We were engaged to audit of accompanying financial state¬
ments of IMP Powers Limited (“under liquidation”) (also
"hereinafter referred to as the Company"), which comprise the
standalone Balance Sheet as at 31st March, 2024, the
standalone Statement of Profit and Loss, the standalone
Cash Flow Statement, the standalone Statement of Changes
in Equity for the year ended, and a summary of the significant
accounting policies and other explanatory information
(hereinafter referred to as “the standalone financial state¬
ments”).
We do not express an opinion on the accompanying
standalone Financial Statements of the Company. Because of
the significance of the matters described in the Basis for Dis¬
claimer of Opinion section of our report, we have not been
able to obtain sufficient appropriate audit evidence to provide
a basis for an audit opinion on these Standalone Financial
Statements.
We draw attention to:
The NCLT, vide its order dated March 29, 2022 (“Insolvency
Commencement Date”) initiated the Corporate Insolvency
Resolution Process (“CIRP”) of the Company under the Code.
The said NCLT Order also records the appointment of Mr.
Mukesh Verma as the Interim Resolution Professional (“IRP”)
in accordance with Section 16 of the Code. Subsequently,
pursuant to the meeting of the Committee of Creditors (the
“CoC”) confirmed Mr. Mukesh Verma as the Resolution Pro¬
fessional (“RP”) for the Company. Upon the application filed
by CoC, the NCLT has approved the appointment of RP. Fur¬
ther resolution plans did not find requisite majority and upon
decision of the CoC on liquidation. Company went into Liqui¬
dation vide NCLT order dated 19th December, 2023
(“Liquidation Commencement Date”), pursuant to the said
liquidation order Hon'ble NCLT Ahmedabad Bench appointed
Mr. Ravindra Kumar Goyal as liquidator for the company.
In view of the on-going liquidation, the powers of Board of
Directors remain suspended and hence, as explained to us,
the powers of directs vests with RP/Liquidator. These audited
standalone financial statements are prepared by the Manage¬
ment of the Company and approved by the liquidator.
The financial statement for the year ended March 31, 2024
have been prepared on the basis of the trial balance for the
period ended March 31, 2024 which is on the basis of the
carrying balance of assets and liabilities as at March 31,
2023. Prior to the commencement of CIRP, the Board of Di¬
rectors, whose powers were subsequently suspended during
the CIRP, had oversight on the management of the affairs of
the company together with the KMPs for the year ended 31st
March 2023. The primary purpose of preparing the financial
statements is for
the compliance with the provisions of the Companies Act, 2013, the
rules and regulations framed thereunder (“Act”).
We have been informed by RP/Liquidator that certain information
including the minutes of meetings of the Committee of Creditors
(COC)/ Stakeholders Consultation Committee (SCC) and the outcome
of certain procedures carried out as a part of the CIRP are confidential
in nature and could not be shared. Accordingly, we are unable to Com¬
ment on the possible financial impact, presentation and disclosures, if
any, that may arise if we have been provided access to that infor¬
mation.
1. As per SA 510, para 10, read with SA 705 (Revised) as applicable,
when an auditor is unable to obtain sufficient appropriate audit
evidence regarding the opening balances, the auditor shall ex¬
press an opinion (qualified opinion or a disclaimer of opinion), as
appropriate, in accordance with SA 705 (Revised). Since we were
unable to obtain appropriate audit evidences pertaining to opening
balances to the extent as mentioned in subsequent paras and
other financial information, (where applicable), we express a dis¬
claimer of opinion.
2. The company has not carried out detailed assessment of the use¬
ful life of Company's assets as company is in progress of updating
fixed assets register, so assets wise useful life working is not pos¬
sible, hence depreciation has been adjusted, based on past histor¬
ical trend and not as per the notification to Schedule II of the Com¬
panies Act, 2013. We are unable to comment on the impact on
statement of Profit & Loss Account.
3. The company has not complied with Ind AS - 19, with respect to
employee benefits. Actuarial valuation certificate has not been
obtained for gratuity and other post-employment benefits.
4. The Company has, on the basis of their internal evaluation, valued
inventories for the period ended 31st March, 2024 at Rs.
9,85,22,485. In the view of current Liquidation Process followed
by liquidation process, and no production activities since long time
and in absence of valuation report and any supporting papers, we
are unable to comment on the realizability of the inventories.
5. For the period ended 31st March 2024, the company has Gross
Trade Receivables for Rs. 39,82,93,341 out of which no provision
for doubtful debt/ECL has been created in the previous financial
years. Further the said balances are aged more-than three years
hence, In the view of current Liquidation Process followed by liqui¬
dation process, and no production activities during review period
and in absence of valuation report and any supporting papers, we
are unable to comment on the carrying value of the said receiva¬
bles. Further in the absence of sufficient appropriate audit evi¬
dence we are unable to review said receivables and accordingly
necessary audit procedures couldn't be performed on the same.
