Diamond Power Infrastructure Limited
Report on the Audit of the Financial Statements Disclaimer of
Opinion
We have audited the financial statements of Diamond Power Infrastructure Limited ("the Company"), which comprise the balance sheet as at 31st March, 2023, and the statement of profit and loss (including other comprehensive income), statement of changes in equity and statement of cash flows for the year then ended, and notes to the Financial Statements ("FS"), including a summary of the significant accounting policies and other explanatory information.
We do not express an opinion on the accompanying financial statements of the Company. Because of the significance of the matter described in the Basis for Disclaimer of Opinion section of our report as under, we do not have nor been able to obtain sufficient appropriate recognizable audit evidence to provide a basis for an audit opinion on these financial statements.
Basis for Disclaimer of Opinion
We were not able to conduct our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act due to the details given as under. Our responsibilities under those SAs are further described in the Auditor's 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 together independent requirements that are relevant to our audit of the financial statements under the provisions of the Act and Rules their under, and we are able to fulfilled our other ethical responsibilities in accordance with these requirements and Code of Ethics. We do not have or obtained sufficient, recognizable and appropriate, audit evidence and information to conclude our audit and give our opinion, so we have given our disclaimer of opinion, we have given important audit observations & information, comes to our best of the knowledge in piecemeal fragments up to the date of signing this report are as under:
a) The Central Bureau of Investigation (CBI) has registered FIR bearing No. 0292018A0006 dated 26th March 2018 under various Indian Penal Code and prevention of Money Laundering Act, 1988 against the Managing Director, Joint Managing Director and other public servants for cheating of banks for the tune of Rs. 2654.40 Crs. and conducted raid in the Diamond Power Infrastructure Limited on 5th and 6th April 2018 at all the places of the company and residence of directors for investigation and filled charge sheet in Hon'ble Special Judge for CBI Court no. 07 at Mirzapur, Ahmedabad on 13th July 2018, the matter is under legal proceeding.
b) On the basis of CBI FIR, the Enforcement Directorate, Ahmedabad (ED) has registered case, bearing no. ECIR/AMZO/03/2018 dated 5th April 2018 under the provision of Section 17 of the Prevention of MoneyLaundering Act, 2002 and conducted search at all the places of the company on 9th April 2018 & attached properties of company & directors by provisionally attached order no. PAO No. 02/2018 dated 24th April 2018, The ED has filled ECIR sheet on 22nd December 2018 with The Hon'ble Court of Principal District & Sessions Judge (Ahmedabad Rural) and Hon'ble Designated special court under the prevention of Money-Laundering Act, 2002, At Ahmedabad, the matter is under legal proceeding.
c) On the basis of CBI FIR, the Directorate of Investigation of Income Tax department has carried out search and seizure U/s 132 of the Act on 10/04/2018 and subsequently a notice U/s 153 A of the Act was issued on 25/10/2018 to file Income Tax returns, the company has filled Income tax returns U/s 139(4) and declared losses of Rs. 715.67 Crs., which was marked as defective returns by IT department. Against that, various notices were given to the company to file ITR of the company but the company has not filled Income tax returns, subsequently as required notices were served by IT department to the company and due to non-availability of
information and records special audit was carried out U/s 142(2A) by the M/s Talati & Talati LLP Chartered Accountants and IT department has added various addition and Assessment order for FY 2017-18 / AY 201819 dated 01/07/2023 is received by the company with tax demand of Rs. 37,98,22,980.00 and addition was done for subsequent years as reported in respective paras of the main audit report.
d) The other regulators / departments like GST, Income Tax, SIFO, Serious fraud investigation department of BSE / NSES & others, over and above details give for ED and CBI have also initiated legal proceeding against the directors, employees, other persons and company, at present legal proceeding are going on and we have no details, other than reported in respective paras of this report.
