We were engaged to audit the accompanying financial statements of Indosolar
Limited, which comprise the Balance Sheet as at March 31, 2022, and the Statement
of Profit and Loss (including other comprehensive income), the Statement of cash
flows and the statement of changes in equity for the year then ended, and notes to
accounts, including a summary of significant accounting policies and other
explanatory information (herein after referred to as "Financial Statements").
We do not express an opinion on the Financial Statements. Because of the
significance of the matters described in the Basis for Disclaimer of Opinion paragraph,
we have not been able to obtain sufficient appropriate audit evidence to provide a
basis for an audit opinion.
Basis for Disclaimer of Opinion
1. Inventory records were not provided to us for checking. These were not physically
verified by us.
Accordingly, we were unable to satisfy ourselves by alternative means concerning
the inventory quantities held at March 31, 2022 and valuation thereof.
2. Gross block and net block of fixed assets as per books are inconsistent with data
provided in Fixed Asset register. As a result of this, we are unable to verify the
written down value of fixed assets sold during the year and resultant Profit/Loss.
There is a difference of Rs. 283.80 lakh in net fixed assets in the audited balance
sheet for the year ended 31st March 2018 and books of accounts produced before
us.
3. We were unable to confirm or verify balances of accounts payables included in
the Balance Sheet of total amount of Rs. 8,606.58 lakh respectively as at March
31, 2022.
4. Due to non - availability of certificates against Fixed Deposit in Union Bank of
India, we were unable to confirm the Fixed Deposit balance with the balance
appearing in the books of accounts. As per Books of accounts balance of Fixed
Deposit with Union bank of India was Rs. 427.86 Lakh.
5. There was a mismatch in the balance of Security Deposit with Noida Power
Company Limited appearing in Books of accounts with that of electricity bill made
available to us. As per books balance was Rs. 103.17 Lakh and as per bill Rs.
104.44 lakh.
6. Interest on borrowing in respect of facilities from Corporation bank, Union bank
of India and Bank of Baroda has not been booked in the books of account as the
company was under moratorium period upto March, 2022. Being the company
was under CIRP there is difference in total interest/ penal interest / expenses /
other charges of approximately Rs. 1,01,028.27 lakh which pertain to this year or
earlier years between claims admitted by Resolution Professional and balances in
books as on 16.04.2019. Subsequent to the year-end, on April 21, 2022, the NCLT
has approved the terms of the Resolution Plan submitted by Waaree Energies
Limited ("Waaree"), which provides, inter alia, the acquisition of the Company by
Waaree. The impact of the same has not been taken during the year.
7. The Company (being an EOU) has not been able to meet its commitment under
the Foreign Trade Policy on the basis of which the Company imported certain raw
material, stores and spares and machineries without payment of custom duty. As
on 31st March, 2022 the Company's NFE is positive by Rs. 17,693.23 lakh without
considering the import value of amortization of Line-C. However, after
amortisation of value of line C NFE becomes negative by Rs 31,213.21 lakh. The
company is not able to achieve positive NFE during the stipulated time; the
company would be liable to duties and penalties payable in accordance with
Notification No. 52/2003 Cus. Dated 31.03.2003. Presently we are unable to
assess upon the possible impact if any on the accompanying statement.
8. In the matter of Company's claim for eligibility of capital subsidy of Rs. 300 Crores
under SIP scheme of Govt. of India. The uncertainty exists with regard to its
quantum and receipt of claim pending its appraisal by Department of Electronics
& Information Technology (DEIT). In the absence of the reasonable assurance,
the management has not recognized the claim.
9. Company was under CIRP as explained in Note 34 of Notes to the Financial
Statements. Subsequent to the year-end, on April 21, 2022, the NCLT has
approved the terms of the Resolution Plan submitted by Waaree Energies Limited
("Waaree"), which provides, inter alia, the acquisition of the Company by Waaree.
The Board of Directors of the Company has been reconstituted on May 18, 2022
with nominees of Waaree being inducted as member of the Board.
10. The Non-adherence of IND-AS as explained in Note 42 of Notes to the Financial
Statements.
11. Referring to the approved Resolution plan by the NCLT order dated 21st April, 2022.
"Upon approval of the Resolution Plan by the NCLT, all non-compliances, breaches and
defaults of Indosolar for the period prior to the Effective Date (including but not limited
to those relating to tax), shall be deemed to be waived by the concerned Governmental
Authorities. Immunity shall be deemed to have been granted to Indosolar from all
proceedings and penalties under all Applicable Laws for any non-compliance for the
period prior to the Effective Date and no interest/penal implications shall arise due to
such non-compliance /default/breach prior to the Effective Date or even accruing after
the Effective Date, but arising out of matters or actions arising prior to the Effective
Date".
