THE MEMBERS OF ENERGY DEVELOPMENT COMPANY LIMITED
REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS ADVERSE
OPINION
We have audited the accompanying standalone financial statements of
Energy Development Company Limited
(hereinafter referred to as "the Company") which comprise the
Balance Sheet as at 31st March, 2023, the Statement of Profit and Loss (including Other
Comprehensive Income),the Statement of Changes in Equity and the Statement of Cash Flows
for the year then ended, and notes to the standalone financial statements, including a
summary of significant accounting policies and other explanatory notes for the year ended
on that date (hereinafter referred to as the "standalone financial statements").
In our opinion and to the best of our information and according to the
explanations given to us, due to the significance of the matters described in the Basis
for Adverse Opinion section below, the aforesaid standalone financial statements do not
give the information required by the Companies Act, 2013 read with relevant rules issued
thereunder from time to time (hereinafter referred to as "the Act") in the
manner so required and also does not give a true and fair view in conformity with the
Indian Accounting Standards notified under section 133 of the Act (hereinafter referred to
as " the Ind AS") and other accounting principles generally accepted in India,
of the state of affairs of the Company as at 31st March, 2023, its profit (including other
comprehensive income), changes in equity and its cash flows for the year ended on that
date.
BASIS FOR ADVERSE OPINION
Attention is drawn to the following notes of the standalone financial
statements:
- Note 7.3(a), 7.3(b) and 7.3(c) regarding investments, loans and other receivables
aggregating to ?2,927.60 Lakhs in Arunachal Pradesh and Uttarakhand Undertaking
transferred pursuant to the agreement dated 9th November, 2015 and consideration of
?4,994.52 Lakhs recoverable in this respect. In view of the uncertainty and non-
fulfillment of the conditions precedent to the agreement, amount recoverable thereagainst
is doubtful of recovery and considering the progress of underlying projects, value of
investments and loans in these companies have been significantly impaired. Impact in this
respect have not been ascertained by the management and recognized in the standalone
financial statements;
- Note 16.3 regarding non-determination of terms and conditions of repayment and
realizable amount in respect of outstanding loans of ?2,748.08 Lakhs from wholly owned
subsidiary companies. Impact in this respect have not been ascertained by the management
and recognized in the standalone financial statements;
- Note 7.1(b) regarding impairment in the value of investments aggregating to ?5,200.00
Lakhs in one of the wholly owned subsidiary company. Impact in this respect have not been
ascertained by the management and recognized in the standalone financial statements;
- Note 13.4, 16.4 and 17.2 regarding outstanding amount of ?3,394.38 Lakhs in respect of
trade receivables, loan amounting to ?313.50 Lakhs (including interest accrued thereon)
and security deposits/ retention money amounting to ?161.17 Lakhs given to/ recoverable
from certain companies which are doubtful of recovery and considering recoverability etc.
are prejudicial to the interest of the Company. In absence of the provision against these
balances, the profit for the year and amount of "financial assets- current" is
overstated to that extent. Impact in this respect have not been recognized in the
standalone financial statements;
- Note 17.3 regarding payment of remuneration amounting to ?40.20 Lakhs to a director,
pending necessary approvals, being shown as recoverable as stated in the said note;
- Note 52 regarding non-availability of confirmation and reconciliation thereof of certain
debit and credit balances including loans, advances, creditors, etc. Adjustments/ impact
with respect to these are currently not ascertainable and as such cannot be commented upon
by us;
- Note 53 regarding receipt of demand notices aggregating to ?18,817.47 Lakhs pertaining
to Income Tax Assessment Order for Assessment Years 2011-2012 to 2020-2021 and stay of
demand pursuant to application filed by the Company. The Company has preferred necessary
appeals before the Commissioner of Income Tax (Appeals) and impact in this respect is
presently not ascertainable;
Overall impact with respect to above, except in case of (d) above, even
though likely to be material, are not ascertainable and as such cannot be commented upon
by us.
We conducted our audit in accordance with the Standards on Auditing
(hereinafter referred to as "SAs") notified under section 143(10) of the Act.