e) In previous years, No operational & Business activities in the office and the factory of the company were conducted ater5th April, 2018 onwards as most of staff and employees had left the organization, except activities related to resolution process as required by resolution professional. All Accounting and operational records like accounting vouchers of cash and bank, office business files, sales and purchase invoices, Journal vouchers, purchase and sales orders etc. and others audit required evidences papers were taken by CBI and ED as per Panchama dated 6th April 2018 and 9th April 2018 respectively. Therefore, no required audit papers and audit evidence papers were provided to us, except few bank and journal vouchers to carry out audit as required as per guidance note of ICAI, so based on few available records and financial statements provided to us by RP /suspended management, we have carried audit with available data, as and were basis.
f) The Company did not produce us the Statutory Registers and records as required to be maintained and kept by it under the provisions of the Companies Act, 2013;
g) The Company has not filed any forms or returns with the Registrar of Companies or Regional Director, Central Government, the Tribunal, Court or other statutory authorities like PF, ESI, labour law etc during the year under review.
h) Company has not provided us differed tax liabilities working in view of continuously incurring losses in past financial years, with accumulated carried forward losses of past years and also do not anticipate any profitability in the company in near future.
i) The Hon'ble National Company Law Tribunal, Ahmedabad ("NCLT") by an order dated 24th August, 2018 admitted the Corporate Insolvency Resolution Process ("CIRP") application filed by financial creditors and Mr. Bhuvan Madan (Registration No. IBBI/IPA-001/IP-P01004/2017-2018/11655) has been appointed as Resolution Professional ("RP") for the Company wide order dated October 23, 2018 to conduct CIRP of DIAMOND POWER INFRASTRUCTURE LIMITED (DPIL), we have been informed by Resolution Professional (RP), after taking over the charge of the management of the DPIL on October 23, 2018, about the ongoing investigations being conducted by the offices of the Directorate of Enforcement ("ED") under Prevention of Money Laundering Act, 2002 ("PMLA"), by the Central Bureau of Investigation ("CBI") and the Income Tax Authorities under the Income tax Act, 1961 into the affairs of DPIL and whereby most of the documents pertaining to DPIL had already been seized by the ED and CBI. The present new RP Mr. Prashant Jain is appointed as the Resolution Professional ("RP") vide order dated 4th May 2021 in term of the Insolvency and Bankruptcy Code, 2016 ("Code") to manage the affairs of the Company as per the provisions of the Code.
In view of the possible effects of the matters described in points no. a) to i) above, we have not been able to comment on the Company's compliance of the covenants in respect of all borrowings and consequential implications including disclosures, if any.
In view of the above and pending outcome of ongoing investigation, we have not been able to comment on the completeness and appropriateness of the balances in relation to these subjected matters as quoted in the financial statements and the consequential impact that the outcomes of the investigations may have on the financial statements and the provisions made by the Present Management during this year.
The Key Audit Matters
In our professional judgment, Key audit matters ('KAM') are matters with, 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 reported important Key audit matters as under. Due to the non-availability of supporting documents/ opinions, we have not provided our responses to the key audit matters.
1. The Hon'ble NCLT vide its order dated June 20, 2022 has approved resolution plan submitted by M/s GSEC Limited in consortium with Mr. Rakesh Shah. Thereafter, as per approved Plan, a Monitoring Committee was constituted to take necessary actions for implementation of the approved Resolution Plan. At present the ED has not released the charges on assets of the company, hence company has filed petition to Honorable Supreme Court for release of charge and matter is under legal process as per the information provided to us.
2. On Trigger date i.e. September 17, 2022, M/s GSEC Limited in consortium with Mr. Rakesh Shah has taken over charge of the company and has reconstituted the Board of Directors of the company ('Board') and new management ('New Management') was put in place to implement the Resolution Plan as approved by the NCLT vide order dated June 20, 2022, as per the approved resolution plan, company has to pay Rs. 501 Crs in the period of 5 years and Rs. 1,899 Crs at the end of 30 years in form of 0.01 % Unsecured redeemable bond. Out of Rs. 501 Crs., Rs. 20 Crs to meet resolution cost, Rs. 5 Crs for operational Creditors, Rs. 2.40 Crs to meet employees liabilities and Rs. 473.60 Crs to be paid over period of 5 years to financial creditors. During the year company has paid Rs. 71.70 Crs to Financial creditors and separately created liabilities towards nonconvertible debentures of Rs. 33.16 Crs.
