The Members of ITI Limited
Report on Standalone Financial Statements of ITI Limited
Disclaimer of Opinion
We were engaged to audit the accompanying Standalone Financial Statements(‘SFS’) of ITI Limited (“The Company”) which comprise the Balance Sheet as at
March 31,2025, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flows, Statement of Changes in Equity for
the year then ended and a summary of material accounting policies and other explanatory information.
We do not express any opinion on the accompanying SFS of the Company. Because of the significance of the matters described in the ‘Basis for Disclaimer 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 SFS.
Basis for Disclaimer of Opinion
1. The SFS of the Company for the year ended March 31, 2024, as approved by the Board of Directors on May 28, 2024, was reported upon by us vide our audit report issued on July 31, 2024. Vide this report, we had issued a Disclaimer of Opinion on the said SFS due to the significance of the matters described in the ‘Basis for disclaimer of opinion’ section of the said report and our inability to quantify/ascertain the impact of matters covered therein on the SFS for the said financial year. Those comments and observations may continue to impact the SFS for the current year.
2. The Company did not have adequate internal financial controls with reference to its financial statements as required by section 134 of the Companies Act, 2013, which may in turn result in errors and misstatements therein which may remain undetected and have a material impact thereof. This includes non-establishment of a sound information systems security policy and general controls interalia with adequate controls, safeguards and oversight over access, use of passwords, change management, modifications/edits made to data through the application or to the database/backend changes, with adequate audit trails and periodical reviews of the same.
3. The Company has recognized the sale of a portion of its land and an old building at Electronic City Bengaluru to Centre for Development of Telematics (C-Dot’) at an agreed consideration of Rs. 20,000 lakhs and the consequent profit on sale thereof amounting to Rs. 10,919 lakhs, pursuant to an agreement to sell dated February 17, 2025, and approvals from Department of Telecommunications, Government of India for the sale. Pending demarcation of the relevant property by the Karnataka Industrial Areas Development Board (‘KIADB’) as at March 31, 2025, subsequent confirmation of demarcation by Electronic City Industrial Township Authority, receipt of balance consideration of Rs.10,000 lakhs, execution of sale deed in favor of the buyer and the consequent transfer of control over the said property to the latter, the derecognition criteria laid down in IndAS-16 ‘Property, Plant and Equipment’ (‘PPE’) is not satisfied. Had the Company not recognized the said sale, Assets held for sale’ would have reflected a balance of Rs. 9,081 lakhs, ‘Other current assets’ would have been lower Rs. 4,152 lakhs (after adjusting other receivables by the Company, simultaneously to be settled without payment), ‘Loss for the year’ and ‘Total comprehensive income (loss)’ would have been more by Rs. 10,919 lakhs, Current Liabilities and provisions would have been more by Rs. 2,280 lakhs (after adjusting other dues by the Company, simultaneously to be settled without payment), debit balance in Profit and Loss account would have been more by Rs. 10,919 lakhs, ‘Earnings per share’ would be lower at Rs. (3.19) as against the reported amount of Rs. (2.43)
4. We had in paragraph 7 under the head ‘Basis for Disclaimer of Opinion’ vide our report dated July 31,2024, on the standalone financial statements for the financial year ended March 31, 2024, reported that assets though put to use in prior years aggregating to Rs. 11,620.82 lakhs had been held in ‘Capital Work in Progress’ and not capitalized as PPE. During the year, the Company has capitalized as PPE/ Investment Property(‘IP’), the new data center to an extent of Rs. 2,679.92 lakhs, NIFT building of Rs. 6,582.06 lakhs and other assets to an extent of Rs. 2,355.16 lakhs, all held in Capital Work in Progress as at April 01, 2024. Since this was a ‘Prior period error’ within the meaning of Ind AS 8 - Accounting Policies, Changes in Accounting estimates and Errors’, the Company ought to have restated its prior year’s figures including the additional charge for depreciation relating to the period up to March 31, 2023, and for the year ended March 31, 2024. For want of full information, we are unable to prepare/quantify the effect of the restated balance sheet as at April 01,2023, all affected figures for the year ended March 31,2024, and the charge for depreciation for year under review/loss for the year/earnings per share and consequent disclosures.