The approval of the Resolution Plan subsequent to 31 March 2022 has been considered
as a non-adjusting event for the purpose of financial statements for the year ended 31
March 2022. Pursuant to such approval of the Resolution Plan, the financial statements
for the year ended 31 March 2022 have been prepared on a going concern basis. As
required by Ind AS 10, 'Events after Balance Sheet date', the possible financial effects of
this non-adjusting event has been mentioned under Note 34.
Emphasis of Matter
We draw attention to the following matters:
1. Note No 10 of the financial statements regarding inventories. Closing stock of
stores, spares and other consumables has been taken as NIL.
2. Note 34 regarding verification and admission of claim by RP. As per the IBC
code the RP has to receive, collate and reconcile all the claims submitted by the
creditors of the company. The RP has verified and admitted the claims submitted by
the creditors against the company as per the Code.
Accounting impact in the books of accounts has not been made in respect to excess,
short or non-receipts of claim or liabilities for financial and operational creditor as the
Resolution plan has been approved during the subsequent year on 21st April, 2022.
3. As per "Indian Accounting Standard 36", "Impairment of Asset", if the carrying
amount of the asset is more than recoverable amount then asset need to be impaired
and as per "Indian Accounting Standard 109" on financial assets through expected
credit loss method basis these provisions we were required to seek for any
impairment obligations from management, since the Company was under the process
CIRP the management determined value in use as on 31st March 2022 by taking
valuation report of April 2019 and taking depreciation for the intervening period thus
the property, plant & equipment has been impaired by Rs.10,747.88 Lakh during the
year.
Non-Recoverable security deposits and balances with government authorities by Rs.
11.48 Lakh and Rs. 46.57 Lakh respectively. Provision for doubtful debts has been
created by Rs. 100.92 Lakh against advances to suppliers, Capital Advance and trade
receivables.
4. Note 34 and Note 43(a)(i) of the financial statements regarding approval of
resolution plan by the NCLT on 21st April 2022 consequently, preparation of financial
statements as on 31st March, 2022 on going concern basis.
Key Audit Matters
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.
Except for the matters described in the Basis for disclaimer of opinion and Material
uncertainty related to going concern, we could not determine whether there are other
key audit matters or not to be communicate in our report.
Information other than financial statements and Auditor's Report thereon
The Management of the company is responsible for the preparation of the other
information. We have not obtained the other information comprises of the Financial or
non-financial information (other than financial statements and the auditor's report
thereon) included in an entity's annual report.
Our opinion on the financial statements does not cover the other information and we do
not express any form of assurance/conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements, or our knowledge obtained during the course
of our audit or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information obtained prior to the
date of this auditor's report, we conclude that there is a material misstatement of this
other information, are required to report that fact. We have nothing to report in this
regard.
Management and Those Charged with Governance's Responsibility for the
Financial Statements
The Management of the company is responsible for the matters stated in section
134(5) of the Companies Act 2013 ("the Act") with respect to the preparation of
these standalone financial statements that give a true and fair view of the financial
position, financial performance and cash flows of the Company in accordance with
the accounting principles generally accepted in India, including the Accounting
Standards specified under section 133 of the Act, read with Companies (Accounts)
Rules, 2015.
This responsibility also includes maintenance of adequate accounting records in
accordance with the provisions of the Act for safeguarding the assets of the Company
and for preventing and detecting frauds and other irregularities; selection and
application of appropriate accounting policies; making judgments and estimates that
are reasonable and prudent; and design, implementation and maintenance of
adequate internal financial controls that were operating for ensuring accuracy and
completeness of the accounting records relevant to the preparation and presentation
of the financial statements that give a true and fair view and are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the
Company's ability to continue as 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.
Auditor's Responsibility
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 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.
As part of an audit in accordance with Standards on Auditing, 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 explaining our opinion
on whether the Company has adequate internal financial controls system in
place and the operating effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by
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.
• Evaluate the overall presentation, structure and content of the financial
statements, including the disclosures, and whether the financial statements
represent the underlying transactions and events in a manner that achieves
fair presentation.