3. The current year results prepared in compliances with the NCLT approved resolution plan and reduced equity share holding of existing share holders to 1 % of paid-up equity share capital as per FY 2021-22, reduced nonconvertible preference shares entire amount, issue of new equity shares to new management of Rs. 50 Crs., written off liabilities as per the resolution plan and provided for known assets outstanding. All accounting treatments given through capital reserves account directly as per the plan and not as required under IND AS.
4. During the financial year, in compliances with the Hon. NCLT approved resolution plan, company has issued
0.01 % per annum Unsecured redeemable bond with maturity amount of Rs. 1,899 Cr. at the end of 30 years. The company has accounted full value of maturity bond value as liabilities in current financial year instead of accounting net present value of Rs. 25.67 Cr. as per the requirements of IND AS. Further, these bonds are repurchased by Gomax Aviation Pvt. Ltd. (SPV of RA) from respective banks / FIs through repurchase agreements for Rs. 25.67 Cr. (NPV as on date). The company has accounted this transaction as advance received from the Gomax Aviation Pvt. Ltd. and liability of Rs. 1,899 Cr. as bond payable as on reporting date. So to that, extent non compliances with IND AS.
5. The company has carried forward PPE Assets outstanding as it is from FY 2017-18 onwards, The company has not carried out detailed assessment of the useful life of Company's assets as company is in progress of updating fixed assets register, so assets wise useful life working is not possible, hence depreciation has been adjusted, based on past historical trend and not as per the notification to Schedule II of the Companies Act, 2013. We are unable to comment on the impact on statement of Profit & Loss Account.
6. The company has not complied with Ind AS - 19, with respect to employee benefits. Actuarial valuation certificate has not been obtained for gratuity and other post-employment benefits.
7. The Company has, on the basis of their internal evaluation, valued inventories at Rs. 4740.40 lakhs. In the view of current CIRP Process, no production activities since long time and in absence of valuation report and any supporting papers, we are unable to comment on the realizability of the inventories.
8. Internal Audit Report were not available for the full year of operations, so we are not able to give our comments on internal control in the company.
9. We have also examined non-compliance with the applicable provisions of the following up to cut off date of 17/09/2022:
(i) Secretarial Standards issued by The Institute of Company Secretaries of India. Secretarial Standard 1 is not applicable as No Board Meeting or Meeting of Committee of Board of Directors.
(ii) The Listing Agreement entered into by the Company with the Stock Exchanges read with Securities and Exchange Board of India (Listing obligations and Disclosure Requirements) Regulations, 2015.
10. Balances under sundry debtors and sundry creditors, Investments, loans and advances given by the old
management of the company, it was provided and effects of it given to Capital reserves account directly, as realizability of it not ascertainable.
11. Associates and subsidiary companies of old management are under CIRP process / liquidation, no audited Financial Statements available and grouped together, it was provided and effects of it given to Capital reserves account directly, as realizability of it not ascertainable.
12. As per the approved resolution plan of NCLT order dated 20/06/2022, all statutory liabilities to be payable as per order only, so in past company has received the assessments orders and notices for demand from the income tax department for the Assessment Year 2013-14 (Rs. 271.18 Crs.), 2014-15 (Rs. 404.64 Crs), 2015-16 (Rs. 188.18 Crs.), 2016-17 (Rs. 161.42 Crs.), 2017-18 (Rs. 90.35 Crs.), 2018-19 (Rs. 37.98 Crs.) total demand of Rs. 1153.77 Crs. will not be payable by the company as per submission received by us.,
13. The company has reported, net closing balance transections of related party in schedule 33 of enclosed AFS instead of reporting gross transections done during the year, so to that extent deviation in IND AS.
14. We have reported information and details available and given to us by the company, in this audit report, there may be additional information over and above not reported or available with us.
Information Other than the Financial Statements and Auditors' Report Thereon
The Company's management and Board of Directors are responsible for the other information. The other information comprises the information included in the Company's Annual Report, but does not include the financial statements and our auditors' report thereon.
