ITI Ltd Auditor Reports

TO THE MEMBERS OF ITI LIMITED

Report on Indian Accounting Standards Standalone Financial Statements of ITI Limited

Our Audit report on Indian Accounting Standards Standalone Financial Statements of the Company for the financial year 2023-24 under audit as approved by the BOD on May 28, 2024 and reported upon by us on the same date, has been revised by us in the light of the comments made in the supplementary audit carried out by Comptroller and Auditor General of India (CAG) in terms of section of 143(6) of the Companies Act, 2013. Accordingly, this audit report supersedes our earlier audit report dated May 28, 2024. Our audit procedures on events subsequent to the date of our original audit report issued on May 28, 2024, is restricted solely to observations made by CAG.

Disclaimer of Opinion

We were engaged to audit the accompanying Indian Accounting Standards Standalone Financial Statements of ITI Limited ("the Company") which comprise the Balance Sheet as at March 31, 2024, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flows, Statement of Changes in Equity for the year then ended and a summary of significant accounting policies and other explanatory information (herein after referred to as ‘SFS).

We do not express an opinion on the accompanying SFS of the Company. Because of the significance of the matters described in the ‘Basis for Disclaimer of Opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these SFS.

Basis for Disclaimer of Opinion

1) The SFS of the Company for the year ended March 31, 2023, as approved by the Board of Directors on May 29, 2023, was reported upon by the earlier auditor M/s GRSM & Associates, Chartered Accountants vide their report issued on the same date. Vide this report, they had qualified their opinion on the said SFS due to the significance of the matters described in the ‘Basis for qualified opinion section of their report and their inability to quantify/ascertain the impact of the items on the SFS and for the said financial year. Their qualifications and observations may continue to impact the SFS for the current year. Management has not provided us with any quantification of the effect of these items on the current years SFS and we are accordingly unable to comment on the same.

2) In terms of SA 510 - Initial Audit Engagements -Opening Balances issued by the Institute of Chartered Accountants of India (‘ICAI), we sought details and current status of certain items of assets and liabilities reflected in the SFS as at March 31, 2024. Management did not furnish us requisite breakup and current status of cumulative debit and credit balances aggregating to Rs. 3,563.55 lakhs & 10,652.02 lakhs respectively carried forward from the said Balance Sheet and reflecting debit and credit balances in the same accounts aggregating to Rs. 3,690.45 lakhs & Rs. 15,500.23 lakhs respectively as at March 31, 2024. Summaries of such accounts are furnished in Annexure- D to this report.

3) The land (Freehold/leasehold) records maintained by the Company and detailed records held by the civil engineering department (‘Civil) could not be correlated, in the absence of an appropriate coding/ cross-referencing system (refer note 1 to SFS). All the deficiencies in documentation to the extent identified and other matters have been based on the records maintained by Civil. Attention of the members is invited to paragraph 1(c) of "Annexure A" of our audit report on matters required to be dealt with in terms of The Companies (Auditors Report) Order, 2020 ("the Order"), wherein we have expressed our inability to comprehensively identify land not in the name of the Company. Many of these deficiencies have significant bearing on the title of the Company to such properties.

4) Attention is drawn to note 1 to SFS regarding property tax payable in respect of land and buildings being recognized either being based on estimates or not determined at all in the absence of demands from the revenue authorities and/or pending updations/reconciliations of land records as per asset records with records of Civil. Due to non-availability of proper records, adequacy / completeness / correctness of provisions recognized, its impact on SFS could not be ascertained.

5) Requisite details of certain land and buildings owned by the Company/ taken on lease (sale/lease deed, location, purpose for which property is put to use, categorization between Property, Plant, & Equipment (‘PPE) and Investment property (IP), whether any amortization of the same is required, income derived therefrom, etc.) were not furnished to us. The original cost and written down value of such assets as at March 31, 2024, aggregated to Rs. 7,657.03 lakhs & Rs. 7,592.54 lakhs respectively. The Company has recognized income to an extent of Rs. 334.91 lakhs on certain items of land and buildings although the relevant leases had expired and to the best of our knowledge, are yet to be renewed. Further, the Company has also not furnished the fair values of its IPs, the basis of determining its fair value, rental income derived from such properties and direct operating expenses (including repairs and maintenance) arising from IP that generated rental income during the year etc., in accordance with IndAS 40 – Investment Property.

6) In terms of the Material Significant Accounting Policies, the Company has not provided any documentation as to the evaluation carried out to test for any impairment of assets in compliance with IndAS 36 ‘Impairment of Assets.

7) Capital work in progress as at March 31, 2024, included the following assets, which to the best of our knowledge has been put to use but continued therein ostensibly for want of certain documents. We are unable to validate the carrying value/ageing data with the relevant documents and the effect of non-recognition of depreciation in the SFS.

Description of asset	Carrying value as at March 31, 2024
	(Rs. In lakhs)
New Data Centre	2,669.45
Other Capital Work in Progress	3,923.39
NIFT building (Refer Note 2 to SFS)	6,582.06

8) The Company has not identified lease contracts entered into by it as a lessee/lessor within the meaning of IndAS 116 – Leases and has not consequently adopted the principles of recognition, measurement and disclosure contemplated therein, contrary to accounting policy but has expensed off/taken to income from/to rent payable/receivable to the statement of profit and loss as per contractual terms. Security deposits paid/received thereon not recognized in the Statement of Profit or Loss in accordance with Ind AS 109 – Financial Instruments.

9) The Company did not have a system of appropriating payments received against specific bills raised in Tally Prime software (books of accounts) and only maintains a running account of bills raised and payments received. Consequently, the Company has certain excel workings based on which the age-wise data in respect of trade receivables as specified in Schedule III of the Companies Act, 2013 are furnished. We could not independently validate the ageing data so furnished with the books of accounts and have relied on such excel workings. Further, the Company has also not obtained confirmation of balances / statements of account / reconciliation with books of accounts. The data furnished in note 4(b) and 7 to the SFS could not be validated by us. Trade receivables include Rs. 18,099.63 lakhs & Rs. 1,95,310.44 lakhs representing debts exceeding 6 months but less than one year and debts exceeding one year and ranging up to/ beyond three years. The Company has not assessed and recognized the quantum of expected credit loss in terms of IndAS 109 - ‘Financial Instruments and has not furnished the requisite disclosures required in respect thereof.

10) The Company has not made provision for credit losses in respect of the following items included under Current Assets - Financial Assets, which are doubtful of recovery:

a. Rs. 5,847.90 lakhs, receivable from C-DOT towards rent from premises leased out to them for the period from 2005-06 to 2010-11.

b. Recoverable from HCL Infosystems Limited of Rs. 1,690.20 lakhs as compensation on account of the excess amount spent by the Mankapur Unit of the Company based on the agreement between ITI, HCL and Alcatel.

c. Recoverable from Himachal Futuristic Communications Ltd of Rs. 1,049.41 lakhs towards Liquidated Damages.

d. Receivable from Mindarray towards encashment of letter of credit of Rs. 1,023.00 lakhs.

e. Receivable from South Western Railway of Rs. 2,908.02 lakhs towards consideration receivable for sale of land.

f. Amounts receivable held under the head Claims and Expenses recoverable Inland amounting to Rs. 344.48 lakhs (breakup not available).

Accordingly, if provision for credit losses were made by the Company, the loss for the year would have been higher and the net current assets lesser by Rs. 12,863.01 lakhs.

11) The Company had received soft loan from the Government of India (GoI) in the financial year 2014-15 of Rs. 30,000 lakhs carrying interest at the rate of 1%. This loan was not recognized at fair value after considering the market borrowing rate. The Company has not identified financial assets and financial liabilities within the meaning of IndAS 109 and has not consequently adopted the principles of recognition, measurement and disclosure contemplated therein.

