Vedanta Limited
Report on the Audit of the Standalone Ind AS Financial StatementsOpinion
We have audited the accompanying standalone Ind AS financial statements of Vedanta Limited ("the Company"), which comprise the Balance sheet as at 31 March 2024, the Statement of Profit and Loss, including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the standalone Ind AS financial statements, including a summary of material accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS financial statements give the information required by the Companies Act, 2013, as amended ("the Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2024, its profit including other comprehensive income its cash flows and the changes in equity for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act.
Our responsibilities under those Standards are further described in the 'Auditor's Responsibilities for the Audit of the Standalone Ind AS 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 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 Code of Ethics.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.
Emphasis of Matter
We draw attention to Note 3(d)(i) of the standalone Ind AS financial statements, with respect to accounting for an acquisition approved by the National Company Law Tribunal, Hyderabad Bench, overriding the applicable Ind-AS requirements. Further as stated in the aforesaid note, the comparative financial information for the year ended 31 March 2023 has also been restated to give effect to the terms of merger.
Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone Ind AS financial statements for the financial year ended 31 March 2024. These matters were addressed in the context of our audit of the standalone Ind AS financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor's responsibilities for the audit of the standalone Ind AS financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone Ind AS financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying standalone Ind AS financial statements.
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Key audit matters
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How our audit addressed the key audit matter
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(a) Accounting and disclosure of related party transactions (as described in note 39 of the Standalone Ind AS financial statements)
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The Company has undertaken transactions with related party,
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Our procedures included the following:
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Vedanta Resources Limited (VRL'), its intermediate holding
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• Obtained and read the Company's policies, processes and procedures in
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company and its affiliates including among others, payment of
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respect of identification of such related parties in accordance with relevant
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brand and strategic management fee, agency commission and
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laws and standards, obtaining approval, recording and disclosure of
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guarantee commission.
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related party transactions and identified key controls. For selected controls
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Accounting and disclosure of such related party transactions
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we have performed tests of controls.
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has been identified as a key audit matter due to a) Significance
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• Tested such related party transactions and balances with the underlying
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of such related party transactions; b) Risk of such transactions
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contracts, confirmation letters and other supporting documents provided
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being executed without proper authorizations; and c) Risk of
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by the Company.
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material information relating to aforesaid transactions not
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• Examined the approvals of the board and/or audit committee of
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getting disclosed in the financial statements.
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these transactions.
• Obtained and assessed the benchmarking report issued by the experts engaged by the management.
• Assessed the competence and objectivity of the external experts.
• Held discussions and obtained representations from the management in relation to such transactions.
• Read the disclosures made in this regard in the financial statements and assessed whether relevant and material information have been disclosed.
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Key audit matters
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How our audit addressed the key audit matter
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Recoverability of carrying value of property plant and equipment, capital work in progress and exploration intangible assets under development and Non-current Investments (as described in note 3(a)(E), 3(a)(F)( ii), 3(c)(A)(i), 3(c)(A)(ii), 3(c)(A)(iii), 3(c)(A)(iv), 5, 6A and 34of
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the Standalone Ind AS financial statements)
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As at 31 March 2024, the Company had significant amounts
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Our audit procedures included the following:
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of property, plant and equipment, capital work in progress and
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• Obtained and read the Company's policies, processes and procedures in
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exploration intangible assets under development which were
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respect of identification of impairment indicators, recording and disclosure
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carried at historical cost less depreciation.
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of impairment charge / (reversal) and identified key controls. For selected
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We focused our efforts on the Cash Generating Unit ("CGU") at (a) Tuticorin within the copper segment; (b) Rajasthan block within the oil & gas segment; (c) Investments made in Western Cluster Limited (WCL) in Liberia within the Iron Ore segment through the wholly owned subsidiary Bloom Fountain Limited and d) Zinc International Mines of Gamsberg, Skorpion and
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controls we have performed tests of controls.
• Assessed through an analysis of internal and external factors impacting the Company, whether there were any indicators of impairment in line with Ind AS 36 and Ind AS 109.
