We have audited the accompanying Standalone Ind AS financial statements of KIRLOSKAR ELECTRIC COMPANY LIMITED (“the
Company”), which comprise the Balance Sheet as at March 31, 2025, and the Statement of Profit and Loss, including Other
Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the year then ended, and Notes to the
financial statements, including a summary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter
described in the Basis for Qualified Opinion paragraph below, the aforesaid Standalone Ind AS financial statements give the
information required by the Companies Act, 2013, as amended (“the Act”) in the manner so required and give a true and fair view in
conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31,2025, and
its profit including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.
Basis for Qualified Opinion
Attention of the Members is invited to note 36(16) to the Standalone Ind AS financial statements regarding the amounts due to the
Company from certain subsidiaries towards part consideration receivable on sale/assignment of certain immovable properties,
receivables, interest charged and expenses reimbursed. The amounts due from the said subsidiaries aggregates to ?11,006.09
lakhs (?11,153.84 lakhs as at March 31, 2024). Pending disposals/realization of assets by the subsidiaries, relying on the
Management Representation, provision of ? 9,711.00 lakhs as at March 31,2025 is recognized. Any shortfall in the realization of the
amount outstanding (net of provision), if any, could not be ascertained.
We conducted our audit in accordance with Standards on Auditing (SAs) specified under section 143(10) of the Companies Act,
2013. Our responsibilities under those Standards are further described in the 'Auditor's Responsibilities for the Audit of the Financial
Statements' section of our report. We are independent of the Company in accordance with the 'Code of Ethics' issued by the Institute
of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements
under the provisions of the Companies Act, 2013 and we have fulfilled our other ethical responsibilities in accordance with these
requirements and the ICAI's Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our qualified opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone Ind
AS financial statements for the financial year ended March 31,2025. These matters were addressed in the context of our audit of the
Standalone Ind AS financial statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on
these matters. We have determined the matters described below to be the key audit matters to be communicated in our report. For
each matter below, our description of how our audit addressed the matter is provided in that context.
a. Going Concern Assessment - Effect of erosion in net worth of the company
a) Note 36(17) of the Standalone Ind AS financial statements - The directors have detailed the reasons for preparing these
Standalone Ind AS financial statements on a going concern basis, though the Company/Group (consisting of the Company, its
subsidiaries and associate) has accumulated losses and their net worth (after excluding Revaluation Reserve) is eroded. There
are certain overdue payments to creditors. The Company has repaid all the term loans which was restructured under JLF
mechanism.
- We have relied on the representations made by the Company and the appraisal of the restructuring plan including monetization
of few non-core assets, projection of increase in turnover and infusion of funds in the near future. The appropriateness of the
said basis of Going Concern is subject to the Company adhering to the restructuring plan and infusion of requisite funds. Hence,
we are of the opinion that there is no existence of material uncertainty that may cast a significant doubt on the Company's ability
to continue as a going concern. Our opinion is not modified in respect of this matter.
Emphasis of Matter
a. Attention of the members is invited to note 36(18) of the Standalone Ind AS financial statements which sets out that the
Company has filed Special Leave Petition in respect of demand of resale tax penalty of ? 527 lakhs before the Honourable
Supreme Court of India. Management has represented to us that it is not probable that there will be an outflow of economic
benefits and hence no provision is required to be recognized in this regard. We have relied on this representation. Our opinion is
not modified in respect of this matter.
Other Information
The Company's Board of Directors is responsible for the other information. The other information comprises the information included
in the annual report but does not include the Standalone Ind AS financial statements and our auditor's report thereon. Our opinion on
the Standalone Ind AS financial statements does not cover the other information and we do not express any form of assurance
conclusion thereon. In connection with our audit of the Standalone Ind AS financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that fact. As described in the Basis
for Qualified Opinion section above, we were unable to obtain sufficient appropriate audit evidence regarding the quantification of
shortfall in realization of consideration receivable from certain subsidiaries pending disposals/realization of assets by the
subsidiaries. Accordingly, we are unable to conclude whether or not the other information in relation to this is materially misstated
with respect to this matter.