Our responsibilities under those SAs are further described in the "Auditors
Responsibilities for the Audit of the Standalone Financial Statements" section of our
report. We are independent of the Company in accordance with the Code of Ethics issued by
the Institute of Chartered Accountants of India (hereinafter referred to as "the
ICAI") together with the ethical requirements that are relevant to our audit of the
standalone financial statements under the provisions of the Act and the Rules thereunder,
and we have fulfilled our other ethical responsibilities in accordance with these
requirements and the ICAIs Code of Ethics. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our adverse opinion on
the standalone financial statements.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment,
were of most significance in our audit of the standalone financial statements for the
financial year ended 31st March, 2023. These matters were addressed in the context of our
audit of the standalone financial statements as a whole and in forming our opinion thereon
and we do not provide a separate opinion on these matters. We have considered the matters
described below to be the key audit matters for incorporation in our report.
We have fulfilled the responsibilities described in the
"Auditors Responsibilities for the Audit of the Standalone Financial
Statements" section of our report, including in relation to these matters.
Accordingly, our audit included the performance of procedures designed to respond to our
assessment of the risks of material misstatement of the standalone financial statements.
The result of our audit procedures, including the procedures performed to address the
matters below, provide the basis for our opinion on the accompanying standalone financial
statements.
Key Audit Maflers |
Addressing
the Key Audit Maflers |
Recognition of Deferred tax
assets (Refer note no. 10 to the standalone financial statements) |
Our audit
procedures based on which we arrived at the conclusion regarding reasonableness of the
recognition of deferred tax assets include the following: |
Deferred tax assets pertaining to
unused tax credit and unabsorbed depreciation aggregating to ?533.96 Lakhs as on 31st
March, 2023, as recognized in earlier years has been continued in the books of accounts in
this year. Recognition of deferred tax assets is based on expected utilization thereof
considering the managements projection of future taxable income of the Company. This
involves estimation of future operations and profitability based on assumptions and
anticipations which may be in variance with the actual happening. |
Evaluation of
the temporary differences and utilization of deferred tax assets based on internal
forecasts by the management and resultant impact on future taxable income of the Company. |
|
The above
includes critical review of underlying assumptions for consistency and arriving at
reasonable level of probability on the matters with due regard to the current and past
results and performances, as required in terms of Ind AS 12 "Income Taxes" and
principles in this regard. |
|
Review of
managements assumption with respect to profit in future periods and taxability
thereof and placing reliance on such assumptions and projections given the current scale
of operations and prevailing conditions and situations. |
INFORMATION OTHER THAN THE STANDALONE FINANCIAL STATEMENTS AND
AUDITORS REPORT THEREON
The Companys Board of Directors is responsible for the
preparation of other information. The other information comprises the information included
in the Annual Report but does not include the standalone financial statements,
consolidated financial statements and our auditors reports thereon. The other
information as stated above is expected to be made available to us after the date of this
auditors report.
Our opinion on the standalone financial statements does not cover the
other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements,
our responsibility is to read the other information identified above when it becomes
available, and, in doing so, consider whether the other information is materially
inconsistent with the standalone financial statements, or our knowledge obtained during
the course of our audit or otherwise appears to be materially misstated.
When we read the other information as stated above and if we conclude
that there is a material misstatement therein, we are required to communicate the matter
to those charged with governance and describe necessary actions required as per applicable
laws and regulations.
RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR
THE STANDALONE FINANCIAL STATEMENTS
The Companys Board of Directors is responsible for the matters
stated in section 134(5) of the Act with respect to the preparation of these standalone
financial statements that give a true and fair view of the financial position, financial
performance(including other comprehensive income), changes in equity and cash flows of the
Company in accordance with the accounting principles generally accepted in India,
including the Indian Accounting Standards notified under section 133 of the Act read with
relevant rules, as amended from time to time. This responsibility also includes
maintenance of adequate accounting records in accordance with the provisions of the Act
for safeguarding of the assets of the Company and for preventing and detecting frauds and
other irregularities; selection and application of appropriate accounting policies; making
judgments and estimates that are reasonable and prudent; and the design, implementation
and maintenance of adequate internal financial controls, that were operating effectively
for ensuring the accuracy and completeness of the accounting records, relevant to the
preparation and presentation of the standalone financial statements that give a true and
fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone financial statements, the Board of
Directors is responsible for assessing the Companys ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the Board of Directors either intends to liquidate the
Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the
Companys financial reporting process.
