Mar 31, 2018
INDEPENDENT AUDITOR''S REPORT
To the Members of Indosolar Limited
1. Report on the Ind AS Financlal Statements
We have audited the accompanying Ind as financial statements of Indosolar Limited ("the Company"), which comprise the balance sheet as at 31st March 2018, the statement of profit and loss {Including other comprehensive Income), the cash flow statement and the Statement of Changes In Equity for the year then ended, and a summary of significant accounting policies and other explanatory Information.
2. Management''s Responsibility for the Ind AS 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 and presentation of these Ind AS financial statements that give a true and fair view of the financial position, financial performance (including other comprehensive income), cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards specified in the Companies (Indian Accounting Standards) Rules, 2015 (as amended) 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 the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
3. Auditor''s Responsibility
Our responsibility is to express an opinion on these Ind AS financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on Auditing specified under Section 143 (10) of the Act and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Ind AS financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the Ind AS financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the Ind AS financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion on the Ind AS financial statements.
4. Basis for Qualification
4.1 Material Uncertainty Related to Going Concern
a) The Company has continued to Incur significant losses in the current year resulting in further erosion of its net worth. The Company has a negative net worth amounting to Rs. 45,652.96 lakhs as on 31st March, 2018. The Company''s current liabilities exceeds the current assets by Rs. 85,105.46 lakhs as on 31st March 2018. The Company''s long term, short-term borrowings and other financial current liabilities as at 31st March 2018 includes the balances of term loan payable to various lender banks amounting to Rs. 33,408.44 lakhs and Rs.75,452.90 lakhs respectively on becoming non-performing assets. These lender banks have exited from Corporate Debt Restructuring (CDR) Cell vide its letter dated 4th November, 2016. However, in absence of requisite information from the banks, we are unable to comment upon the possible impact of such exit on the carrying value of aforesaid long term, short-term borrowings, other financial current liabilities as at 31st March 2018 and interest expense (including penal interest, if any) for year ended 31st March 2018 and the consequential impact on the accompanying statement.
b) In the matter of Company''s claim tor eligibility of capital subsidy under SIP scheme of Govt. of India, the Special Leave petition (SLP) filed by the Department of Information Technology (DIT), against the order of the Hon''ble High Court of Delhi has been dismissed by the Hon''ble Supreme court vide Its order dated August 25, 2017. The uncertainty exists with regard to Its quantum and receipt of claim pending Its appraisal by Department of Information Technology. In the absence of the reasonable assurance, the management has not recognized the claim. (Refer Note No 44(A)(iii)
c) 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, 2018 the Company''s NFE is positive by Fts. 23,913.25 lakhs without considering the import value of amortization of LJne-C. in case, Company also amortizes the value of Line C (Commercial production yet to start) NFE as on 31st March, 2018 would be negative by Rs.5494.01 takhs. In case positive NFE not achieved 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 comment upon the possible impact if any on the accompanying statement. (Refer Note No 44(B)(ii).
d) The Company has plant and machinery under installation, disclosed under CWIP, aggregating to Rs. 56,447.97 lakhs in respect of which management has recognized an impairment loss of Rs. 30,700.00 lakhs during the year ended 31st March, 2018 based on recoverable value of the assets determined using value in use method and is therefore dependent on the various factors considered in making projections by the management. In the absence of sufficient and appropriate audit evidence with respect to the uncertainty underlying the assumptions particularly the timing of expected imposition of anti/safeguard duty and installation of Line -C and commencement of its commercial production,used in the long term projections, we are unable to comment on the carrying value of aforesaid Property, Plant and Equipment and adequacy of the impairment loss recognized during the year ended 31st March, 2018 and the consequential impact, if any, on the accompanying statement ( Refer Note No 44(B)(iii).
e) During the year the Company has received the approval of One Time Settlement (''OTS'') Scheme from Union Bank of India (''Bank''). As per the OTS Scheme if the Company is unable to pay as per stipulations, the OTS proposal will stand cancelled automatically and the bank will take suitable legal steps for recovery of entire dues (Refer Note No 44{A)(i).
On the basis of overall evaluation of the above factors and considering the domestic content requirements under various Government schemes, proposed anti-dumping/safeguard duty on import of solar cell, Company''s claim for certain capital incentive from Department of Information Technology (DIT), the Company''s continuing efforts to settle with the remaining banker''s and Asset Reconstruction Company (India) Limited, the management believes that it is appropriate to prepare the accounts on a going concern basis. Refer Note No 43.
On the basis of overall evaluation of the above factors, in our view, the full erosion of net worth, inability of the Company to meet the financial projections due to operating and cash losses, due to continuing down trend in the solar industry, inability of the Company to meet its certain material liabilities and commitments, the fact that the impact of the government decisions would be known only in future, the uncertainty of outcome of claims, uncertainty on the ability of the Company to meet its export obligations & to install line C acquired in the financial year 2011-12 (appearing in CWIP),due to non-fulfillment of its financial obligations towards the supplier of the plant & technology, indicate the existence of material uncertainties that may cast significant doubt about the Company''s ability to continue as a going concern and therefore, the Company may not be able to realise its assets and discharge its liabilities in the normal course of business. Consequently, material uncertainties exist regarding the use of going concern assumption in preparing the financial statements.
In view of above uncertainties we are unable to comment on the ability of the Company to continue as a going concern and consequential classification and adjustment to the accompanying financial statements, if any, that might have been necessary had the financial statements being prepared under liquidation basis. The extent of the effect on the resultant adjustments to the accumulated losses, assets and liabilities as at the year-end is presently not ascertainable.
4.2 During the previous year two secured lenders have assigned their outstanding dues to Assets Reconstruction Company (India) Limited (ARCIL). i) Pending finalization of terms of assignment, the company has not provided interest Rs. 4934.74 lakhs for the year ended 31st March, 2018. As a consequence to this, interest of Rs. 4934.74 lakhs for the year ended 31st March, 2018 has been under provided, ii) On the basis of confirmation received from one of the lending bank namely Corporation Bank in the Non-Performing Assets (NPA) account, the Company''s liability to the bank is more by Rs. 2323.88 lakhs as on 31.03.2018 which prima facie appears to be primarily penal interest. Pending receipts of requisite details, their verification and reconciliation of the claim and pending OTS proposal of the Company with the bank, the Company has not provided the same.
