the statutory authorities on account of a dispute;
(viii) Based on our audit procedures and as per the information andexplanations given by the management no amount has been surrendered or disclosed asincome during the year in the tax assessments under the Income Tax Act 1961. Accordinglyparagraph 3(viii) of the order is not applicable to the Company;
(ix) (a) According to the records of the Company examined by us and theinformation and explanations given to us the Company has not defaulted in the repaymentof loans or borrowings to any financial institution or bank during the year. The Companydid not have any loans or borrowing from government or dues to debenture holders duringthe year;
(b) The Company has not been declared wilful defaulter by any bank orfinancial institution or government or any government authority;
(c) According to the information and explanation given to us termloans were applied for the purpose for which the loans were obtained;
(d) On an overall examination of the financial statements of the Company funds raisedon short term basis have prima facie not been used during the year for long-termpurposes by the Company;
(e) On an overall examination of the financial statements of theCompany the Company has not taken any funds from any entity or person on account of or tomeet the obligations of its subsidiaries;
(f) On an overall examination of the financial statements of theCompany the Company has not raised any loans during the year on the pledge of securitiesheld in its subsidiaries joint ventures or associate companies;
(x) (a) The Company has not raised moneys by way of initial publicoffer or further public offer (including debt instruments) during the year and hencereporting under clause 3(x)(a) of the Order is not applicable;
(b) During the year the Company has not made any preferentialallotment or private placement of shares or convertible debentures (fully or partly oroptionally) and hence reporting under clause 3(x) (b) of the Order is not applicable;
(xi) (a) To the best of our knowledge and according to the informationand explanations given to us no material fraud by the Company and no material fraud onthe Company by its officers or employees has been noticed or reported during the year.
(b) No report under sub-section (12) of section 143 of the CompaniesAct has been filed in Form ADT-4 as prescribed under rule 13 of Companies (Audit andAuditors) Rules 2014 with the Central Government during the year and up to the date ofthis report;
(c) We have taken into consideration the whistle blower complaintsreceived by the Company during the year (and upto the date of this report) whiledetermining the nature timing and extent of our audit procedures;
(xii) The Company is not a Nidhi Company. Accordingly reporting onclause 3(xii) of the Order does not arise;
(xiii) I n our opinion and according to the information andexplanations given to us the Company is in compliance with sections 177 and 188 of theAct where applicable for all transactions with related parties undertaken during theyear and the details of such related party transactions have been disclosed in thefinancial statements as required by the applicable accounting standards;
(xiv) (a) I n our opinion the Company has an adequate internal auditsystem commensurate with the size and the nature of its business;
(b) We have considered the internal audit reports for the year underaudit issued to the Company during the year and till date in determining the naturetiming and extent of our audit procedures;
(xv) According to the information and explanations given to us theCompany has not entered into any non-cash transactions with directors or persons connectedwith the directors during the year and hence provisions of section 192 of the Act is notapplicable to the Company;
(xvi) (a) I n our opinion the Company is not required to be registeredunder section 45-IA of the Reserve Bank of India Act 1934. Hence reporting under clause3(xvi)(a) (b) and (c) of the Order is not applicable;
(b) In our opinion there is no core investment company within theGroup (as defined in the Core Investment Companies (Reserve Bank) Directions 2016) andaccordingly reporting under clause 3(xvi)(d) of the Order is not applicable;
(xvii) The Company has not incurred cash losses during the financialyear covered by our audit and the immediately preceding financial year;
(xviii) There has been no resignation of the statutory auditors of theCompany during the year;
(xix) On the basis of the financial ratios ageing and expected datesof realisation of financial assets and payment of financial liabilities other informationaccompanying the financial statements and our knowledge of the Board of Directors andmanagement plans and based on our examination of the evidence supporting the assumptionsnothing has come to our attention which causes us to believe that any materialuncertainty exists as on the date of the audit report indicating that Company is notcapable of meeting its liabilities existing at the date of balance sheet as and when theyfall due within a period of one year from the balance sheet date. We however state thatthis is not an assurance as to the future viability of the Company. We further state thatour reporting is based on the facts up to the date of the audit report and we neither giveany guarantee nor any assurance that all liabilities falling due within a period of oneyear from the balance sheet date will get discharged by the Company as and when they falldue;
(xx) (a) I n respect of other than ongoing projects the Company doesnot have any such Corporate Social Responsibility activities and hence transferringunspent amount to a Fund specified in Schedule VII to the Companies Act within a period ofsix months of the expiry of the financial year in compliance with second proviso tosub-section (5) of section 135 of the Act is not applicable to the Company. Accordinglyreporting under clause 3(xx)(a) of the Order is not applicable
(b) The unspent amount towards Corporate Social Responsibility pursuantto ongoing project has been transferred to a special account in compliance with provisionsof sub-section 6 of Section 135 of the Act.
Annexure B to the Independent Auditor?s Report
(Referred to in paragraph 2(f) under Report on Other Legal andRegulatory Requirements? section of our report to the Members of VA Tech WabagLimited of even date)
Independent Auditors? Report on the Internal Financial Controlswith reference to financial statements under clause (i) of sub-section 3 of Section 143 ofthe Companies Act 2013 (the Act?)
We have audited the internal financial controls with reference tofinancial statements of VA Tech Wabag Limited ("the Company") as of 31 March2022 in conjunction with our audit of the standalone financial statements of the Companyfor the year ended on that date.
Management?s Responsibility for Internal Financial Controls
The Board of Directors of the Company is responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting ("the Guidance Note") issued by theInstitute of Chartered Accountants of India ("ICAI"). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company?s policies the safeguarding of its assetsthe prevention 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 ("the Act").
Our responsibility is to express an opinion on the Company?sinternal financial controls with reference to financial statements based on our audit. Ouraudit is conducted in accordance with the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting (the "Guidance Note") issued by the ICAI andthe Standards on Auditing prescribed under Section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial controls. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlswith reference to financial statements was established and maintained and if such controlsoperated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system with reference to financialstatements and their operating effectiveness. Our audit of internal financial controlswith reference to financial statements included obtaining an understanding of internalfinancial controls with reference to financial statements assessing the risk that amaterial weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor?s judgement including the assessment of the risks of materialmisstatement of the standalone financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company?s internalfinancial controls system with reference to financial statements.
Meaning of Internal Financial Controls with reference to FinancialStatements
A company?s internal financial controls with reference tofinancial statements is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of the standalone financialstatements for external purposes in accordance with generally accepted accountingprinciples. A company?s internal financial controls with reference to financialstatements 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 standalone financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany?s assets that could have a material effect on the standalone financialstatements.
Inherent Limitations of Internal Financial Controls with reference toFinancial Statements
Because of the inherent limitations of internal financial controls withreference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to financial statements to future periods are subject to the riskthat the internal financial controls with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.
In our opinion and to the best of our information and according to theexplanations given to us the Company has in all material respects an adequate internalfinancial controls with reference to financial statements and such internal financialcontrols with reference to financial statements were operating effectively as of 31 March2022 based on the internal financial controls with reference to financial statementscriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India.
| ||For SHARP & TANNAN |
| ||Chartered Accountants |
| ||(Firm?s Registration No. 003792S) |
| ||V. Viswanathan |
| ||Partner |
|Place: Chennai ||Membership No. 215565 |
|Date: 27 May 2022 ||UDIN: 22215565AJTMQN4333 |