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, 2024, 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, 2024, 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 there under, 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 RS.7,471.65 Lakhs 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. 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.
The hearing before Honble high court was done on 19.07.2023 and as per the interim order dated 09.10.2023, of Honble high court, the company has been advised to deposit bank guarantee amount. The company has filed objections appeal against the award. In compliance of Honble Delhi High Court order, Bank Guarantee to the tune of RS.8,471.65 lakhs have been deposited with the court registry as per the orders of Honble Delhi High Court. It is to mention that the Honble High Court, Delhi has reserved the judgment in the said matter.
2. Note No.37.2(v) regarding Notice dated 25.02.2022 issued by the National Anti-Profiteering Authority (GST) alleging profiteering amounting to RS.5,041.44 Lakhs 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. 49(b) regarding Railway board clarified that for Rail Neer plants run departmentally by the company, the profits between Railway board and company shall be shared in the ratio of 15:85 and for plants operated under PPP model/run by DCO, profits between Railway board and company shall be shared in the ratio 40:60. Accordingly, the company has recognized profit Share amounting to RS.320.33 Lakhs being 15% of profit of Departmentally run Railneer plants and RS.452.25 Lakhs being 40% of the profits of plants run on PPP model during the year ended 31st March, 2024 after charging profit Share amounting RS.1451.24 Lakhs towards differential profit Share @25% on profits from PPP plants for previous years. Provision for the differential amount of profit sharing @25% (40%-15%) up to 31st March, 2023 amounting RS.1451.24 Lakhs is shown as an exceptional item for the year ended 31st March, 2024, even though the Company has made representation to the Railway Board for sharing of profit at uniform ratio of 15:85 for all Railneer plants till FY 2022-23. Response from Railway Board is still awaited. These matters are subject to reconciliation 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. 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, 2024 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.51(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 RS.364.83 Lakhs debited to their accounts.
6. Note Nos.10.1 & 58(i) Regarding trade receivables as on March.31, 2024 includes of RS.1,296.18 Crores due from Railways and Government as on March.31, 2024 (As on March.31, 2023 RS.1053.53 Crores). Out of dues from Railways and Government, outstanding for more than 3 years amounts to RS.134.65 Crores include defaulted amount to RS.35.86 Crores.
7. Note No. 72 regarding Certain applications made by the Company for advance ruling relating to applicability of Goods and Services Tax in respect of certain income / receipts amounting to RS.33,595 Lakhs 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.73 regarding non-recognition of revenue for the financial years 2020-21 to 2023-24 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 percentage 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. 78 regarding: (i) Differences between certain subsidiary and control ledger balances which are pending for identification, reconciliation and adjustments, if any, as on March.31, 2024, (ii) review and improvement of system of identification and disclosure of trade payables pending, (iii) 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, 2024 which needs improvement by way of confirmations from such parties and their classification into Micro, Small and Medium category.
10. Note No. 79 regarding Inadmissible payments made of ex-gratia / performance related pay to deputationists amounting to RS.230.13 Lakhs 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. No further communication has been received from Ministry of Railways by the company. Appropriate decision will be taken on this matter as and when response is received from Ministry of Railways.
11. Note No. 76 regarding enhancement of charges for operation of two Tejas trains by the Railway Board, Ministry of Railways with effect from August 13, 2021 vide its letter dated June 05, 2023 as the earlier instructions for charges were valid till August 12, 2021. During the year ended March.31, 2024, the Company has made provision for enhanced charges with effect from August 13, 2021 for the period up to March.31, 2023 amounting to RS.5,126.20 Lakhs and shown as an "Exceptional Item in the financial results. However, the Company has made representation to the Railway Board All for withdrawal of these instructions for enhanced charges from retrospective effect which is pending.
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, 2024, 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.
Materiality is the magnitude of misstatements in the Consolidated financial statements that, individually or in aggregate, makes it probable that the economic decisions of reasonably knowledgeable user of the Consolidated financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and evaluating results of that work; and (ii) to evaluate the effect of any identified misstatements in the Consolidated financial statements.
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 offices to railways which is against the guidelines agreed upon with 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 longterm 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. Based on our examination, which included test checks, the Company has used accounting software for maintaining its books of account for the financial year ended March.31, 2024 which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software. Further, during course of our audit we did not come across any instance of the audit trail feature being tampered with.