As a consequence to this, interest of Rs. 7258.62 lakhs for the year ended 31st March, 2018 has been under provided. Had the Company provided the interest on loans loss for the year ended 31st March, 2018 would have been higher by Rs.7258.62 lakhs and Current Liabilities and Reserve & Surplus have been under stated by the same.
5. Qualified opinion
In our opinion and to the best of our Information and according to the explanations given to us, except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph 4.1 which highlight material uncertainties, the impact of which is currently not ascertainable including the ability of the company to continue as a going concern and paragraph 4.2 regarding non provision of interest, the aforesaid Ind AS financial statements give the information required by the Act in the manner or equired and give a true and fair of view inconformity with the accounting principles generally accepted in India of the state of affairs of the Company as at 31st March 2018, its loss (including other comprehensive income) and other financial information for the year ended on that date.
6. Report on Other Legal and Regulatory Requirements
As required by the Companies(AuditorJs Report) Order, 2016 (''Order''), issued by the Central Government of India in terms of sub section(11}of section 143 of the Act (here in after referred to as the "Order"), we give in the Annexure A, 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. We have sought and,except for the matters described In the Basis for Qualified Opinion paragraph,obtained all the Information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;
b. Except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph above, 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;
c. The Balance Sheet, the Statement of Profit and Loss (including other comprehensive income), the Cash Row Statement and the Changes in Equity dealt with by this Report are in agreement with the books of account;
d. Except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, in our opinion, the Ind AS financial statements comply with the the Indian Accounting Standards specified under Section 133 of the Act;
e. The matter described in the Basis for Qualified Opinion paragraph above.in our opinion.may have an adverse effect on the functioning of the Company;
f. On the basis of written representations received from the directors as on 31st March 2018, and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March 2018 from being appointed as a director in terms of Section 164 (2) of the Act;
g. The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph above.
h. With respect to the adequacy of the internal financial control sever financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in Annexure B;and.
i. With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
(i) The Company has disclosed the impact of pending litigations on its financial position in its lnd AS financial statements - Refer note 38 to the Ind AS financial statements;
(ii) The Company did not have any long term contracts including derivative contracts for which there were any foreseeable losses; and
(i) The Company did not have any dues on account of Investor Education and Protection Fund.
(iv) The reporting on disclosure relating to specified Bank Notes is not applicable to the company for the year ended March 31, 2018.
For ARUN K GUPTA & ASSOCIATES |
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Firm Registration No. 000605N |
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Chartered Accountants |
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Date: 25-05-2018 |
(SACHM KUMAR) |
Place: Greater Nolda | PARTNER |
M. No. 503204 |
Annexure-A to the Auditor''s Report
The Annexure referred to In Independent Auditors'' Report to the members of the Company on the Ind AS financial statements for the year ended 31st March, 2018.We report that;
1: (a) According to the information and explanations given to us, the Company has maintained proper records showing full particulars, Including quantitative details and situation of fixed assets.
(b) According to the Information and explanations given to us, the fixed assets have been physically verified by the management during the year in a phased manner and no material discrepancies have been noticed on such verification. In our opinion, the frequency of physical verification of fixed assets Is reasonable having regard to the size of the Company and the nature of its assets.
(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the the deeds of the Immovable properties are held In the name of the Company.
2. According to the Information and explanations given to us, the inventories have been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable and no material discrepancies were noticed.
3. According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms, limited liability partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Accordingly, Paragraph 3 (iii) (a), (b) and (c) of the Order are not applicable.
4. The Company has not given any loans, or made any investments, or provided any guarantee, or security as specified under section 185 and 186 of the Companies Act 2013. Accordingly, Paragraph 3(iv) of the Order is not applicable.
5. According to the information and explanations given to us, the company has not accepted any deposits from the public during the year.
6. We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by Central government for maintenance of cost records under section 148(1)of the Companies Act 2013, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.
7. a) According to the information and explanations given to us and on the basis of our examination of the records of the
Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including provident fund, employees'' state insurance, income tax, sales tax, service tax, duty of customs.duty of excise, value added tax, goods & service tax, cess and other material statutory dues have generally been regularly deposited during the year with the appropriate authorities.
b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees'' state insurance, income tax, sales tax, service, tax duty of excise, duty of custom, value added tax, goods & service tax, cess and other material statutory dues were in arrears as at 31 March 2018 for a period of more than six months from the date they became payable.
c) According to the information and explanations given to us, and on the basis of the records of the Company examined by us, there are no dues of income tax, sales tax, duty of customs, duty of excise, value added tax, goods & service tax, which have not been deposited with the appropriate authorities on account of any dispute except as mentioned below :
Name of |
Nature of |
Amount in |
Period to which the |
Forum where dispute Is |
the statute |
the dues |
Rupees (lakhs) |
amount relates |
pending |
Finance Act, 1994 |
Service tax |
299.77 |
June 15 to March 16 |
Commissioner of Service tax |
Finance, Act, 1994 |
Service tax |
1193.42 |
April 16 to June 17 |
Commissioner Central Tax |
Value Added Tax Act |
VAT Demand |
4.35 |
2014-2015 |
The Additional Commissioner |
(UP) 2015 |
(Appeals), Noida |
In our opinion and according to the Information and explanations given to us, and based on our examination of the books of account and related records, the Company has defaulted in repayment of dues to its bankers as disclosed below. In view of default, long term borrowings become current liabilities and disclosed In Balance Sheet accordingly. The Company did not have any outstanding dues to financial institutions, government and debenture holders during the year.
Name of the lender |
Nature of dues |
Amount in rupees (lakhs) |
Period to which it relates |
Andhra Bank |
Interest |
5,875.24 |
July 2013- March 2018 |
Andhra Bank |
Principal |
15,746.97 |
October 2013- March 2018 |
Bank of Baroda |
Interest |
7,656.63 |
July 2013- March 2018 |
Bank of Baroda |
Principal |
10,497.92 |
October 2013- March 2018 |
Corporation Bank |
Interest |
10,178.89 |
April 2013- March 2018 |
Corporation Bank |
Principal |
15,281.72 |
October 2013- March 2018 |
Indian Bank |
Interest |
3,753.73 |
April 2013- March 2018 |
Indian Bank |
Principal |
9,179.22 |
October 2013- March 2018 |
(B) During the year the Company has received the approval of One Time Settlement (''OTS'') Scheme from Union Bank of India (''Bank'') vide sanction letters dated 20.10.2017 which were duly approved by the Board of Directors in their meeting held on 20th December, 2017. The OTS proposal contains: (a) the waiver of interest till March 2018 which includes interest of Rs. 20,707.50 lakhs recognized in the books of account till September 2017, (b) restructuring of loan liability amounting to Rs. 20,866.44 lakhs, (c) conversion of part of the loan amounting to Rs. 20,700.00 lakhs into 1% Optionally Convertible Cumulative Redeemable Preference Shares (OCCRPS).
