Indian Railway Catering & Tourism Corporation Auditors Report


To the Members of

Indian Railway Catering and Tourism Corporation Limited Report on the Audit of the Standalone Financial Statements Opinion

We have audited the accompanying Standalone Financial Statements of Indian Railway Catering and Tourism Corporation Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2023, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended and Notes to the Standalone Financial Statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as "Standalone Financial Statements").

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Financial Statements give the information required by the Companies Act, 2013, as amended, ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards ("Ind AS") prescribed under section 133 of the Act read with the Companies (Indian Accounting Standard) Rules, 2015, as amended, and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2023, its profit (financial performance including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.

Basis of Opinion

We conducted our audit of the Standalone Financial Statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards 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 together with the ethical requirements that are relevant to our audit of the financial Statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Standalone Financial Statements.

Emphasis of Matter

We draw attention to:

1. Note No. 37.2(iv) regarding arbitration award pronounced in April 2022 amounting to H7,400Lakhs plus simple

interest @ 6% per annum from January 2018 onwards, given in favour of certain licensees which represents principal amount towards claims for supply of welcome drinks not paid to licensees and recovery of differential costs for the supply of regular meals to the passengers on the instructions of Railways whereas the price of combo meal, which is lower than the price of regular meal, was reimbursed to these licensees. The Company has filed objections against the award and the same was listed before Honourable High Court of Delhi. Matter is pending. The Company contends that the main liability in this matter would be of Railways and the Company has the right to recovery from Railways in case ultimately it is made liable to pay.

2. Note No.37.2(v) regarding notice dated 25.02.2022 issued by the National Anti-Profiteering Authority (GST) alleging profiteering amounting to H5,041.44Lakhs for the period July 1, 2017 to May 31, 2020 against the Company under Section 171 of the CGST Act, 2017 for not passing on the benefit of reduction in rate of tax to the consumers by way of commensurate reduction in the MRP of Railneer brand of drinking water manufactured and sold by the Company even though there was reduction in the tax rate on the introduction of GST w.e.f. July 1, 2017. The Company contends that Railneer drinking water falls under controlled price segment as the MRP is fixed by Ministry of Railways, Government of India and the MRP fixed in the year 2012 is still continuing despite substantial increase in prices of raw-materials, power, HR cost, freight etc. Legal opinion obtained by the Company justifies the contention of the Company. Competent Commission of India ("CCI") is now vested with powers to adjudicate all such cases in which benefit of tax reduction not being passed to consumers by the assesses and the matter is now pending with CCI.

3. Note Nos. 54(b) & 83 regarding 15% share of Railneer Segment profit for the period 2007-08 to 2020-21 amounting to H2,713.32Lakhs paid to Railways which was shown as an Exceptional Item in the Statement of Profit and loss of the Company during the previous year. The Railway Board has demanded 40% share of PPP plants revenue whereas the Company has contended that PPP plants are not run on license basis and accordingly paid 15% share of profits of these plants which is included in above payment. No provision for share of Railways was considered necessary by the Company in view of treatment of above payment of H2,713.32Lakhs as an expense for the previous year which resulted into loss of Railneer segment in the previous year. These matters are subject to confirmation / reconciliation by / with the Railways.

4. Note No. 39 regarding balance confirmation letters from parties & banks. Guidelines issued by the Company for obtaining balance confirmation letters from parties & banks have been followed partially by certain offices. We are informed that no balance confirmation letters are sent to Railways since their books of account are maintained on cash basis. We note that substantial amounts are receivable / payables from / to Railways which also includes number of inoperative debit balances and few credit balances as on March 31, 2023 including legacy debit & credit balances i.e. those pertaining to the period of transfer of catering operations from / to the Railways. Further, response to balance confirmation letters sought from other parties and banks was negligible and the system and procedures of obtaining balance confirmations at periodical intervals has not been reviewed and strengthened to ensure better response from the parties.

5. Note No. 56(b) regarding non-sharing of input tax credit data of GST for certain periods by Developer cum Operators ("DCO") of four Rail Neer plants resulting in non-recognition of these claims receivables in the books of account of the Company. Amount of such claims are not ascertainable at this stage. Further, these DCOs are also disputing these claims including claims of H751.74Lakhs debited to their accounts.

6. Note Nos.10.1 & 63(i) regarding trade receivables as on March 31, 2023 of H851Crores due from Railways as on March 31, 2023 (As on March 31, 2022 H353 Crores). Out of dues from Railways, outstanding for more than six months amounts to H407 Crores which also includes inoperative balances of H88 Crores due for 3 to 5 years classified as good and recoverable as on March 31, 2023 even though no balance confirmation of Railways is available for these dues as on March 31, 2023.