12) Inventories with book value of Rs. 22,220.13 lakhs, included several old items lying in the various site/stores for which NRV as at March 31, 2024, was not made available. The Companys inventories included old inventory and has not performed any ageing, usefulness and serviceability assessment held at various units to ascertain obsolete inventory. Company did not furnish the physical verification reports which was reportedly conducted as explained to us and in the absence of any excess/shortage list readily available we could not verify if there were any adjustments required to be made to the books of account. A ready list of inventories was not furnished to confirm the bifurcation of raw materials & production stores, materials issued against fabrication contracts, non-production stores, work in process production/installation, manufactured components, finished goods, stock reconciliation account, material in transit and goods pending inspection. We have relied on such list furnished in various excel sheets and could not independently validate the stock records with amounts as furnished in note 6 to the audited SFS. In the absence of full data, we are unable to obtain sufficient appropriate audit evidence regarding the valuation of such stores and spares and whether the same is in accordance with IndAS 2 – Inventories.

13) In respect of certain current/non-current liabilities complete details/ nature and ageing in respect of each amounts payable, reasons for their pendency, reasons for non-claim by parties, confirmation/ statement of account/reconciliation were not made available.

14) Reference is invited to note 17(c) to SFS regarding disclosure of information pertaining to vendors under Micro, Small and Medium Enterprises Development Act, 2006, pending identification of such vendors and consequential non-provision for interest, if any, in terms of section 23 of the said act, consequent effect on SFS not ascertained.

15) The Company has not carried-out any fair valuation as was required in terms of the IndAS 109 ‘Financial Instruments in respect of all financial assets and liabilities which are receivable/payable beyond a period of 12 months from the date of initial recognition (examples: certain employee receivables, retention money payable, security deposits accepted/paid, etc.) for the purposes of determination of amortized costs and amortization/recognition of expenses/income of the differential between amortized cost and contractual amounts payable/receivable.

16) The Companys contribution to ITI Employees Provident Fund Trust (‘PF Trust) covering all units as detailed in point 22(e) of the Material Accounting Policies has been considered as a defined contribution plan and not that to a defined benefit plan both for the current year and prior years. Accordingly, the liability to the trust should have been evaluated actuarily and recognized rather than 12% of the eligible salaries to be made over during the year. Consequent disclosures required in terms of IndAS 19 – Employee Benefits have not been furnished.

17) The Company has not evaluated actuarily its liability to the Kalyanakari Death Benefit Scheme of its employees in the event of shortfall between the funds available from recoveries from employees & interest thereon and amount payable to deceased employees in any year.

18) The Company has not reconciled its books of accounts with its GST returns filed across all its units/divisions/corporate office (turnover, exempt turnover, taxes payable, input tax credit available and availed and tax deducted at source) in the absence of which we are unable to ascertain any effect on the SFS. Company to examine the advances received by it and identify the goods and service portion of the respective advances received based on respective contracts and ensure GST remittance on such service portion of advances received. Matter may be examined by the Company regarding such compliance and appropriate action be taken. Pending such bifurcation of goods and service portion we are unable to ascertain if there is GST liability on advances and consequent interest provision thereon in the books of accounts. The Company has not filed its annual return of reconciliation of turnover between books and returns for certain registrations pertaining to financial years 2021-22 and 2022-23 respectively, contrary to rule 80 of the CGST Rules, 2016.

19) The Company has not reconciled the entries in Form 26AS and AIS in the Income Tax portal website with the books. Due to lack of adequate ready data/reconciliation, we are unable to independently validate the entries in Form 26AS / AIS / TIS and consequent disclosures in the SFS of advance tax/refunds/disputed taxes, if any.

20) The Company has reported to the extent ascertained in respect of contingent liabilities and capital commitments as detailed in note 31 to SFS. In the absence of full and comprehensive list across all divisions of the Company with testing of the probability of the liability devolving with appropriate legal advice wherever required, we are unable to ascertain the completeness/accuracy of the values reported in the said note and any provisions that may be required in this respect.

21) The Company has not identified warranty obligations as a distinct performance obligation within the meaning of IndAS 115 – Revenue from contracts with customers and recognizes the same as and when obligations arise on the plea that it generally has a back-to-back claim against its vendors. The Company has not provided us with the requisite documentation indicating such rights in each and every contract entered into by it.

22) Palakkad Unit has received an amount of Rs. 51 lakhs from certain customers as of March 31, 2024 which have not been accounted for in the books of account since the management is unable to map these receipts with the specific invoices raised by it. Accordingly, the bank balances of the Company are understated to the tune of Rs. 51 lakhs as of March 31, 2024, and the Accounts receivable balances are overstated to the same extent. (As per the audit report issued by Balaram & Nandakumar, Chartered Accountants dated May 24, 2024)

23) Company has not compiled and disclosed the requisite data detailed below in terms of Schedule III, division II to the Act.

Sl.No Requisite disclosures not furnished

1. Fair value of investment property

2. Relationship with Struck off Companies

24) a. Attention is invited to note 22 of the SFS where in the Company has enumerated the status of a contract with Ministry of Defense, GoI, for supply and establishment of Army Static Switched Communication Network (ASCON) at an agreed consideration. In terms of the said contract, the Company was to mandatorily demonstrate its complete solution so as to bring out its capabilities vis-?-vis the requirements of the customer, which would be evaluated by the latter and form an essential part of the test bed evaluation process. We are informed for the reasons stated in the said note that the test best approval is awaited as at March 31, 2024, which is expected upon completion of certain activities as detailed therein. The Company has proceeded with part execution of the contract pending test bed final approval and in the opinion of the management of the Company is not impacting the revenue already recognized up to March 31, 2024, to an aggregate extent of Rs. 1,48,686.48 lakhs. We have relied on the representations made by the Company and do not express any independent opinion on such revenue recognized.

b. The Company has entered into contracts with a customer for implementation of a network within a specified area at an aggregate consideration (excluding O&M and taxes) of Rs. 2,48,954.87 lakhs. As against this, the Company has recognized revenue to an extent of Rs. 2,36,701.57 lakhs although the contract is not complete. In the absence of the percentage completion, we are unable to obtain sufficient appropriate audit evidence in support of the revenue recognition.

c. The Companys system of revenue recognition is based upon the percentage of completion method. The Company had inadequate documentation to support reassessment of total costs of each contract and costs yet to be incurred on every reporting date, backed by customer attested data of work completed and certified, work completed but yet to be certified and internal assessment of cost incurred in respect of work in progress. The Company has also recognized unbilled revenues to an aggregate extent of Rs. 2,17,467.63 lakhs as at year end. This includes unbilled revenue recognized up to March 31, 2023, and yet to be billed to the customer as at March 31, 2024, upon certification of the work. The Company has not furnished us an analysis of unbilled revenue identifying the milestones to be achieved before the same can be billed, the further costs yet to be incurred to achieve such milestone, and the estimate of likely costs of rework/modifications that is to be incurred in the process of achieving certification. Accordingly, we could not obtain sufficient appropriate audit evidence of revenue recognized.

25) Attention is invited to note 22 & note 25 of the SFS where in Company enumerated breakups of ‘Sales under broad heads & ‘Service Income under broad heads (Note 22), ‘Goods purchased under broad heads (Note 25(a)) and ‘Service Expenses under broad heads (Note 25(b)). We could not independently validate the breakup so furnished with the books of accounts and have relied on workings.

26) Attention is invited to Note 31 of the SFS where in the Company has reported certain non-compliances. We understand that there are non-compliance with various provisions of SEBI Listing Regulations towards Quorum for Board meeting, Non-compliance with the constitution of Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee and Risk Management Committee. Due to lack of adequate ready data/ information, we are unable to independently validate the amounts in the said note. Company has confirmed to us that, representation to the Stock Exchanges for waiver of penalty has been submitted as the non-compliance as regards to the said non-compliances was not due to any negligence and also the BSE/NSE had given waiver in the past year. Accordingly, the Company is confident that further penalties also will be waived on the same grounds. Consequential non-provision for penalty and interest and consequent effect on SFS not ascertained.