We have given disclaimer of 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 the 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 and information available with us and it is reported in basis for disclaimer of opinion, key audit matters and in other applicable paras and schedules of main financial statements.
Management's Responsibility for the Financial Statements
The Company's Board of Directors/Resolution Professional / Management is responsible for the matters stated in section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the accounting Standards
specified 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 of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate implementation and maintenance of 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 financial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, Board of Directors / Resolution Professional / New Management is responsible for assessing the Company's 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.
Board of Directors / Resolution Professional / New Management are also responsible for overseeing the Company's financial reporting process.
The Hon'ble NCLT vide its order dated June 20, 2022 has approved resolution plan submitted by M/s GSEC Limited in consortium with Mr. Rakesh Shah. Thereafter, as per approved Plan, a Monitoring Committee was constituted to take necessary actions for implementation of the approved Resolution Plan. At present the ED has not released the charges on assets of the company, hence company has filed petition to Honorable Supreme Court for release of charge and matter is under legal process as per the information provided to us. On Trigger date i.e. September 17, 2022, M/s GSEC Limited in consortium with Mr. Rakesh Shah has taken over charge of the company and has reconstituted the Board of Directors of the company ('Board') and new management ('New Management') was put in place to implement the Resolution Plan as approved by the NCLT vide order dated June 20, 2022. The current year results prepared in compliances with the NCLT approved resolution plan. all accounting treatments given through capital reserves account directly as per the plan and not as required under IND AS.
Auditor's Responsibilities for the Audit of the 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 auditor's 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 for the current year under reporting only. We are able to get required audit papers, information, supporting and documents for current year under reporting, however we were not able to give comments on previous financial years, due to details given in paras of basis of opinion and key audit matters, further current year under audit may have material impacts as company has carried forward opening balances of assets and liabilities from previous years. So based on details given in this para, we also conform for current year under reporting that :
• 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 with reference to financial statements in place and the operating effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's 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 Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's 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 statement of the current period and are therefore the key audit matters. We describe these matters in our auditor's 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.
Repost 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 the Order, to the extent applicable, which is subject to the possible effect of the matters described in the Basis for Disclaimer of Opinion section above.
(A) 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) Due to the possible effects of the matter described in the Basis for Disclaimer of Opinion section above, we are unable to state whether 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) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion section above, we are unable to state whether 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 relevant books of account.
d) Due to the possible effects of the matter described in the Basis for Disclaimer of Opinion section above, the aforesaid financial statements do not comply with the Indian Accounting Standards prescribed under section 133 of the Act read with Companies (Indian Accounting Standards) Rules, 2015, as amended.
e) On the basis of the written representations received from the directors as on 31st March, 2023 taken on record by the new management and Board of Directors, none of the directors are disqualified as on 31st March, 2023 from being appointed as a director in terms of Section 164(2) of the Act..
f) 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 Company's internal financial controls over financial reporting for the reasons stated therein.
g) With respect to the matter to be included in the Auditors' Report under Section 197(16) of the Act as amended:
In our opinion and according to the information and explanations given to us, the remuneration paid by the company to new management and board members, which are incorporated in India to its directors during the current year is in accordance with the provisions of Section 197 of the Act.
h) 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 many pending litigations which would impact its financial position.
ii. Due to non-availability of details, we are not able to comments on this point.
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company..
iv. (a) The Management has represented that, to the best of its knowledge and belief, other than disclosed in notes, to the Financial Statements, 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, other than disclosed in notes, 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 entity ("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 the audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under
(a) and (b) above, contain any material misstatement..
v. Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from April 1, 2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31, 2023.
2. As required by the Companies (Auditor's Report) Order, 2020 (the "Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in "Annexure B" a statement on the matters specified in paragraphs 3 and 4 of the Order.
