1. We have audited the accompanying standalone financial statements of Delta Corp Limited (‘the Company’), which comprise the Balance Sheet as at 31st March 2024, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flow and the Statement of Changes in Equity for the year then ended, and notes to the standalone financial statements, including material accounting policy information and other explanatory information.
2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone 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 (‘Ind AS’) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March 2024, and its profit (including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.
Basis for Opinion
3. We conducted our audit in accordance with the Standards on Auditing 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 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 Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
4. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone 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.
5. We have determined the matters described below to be the key audit matters to be communicated in our report.
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Key audit matters
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How our audit addressed the key audit matter
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Contingent liability for Goods and Service Tax demands
(Refer note 1C(l) for the accounting policy on provisions and contingent liabilities and note 33 of the standalone financial statements for contingent liabilities)
The Company along with three subsidiary companies had received show cause notices from the Directorate General of GST Intelligence for alleged short payment of Goods and Service Tax (GST) aggregating ' 23,207.30 Crores for periods from 1st July 2017 to 30th November 2022.
The amounts claimed under the above notices are inter alia based on the gross bet value/face value of all games played at the casinos/online platform and short payment of GST on consideration received towards entry to the casino/ gross rake amount collected from online platform during the above-mentioned period. This matter has been an industry issue and multiple representations have been made by the industry participants to the Government in this regard. The Company / subsidiary company have filed Write petitions and have obtained Stay order from respective High Courts.
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Our audit procedures included, but were not limited, to
the following:
• Obtained an understanding of the management’s process for updating the status of the GST matter, assessment of accounting treatment in accordance with Ind AS 37.
• Evaluated the design and tested the operating effectiveness of key controls around above process.
• Obtained an understanding of the GST matters pending against the Company and discussed the key developments with the management. We also tested the independence, objectivity and competence of management experts involved in the matter.
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Key audit matters
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How our audit addressed the key audit matter
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Total demand from above matters on the Company
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•
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Obtained direct confirmation from the external legal
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aggregates to ' 11,767.81 Crores, has been disclosed as
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counsel handling GST litigation with respect to the
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contingent liability based on management’s assessment
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legal determination of the liability arising from such
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in accordance with external legal advice obtained by the
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litigation, and assessment of resulting contingent
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management.
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liability disclosures in the financial statements in
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The amounts involved are material and the application of
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accordance with requirements of Ind AS 37.
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accounting principles, as given under Ind AS 37, in order to
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•
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Obtained and reviewed the necessary evidence
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determine the amount to be recognised as a liability or to be
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which includes correspondence with the external
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disclosed as a contingent liability, is inherently subjective,
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experts, show cause notices (SCN), responses to
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and needs careful evaluation and judgement to be applied
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SCN, Writ petition filled by the Company to support the
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by the management.
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decisions and rationale for management’s conclusion.
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Considering the degree of judgement, significance of the amounts involved, inherent high estimation uncertainty and
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Involved our tax experts to assess the matter and the
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reliance on experts, and unexpected adverse outcomes could significantly impact the financial position of the Company, this matter has been identified as key audit
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responses received from the management experts to ensure that the conclusions reached are supported by sufficient legal rational.
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matter for the current year audit.
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Evaluated the adequacy of the disclosure regarding
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In addition to the above, the contingent liability disclosures
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the significant litigations of the Company in the
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made in the accompanying standalone financial statements with respect to above matter have also been considered as fundamental to user’s understanding of such financial statements.
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standalone financial statements.
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Revenue recognition
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Our audit procedures included, but were not limited, to
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(Refer note 1C(a) for the accounting policy on revenue
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the following:
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recognition, note 26 of the standalone financial statement for revenue recognized during the year and note 53 for disaggregate revenue information under Ind AS 115)
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Obtained and updated our understanding of the revenue business process.
Evaluated the design and tested the operating
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The Company has recognized ' 635.66 Crores as revenue
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effectiveness of key controls over the recognition and
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net of Goods and Service Tax (GST) from physical casinos
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measurement of revenue. Involved our information
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and hospitality business which requires processing of a
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technology specialists to test information technology
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large number of transactions each day. Further, significant quantum of sale transactions in hospitality and casino
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related general controls.