7. Note No. 77 regarding certain applications made by the Company in previous years for advance ruling relating to applicabilityofGoodsandServicesTaxinrespectofcertain income / receipts amounting to H33,595Lakhs received mainly from the Ministry of Railways, Government of India for which the decision of the Authority for Advance Ruling is awaited.

8. Note No.79 regarding non-recognition of revenue for the financial years 2020-21 to 2022-23 from the increase to be made in license fee for trains due to tariff revision made by the Railway Board in financial year 2019-20 as the exercise regarding sale-assessment of post-paid trains, which will determine the % of increase in license fee, is still under progress as on date. Regarding prepaid trains, even though the sale assessment is over but no revenue was also recognised as certain licensees have disputed demand of additional license fee on account of tariff revision. As the revenue to be recognised cant be either ascertained at this stage or is disputed, the same has been postponed.

9. Note No. 85 regarding: (i) differences between certain subsidiary and control ledger balances which are pending for identification, reconciliation and adjustments, if any, as on March 31, 2023, (ii) review and improvement of system of identification and disclosure of trade payables pending, (iii) marking / knocking off payments made to suppliers and receipts from trade receivables with relevant invoices received / raised for disclosing proper ageing of trade payables and trade receivables at the year-end in the Standalone Financial Statements which are pending in certain cases and (iv) identification of MSME suppliers and their classification into Micro, Small and Medium category to ensure proper disclosure of their dues in Standalone Financial Statements as on March 31, 2023 which needs improvement by way of confirmations from such parties and their classification into Micro, Small and Medium category.

10. Note No. 86 regarding Railway Board letter dated February 23, 2023 imposing fine on the Company @ H1

Lakh per day till the services commences in case catering services are not commenced in trains within 3 days from the date of intimation by the Zonal Railways. The Company has made representation to the Railway Board in March 2023 for review of these instructions for which response of the Railway Board is awaited. Amount of fine payable as on March 31, 2023 not ascertained by the management.

11. Note No. 87 regarding inadmissible payments made of ex-gratia / performance related pay to deputationists amounting to H230.13Lakhs since the year 2015-16 to

2020-21 as stated by C&AG in their provisional Para for C&AGs Report (Railways) for the year ended March 31, 2022 sent to Railway Board. Vide letter dated January 24, 2023, the Company has given its response to the Railway Board letter dated January 09, 2023 seeking comments from the Company wherein payments made to deputationists was justified by the Company. Pending receipt of communication from Railway Board in this regard, amounts paid H243.70Lakhs including H13.57Lakhs for the year 2021-22 has not been shown as recoverable in the books.

Our opinion on the Standalone Financial Statement is not modified in respect of above matters.

Key Audit Matter

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Standalone Financial Statements of the current period. 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 determined the matter described below to be the key audit matter to be communicated in our report.

Assessment of litigation and related disclosure of contingent liabilities

Refer to Note No. 2 (o) to the Standalone Financial Statements

– Use of estimates and judgements-Provisions, Contingent liabilities and Contingent assets and Note No. 37.2 to the Standalone Financial Statements for "Contingent Liabilities" and other significant litigations stated therein.

As at March 31, 2023, the Company has exposures towards number of litigations relating to various matters as set out in the aforesaid Note.

Significant managements judgement is required to assess such matters to determine the probability of occurrence of material outflow of economic resources and whether a provision should be made. The judgement is also supported with legal advice in certain material cases as considered appropriate.

As the ultimate outcome of the litigations are uncertain and the position taken by the management are based on the application of their best judgement which may be subject to management bias, related legal advice including those relating to interpretation of laws / regulations, we have identified this as a Key Audit Matter.

How our audit addressed the key audit matter

Our audit procedures included the following:

• We understood, assessed and tested the design and operating effectiveness of key controls surrounding assessment of litigations relating to the relevant laws and regulations;

• We read and considered latest orders / awards by various courts / authorities on these matters;

• We conducted detailed discussions with in-house legal head, tax consultants and senior management to understand their assessment on the most likely outcome of the material litigations and to understand the basis considered for the provisions made towards these litigations;

• We performed our assessment on a test basis on the underlying calculations supporting the contingent liabilities/other significant litigations disclosed in the Standalone Financial Statements;

• We considered external legal opinions, where relevant, obtained by management;

• We evaluated managements assessments by understanding precedent set in similar cases and assessed the reliability of the managements past estimates / judgements;

• We evaluated managements assessment around those matters that are not disclosed or not considered as contingent liability, as the probability of material outflow is considered to be remote by the management; and

• We assessed the adequacy of the Companys disclosures.