9 According to the information and explanations given to us, the Company did not raise any money by way of initial public offer or further public offer (including debt instruments) and the term loans during the year. Accordingly, Paragraph 3(ix) is not applicable,
10. According to the information and explanations given to us, no material fraud by or on the Company by its officers or employees has been noticed or reported during the course of our audit.
11. According to the records of the Company examined by us and the information and explanation given to us, the Company has paid and provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V of the Companies Act 2013.
12. According to the information and explanations given to us, the Company is not a nidhi company. Accordingly, Paragraph 3(xii) of the Order is not applicable.
13. According to the information and explanations given to us and based on our examination of the records of the Company, there are no transactions with the related parties which are not incompliance with Section 177 and 188 of the Companies Act, 2013 and the details have been disclosed in the Ind AS financial statements as required by the applicable accounting standards.
14. The Company has made preferential allotment of fully paid up equity shares by way of conversion of the amount outstanding in loan account of the applicant during the year under review & the requirements of Section 42 of the Companies Act, 2013 have been complied with subject to the fact that no fresh money was received against the said allotment as stated herein above. Since preferential allotment has been made by conversion of existing loan and no fresh money has been received, the utilization of the same could not be commented upon. The Company has not made any preferential allotment of fully or partly convertible debentures during the year.
15. According to information and explanations given to us, the Company has not entered into any non-cash transactions with directors or persons connected with them as referred to in section 192 of the Companies Act, 2013. Accordingly, Paragraph 3(xv) of the Order is not applicable.
16. According to the information and explanations given to us, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.
Place: Greater Nolda |
Date: 25-05-2018 |
(SACHM KUMAR) |
PARTNER |
M. No. 503204 |
For ARUN K GUPTA & ASSOCIATES |
Firm Registration No. 000605N |
Chartered Accountants |
Annexure-B to the Independent Auditor''s Report
Report on the Internal Financial Controls under Clause (I) of Sub-section 3 of Section 143 of the Companies Act, 2013 (''the Act1)
We have audited the internal financial controls over financial reporting of Indosolar Limited ("the Company") as on 31st March 2018 in conjunction with our audit of the Ind AS financial statements of the Company for the year ended on that date.
Management''s Responsibility for Internal Financial Controls
The Company''s management Is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated In the Guidance Note on Audit of Internal Financial Controls over Financial Reporting Issued by the Institute of Chartered Accountants of India (''ICAI''). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, Including adherence to Company''s policies, the a safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial Information, as required under the Companies Act, 2013.
Auditors'' Responsibility
Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the "Guidance Note") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013, to the extent applicable to an audit of internal financial controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the Ind AS Financial Statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Ind AS Financial Statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of Ind AS Financial Statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the Ind AS Financial Statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the in herent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management over-ride of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become in adequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated In the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting, issued by the Institute of Chartered Accountants of India.
For ARUN K GUPTA & ASSOCIATES |
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Firm Registration No. 000605N |
|
Chartered Accountants |
|
Place: Greater Noida |
|
Date: 2545-2018 |
(SACHH KUMAR) |
PARTNER |
|
M. No. 503204 |
Our responsibility is to express an opinion on these Ind AS financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on Auditing specified under Section 143 (10) of the Act and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Ind AS financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the Ind AS financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the Ind AS financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion on the Ind AS financial statements.
4. Basis for Qualification
4.1 Material Uncertainty Related to Going Concern
a) The Company has continued to Incur significant losses in the current year resulting in further erosion of its net worth. The Company has a negative net worth amounting to Rs. 45,652.96 lakhs as on 31st March, 2018. The Company''s current liabilities exceeds the current assets by Rs. 85,105.46 lakhs as on 31st March 2018. The Company''s long term, short-term borrowings and other financial current liabilities as at 31st March 2018 includes the balances of term loan payable to various lender banks amounting to Rs. 33,408.44 lakhs and Rs.75,452.90 lakhs respectively on becoming non-performing assets. These lender banks have exited from Corporate Debt Restructuring (CDR) Cell vide its letter dated 4th November, 2016. However, in absence of requisite information from the banks, we are unable to comment upon the possible impact of such exit on the carrying value of aforesaid long term, short-term borrowings, other financial current liabilities as at 31st March 2018 and interest expense (including penal interest, if any) for year ended 31st March 2018 and the consequential impact on the accompanying statement.
b) In the matter of Company''s claim tor eligibility of capital subsidy under SIP scheme of Govt. of India, the Special Leave petition (SLP) filed by the Department of Information Technology (DIT), against the order of the Hon''ble High Court of Delhi has been dismissed by the Hon''ble Supreme court vide Its order dated August 25, 2017. The uncertainty exists with regard to Its quantum and receipt of claim pending Its appraisal by Department of Information Technology. In the absence of the reasonable assurance, the management has not recognized the claim. (Refer Note No 44(A)(iii)
c) 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, 2018 the Company''s NFE is positive by Fts. 23,913.25 lakhs without considering the import value of amortization of LJne-C. in case, Company also amortizes the value of Line C (Commercial production yet to start) NFE as on 31st March, 2018 would be negative by Rs.5494.01 takhs. In case positive NFE not achieved 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 comment upon the possible impact if any on the accompanying statement. (Refer Note No 44(B)(ii).
d) The Company has plant and machinery under installation, disclosed under CWIP, aggregating to Rs. 56,447.97 lakhs in respect of which management has recognized an impairment loss of Rs. 30,700.00 lakhs during the year ended 31st March, 2018 based on recoverable value of the assets determined using value in use method and is therefore dependent on the various factors considered in making projections by the management. In the absence of sufficient and appropriate audit evidence with respect to the uncertainty underlying the assumptions particularly the timing of expected imposition of anti/safeguard duty and installation of Line -C and commencement of its commercial production,used in the long term projections, we are unable to comment on the carrying value of aforesaid Property, Plant and Equipment and adequacy of the impairment loss recognized during the year ended 31st March, 2018 and the consequential impact, if any, on the accompanying statement ( Refer Note No 44(B)(iii).
e) During the year the Company has received the approval of One Time Settlement (''OTS'') Scheme from Union Bank of India (''Bank''). As per the OTS Scheme if the Company is unable to pay as per stipulations, the OTS proposal will stand cancelled automatically and the bank will take suitable legal steps for recovery of entire dues (Refer Note No 44{A)(i).