As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from April 2023, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 on preservation of audit trail as per statutory requirement for record retention is not applicable for the financial year ended March.31, 2024.
| For N. K. Bhargava & Co. |
| Chartered Accountants |
| (Firms Registration No. 000429N) |
| Sd/- |
| (N. K. Bhargava) |
| (Partner) |
| Membership No: 080624 |
| Place: New Delhi |
| Dated: May 28, 2024 |
| UDIN: 24080624BKEJWE9994 |
Annexure 1 referred to in paragrapRs.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, 2024
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 Foot-Notes 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 RS.325 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 RS.8.06 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 RS.103.81 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 RS.28.23 Lakhs). Renewal of Lease Agreement is pending since April 01, 2021.
5. Three residential flats costing RS.1,374 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 there under;
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 RS.339.05 Lakhs for the year (Previous year RS.4,999.97 Lakhs), delays in deposit of part amounts of monthly Income-tax TDS dues of RS.1.38 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, 2024 for a period of more than six months from the date they became payable except for PF dues of RS.11.59 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 Up to 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 | 2011 to 2015 | Commissioner of Central tax (Appeals) | 2.95 | 2.95 | - |
| 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) | 229.83 | 229.83 | - |
| 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) | 599.39 | - |
599.39 |
| VAT Delhi & CST | Assessment, Interest & Penalty | 2013-14 to 2015-16 | DVAT OHA | 42797 | 2.98 | 424.99 |
| 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 | 4757 | - |
4757 |
| 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 | 30.22 | - |
30.22 |
| VAT UP | Assessment, Interest & Penalty | 2008-09 | Commissioner (UPVAT) | 1708 | 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 | 5.41 | 5.05 | 0.36 |
| TN VAT Act | Demand | 2014-15 | Assistant Commissioner | 5.91 | 5.91 | |
| TNVAT | Demand | 2015-2016 to 2017-18 | Assistant commissioner (ST) | 319.13 | - |
319.13 |
| 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 TDS | Demand | 2007-08 to 2022-23 | TDS Authority | 15.59 | - |
15.59 |
| 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 | 2018-19 to 2019-20 | Assistance commissioner (ST) | 5708 | 13.03 | 44.05 |
| 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 |
| Finance Act & Central excise | Demand | 2015-2017 | Commissioner (Appeal II) Central Excise & GST | 2.17 | 2.17 | - |
| Entry Tax | Assessment, Interest & Penalty | 2011-12 to 2012-13 | High Court | 0.90 | - |
0.90 |
| GST | Show Cause Notice | 2018-19 | Assistant Commissioner | 2.04 | - | 2.04 |
| GST - Maharahtra | Show Cause Notice | 2017-18 | Commissioner ,Appeals | 93.75 | 4.08 | 89.67 |
| GST | Show Cause Notice | 2020-21 | Office of Assistant Commissioner, Telengana | 30.10 | 12.39 | 17.71 |
| GST | Show Cause Notice | 2018-19 | Office of deputy commissioner Telengana | 16707 | - | 16707 |
| GST | Show Cause Notice | 2017-20 | DGGI,Belagavi | 31.06 | 31.06 | |
| GST | Demand | 2017-18 to 2020-21 | Additional / Joint Commissioner | 15.56 | 1.58 | 13.98 |
| GST | Demand | 2017-2020 | Additional Commissioner | 147.76 | - | 147.76 |
| GST | Show Cause Notice | 2017-18 | Deputy Commissioner | 95.87 | 88 | 787 |
| GST | Demand | 2018-19 | Additional Commissioner | 393.03 | - | 393.03 |
| TOTAL | 23,935.23 | 964.71 | 22,970.52 |
# Provided RS.2,578.03 Lakhs 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 subsidiaries. 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 subsidiaries. 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 paragrapRs.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, 2024 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 in to any noncash transactions with directors or persons connected with them. Accordingly, provisions of paragraph3(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 paragrapRs.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 paragrapRs.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 up to 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 2023-24, under sub-section (5) of section 135 of the Act amounting to RS.280.36 Lakhs as on March.31, 2024 (RS.151.27 Lakhs as on March.31, 2023) in respect of ong oing projects has been transferred to special account in compliance with the provisions of sub-section (6) of section 135 of the said Act.