5. The Company is in the process of reconciling the value of land as per the asset register with the respective title deeds/ documents across various locations of the Company. Company has an independent list of land owned at various locations, wherein the respective title deeds are being corelated to the records maintained by civil engineering department. We have relied on the documents furnished for verification of title deeds and do not express any independent opinion on the same. Further, the auditors of Naini (M/s Vinay Kumar & Co) and Palakkad (M/s Balaram & Nandakumar) units have commented on the limitations in respect of title deeds of the units. Land measuring 77 Acres at Palakkad valuing Rs.19,470 Lakhs (Carrying Value) have been resumed by the Govt of Kerala and is under adjudication of the Apex Court. The value of Land as shown in the SFS includes such land resumed by the Govt of Kerala pending decision by the Apex court.
6. Fixed asset records (FAR) maintained in excel sheets are with inadequate description and location of assets, which in turn may impact the rate of depreciation to be applied and the consequent written down value of assets. The FAR is not updated for land held by the Company including revaluation amounts. Management has not assessed assets which are unserviceable/ not in working condition and has not recognized any provision for diminution in value with respect to such assets. The Company has not made available records in support of physical verification of PPE carried. In the absence of such comprehensive data in FAR, documentation in support of physical verification carried out and adjustment of discrepancies, if any arising from reconciliation of the same with book records and non-identification of assets which are unserviceable/ not in working condition, we are unable to comment on compliance with IndAS-16 ‘Property, Plant and Equipment’.
7. Requisite details of certain land and buildings owned by the Company/taken on lease (sale/lease deed, location, purpose for which property is put to use, categorization between PPE and IF) whether any amortization of the same is required, income derived therefrom, etc.) were not furnished to us. The written down value of such assets as at March 31,2025, aggregated to Rs. 18,746.49 lakhs. The Company has recognized income during the year and prior years for which either there were no rental agreements or agreements had expired pending renewal. The Company has not furnished required disclosures as per IndAS 40- Investment Property including the fair values (FV) of its IPs, the basis of determining its FV, rental income derived from such properties and direct operating expenses (including repairs and maintenance) arising from IP that generated rental income during the year etc. In the absence of sufficient appropriate audit evidence, we are unable to ascertain impact, if any, on the SFS.
8. In terms of the ‘Material Accounting Policies’, the Company has not provided any documentation in support of the evaluation carried out to test for impairment of assets in compliance with IndAS 36 ‘Impairment of Assets’. Accordingly, we are unable to satisfy ourselves whether any provision for impairment of assets is required to be recognized in these SFS.
9. Unrealized gains/losses on laptops produced by the Palakkad unit of the Company and transferred to other units for captive use have not been assessed and eliminated. In the absence of sufficient appropriate audit evidence, effect on SFS could not be ascertained.
10. Internally developed software by a unit of the Company for captive use has not been evaluated for recognition in terms of IndAS 38- ‘Intangible Assets’ and measured, if required. In the absence of sufficient appropriate audit evidence, effect on SFS could not be ascertained.
11. The Company has not identified lease contracts entered into by it as a lessee/lessor within the meaning of IndAS 116 - Leases and has consequently not adopted the principles of recognition, measurement and disclosure contemplated therein, contrary to accounting policy but has expensed off/recognized as income in the Statement of Profit and Loss as per contractual terms. Security deposits paid/received thereon have not been recognized in the Statement of Profit and Loss in accordance with Ind AS 109 - Financial Instruments. In the absence of sufficient appropriate audit evidence, we are unable to ascertain impact, if any, on the SFS.