Common to all matters dealt with above:

We are unable to obtain sufficient appropriate audit evidence to form an opinion on the SFS due to the potential interaction of the multiple/ undetected misstatements, if any, contained therein and their possible individual and cumulative effect on the SFS, which may be material and pervasive, accordingly forms a basis for the disclaimer of opinion.

Material Uncertainty on Going Concern

The Company incurred a net loss of Rs. 56,906 lakhs during the year ended March 31, 2024. In spite of events or conditions which may cast a doubt on the ability of the Company to continue as a going concern, the management is of the opinion that going concern basis of accounting is appropriate in view of the continued support of the Government of India, high value of order book under execution with adequate margins, adequate working capital borrowing from banks already sanctioned, conversion of unbilled revenue into billed revenue by completing the contract milestones within next 12 months, step-up the recovery processes to collect the billed dues as mentioned in the note 31 of the SFS. Our opinion is not modified in respect of this matter. Also, refer to our comments under para 19 of Annexure – A to this report.

Emphasis of Matter

a. The Company had received funds towards capital expenditure as part of the financial assistance approved by Cabinet Committee on Economic Affairs (CCEA) when the Company was declared a Sick Company as per provisions of the Sick Industrial Companies Act, 1985.

b. The Company is not in compliance with the requirements of having a specified proportion/ number of independent directors.

c. The Company continues to carry a land admeasuring 77 acres having a carrying value of Rs. 19,470 lakhs under Property, Plant & Equipment after receiving intimation of re-possession by the Government of Kerala as the Company has disputed the same, and the matter is under adjudication of the Apex Court.

[Refer Note No.31 of the SFS for the above matters]

Our opinion is not modified in this respect in respect of the above matters.

MANAGEMENTS RESPONSIBILITY FOR SFS

The Board of Directors of the Company is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these SFS that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (IndAS) prescribed under Section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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 SFS that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the SFS, 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.

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

AUDITORS RESPONSIBILITY FOR THE AUDIT OF SFS

Our responsibility is to conduct an audit of the SFS in accordance with Standards on Auditing and to issue an auditors report. However, because of the matters described in the Basis for Disclaimer of Opinion section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on SFS.

We are independent of the Company in accordance with the ethical requirements in accordance with the requirements of the Code of Ethics issued by ICAI and the ethical requirements as prescribed under the laws and regulations applicable to the Company.

Other Matters

We did not audit the Financial Statements (‘FS) of the Mankapur, Raebareli, Srinagar, Naini and Palakkad Branches included in the SFS of the Company, whose FS reflect total assets of Rs. 1,93,893.25 lakhs as at March 31, 2024, and total income of Rs. 19,023.13 lakhs for the year ended on that date as considered in the SFS (excluding inter-unit balances and transactions). The FS of these components have been audited by the component auditors whose report has been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of these components is solely on the report of such component Auditors.

Our opinion is not modified in respect of these matters.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1) As required by the Companies (Auditors Report) Order, 2020 ("the Order") issued by the Central Government in terms of Section 143 (11) of the Act, we give in the "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order which is subject to the possible effects of the matters described in the ‘Basis for Disclaimer of Opinion section of our Independent auditors report and in our report on the Internal Financial Controls over Financial Reporting with reference to SFS.

2) As required by Section 143(3) of the Act, we report that:

a. As described in the Basis for Disclaimer of Opinion section above, we have sought but were not able to obtain all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

b. In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books, except for the matters described in the Basis for Disclaimer of Opinion section above.

c. The report on the accounts of any branch office of the Company audited under sub-section (8) by a person other than the Company auditor has been sent to us under the proviso to that sub-section and the manner in which he has dealt with it in preparing his report.

d. The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, Statement of Changes in Equity, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account, except for the matters stated in the Basis for Disclaimer of Opinion section of our Report.

e. Due to the possible effects of the matter described in the Basis for Disclaimer of Opinion section above, we are unable to state whether the aforesaid SFS comply with the Indian Accounting Standards prescribed under section 133 of the Act read with Companies (Indian Accounting Standards) Rules, 2021, as amended.

f. Due to the possible effect of the matters described in the Basis for Disclaimer of Opinion section above, we are unable to state whether they have any adverse effect on the functioning of the Company.

g. As per GSR- 463 (E) dated June 5, 2015, issued by the Ministry of Corporate Affairs, the provisions of Section 164(2) of the Companies Act, 2013 regarding disqualification of director(s) is not applicable to the Company, since it is a Government Company.

h. The reservation/modification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Disclaimer of Opinion section, read with paragraph 2(b) above.

i. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B".

Our report expresses disclaimer of opinion on the Companys internal financial controls over financial reporting for the reasons stated therein. j. Except for the possible effects of the matters described in the Basis for Disclaimer of Opinion section above, with respect to the other matters to be included in the Independent Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the estimated impact of pending litigations on its the financial position as detailed in Note 31 to SFS, to the extent ascertained.

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts. The Company did not enter into any 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). Management 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 or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

b). Management has represented, that, to the best of its knowledge and belief, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding 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 considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) above contain any material misstatement.

v. The Company did not declare or pay any dividends during the year. Accordingly, no reporting under the said subclause is applicable.

vi. The Company uses multiple accounting software having feature of recording audit trail with edit log version (‘Tally Prime™ and ‘Integrated Manufacturing Management System(‘IMMS)) for maintenance of its books of account for the financial year ended March 31, 2024, except in case of Network system units (‘NSU) where the accounting software used by them did not have such feature.

Based on examination, including certain test checks and discussions with the management, except for NSU, we are of the opinion that the Tally Prime Edit Log version software had a feature of recording audit trail (edit log) facility and the same is operated throughout the period from the respective dates they were implemented (refer table below) during the year.

Further Palakkad unit used ‘IMMS software which had a feature of recording audit trail (edit log) facility and the same has been operated throughout the period based on the auditor comments of Palakkad unit vide his report dated May 24, 2024. Below are details of other units/ROs who implemented and used Tally prime (edit log) facility with effect from various dates detailed below.

Unit/RO name	Date of implementation of "Tally prime (edit log)"
RO Bangalore	07-03-2023
RO Mumbai	07-03-2023
RO Chennai	06-03-2023
RO Hyderabad	07-03-2023
RO Lucknow	29-03-2023
RO Delhi	09-03-2023
RO Kolkata	24-03-2023
RO Bhubaneshwar	07-03-2023
Corporate	19-06-2023
BGP	13-04-2022
R&D	16-05-2022
Mankapur	25-04-2023 to 29-08-2023
	30-08-2023 to 31-03-2024
Raebareli	08-08-2023
Naini	25-08-2023
Srinagar	10-03-2023

Up to the above said dates of implementation, there was no system of recording audit trail. Hence, to the said extent, we are unable to comment on the requirements of rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.

We have not come across any instance of the audit trail feature being tampered with for the period after the above said implementation dates.

As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from April 1, 2023, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 on preservation of audit trail as per the statutory requirements for record retention is not applicable for the financial year ended March 31, 2024.

As required by Section 143(5) of the Act, we have considered the directions issued by the Comptroller and Auditor-General of India, the action taken thereon and its impact on the accounts and SFS of the Company is given in "Annexure C".