On the basis of overall evaluation of the above factors and considering the domestic content requirements under various Government schemes, proposed anti-dumping/safeguard duty on import of solar cell, Company''s claim for certain capital incentive from Department of Information Technology (DIT), the Company''s continuing efforts to settle with the remaining banker''s and Asset Reconstruction Company (India) Limited, the management believes that it is appropriate to prepare the accounts on a going concern basis. Refer Note No 43.
On the basis of overall evaluation of the above factors, in our view, the full erosion of net worth, inability of the Company to meet the financial projections due to operating and cash losses, due to continuing down trend in the solar industry, inability of the Company to meet its certain material liabilities and commitments, the fact that the impact of the government decisions would be known only in future, the uncertainty of outcome of claims, uncertainty on the ability of the Company to meet its export obligations & to install line C acquired in the financial year 2011-12 (appearing in CWIP),due to non-fulfillment of its financial obligations towards the supplier of the plant & technology, indicate the existence of material uncertainties that may cast significant doubt about the Company''s ability to continue as a going concern and therefore, the Company may not be able to realise its assets and discharge its liabilities in the normal course of business. Consequently, material uncertainties exist regarding the use of going concern assumption in preparing the financial statements.
In view of above uncertainties we are unable to comment on the ability of the Company to continue as a going concern and consequential classification and adjustment to the accompanying financial statements, if any, that might have been necessary had the financial statements being prepared under liquidation basis. The extent of the effect on the resultant adjustments to the accumulated losses, assets and liabilities as at the year-end is presently not ascertainable.
4.2 During the previous year two secured lenders have assigned their outstanding dues to Assets Reconstruction Company (India) Limited (ARCIL). i) Pending finalization of terms of assignment, the company has not provided interest Rs. 4934.74 lakhs for the year ended 31st March, 2018. As a consequence to this, interest of Rs. 4934.74 lakhs for the year ended 31st March, 2018 has been under provided, ii) On the basis of confirmation received from one of the lending bank namely Corporation Bank in the Non-Performing Assets (NPA) account, the Company''s liability to the bank is more by Rs. 2323.88 lakhs as on 31.03.2018 which prima facie appears to be primarily penal interest. Pending receipts of requisite details, their verification and reconciliation of the claim and pending OTS proposal of the Company with the bank, the Company has not provided the same.
As a consequence to this, interest of Rs. 7258.62 lakhs for the year ended 31st March, 2018 has been under provided. Had the Company provided the interest on loans loss for the year ended 31st March, 2018 would have been higher by Rs.7258.62 lakhs and Current Liabilities and Reserve & Surplus have been under stated by the same.
5. Qualified opinion
In our opinion and to the best of our Information and according to the explanations given to us, except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph 4.1 which highlight material uncertainties, the impact of which is currently not ascertainable including the ability of the company to continue as a going concern and paragraph 4.2 regarding non provision of interest, the aforesaid Ind AS financial statements give the information required by the Act in the manner or equired and give a true and fair of view inconformity with the accounting principles generally accepted in India of the state of affairs of the Company as at 31st March 2018, its loss (including other comprehensive income) and other financial information for the year ended on that date.
6. Report on Other Legal and Regulatory Requirements
As required by the Companies(AuditorJs Report) Order, 2016 (''Order''), issued by the Central Government of India in terms of sub section(11}of section 143 of the Act (here in after referred to as the "Order"), we give in the Annexure A, 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. We have sought and,except for the matters described In the Basis for Qualified Opinion paragraph,obtained all the Information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;
b. Except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph above, 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;
c. The Balance Sheet, the Statement of Profit and Loss (including other comprehensive income), the Cash Row Statement and the Changes in Equity dealt with by this Report are in agreement with the books of account;
d. Except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, in our opinion, the Ind AS financial statements comply with the the Indian Accounting Standards specified under Section 133 of the Act;
e. The matter described in the Basis for Qualified Opinion paragraph above.in our opinion.may have an adverse effect on the functioning of the Company;
f. On the basis of written representations received from the directors as on 31st March 2018, and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March 2018 from being appointed as a director in terms of Section 164 (2) of the Act;
g. The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph above.
h. With respect to the adequacy of the internal financial control sever financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in Annexure B;and.
i. With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
(i) The Company has disclosed the impact of pending litigations on its financial position in its lnd AS financial statements - Refer note 38 to the Ind AS financial statements;
(ii) The Company did not have any long term contracts including derivative contracts for which there were any foreseeable losses; and
(i) The Company did not have any dues on account of Investor Education and Protection Fund.
(iv) The reporting on disclosure relating to specified Bank Notes is not applicable to the company for the year ended March 31, 2018.
For ARUN K GUPTA & ASSOCIATES |
|
Place: Greater Nolda |
Firm Registration No. 000605N |
Date: 25-05-2018 |
Chartered Accountants |
(SACHM KUMAR) |
PARTNER |
M. No. 503204 |
Annexure-A to the Auditor''s Report
The Annexure referred to In Independent Auditors'' Report to the members of the Company on the Ind AS financial statements for the year ended 31st March, 2018.We report that;
1: (a) According to the information and explanations given to us, the Company has maintained proper records showing full particulars, Including quantitative details and situation of fixed assets.
(b) According to the Information and explanations given to us, the fixed assets have been physically verified by the management during the year in a phased manner and no material discrepancies have been noticed on such verification. In our opinion, the frequency of physical verification of fixed assets Is reasonable having regard to the size of the Company and the nature of its assets.
(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the the deeds of the Immovable properties are held In the name of the Company.
2. According to the Information and explanations given to us, the inventories have been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable and no material discrepancies were noticed.