12. The Company did not have a system of appropriating payments received against specific bills raised and only maintains a running account of bills raised and payments received. Consequently, the Company has furnished, based on excel workings, age-wise data in respect of trade receivables as mandated by schedule III, part II to the Companies Act, 2013. We could not independently validate the ageing data so furnished with the books of account The Company did not furnish bill wise breakup for certain trade receivables. Further, the Company did not obtain confirmation of balances / statements of account for its trade receivables refer note 31(3) and 31(40) of SFS. The Company has not assessed and recognized the quantum of expected credit loss in terms of IndAS 109 - Financial Instruments’ and has not furnished the requisite disclosures required in respect thereof. The Company did not furnish us requisite analysis/ breakup of unbilled revenue of Rs 1,79,339.58 lakhs identifying the milestones to be achieved before the same can be billed, the further costs yet to be incurred to achieve such milestones and the estimate of likely costs of rework/modifications that are to be incurred in the process of achieving certification from its customers. In the absence of sufficient appropriate audit evidence, we are unable to ascertain impact, if any, on the SFS.
13. The Company has several old balances in various receivable accounts in the nature of deposits, claims recoverable and other receivables(both current/ non-current) including certain receivables which are disputed amounting to Rs. 7,015.11 lakhs, which are long outstanding and with no adequate supporting. The Company has also not obtained confirmation of balances/ statements of account/ reconciliation with books of accounts/ not assessed and recognized the quantum of expected credit loss in terms of IndAS 109 - ‘Financial Instruments’. In the absence of sufficient appropriate audit evidence, we are unable to ascertain impact, if any, on the SFS.
14. The Company had received soft loan from the Government of India in the financial year 2014-15 of Rs. 30,000 lakhs carrying interest at the rate of 1%. This loan was not recognized at fair value after considering the market borrowing rate. The Company has not identified financial assets and financial liabilities within the meaning of IndAS 109 and has consequently not adopted the principles of recognition, measurement and disclosure contemplated therein. In the absence of sufficient appropriate audit evidence, we are unable to ascertain impact, if any, on the SFS.
15. The Company did not carry out physical verification of inventory at all locations, in the absence of which excess/shortages as compared to book records were not assessed. Inventories with book value of Rs. 23,138.76 lakhs, lying in the various sites/outside locations/stores for which assessment of net realizable value as at March 31,2025, was not made available. The Company’s inventories include old and non-moving items and has not carried out any ageing, usefulness and serviceability assessment to ascertain obsolete inventories, if any. List of inventories was not furnished to confirm its bifurcation into raw materials, components, stores, work in process, manufactured components, finished goods, material in transit and goods pending inspection along with requisite quantitative stock reconciliation statements. We could not independently validate the stock records with valuation made by the Company with supporting documents. We have not been able to independently verify and ensure compliance with IndAS 2- Inventories.
16. In the absence of complete details/nature and ageing of each amount payable, reasons for their pendency, reasons for non-claim by parties where applicable, confirmations/statements of account/reconciliations prepared of certain liabilities (both current/non-current) and advances received from customers of Rs. 1,84,574.93 lakhs, we have not obtained sufficient appropriate audit evidence and are unable to comment on its completeness/ accuracy. The data regarding ageing of trade payables as disclosed vide note 17(c) & 14(c) SFS is as furnished by the management and in absence of bill-wise breakup, we are unable to independently validate the same.
17. Reference is invited to note 17(c) & 14(c) to the SFS regarding disclosure of information pertaining to dues to micro and small enterprises in terms of the Micro, Small and Medium Enterprises Development Act, 2006. Pending identification of such vendors and consequential non-provision for interest, if any, in terms of section 23 of the said act, we have not obtained sufficient appropriate audit evidence and are unable to comment on its completeness/ accuracy.
18. The Company has not carried-out any fair valuation assessment in terms of the IndAS 109 ‘Financial Instruments’ in respect of its financial assets and liabilities which are receivable/payable beyond a period of 12 months from the date of initial recognition (examples: certain employee receivables, retention money payable, security deposits accepted/paid, etc.) for the purposes of determination of amortizedcosts and amortization/recognition of expenses/ income of the differential between amortized cost and contractual amounts payable/receivable.