For B.K.RAMADHYANI & CO LLP

Chartered Accountants

Firm Registration No. 002878S/S200021

(CA Vasuki H S)

Partner

Membership No. 212013

UDIN: 24212013BKCLTJ8245

Place: Bengaluru

Date: July 31, 2024

"ANNEXURE A" TO THE INDEPENDENT AUDITORS REPORT

As referred to in Paragraph 1 of the section on ‘Report on Other Legal and Regulatory Requirements of our report at even date to the members of the ITI Limited on the IndAS Financial Statement for the year ended March 31, 2024 and to be read subject to the possible effects of the matters described in the Basis for Disclaimer of Opinion section above and in our separate report on the internal controls over financial reporting, we report that:

ANNEXURE-A REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING "REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS" OF OUR REPORT TO THE MEMBERS OF ITI LIMITED

1. a) (A) As per the information and explanations provided to us, the Company has not maintained adequate records showing particulars, including quantitative details, location, asset transfers between units and asset coding system of Property, Plant and Equipment ("PPE"), as also detailed in footnote to note 1 to SFS. The amounts reported under gross block and accumulated depreciation in the said note were pending reconciliation with PPE/GL records. Land records at various divisions/units need to be reconciled with respective documents held at corporate office/respective divisions/units and with respective asset registers, pending which we are unable to report on paragraph 3(i)(a)(A) of the Order.

(B) Based on the information and explanation furnished to us, the Company does not have any intangible asset as at March 31, 2024, consequently reporting under the said paragraph 3(i)(a) (B) of the Order is not applicable.

b) According to the information and explanations given to us, the Company has not physically verified PPE and accordingly, we are unable to comment report on paragraph 3(i)(b) of the Order.

c) According to the information and explanations given to us, reference is drawn to note 1 to SFS which includes certain observations regarding incomplete land records at corporate office/units and are under reconciliation with respective documents/records held at Corporate office/respective divisions/units.

In the cases where the Company is the lessee, certain lease agreements were not duly executed in favor of the Company, pending renewal/finalization of those lease contracts. Further due to the reasons stated in note 1 to SFS we are unable to further comment whether the title deeds of immovable properties are held in the name of the Company as detailed below. Accordingly, we are unable to comment as required under paragraph 3(i)(c) of the Order.

Description of property	Gross carrying value (Rs In lakhs)	Held in name of	Whether promoter, director or their relative or employee	Period held – indicate range, where appropriate	Reason for not being held in name of Company (also indicate if in dispute)	Unit
Land	19,470	Title resumed by Government of Kerala	No	Over 10 years	Company has disputed the resumption	Palakkad
Land	9,282	Absolute Sale Deed not yet executed	No	Over 10 years	Pending	Naini
Land	11,620	Absolute Sale Deed not yet executed	No	Over 10 years	Pending due to non-submission of proof of compensation paid by ITI Limited to the landowners at the time of land acquirement	Raebareli
Land	Not ascertainable	Absolute Sale Deed not held on record	No	Not ascertainable	Out of 191.03 acres of land purchased, title deeds for 41.77 acres land are not available	Mankapur
Land	Not ascertainable	Absolute Sale Deed not held on record	No	Over 10 years	Out of 435 acres of land, title deed for 375 acres held. For balance area, only record of rights held.	BGP

d) Based on the information and explanation given to us by the Company, it has not revalued any of its PPE (including Right of Use assets) or intangible assets or both during the year. Accordingly, reporting under paragraph 3(i)(d) of the Order is not applicable. e) Based on the information and explanation given to us, there are no proceedings have been initiated or are pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder. Accordingly, reporting under paragraph 3(i)(e) of the Order is not applicable. 2. a) According to the information and explanations given to us, Company did not carry out extensive physical verification of inventories covering all categories. We are unable to comment under paragraph 3(ii)(a) of the Order. There were observations from the auditors of certain units of the Company which also could not be commented upon in the absence of appropriate audit evidence/replies by the Company.

b) In our opinion and according to the information and explanation provided, in the absence of ready data extracted from the books of account in respect of inventories, sales, debtors, production and other details as furnished by the Company to the bank where working capital facilities availed and in the absence of consequent reconciliations of those returns with corresponding entries in the books of accounts, we are unable to comment on paragraph 3(ii) (b) of the Order.

3. During the year, the Company has not made investments in, provided any guarantee or security or granted any loans or advances in the nature of loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or any other parties. Accordingly, the reporting under paragraph 3(iii)(a) to (f) are not applicable.

4. Based on the information and explanations given to us, the Company has not granted any loans, made investments or provided any guarantees covered under the provisions of section 185 and 186 of the Act. Accordingly, the reporting under paragraph 3(iv) is not applicable.

5. The Company has not accepted any deposits as applicable under the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other provisions of the Act and rules framed under. The Company based on its internal assessment represented that amounts due on account of retention money/other deposits on its various projects are covered under exempted deposits and accordingly, comply with section 73 to 76 of the Act. In the absence of clear ageing/documentation/reasons of non-repayment by the Company, we are unable to comment on such compliance. Hence, reporting under paragraph 3(v) of the Order could not be commented upon. and explanation provided to us, the Company has maintained such records as detailed in the cost auditors report for FY 2022-23. The Company is yet to update its cost records for FY 2023-24.

7. a) The Company is not regular in depositing undisputed statutory dues including Goods and Services Tax, provident fund, employees state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues to the respective appropriate authorities to the extent of the arrears of outstanding statutory dues as on the last day of the financial year concerned for a period of more than six months from the date they became payable which is furnished below.

6. The maintenance of cost records has been prescribed by the Central Government under section 148(1) of the Act. As per the information