• In relation to the CGU at (a) Tuticorin within the copper segment; (b)
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Swatberg to evaluate Company's liability w.r.t. loan (secured by
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Rajasthan block within the oil & gas segment; (c) Western Cluster Limited
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financial guarantee by Company) taken by Company's wholly owned subsidiary THL Zinc Ventures Limited (THLZVL) on basis
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(WCL) in Liberia within the Iron Ore segment for evaluating recoverability for the Investments made in WCL through the wholly owned subsidiary
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of recoverable value of such mines.
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Bloom Fountain Limited d) Zinc International Mines in Gamsberg, Skorpion and Swatberg to evaluate Company's liability w.r.t. loan (secured by
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Recoverability of property plant and equipment, capital work in
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financial guarantee by Company) taken by Company's wholly owned
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progress and exploration intangible assets under development,
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subsidiary THL Zinc Ventures Limited on basis of recoverable value
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non-current investment and Recognition of Expected Credit
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of such mines, where impairment charge / (reversal) indicators were
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Loss on financial guarantee has been identified as a key audit
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identified, obtained and evaluated the valuation models used to determine
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matter due to:
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the recoverable amount by assessing the key assumptions used by
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• The significance of the carrying value of assets
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management, which included:
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being assessed.
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- Assessment of the implications of withdrawal of Company's license
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• The fact that the assessment of the recoverable amount of
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to operate the copper plant at Tuticorin. Assessed management's
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the Company's CGU involves significant judgements about
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position after unfavorable order of the Hon'ble Supreme Court against
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the future cash flow forecasts, scrap value / Depreciated
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re-opening of plant and its consequential impairment on PPE, CWIP
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Replacement Cost, price, production forecasts and the
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and other assets.
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discount rate that is applied.
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- Evaluated the valuation methodology adopted by the management i.e.
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• The withdrawal of Company's licenses to operate the copper
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determination of fair value loss less cost of disposal through various
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plant and unfavorable order of the Honorable Supreme Court
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scenarios in light of the facts and circumstances of the matter.
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of India, leading to an exceptional charge of ' 746 crore.
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- Assessed management's forecasting accuracy by comparing prior
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• Receipt of final partial arbitration award on DGH demand
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year forecasts to actual results and assessed the potential impact of
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arbitration which allowed exploration cost recovery and
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any variances.
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had an impact on IM tranche. Accordingly, impairment of
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- Corroborated the sales price assumptions used in the models
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' 550 crore was reversed on PPE, and ' 1,082 crore on
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against analyst consensus / geography of sales and assessed the
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investment in wholly owned subsidiary, Cairn India Holding Limited ("CIHL"), on account of increase in valuation of CIHL pursuant to award. However, the government has filed an
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reasonableness of costs.
- Compared the production forecasts used in the impairment tests with
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appeal with the High Court against the arbitration award.
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management's approved reserves and resources estimates,
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• The fact that in the previous year, Company's subsidiary WCL obtained the mining license and has started
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- Evaluated the grounds of appeal filed with High Court for partial arbitration award received by Company.
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the mining activity at Bomi mine in Liberia, leading to
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- Tested the weighted average cost of capital used to discount the
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reversal of impairment in the previous year. However, the
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impairment models.
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operations in the current year were not in line with the
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- Tested the mathematical accuracy of the models.
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projected performance.
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- Compared assumptions used by management in respect of price
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• The fact that financial guarantee given by Company
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forecast and ore grade against the consensus report and reserve and
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amounting to ' 8,168 crore (USD 980 mn) for loan taken
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resource report.
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by THLZVL has to be recognized as liability in books if
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- Assessed the production and profitability trend in the Zinc
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THLZV's assets (i.e. Zinc International Mines) do not exhibit
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International segment and compared the same with the projected
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recoverable value equal to or higher than loan amount.
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cash flows for reasonableness.