3. According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms, limited liability partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Accordingly, Paragraph 3 (iii) (a), (b) and (c) of the Order are not applicable.
4. The Company has not given any loans, or made any investments, or provided any guarantee, or security as specified under section 185 and 186 of the Companies Act 2013. Accordingly, Paragraph 3(iv) of the Order is not applicable.
5. According to the information and explanations given to us, the company has not accepted any deposits from the public during the year.
6. We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by Central government for maintenance of cost records under section 148(1)of the Companies Act 2013, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.
7. a) According to the information and explanations given to us and on the basis of our examination of the records of the
Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including provident fund, employees'' state insurance, income tax, sales tax, service tax, duty of customs.duty of excise, value added tax, goods & service tax, cess and other material statutory dues have generally been regularly deposited during the year with the appropriate authorities.
b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees'' state insurance, income tax, sales tax, service, tax duty of excise, duty of custom, value added tax, goods & service tax, cess and other material statutory dues were in arrears as at 31 March 2018 for a period of more than six months from the date they became payable.
c) According to the information and explanations given to us, and on the basis of the records of the Company examined by us, there are no dues of income tax, sales tax, duty of customs, duty of excise, value added tax, goods & service tax, which have not been deposited with the appropriate authorities on account of any dispute except as mentioned below :
Name of |
Nature of |
Amount in |
Period to which the |
Forum where dispute Is |
the statute |
the dues |
Rupees (lakhs) |
amount relates |
pending |
Finance Act, 1994 |
Service tax |
299.77 |
June 15 to March 16 |
Commissioner of Service tax |
Finance, Act, 1994 |
Service tax |
1193.42 |
April 16 to June 17 |
Commissioner Central Tax |
Value Added Tax Act |
VAT Demand |
4.35 |
2014-2015 |
The Additional Commissioner |
(UP) 2015 |
(Appeals), Noida |
In our opinion and according to the Information and explanations given to us, and based on our examination of the books of account and related records, the Company has defaulted in repayment of dues to its bankers as disclosed below. In view of default, long term borrowings become current liabilities and disclosed In Balance Sheet accordingly. The Company did not have any outstanding dues to financial institutions, government and debenture holders during the year.
Name of the lender |
Nature of dues |
Amount in rupees (lakhs) |
Period to which it relates |
Andhra Bank |
Interest |
5,875.24 |
July 2013- March 2018 |
Andhra Bank |
Principal |
15,746.97 |
October 2013- March 2018 |
Bank of Baroda |
Interest |
7,656.63 |
July 2013- March 2018 |
Bank of Baroda |
Principal |
10,497.92 |
October 2013- March 2018 |
Corporation Bank |
Interest |
10,178.89 |
April 2013- March 2018 |
Corporation Bank |
Principal |
15,281.72 |
October 2013- March 2018 |
Indian Bank |
Interest |
3,753.73 |
April 2013- March 2018 |
Indian Bank |
Principal |
9,179.22 |
October 2013- March 2018 |
(B) During the year the Company has received the approval of One Time Settlement (''OTS'') Scheme from Union Bank of India (''Bank'') vide sanction letters dated 20.10.2017 which were duly approved by the Board of Directors in their meeting held on 20th December, 2017. The OTS proposal contains: (a) the waiver of interest till March 2018 which includes interest of Rs. 20,707.50 lakhs recognized in the books of account till September 2017, (b) restructuring of loan liability amounting to Rs. 20,866.44 lakhs, (c) conversion of part of the loan amounting to Rs. 20,700.00 lakhs into 1% Optionally Convertible Cumulative Redeemable Preference Shares (OCCRPS).
9 According to the information and explanations given to us, the Company did not raise any money by way of initial public offer or further public offer (including debt instruments) and the term loans during the year. Accordingly, Paragraph 3(ix) is not applicable,
10. According to the information and explanations given to us, no material fraud by or on the Company by its officers or employees has been noticed or reported during the course of our audit.
11. According to the records of the Company examined by us and the information and explanation given to us, the Company has paid and provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V of the Companies Act 2013.
12. According to the information and explanations given to us, the Company is not a nidhi company. Accordingly, Paragraph 3(xii) of the Order is not applicable.
13. According to the information and explanations given to us and based on our examination of the records of the Company, there are no transactions with the related parties which are not incompliance with Section 177 and 188 of the Companies Act, 2013 and the details have been disclosed in the Ind AS financial statements as required by the applicable accounting standards.
14. The Company has made preferential allotment of fully paid up equity shares by way of conversion of the amount outstanding in loan account of the applicant during the year under review & the requirements of Section 42 of the Companies Act, 2013 have been complied with subject to the fact that no fresh money was received against the said allotment as stated herein above. Since preferential allotment has been made by conversion of existing loan and no fresh money has been received, the utilization of the same could not be commented upon. The Company has not made any preferential allotment of fully or partly convertible debentures during the year.
15. According to information and explanations given to us, the Company has not entered into any non-cash transactions with directors or persons connected with them as referred to in section 192 of the Companies Act, 2013. Accordingly, Paragraph 3(xv) of the Order is not applicable.
16. According to the information and explanations given to us, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.
Place: Greater Nolda |
Date: 25-05-2018 |
(SACHM KUMAR) |
PARTNER |
M. No. 503204 |
For ARUN K GUPTA & ASSOCIATES |
Firm Registration No. 000605N |
Chartered Accountants |
Annexure-B to the Independent Auditor''s Report
Report on the Internal Financial Controls under Clause (I) of Sub-section 3 of Section 143 of the Companies Act, 2013 (''the Act1)
We have audited the internal financial controls over financial reporting of Indosolar Limited ("the Company") as on 31st March 2018 in conjunction with our audit of the Ind AS financial statements of the Company for the year ended on that date.
Management''s Responsibility for Internal Financial Controls
The Company''s management Is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated In the Guidance Note on Audit of Internal Financial Controls over Financial Reporting Issued by the Institute of Chartered Accountants of India (''ICAI''). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, Including adherence to Company''s policies, the a safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial Information, as required under the Companies Act, 2013.
Auditors'' Responsibility
Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the "Guidance Note") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013, to the extent applicable to an audit of internal financial controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the Ind AS Financial Statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Ind AS Financial Statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of Ind AS Financial Statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the Ind AS Financial Statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the in herent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management over-ride of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become in adequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated In the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting, issued by the Institute of Chartered Accountants of India.