19. The Company’s contribution to ITI Employees Provident Fund Trust (‘PF Trust’) as detailed in its Material Accounting Policies has been considered as a defined contribution plan and not as a defined benefit plan, both for the current and prior years. Accordingly, the liability to the trust ought to have been evaluated actuarily and recognized rather than at 12% of the eligible salaries to be made over during the year. We have also not received the audited financial statements of the PF Trust to assess whether there is any shortfall between the income received by the PF Trust and interest expense recognized based on the rate of interest declared by the Provident Fund Commissioner, Government of India for the year or prior years. Consequent disclosures required in terms of IndAS 19 - Employee Benefits have not been furnished.
20. The Company has not reconciled its books of accounts with its GST returns (GSTR-1/3B/2A/2B/6/7/7A/9&9C) filed across all its registrations refer note 31(3) of SFS. (turnover, exempt turnover, taxes payable, input tax credit available/availed and tax deducted at source). The Company has not segregated the goods and service portions of the advances received based on respective contracts and remitted GST liability on the service portion of the same. Pending such bifurcation, we are unable to ascertain the quantum of GST liability on advances payable and required provision along for interest payable. The company has not ascertained the reversal of GST input and interest thereon on account of non-payment of vendors before 180 days. The Company has not filed its annual return of reconciliation of turnover between books and returns for certain registrations pertaining to the financial years 2021-22, 2022-23 and 2023-24 respectively, contrary to rule 80 of the CGST Rules, 2016. Reconciliation for the current year between its books of account and returns for each registration has also not been furnished to us.
21. The Company has not reconciled the entries in forms 26AS, TIS and AIS in the Income Tax portal website with its books of account for the current and prior years. The Company has not disclosed the TDS/ TCS receivables appropriately in terms of Schedule III of the Act.
22. The Company has reported to the extent ascertained its contingent liabilities/ legal/ arbitration cases and capital commitments as detailed in note 31(10) & 31(11) of SFS . In the absence of full and comprehensive list across all divisions/units/ROs/Corporate office of the Company with testing of the probability of the liability devolving supported with appropriate legal advice wherever required, we are unable to ascertain the completeness/accuracy of the values reported in the said note and any provisions that may be required to be recognized in this respect.
23. The Company has not identified warranty obligations as a distinct performance obligation within the meaning of IndAS 115 - ‘Revenue from contracts with customers’ but recognizes the same as and when obligations arise on the plea that it generally has a back-to-back claims against its vendors. The company has not provided us with the requisite documentation indicating such rights in each contract entered into by it.
24. a. The Company has entered into composite contracts with certain customers for planning, engineering, supply, installation, commissioning, testing and
annual maintenance, involving substantial amounts. In these cases, the Company has recognized revenue for supply of goods to customers based on dispatches and for services, wherever completed by it, as at year end. The Company has not furnished us with the requisite documentation substantiating compliance with the preconditions for recognizing revenue in terms of IndAS 115-Revenue from Contracts with Customers and passing of controls to the latter over the goods and services. The Company has also not assessed probable losses which it might incur on account of cost overruns and in completion of services, requiring recognition.
b. Attention is invited to foot note of note 22 of the SFS where in the Company has enumerated the status of a contract with Ministry of Defense, government of India, for supply and establishment of Army Static Switched Communication Network (ASCON) at an agreed consideration. In terms of the said contract, the Company was to mandatorily demonstrate its complete solution to bring out its capabilities vis-a-vis the requirements of the customer, which would be evaluated by the latter and form an essential part of the test bed evaluation process. We are informed for the reasons stated in the said note that the test best approval was awaited as at March 31, 2025, which is expected upon completion of certain activities as detailed therein. The Company has proceeded with part execution of the contract pending test bed final approval and in the opinion of the management of the Company is not impacting the revenue already recognized up to March 31, 2025, to an aggregate extent of Rs. 1,69,522.25 lakhs. We cannot express any independent opinion on such revenue recognized.
