TCI Finance Ltd Auditor Reports

To

The Members of TCI Finance Limited

Report on the Audit of the Financial Statements Quaified Opinion

1. We have audited the accompanying Financial Statements of TCI Finance Limited ("the Company"), for the quarter and year ended March 31, 2024 ("the Statement"), attached herewith, being submitted by the company pursuant to the requirement of Regulation33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended ("the listing Regulations").

2. In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in Basis for Qualified Opinion section and Material Uncertainty Related to Going Concern section of this report, the aforesaid financial statements give the information required by the Companies Act 2013 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2024, the loss and total comprehensive income, changes in equity and its cash flows for the year ended on that date.

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects in the respect of the matters described in paragraph 3 under basis for qualified opinion below, the Statement: (i) is presented in accordance with the requirements of Regulation 33 of the Listing Regulations in this regard; and (ii) give a true and fair view in conformity with the recognition and measurement principles laid down in the applicable Indian Accounting Standard and other accounting principles generally accepted in India, of the net loss and other comprehensive loss and other financial information for the year ended March 31,2024

Basis for qualified Opinion

We draw attention to following notes to the financial statements: a. Note 29 regarding claims on the Company by the lenders of Amrit Jal Ventures Private Limited and its subsidiary Gati Infrastructure Bhasmey Power Private Limited aggregating to Rs. 25,619.80 Lakhs due to invocation of corporate guarantee given by the Company. Against the said liability, the Company during the year 2019-20, considering the disputed nature of claim and unlawful invocation of Corporate Guarantee made a provision of Rs.7,798.91 Lakhs. As at March 31, 2024, the Company has disclosed the balance amount of liability Rs.17,820.89 Lakhs as contingent liability in its financial statements. In the absence of adequate basis for recognition of partial liability, in our opinion the company ought to have recognised the liability in its books. Had the liability been recognised, the loss for the year and accordingly the other equity (negative balance) will be higher by Rs.17,820.89 Lakhs. b. Note no 28 (i) regarding the invocation of Companys investment in equity shares of Gati Limited pledged as security for the credit facilities availed from Godavari Commercial Services Private Limited (Godavari), one of the lenders to the Company. However, the Company continued to present the said equity shares as investment at fair value as at March 31, 2024 despite invocation for the reasons stated in the said note. Fair value of the invoked shares considered as an asset aggregates to Rs.930.25 Lakhs. Considering that investments have been sold, we are unable to comment on the appropriateness of presentation of fair value of said equity shares as investments in the financial statements. Further in view of the uncertainty relating to recoverability of the said investment, we are unable to comment on the impact, if any, on the loss for the year and other equity as at March 31, 2024. c. Note no 28(iii) regarding the investments in equity shares of the Company held in Gati Limited pledged for the facilities availed by Amrit Jal Ventures Private Limited (AJVPL). The lenders of AJVPL have invoked the pledge and realized their dues. However, the company continued to present the said equity shares as investment at fair value as at March 31, 2024 despite invocation for the reasons stated in the said note. The fair value of the invoked shares considered as an asset aggregates to Rs.774.41 Lakhs. Considering that investments have been sold, we are unable to comment on the appropriateness of presentation of fair value of said equity shares as investments in financial statements. Further, in view of the uncertainty relating to recoverability of the said investment, we are unable to comment on the impact if any, on the loss for the year and other equity as at March 31, 2024. d. Regarding preparation of the financial statements by the management on a going concern basis for reasons stated therein. In the absence of sufficient and appropriate evidence and the liabilities devolved on the company upon invocation of guarantees by the lenders of other entities in opinion, preparation of financial statements on a going concern is not appropriate. Hence, we are unable to comment on the effect on carrying value of assets and liabilities had the financial statements been prepared not as a going concern. e. Note no 31 regarding non recognition of interest expense of Rs.62.44 Lakhs for the year ended March 31, 2024 for the reasons stated in the said note. The interest expense not recognised, upto March 31, 2024 aggregates to Rs.398.31 Lakhs. Consequently, loss for the year is lower by Rs.62.44 Lakhs and Other Equity (negative balance) and borrowings are lower by Rs.398.31 Lakhs. f. The Company has received communication from RBI regarding non-reporting of matters reported at para (b), (c) and (d) above and a direction to account the same in the financial statements of March 31, 2020. As the Company received the complaint, post the audit of March 31, 2021, the Company has submitted the revised financial position [i.e. special purpose reporting] by adjusting the above-said qualifications. The financial statements for the current year do not include any adjustments contained in the directions of the RBI. We are unable to comment on effect on presentation and disclosures in the financial Statements the Company followed the directions of the RBI.

In view of the matters reported at para (a) to (f) above and considering cumulative effect of these matters on the carrying values of assets and liabilities as at the year end, we are unable to comment on the effect on the loss for the year and the retained earnings, had these matters been given effect in the financial results and financial statements for the current year.

We conducted our audit of the financial statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the 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 (ICAI) together with the independence requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI s Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion on the financial statements.

Material Uncertainty Related to Going Concern

We draw attention to Note 33 regarding preparation of the financial statements by the management on a going concern basis for the reasons stated therein. In the absence of sufficient and appropriate audit evidence and the liabilities devolved on the Company upon invocation of guarantees by the lenders of other entities, we are of the opinion that preparation of financial statements on a going concern is not appropriate. Hence, we are unable to comment on the effect on carrying value of assets and liabilities had the financial statements been prepared not as a going concern.