For ARUN K GUPTA & ASSOCIATES |
|
Firm Registration No. 000605N |
|
Chartered Accountants |
|
Place: Greater Noida |
|
Date: 2545-2018 |
(SACHH KUMAR) |
PARTNER |
|
M. No. 503204 |
Mar 31, 2016
To the Members of Indosolar Limited 1. Report on the Financial Statements
We have audited the accompanying financial statements of Indosolar Limited (âthe Companyâ), which comprise the balance sheet as at 31 March 2016, the statement of profit and loss and the cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information.
2. Managementâs Responsibility for the Financial Statements
The Companyâs Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act 2013 (âthe Actâ) with respect to the preparation and presentation of these 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 Rule 7 of the Companies (Accounts) Rules, 2014. 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 effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
3. Auditorâs Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companyâs preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Companyâs Directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion on the financial statements.
4. Basis for Qualification
a) The Company has continued to incur significant losses in the current year resulting in further erosion of its net worth which had already been fully eroded during the year ended 31 March 2014. Further, the Company has not met its liabilities due on the first corporate debt restructuring package (Rs. 59,444.58 lakhs) and on account of purchase of materials and capital goods (Rs. 6,452.78 lakhs). Further, an amount of Rs. 10,07750 lakhs will become payable by 31 March 2017 Due to continued liquidity issues, the Company approached the consortium bankers for a second corporate debt restructuring package on the basis of a techno economic viability study conducted by an external expert. Consortium bankers in their joint lenders meeting has decided that banksâ are not considering second restructuring proposal as of now and exploring the possibility of sale to Asset Restructuring Company and/or to invoke change in management.
b) As per the Company, despite significant downturn in global market, as a result of several initiatives by Government of India, the domestic market has been showing an upturn of late resulting in the Company getting orders and hence continuation of commercial production. Based on the current orders in hand (approx. 71 MW), the Company expects to operate at the significant level of capacity till July 2016. The note of the Statement also expands on certain measures taken/expected to be announced by the Government to support domestic manufacturers in India including the domestic content requirement etc.
c) The Companyâs claim to it being eligible for certain capital incentives is still under litigation and the outcome will be known upon the conclusion of the litigation. Also refer note 40 to the financial statement.
d) The dispute with MP Urja regarding the turnkey contract and the likely impact of the customers claim is uncertain. Also refer note 41 to the financial statements.
e) The Company has not been able to meet its commitment to Special Economic Zone on the basis of which the Company imported certain raw material and machinery without payment of custom duty. Also refer note 33 to the financial statements.
On the basis of the overall evaluation of the above factors and considering the domestic content requirements and other expression of interests issued by certain Public Sector Units, procurement of recent orders and resumption of production in the second quarter of year ended 31 March 2016, a techno economic viability conducted by an external expert which forms the basis of the application for seeking a second Corporate Debt Restructuring package and favorable decision of the High Court of Delhi in relation to the Companyâs eligibility for certain capital incentive, management believes that there is no impairment in respect of the carrying value of its fixed assets including capital work in progress as at 31 March 2016 and that it is appropriate to prepare the accounts on a going concern basis.. In our view, the full erosion of net worth, inability of the Company to meet certain material liabilities and commitments, the fact that the impact of the government decisions would be known only in future, the uncertainty of outcome of claims, uncertainty regarding the second corporate debt restructuring and uncertainty on the ability of the Company to meet its export obligations create material uncertainties. Therefore, the quantum of impairment in respect of carrying value of fixed assets cannot be determined at present and material uncertainties exist regarding the use of going concern assumption in preparing the financial statements.
5. Qualified opinion
In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, the aforesaid financial statements give the information required by 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 31 March 2016, its loss and its cash flows for the year ended on that date.
6. Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditorâs Report) Order, 2016 (âOrderâ), 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, 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. We have sought and, except for the matters described in the Basis for Qualified Opinion paragraph, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;
b. except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph above, 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;
c. 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;
d. except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, in our opinion, the financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;
e. the matter described in the Basis for Qualified Opinion paragraph above, in our opinion, may have an adverse effect on the functioning of the Company;
f. on the basis of written representations received from the directors as on 31 March 2016, and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2016 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; and
h. With respect to the other matters to be included in the Auditorâs Report in accordance with Rule11of 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. The Company has disclosed the impact of pending litigations on its financial position in its financial statements -Refer note 39 and note 40 to the financial statements;
ii. the Company did not have any long term contracts including derivative contracts for which there were any foreseeable losses; and
iii. the Company did not have any dues on account of Investor Education and Protection Fund.
The Annexure referred to in Independent Auditorsâ Report to the members of the Company on the financial statements for the year ended 31 March 2016. We report that:
(i) (a) According to the information and explanations given to us, the Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) According to the information and explanations given to us, the Company has a regular programme of physical verification of its fixed assets by which all fixed assets are verified annually. In our opinion, the frequency of physical verification is reasonable having regard to the size of the Company and nature of its assets. As informed to us, no discrepancies have been noticed on such verification.
(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deed of the immovable properties are held in the name of the Company.
(ii) According to the information and explanations given to us, the inventories have been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable and no material discrepancies were noticed.
(iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms, limited liability partnerships or other parties covered in the register maintained under section 189 of the Act. Accordingly, Paragraph 3 (iii) (a), (b) and (c) of the Order are not applicable.
(iv) The Company has not given any loans, or made any investments, or provided any guarantee, or security as specified under section 185 and 186 of the Act. Accordingly, Paragraph 3(iv) of the Order is not applicable.
(v) According to the information and explanations given to us, the Company has not accepted any deposits from the public during the year.
(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by Central government for maintenance of cost records under section 148(1) of the Act, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.
(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including provident fund, employeesâ state insurance, sales tax, duty of customs duty of excise, value added tax, cess and other material statutory dues have generally been regularly deposited during the year with the appropriate authorities. In respect of income tax and service tax, the amounts have not been regularly deposited with the appropriate authorities and there have been delays in number of cases.