AUDITORS RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE
FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the
standalone financial statements as a whole are free from material misstatement, whether
due to fraud or error, and to issue an auditors report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit
conducted in accordance with SAs will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the standalone financial
statements, whether due to fraud or error, design and perform audit procedures responsive
to those risks, and obtain audit evidence that is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal controls;
- Obtain an understanding of internal control relevant to the audit in order to design
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 Company has
adequate internal financial controls system in place and the operating effectiveness of
such controls;
- Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management;
- Conclude on the appropriateness of managements use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the
Companys ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditors report to the
related disclosures in the standalone 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 auditors report. However, future events or conditions
may cause the Company to cease to continue as a going concern;
- Evaluate the overall presentation, structure and content of the standalone financial
statements, including the disclosures, and whether the standalone financial statements
represent the underlying transactions and events in a manner that achieves fair
presentation.
We communicate with those charged with governance regarding, among
other matters, the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify during our
audit.
We also provide those charged with governance with a statement that we
have complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we
determine those matters that were of most significance in the audit of the standalone
financial statements of the current period and are therefore the key audit matters. We
describe these matters in our auditors report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we determine
that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
- As required by the Companies (Auditors Report) Order, 2020 (hereinafter referred
to as "the Order"), issued by the Central Government of India in terms of
sub-section (11) of section 143 of the Act, we give in the "Annexure A" a
statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent
applicable.
- Further to our comments in the annexure referred to in the paragraph above, as required
by section 143(3) of the Act, we report that:
- We have sought and, except for the effects/ possible effects of the matters described in
the Basis for Adverse Opinion section above, obtained all the information and explanations
which to the best of our knowledge and belief were necessary for the purposes of our audit
of the aforesaid standalone financial statements;
- Except for the effects/ possible effects of the matters described in the Basis for
Adverse Opinion section above, in our opinion, proper books of account as required by law
have been kept by the Company so far as it appears from our examination of those books;
- The Standalone Balance Sheet, the Standalone Statement of Profit and Loss (including
Other Comprehensive Income), the Standalone Statement of Changes in Equity and the
Standalone Statement of Cash Flows dealt with by this Report are in agreement with the
relevant books of account maintained for the purpose of preparation of the standalone
financial statements;
- Due to the significance of the matters described in the Basis for Adverse Opinion
section above, in our opinion, the aforesaid standalone financial statements do not comply
with the requirement and provisions of Indian Accounting Standards notified under Section
133 of the Act;
- The matters described in the Basis for Adverse Opinion section above especially those
relating to non-provision of investments, loans, trade and other receivables as stated in
paragraphs (a), (b), (c) and (d) and demand for income tax raised by Income Tax
Authorities pending resolution thereof as stated in paragraph (g) of that section, in our
opinion, may have an adverse effect on the functioning of the Company;
- On the basis of the written representations received from the directors as on 31st
March, 2023 taken on record by the Board of Directors, none of the directors is
disqualified as on 31st March, 2023 from being appointed as a director in terms of section
164(2) of the Act;
- The adverse remarks relating to the maintenance of accounts and other matters connected
therewith are as stated in the Basis for Adverse Opinion section above; and
- With respect to the adequacy of the internal financial controls with reference to the
standalone financial statements and the operating effectiveness of such controls, refer to
our separate Report in "Annexure B". Our report expresses qualified opinion on
the adequacy and operating effectiveness of internal financial controls with reference to
the standalone financial statements of the Company.