25. We understand that the Company entered into a Memorandum of Understanding (‘MOU’) with the Minister of State, Department of Minority Affairs and Madrasah Education (MA&ME), Govt of West Bengal dated February 25, 2021 for execution of Infrastructure and IT Development Project wherein it was to host, operate, administer and execute the said project for a consultancy charge of 5% of the total vetted estimated cost of Detailed Project Reports (DPR) without GST. Pursuant to this MOU, the Company reportedly issued Work Orders (WOs) to several vendors before obtaining approvals from the corporate office. The work order issued by MA&ME was reportedly cancelled by the Minister of Minority Affairs, Government of India on March 2, 2022, and Company in turn reportedly cancelled the WOs issued on various vendors on September 2, 2023. Certain vendors to whom contracts had been awarded have reportedly filed writs in the High Court of Kolkata regarding non-payment of dues by the Company for work completed by them to an extent of Rs. 292 lakhs (to the extent furnished to us). There were reportedly irregularities observed in the receipt of the said MOU and as well as in the WOs issued and cancelled by the Company on certain vendors in terms of an inter-office memo from the Chief Vigilance Officer (CVO) to Chairman and Managing Director (CMD) dated July 25, 2023. Management has represented that these irregularities are in the nature of negligence and has confirmed that there is no fraud committed in this respect. We have relied on the information and explanations furnished by the Company and do not express any independent opinion on the said matter including any probability of fraud. Effect on the SFS, if any, is not ascertainable at this stage.
26. The Company has reported certain non-compliances with various provisions of the SEBI Listing Regulations/Companies Act, 2013 (‘the Act’) interalia in respect of quorum for board meetings, non-compliance with the constitution of audit and risk management committees, specified proportion/ number of independent directors. Consequential non-provision for penalty and interest on such non-compliance not recognized in the SFS.
27. The Company received ?5,900 lakhs on January 23, 2025, from the Government of India through the Department of Telecommunications (order dated January 21,2025) for specified capital projects, as equity investment per communication dated January 08, 2025, from Government of India to DOT. While the Board approved the share issuance on May 27, 2025, the Company did not obtain prior shareholder approval via special resolution under Section 62(1) (c) of the Companies Act, 2013, including not obtaining a valuation report in support of its issue price. It also did not comply with Section 42 procedures for private placement or the applicable stock exchange listing regulations. The Company believes that Regulation 70 of SEBI (ICDR) Regulations, 2009 exempts it from passing a special resolution; however, no such exemption exists under the Companies Act. Further, the shares were not allotted within 60 days of receipt nor was the amount refunded within the next 15 days, leading to the funds being regarded as a deposit under Rule 2(1)(c)(vii) of the Companies (Acceptance of Deposits) Rules, 2014. The impact of this non-compliance on the standalone financial statements could not be ascertained.
28. Attention of the members is also invited to our comments in para 2(j)(vi) of the section on ‘Report on legal and regulatory matters’ regarding audit trails and in Annexure D, pursuant to the directions of the Comptroller and Auditor General of India. We are unable to assess the impact of these observations on the SFS.
29. There are current and old balances carried forward in certain assets and liabilities accounts which are set out in Annexure A to this report. In respect to these accounts, management has not furnished us the composition of such balances and requisite records in support thereof. In the absence of sufficient appropriate audit evidence, we are unable to assess the impact of the same on the SFS.
30. The Company has not furnished certain disclosures as required under Schedule III of the Act in respect of the details of quarterly returns / statements of Current assets filed by the Company with banks and accordingly we are unable to comment if those returns were in agreement with the books of accounts or reconciliations/reasons of material discrepancies, if any, if there were differences.
Common to all matters dealt with above:
We are unable to obtain sufficient appropriate audit evidence to form an opinion on the SFS due to the potential interaction of the multiple/undetected misstatements, if any, contained therein and assessment of their possible individual and cumulative effect thereof, which may be material and pervasive, and accordingly forms the basis for the disclaimer of opinion.
Material Uncertainty for continuing as a Going Concern.