Based on the above work performed, the assessment of management in respect of litigations and related disclosures relating to contingent liabilities / other significant litigations in the Standalone Financial Statements is considered to be reasonable.

Information Other than the Financial Statements and Auditors Report Thereon

The Companys Board of Directors is responsible for the other information. The other information comprises the information included in the Management Discussion and Analysis, Boards Report including Annexures to Boards Report, Business Responsibility Report, Corporate Governance and Shareholders Information, but does not include the Standalone Financial Statements and our auditors report thereon.

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 in the audit, or otherwise appears to be materially misstated.

When we read the other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance. Such other information is pending as on the date of our audit report.

Responsibilities of Management 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, and cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended.

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 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 financial Statements, management 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 management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Companys financial reporting process.

Auditors Responsibility for the audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the 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 judgement and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the 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 control;

• 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 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 financial statements, including the disclosures, and whether the 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

1. As required by the Companies (Auditors Report) Order, 2020 ("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 1 a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by Section 143(3) of the Act, based on our audit we report that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit except for the following:

(i) Balance confirmation letters were not received by us from most of the parties and banks. Further, balance confirmation letters were not sent by certain offices which is against the guidelines agreed upon with us;

(ii) Information and explanations are being furnished to us with substantial delays by certain offices, and

(iii) Information and explanations sought regarding differences between financial data (including difference of H423Lakhs between trade receivables as on December 31, 2022) of operations department in "Air Ticketing Division" under the Tourism Office at Corporate Office and the books of account maintained by the Company in ERP were not furnished to us.

Impact of our observations stated above on Standalone Financial Statements cant be quantified.

(b) 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.

(c) The Balance Sheet, the Statement of Profit and Loss including other Comprehensive income, the Cash Flow Statement and Statement of Changes in equity dealt with by this report are in agreement with the books of account.

(d) In our opinion, the aforesaid Standalone Financial Statements comply with the Indian Accounting Standards specified under Section 133 of the Act:

(e) In terms of Notification No. 463 (E) dated 5th June, 2015 issued by the Ministry of Corporate affairs, provisions of Section 164(2) of the Act regarding disqualifications of the Directors, are not applicable as it is a Government Company.

(f) With respect to the adequacy of internal financial controls over financial reporting with reference to the Standalone Financial Statements of the Company and the operating effectiveness of such controls, refer to our separate Report in Annexure 2. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Companys internal financial controls over financial reporting.

(g) As required by sub-section (5) of section 143 of the Act, we enclose herewith "Annexure 3", a Statement on the Directions issued by the Comptroller and Auditor General of India.

(h) As per notification No. GSR 463 (E) dated June 5, 2015 issued by the Ministry of Corporate Affairs, Government of India, Section 197 of the Act is not applicable to the Government Companies. Accordingly, reporting in accordance with requirements of provisions of section 197(16) of the Act is not applicable to the Company.

(i) 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, in our opinion and to the best of our information and according to the explanations given to us: i. The Company has disclosed the impact of pending litigations on its financial position in its Standalone Financial Statements. Refer Note No. 37.2 of the Standalone Financial Statements. ii. The Company has not entered into any long-term contracts including derivative contracts. iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company. iv. (a) The Company has represented that, to the best of its knowledge and belief, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to any persons or entities, 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 or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; (b) The Company has represented that, to the best of its knowledge and belief, no funds have been received by the Company from any persons or entities, including foreign entities ("intermediaries"), 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 party "Ultimate Beneficiaries" or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

(c) Based on such audit procedures that we have considered appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations made to us under paragraphs (iv)(a) and (b) contain any material mis-statement.

v. The interim and final dividends paid during the financial year are in compliance with provisions of section 123 of the Act. Further, the Board of Directors of the Company have proposed final dividend for the year which is subject to the approval of the members of the Company at the ensuing Annual General Meeting. The amount of dividend proposed is in accordance with section 123 of the Act, as applicable.

vi. Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 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 April 1, 2023, and accordingly reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31, 2023.