- With respect to the other matters to be included in the Auditors Report in
accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014 (as amended from
time to time), in our opinion and to the best of our information and according to the
explanations given to us:
- Pending litigations (other than those already recognized in the standalone financial
statements) having material impact on the financial position of the Company have been
disclosed in the standalone financial statements as required in terms of relevant
accounting standards and provisions of the Act- refer note no. 40(A)to the standalone
financial statements;
- The Company did not have any long-term contracts including derivative contracts for
which there were any material foreseeable losses;
- There has been no delay in transferring amounts which were required to be transferred to
the Investor Education and Protection Fund by the Company;
- a. The management has represented that, to the best of its knowledge and belief as
disclosed in note no. 54 to the standalone financial statements, no funds have been
advanced or loaned or invested (either from borrowed funds or securities premium or any
other sources or kind of funds) by the Company to or in any other person(s) or
entity(ies), including foreign entities ("Intermediaries"), with the
understanding, whether recorded in writing or otherwise, that the Intermediary shall,
whether, directly or indirectly, lend or invest in other persons or entities identified in
any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries")
or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
- The management has represented that, to the best of its knowledge and belief as
disclosed in note no. 54 to the standalone financial statements, no funds have been
received by the Company from any person(s) or entity(ies), including foreign entities
("Funding Parties"), with the understanding, whether recorded in writing or
otherwise, that the Company shall, whether, directly or indirectly, lend or invest in
other persons or entities identified in any manner whatsoever by or on behalf of the
Funding Parties ("Ultimate Beneficiaries") or provide any guarantee, security or
the like on behalf of the Ultimate Beneficiaries; and
- Based on the audit procedures that have been considered reasonable and appropriate in
the circumstances, nothing has come to our notice that has caused us to believe that the
representations under sub-clause (i) and (ii) of Rule 11(e) of the Companies (Audit and
Auditors) Rules, 2014 (as amended from time to time), as provided under (a) and (b) above,
contain any material misstatement;
- The Company has not declared or paid any dividend and has also not proposed any dividend
during the year and as such requirement for complying with the provisions of section 123
of the Act in this respect are not applicable to the Company; and
- Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014, as amended from time to
time, for maintaining books of account using accounting software which has a feature of
recording audit trail (edit log) facility is applicable to the Company with effect from
1st April, 2023 and accordingly, reporting under Rule 11(g) of the Companies (Audit and
Auditors) Rules, 2014, as amended from time to time, is not applicable for the financial
year ended 31st March, 2023.
- With respect to the reporting under section 197(16) of the Act to be included in the
Auditors Report, in our opinion and according to the information and explanations
given to us, the remuneration (including sitting fees) paid by the Company to its
directors during the current financial year, except as stated in paragraph (e) of Basis
for Adverse Opinion section above, is in accordance with the provisions of section 197 of
the Act and is not in excess of the limit laid down therein.
Place : Kolkata
Dated : 30th May, 2023
For A L P S & Co
Chartered Accountants
Firms Registration No.: 313132E
Sd/- A. K. KHETAWAT
Partner
Membership No.: 052751 UDIN : 23052751BGQJLA3326
"ANNEXURE – A" TO THE INDEPENDENT AUDITORS REPORT
(Referred to in paragraph 1 under "Report on Other Legal and
Regulatory Requirements" section of our report of even date to the members of Energy
Development Company Limited)
- In respect of the Companys property, plant and equipment and intangible assets
- (A) The Company has maintained proper records showing full particulars, including
quantitative details and situations of its property, plant and equipment;
(B) The Company has maintained proper records showing full particulars
of intangible assets;
- During the year, property, plant and equipment have been physically verified by the
management according to a regular program of verification which, in our opinion, is
reasonable having regard to the size of the Company and the nature of its assets.
According to the information and explanations given to us, no material discrepancies were
noticed on such verification;
- According to the information and explanations given to us and based on our examination
of the relevant records of the Company, the title deeds of all immovable properties (other
than properties where the Company is lessee and lease agreements are duly executed in
favour of the lessee), as disclosed in note no. 5 on property, plant and equipment to the
standalone financial statements, are held in the name of the Company as on the balance
sheet date;
- The Company has not revalued any of its property, plant and equipment (including
right-of-use assets) and intangible assets during the year.Accordingly,reporting under
clause (i)(d) of paragraph 3 of the Order is not applicable; and
- According to the information and explanations given to us and as represented by the
management, no proceeding has been initiated during the year or are pending against the
Company as at 31st March, 2023for holding any benami property under the Benami
Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made there under, as amended
from time to time. Accordingly, reporting under clause (i)(e) of paragraph 3 of the Order
is not applicable.
- According to the information and explanations given to us and based on our examination
of the books of account of the Company:
- The inventories of the Company have been physically verified by the management during
the year at reasonable intervals and in our opinion coverage and procedure of such
verification by the management is appropriate having regard to the size of the Company and
nature of its inventories. The discrepancies noticed on physical verification of
inventories were not 10% or more in aggregate for each class of inventories and have been
properly dealt with in the books of the account; and
- The Company has been sanctioned working capital limits in excess of five crore rupees,
in aggregate, from bank on the basis of security of certain current assets in respect of
which monthly statements (hereinafter referred to as "Statements") have been
filed with the banks. These Statements have been prepared in accordance with the books of
account and there are no differences at the quarter ends in this respect.