The Company incurred a net loss of Rs. 23,315.35 lakhs during the year ended March 31,2025 with its current liabilities as at year end being more than its current assets as reflected in the SFS and such gap likely to increase in the wake of our qualifications outlined in the foregoing paragraphs under the heading ‘Basis for Disclaimer of Opinion’ may cast a doubt on the ability of the Company to continue as a going concern. Reference is drawn to note 31(4) of SFS where in the management is of the opinion that going concern basis of accounting is appropriate in view of the factors outlined in the said note. The appropriateness of the going concern is subject to successful attainment of the plans of the Company. Our opinion is not modified in respect of this matter.
Emphasis of Matter
According to the Company, Uttar Pradesh Power Corporation Limited(‘UPPCL) has shown excess reading of electricity bill, which has been decided by Consumer Forum in its favor but still Rs. 326.26 lakhs is being shown as arrears of dues in their bill. Unit has reportedly filed a case against UPPCL in the Hon’ble High Court at Lucknow and the matter is sub judice. (As reported by M/S Chandnani Singh & Associates, Chartered Accountants, RaeBareli unit of the Company).
Other Information
The Company’s Board of Directors is responsible for the other information, which consist of Company information, ten-year digest, figures at a glance, director’s report and report on corporate governance (‘Other Information’). Our opinion on the SFS do not cover the Other Information and we do not express any form of assurance/ conclusion thereon. In connection with our audit of the SFS, our responsibility is to read the Other Information and in doing so, consider whether the Other Information is materially inconsistent with the SFS, 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. Management has represented to us that Other Information for the financial year March 31,2025, have not been finalised and accordingly, the same was not furnished to us.
Management’s and Board of Directors’ Responsibilities for the Standalone Financial Statements
The Company’s Management and the 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 SFS that give a true and fair view of the net profit/ loss and other financial information, the Statement of Assets and Liabilities and the Statement of Cash Flow in accordance with the recognition and measurement principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2021, issued there under and in compliance with Regulation 33 of the Listing Regulations. 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 accuracy and completeness of the accounting records, relevant to the preparation and presentation of the SFS that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the SFS, management and the Board of Directors are 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 intend to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors is responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Standalone Financial Statements
Our responsibility is to conduct an audit of the SFS in accordance with Standards on Auditing and to issue an auditor’s report. However, because of the matters described in the Basis of Disclaimer of the opinion section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion of SFS.
We are independent of the Company in accordance with the ethical requirements in accordance with the requirements of the Code of Ethics issued by ICAI and the ethical requirements as prescribed under the laws and regulations applicable to the Company.
Other Matters
We did not audit the financial statements of the Mankapur, Raebareli, Srinagar, Naini & Palakkad Units included in the SFS of the Company, whose financial statements reflect total assets of Rs. 2,13,613 lakhs, total income of Rs. 38,294 lakhs and total loss of Rs. 22,952 lakhs for the year ended March 31, 2025, (excluding inter-unit balances and transactions). The financial statements of these units have been audited by unit’s auditors whose reports have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of these units is solely on the reports of such units auditors. Our opinion is not modified in respect of these matters.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
As required by the Companies (Auditors’ Report) Order, 2020 (“the Order”) issued by the Central Government in terms of section 143 (11) of the Act, we give in the “Annexure B” a statement on the matters specified in paragraphs 3 and 4 of the Order, which is subject to the possible effects of the matters described in the ‘Basis for Disclaimer Opinion’ section of our Independent auditor’s report and in our report on the Internal Financial Controls over Financial Reporting.
