We have audited the accompanying Financial Statements of Indian Renewable Energy Development Agency Limited ("the Company”),which comprise the 'Balance Sheet as at March 31, 2024, 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, including a summary of material accounting policies and Other Explanatory information prepared in accordance with the requirement of the Companies Act 2013 (as amended) ("the Act”)' (hereinafter referred to as "Financial Statements”).
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Financial Statements give the information required by 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 the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2024, and profit including comprehensive income, changes in equity and its cash flows for the year ended on that date.
Basis for opinion
We conducted our audit in accordance with the Standards on
Auditing specified under section 143(10) of the Act ("SAs”). 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 ("ICAI”) together with the ethical requirements that are relevant to our audit of the Financial Statements under the provisions of the Act 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 obtained by us, is sufficient and appropriate to provide a basis for our audit opinion on the Financial Statements.
Emphasis of Matter
1. As described in Note 38 (39) to the Financial Statements, the company has classified certain Loans given aggregating to Rs. 87,366.57 Lacs required to be classified as stage III /Non-Performing Assets (NPA) as stage II / Standard in terms of interim order of Hon'ble High Court of Andhra Pradesh. The statutory disclosures have been made accordingly. However, as a matter of prudence, interest income on such accounts becoming NPA in terms of prudential norms of RBI has been recognized on collection basis and allowance for impairment loss has been made in accounts accordingly.
Our opinion is not modified in respect of 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, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters. We have considered the matters described below to be the Key Audit Matters for incorporation in our Report.
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Sr. No.
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Key Audit Matters
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Auditor's Response
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1.
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Impairment of Loan Assets - Expected Credit loss
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Our Audit procedures based on which we arrived at
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Refer Note no. 38 (20 (A) (a) (ii)) to the Financial Statements read with accounting policy No.3(xx)- 'Financial Instruments')
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conclusion regarding reasonableness of the disclosures and accounting for Impairment of Loan Assets - Expected Credit loss includes the following:
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Financing is principal business of the Company and disclosure of Loan assets at fair value considering the provision for loss due to impairment is most significant.
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We have obtained an understanding of the guidelines as specified in Ind AS 109 "Financial Instruments”, various regulatory updates, guidance of ICAI and internal instructions and procedures of the Company in respect of
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The Company follows a Board approved methodology
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the ECL and adopted the following audit procedures:
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wherein assessment for allowance is carried out by an external agency for impairment based on certain criterion / framework classifying the assets into various stages depending upon credit risk and level of evidence of impairment. The measurement of an expected credit loss
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Evaluation and testing of the key internal control mechanisms with respect to the loan assets monitoring, assessment of the loan impairment including testing of relevant data quality, and review of the real data entered.
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allowance (ECL) for financial assets measured at
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Recoveries in the loan assets are verified to ascertain
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amortized cost requires the use of complex models and
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level of stress thereon and impact on impairment
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significant assumptions about future economic
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allowance in financial statements.
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conditions and credit behaviour (e.g., likelihood of customers defaulting and resulting losses).
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Verification / review of the documentation, operations / performance, valuation of available securities and
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The Company makes significant judgments while
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monitoring of the loan assets, especially large and
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assessing ECL and the assumptions underlying the ECL are
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stressed loan assets, to ascertain any overdue,
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monitored and reviewed on an on-going basis.
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unsatisfactory conduct or weakness in any loan asset
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The proper application of such assumptions is material for
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account.
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statement of the Loan Assets. In view of the materiality of
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The company avails services of third party for evaluation
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the amount of loan assets in the Financial Statements, the
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of ECL Components and such party was changed during
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loss due to impairment of loan assets has been considered
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the year . The calculations in the study for impairment
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as Key Audit Matter in our audit.
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allowance carried out by third party are relied upon by us and test checks are carried out for the same. The data shared with the third party is verified by us for correctness of material components being submitted. Our audit procedure in the same are limited in view of not sharing certain parameters and software used for study of such data being considered confidential by such third party.
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We also compared ECL with the provisioning as required by the applicable directions of the Reserve Bank of India and ensured adequacy of impairment allowance accordingly.
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Sr. No.
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Key Audit Matters
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Auditor's Response
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2.
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Fair valuation of Derivative Financial Instruments
(Refer Note No. 38 (28) to the Financial Statement read with accounting policy No. 3(xx).
To mitigate the Company's exposure to foreign currency risk and interest rate, non-Rupee cash flows are monitored and derivative contracts are entered for hedging purpose. The derivatives are measured at fair value as per Ind AS 109.
To qualify for hedge accounting, the hedging relationship must meet certain specified requirements as per Ind AS. Hedge accounting results in significant impact on financial statements together with complexity of its accounting/assumptions and numerous parameters therein for establishing hedge relationship. Gain/Loss on these derivatives is recognised in other comprehensive income or profit and loss as provided by Ind AS. The magnitude of such transactions is significant as per the operations of the company.
In view of facts of the matter we have identified it as a key audit matter.
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Our Audit procedures based on which we arrived at conclusion regarding reasonableness of the disclosures and accounting for derivatives include the following:
Discussing and understanding management's perception and studying policy of the company for risk management.
Verification of fair value of derivative in terms of Ind AS 109, testing the accuracy and completeness of derivative transactions.