- The Company has not made investments or provided guarantee or security or granted loans
or advances in the nature of loans, secured or unsecured, to companies, firms, limited
liability partnerships or any other parties during the year.
- The Company has not provided loans or advances in the nature of loans, or provided
guarantee or security during the year and accordingly, reporting under clause (iii)(a) of
paragraph 3 of the Order is not applicable;
- The Company has not made investments or provided guarantee or security or granted loans
or advances in the nature of loans during the year and accordingly, reporting under clause
(iii)(b) of paragraph 3 of the Order is not applicable;
- In respect of loans outstanding from the beginning of the year, there were no
stipulations with respect to repayment of principal and interest where applicable. As
such, we are unable to make comment on the regularity of repayment of principal and
payment of interest;
- As stated in clause (iii)(c) above, there are no stipulations with respect to repayment
of principal and interest where applicable and as such amounts overdue for more than
ninety days are not ascertainable;
- As stated in clause (iii)(c)above, it is not possible to ascertain and comment on
whether any amount outstanding has fallen due for payment. Accordingly, reporting required
under clause (iii)(e) of paragraph 3 of the Order has not been given; and
- The details of loan outstanding from the beginning of the year and as required under
clause (iii)(f) of paragraph 3 of the Order are as follows:
Aggregate amount
of loan outstanding (? in Lakhs) |
Percentage
thereof to total loans granted |
Aggregate
amount of loan granted to promoter, related parties as defined in clause (76) of section 2
of Companies Act, 2013 (?in Lakhs) |
?2,840.52 Lakhs |
75.89% |
?2,840.52
Lakhs - subsidiary companies |
?588.72 Lakhs |
15.73% |
?588.72
Lakhs - associate company |
?313.50 Lakhs |
8.38% |
Not
applicable |
- In our opinion and according to the information and explanations given to us, the
Company has complied with the provisions of section 185 of the Act in respect of loans
granted in earlier years.The Company has complied with the provisions of section 186 of
the Act, to the extent applicable to the Company.
- According to the information and explanation given to us and based on our examination of
the books and records of the Company, the Company has neither accepted any deposits or
amount deemed to be deposits from public covered under sections 73 to 76 or any other
relevant provisions of the Act and rules framed thereunder. Accordingly, reporting under
clause (v) of paragraph 3 of the Order is not applicable.
- We have broadly reviewed the cost records and accounts prescribed by the Central
Government under section 148(1) of the Act and are of the opinion that prima-facie, such
records have been made and maintained by the Company. However, we have not carried out any
detailed examination of such accounts and records.
- According to the information and explanations given to us and based on our examination
of the books of accounts:
- During the year, undisputed statutory dues including goods and services tax, provident
fund, employees state insurance, income tax, sales tax, service tax, duty of
customs, duty of excise, value added tax, cess and any other statutory dues, as applicable
to the Company have generally been regularly deposited by the Company with the appropriate
authorities though there has been slight delay in a few cases. There are no undisputed
amounts in respect of goods and services tax, provident fund, employees state
insurance, income tax, sales tax, service tax, duty of customs, duty of excise, value
added tax, cess and any other material statutory dues, in arrears as at 31st March, 2023
for a period of more than six months from the date they became payable except in respect
of following cases:
Name of the
Statute |
Nature
of Dues |
Amount
(? in lakhs) |
Period
to which the amount relates |
Due
Date |
Date
of Payment |
Income Tax |
Tax
deducted at source |
6.46 |
March2014 |
30th
April, 2014 |
Unpaid |
Income Tax |
Tax
deducted at source |
3.43 |
March2015 |
30th
April, 2015 |
Unpaid |
- The details of statutory dues referred to in clause (vii)(a) above, which have not been
deposited on account of any dispute are as follows:
Name of the
Statute |
Nature
of Dues |
Amount
(? in lakhs) |
Period
to which the amount relates |
Forum
where dispute is pending |
The Income Tax Act,
1961 |
Income
Tax |
21,557.57 |
FY
2010-2011 to FY 2019-2020 |
CIT
(Appeals) |
The Finance Act, 1994 |
Service
Tax |
15.41 |
FY
2007-2008 |
CESTAT |
- In our opinion and on the basis of information and explanations given to us and as
represented by the management with respect to income tax proceedings as stated in note no.
