GTL LIMITED
Report on the audit of the Financial Statements
Qualified Opinion
We have audited the accompanying financial statements of GTL 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 Changes in Equity and the Statement of Cash Flows for the year ended on that date, notes to the financial statements and a summary of material accounting policies and other explanatory information (hereinafter referred to as “the financial statements”) in which, are included, the returns for the year ended on that date of the Company's branch located at Nepal.
In our opinion and to the best of our information and according to the explanations given to us, except for the effect of matters prescribed in the basis for qualified opinion Section of our report, the aforesaid financial statements give the information required by the Companies Act, 2013 (“the Act”) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, (“Ind AS”) and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31,2024, the profit and other comprehensive income, changes in equity and its cash flows for the year ended on that date.
Basis for Qualified Opinion
As mentioned in Note No. 32.1 to the Statement, the Company has neither paid nor provided interest on its borrowings during the financial year. Had such interest been recognised, the finance cost and interest liability for the year ended March 31, 2024 would have been more by ' 426.55 Crores. Consequently, the reported profit after Other Comprehensive Income by the Company for the year ended March 31,2024 would have been a loss of ' 215.93 Crores. The Earnings per Share (EPS) would have been negative ' 13.72.
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 (“the Act”). Our responsibilities under those Standards 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 (“the ICAI”) together with the ethical / independence requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules 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 modified audit opinion on the financial statements.
Material Uncertainty relating to Going Concern
We draw attention to the following notes to the accompanying financial statements-
a) Note no. 49 which inter-alia states that its net worth has been eroded and the Company's current liabilities are higher than its current assets as at March 31, 2024. The above conditions indicate the existence of material uncertainty that casts significant doubt about the Company's ability to continue as a going concern. However, the financial statements of the Company have been prepared on going concern basis for the reasons stated in the said note - As against the 'in-principle' approval to the One Time Settlement ('OTS') proposal of the Company of ' 375.79 Crores, Secured Lenders have recovered an amount of ' 101.01 Crores through sale of Company's immovable properties under SARFAESI Act, and for balance of ' 274.78 Crores, the Company has deposited ' 172.14 Crores as on date in Escrow account, maintained for the said purpose and is awaiting requisite sanction from the Secured Lenders along with resolution of National Company Law Appellate Tribunal (NCLAT) and Debt Tribunal (DRT) related issues.
Our opinion is not modified in respect of the above matter.
Emphasis of Matter
We draw attention to the following notes to the accompanying financial statements-
a) Note no. 35 which inter alia states that, the Company's lenders have sold immovable properties of the Company. The Lenders have appropriated the sale proceeds of ' 181.10 Crores of the six immovable properties of the Company, sold during the reporting period, against the Rupee Loans. The amount realized over the carrying value of Assets of ' 137.62 Crores is considered as “Exceptional Item”.
b) We invite attention to the note no. 47 which inter-alia states that, with regards to the FIR filed by the Central Bureau of Investigation of India (CBI), during FY 202223, investigation was conducted towards certain charges against the Company.
Our opinion is not modified in respect of the above matters. 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, 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.
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Sr. No.
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Key Audit Matter
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Auditor’s Response
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1.
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Accuracy of recognition, measurement, presentation and disclosures of revenues and other related balances in view of adoption of Ind AS 115 “Revenue from Contracts with Customers”
The application of the revenue accounting standard involves certain key judgments relating to identification of distinct performance obligations, determination of transaction price of the identified performance obligations, the appropriateness of the basis used to measure revenue recognised over a period.
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We assessed the Company's process to identify the impact of
adoption of the revenue accounting standard.
The procedure performed included the following:
1. Evaluated the design of internal controls relating to revenue recognition.
2. Selected a sample of continuing and new contracts, and tested the operating effectiveness of the internal control, relating to identification of the distinct performance obligations and determination of transaction price.
3. Selected a sample of continuing and new contracts and performed the following procedures:
- Read, analyzed and identified the distinct performance obligations, if any, in these contracts.
- Compared these performance obligations with that identified and recorded by the Company.
- Considered the terms of the contracts to determine basis of recognizing the revenue 'at a point' or 'over the period', the transaction price including any variable consideration to verify the transaction price used to compute revenue and to test the basis of estimation of the variable consideration.
- Verified whether the revenue has been recognised only post the fulfilment of the performance obligations and related conditions.
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2.
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Evaluation of uncertain tax positions:
The Company has material uncertain tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes.
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Our procedures included the following:
Obtained understanding of key uncertain tax positions;
Obtained details of completed tax assessments and demands for the year ended March 31,2024 from the management;
We along with our internal tax experts -
i. Discussed with management and evaluated the Management's underlying key assumptions in estimating the tax provision;
ii. Assessed management's estimate of the possible outcome of the disputed cases; and
iii. Considered legal precedence and other rulings in evaluating management's position on these uncertain tax positions.