Our opinion is modified in respect of this matter.

Emphasis of Matter:

1. We draw attention to Note no 25 regarding the petition filed by the three shareholders on the Company and the management regarding operation and mismanagement of affairs of the Company and the statutory auditors of the Company regarding reporting requirements of the said transactions.

2. We draw attention to Note no 32 regarding the receipt of the communication from Reserve Bank of India regarding the non- compliance with the maintenance of minimum Net Owned Funds as required under RBI Act, 1934 advising the Company for surrender of Certificate of Registration.

Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the 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 matters described below to be the key audit matters to be communicated in our report.

Key Audit Matters	Auditors Response
1. Existence, rights & obligations, completeness, and valuation of the investments given as guarantees to the lenders of the Company / lenders of the related parties - Refer Note 28 to the financial statements - "Invest- ments Sale of Pledged Shares by Lenders".	We reviewed the matters involved in the litigations and also the representations furnished by the Com- pany and also other undertakings by the counter par- ties. The same has been reported under "Basis for qualified Opinion" section of this report.

 

2 Recognition of the corporate guarantee as liability	Guarantee invocations by the lenders and ability of the entities on whose behalf the guarantees were given, prepared by the management and approved by the Board of Directors / Audit Committee. These estimates have been considered and in view of the uncertainties involved in the estimates, the same has been reported under "Basis for qualified Opinion " section of this report
As at March 31, 2024 the Company has given corporate guarantees to lenders of Amrit Jal Ventures Private Limited and to the lenders of subsidiaries of AJVPL (collectively referred as AJVPL) aggregating to Rs.31,366.71 Lakhs - Refer Note 29 to the financial statements

Information Other than the Financial Statements and Auditors Report Thereon

The Companys Board of Directors is responsible for the preparation of other information. The other information comprises the information included in the Management Discussion and Analysis, Boards Report including Annexures to Boards Report, Business Responsibility and Sustainability Report, Corporate Governance and Shareholder information, but does not include the financial statements and our auditors report thereon.

Our opinion on the 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 financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained during the course of our audit, or otherwise appears to be materially misstated.

If, based on the work we have performed we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Managements Responsibility for the Financial Statements

The Companys Board of Directors are responsible for the presentation of these annual financial results that give a true and fair view of the net loss and other comprehensive loss of the company and other financial information in accordance with the applicable Accounting Standards prescribed under section 133 of the Act read with relevant rules issued there under and other accounting principles generally accepted in India and in compliance with the Listing Regulations. 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 judgment and estimates that are responsible 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 annual financial results 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 and Board of Directors are responsible for assessing the companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.

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

Auditors Responsibility for the Audit of 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 financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment 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 the Board of Directors.

Conclude on the appropriateness of the Board of Directors 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 upto 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 financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the 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 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 A, a statement on the matters specified in paragraphs 3 and 4 of the Order, to the applicable.

2. As required by Section 143(3) of the Companies Act, 2013, 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 purpose 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. c) the Balance Sheet, the Statement of Profit and Loss including Other Comprehensive income, statement of changes in equity and the Statement of Cash Flow dealt with by this Report are in agreement with the books of the account. d) Except for the possible effect of the matters described in the Basis for Qualified Opinion paragraph above, in our opinion, the aforesaid financial statements comply with the Ind AS specified under section 133 of the Act e) The matter relating to going concern described under Material Uncertainty Related to Going Concern paragraph above, and the matters stated at paragraphs "a" to "f" of Basis for Qualified Opinion paragraph above, in our opinion, may have an adverse effect on the functioning of the Company. f) On the basis of written representations received from the directors as on March 31, 2024, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2024, from being appointed as a director in terms of Section 164(2) of the Act. g) The qualifications relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph above. h) 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 a modified opinion on the adequacy and operating effectiveness of the internal financial control over financial reporting of those companies, for reasons stated therein. i) with respect to the other matters to be included in the Auditors Report in accordance with the requirements of section 197(16) of the Act, as amended: In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act. j) 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 financial statements - Refer Note No. 24 and 25 to the financial statements. ii. The company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses and iii. There are no amounts which are required to be transferred, to the Investor Education and Protection Fund by the Company for the year ended March 31, 2024. iv.(a)the Management has represented that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) 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 or entity, including foreign entity ("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) the Management has represented, that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the company from any person or entity, 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; and (c) Based on audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material mis-statement. v. The Company has not declared or paid any dividend during the year. vi. Based on our examination, which included test checks, the company has used accounting softwares for maintaining its books of accounts for the Financial year ended March 31, 2024 which has a feature of recording audit trial (edit Log) facility and the same has operated through out the year for all the relevant transactions recorded in the softwares. Further during the course of our audit we did not come across any instance of the audit trial feature being tampered with.

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

(b) Details of dues of Income Tax, Customs Duty, Excise Duty, Value Added Tax and Cess which have not been deposited as on March 31, 2024 on account of disputes are as below:

Nature of statute	Nature of the dues	Amount (Rs. in Lakhs)	Period to which the amount relates	Forum where dispute is pending
Karnataka Sales Tax	Tax/Penalty	0.64	1996-1997	Joint Commissioner of Commercial Taxes (Appeals)

 

	for G D Upadhyay & Co.,
	Chartered Accountants
	Firm Registration No. 005834S
	Inderjeet Upadhyay
	Partner
	Membership No. 220791
	UDIN: 23220791BGVBOC6671
Place: Hyderabad
Date: May 08, 2024