To the Members of
Websol Energy Systems Limited
Report on the Audit of the Financial Statements Opinion
We have audited the accompanying Financial Statements of Websol Energy System Limited(the Company') which comprise the Balance Sheet as at 31st March 2021 theStatement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year then ended and notes tothe Financial statement including a summary of the significant accounting policies andother explanatory information (herein after referred to as "financialstatements"). In our opinion and to the best of our information and according to theexplanations given to us the aforesaid financial statements give the information requiredby the Companies Act 2013 (the Act') in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at 31st March 2021 and its profit (including othercomprehensive income) changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the financial statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India (ICAI') togetherwith the ethical requirements that are relevant to our audit of the financial statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.
Emphasis of Matter
We draw attention to Note No. 34(12) of the financial statements which explains themanagement's assessment that there is no significant impact of COVID-19 pandemic on theFinancial Statements for the year ended 31st March 2021.
Our opinion is not modified in respect of above 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. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.
|Key Audit Matter ||Auditor's Response |
|Accuracy of recognition measurement presentation and disclosures of revenues and other related balances as per Ind AS 115 "Revenue from Contracts with Customers".. ||Our procedures in relation to revenue recognition for those contracts included: |
|The application of the revenue accounting standard involves certain key judgements relating to identification of distinct performance obligations determination of transaction price of the identified performance obligations the appropriateness of the basis used to measure revenue recognised over a period. Additionally revenue accounting standard contains disclosures which involves collation of information in respect of disaggregated revenue and periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date. || Understanding and evaluating the design and testing the operating effectiveness of controls in respect of revenue recognition |
|Refer Note No. 2.9 to the Financial Statements. || Reading the underlying contracts with customers and advances received |
| || Assessing the appropriateness of information such as allotment letter and stage of completion of the project including expected completion date completion certificate and possession letter used by the Management to determine the duration of the project |
| || Evaluating the assumptions used by the Management in ascertaining performance obligation is satisfied over time or at a point in time in accordance with Ind AS 115. |
| || Selected a sample of agreements and tested the operating effectiveness of the internal control relating to identification of the distinct performance obligations and determination of transaction price satisfaction of performance obligation at a point of time and in recording and disclosing revenue in accordance with the new revenue accounting standard. |
| ||Based on the above procedures performed we did not find any significant exceptions in revenue recognized on transitioning to Ind AS 115 Revenue from contracts with customers |
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 andShareholder's Information but does not include the financial statements and our auditor'sreport 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.
When we read the annual report if we conclude that there is a material misstatementtherein we are required to communicate the matter to those charged with governance.
Responsibilities of Management and Those Charged with Governance for the Financialstatements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial position financial performance changes in equityand cash flows of the Company in accordance with the accounting principles generallyaccepted in India including the Indian Accounting Standards specified under section 133of the Act. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
That Board of Directors are also responsible for overseeing the company's financialreporting process.
Auditor's Responsibility 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:
Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act we are also responsible for expressing our opinion on whether the companyhas adequate internal financial controls system in place and the operating effectivenessof such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
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.
Due to the COVID-19 pandemic lockdown and other travel restrictions are imposed by theGovernment/local administration; hence the audit processes were partially carried outelectronically by remote access. The necessary records were made available by themanagement through digital medium and were accepted as audit evidence while reporting forthe current period.
Our opinion is not modified in respect of these matters.
Report on Other Legal and Regulatory Requirements
1. 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 Act we give in the "Annexure A" a statement on the matters specified inthe paragraph 3 and 4 of the Order.
2. 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 flows dealt with by thisReport are in agreement with the books of account.
(d) In our opinion the aforesaid financial statements comply with the Ind AS specifiedunder Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014.
(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". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements- Refer Note No. 34.1 to the financial statements.
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts;
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
3. With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended:
In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act
"Annexure A" to the Independent Auditor's Report
Statement referred to in paragraph Report on Other Legal & RegulatoryRequirements' of our report of even date to the members of Websol Energy System Limited onthe financial statements for the year ended 31st March 2021:
1. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of its fixed assets.
(b) As explained to us the Fixed Assets have been physically verified by themanagement at regular intervals. Based on our review no material discrepancies betweenthe book records and the physical fixed assets have been noticed.
(c) According to information and explanations given to us and on the basis of ourexamination of the books of account and records leasehold land is registered in the nameof the Company.
2. The management has conducted the physical verification of inventory at reasonableintervals. No discrepancies have been noticed on physical verification of the inventory ascompared to books records.
3. The Company has not granted any loans secured or unsecured to companies firmsLimited Liability partnerships or other parties covered in the Register maintained undersection 189 of the Act. Accordingly the provisions of clause 3 (iii) (a) to (C) of theOrder are not applicable to the Company and hence not commented upon.
4. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and I86 of the Act in respect ofloans investments guarantees and security.