For : A Yadav & Associates LLP Chartered Accountants FRN : 129725W/W100686
CA Arvind K. Yadav, Partner Place : Baroda
UDIN : 23047422BGUTGV6694 Date: 30/05/2023
ANNEXURE "A" TO THE INDEPENDENT AUDITOR'S REPORT ON THE STANDALONE FINANCIAL STATEMENTS OF DIAMOND POWER INFRASTRUCTURE LTD FOR THE YEAR ENDED 31st MARCH 2023 (Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements' section of our report of even date)
i (a) (A) The Company is in process of updating proper records of Property, Plant and Equipment regarding
particulars including quantitative details and situation of the said assets at the end of the financial YEAR.
(B) The Company is not having any intangible assets. Hence the provisions of clause (i)(a)(B) of paragraph 3 of the order is not applicable to the company.
(b) Due to the possible effects of the matter described in the Basis for Disclaimer of Opinion and key audit matters section above in main report, so we are not able to comments on this para.
(c) Due to the possible effects of the matter described in the Basis for Disclaimer of Opinion and key audit matters
section above in main report, so we are not able to comments on this para.
(d) Due to the possible effects of the matter described in the Basis for Disclaimer of Opinion and key audit matters section above in main report, so we are not able to comments on this para.
(e) Due to the possible effects of the matter described in the Basis for Disclaimer of Opinion and key audit matters section above in main report, so we are not able to comments on this para.
ii (a) Due to the possible effects of the matter described in the Basis for Disclaimer of Opinion and key audit
matters section above in main report, so we are not able to comments on this para.
(b) According to the information and explanations given to us and on the basis of our examination of the records of the company, the company has sanctioned working capital limits in excess of five crore rupees, in aggregate, from banks or financial institutions on the basis of the security of current assets at any point of time in previous years. All loans were classified as NPA by banks and company has defaulted in payment of loans. During the year new management has taken over charge of the company from cut off date i.e. 17/09/2022 and after that, no new bank / FIs loan sanctioned to the company.
iii Due to the possible effects of the matter described in the Basis for Disclaimer of Opinion and key audit matters section above in main report, we have not been able to comment whether the Company has granted any loans, secured or unsecured, to companies, firms, Limited Liability Partnership or other parties covered in the register maintained under Section 189 of the Act during the year, however during the year new management has taken over charge of the company from cutoff date i.e. 17/09/2022 and after that, no new granted by the company. In view of the foregoing, we have been not able to comment on the Clause iii (a), iii (b), iii (c), iii (d), iii (e) and iii (f) of the said Order.
iv According to the information and explanations given to us and on the basis of our examination of the records of the company, the company has given loans and provided guarantees or securities as specified under Section 185 of the Companies Act, 2013 ("the Act") and the company has provided guarantee or securities as specified under Section 186 of the Act 2013 to associates and subsidiary companies, corporate guarantees was en-cashed for Rs. 114 Crs. for DPTL and Rs. 3.35 Crs for DIL in previous financial years and further, in our opinion, the company has not complied with the provisions of Section 186 of the Act in relation to loans given, guarantees provided and investments made. however, during the year new management has taken over charge of the company from cutoff date i.e. 17/09/2022 and after that, no new loan / guarantees granted by the company
v In our opinion and according to information and explanations given to us, the company has not accepted any deposits or amounts which are deemed to be deposits from the public, except unsecured loans from subsidiaries, directors and associates companies, friends and relatives amounting to Rs. 4731.85 Lakhs in previous financial years and during the current year new management of the company has taken unsecured loan from company under same management amounting to Rs. 43.51 Crs. at interest rate of 10 % p.a. and repayment terms and conditions yet to be fixed.
vi According to the information and explanations given to us, the Central Government has prescribed the maintenance of cost records under Section 148(1) of the Companies Act, 2013 in respect of the products dealt with by the company. Due no major manufacturing activities in the company, company has not prepared cost records as required.
vii (a) The company has liability in respect of Service Tax, Duty of excise, Sales tax and Value added tax during the
year since effective 1st July 2017, these statutory dues /returns have not been submitted to Goods and Services Tax ("GST")
According to the information and explanations given to us and on the basis of our examination of the records of the company, in our opinion amounts deducted / accrued in the books of account in respect of undisputed statutory dues including GST, Provident Fund, Employees' State Insurance, Income Tax, Duty of Customs, Cess and other statutory dues to the extent applicable to the company has not deposited by the company with the
appropriate authorities within the prescribed time limits, however, during the year new management has taken over charge of the company from cutoff date i.e. 17/09/2022 and after that no undisputed statutory liabilities were unpaid.