53 pending against the Company or even otherwise, we have neither come across nor have
been informed of transactions which were previously not recorded in books of account and
that have been surrendered or disclosed as income during the year in the tax assessments
under the Income Tax Act, 1961 and accordingly, reporting under clause (viii) of paragraph
3 of the Order is not applicable.
- In our opinion and on the basis of information and explanations given to us and based on
our examination of the books of account of the Company:
- In respect of unsecured borrowings taken during the year and unsecured loans obtained in
earlier years which were outstanding as at 31st March, 2023, there were no stipulations
with respect to repayment of principal and interest. As such, we are unable to make
comment on the regularity of repayment of principal and payment of interest;
- The Company has not been declared wilful defaulter by any bank or financial institution
or any other lenders;
- In respect of unsecured borrowing taken during the year as stated above, terms of
repayment thereof and utilization of the fund obtained have not been stipulated. Other
than this, no term loan has been availed by the Company and accordingly, the reporting
required under clause (ix)(c) of paragraph 3 of the Order as such cannot be made;
- According to the information and explanations given to us, and the procedures performed
by us, and on an overall examination of the standalone financial statements of the
Company, we reportthat no funds raised on short term basishave been used for long term
purposes by the Company;
- The Company has not taken any funds from any entity or person on account of or to meet
obligation of its subsidiaries or its associate. The Company does not have any joint
ventures. Accordingly, reporting under clause (ix)(e) of paragraph 3 of the Order is not
applicable; and
- The Company has not raised loans during the year on the pledge of securities held in its
subsidiaries or its associate. The Company does not have any joint ventures. Accordingly,
reporting under clause (ix)(f) of paragraph 3 of the Order is not applicable.
- According to the information and explanations given to us and based on our examination
of the books of account of the Company:
- The Company has not raised any money by way of initial public offer or further public
offer (including debt instruments) during the year and accordingly, reporting under clause
(x)(a) of paragraph 3 of the Order is not applicable; and
- The Company has not made any preferential allotment or private placement of shares or
convertible debentures (fully, partially, or optionally convertible) during the year and
accordingly, reporting under clause (x)(b) of paragraph 3 of the Order is not applicable.
- a. During the course of our examination of books and records of the Company carried out
in accordance with generally accepted auditing practices in India, and according to the
information and explanation given to us, we have neither come across any instance of fraud
by or on the Company noticed or reported during the
year, nor have we been informed of any such cases by the management;
- According to the information and explanations given to us and based on our examination
of the books and records of the Company, no report under sub-section (12) of section 143
of the Act, in Form ADT-4, as prescribed under Rule 13 of Companies (Audit and Auditors)
Rules, 2014 (as amended from time to time) has been filed with the Central Government.
Accordingly, reporting under clause (xi)(b) of paragraph 3 of the Order is not applicable;
and
- One anonymous whistle blower complaint regarding payments to one of the director has
been received by directors and officials of the Company. Payments made being remuneration
to the said director pending necessary approval as stated in note no. 17.3 have been
considered recoverable. The said complaint, even though as explained was disposed of by
the management, being taken on record by the Company and communicated to us, has been
taken into consideration while determining the nature, timing and extent of audit
procedures by us. Other than this, according to the information and explanation given to
us and as far as ascertained from examination of the books and records in accordance with
generally accepted auditing practices in India, no whistle blower complaints were received
during the year.
- In our opinion and according to the information and explanations given to us, the
Company is not a Nidhi Company and accordingly, the Nidhi Rules, 2014 is not applicable to
it, hence, reporting under clauses (xii)(a), (xii)(b) and (xii)(c) of paragraph 3 of the
Order is not applicable.
- According to the information and explanations given to us and based on our examination
of the records of the Company, transactions with the related parties, except as stated in
paragraph (e) of Basis for Adverse Opinion section above, are in compliance with
provisions of sections 177 and 188 of the Act where applicable and details of such
transactions have been disclosed in the standalone financial statements as required by the
applicable accounting standards.
- a. The Company has appointed a firm of Chartered Accountants to carry out the internal
audit of the Company. In our opinion and according to the information and explanations
given to us, the internal audit system is commensurate with the size and nature of its
business; and
b. We have considered, during the course of our audit, the reports of
the internal auditor for the period under audit, issued to the Company during the year and
till date, in determining nature, timing and extent of our audit procedures in accordance
with the guidance provided in SA 610 "Using the work of Internal Auditors".