6. In absence of independent bank confirmations for 4 current ac¬
counts, as required under SA 505 - External Balance Confirma¬
tion, having a book balance of Rs. 1,52,464.88 as on March 31,
2024 also non-availability of Bank account statements for 4 cur¬
rent accounts having a book balance of Rs. 1,52,464.88 as on
March 31, 2024 led to incomplete supporting for our audit opin¬
ion. Hence, we are unable to comment on the bank transactions
as well as the closing balances as appearing in the books of ac¬
counts for the said bank balances.
7. For the period ended 31st March 2024, the company has reported
“Other Current Assets” includes interest accrued/receivables Rs.
6,81,34,772, EMD/ Margin Money and Other Deposits Rs.
1,26,09,438 and Balance with Government Authorities
Rs. 49,98,779. The said balances are aged and are sub¬
ject to confirmations. In the view of current Liquidation
Process followed by liquidation process, and no produc¬
tion activities during review period and in absence of any
supporting papers, we are unable to comment on the car¬
rying value of the said balances of “Other Current Assets”.
Further in the absence of sufficient appropriate audit evi¬
dence we are unable to review said receivables and ac¬
cordingly necessary audit procedures couldn't be per¬
formed on the same.
8. Property, Plant & Equipment - The company has not car¬
ried out detailed assessment of the useful life of Compa¬
ny's assets as company is in progress of updating fixed
assets register, so assets wise useful life working is not
possible, hence depreciation has been adjusted, based on
past historical trend and not as per the notification to
Schedule II of the Companies Act, 2013. We are unable to
comment on the impact on statement of Profit & Loss
Account.
9. In respect of Finance cost we draw attention to note no.
47 of the standalone financial statement of the Company,
that it has not provided finance cost related with interest
expenses for the year ended on March 31, 2024 as the
account of the Company has been classified as Non¬
Performing Assets (NPA) by all lenders on financial facili¬
ties availed from them. Due to non-provision of the inter¬
est expenses, Loss for the year ended on March 31, 2024
is understated. Amount is not determinable.
10. The Company is in the process of reconciling direct/
indirect tax related balances as per books of account and
as per tax records. Accordingly, we are unable to comment
whether these balances are fairly stated in the books
11. Material Uncertainty related to Going Concern:
a) the company has accumulated losses and its net
worth has been eroded. The company has incurred net
loss during the current year and in the earlier year(s),
the company's current liabilities exceed its current
assets and the company has a high debt-equity ratio
as at 31st March, 2024, earnings per share is nega¬
tive.
b) Uncertainty in Going Concern due to initiation of liqui¬
dation vide order date 19th December, 2023 of
Hon'ble NCLT Ahmedabad Bench. Accordingly, audited
consolidated financial results of the Company for year
ended March 31, 2024 have been reviewed by Liqui¬
dator. The status of the Company being under liquida¬
tion and impact arising therefrom as such cannot be
commented upon by us. However, the standalone
financial statements are prepared on the going con¬
cern assumption.
Emphasis of Matter
1. We draw attention to Note 41 of the standalone Ind AS
financial statements, which states that Powers of the
Board of directors have been suspended on account of
ongoing liquidation process. These financial statements
are signed by the Liquidator Mr. Ravindra Kumar Goyal
confirming the accuracy and completeness of the financial
statements and thereafter taken on record by the Liquida-
tor. Liquidation process has commenced with effect from Decem¬
ber 19, 2023.
2. We draw attention to Note 42 of the standalone Ind AS financial
statements, that Liquidation Process under Section 33 of the
Insolvency and Bankruptcy Code, 2016 has been admitted
against the Company vide Honourable National Company Law
Tribunal, Ahmedabad bench vide Order dated 19.12.2023 and
Mr. Ravindra Kumar Goyal (having registration no. IBBI/ IPA-
001 / IP-P-02019/2020-2021/13098} has been appointed as
Liquidator of the company under section 34 of the Insolvency
and Bankruptcy Code, 2016 and Resolution Professional has
been discharged. Upon the order of Hon'ble NCLT, all the powers
of board of directors shall cease to have effect and shall be vest¬
ed in the Liquidator.
3. Balances of Trade Receivables, Trade Payables and Loans and
advances are subject to confirmations and reconciliations.
Our opinion is not modified in respect of these matters.
Key Audit Matters
Key audit matter is the matter that, in our professional judgment,
was of most significance in our audit of the standalone financial
statements of the current period. This matter was addressed in the
context of our audit of the standalone financial statements as a
whole, and in forming our opinion thereon, and we do not provide a
separate opinion on this matter.
Other Information
The Company's erstwhile Management, Resolution Professional and
Liquidator are responsible for the other information. The other infor¬
mation comprises the information related with Annual Report is not
yet compiled.
Our opinion on the financial statements does not cover the other
information and we do not express any form of assurance conclu¬
sion thereon.
In connection with our audit of the financial statements, our respon¬
sibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the audit or oth¬
er-wise appears to be materially misstated. If, based on the work
we have performed, we conclude that there is a material misstate¬
ment of this other information, we are required to report that fact.
We have nothing to report in this regard.