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The key judgements and estimates are centered on the assessment of Scrap / Depreciated Replacement Cost for the Copper plant, cash flow forecasts, impact of litigation w.r.t. partial arbitration award, discount rate assumptions, price,
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- Assessed reserves and resources estimation methods and policies and read reports provided by management's external reserves experts for the oil and gas assets of the Company;
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production forecasts and related disclosures as given in note 5
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- Assessed the competence, capability and objectivity of experts
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(Property, plant and equipment), 6A (Non-current investments)
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engaged by management; through understanding their relevant
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and 34 (Exceptional items) of the accompanying financial
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professional qualifications and experience.
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statements.
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- Engaged valuation experts to assist in performance of the
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above procedures.
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• Assessed the disclosures made by the Company in this regard and evaluated the considerations leading to disclosure of above impairment charge / (reversal) as exceptional items.
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Key audit matters
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How our audit addressed the key audit matter
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Recoverability of disputed trade receivables in Power segment (as described in note 3(c)(B)(ii) and 7 of the Standalone Ind AS financial statements)
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As of 31 March 2024 the value of disputed receivables in the
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Our audit procedures included the following:
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power segment aggregated to ' 673 crore.
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• Examined the underlying power purchase agreements.
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Due to short supply or non-supply of power due to transmission
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• Examined the relevant state regulatory commission, appellate tribunal and
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line constraints, order received from Orissa State Electricity Regulatory Commission (OERC) and disagreements over the
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court rulings.
• Obtained and assessed the model prepared by the management for
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quantification relating to aforementioned disputes or timing of the recovery of receivables, the recovery of said receivables
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computation of Expected credit loss on the disputed receivables, including
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are subject to increased risk. Some of these balances are also
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testing of key assumptions.
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subject to litigation. The risk is specifically related to receivables
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• Tested arithmetical accuracy of the models prepared by the management.
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from GRIDCO. These receivables include long outstanding
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• Obtained independent external lawyer confirmation from Legal Counsel of
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balances as well and are also subject to counter party credit risk
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the Company who is contesting the cases.
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and hence considered as a key audit matter.
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• Examined external legal opinions in respect of the merits of the case and assessed management’s position through discussions with the management’s in-house legal team to determine the basis of their conclusion.
• Assessed the competence and objectivity of the Company’s experts.
• Assessed the disclosures made by the Company in this regard.
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Claims and exposures relating to taxation and litigation (as described in note 3(c)(B)(i), 38D and 44 of the Standalone Ind AS financial statements)
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The Company is subject to a large number of tax and legal
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Our audit procedures included the following:-
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disputes, including developments in DGH Arbitration matter,
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• Obtained an understanding of the process of identification of claims,
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vendor arbitrations, income tax disallowances and various
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litigations and its classification as probable, possible or remote and
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indirect tax disputes which have been disclosed / provided for in
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identified key controls in the process. For selected controls we have
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the financial statements based on the facts and circumstances
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performed tests of controls.
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of each case.
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• Obtained the summary of Company’s legal and tax cases and assessed
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Taxation and litigation exposures have been identified as a key
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management’s position through discussions with the Legal Counsel, Head
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audit matter due to the complexities involved in these matters,
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of Tax and operational management, on both the probability of success in
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timescales involved for resolution and the potential financial impact of these on the financial statements. Further, significant
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significant cases and the magnitude of any potential loss.
• Obtained independent external lawyer confirmations from Legal Counsel
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management judgement is involved in assessing the exposure of each case and thus a higher risk involved on adequacy of
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of the Company who is contesting the cases.
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provision or disclosure of such cases.
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• Examined external legal opinions (where considered necessary) and other evidence to corroborate management’s assessment of the risk profile in respect of legal claims.
• Assessed the competence and objectivity of the Company’s experts.
• Engaged tax specialists to technically appraise the tax positions taken by management with respect to income tax and indirect tax matters.
• Assessed whether management assessment of similar cases is consistent across the divisions and subsidiaries or that differences in positions are adequately justified.
• Assessed whether management assessment of similar cases is consistent with the positions taken in earlier periods or that difference in positions are adequately justified.