Evaluation of management's key internal controls over classification, valuation, and valuation models of derivative instruments.
Obtained details of various financial derivatives contracts as outstanding/pending for settlement as on 31st March, 2024.
Verification of underlying assumptions in estimating the fair valuation arrived at for those financial derivative contracts.
Appropriateness of the valuation methodologies applied and testing the same on sample basis for the derivative instruments.
Additionally, we verified the accounting of gain/loss on derivatives in the other comprehensive income or Profit & Loss Account.
Reviewed the appropriateness and adequacy of disclosures by the management as required in terms of Ind AS 109.
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3.
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Liability for Taxation including Income Tax
Refer note 38 (17 a) The company has material uncertain tax demands in respect of matters under dispute which involves significant judgement to determine the possible outcome of these disputes.
During the year, Hon'ble High Court of Delhi decided the Writ Petitions relating to income tax cases for Financial Year (FY) 1997-1998 to FY 2008-2009 and for FY 2009-10 to 2017-18 ( except FY 2013-14) appeals orders were passed by the CIT(Appeals). Orders were received for other Financial years also. Appropriate provision and disclosure of consequential liabilities is material to the presentation of financial statements.
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Our Audit procedures based on which we arrived at conclusion regarding reasonableness of the disclosures and accounting for Liability for Income Tax include the following:
Our audit procedure includes review of various orders passed by Hon'ble High Court and CIT ( Appeals) / Assessing Officer on the subject matter in dispute with Department of Income Tax. We undertook procedure to evaluate management position on these uncertain tax positions.
For other tax matters, the facts and the legal pronouncements were analyzed and reviewed.
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Sr. No.
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Key Audit Matters
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Auditor's Response
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Service Tax and Goods & Service Tax (GST) Authorities
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We reviewed the appropriateness and adequacy of
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have also raised certain issues and raised demands for
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disclosures by the management as required in terms of Ind
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several past periods, which are being contested. Possible
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AS 37 "Provisions, Contingent Liabilities and Contingent
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outcome of these demands is substantial.
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Assets " as well as Ind AS 12 "Income Taxes”
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In view of this we have identified it as a key audit matter.
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Information Other than the Ind AS Financial Statements and Auditor's Report thereon
The Company's Board of Directors is responsible for the other information. The other information comprises the information included in the Board's Report including Annexures to Directors' Report, Management Discussion and Analysis Report, but does not include the financial statements and our auditors' report thereon. The other information as stated above is expected to be made available to us after the date of this auditors' report.
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 the other information as stated above and if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and describe necessary actions required as per applicable laws and regulations.
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 state of affairs (financial position), Profit or Loss (financial performance including other comprehensive income), changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian 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 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, the Board of Directors of the company 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 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 is also 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 Standard on Auditing 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 scepticism 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 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 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 ability of the company 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, make it probable that 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 of the Company regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal financial 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.
Reports on other legal and regulatory requirements
1. 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 Companies Act, 2013, we give in the "Annexure-A”, a statement on the matters specified in paragraphs 3 and 4 of the Order, to extent applicable and in terms of subsection (5) of section 143 of the Act, we give in the "Annexure-B” information in respect of the directions issued by Comptroller and Auditor-General of India in respect of the company .
2. 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 and proper returns adequate for the purposes of our audit have been received from branches not visited by us;
c) The balance sheet, the Statement of Profit & Loss including Other Comprehensive Income, Statement of Changes in Equity and the statement of Cash Flows dealt with by this report are in agreement with the books of account;
d) In our opinion, the aforesaid financial statements comply with the accounting standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;
e) In terms of Notification no. G.S.R. 463 (E) dated 5th June 2015 issued by the Ministry of Corporate Affairs, provisions of Section 164(2) of the Act regarding disqualifications of the Directors, are not applicable as it is a government Company;
f) As per notification number G.S.R. 463 (E) dated 5th June, 2015 issued by Ministry of Corporate Affairs, section 197 of the Act as regards the managerial remuneration is not applicable to the Company, since it is a Government Company.
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-C”.
h) 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 ( 'Audit Rules') , 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 38 (17) to Financial Statements.
ii. The Company has made due provision as required under the applicable law or Indian Accounting Standards, for material foreseeable losses, if any, on long term contracts including derivatives contracts: - Refer note 38(20)(C)(II)(c) to the financial statements.
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 (Refer note
38(26)) that to the best of its knowledge and belief , no funds have been advanced or loaned or invested ( either from borrowed funds or share premium or any other sources or kind of funds ) by the company to or in any other person or entity, including foreign entity ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, 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 (( Refer note 38(26)) that to the best of its knowledge and belief , no funds 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, 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 procedure performed 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 (a) and (b) contain any material mis-statement.
v. No dividend has been declared or paid during the year by the company.
vi. Based on our examination which included test checks, the company has used an accounting software for maintaining its books of account for the financial year
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ended 31 March 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 audit trail feature being tampered with and the management has represented that the audit trail feature cannot be disabled. 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 records retention is not applicable
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for the Financial Year ended 31 March 2024.
For DSP & ASSOCIATES
Chartered Accountants
Firm's Registration Number: 006791N
Sd/-
(Atul Jain )
Partner
Membership No. 091431
Date: 19th April 2024
Place: New Delhi
UDIN: 24091431BKFKGN1586
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