| For N. K. Bhargava & Co. |
| Chartered Accountants |
| (Firms Registration No. 000429N) |
| Sd/- |
| (N. K. Bhargava) |
| (Partner) |
| Membership No: 080624 |
| Place: New Delhi |
| Dated: May 28, 2024 |
| UDIN: 24080624BKEJWE9994 |
Annexure 2 referred to in paragrapRs.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, 2024
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, 2024 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, 2024:
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. Company needs to strengthen more professional staff. We observed: (i) internal financial controls being compromised / not implemented including maker and checker concept stated above, (ii) 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 where in such accounts and differences are yet to be identified and quantified respectively by the management.
iii. Guidelines issued by the Company for obtaining balance confirmation letters from parties have been followed by 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.
iv. Manual controls are followed instead of system- based automated controls, checks and balances as the transactions executed througRs.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.
v. Large number of inoperative debit and credit balances exists as on March.31, 2024 including large number of legacy entries. Company started to identified, reconcile the balances. Once all the entries identified then wite-off / write-back need to be done by company if necessary.
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 paragrapRs.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, 2024, 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 N. K. Bhargava & Co. |
| Chartered Accountants |
| (Firms Registration No. 000429N) |
| Sd/- |
| (N. K. Bhargava) |
| (Partner) |
| Membership No: 080624 |
| Place: New Delhi |
| Dated: May 28, 2024 |
| UDIN: 24080624BKEJWE9994 |
Annexure 3 referred to in paragrapRs.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, 2024
| 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. |
| 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. | |
| 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. | 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. |
| Whether such cases are properly accounted for? | |
| 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, 2024 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 N. K. Bhargava & Co. |
| Chartered Accountants |
| (Firms Registration No. 000429N) |
| Sd/- |
| (N. K. Bhargava) |
| (Partner) |
| Membership No: 080624 |
| Place: New Delhi |
| Dated: May 28, 2024 |
| UDIN: 24080624BKEJWE9994 |
Revised Independent Auditors Report
To the Members of
Indian Railway Catering and Tourism Corporation Limited
Revised Report on the Audit of the Standalone Financial Statements
This revised independent auditors report supersedes our earlier report dated May 28, 2024, following the identification of apparent errors. The revision is being made in response to observations raised by the Comptroller & Auditor General of India (New Delhi), aiming to enhance transparency and no changes in opinion as expressed earlier. Furthermore, we affirm that there have been no changes to any figures in the financial statements of the company as at March.31, 2024, to the best of our knowledge.
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, 2024, 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 material 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, 2024, 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 there under, 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 RS.7,471.65 Lakhs 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. 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.
The hearing before Honble high court was done on 19.07.2023 and as per the order dated 09.10.2023, of Honble high court, the company has been advised to deposit bank guarantee amount. The company has filed objections appeal against the award. In compliance of Honble Delhi High Court order, Bank Guarantee to the tune of RS.8,471.65 lakhs have been deposited with the court registry as per the orders of Honble Delhi High Court. It is to mention that the Honble High Court, Delhi has reserved the judgment in the said matter.
2. Note No.37.2(v) regarding Notice dated 25.02.2022 issued by the National Anti-Profiteering Authority (GST) alleging profiteering amounting to RS.5,041.44 Lakhs 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 alt 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. 49(b) regarding Railway board clarified that for Rail Neer plants run departmentally by the company, the profits between Railway board and company shall be shared in the ratio of 15:85 and for plants operated under PPP model/run by DCO, profits between Railway board and company shall be shared in the ratio 40:60. Accordingly, the company has recognized profit Share amounting to RS.320.33 Lakhs being 15% of profit of Departmentally run Railneer plants and RS.452.25 Lakhs being 40% of the profits of plants run on PPP model during the year ended 31st March, 2024 after charging profit Share amounting RS.1451.24 Lakhs towards differential profit Share @25% on profits from PPP plants for previous years. Provision for the differential amount of profit sharing @25% (40%-15%) up to 31st March, 2023 amounting RS.1451.24 Lakhs is shown as an exceptional item for the year ended 31st March, 2024, even though the Company has made representation to the Railway Board for sharing of profit at uniform ratio of 15:85 for all Railneer plants till FY 2022-23. Response from Railway Board is still awaited. These matters are subject to reconciliation 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. 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, 2024 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.51(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 H364.83 Lakhs debited to their accounts.