Unit	Name of the Statute	Nature of the Dues	Amount (Rs.)	Period to which the amount relates	Due Date	Date of Payment
BGP, NSU, Corporate, Srinagar & other units	Employees Provident Fund Act, 1952	PF	891.53	2023-2024	Unascertainable	Unascertainable
BGP, NSU, Corporate, Srinagar & other units	Employees Provident Fund Act, 1952	PF	260.14	2022-2023	Unascertainable	Unascertainable
BGP, NSU, Corporate, Srinagar & other units	Employees Provident Fund Act, 1952	PF	95.70	2021-2022	Unascertainable	Unascertainable
BGP, NSU, Corporate, Srinagar & other units	Employees Provident Fund Act, 1952	PF	132.61	2020-2021	Unascertainable	Unascertainable
BGP, NSU, Corporate, Srinagar & other units	Employees Provident Fund Act, 1952	PF	111.43	2019-2020	Unascertainable	Unascertainable
BGP, NSU, Corporate, Srinagar & other units	Employees Provident Fund Act, 1952	PF	451.07	2018-19 & Prior	Unascertainable	Unascertainable
Mankapur	Employees Provident Fund Act, 1952	PF	498.35	2023-2024	Unascertainable	Unascertainable
Mankapur	Employees Provident Fund Act, 1952	PF	641.12	2022-2023	Unascertainable	Unascertainable
Mankapur	Employees Provident Fund Act, 1952	PF	465.74	2021-2022	Unascertainable	Unascertainable
Mankapur	Employees Provident Fund Act, 1952	PF	357.10	2020-2021	Unascertainable	Unascertainable
Mankapur	Employees Provident Fund Act, 1952	PF	857.00	2019-2020	Unascertainable	Unascertainable
Mankapur	Employees Provident Fund Act, 1952	PF	591.31	2018-19 & Prior	Unascertainable	Unascertainable
Naini	Employees Provident Fund Act, 1952	PF	252.91	2023-2024	Unascertainable	Unascertainable
Naini	Employees Provident Fund Act, 1952	PF	1,557.17	2022-2023	Unascertainable	Unascertainable
Naini	Employees Provident Fund Act, 1952	PF	807.65	2021-2022	Unascertainable	Unascertainable
Raebareli	Employees Provident Fund Act, 1952	PF	396.89	2023-2024	Unascertainable	Unascertainable
Raebareli	Employees Provident Fund Act, 1952	PF	3,971.24	2022-2023	Unascertainable	Unascertainable
Raebareli	Employees Provident Fund Act, 1952	PF	620.53	2021-2022	Unascertainable	Unascertainable
Raebareli	Employees Provident Fund Act, 1952	PF	361.51	2020-2021	Unascertainable	Unascertainable
Raebareli	Employees Provident Fund Act, 1952	PF	9.36	2019-2020	Unascertainable	Unascertainable
Raebareli	Employees Provident Fund Act, 1952	PF	50.53	2018-19 & Prior	Unascertainable	Unascertainable
Palakkad	Employees Provident Fund Act, 1952	PF	274.32	2023-2024	Unascertainable	Unascertainable
Palakkad	Employees Provident Fund Act, 1952	PF	51.69	2022-2023	Unascertainable	Unascertainable
Palakkad	Employees Provident Fund Act, 1952	PF	127.10	2020-2021	Unascertainable	Unascertainable
RO Hyderabad	Income Tax Act, 1961	TDS -192	0.24	2022-2023	Unascertainable	Unascertainable
RO Hyderabad	Income Tax Act, 1961	TDS-194 C	0.14	2022-2023	Unascertainable	Unascertainable
RO Hyderabad	GST Acts and rules made thereunder	TDS on GST	0.14	2022-2023	Unascertainable	Unascertainable
RO Hyderabad	GST Acts and rules made thereunder	TDS on GST	0.20	2022-2023	Unascertainable	Unascertainable
RO Hyderabad	GST Acts and rules made thereunder	Interest Payable on GST	44.18	2019-2021	Unascertainable	Unascertainable
RO BBSR	Service Tax Act, 1994	Service Tax	3.89	2018-19 & Prior	Unascertainable	Unascertainable
RO Delhi	Service Tax Act, 1994	Service Tax	83.03	2018-19 & Prior	Unascertainable	Unascertainable
RO Delhi	Income Tax Act, 1961	TDS-194 I	0.18	2023-2024	Unascertainable	Unascertainable
RO Delhi	PT Acts and rules made thereunder	PT	0.01	2023-2024	Unascertainable	Unascertainable
RO Delhi	PT Acts and rules made thereunder	PT	0.01	Prior to 2023-2024	Unascertainable	Unascertainable
RO Delhi	GST Acts and rules made thereunder	TDS on GST	6.51	2023-2024	Unascertainable	Unascertainable
RO Lucknow	Income Tax Act, 1961	TDS-194 C	0.08	2023-2024	Unascertainable	Unascertainable
RO Lucknow	Income Tax Act, 1961	TCS Payable	0.00	2022-2023	Unascertainable	ALIGN=RIGHT>Unascertainable
NSU	GST Acts and rules made thereunder	TDS on GST (Gujarat)-IGST	1.28	2023-2024	Unascertainable	Unascertainable
NSU	PT Acts and rules made thereunder	PT	0.01	2022-2023	Unascertainable	Unascertainable
NSU	ESI Act, 1948	ESI Employee	5.42	Prior to 2023-2024	Unascertainable	Unascertainable
NSU	ESI Act, 1948	ESI Employee	0.07	2023-2024	Unascertainable	Unascertainable
NSU Delhi	GST Acts and rules made thereunder	GST TDS	0.20	2023-2024	Unascertainable	Unascertainable
BGP	GST Acts and rules made thereunder	TDS on GST- IGST	36.67	2022-2023	Unascertainable	Unascertainable
Corporate	Service Tax Act, 1994	Service Tax	8.61	2018-19 & Prior	Unascertainable	Unascertainable
Corporate	Income Tax Act, 1961	Income Tax	212.31	Since 2020-21	Unascertainable	Unascertainable
Naini/RBL/MKP/RO Lucknow	Sales Tax	Sales Tax	5634.01	Unascertainable	Unascertainable	Unascertainable
Naini	Central Excise Act, 1944	Excise Duty	0.44	Unascertainable	Unascertainable	Unascertainable
Raebareli	Service Tax Act, 1994	Service Tax	2417.74	Unascertainable	Unascertainable	Unascertainable

Note :

1) All the above statutory dues are furnished to the extent identified and pending reconciliation of documents/orders/demand notices with books of accounts across all units/RO/Corporate office.

2) The PF dues reported above were furnished by the Company reportedly from various PF trusts across all units/ROs/Corporate office. The amounts reported more than 6 months are based on certain workings in spreadsheets which could not be independently validated by us since the same was not reconciled with the books of accounts.

3) Reference is drawn to paragraph 18 of our comments in ‘Disclaimer of opinion, wherein the Company had not reconciled its books of accounts with its GST returns filed across all its units/divisions/corporate office (turnover, exempt turnover, taxes payable, input tax credit available and availed and tax deducted at source), consequently dues if any, more than 6 months could not be ascertained. Further, in the said paragraph, GST applicability on advances on account of services for the reasons stated in the said paragraph could not be ascertained and hence not reported above.

Reference is drawn to our comments in Disclaimer of opinion paragraph 2 wherein there were no details available regarding certain opening balances as enumerated in Annexure-D to this report. We are unable to confirm whether all statutory dues payable by the Company are reported in the above table since no ready data/list duly reconciled with all ledger accounts was available. Consequently, we are unable to comment on the correctness/completeness of the reported amounts in the above table.

b) According to the records of the Company and according to the information and explanation given to us, there are certain statutory dues outstanding on account of any disputes are as under:

Unit	Name of the statute	Nature of dues	Amount in Rs. Lakhs (As on 31.03.2024)	Period to which the dispute relates	Forum where the dispute is pending
BGP	Central Excise Act, 1944	Nil rate of duty availed on Software disputed by CE dept (Net of Pre deposit Rs 200.00 lakhs)	637.00	2003-2005	Custom Excise & Service Tax Appellate Tribunal
BGP	Central Excise Act, 1944	ED Demanded on R&D prototype modules for field trail. Stay extended (net of pre deposit Rs 30.00 lakhs)	299.00	2006-07	Custom Excise & Service Tax Appellate Tribunal
BGP	Central Excise Act 1944	Nil Rate of Duty availed on software disputed by Central excise dept (Net of Pre deposit Rs Rs 14.00)	497.28	2001-2002 2002-2003	Custom Excise & Service Tax Appellate Tribunal
BGP	Central Excise Act 1944	CENVAT Credit	376.00	2007-2008	Custom Excise & Service Tax Appellate Tribunal
MKP	UP VAT	Sales Tax	264.89	1986-1989	UP Government
MKP	UP VAT	Sales Tax	15.32	1989-1996	UP Government
MKP	Finance Act, 1994	Service Tax	6,456.79	2009-10 to 2013-14	CESS Tax, Allahabad
NNI	Central Sales Tax (CST)	Demand of other dues and Additional Tax against FORM ‘C	1,013.98	2005-2006	Joint Commissioner (Appeals), Commercial Tax, Allahabad
NNI	Central Sales Tax	Demand of Additional Tax against FORM ‘C	2.64	2007-08	Additional Commissioner (Appeals), Commercial Tax, Allahabad
NNI	CST/ UPVAT/ Entry Tax	Demand of other dues	9.23	2008-09	Addl Commissioner, (Appeals), Commercial Tax, Allahabad
NNI	Central Sales Tax	Demand of other dues and Additional Tax against FORM ‘C	2.12	2009-10	Deputy Commissioner, Commercial Tax, Allahabad
NNI	CST/ UPVAT	Demand of other dues and Additional Tax against FORM ‘C	60.57	2010-11	Additional Commissioner (Appeals), Commercial Tax, Allahabad
NNI	CST	Demand of other dues and Additional Tax against FORM ‘C	10.96	2011-12	Tribunal, Commercial Tax, Allahabad
NNI	CST/ UPVAT	Demand of other dues and FORM ‘C	146.75	2012-13	Deputy Commissioner Sector 14, Commercial Tax, Allahabad
Unit	Name of the statute	Nature of dues	Amount in Rs. Lakhs (As on 31.03.2024)	Period to which the dispute relates	Forum where the dispute is pending
NNI	CST/ UPVAT	Demand of Tax	86.75	2013-14	Deputy Commissioner Sector 14, Commercial Tax, Allahabad
PKD	Service Tax	Service Tax	109.44	2010-2011	CESTAT, Bangalore
PKD	Service Tax	Service Tax	140.34	2011-2012	CESTAT, Bangalore
PKD	Service Tax	Service Tax	161.27	2011-2012	CESTAT, Bangalore
PKD	Service Tax	Service Tax	2.76	2012-2013	CESTAT, Bangalore
PKD	Service Tax	Service Tax	2.69	2012-2013	CESTAT, Bangalore
PKD	CST	Sales Tax	28.04	2001-02	High Court, Ernakulam
PKD	CST	Sales Tax	504.13	2003-04	KVAT Tribunal, Palakkad
PKD	Customs, Central Excise & Service Tax	Service Tax	143.42	2016-17 & 2017-18	Commissioner Appeals, Kochi
PKD	Customs, Central Excise & Service Tax	Service Tax	3.93	Apr 2015 to Jun 2017	Commissioner Appeals, Kochi
PKD	Goods & Service Tax	Goods & Service Tax	7,054.14	2017-2018 &2018-2019	Commissioner Appeals, Kochi
RBL	Sales Tax Act	Sales Tax	122.53	2010-11	Trade Tax Tribunal, Lucknow
RBL	Sales Tax Act	Sales Tax	87.39	2014-15	Trade Tax Tribunal, Lucknow
RO BG	Karnataka VAT Act, 2003	Turnover Suppression	26.47	2013-14	Commercial Tax Officer, Thirpunithura
RO BG	Karnataka VAT Act, 2003	Turnover Suppression	48.92	2014-15	Appellate Assistant Commissioner, Commercial Taxes, Ernakulam
RO BG	Service Tax	Non-payment of Service Tax on Royalty payments received	44.78	2012-13 to 2014-15	Commissioner of Central Excise
RO BG	KVAT	Turnover suppression	65.87	2012-13	Dy Commr (Appeals) - Commercial Tax, Ernakulam
SNR	Sales Tax	Sales Tax	733.36	1987-88 to 1989- 90,1996-97, 1999-00, 2002-03	High Court, J & K
RO BBSR	Sales Tax	Sales Tax	226.05	2013-14	Commissioner of Sales Tax Bhubaneshwar
CORP	Income Tax	Income Tax	691.72	2017-18	Commissioner of Income Tax
RBL	Goods & Service Tax	EXCESS ITC of GST CLAIMED	1,634.03	2017-18	High Court -Lucknow
RBL	Goods & Service Tax	EXCESS ITC of GST CLAIMED	225.46	2017-18	High Court -Lucknow