- According to the information and explanations given to us and as represented to us by
the management and based on our examination of the records of the Company, the Company has
not entered into non-cash transactions with directors or persons connected with them and
accordingly, reporting under clause (xv) of paragraph 3 of the Order is not applicable.
- According to the information and explanations given to us and based on our examination
of the books and records of the Company:
- The Company is not required to be registered under section 45-IA of the Reserve Bank of
India Act 1934;
- The Company has not conducted any non-banking financial or housing finance activities
during the year;
- The Company is not a Core Investment Company as defined in the Core Investment Companies
(Reserve Bank) Directions, 2016, as amended from time to time, issued by the Reserve Bank
of India andaccordingly, reporting under clause (xvi)(c) of paragraph 3 of the Order is
not applicable; and
- In our opinion and based on the representation received from the management, there is no
core investment company within the Group (as defined in the Core Investment Companies
(Reserve Bank) Directions, 2016) and accordingly, reporting under clause (xvi)(d) of
paragraph 3 of the Order is not applicable.
- Based on the examination of the books of accounts, we report that the Company has not
incurred cash losses in the current financial year covered by our audit or in the
immediately preceding financial year.
- There has been no resignation of statutory auditors during the year and accordingly,
reporting under clause
(xviii) of paragraph 3 of the Order is not applicable.
- According to the information and explanations given to us and based on the financial
ratios (refer note no. 51 to the standalone financial statements), ageing and expected
dates of realization of financial assets and payment of financial liabilities, other
information accompanying standalone financial statements, our knowledge of the Board of
Directors and management plans and based on our examination of the evidences supporting
the assumptions, nothing has come to our attention, which causes us to believe that any
material uncertainty exists as on the date of the audit report that Company is not capable
of meeting its liabilities existing at the date of balance sheet as and when they fall due
within a period of one year from the balance sheet date. We, however, state that this is
not an assurance as to the future viability of the Company. We further state that our
reporting is based on the facts up to the date of the audit report and we neither given
any guarantee nor any assurance that all liabilities falling due within a period of one
year from the balance sheet date, will get discharged by the Company as and when they fall
due.
- According to the information and explanation given to us and based on our examination of
the books of account, the requirement for making expenditure towards corporate social
responsibility activities is not applicable as per the criteria specified under section
135 of the Act read with relevant rules issued thereunder from time to time and
accordingly, reporting under clauses (xx)(a) and (xx)(b) of paragraph 3 of the Order is
not applicable.
- The reporting under clause (xxi) of paragraph 3 of the Order is not applicable in
respect of audit of standalone
financial statements.
Place : Kolkata
Dated : 30th May, 2023
For A L P S & Co
Chartered Accountants
Firms Registration No.: 313132E
Sd/- A. K. KHETAWAT
Partner
Membership No.: 052751 UDIN : 23052751BGQJLA3326
"ANNEXURE – B" TO THE INDEPENDENT AUDITORS REPORT
(Referred to in point (h) of paragraph 2 under "Report on Other
Legal and Regulatory Requirements" section of our report of even date to the members
of Energy Development Company Limited)
Report on the Internal Financial Controls with reference to the
standalone financial statements under clause (i) of sub-section 3 of section 143 of the
Companies Act, 2013 (hereinaher referred to as "the Act")
We have audited the internal financial controls with reference to the
standalone financial statements of Energy Development CompanyLimited (hereinafter referred
to as "the Company") as at 31st March,2023 in conjunction with our audit of the
standalone financial statements of the Company for the year ended on that date.
MANAGEMENTS RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS WITH
REFERENCE TO THE STANDALONE FINANCIAL STATEMENTS
The Board of Directors of the Company is responsible for establishing
and maintaining internal financial controls based on the internal control with reference
to the standalone financial statements criteria established by the Company considering the
essential components of internal control stated in the Guidance Note on Audit of Internal
Financial Controls over Financial Reporting (hereinafter referred to as "the Guidance
Note") issued by the Institute of Chartered Accountants of India (hereinafter
referred to as "the ICAI"). These responsibilities include the design,
implementation and maintenance of adequate internal financial controls that were operating
effectively for ensuring the orderly and efficient conduct of its business, including
adherence to Companys policies, the safeguarding of its assets, the prevention and
detection of frauds and errors, the accuracy and completeness of the accounting records,
and the timely preparation of reliable financial information, as required under the Act.