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business, get settled in cash which requires the auditor to
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Conducted cash counts at the year-end as well as
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put significant additional effort and procedures to obtain
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during the quarterly reviews for the locations selected
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comfort on those transactions.
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on sample basis.
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Further, with effect from 01st October 2023, the method for
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For samples selected during the year and samples
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computing GST liability on sales from Physical Casinos was
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selected from the period before and after year end,
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changed wherein the GST liability is payable on purchase
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tested supporting documents for revenue recognition
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of chips / tokens/ coins or tickets for use in casino which in
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including tracing of customers’ cash deposits to bank
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turn have consequential impact on net revenue.
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statements.
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Standards on Auditing prescribe a presumed risk of fraud in
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Tested, on a sample basis, the appropriateness of
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revenue recognition that revenue may be misstated through
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journal entries impacting revenue, as well as other
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improper recognition. Given this inherent risk, we identified
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adjustments made in the preparation of the financial
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the occurrence of revenue as a significant risk of material
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statements with respect to revenue recognition
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misstatement.
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including specific journals posted manually directly
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Considering the amounts involved, large number of transactions and significant management judgement involved, revenue recognition was considered as a key audit matter for the current year audit.
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to revenue including applying new method of computation of GST and discharge of GST liability.
Evaluated the appropriateness of disclosures made
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in the financial statements with respect to revenue
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recognized during the year as required by applicable
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accounting standards.
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Key audit matters
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How our audit addressed the key audit matter
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Impairment testing of investments in subsidiaries:
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Our procedures included, but were not limited to the
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(Refer note 1C(f) for the accounting policy on
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following:
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Investment in subsidiaries and associate and note 3 of
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Obtained an understanding of management’s process
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the standalone financial statements for Investments)
As at 31st March 2024, the carrying amount of investment
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and evaluated the design and tested the operating effectiveness of controls around identification of indicators of impairment under Ind AS, and around
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in two operating subsidiary is ' 640.90 Crores.
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valuation of the business of such subsidiaries to
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Management has considered that the losses suffered by such subsidiaries indicate possible impairment in
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determine recoverable value of the said investment;
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the carrying values of these assets. During the year,
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Assessed the appropriateness of methodology
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these subsidiaries were also impacted by changes
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and valuation model used by the management to estimate the recoverable value of investment in such
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in the method for computing Goods and Service Tax (‘GST’) liability and rate of GST liability on sales from
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subsidiaries;
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physical casinos and online gaming owing to the GST
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Assessed the professional competence, objectivity
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amendments applicable from 01st October 2023.
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and capabilities of the valuation specialist engaged
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Accordingly, the management has performed impairment
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by the management;
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assessment and has estimated the recoverable amount
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Obtained the management projections with regard to
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of its investment in such subsidiaries using ‘Discounted
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recoverable value and agreed the cash flow forecasts
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Cash Flow valuation model’.
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for subsidiaries used in the recoverability working to
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As per such assessment done by the management, no
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the projections approved by the Board of Directors of
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further adjustments are required to the carrying value
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the respective subsidiary company/ Company as the
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of the investments in such subsidiaries as at 31st March
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case maybe.
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2024.
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Assessed the reasonableness of key assumptions
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The assumptions applied by the management in
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used in the cash flow projections such as revenue
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determining the recoverable value include discount
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and profit growth rates, operating margins based
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rates, cash flow projections over five years, growth
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on historical trends, current market conditions post
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rate amongst others which are dependent on future
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the implementation of GST amendments, future
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market and economic conditions. Changes in these
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plans of the Company and also compared these
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assumptions could lead to an impairment to the carrying
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assumptions with industry and economic forecasts.
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value of these investments.
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Further, we assessed the reasonability of discounting rates considered by the management in arriving at
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Considering the materiality of the carrying value of the amounts involved, the significant management
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recoverable values.
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judgement required in estimating the recoverable
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With respect to GST matter, basis our procedures
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value of these investments and such estimates and
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performed as mentioned in separate KAM above
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judgements being inherently subjective, this matter has
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on "Contingent liability for Goods and Service Tax demands”, we assessed whether the cash flow
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been identified as a key audit matter for the current year
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audit.
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projections given by the management are appropriate.
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Involved our internal auditor’s valuation specialists to validate the valuation assumptions and methodology considered by the management while computing recoverable amount basis the amount involved. Also, performed sensitivity analysis on the key assumptions mentioned above.