Note :

All the above disputed statutory dues are furnished to the extent identified and pending reconciliation of documents/orders/demand notices across all units/ RO/Corporate office. Consequently, we are unable to comment on the correctness/completeness of the reported amounts in the above table.

8. According to the information and explanation given and as represented to us, there are no transactions which are not recorded in the books of account, which have been surrendered or disclosed as income during the year in the tax assessments in the Income Tax Act, 1961.

9. a) According to the information and explanation furnished to us, the Company has not defaulted in the repayment of borrowings or in the payment of interest thereon to banks other than those reported below.

Nature of borrowing	Name of lender	Amount not paid on due date	Whether principal or interest	No. of days delay or unpaid	Remarks, if any
	GOI, Ministry of	Rs. 12,000 Lakhs (Principal) and Rs.			Based on an order of DoT dated April 29, 2022, Company to repay 1/5th of sanctioned loan (as per sanction terms) per
Term Loan	Communications & IT Dept. of Telecommunications	3,004.76 Lakhs (Interest – to the extent determined)	Both Principal and Interest	Up to 730 days	year for 5 years from Financial Years (FY) 2022-23. However, the same was not paid for FY 2022-23 and 2023-24. Penal interest not paid for respective FYs.
Term Loan	Indian Bank Limited	Rs. 38.81 Lakhs Rs. 238.00 Lakhs	Interest	6 Days
Term Loan	Indian Bank Limited	(Principal) and Rs. 36.04 (Interest) Rs. 1,000 Lakhs	Both Principal and Interest	13 Days	The said defaults have been subsequently rectified.
Term Loan	Canara Bank Limited	(Principal) and Rs. 89.59 (Interest)	Both Principal and Interest	6 Days

b) Based on the information and explanation furnished and as represented to us, the Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority. Accordingly, no reporting is required under paragraph 3(ix)(b). c) The Company has taken term loans from banks and is confirmed to us that, based on the documents maintained and information furnished, all term loans were applied for the purposes for which the loans were obtained. d) On an overall examination of the financial statements as at March 31, 2024, of the Company, the Company has used Rs. 82,480.47 lakhs funds raised on short term basis to finance long-term assets of the Company. We further draw attention to Note 31 to SFS where in the current ratio of the Company is less than 1 (being 0.89) which is also an indication that short-term funds have been used to finance long-term assets of the Company. e) On an overall examination of the SFS of the Company, it has not taken any funds from any entity or person on account of or to meet the obligations of its subsidiaries, associates or joint ventures. Accordingly, reporting under the paragraph 3(ix)(e) of the Order is not applicable. f) Based on the Company has not raised loans during the year on the pledge of securities held in its subsidiaries, joint ventures or associate companies. Accordingly, reporting under the paragraph 3(ix)(f) of the Order is not applicable. 10. a) According to the information and explanation given to us, no moneys were raised during the year by way of initial public offer or further public offer (including debt instruments). Accordingly, reporting under paragraph 3(x)(a) of the Order is not applicable. b) According to the information and explanation given to us, the Company has made preferential allotment during the year for an amount of Rs. 10,700 Lakhs (incl securities premium) which was received during previous FY 2022-2023 at a price of Rs. 94.61 per share by issue of equity shares on preferential basis, as a part of financial assistance to ITI Limited, based on recommendations of Board for Reconstruction of Public Sector Enterprise approved by CCEA dated February 12, 2014, as communicated vide letter dated February 24, 2014. As represented by the Company, the same is utilized as prescribed by CCEA. Further the requirements of section 62 of the Companies Act, 2013 have been complied with. No private placement of shares or convertible debentures (fully, partially or optionally convertible) were made during the year.

11. a) Based on the information and explanation given and as represented to us, no material fraud by or on the Company has been noticed or reported during the year. Accordingly, reporting under paragraph 3(xi)(a) is not applicable. b) No report under sub-section (12) of section 143 of the Act has been filed in Form ADT-4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules, 2014 with the Central Government, during the year and up to the date of this report. Accordingly, reporting under paragraph 3(xi)(b) is not applicable. c) Based on the information and explanation given and as represented to us, there are no whistleblower complaints received by the Company during the year. Since the Company has not furnished any data regarding the same, we are unable to comment on the reporting of paragraph 3(xi)(c) of the said Order. 12. In our opinion the Company is not a Nidhi Company. Accordingly, the reporting under paragraph 3(xii) (a) to (c) of the said Order are not applicable. 13. The Company, being a Government Company, is exempted from the provisions of Section 177 and Section 188 of the Companies Act, 2013 relating to transactions with related parties in terms of MCA Notification No. GSR 463 (E) dated 05th June 2015. Accordingly, reporting under paragraph 3(xiii) of the Order is not applicable.

14. a) In our opinion and based on review of the internal control procedures and internal audit mechanism placed by the Company, although there is an internal audit function, the scope, coverage and requisite size of the internal audit system is not commensurate with the size and nature of its business. b) For the reasons stated in the above clause, the internal audit reports could not be entirely considered by us. 15. As represented to us by the management and according to the information and explanation given to us, the Company has not entered into any non-cash transactions with directors or persons connected with him. Accordingly, the reporting under paragraph 3(xv) of the said Order is not applicable. 16. a) In our opinion, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, reporting under paragraph 3(xvi)(a) to (c) of the Order is not applicable. b) In our opinion, there is no core investment Company within the Group (as defined in the Core Investment Companies (Reserve Bank) Directions, 2016) and accordingly the reporting under the paragraph 3(xvi)(d) of the Order is not applicable.