According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employeesâ state insurance, income tax, sales tax, service, tax duty of excise, duty of custom, value added tax, cess and other material statutory dues were in arrears as at 31 March 2016 for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us, and on the basis of the records of the Company examined by us, there are no dues of income tax, sales tax, duty of customs, duty of excise and value added tax which have not been deposited with the appropriate authorities on account of any dispute except as mentioned below:
Name of the statute |
Nature of the dues |
Amount in rupees (lakhs)* |
Period to which the amount relates |
Forum where dispute is pending |
Finance Act, 1994 |
Service tax |
25.60 |
2010-2011 |
Commissioner of Service tax |
Finance Act, 1994 |
Service tax |
161.06 |
2011-2012 |
Commissioner of Service tax |
Finance Act, 1994 |
Service tax |
20.10 |
2012-2013 |
Commissioner of Service tax |
Finance Act, 1994 |
Service tax |
11.52 |
2013-2014 |
Commissioner of Service tax |
âSubsequent to the year end, the Company has paid Rs. 11.61 lakhs as payment under protest.
(viii) In our opinion and according to the information and explanations given to us, and based on our examination of the books of account and related records, the Company has defaulted in repayment of dues to its bankers as disclosed below. The Company did not have any outstanding dues to financial institutions, government and debenture holders during the year.
Nature of the lender |
Nature of dues |
Amount in rupees (lakhs) |
Period to which it relates |
Andhra Bank |
Interest |
5,969.84 |
July 2013- March 2016 |
Andhra Bank |
Principal |
6,882.66 |
October 2013- March 2016 |
Bank of Baroda |
Interest |
3,995.76 |
July 2013- March 2016 |
Bank of Baroda |
Principal |
2,505.34 |
October 2013- March 2016 |
Corporation Bank |
Interest |
5,333.64 |
April 2013- March 2016 |
Corporation Bank |
Principal |
5,26748 |
October 2013- March 2016 |
Indian Bank |
Interest |
3,83744 |
April 2013- March 2016 |
Indian Bank |
Principal |
2,015.71 |
October 2013- March 2016 |
Union Bank of India |
Interest |
11,063.21 |
April 2013- March 2016 |
Union Bank of India |
Principal |
12,573.50 |
October 2013- March 2016 |
(ix) According to the information and explanations given to us, the Company did not raise any money by way of initial public offer or further public offer (including debt instruments) and the term loans during the year. Accordingly, Paragraph 3(ix) is not applicable.
(x) According to the information and explanations given to us, no material fraud by or on the Company by its officers or employees has been noticed or reported during the course of our audit.
(xi) According to the information and explanations given to us, and based on our examination of the records of the Company, the Company has accrued/paid managerial remuneration which was in excess of the limits specified in Schedule V read with Section 197 of the Act. The Company had filed applications with the Central Government for regularizing the payments of managerial remuneration. Subsequent to the year end, the Company received letters from Central Government rejecting such applications. Accordingly, the Company has recovered the managerial remuneration paid in year ended 31 March 2016 of Rs. 184.99 lakhs and in previous year of Rs. 147.84 lakhs by adjusting the payable balances of directors.
(xii) According to the information and explanations given to us, the Company is not a nidhi company. Accordingly, Paragraph 3(xii) of the Order is not applicable.
(xiii) According to the information and explanations given to us and based on our examination of the records of the Company, there are no transactions with the related parties which are not in compliance with Section 177 and 188 of the Act and the details have been disclosed in the Financial Statements, as required, by the applicable accounting standards.
(xiv) According to the information and explanation given to us and on the basis of our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.
(xv) According to information and explanations given to us, the Company has not entered into any non-cash transactions with directors or persons connected with them. Accordingly, Paragraph 3(xv) of the Order is not applicable.
(xvi) According to the information and explanations given to us, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (âthe Actâ)
We have audited the internal financial controls over financial reporting of Indosolar Limited (âthe Companyâ) as on 31 March 2016 in conjunction with our audit of the financial statements of the Company for the year ended on that date.
Managementâs Responsibility for Internal Financial Controls
The Companyâs management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (âICAIâ). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to Companyâs policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.
Auditorsâ Responsibility
Our responsibility is to express an opinion on the Companyâs internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the âGuidance Noteâ) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companyâs internal financial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A companyâs internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companyâs internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companyâs assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting, issued by the Institute of Chartered Accountants of India.
For B S R & Co. LLP
Chartered Accountants
Firmâs registration number: 101248W/W-100022
Rajiv Goyal
Place: Gurgaon Partner
Date: 30 May 2016 Membership number: 094549
Mar 31, 2015
We have audited the accompanying financial statements of Indosolar
Limited ("the Company"), which comprise the Balance Sheet as at 31
March 2015, and the Statement of Profit and Loss and the Cash Flow
Statement for the year then ended, and a summary of significant
accounting policies and other explanatory information.
2. Management's Responsibility for the 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 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 referred
specified under section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014. 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 effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and
presentation of the financial statements that give a true and fair view
and are free from material misstatement, whether due to fraud or error.
3. Auditor's Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We have taken into account the
provisions of the Act, the accounting and auditing standards and
matters which are required to be included in the audit report under the
provisions of the Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on Auditing
specified under Section 143(10) of the Act. Those Standards require
that we comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and the disclosures in the financial statements. The
procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal financial control relevant
to the Company's preparation of the financial statements that give a
true and fair view in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing
an opinion on whether the Company has in place an adequate internal
financial controls system over financial reporting and the operating
effectiveness of such controls. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness
of the accounting estimates made by the Company's Directors, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our qualified audit opinion on the
financial statements
4. Basis of Qualification
a) The Company has made a profit in the current quarter though on a
full year basis it has continued to incur losses resulting in further
erosion of its net worth which had already been fully eroded as at 31
March 2014. Further the Company has not met its liabilities (Rs.