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Evaluated the appropriateness of disclosures made in the financial statement with respect to indicators of impairment, results of impairment testing, assumptions and methods used by Management in determining the recoverable value.;
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Information other than the Financial Statements and
Auditor’s Report thereon
6. The Company’s Board of Directors are responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the standalone financial statements and our auditor’s report thereon. The Annual Report is expected to be made available to us after the date of this auditor’s report.
Our opinion on the standalone financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.
In connection with our audit of the standalone 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 standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
When we read the Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.
Responsibilities of Management andThose Charged with
Governance for the Standalone Financial Statements
7. The accompanying standalone financial statements have been approved by the Company’s Board of Directors. The Company’s Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation and presentation of these standalone financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS specified under section 133 of the Act 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 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.
8. In preparing the financial statements, the Board of Directors 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.
9. The Board of Directors is also responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the
Standalone Financial Statements
10. 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 Standards 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.
11. As part of an audit in accordance with Standards on Auditing, specified under section 143(10) of the Act we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to
those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls 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 Board of Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the 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; and
• 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.
12. 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.
13. 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.
14. 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
15. As required by section 197(16) of the Act based on our audit, we report that the Company has paid remuneration to its directors during the year in accordance with the provisions of and limits laid down under section 197 read with Schedule V to the Act.
16. As required by the Companies (Auditor’s Report) Order, 2020 (‘the Order’) issued by the Central Government of India in terms of section 143(11) 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.
17. Further to our comments in Annexure A, as required by section 143(3) of the Act based on our audit, 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 purpose of our audit of the accompanying standalone financial statements;
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 paragraph 17(i)(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (as amended);
c) The standalone financial statements dealt with by this report are in agreement with the books of account;
d) In our opinion, the aforesaid standalone financial statements comply with Ind AS specified under section 133 of the Act;
e) The matter described in paragraph 5 under the "key audit matters section” w.r.t. contingent liability for goods and services tax demands, in our opinion, may have an adverse effect on the functioning of the Company;
f) On the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March 2024 from being appointed as a director in terms of section 164(2) of the Act;
g) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in paragraph 17(b) above on reporting under section 143(3)(b) of the Act and paragraph 17(i)(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (as amended);
h) With respect to the adequacy of the internal financial controls with reference to financial statements of the Company as on 31st March 2024 and the operating effectiveness of such controls, refer to our separate report in Annexure B wherein we have expressed an unmodified opinion; and
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, as detailed in note 33 to the standalone financial statements, has disclosed the impact of pending litigations on its financial position as at 31st March 2024.;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses as at 31st March 2024.;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended 31st March 2024;
iv. a. The management has represented
that, to the best of its knowledge and belief, as disclosed in note 56(v) to the standalone financial statements, no funds have been advanced or loaned or invested (either from borrowed funds or securities premium or any other sources or kind of funds) by the Company to or in any person(s) or entity(ies), including foreign entities (‘the 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 (‘the Ultimate Beneficiaries’) or provide any guarantee, security or the like on behalf the Ultimate Beneficiaries;
b. The management has represented that, to the best of its knowledge and
belief, as disclosed in note 56(vi) to the standalone financial statements, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities (‘the 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 as considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the management representations under sub-clauses (a) and (b) above contain any material misstatement.
a. The final dividend paid by the
Company during the year ended 31st March 2024 in respect of such dividend declared for the previous year is in accordance with section 123 of the Act to the extent it applies to payment of dividend.
b. As stated in note 42(b) to the accompanying standalone financial statements, the Board of Directors of the Company have proposed final dividend for the year ended 31st March 2024 which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend declared is in accordance with section 123 of the Act to the extent it applies to declaration of dividend.
vi. As stated in Note 57 to the standalone financial statements, the Company, in respect of financial year commencing on 1st April 2023, has used accounting software for maintaining its books of account which does not have feature of recording audit trail (edit log) facility.
For Walker Chandiok & Co LLP
Chartered Accountants
Firm’s Registration No.: 001076N/N500013
Khushroo B. Panthaky Partner
Membership No.: 042423 UDIN: 24042423B KC M N G6645
Place: Mumbai Date: 7th May, 2024
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