17. The Company has incurred cash losses in the financial year and in the immediately preceding financial year amounting to Rs. 51,593.90 lakhs and Rs. 31,059.79 lakhs respectively. 18. According to the information and explanation furnished to us by the Company, there is no resignation of statutory auditors during the year. Accordingly, reporting under paragraph 3(xviii) of the Order is not applicable. 19. Attention is invited to note 31 to SFS regarding the same prepared on a going concern basis and our comments as detailed under the heading "Material Uncertainty on Going Concern", notwithstanding that the Company incurred losses during the current year and immediately preceding year, has significant liabilities to be discharged and its current ratio also being less than one. The appropriateness of the said basis is inter alia dependent on the Company meeting/ adhering to its cash flow requirements through expected conversion of unbilled revenue into billed revenue / realization, step-up recovery processes to collect billed dues, adequate sanction of working capital borrowing from consortium banks along with continued support of the Government of India as detailed in the said note. 20. Company although is satisfying conditions specified under Section 135 of the Act and becomes liable to comply with the provisions of the Section 135 and Companies Rules, 2014 but since there are no profits, section 135 of the said Act will not be applicable. Accordingly, reporting under the paragraph 3(xx (a) & (b) are not applicable.

	For B.K.RAMADHYANI & CO LLP
	Chartered Accountants
	Firm Registration No. 002878S/S200021
	(CA Vasuki H S)
	Partner
	Membership No. 212013
	UDIN: 24212013BKCLTJ8245
Place: Bengaluru
Date: July 31, 2024

"ANNEXURE B" TO THE INDEPENDENT AUDITORS REPORT

Annexure B referred to in Paragraph 2 (i) under the heading "Report on other legal and regulatory requirements" of our report to the members of ITI Limited

Report on the Internal Financial Controls under Clause (i) of Subsection 3 of Section 143 of the Companies Act, 2013 ("the Act")

We were engaged to audit the internal financial controls over financial reporting of ITI Limited ("the Company") as of March 31, 2024, in conjunction with our audit of the SFS of the Company for the year ended on that date.

Managements Responsibility for Internal Financial Controls

The Companys management is responsible for establishing and maintaining internal financialcontrols based on the internal control 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 (the "Guidance Note") 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.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls over financial reporting based on our audit conducted in accordance with the Guidance Note and the Standards on Auditing, to the extent applicable to an audit of internal financial controls, both issued by the ICAI.

Because of the matter described in Disclaimer of Opinion paragraph below, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on internal financial controls system over financial reporting of the Company.

Meaning of Internal Financial Controls over Financial Reporting

A Companys internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of SFS for external purposes in accordance with generally accepted accounting principles. A Companys internal financial control over financial reporting includes 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 SFS 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 SFS.

Disclaimer of Opinion

According to the information and explanation given to us, the Company has neither established nor tested its internal financial control over financial reporting on criteria based on or 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. Because of this reason, we are unable to obtain sufficient appropriate audit evidence to provide a basis for our opinion whether the Company had adequate internal financial controls over financial reporting and whether such internal financial controls were operating effectively as at March 31, 2024.

We have considered the disclaimer reported above in determining the nature, timing, and extent of audit tests applied in our audit of the SFS of the Company, and the disclaimer has affected our opinion on the SFS of the Company and we have issued disclaimer of opinion on SFS.

	For B.K.RAMADHYANI & CO LLP
	Chartered Accountants
	Firm Registration No. 002878S/S200021
	(CA Vasuki H S)
	Partner
	Membership No. 212013
	UDIN: 24212013BKCLTJ8245
Place: Bengaluru
Date: July 31, 2024

"ANNEXURE C" TO INDEPENDENT AUDITORS REPORT

Directions issued by the Comptroller & Auditor General of India under Section 143(5) of the

Companies Act, 2013 indicating the areas to be examined by the Statutory Auditors during the course of audit of annual accounts of ITI Limited (Standalone) for the year 2023-24.

Sl. No. Areas Examined	Auditors Observations
1. Whether the company has system in place to process all the accounting transactions through IT system?	The Company has a system in place to process all the accounting transactions through IT software, except for the matters described in the Basis for Disclaimer of Opinion section.
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.	Sub-systems such as PPE, inventory, invoicing, order processing, payroll are outside the accounting software.
2. Whether there is any restructuring of an existing loan or cases of waiver/ write off of debts/loan/interest etc. made by a lender to the company due to the companys inability to repay the loan?	According to the information and explanations given to us and based on our examination of the records of the Company, during the year there has been no restructuring of any existing loan during the year and hence, no reporting made.
If yes, the financial impact may be stated. Whether such cases are properly accounted for?
3. Whether funds (grants/subsidy etc.) received/receivable for specific schemes from Central/State Government or its agencies were properly accounted for /utilized as per its term and conditions?	Based on the information and explanation furnished to us, in respect of the capital grants and revenue grants as reported under note 13, note 18 and note 12 to SFS, we are unable to collect sufficient appropriate audit evidence in respect of the utilization / accounting which is reportedly done at various units/corporate office of the Company. Further verification and reconciliation of respective bank accounts for its receipt and utilizations, including the closing balances unutilized could not be readily traced in the books of accounts as no ready data was made available for our verification, in absence of which we are unable to comment on the same.
List the cases of deviation.

COMPLIANCE CERTIFICATE

We have conducted the audit of accounts of ITI LIMITED for the year ended 31-3-2024 in accordance with the directions issued by the C&AG of India under Section 143 (5) of the Companies Act, 2013 and certify that we have complied with all the directions issued to us.

	For B.K.RAMADHYANI & CO LLP
	Chartered Accountants
	Firm Registration No. 002878S/S200021
	(CA Vasuki H S)
	Partner
	Membership No. 212013
	UDIN: 24212013BKCLTJ8245
Place: Bengaluru
Date: July 31, 2024

Annexure D to the Audit Report

Amounts in Rs.