For P.R. Mehra & Co

Chartered Accountants

(Firms Registration No. 000051N)

Ashok Malhotra

(Partner)

Membership No: 082648 Place: New Delhi Dated: May 29, 2023

UDIN:23082648BGZELT4140

Annexure 1

"Annexure 1" referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements section of our report of even date on the Standalone Financial Statements of Indian Railway Catering and Tourism Corporation Limited for the year ended March 31, 2023 i. a. (A) The Company has maintained proper records showing full particulars, including quantitative details and situation of Property, Plant and Equipment except for number-wise identification of these assets.

(B) The Company has maintained proper records showing full particulars of intangible assets;

b. According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has a regular programme of physical verification by which all Property, Plant and Equipment are verified at the year-end which, in our opinion, is a reasonable interval having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification;

c. According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties (other than immovable properties where the Company is a lessee and lease agreements are duly executed in favour of the lessee. Refer FootNotes below for cases where lease agreements are not executed) disclosed in the Standalone Financial Statements are held in the name of the company except for the following properties in respect of which title deeds are yet to be executed;

Description of property Gross carrying value Held in name of Whether promoter, director or relative or employee Period held Reason for not being held in name of company
(1) (2) (3) (4) (5) (6)
Land for Hotel at Village Bimeetha, khajuraho, Madhya Pradesh Rs. 66.98 Lakhs See Reason given in Column 6 of this Table See Reason given in Column 6 of this Table Since 03.09.2013 Title deed yet to be executed.
Land for Hotel at Kevadia, Gujrat Rs. 1,275 Lakhs See Reason given in Column 6 of this Table See Reason given in Column 6 of this Table. Since 15.10.2020 Title deed yet to be executed.

Foot-Notes for immovable properties taken on lease:

1. Residential Buildings at D/91 & D/141, Western Railway Colony, Pali Hills, Mumbai costing H325 Lakhs held since 03.10.2012 was allotted by Railways for which License agreement is yet to be executed.

2. Land allotted by Assam State Government at Jagi Road, Assam for H8.06 Lakhs for Rail Neer plant vide order dated February 17,2017. Lease agreement is yet to be executed.

3. Land allotted by Himachal Pradesh State Government at Una for H103.81 Lakhs for Rail Neer plant on lease since October 30, 2018. Lease agreement is yet to be executed.

4. Land given by Railways since December 17, 2009 for Ambernath Rail Neer Plant (ROU H28.23 Lakhs). Renewal of Lease Agreement is pending since April 01, 2021.

5. Three residential flats costing H1,374 Lakhs near Safdarjung Railway Station occupied since November / December 2022. Lease agreement is yet to be executed with Rail Vikas Nigam Limited.

d. According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not revalued its Property, Plant and Equipment (including Right of Use assets) or intangible assets or both during the year. Accordingly, clause 3(i)(d) of the Order is not applicable to the Company;

e. According to the information and explanations given to us and on the basis of our examination of the records of the Company, there are no proceedings initiated or pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder;

ii. a. The physical verification of inventory (except finished stock at most of the Depots which was confirmed in writing by third parties) has been conducted at reasonable intervals by the management and the coverage and procedure of such verification by the management is appropriate and no discrepancies of 10% or more in the aggregate for each class of inventory were noticed;

b. In our opinion and according to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has been sanctioned (renewed) working capital limits in excess of five crore rupees in the form of overdraft against fixed deposits receipts held with bank. Overdraft facility was not utilised during the year and we are informed that no returns or statements were required to be filed by the Company;

iii. In our opinion and according to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not made any investment, provided guarantee or security or granted any loans or advances in the nature of loans, secured or unsecured, to companies or firms, Limited Liability Partnerships or any other parties during the year. Accordingly, clause 3(iii) of the Order is not applicable to the Company;

iv. In view of our observations in paragraph (iii) above in respect of loans, investments, guarantees and security, the compliance with the provisions of section 185 and 186 of the Companies Act are not applicable;

v. The Company has not accepted any deposits or any amounts which are deemed to be deposits from the public. Accordingly, clause 3(v) of the Order is not applicable to the Company;

vi. According to the information and explanations given to us, the Central Government has not prescribed the maintenance of cost records under sub-section (1) of section 148 of the Companies Act, 2013 for the products manufactured by it and the services provided by it. Accordingly, clause 3(vi) of the Order is not applicable to the Company;

vii. a. According to the information and explanations given to us and on the basis of our examination of the records of the Company, except for delays in deposit of part amounts of monthly GST & GST TDS dues aggregating to H4,999.97Lakhs for the year (Previous year H2,930 Lakhs), delays in deposit of part amounts of monthly Income-tax TDS dues of H291.92 Lakhs and

PF dues of certain employees who failed to link their Aadhaar Cards with their PF Number, the Company is generally regular in depositing undisputed statutory dues including, provident fund, income-tax, and other material statutory dues applicable to it to the appropriate authorities.