As required by section 143(3) of the Act, we report that:
a. As described in the ‘Basis for Disclaimer of Opinion’ section above, we have sought but were not able to obtain 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 in respect of matters described in the ‘Basis for Disclaimer of Opinion’ section above.
c. The reports on the accounts of branch/ unit offices of the Company audited by branch/ unit auditors have been forwarded to us and have been duly dealt with while preparing this report.
d. The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, Statement of Changes in Equity, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account, except for gross block and accumulated depreciation of PPE and IP as per books are not in agreement with the corresponding figures in the relevant notes to the SFS.
e. Due to the possible effects of the matters described in the ‘Basis for Disclaimer of Opinion’ section above, we are unable to state whether the aforesaid SFS comply with the Indian Accounting Standards prescribed under section 133 of the Act read with Companies (Indian Accounting Standards)Rules, 2021, as amended.
f. As per GSR- 463 (E) dated June 5, 2015, issued by the Ministry of Corporate Affairs, the provisions of Section 164(2) of the Companies Act, 2013 regarding disqualification of director(s) is not applicable to the Company, since it is a Government Company.
g. The reservation/modification relating to the maintenance of accounts and other matters connected therewith are as stated in the ‘Basis for Disclaimer of Opinion section’.
h. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure C” and paragraph 2 of the section ‘Basis for Disclaimer of Opinion’. Our report expresses a disclaimer of opinion on the Company’s internal financial controls over financial reporting for the reasons stated therein.
i. Except for the possible effects of the matters described in the ‘Basis for Disclaimerof Opinion’ section above, with respect to the other matters to be included in theIndependent Auditor’s Report in accordance with Rule 11 of the Companies (Auditand 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 estimated impact of pending litigations onits financial position as detailed in Note 31(11) to FS, to the extent ascertained. Refer para 22 of the section ‘Basis for Disclaimer of Opinion’ of our report.
ii. The Company has made provisions, as required under applicable law or accounting standards, for material foreseeable losses, if any, on longterm contracts, subject to our comments in para 24(a) of the section ‘Basis for Disclaimer of Opinion’ of our report. The Company did not enter into any derivative contracts.
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
j. i. Management has represented that, to the best of its knowledge and belief, no funds have been advanced or loaned or invested (either from
borrowed funds or share premium or any other sources or kind of funds) by the company to or in any other person(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.
ii. Management has represented, that, to the best of its knowledge and belief, 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.
iii. Based on such audit procedures that we 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 (i) and (ii) above contain any material misstatement.
k. The Company did not declare or pay any dividends during the year. Accordingly, no reporting under the said sub clause is applicable.
l. The Company uses multiple accounting software (‘Tally Prime™’ and ‘Integrated Manufacturing Management System’(IMMS)) for maintenance of its books of account for the financial year ended March 31,2025. We understand, based on examinations, including certain test checks and discussions with the management, that Tally Prime Edit Log version software had a feature of recording audit trail (edit log) facility and the same was operated throughout the year except Bengaluru NSU unit, where such audit trails were implemented in the month of June 12, 2024. The branch auditors of Raebareli and Srinagar units of the Company have not commented on availability of audit trails/edit log facilities and the same were also not furnished to us. We have not come across any instances of the audit trail features being tampered with for the period except in respect of Raebareli and Srinagar units, where such examination could not be carried out. Based on Tally Prime’s architecture, we understand that there is no audit trail (edit log) of database changes. Palakkad unit uses ‘IMMS’ software which has a feature of recording audit trail (edit log) facility. The audit trails of changes to this software were not furnished to the branch auditors. Many of the records used for preparation of SFS like payroll, inventory/ fixed asset records, billing and invoicing on customers etc., at certain units are maintained in excel/ other software, where there are no audit trails/ edit logs.
The Company based on explanations furnished has preserved audit trails of Tally for the financial year 2023-24 from the date they were activated, differently at various units. We are unable to comment on the audit trail preservation in respect of IMMS software.
m. As required by section 143(5) of the Act, we report on matters covered in the directions issued by the Comptroller and Auditor-General of India, the action taken thereon and its impact on the SFS of the Company in “Annexure D”.
For B.K.RAMADHYANI & CO LLP Chartered Accountants Firm Registration No. 002878S/S200021
(CA Vasuki H S) Partner
Membership No. 212013 UDIN: 25212013BMLXLT6278
Place: Bengaluru Date: June 13, 2025
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