6. Note Nos.10.1 & 58(i) Regarding trade receivables as on March.31, 2024 includes of RS.1,296.18 Crores due from Railways and Government as on March.31, 2024 (As on March.31, 2023 RS.1053.53 Crores). Out of dues from Railways and Government, outstanding for more than 3 years amounts to H134.65 Crores include defaulted amount to RS.35.86 Crores.
7. Note No. 72 regarding Certain applications made by the Company for advance ruling relating to applicability of Goods and Services Tax in respect of certain income / receipts amounting to RS.33,595 Lakhs 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.73 regarding non-recognition of revenue for the financial years 2020-21 to 2023-24 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 percentage 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. 78 regarding: (i) Differences between certain subsidiary and control ledger balances which are pending for identification, reconciliation and adjustments, if any, as on March.31, 2024, (ii) review and improvement of system of identification and disclosure of trade payables pending, (iii) 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, 2024 which needs improvement by way of confirmations from such parties and their classification into Micro, Small and Medium category.
10. Note No. 79 regarding Inadmissible payments made of ex-gratia / performance related pay to deputationists amounting to RS.230.13 Lakhs 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. No further communication has been received from Ministry of Railways by the company. Appropriate decision will be taken on this matter as and when response is received from Ministry of Railways.
11. Note No. 76 regarding enhancement of charges for operation of two Tejas trains by the Railway Board, Ministry of Railways with effect from August 13, 2021 vide its letter dated June 05, 2023 as the earlier instructions for charges were valid till August 12, 2021. During the year ended March.31, 2024, the Company has made provision for enhanced charges with effect from August 13, 2021 for the period up to March.31, 2023 amounting to RS.5,126.20 Lakhs and shown as an "Exceptional Item in the financial results. However, the Company has made representation to the Railway Board All for withdrawal of these instructions for enhanced charges from retrospective effect which is pending.
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, 2024, 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.
Materiality is the magnitude of misstatements in the Consolidated financial statements that, individually or in aggregate, makes it probable that the economic decisions of reasonably knowledgeable user of the Consolidated financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and evaluating results of that work; and (ii) to evaluate the effect of any identified misstatements in the Consolidated financial statements.
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 offices to railways which is against the guidelines agreed upon with 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 longterm 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. Based on our examination, which included test checks, the Company has used accounting software for maintaining its books of account for the financial year ended March.31, 2024 which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software. Further, during course of our audit we did not come across any instance of the audit trail feature being tampered with.
As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from April 2023, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 on preservation of audit trail as per statutory requirement for record retention is not applicable for the financial year ended March.31, 2024.
| For N. K. Bhargava & Co. |
| Chartered Accountants |
| (Firms Registration No. 000429N) |
| Sd/- |
| (N. K. Bhargava) |
| (Partner) |
| Membership No: 080624 |
| Place: New Delhi |
| Dated: July 24, 2024 |
| UDIN: 24080624BKEJWY4693 |
"Annexure 1"
Referred to in paragrapRs.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, 2024
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 RS.325 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 RS.8.06 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 RS.103.81 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 RS.28.23 Lakhs). Renewal of Lease Agreement is pending since April 01, 2021.