According to the information and explanations given to us, no undisputed amounts payable in respect of GST, Income-tax, and other material statutory dues were in arrears as at March 31, 2023 for a period of more than six months from the date they became payable except for PF dues of H6.93 Lakhs in respect of those employees who failed to link their Aadhaar Card number with their PF number;

b. According to the information and explanations given to us, the statutory dues which have not been deposited with the appropriate authorities on account of any dispute are as under:

Name of the statue Name of the Dues Period to which amount pertains Forum where dispute is pending Gross Liability (Amounts Rs.in Lakhs) Amount Paid (Amount Rs.in Lakhs) Net Liability (Amount Rs. in Lakhs)
Service Tax Tax on Renting, Agent Business, catering etc. 01.04.2007 to 31.03.2012 CESTAT 10,480.19# - 10,480.19#
Service Tax Tax on Renting, Agent Business, catering etc. 2012-13 Upto June 2017 CESTAT 23.05 2.31 20.74
Service Tax Demands on catering, tour operations, goods transportation etc. 2014-15 High Court/Tribunal/ Appellate Authority 56.36 4.23 52.13
Service Tax On Sale of Package Drinking Water 2008-09 to 2012-13 CESTAT/Commissioner (Appeals) 38.57 - 38.57
Service Tax Demand 2014-15 (2nd Half year & 2015-16 Deputy Commissioner 14.28 1.43 12.85
Service Tax Demand 2010-11 to 2013-14 CUSTOMS, CENTRAL EXCISE AND SERVICE TAX APPELLATE TRIBUNAL 458.95 458.95 -
Service Tax Demand Cum SCN 2017-18 Commissioner of Central tax 64.94 - 64.94
Service Tax Demand 2015-17 Commissioner of Central tax 199.76 - 199.76
Service Tax Demand 2011 to 2015 Commissioner of Central tax (Appeals) 39.36 2.95 36.41
VAT Demand on Mobile Catering Services 2008-09 to June 2017 Supreme Court 8,251.01 - 8,251.01
VAT Assessment, Interest & Penalty 2005-06 & 2008-09 Jt. Comm. of Sales Tax (Appeal) 373.30 36.82 336.48
VAT ITC Denial, demand on Mobile Catering 2010-11 to 2012-13 Tribunal 161.70 80.87 80.83
VAT Bihar Demand on Mobile Catering Services 2008?09 to 2011-12 Supreme Court 915.80 - 915.80
VAT Bihar Demand on Mobile Catering Services 2011-12 High Court/ Tribunal/ Appellate Authority 73.24 - 73.24
VAT Delhi Assessment, Interest & Penalty 2012-13 VATO, SPL OHA 77.74 - 77.74
VAT Delhi & CST Assessment, Interest & Penalty 2009-10 to 2010-11 Special Commissioner (DVAT) 599.38 - 599.38
VAT Delhi & CST Assessment, Interest & Penalty 2013-14 to 2015-16 DVAT OHA 427.97 8.03 419.94
VAT Jharkhand Penalty 2010-11 to 2012-13 ADC 46.31 5.79 40.52
VAT Jharkhand Demand 2010-11 to 2012-13 High Court/ Tribunal/ Appellate Authority 40.03 - 40.03
VAT Kerala Pertaining to Denial of Compounding Rate 2014-15 ACTO 47.57 - 47.57
VAT Odisha Assessment, Interest & Penalty 2011-12 to 2013-14 Commissioner, Tribunal 64.66 4.31 60.35
VAT Odisha Demand on Mobile Catering Services 2011-12 to 2012-13 Tribunal 82.91 13.53 69.38
VAT Rajasthan Assessment, Interest & Penalty 2005-06 to 2016-17 ACTO 32.56 - 32.56
VAT UP Assessment, Interest & Penalty 2008-09 Commissioner (UPVAT) 17.08 6.83 10.25
Delhi VAT Act Demand 2016-17 VAT - Official Hearing Authority 0.46 - 0.46
R VAT Demand 2015-16 & 2017-18 Commercial Tax Officer 3.11 - 3.11
TN VAT Act Demand 2014-15 Assistant Commissioner 5.91 2.83 3.08
TNVAT Demand 2015-2016 to 2017-18 Assistant commissioner (ST) 319.13 - 319.13
VAT-MP Demand 2017-18 Commercial Tax Officer 35.82 - 35.82
Delhi CST Demand 2016-17 VAT - Official Hearing Authority 84.61 - 84.61
Delhi CST Demand 2017-18 Special hearing authority 8.63 - 8.63
CST Demand 2014-15 & 2015-16 Assistant commissioner (ST) 43.84 - 43.84
Income Tax Assessment 2020-21 AO, Income Tax 25.65 - 25.65
Income Tax Demand 2007-08 to TDS Authority 16.46 - 16.46
TDS 2022-23
CGST Act 2021 Demand 2017-18, 2018- 19 & 2019-20 Additional director general 41.34 - 41.34
CGST Act Demand 2017-18 & 2019-20 Joint commissioner appeal -05 6.13 - 6.13
GST TS Demand 2017-18 to 2020-21 Assistance commissioner (ST) 51.53 - 51.53
GST TS Assessment 2021-22 GST Authority 50.20 - 50.20
GST-TS Show Cause Notice 2017-18, 2018- 19 & 2019-20 Additional director general 39.46 18.49 20.97
GST OD Demand 2018-19 CT & GST officer 0.21 - 0.21
GST ACT Demand 2020-2021 superintendent of GST and central excise 3.47 - 3.47
GST ACT Demand 2014-15 Kerala High Court 44.05 - 44.05
GST AP Show Cause Notice 2018-19 & 2019-20 Additional director general 14.91 13.03 1.88
Finance Act & Central excise Demand 2015-2017 Commissioner (Appeal II) Central Excise & GST 2.17 0.16 2.01
Entry Tax Assessment, Interest & Penalty 2011-12 to 2012-13 High Court 0.90 - 0.90
TOTAL 23,384.72 660.57 22,724.15