Materiality is the magnitude of misstatements in the financial statements that,
individually or in aggregate, makes it probable that the economic decisions of a
reasonably knowledgeable user of the financial statements may be influenced. We
consider quantitative materiality and qualitative factors in (i) planning the scope of
our audit work and in evaluating the results of our work; and (ii) to evaluate the
effect of any identified misstatements in the financial statements.
We communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify during our
audit.
We also provide those charged with governance with a statement that we have
complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably be
thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine
those matters that were of most significance in the audit of the financial statements
of the current period and are therefore the key audit matters. We describe these
matters in our auditor's report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because the adverse consequences
of doing so would reasonably be expected to outweigh the public interest benefits of
such communication.
Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditor's Report) Order, 2020 ("the Order") issued
by the Central Government of India in terms of sub-section (11) of section 143 of
the Act, we give in the Annexure a statement on the matters Specified in paragraphs
3 and 4 of the Order.
As required by section 143 (3) of the Act, we report that:
a) As described in the Basis for Disclaimer of Opinion paragraph, we sought but were
unable to obtain all the information and explanations which to the best of our
knowledge and belief were necessary for the purpose of our audit;
b) Due to the possible effects of the matter described in the Basis for Disclaimer of
Opinion paragraph, we are unable to state whether proper books of account as
required by law have been kept by the Company so far as appears from our
examination of those books;
c) Due to the possible effects of the matter described in the Basis for Disclaimer of
Opinion paragraph, we are unable to state whether the Balance Sheet, Statement
of Profit and Loss and Cash Flow Statement dealt with by this Report are in
agreement with the books of account;
d) Due to the possible effects of the matter described in the Basis for Disclaimer of
Opinion paragraph, we are unable to state whether the aforesaid financial
statements comply with the Accounting Standards under Section 133 of the Act
read with the relevant rules issued there under;
e) The matter described in the Basis for Disclaimer of Opinion paragraph above, in
our opinion, may have an adverse effect on the functioning of the Company.
f) No written representations has been received from the suspended directors as on
March 31, 2022, and not taken on record by the suspended Board of Directors
regarding disqualification of directors as on March 31, 2022, from being appointed
as a director in terms of section 164(2) of the Act. So we are unable to comment
upon this.
g) Provisions of ESI and PF have not been complied during the year.
h) The company has not complied with the following provisions of Companies Act
2013 and Securities and Exchange Board of India (Listing Obligations and
Disclosure Requirements) Regulations, 2015
i. MSME Form-1, Active INC - 22A and Forms for directors' resignations.
ii. Appointment of internal auditor (Sec 138 of the Companies Act, 2013).
iii. Constitution of Audit Committee, Nomination and Remuneration
Committee, Stakeholders Relationship Committee, Risk management
Committee and Share transfer Committee. (Sec 177 and 178 of the
Companies Act, 2013 and Regulation 18, 19, 20, 21 and 40 of SEBI
(LODR).
iv. Secretarial audit for the year 2021-22 (Regulation 24A and Sec 204 of the
Companies Act, 2013.)
v. Limited Review for FY 2021-22.
Further, in the absence of Secretarial Audit we cannot comment on detailed
compliances of Companies Act provisions and Regulations of Securities and
Exchange Board of India.
i) The reservation relating to the maintenance of accounts and other matters
connected therewith are as stated in the Basis for Disclaimer of Opinion paragraph
above.
j) With respect to the adequacy of the internal financial controls over financial
reporting of the company and the operating effectiveness of such controls, refer
to our separate report in "Annexure B". Our report expresses a disclaimer opinion
on the adequacy and the operating effectiveness of the company's internal
financial controls over financial reporting; and internal audit has also not been
taken placed by company.
k) With respect to the other matters to be included in the Auditors' Report in
accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in
our opinion and to the best of our information and according to the explanations
given to us:
i. Due to the possible effects of the matter described in the Basis for
Disclaimer of Opinion paragraph, we are unable to state whether the
Company has disclosed the impact of pending litigations on its financial
position in its financial statements;
ii. Due to the possible effects of the matter described in the Basis for
Disclaimer of Opinion paragraph, we are unable to state whether the
Company has made provision, as required under the applicable law or
accounting standards, for material foreseeable losses, if any, on long term
contracts including derivative contracts;
iii. There is no amount required to be transferred, to the Investor Education
and Protection Fund by the Company.
For A.K.G. & ASSOCIATES
Chartered Accountants
FRN 002688N
Place: Delhi CA. Harvinder Singh
Date: 05th September, 2022 Partner
M. No.087889
UDIN: 22087889AQYWFL2418
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