Credit ledger accounts

Unit/RO name	Ledger Name	Debit / Credit	Opening Balance	Closing Balance
BGP	14502 LIABILITY FOR OTHER FIN.-PAYROLL	Credit	-24,97,29,132	-2,70,65,867
BGP	145.02 LIABILITY FOR OTHER FIN MISC	Credit	-15,17,14,635	-14,31,05,628
BGP	147.05 OTHER DEPOSITS	Credit	-4,40,10,101	-3,99,22,395
BGP	14702 SEC DEP BLDG CONTRACTORS	Credit	-4,24,61,366	-4,09,92,627
BGP	Rent Deposits (Other Payable)	Credit	-3,74,06,692	-4,10,88,534
BGP	Advances Recd. From Customers	Credit	-2,72,65,970	-2,10,58,487
BGP	Salary Payable	Credit	-2,68,59,014	-5,11,26,230
BGP	14509 CONTRACTOR LIABILITY CIVIL & OTHERS	Credit	-2,37,75,933	-2,46,35,498
BGP	Salaries Recoveries	Credit	-2,32,43,236	-2,12,11,909
BGP	145.08 OTHER LIABILITIES-OTHERS	Credit	-1,02,13,201	-1,06,13,931
BGP	PL Encashment Liability for MKP	Credit	-28,22,919	-28,22,919
BGP	PL Encashment for Naini	Credit	-3,55,911	-4,60,943
BGP	14106 Exp. & Services Other	Credit	-1,41,540	-1,41,540
BGP	22506 TA ADVANCE SALARY RECOVERY	Credit	-64,635	-17,479
BGP	226.06 ADV RECOVERABLE- OTHER MISC. REC.	Credit	-1,456	-93,031
RO Bhuvaneshwar	19103 SERVICE TAX	Credit	-3,89,165	-3,89,165
RO Bhuvaneshwar	Advances From Customer	Credit	-5,34,488	-5,34,488
RO Chennai	18210 OTHER PAYABLES	Credit	-1,25,742	-1,21,235
RO Hyderabad	28570 EMD FROM VENDORS	Credit	-3,06,252	-28,77,792
RO Hyderabad	14705 - Security Deposit	Credit	-92,719	-95,31,806
RO Lucknow	18250 DEPOSITS FROM CONTRACTORS	Credit	-6,04,97,916	-6,02,41,881
RO Lucknow	18250 DEPOSITS FROM CONTRACTORS	Credit	-1,17,69,408	-1,25,13,796
RO Lucknow	18260 MISC. LIABILITIES	Credit	-1,43,41,712	-76,49,013
RO Lucknow	RECOV. SUPPILERS/OTHER	Credit	-43,89,145	-3,82,10,694
RO Lucknow	19400 ADVANCE FROM CUSTOMERS	Credit	-31,65,736	-64,18,05,136
Unit/RO name	Ledger Name	Debit / Credit	Opening Balance	Closing Balance
RO Lucknow	28570 EMD FROM VENDORS	Credit	-9,25,000	-14,40,000
RO Lucknow	UNPAID TRAVELLING ALLOWANCE	Credit	-57,052	-57,052
RO Lucknow	SALARIES AND WAGES UNPAID	Credit	-21,156	-21,156
RO Lucknow	RECOVERIES-PAYROLL	Credit	-9,500	-9,500
RO Lucknow	18220 SALARY PAYABLE	Credit	-14,82,517	-13,64,682
RO Delhi	Security From Vendor-BPL	Credit	-5,44,048	-5,44,048
RO Delhi	142 45 Security Deposits	Credit	-1,56,87,009	-1,67,17,232
RO Delhi	EMD From Vendor- Delhi	Credit	-2,32,86,732	-4,64,74,939
RO Delhi	EMD From Vendor- BPL	Credit	-25,69,720	-25,69,720
RO Delhi	18220 SALARY PAYABLE	Credit	-41,96,826	-68,51,175
RO Delhi	19103 Service Tax	Credit	-83,03,254	-83,03,254
RO Delhi	19105 Rajasthan/MP Tax	Credit	-12,012	-12,012
RO Lucknow	Misc Liability	Credit	-27,24,29,954	-26,74,26,405
		Total	-1,06,52,02,803	-1,55,00,23,198
				Amounts in Rs.
	Debit ledger accounts
RO name	Ledger Name	Debit/Credit	Opening Balance	Closing Balance
BGP	21872 CLAIMS RENT SHOPS & BLDG.	Debit	9,19,95,582	9,71,42,650
BGP	225.05 ADV.TO CONTRACTORS	Debit	4,71,49,437	4,71,49,437
BGP	228.01 CLAIMS AND EXPENSES RECOV INLAND	Debit	3,44,48,482	3,44,48,482
BGP	230.04 SECURITY DEPOSIT PAID ACCOUNT	Debit	3,39,64,684	3,39,37,224
BGP	225.07 OTHER ADVANCE RECOV. BGP	Debit	2,35,76,835	2,35,76,835
BGP	21871 CLAIMS RENT QTRS.	Debit	1,83,93,414	3,26,27,524
BGP	228.01 Electricity Data Centre	Debit	1,61,61,589	90,67,535
BGP	230.03 DEPOSIT PAID-OTHERS (EMD)	Debit	69,88,737	72,12,277
BGP	22507 OTHER ADVANCE RECOV. BGP PI	Debit	39,59,363	39,43,655
BGP	22801 Stipend Claims	Debit	29,76,528	29,76,528
BGP	235.00 Prepaid Expenses	Debit	27,60,847	21,34,831
BGP	22801 South Western Rly Leased Rent	Debit	21,27,813	21,27,813
BGP	21873 CLAIM GROUND RENT	Debit	13,36,670	7,39,543
BGP	22801 Recoverable UTSTARCOM NGN Mfg.	Debit	10,67,771	10,67,771
BGP	22506 TA Adv. BGP VUSS MUSS	Debit	9,09,826	9,09,826
BGP	Sales Tax Input Credits	Debit	6,65,486	6,65,486
Unit/RO name	Ledger Name	Debit / Credit	Opening Balance	Closing Balance
BGP	22513 MECHNOLINC WELDERS	Debit	5,00,000	5,00,000
BGP	230.01 DEPOSIT TCS RECEIVABLE	Debit	4,79,746	4,60,351
BGP	Excise Duty Input Credits / Deposits	Debit	4,27,401	4,27,401
BGP	Custom Duty Input Credits / Deposits	Debit	3,65,627	3,65,627
BGP	Sales Tax	Debit	3,53,690	3,53,690
BGP	226.13 OTHER ADVANCES RECOVERABLE	Debit	3,06,506	99,506
BGP	21873 CLAIMS GROUND RENT GST B2B	Debit	1,79,319	3,56,519
BGP	222.00 Imprest Account	Debit	1,47,434	2,13,989
BGP	22506 TA Advance 4 G BGP	Debit	97,836	59,124
BGP	226.03 ADV RECOVERABLE- FESTIVAL ADVANCE	Debit	84,800	5,74,800
BGP	22506 TA/DA ASCON PHASE 4	Debit	48,086	38,086
BGP	226.05 ADV RECOVERABLE- CYCLE ADVANCE	Debit	30,000	30,000
BGP	22801 RECOVERABLE FROM SSTPL - SAAS AADHAR	Debit	29,500	29,500
BGP	22510 TA/DA ASCON PHASE 4	Debit	4,651	-21,408
BGP	225.20 CANTEEN ADVANCE RECOVERABLE	Debit	240	240
BGP	Excise Duty	Debit	150	-
RO Bhuvaneshwar	SECURITY DEPOSIT FOR SALES TAX APPEAL FEES	Debit	7,90,538	7,90,538
RO Lucknow	29100 SECURITY DEPOSIT	Debit	2,00,96,845	2,14,91,939
RO Lucknow	ADVANCE TOWARDS PURCHASES-ROS	Debit	1,99,65,600	1,99,65,600
RO Lucknow	RECOV.OF TA EXP-RLY-F	Debit	16,78,207	16,78,207
RO Lucknow	PAY AEAR DUE FROM HQ	Debit	81,596	81,596
RO Lucknow	28316 OTHER ADVANCE RECOVERABLE	Debit	44,181	57,803
RO Lucknow	28315 TA RECOVERABLE	Debit	37,163	5,482
RO Lucknow	ADVANCE RECOVERABLE SERVICES	Debit	26,000	24,000
RO Delhi	28750 EMD RECEIVABLE (DELHI)	Debit	1,92,76,378	2,02,76,379
RO Delhi	28312 STAFF IMPREST ADVANCE & LOANS	Debit	3,39,229	2,00,718
RO Delhi	28315 TA RECOVERABLE	Debit	15,10,912	3,69,650
RO Delhi	28316 OTHER ADVANCE RECOVERABLE (ANNUAL ADVANCE)	Debit	81,000	-1,000
RO Delhi	28570 EMD RECEIVABLE (BHOPAL)	Debit	4,58,123	4,58,123
RO Delhi	29100 SECURITY DEPOSITS (BHOPAL)	Debit	74,636	74,636
RO Delhi	29100 SECURITY DEPOSITS (DELHI)	Debit	3,57,020	3,57,020
	Total		35,63,55,479	36,90,45,534

For B.K.RAMADHYANI & CO LLP

	Chartered Accountants
	Firm Registration No. 002878S/S200021
	(CA Vasuki H S)
	Partner
	Membership No. 212013
	UDIN: 24212013BKCLTJ8245
Place: Bengaluru
Date: July 31, 2024