(b) As reported in main report under the "Key audit matters", company has default in payment of undisputed amounts in respect of GST, Provident Fund, Employees' State Insurance, Income Tax, Duty of Customs, Cess and other statutory dues to the extent applicable to the company were in arrears as at 31st March 2022 and also not paid for a period of more than six months from the date they became payable for previous financial years. however, during the year new management has taken over charge of the company from cutoff date i.e. 17/09/2022 and after that no undisputed statutory liabilities were unpaid.
viii Due to the possible effects of the matter described in the Basis for Disclaimer of Opinion and key audit matter section above in main report for previous financial years. During the year new management has taken over charge of the management of the company from cutoff date i.e. 17/09/2022 and after that the company has not surrendered or disclosed any transactions, previously unrecorded as income in the books of account, in the tax assessments under the Income Tax Act, 1961 as income during the year.
ix (a) According to the information and explanations given to us and on the basis of our examination of the records
of the company, the company has defaulted in the repayment of all loans or borrowings, in the payment of interest thereon to all lenders and classified all borrowing as NPA by banks and Fis in previous financial years. During the year new management has taken over charge of the company from cutoff date i.e. 17/09/2022, as per the NCLT resolution plan order dated 20/06/2022 for repayment of old defaulted loan of banks / FIs, company has to pay Rs. 501 Crs in the period of 5 years and Rs. 1,899 Crs at the end of 30 years in form of 0.01 % unsecured redeemable bond. Company has not taken any type of new loan from Banks /FIS, so reporting under this clause and clause ix (b), ix (c), ix (d), ix (e), ix (f) are not required.
x (a) The company has not raised any moneys by way of initial public offer or further public offer (including debt instruments), during previous year bank debts were converted to equity shares to comply restructure mechanism of RBI in the year January 2017. During the year new management has taken over charge of the company from cutoff date i.e. 17/09/2022 and issued and allotted fully paid equity shares amounting to Rs. 50 Crs to the new management in compliances with NCLT approved resolution plan order dated 20/06/2023.
(b) According to the information and explanations given to us and on the basis of our examination of the records of the company, In current year, company has written of fully paid equity shares and preference shares holding in compliances in compliances with NCLT approved resolution plan order dated 20/06/2022, during the current year company has issued new equity shares to the new management at Rs. 10 per shares, nos. for 500 Lacs equity shares and continuation of 1 % of old fully paid equity shares holding nos 26.97 Lacs amounting Rs. 269.71 Lacs, required in principal approval from NSE received in March 2023 & BSE approval is under process.
Further as per the NCLT resolution plan order dated 20/06/2022, company has to pay Rs. 501 Crs in the period of 5 years and Rs. 1,899 Crs at the end of 30 years, so to meet this liabilities company has issued 0.01 % unsecured redeemable bond and accounted full maturity value as liabilities in the FS, instead of recording of NPV as per requirements of IND AS.
xi (a) Based on examination of the books of records of the company and according to the information and explanations given to us, considering the principles of materiality outlined in the Standards on Auditing, we report that no fraud by the company or on the company has been noticed or reported during the course of the audit during the year.
(b) According to the information and explanations given to us, no report under subsection (12) of Section 143 of the Act has been filed by the auditors in Form ADT-4 as prescribed under Rule 13 of Companies (Audit and Auditors) Rules, 2014 with the Central Government.