# Provided H2,578.03Lakhs in the books of account.

viii. According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not surrendered or disclosed any transactions, previously unrecorded as income in the books of account, in the tax assessments under the Income-tax Act, 1961 (43 of 1961) as income during the year;

ix. a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, except for sanction of overdraft facility from bank against fixed deposits with banks, the Company has not availed any loan or other borrowings from any other lender. The Company has not defaulted in repayment of loan or in payment of interest thereon;

(b) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not been declared a wilful defaulter by the bank;

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not obtained any term loans. Accordingly, clause 3(ix)(c) of the Order is not applicable;

(d) According to the information and explanations given to us and on the basis of our examination of the records of the Company, we report that no funds were raised on short-term basis by the Company. Accordingly, clause 3(ix)(d) of the Order is not applicable;

(e) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that the Company has not taken any funds from any entity or person on account or to meet the obligations of its joint-venture. Accordingly, clause 3(ix)(e) of the Order is not applicable;

(f) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that the Company has not raised loans during the year on the pledge of securities held in its joint-venture. Accordingly, clause 3(ix)(f) of the Order is not applicable;

x. The company has not raised any money by way of Initial Public Offer or further public offer (including debt instruments) during the year. Further, the Company has not made any preferential allotment or private placement of shares or convertible debentures during the year. Accordingly, clause 3(x)(a & b) of the Order is not applicable to the Company;

xi. a. According to the information and explanations given to us by the Company, no fraud by the Company or any fraud on the Company has been noticed or reported during the year;

b. No report has been filed by us under sub-section (12) of section 143 of the Companies Act during the year in Form ADT-4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules, 2014 with the Central Government;

c. As represented to us by the management, there are no whistle-blower complaints received by the Company during the year;

xii. The Company is not a Nidhi company. Accordingly, provisions of paragraph 3(xii) of the Order is not applicable to the Company;

xiii. According to the information and explanations given to us and based on our examination of the records of the Company, all transactions with the related parties are in compliance with sections 177 and 188 of Companies Act where applicable and details of such transactions have been disclosed in the Standalone Financial Statements as required by the applicable Standards on Auditing;

xiv. a. The Company has an internal audit system commensurate with the size and nature of its business except for internal audit of Zonal and Regional offices, Tourism Office at Corporate Office and Railneer Plants which, in our opinion, needs improvements in terms of coverage of business conducted by the Company and also transaction audit including material year-end transactions needs adequate coverage to make it commensurate with the size and nature of its business;

b. We have considered the reports of the Internal Auditor for the year ended march 31, 2023 furnished to us;