The company has not made any investment or furnished any guarantee or securities withinthe meaning of section 185 and I86 of the Act. However In our opinion and according tothe information and explanations given to us the Company has complied with the provisionsof section 185 and I86 of the Act in respect of loan granted
5. The Company has not accepted any deposits from the public and hence the directivesissued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any otherrelevant provisions of the Act and the Companies (Acceptance of Deposit) Rules 2015 withregard to the deposits accepted from the public are not applicable.
6. In our opinion and according to the information and explanation given to us thecost records and accounts has not been prescribed by the Government under section 148 (1)of the Act. Accordingly the provisions of clause 3 (vi) of the Order are not applicableto the Company and hence not commented upon.
7. (a) According to information and explanations given to us and on the basis of ourexamination of the books of account and records the Company has been generally irregularin depositing undisputed statutory dues including Provident Fund Employees StateInsurance Income-Tax Duty of Customs Duty of Excise Cess Goods and Services Tax (GST)and any other statutory dues with the appropriate authorities.
According to the information and explanations given to us the following undisputedamounts payable in respect of the above were in arrears as at 31st March 2021 for aperiod of more than six months from the date on when they become payable:
|Name of Statute ||Nature of dues ||Amount (Rs In lakh) |
|Employee Provident Fund Organisation ||Provident Fund ||5.20 |
|Directorate of Commercial Taxes ||Professional Tax ||1.33 |
|Government of West Bengal || || |
(b) The disputed statutory dues aggregating to Rs 194.61 lakh that have not beendeposited on account of matters pending before appropriate authorities are as under:
|Sl. No. Name of the Statute ||Nature of dues ||Period to which pertain ||Amount (Rs In lakh) ||Forum where dispute is pending |
|1 Central Excise Act 1944 ||Excise Duty ||1994-95 to 1999-00 ||116.55* ||High court Kolkata |
|2 Central Excise Act 1944 ||Excise Duty ||October 2006 to October 2007 ||57.12 ||High court Kolkata |
|3 Central Excise Act 1944 ||Excise Duty ||November 1999 to June 2001 ||13.87 ||High court Kolkata |
|4 Income Tax Act 1956 ||Tax Deducted at sources ||-** ||7.07 ||- |
* The company had paid Rs 100.00 lakhs against this demand in the year 2004-05.
** The Company is currently not able to identify the period for which the correspondingdemand relates to as the same has been reflected as Demand relating to previous years inTraces.
8. The Company had Foreign Currency Convertible Bonds (FCCBs') amounting to US$12.00 Million out of which FCCBs of the value US$ 0.50 Million has been converted into548645 Equity Shares of the Company during the year as per the rates approved byregulators and shareholders.
The Company has currently failed to make timely repayment of its principal outstandingof Rs 301.96 lakhs as against working capital loan repayable on demand from Invent Assetsand Reconstruction Co. Pvt. Ltd. which has been recalled by the lender via a letter dated4th May 2020 and is not yet repaid by the company as on 31.03.21. i.e. period of defaultof 11 months.
9. Based upon the audit procedures performed and the information and explanations givenby the management the company has not raised moneys by way of initial public offer orfurther public offer including debt instruments and term loans. Accordingly theprovisions of clause 3 (ix) of the Order are not applicable to the Company and hence notcommented upon.
10. Based upon the audit procedures performed and the information and explanationsgiven by the management we report that no fraud by the Company or on the company by itsofficers or employees has been noticed or reported during the year. 11. According to theinformation and explanations given to us and based on our examination of the records ofthe Company the Company has paid/provided for managerial remuneration in accordance withthe requisite approvals mandated by the provisions of section 197 read with Schedule V tothe Act.
12. In our opinion the Company is not a Nidhi Company. Therefore the provisions ofclause 3(xii) of the Order are not 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 section 177 and 188 of Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
14. Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not made any preferential allotment or privateplacement of shares during the year under review. Accordingly the provisions of clause 3(xiv) of the Order are not applicable to the Company and hence not commented upon.
15. Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not entered into any non-cash transactions withdirectors or persons connected with him. Accordingly the provisions of clause 3 (xv) ofthe Order are not applicable to the Company and hence not commented upon.
16. In our opinion the company is not required to be registered under section 45 IA ofthe Reserve Bank of India Act 1934 and accordingly the provisions of clause 3 (xvi) ofthe Order are not applicable to the Company and hence not commented upon.
"Annexure B" to the Independent Auditor's Report
Report on the Internal Financial Controls under Clause (i) of sub-section 3 of section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of WebsolEnergy System Limited ("the Company") as of 31st March 2021 in conjunction withour audit 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 Reporting("the Guidance Note") issued by the Institute of Chartered Accountants of India(ICAI). These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to Company's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Act.
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 and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both issued by the ICAI. 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 were 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 judgement 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 31stMarch 2021 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note issued by theICAI.
| ||For G.P. Agrawal & Co. |
| ||Chartered Accountants |
| ||Firm's Registration No. - 302082E |
| ||(CA. Radhika Singhania) |
|Place of Signature: Pune ||Partner |
|Date: The 31st day of May 2021 ||Membership No. 310691 |