Liquidator's/ Management's responsibilities for the
standalone financial statement
The Statement has been prepared on the basis of the
standalone annual financial statements. The Liquidator/
Management of the Company are responsible for the mat¬
ters stated in section 134(5) of the Act with respect to
these standalone Ind AS financial Statements that gives a
true and fair view of the financial position , financial per¬
formance including other comprehensive income, cash
flows and changes in equity of the Company and other
financial information in accordance with the applicable
accounting standards prescribed under Section 133 of the
Act, read with relevant rules issued thereunder and other
accounting principles generally accepted in India. This
responsibility also includes maintenance of audit trail and
adequate accounting records in accordance with the provi¬
sions of the Act for safeguarding of the assets of the Com¬
pany 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, implementa¬
tion and maintenance of adequate internal financial con¬
trols, that were operating effectively for ensuring the accu¬
racy and completeness of the accounting records, relevant
to the preparation and presentation of the Statement that
give a true and fair view and are free from material mis¬
statement, whether due to fraud or error.
In preparing the standalone financial statements, Liquida-
tor/management is responsible for assessing the Compa¬
ny’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 Liquidator/
management either intends to liquidate the Company or to
cease operations, or has no realistic alternative but to do
so. Liquidator/ management are also responsible for over¬
seeing the Company’s financial reporting process.
Auditor's Responsibilities for the Audit of the Standalone
Financial Results
Our objectives are to obtain reasonable assurance about
whether the Statement as a whole is 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 guaran¬
tee that an audit conducted in accordance with SAs will
always detect a material misstatement when it exists. Mis¬
statements can arise from fraud or error and are consid¬
ered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic deci¬
sions of users taken on the basis of the Statement.
As part of an audit in accordance with SAs, we exercise
professional judgment and maintain professional skepti¬
cism throughout the audit. We also:
? Identify and assess the risks of material misstatement
of the Statement, whether due to fraud or error, design
and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropri¬
ate to provide a basis for our opinion. The risk of not de¬
tecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may in¬
volve 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 cir¬
cumstances. Under Section 143(3) (i) of the Act, we are also re¬
sponsible 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 con¬
trols.
? Evaluate the appropriateness of accounting policies used and
the reasonableness of accounting estimates and related disclo¬
sures made by the Liquidator/Management.
? Conclude on the appropriateness of the Liquidators"/ Manage¬
ments" 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 con¬
clude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the
financial results or, if such disclosures are inadequate, to modify
our opinion. Our conclusions are based on the audit evidence ob¬
tained 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
Statement, including the disclosures, and whether the Statement
represents 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 state¬
ment that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all rela¬
tionships and other matters that may reasonably be thought to bear
on our independence, and where applicable, related safeguards.
Report on Other Legal and Regulatory Requirements
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 para¬
graphs 3 and 4 of the Order, to the extent applicable.
As required by Section 143(3) of the Act, we report that:
1. We have sought and except for effects (to the extent ascer¬
tained) of the matters described in the basis of qualified opinion
paragraph, obtained all the information and explanations which to
the best of our knowledge and belief were necessary for the pur¬
poses of our audit.
2. Except for the effects (to the extent ascertained) of the matter
described in our basis of opinion paragraph, in our opinion, proper
books of account as required by law have been kept by the Compa¬
ny so far as it appears from our examination of those books and
proper returns adequate for the purposes of our audit.
3. The Balance Sheet, the Statement of Profit and Loss, and the
Cash Flow Statement dealt with by this Report are in agreement
with the books of account.
4. In our opinion, the aforesaid standalone financial statements
comply with the Accounting Standards specified under Section 133
of the Act, read with Rule 7 of the Companies (Accounts) Rules,
2014.
5. Pursuant to the Liquidation Order dated December 19, 2023 by
Hon'ble NCLT, the erstwhile Directors of the Company are deemed
to have Suspended/resigned/vacated the office. Hence, none of
the erstwhile Directors continue as Members of the Board.
6. The qualification relating to the maintenance of accounts and
other matters connected therewith are as stated in the Basis for
opinion paragraph
7. With respect to the adequacy of the internal financial controls
over financial reporting of the Company and the operating effec¬
tiveness of such controls, refer to our separate Report in
“Annexure B”.
8. With respect to the other matters to be included in the Auditor's
Report in accordance with Rule 11 of the Companies (Audit and
Auditors) Rules, 2014, in our opinion and to the best of our infor¬
mation and according to the explanations given to us:
? The Company has disclosed the impact of pending litigations on
its financial position in its financial statements- Refer Note
No.34.1 in its financial position in its standalone Ind AS financial
statements
? The Company did not have any long-term contracts including
derivative contracts for which there were any material foreseeable
losses.
? An amount of Rs. 1,33,831 which was required to be trans¬
ferred to the Investor Education and Protection Fund by the Com¬
pany which has not been transferred.
For SHYAM GUPTA & ASSOCIATES.,
Chartered Accountants
Firm Registration Number: 0007309C
CA Nirav Saiya
Partner
Membership No. 179919
Date: 23-05-2024
Place: Mumbai
UDIN: 24179919BKGWSX5581
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