Additionally, considered the effect of new information in respect of uncertain tax positions as at April 1, 2023 to evaluate whether any change was required to management's position on these uncertainties.
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3.
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Assessment of contingent liabilities and provisions related to Taxation, Litigations and claims:
The assessment of the existence of the present legal or constructive obligation, analysis of the probability of the related payment and analysis of a reliable estimate, requires management's judgement to ensure appropriate accounting or disclosures.
Due to the level of judgement relating to recognition, valuation and presentation of provisions and contingent liabilities, this is considered to be a key audit matter.
(Refer note 39 to the financial statements)
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Our audit procedures included:
- As part of our audit procedures we have assessed Management's processes to identify new possible obligations and changes in existing obligations for compliance with Company policy and Ind AS 37 requirements.
- We have analysed significant changes from prior periods and obtain a detailed understanding of these items and assumptions applied.
- We have obtained relevant status details and Management representations on the major outstanding litigations.
- As part of our audit procedures we have reviewed minutes of board meetings (including the Audit Committee).
- We have held regular discussions with Management and internal legal department.
- We challenged the assumptions and critical judgements made by management which impacted their estimate of the provisions required, considering judgements previously made by the authorities in the relevant jurisdictions or any relevant opinions given by the Company's advisors and assessing whether there was an indication of management bias.
- We discussed the status in respect of significant provisions with the Company's internal tax and legal team.
We performed retrospective review of management judgements
relating to accounting estimate included in the financial
statement of prior year and compared with the outcome.
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Other matters
a) We did not audit the financial statements / information of Nepal branch included in the financial statements of the Company, whose financial statements / financial information reflect total assets of ' 0.70 Crore (net assets of ' 0.05 Crore) as at March 31,2024 and total revenues of ' Nil for the year ended on that date. The financial statements / information of this branch are unaudited. According to the information and explanations given to us by the Management, there are no transactions at the said branch and these financial statements/information are not material to the Company.
b) As at March 31,2024, balance confirmations, with respect to Bank Loan including interest accrued (net of Escrow Account Balance), Bank Guarantee, Bank Current Account and Fixed Deposits aggregating to ' 3,874.54 Crores, have not been received.
Our opinion is not modified in respect of above matters.
Information Other than the Financial Statements and Auditor’s Report thereon
The Company's Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis, Board's Report including Annexures to Board's Report, Business Responsibility Report, Corporate Governance and Shareholder's Information, but does not include the financial statements and our auditor's 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 identified above when it becomes available 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.
When we read other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and describe actions applicable in the applicable laws and regulations. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance, total comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS and other accounting principles generally accepted in India.
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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the 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.
The Board of Directors are responsible for overseeing the Company's financial reporting process.
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. 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 financial controls 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 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 statements 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.
Report on Other Legal and Regulatory Requirements
I. As required by the Companies (Auditor's 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 extent applicable.
II. As required by Section 143 (3) of the Act, we report that:
a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.
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 report on the accounts of the branch office of the Company have not been audited under Section 143(8) of the Act by branch auditor. Accounts of the branch are management certified and have been appropriately dealt with by us in preparing this report. (Refer Point (a) of Other Matter paragraph above)
d) The Balance Sheet, the Statement of Profit and Loss including (other comprehensive income), the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account.
e) I n our opinion, the aforesaid Financial Statements comply with the Ind AS specified under Section 133 of the Act, read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015.
f) On the basis of the written representations received from the directors as on March 31, 2024 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) 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” to this report.
h) With respect to the other matters to be included in the Auditor's Report under Section 197(16) of the Act:
In our opinion and according to the information and explanation given to us, the remuneration paid by the Company to its directors during the current year is in accordance with the provision of Section 197 of the Act.
i) With respect to the other matters to be included in the Auditor's 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. 39.C.1 to the Financial Statements.
ii. The Company does not have any long - term contracts including derivative contracts for which there are any material foreseeable losses.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company. However, unpaid dividend of ' 0.20 Crore pertaining to the years 2000-01, 2001-02 and 2003-04 to 2009-10 has not been transferred to Investor Education and Protection Fund but is held in abeyance on account of pending legal cases.
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 dividend during the year. Hence, this clause is not applicable.
vi. Based on our examination, which included test checks, the Company has used accounting software for maintaining its books of accounts for the financial year ended March 31, 2024 which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software. Further, during the course of our audit we did not come across any instance of the audit trail feature being tampered with.
As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from April 1, 2023, reporting under Rule 11(g) of the 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.
For GDA & Associates
Chartered Accountants
Firm Registration Number: 135780W
Akshay D. Maru
Partner
Membership No: 150213
UDIN : 24150213BKAJKC9511
Place : Mumbai
Date : May 15, 2024
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