5. Three residential flats costing RS.1,374 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 there under;
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 RS.339.05 Lakhs for the year (Previous year RS.4,999.97 Lakhs), delays in deposit of part amounts of monthly Income-tax TDS dues of RS.1.38 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, 2024 for a period of more than six months from the date they became payable except for PF dues of RS.11.59 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 Up to 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 | 2011 to 2015 | Commissioner of Central tax (Appeals) | 2.95 | 2.95 | - |
| 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) | 229.83 | 229.83 | - |
| 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 | 7774 | - |
7774 |
| VAT Delhi & CST | Assessment, Interest & Penalty | 2009- 10 to 2010- 11 | Special Commissioner (DVAT) | 599.39 | - |
599.39 |
| VAT Delhi & CST | Assessment, Interest & Penalty | 2013-14 to 2015-16 | DVAT OHA | 427.97 | 2.98 | 424.99 |
| 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 | 30.22 | - |
30.22 |
| 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 | 5.41 | 5.05 | 0.36 |
| TN VAT Act | Demand | 2014-15 | Assistant Commissioner | 5.91 | 5.91 | - |
| TNVAT | Demand | 2015-2016 to 2017-18 | Assistant commissioner (ST) | 319.13 | - |
319.13 |
| 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 TDS | Demand | 2007-08 to 2022-23 | TDS Authority | 15.59 | - |
15.59 |
| 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 | 2018- 19 to 2019- 20 | Assistance commissioner (ST) | 57.08 | 13.03 | 44.05 |
| 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 |
| Finance Act & Central excise | Demand | 2015-2017 | Commissioner (Appeal II) Central Excise & GST | 2.17 | 2.17 | - |
| Entry Tax | Assessment, Interest & Penalty | 2011- 12 to 2012- 13 | High Court | 0.90 | - |
0.90 |
| GST | Show Cause Notice | 2018-19 | Assistant Commissioner | 2.04 | - | 2.04 |
| GST - Maharahtra | Show Cause Notice | 2017-18 | Commissioner ,Appeals | 93.75 | 4.08 | 89.67 |
| GST | Show Cause Notice | 2020-21 | Office of Assistant Commissioner, Telengana | 30.10 | 12.39 | 1771 |
| GST | Show Cause Notice | 2018-19 | Office of deputy commissioner Telengana | 167.07 | - |
167.01 |
| GST | Show Cause Notice | 2017-20 | DGGI,Belagavi | 31.06 | - | 31.06 |
| GST | Demand | 2017-18 to 2020-21 | Additional / Joint Commissioner | 15.56 | 1.58 | 13.98 |
| GST | Demand | 2017-2020 | Additional Commissioner | 14776 | - | 14776 |
| GST | Show Cause Notice | 2017-18 | Deputy Commissioner | 95.87 | 88 | 7.87 |
| GST | Demand | 2018-19 | Additional Commissioner | 393.03 | - | 393.03 |
| Total | 23,935.23 | 964.71 | 22,970.52 |
# Provided RS.2,578.03 Lakhs 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 subsidiaries. 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 subsidiaries. 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 paragrapRs.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, 2024 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 in to any noncash transactions with directors or persons connected with them. Accordingly, provisions of paragraph3(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 paragrapRs.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 paragrapRs.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 up to 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 2023-24, under sub-section (5) of section 135 of the Act amounting to RS.280.36 Lakhs as on March.31, 2024 (RS.151.27 Lakhs as on March.31, 2023) 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 N. K. Bhargava & Co. |
| Chartered Accountants |
| (Firms Registration No. 000429N) |
| Sd/- |
| (N. K. Bhargava) |
| (Partner) |
| Membership No: 080624 |
| Place: New Delhi |
| Dated: July 24, 2024 |
| UDIN: 24080624BKEJWY4693 |
"Annexure 2"
Referred to in paragrapRs.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, 2024
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, 2024 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, 2024:
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. Company needs to strengthen more professional staff. We observed: (i) internal financial controls being compromised / not implemented including maker and checker concept stated above, (ii) 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 where in such accounts and differences are yet to be identified and quantified respectively by the management.
iii. Guidelines issued by the Company for obtaining balance confirmation letters from parties have been followed by 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.
iv. Manual controls are followed instead of system- based automated controls, checks and balances as the transactions executed througRs.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.
v. Large number of inoperative debit and credit balances exists as on March.31, 2024 including large number of legacy entries. Company started to identified, reconcile the balances. Once all the entries identified then wite-off / write-back need to be done by company if necessary.
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 paragrapRs.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, 2024, 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 N. K. Bhargava & Co. |
| Chartered Accountants |
| (Firms Registration No. 000429N) |
| Sd/- |
| (N. K. Bhargava) |
| (Partner) |
| Membership No: 080624 |
| Place: New Delhi |
| Dated: July 24, 2024 |
| UDIN: 24080624BKEJWY4693 |
"Annexure 3"
Referred to in paragrapRs.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, 2024
| 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. |
| 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. | |
| 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. | 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. |
| Whether such cases are properly accounted for? | |
| 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, 2024 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 N. K. Bhargava & Co. |
| Chartered Accountants |
| (Firms Registration No. 000429N) |
| Sd/- |
| (N. K. Bhargava) |
| (Partner) |
| Membership No: 080624 |
| Place: New Delhi |
| Dated: July 24, 2024 |
| UDIN: 24080624BKEJWY4693 |
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