(c) As per the information given to us, no whistle blower complaints were received by the company during the year.
xii According to the information and explanations given to us, the company is not a Nidhi Company. Accordingly,
clause 3(xii) of the Order is not applicable.
xiii In our opinion and according to the information and explanations given to us, the transaction with related parties are in compliance with Section 177 and 188 of the Act, where applicable, and the details of the related party transactions have been disclosed in the standalone financial statements as required by the applicable accounting standards except, During the financial year, in compliances with the Hon. NCLT approved resolution plan, company has issued 0.01 % per annum Unsecured redeemable bond with maturity amount of Rs. 1,899 Crs at the end of 30 years. The company has accounted full value of maturity bond value as liabilities in current financial year instead of accounting net present value of Rs. 25.67 Crs. as per the requirements of IND AS. Further, these bonds are repurchased by Gomax Aviation Pvt. Ltd. (SPV of RA) from respective banks / FIs through repurchase agreements for Rs. 25.67 Crs. (NPV as on date). The company has accounted this transaction as advance received from the Gomax Aviation Pvt. Ltd. and liability of Rs. 1,899 Crs. as bond payable as on reporting date. So to that, extent non compliances with IND AS.
xiv (a) In our opinion and according to the information and explanations given to us and our audit procedures, the company has yet to start Internal Audit System commensurate with the size and nature of its business, as new management has taken the company from cutoff date and no major operational activities up to March 2023. Company has appointed internal auditor, but the report was under finalization and not give to us, so we are not able to give our view on it.
(b) We have not received the Internal Audit Reports of the company issued till date for the period under review, so we are not able to give our view on it.
xv In our opinion and according to the information and explanations given to us, the company has not entered into any non-cash transactions with its directors or persons connected to its directors and hence, provisions of Section 192 of the Act are not applicable to the company, except , During the financial year, in compliances with the Hon. NCLT approved resolution plan, company has issued 0.01 % per annum Unsecured redeemable bond with maturity amount of Rs. 1,899 Cr. at the end of 30 years. The company has accounted full value of maturity bond value as liabilities in current financial year instead of accounting net present value of Rs. 25.67 Cr. as per the requirements of IND AS. Further, these bonds are repurchased by Gomax Aviation Pvt. Ltd. (SPV of RA) from respective banks / FIs through repurchase agreements for Rs. 25.67 Crs. (NPV as on date). The company has accounted this transaction as advance received from the Gomax Aviation Pvt. Ltd. and liability of Rs. 1,899 Crs. as bond payable as on reporting date. So to that, extent non compliances with IND AS.
xvi (a) The company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.
Accordingly, clauses 3(xvi)(a) and 3(xvi)(b) of the Order are not applicable.
(b) The company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, clauses 3(xvi)(b) of the Order are not applicable.
(C) The company is not a Core Investment Company (CIC) as defined in the regulations made by the Reserve Bank of India. Accordingly, clause 3(xvi)(c) of the Order is not applicable.
(d) According to the information and explanations provided to us during the course of audit, the Group does not have any CICs. Accordingly, clause 3(xvi)(d) of the Order is not applicable.
xvii The company has incurred substantial cash losses in the current and in the immediately preceding financial years.
xviii There has been no resignation of the statutory auditors during the year.
xix According to the information and explanations given to us and on the basis of the financial ratios, ageing and
expected dates of realization of financial assets and payment of financial liabilities, other information accompanying the standalone financial statements, our knowledge of the Board of Directors and management plans and based on our examination of the evidence supporting the assumptions, nothing has come to our attention, which causes us to believe that any material uncertainty exists as on the date of the audit report that the company is not capable of meeting its liabilities existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date. The new management has taken over the company from cutoff date i.e. 17/09/2022 and prior to that, company was defaulted in repayment of all liabilities. We have given our view based on the strength of new management of the company only. We, however, state that this is not an assurance as to the future viability of the company. We further stated that
our reporting is based on the facts up to the date of the audit report and we neither give any guarantee nor any assurance that all liabilities falling due within a period of one year from the balance sheet date, will get discharged by the company as and when they fall due.
xx In our opinion and according to the information and explanations given to us, there is no liability of the company under section 135 of the Act relating to corporate social responsibility pursuant. Accordingly, clauses 3(xx)(a) and 3(xx)(b) of the Order are not applicable.
For : A Yadav & Associates LLP Chartered Accountants FRN : 129725W/W100686
CA Arvind K. Yadav, Partner
Place : Baroda
UDIN : 23047422BGUTGV6694 Date : 30/05/2023
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