xv. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into any non-cash transactions with directors or persons connected with them. Accordingly, provisions of paragraph 3(xv) of the Order is not applicable to the Company;

xvi. The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934 (2 of 1934). Accordingly, provisions of paragraph 3(xvi) of the Order is not applicable to the Company;

xvii. The Company has not incurred cash losses in the current financial year and in the immediately preceding financial year; xviii.There was no resignation of statutory auditors during the year. Accordingly, provisions of paragraph 3(xviii) of the Order is not applicable to the Company;

xix. According to the information and explanations given to us and on the basis of financial ratios, ageing and expected dates of realization of financial assets and payment of financial liabilities, other information accompanying the financial statements, our knowledge of the Board of Directors and management plans and based on our examination of the evidence supporting the assumptions, nothing has come to our attention, which causes us to believe that any material uncertainty exists as on date of audit report that the Company is not capable of meeting its liabilities existing at the balance sheet date as and when they fall within a period of one year from the balance sheet date. We further state that our reporting is based on the facts upto the date of the audit report and we neither give any guarantee nor any assurance that all liabilities falling due within a period of one year from the balance sheet, will get discharged by the Company as and when they fall due;

xx. a. In our opinion and according to the information and explanations given to us, in respect of other than ongoing projects, there is no unspent amount which was required to be transferred to a Fund specified in Schedule VII to the Companies Act. Accordingly, clause 3(xx)(a) of the Order is not applicable to the Company;

b. Amount remaining unspent, out of CSR requirements for the financial year 2022-23, under sub-section (5) of section 135 of the Act amounting to H151.27 Lakhs as on March 31, 2023 (H124.39 Lakhs as on March

31, 2022) in respect of ongoing projects has been transferred to special account in compliance with the provisions of sub-section (6) of section 135 of the said Act.

For P.R. Mehra & Co

Chartered Accountants

(Firms Registration No. 000051N)

Ashok Malhotra

(Partner)

Membership No: 082648 Place: New Delhi Dated: May 29, 2023

Annexure 2

"Annexure 2" referred to in paragraph 2(f) under ‘Report on Other Legal and Regulatory Requirements section of our report of even date on the Standalone Financial Statements of Indian Railway Catering and Tourism Corporation Limited for the year ended March 31, 2023

Report on the Internal Financial Controls with reference to Standalone Financial Statements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls with reference to Standalone Financial Statements of Indian Railway Catering and Tourism Corporation Limited ("the Company") as of March 31, 2023 in conjunction with our audit of the Standalone Financial Statements of the Company for the year ended on that date.

1. Managements Responsibility for Internal Financial Controls

The Companys management is responsible for establishing and maintaining internal financial controls based on the internal controls over financial reporting 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 (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.

2. Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls over financial reporting with reference to these Standalone Financial Statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both applicable to an audit of internal financial controls and both issued by ICAI. Those Standards 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 these Standalone Financial Statements were 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 control with reference to these Standalone Financial Statements and their operating effectiveness. Our audit of internal financial control over financial reporting with reference to the Standalone Financial Statements included obtaining an understanding of internal financial control with reference to these 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 judgement, 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 over financial reporting with reference to these Standalone Financial Statements.

3. Meaning of Internal Financial Controls with reference to Standalone Financial Statements

A Companys internal financial controls 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 financial Statements for external purposes in accordance with generally accepted accounting principles. A Companys internal financial controls with reference to the Standalone Financial Statements include 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 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 Standalone Financial Statements.

4. Inherent Limitations of Internal Financial Controls with reference to Standalone Financial Statements

Because of the inherent limitations of internal financial controls over financial reporting with reference to the Standalone Financial Statements, including the possibility of collusion or improper management override of controls, material mis-statements 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.

5. According to the information and explanations given to us and based on our audit, we have following observations in this regard for the year ended March 31, 2023: i. Maker and checker concept, which is an important internal financial control, is generally missing i.e. not being implemented resulting in number of errors and omissions in financial and other data based on which transactions are recorded in books of account. We also observed that inadequate number of experienced professionally qualified personnel at various offices results in: (i) internal financial controls being compromised / not implemented including maker and checker concept stated above, (ii) information and explanations being furnished to us with substantial delays, (iii) non-review of closing statements / data sent by various offices to Zonal