• Assessed the relevant disclosures made within the financial statements to address accuracy of the amounts and whether they reflect the facts and circumstances of the respective tax and legal exposures and
the requirements of relevant accounting standards.
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Information Other than the 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 Annual report, but does not include the standalone Ind AS financial statements and our auditor’s report thereon.
Our opinion on the standalone Ind AS 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 standalone Ind AS financial statements, our responsibility is to read the other information and, in doing so, consider whether such other information is materially inconsistent with the financial statements or our knowledge obtained in 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. We have nothing to report in this regard.
Responsibilities of Management for the Standalone Ind AS 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 standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended.
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 the 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 standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone Ind AS 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.
Those Charged with Governance are also responsible for overseeing the Company’s financial reporting process.
Auditor's Responsibilities for the Audit of the Standalone Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone Ind AS 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 standalone Ind AS financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
1. Identify and assess the risks of material misstatement of the standalone Ind AS 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.
2. Evaluate the overall presentation, structure and
content of the standalone Ind AS financial statements, including the disclosures, and whether the standalone Ind AS financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
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 standalone Ind AS financial statements for the financial year ended 31 March 2024 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.
Other Matter
We did not audit the financial statements and other financial information, in respect of unincorporated joint operation, whose financial statements include total assets of ' 200 crore as at 31 March 2024, total revenues of ' 111 crore, net profit after tax of ' 28 crore and total comprehensive income of ' 28 crore for the year ended 31 March 2024, and net cash inflows of ' Nil for the year ended 31 March 2024. These financial statements and other financial information of the said unincorporated joint operation have not been audited by other auditors, whose unaudited financial statements, other unaudited financial information have been furnished to us by the management. Our opinion on the standalone Ind AS financial statements, in so far as it relates to the amounts and disclosures included in respect of these unincorporated joint operation and our report in terms of sub-sections (3) of Section 143 of the Act, in so far as it relates to the aforesaid unincorporated joint operation, is based solely on the
unaudited information furnished to us by the management.
Our opinion is not modified in respect of this matter.
Report 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 Act, we give in the "Annexure 1" a statement on the matters specified in paragraphs 3 and 4 of the Order.
2. As required by Section 143(3) of the Act, we report, to the extent applicable, 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 except for the matters stated in the paragraph (vi) below on reporting under Rule 11(g);
(c) The Balance Sheet, the Statement of Profit and Loss including the Statement of 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;
(d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified 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 31 March 2024 taken
on record by the Board of Directors, none of the directors is disqualified as on 31 March 2024 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 with reference to these standalone Ind AS financial statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure 2" to this report;
(g) In our opinion, the managerial remuneration for the year ended 31 March 2024 has been paid
/ provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act;
(h) The observation relating to the maintenance of accounts and other matters connected therewith are as stated in the paragraph (b) above on reporting under Section 143(3)(b) and paragraph i(vi) below on reporting under Rule 11(g).
(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, as amended in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements -Refer Note 38D and 44 to the standalone Ind AS financial statements;
ii. The Company did not have any long-term contracts including derivative contracts for which there were 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
iv. a) The management has represented
that, to the best of its knowledge and belief, as disclosed in the note 39H to the standalone Ind AS financial statements, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
b) The management has represented that, to the best of its knowledge and belief, as disclosed in the note 39H to the standalone Ind AS financial
statements, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and
c) Based on such audit procedures
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 misstatement.
v. The interim dividend declared and paid by the Company during the year and until the date of this audit report is in accordance with section 123 of the Act.
vi. Based on our examination which included test checks, the Company has used accounting software for maintaining its books of account 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 except that, audit trail feature is not enabled for direct changes to data in certain database tables when using system administrator access rights, as described
in note 41(d) to the financial statements. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with in respect of accounting software.
For S.R. Batliboi & Co. LLP
Chartered Accountants ICAI Firm Registration Number: 301003E/E300005
per Vikas Pansari
Partner
Place of Signature: Mumbai Membership Number: 093649 Date: 25 April 2024 UDIN: 24093649BKGPPX5245
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