Responsibility of Management and Those Charged with Governance for Financial Statements
The Company's Board of Directors 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 Ind AS financial statements that give a true and fair view of the financial position,
financial performance, changes in equity 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. This responsibility also includes
maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the
Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting
policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of
adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting
records, relevant to the preparation and presentation of the Standalone Ind AS financial statements that give a true and fair view and
are free from material misstatement, whether due to fraud or error.
In preparing the Standalone Ind AS financial statements, management is responsible for assessing the Company's ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to
do so. Those Board of Directors are also responsible for overseeing the company's financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the Standalone Ind AS financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable
assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Standalone
Ind AS financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the
audit. We also:
• Identify and assess the risks of material misstatement of the standalone 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 financial controls 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 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 standalone 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
standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the standalone 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.
Other Matters
1. We did not audit the financial statement/information of Ajman Branch office of the Company, included in the financial statements
of the Company for the quarter ended and year ended March 31, 2025 whose financial statements/information reflect total
assets of ?689.27 lakhs as at March 31, 2025 and total revenues of ?2,662.10 lakhs for the year ended on that date. The
financial statements/information of the said branches has been audited by the Branch Auditor whose report has been furnished
to us. So, to the extent the amounts have been derived from such financial statements is based solely on the report of the Branch
auditor. Our report is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order, 2020 ("the Order") issued by the Central Government in terms of sub¬
section (11) of section 143 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.
2. As required by section 143(3) of the Act, we report 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;
b. In our opinion proper books of account as required by law have been kept by the Company so far as appears from our
examination of those books and proper returns adequate for the purposes of our audit have been received from the
branches not visited by us;
c. The report on the accounts of the Kuala Lumpur office in Malaysia and Ajman office in UAE of the Company audited under
Section 143(8) of the Act by the branch auditors have been forwarded to us and have been duly dealt with by us while
preparing this report;
d. The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, the Statement of Cash Flows
and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;
e. In our opinion, the aforesaid Standalone Ind AS financial statements comply with the Accounting Standards specified under
Section 133 of the Act, read with relevant rules as amended;
f. On the basis of the written representations received from the directors as on March 31,2025 taken on record by the Board of
Directors, none of the directors is disqualified as on March 31, 2025 from being appointed as a director in terms of Section
164 (2) of the Act;
g. 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”;
h. With respect to the other matters to be included in the Auditor's Report in accordance with the requirements of section
197(16) of the Act, as amended:
In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the
company to its directors during the year is in accordance with the provisions of section 197 of the Act.
i. 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 as amended, in our opinion and to the best of our information and according to the explanations
given to us:
i) The Company have disclosed the impact of pending litigations on its financial position in its financial statements - Refer
Note 35(1a) to the Standalone Ind AS financial statements;
ii) The Company did not have any long-term contracts including derivative contracts for which there were any material
foreseeable losses under applicable laws or accounting standards;
iii) There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection
Fund by the Company.
iv) (a) The Management has represented that, to the best of its knowledge and belief, no funds (which are material either
individually or in the aggregate) 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 or entity, including foreign
entity (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary
shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by
or on behalf of the Company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the
Ultimate Beneficiaries;
(b) The Management has represented, that, to the best of its knowledge and belief, no funds (which are material either
individually or in the aggregate) have been received by the Company from any person or entity, including foreign
entity (“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;
(c) Based on the audit procedures that have been considered reasonable and appropriate in the circumstances,
nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of
Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.
(d) The Company has not declared or paid any Dividend during the year.
(e) The company has used such accounting software for maintaining its books of account which has a feature of
recording audit trail (edit log) facility and the same has been operated throughout the year for all transactions
recorded in the software and the audit trail feature has not been tampered with and the audit trail has been preserved
by the company as per the statutory requirements for record retention.
For K N Prabhashankar & Co.,
Chartered Accountants
Firm Reg. No. 004982S
A.Umesh Patwardhan
Partner
Place: Bengaluru M. No.222945
Date: May 28, 2025 UDIN: 25222945BMLIGB4604
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