/ Corporate Offices and (iv) transactions recorded earlier / balances outstanding in books of account not being reviewed periodically by these offices. ii. We noted that: (a) differences exists between certain subsidiary and control ledger balances in books of account maintained in ERP wherein such accounts and differences are yet to be identified and quantified respectively by the management, and (b) differences between financial data (including difference of H423Lakhs between trade receivables as on December 31, 2022) of operations department in "Air Ticketing Division" under the Tourism Office at Corporate Office and the books of account maintained by the Company in ERP were not furnished to us and these financial data was not being reconciled periodically. iii. Linking of payments made & receipts with invoices received and raised respectively is delayed / pending/not done properly in certain cases resulting in incorrect disclosures of ageing of trade payables & receivables at the year end. iv. Guidelines issued by the Company for obtaining balance confirmation letters from parties have been followed partially by certain offices. No balance confirmation letters were sent to Railways as the Railways maintain their books of account on cash basis. Further, response to balance confirmations sought from other parties and banks was negligible and the system and procedures of obtaining balance confirmations at periodical intervals has not been reviewed and strengthened to ensure better response from the parties. v. Manual controls are followed instead of system-based automated controls, checks and balances as the transactions executed through 3rd party applications / portals are posted manually in ERP by compiling data through Excel as the existing ERP application is not integrated with certain functions / segments of the Company. Audit trail (edit log) of data, which is an important internal financial control, is also not available for data compiled in Excel. vi. Large number of inoperative debit and credit balances exists as on March 31, 2023 including large number of legacy entries. No efforts are being made to identify, reconcile and then write-off / write-back, if necessary, these balances. vii. Transaction by transaction reconciliation is not being done for many bank accounts being handled at Internet Ticketing segment of the Company on account of: (i) voluminous ticket bookings and cancellations and (ii) non-availability of transaction-wise daily debits and credits reports from certain banks required for automated reconciliation system.

6. Opinion

In our opinion and to the best of our information and according to the explanations given to us and read with our observations stated in paragraph 5 above, the company has, in all the material respects, adequate internal financial controls with reference to the Standalone Financial Statements in place and such internal financial controls with reference to the Standalone Financial Statements were operating effectively as of March 31, 2023, based on the internal controls over financial reporting criteria established by the Company considering the components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial reporting issued by ICAI.

For P.R. Mehra & Co

Chartered Accountants

(Firms Registration No. 000051N)

Ashok Malhotra

(Partner)

Membership No: 082648 Place: New Delhi Dated: May 29, 2023

Annexure 3

"Annexure 3" referred to in paragraph 2(g) under ‘Report on Other Legal and Regulatory Requirements section of our report of even date on the Standalone Financial Statements of Indian Railway Catering and Tourism Corporation Limited for the year ended March 31, 2023

Directions under section 143(5) of the Companies Act, 2013 Auditors reply on action taken on Directions
1.

Whether the Company has system in place to process all the accounting transactions through IT? If yes, the implications of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications, if any, may be stated.

As per the information and explanations given to us, the Company has a system in place to process a major portion of its accounting transactions through IT. However, the existing ERP application of Oracle system is not an end to end integrated accounting system in view of pending implementation of certain Modules e.g. (Property, Plant and Equipment, Intangibles and Right of Use Assets, Payroll and ARCS (Accounts Reconciliation Cloud Services).

Further, online train ticket booking amounts, MCDO data of tourism, E-Catering, Railneer plants data and transactions are compiled in Excel and uploaded / posted manually in Financial Accounting Module of ERP as the master data and transaction data captured in these third-party applications is not compatible with ERP application. Based on the audit procedures carried out and as per the information and explanations given to us, the processing of accounting transactions outside IT system have no material issues regarding integrity of the accounts except that editing of data compiled in Excel as stated above dont have audit trail.

2. Whether there is restructuring of an existing loan or cases of waiver/ write off of debts/loans/interest etc. made by a lender to the company due to the companys inability to repay the loan? If yes, the financial impact may be stated. Whether such cases are properly accounted for? There were no cases of restructuring of an existing loan or cases of waiver/ write off of debts / loans / interest etc. by any lender to the Company during the current financial year.
3. Whether funds (grants / subsidy etc.) received/receivable for specific schemes from central/state Governments or its agencies were properly accounted for/utilized as per its term and conditions? List the cases of deviation. We are informed that no such funds were received / receivable during the year ended March 31, 2023 by the Company. With regards to the government grant received in previous years, the same is being accounted for in terms of the applicable Ind AS.

For P.R. Mehra & Co

Chartered Accountants

(Firms Registration No. 000051N)

Ashok Malhotra

(Partner)

Membership No: 082648 Place: New Delhi Dated: May 29, 2023