AUDITORS RESPONSIBILITY
Our responsibility is to express an opinion on the Companys
internal financial controls with reference to the standalone financial statements based on
our audit. We conducted our audit in accordance with the Guidance Note issued by the ICAI
and the Standards on Auditing notified under section 143(10) of the Act, to the extent
applicable to an audit of internal financial controls. Those Standards on Auditing and the
Guidance Note require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance about whether adequate internal financial controls
with reference to the standalone financial statements was established and maintained and
if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about
the adequacy of the internal financial controls system with reference to the standalone
financial statements and their operating effectiveness. Our audit of internal financial
controls with reference to the standalone financial statements included obtaining an
understanding of internal financial controls with reference to the standalone financial
statements, assessing the risk that a material weakness exists, and testing and evaluating
the design and operating effectiveness of internal control based on the assessed risk. The
procedures selected depend on the auditors judgment, including the assessment of the
risks of material misstatement of the standalone financial statements, whether due to
fraud or error.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion on the Companys internal
financial controls system with reference to the standalone financial statements.
MEANING OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE STANDALONE
FINANCIAL STATEMENTS
A companys internal financial control with reference to the
standalone financial statements is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of the standalone
financial statements for external purposes in accordance with generally accepted
accounting principles. A companys internal financial control with reference to the
standalone financial statementsincludes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of the
standalone financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the companys assets that could have a material effect on the
financial statements.
INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO
THE STANDALONE FINANCIAL STATEMENTS
Because of the inherent limitations of internal financial controls with
reference to the standalone financial statements, including the possibility of collusion
or improper management override of controls, material misstatements due to error or fraud
may occur and not be detected. Also, projections of any evaluation of the internal
financial controls with reference to the standalone financial statements to future periods
are subject to the risk that the internal financial control with reference to the
standalone financial statements may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.
BASIS FOR QUALIFIED OPINION
According to the information and explanations given to us and based on
our audit, the following material weaknesses have been identified in the Companys
internal financial controls with reference to the standalone financial statements as at
31st March, 2023:
- The Company did not have an appropriate internal control system in relation to granting
of loans to subsidiary and associate and/ or other companies and making recoveries against
the trade and other receivables, including ascertaining economic substance and business
rationale of the transactions, establishing segregation of duties and determining
credentials of the counter parties (refer note no. 13, 16 and 17 to the standalone
financial statements);
- With respect to inter corporate deposits, the Company did not have appropriate system to
evaluate the credit worthiness of the parties and recoverability of monies given including
interest thereon and related party transactions especially with respect to remuneration
paid to one of the director of the Company (refer note no. 17.3) and also ensuring the
compliances with respect to provisions of the Act so that these are not considered to be
prejudicial to the interest of the Company;
- Non-availability of confirmation and reconciliation thereof of certain debit and credit
balances including loans, advances, creditors, etc. (refer note no. 52 to the standalone
financial statements).
A ‘material weakness is a deficiency, or a combination of
deficiencies, in internal financial controls with reference to standalone financial
statements, such that there is a reasonable possibility that a material misstatement of
the Companys annual or interim financial statements will not be prevented or
detected on a timely basis.
QUALIFIED OPINION
In our opinion, to the best of our information and according to the
explanations given to us, except for the effects/ possible effects of the material
weaknesses described in Basis for Qualified Opinion section above on the achievement of
the objectives of the control criteria, the Company has maintained, in all material
respects, an adequate internal financial controls with reference to the standalone
financial statements and such internal financial controls with reference to the standalone
financial statements were operating effectively as at 31st March,2023, based on the
internal control with reference to the standalone financial statements criteria
established by the Company considering the essential components of internal control stated
in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting
issued by the Institute of Chartered Accountants of India.
We have considered the material weaknesses identified and reported
above in determining the nature, timing and extent of audit tests applied in our audit of
the standalone financial statements of the Company for the year ended 31st March, 2023,
and these material weaknesses have affected our opinion on the said standalone financial
statements of the Company and we have issued an adverse opinion on the standalone
financial statements of the Company.
Place : Kolkata
Dated : 30th May, 2023
For A L P S & Co
Chartered Accountants
Firms Registration No.: 313132E
Sd/- A. K. KHETAWAT
Partner
Membership No.: 052751 UDIN : 23052751BGQJLA3326