26522.78 lakhs) due on the first corporate debt restructuring package
and on account of purchase of materials and capital goods (Rs. 3,866.32
lakhs). The Company has therefore approached the bankers for a second
corporate debt restructuring package on the basis of a technical
economic viability study conducted by an external expert.
b) As per the Company, despite significant downturn in global market,
as a result of several initiatives by Government of India, the domestic
market has been showing an upturn of late resulting in the Company
having obtained orders for 132.65 MW in the current year which has
resulted in recommencement of production in the current year ended 31
March 2015 which is expected to ensure full capacity utilization upto
May 2015. The note also expands on certain measures taken/expected to
be announced by the Government to support domestic manufacturers in
India including the domestic content requirement, viability gap funding
etc.
c) The Company's claim to it being eligible for certain capital
incentives is still under litigation. (Note 35)
d) The dispute with MP Urja regarding the turnkey contract and the
likely impact of the customers claim is uncertain. (Note 42)
e) The Company has not been able to meet its commitment to customs
authorities on the basis of which the company imported certain raw
materials and machinery without payment of customs duty. (Note 35)
On the basis of its overall evaluation of the above factors and as per
the techno-economic viability study conducted by an external expert,
the Company believes that there is no impairment in respect of carrying
value of its fixed assets including capital work in progress as at 31
March 2015 and it is appropriate to prepare the accounts on a going
concern basis. In our view, the full erosion of net worth, inability of
the Company to meet certain material liabilities and commitments, the
fact that the impact of the government decisions (some of which are yet
to be announced) would be known only in future, the uncertainty of
outcome of various litigations and claims and uncertainty regarding
whether the second corporate debt restructuring package (which, as
informed to us is under consideration by the bankers) would be
sanctioned or not create material uncertainties (even though the
procurement of certain orders during the year resulting in full
resumption of production is a positive factor). Therefore, the quantum
of impairment in respect of carrying value of fixed assets cannot be
determined as at present and material uncertainties exist regarding the
use of going concern assumption in preparing the financial statements.
5. Qualified opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the possible effects of the matter
described in the Basis for Qualified Opinion paragraph, the aforesaid
financial statements give the information required by 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 31 March 2015, its loss and its cash flows
for the year ended on that date.
6. Emphasis of matter
Without qualifying our opinion, attention is invited to note 36, with
regard to managerial remuneration paid by the Company amounting to Rs.
97 lakhs for the year ended 31 March 2015, which is in excess of the
limits specified under schedule V read with section 197 of the
Companies Act, 2013 and in respect of which Central Government approval
as required under the provisions of the Companies Act, 2013, is
pending. The impact if any of this on the financial statement is not
ascertainable at present.
7. Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditor's Report) Order, 2015 ('Order'),
issued by the Central Government of India in terms of sub-section (11)
of section 143 of the Act, we enclose in the Annexure, a statement on
the matters specified in paragraphs 3 and 4 of the said Order.
As required by section 143(3) of the Companies Act, 2013, we report
that:
a. We have sought and, except for the matters described in the Basis
for Qualified Opinion paragraph, obtained all the information and
explanations which to the best of our knowledge and belief were
necessary for the purposes of our audit.
b. Except for the possible effects of the matter described in the
Basis for Qualified Opinion paragraph above, 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.
c. 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.
d. Except for the possible effects of the matter described in the
Basis for Qualified Opinion paragraph, in our opinion, the Balance
Sheet, Statement of Profit and Loss and Cash Flow Statement comply with
the Accounting Standards specified under section 133 of the Act, read
with Rule 7 of the Companies (Accounts) Rules, 2013; and
e. The matter described in the Basis for Qualified Opinion paragraph
above, in our opinion, may have an adverse effect on the functioning of
the Company
f. On the basis of written representations received from the directors
as on 31 March 2015, and taken on record by the Board of Directors,
none of the directors is disqualified as on 31 March 2015, from being
appointed as a director in terms of sub-section (2) of section 164 of
the Companies Act, 2013.
g. 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 information and
according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its
financial position in its financial statements  Refer Note 41 to the
financial statement;
ii. The Company did not have any long term contracts including
derivative contracts for which there were any foreseeable losses; and
iii. The Company did not have any dues on account of Investor
Education and Protection Fund.
ANNEXURE REFERRED TO IN PARAGRAPH 6 OF THE INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF INDOSOLAR LIMITED ON THE ACCOUNTS FOR THE YEAR ENDED
31ST MARCH 2015
(i) (a) According to the information and explanations given to us, the
Company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets.
(b) According to the information and explanations given to us, the
Company has a regular programme of physical verification of its fixed
assets by which all fixed assets are physically verified by the
management in a phased manner over a period of two years. In accordance
with such phased programme, the Company has carried out physical
verification of majority of its fixed assets during the year. In our
opinion, the frequency of physical verification is reasonable having
regard to the size of the Company and nature of its fixed assets. As
informed to us, no discrepancies have been noticed on such
verification.
(ii) (a) According to the information and explanations given to us, the
inventories have been physically verified by the management during the
year. In our opinion, the frequency of such verification is reasonable.
Further, as informed, there are no stocks lying with third party.
(b) In our opinion and according to the information and explanations
given to us, the procedures for physical verification of inventory
followed by the management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) According to the information and explanations given to us, and on
the basis of our examination of the records of inventories, we are of
the opinion that the Company is maintaining proper records of
inventories. As informed to us, the discrepancies noticed on physical
verification of inventories as compared to the book records were not
material.
(iii) (a) According to the information and explanations given to us,
the Company has not granted any loans, secured or unsecured, to
companies or other parties covered in the register maintained under
section 189 of the 2013 Act. Accordingly, paras 3 (iii) (a) and (b) of
the Order are not applicable. There are no firms covered in the
register required under section 189 of the Act.
(iv) In our opinion and according to the information and explanations
given to us, and having regard to the explanation that purchases of
certain items of inventories and fixed assets are for the Company's
specialised requirements and suitable alternative sources are not
available to obtain comparable quotations, there is an adequate
internal control system commensurate with the size of the Company and
the nature of its business with regard to purchase of inventories and
fixed assets and with regard to sale of goods. The activities of the
Company do not involve rendering of services. We did not observe any
major weakness in internal controls during the course of our audit.
(v) According to the information and explanations given to us, the
Company has not accepted any deposits from the public during the year.
(vi) We have broadly reviewed the books of account maintained by the
Company pursuant to the rules prescribed by Central government for
maintenance of cost records under section 148(1) of the Companies Act,
2013 and are of the opinion that prima facie, the prescribed accounts
and records have been made and maintained. We have not, however, made a
detailed examination of the records with a view to determine whether
they are accurate or complete.
(vii) (a) According to the information and explanations given to us and
on the basis of our examination of the records of the Company, amounts
deducted/ accrued in the books of account in respect of undisputed
statutory dues including Provident fund, Employees' state insurance,
Income tax, Sales tax, Wealth tax, Service tax, Excise duty, Custom
duty, Value added tax, Cess and other material statutory dues, to the
extent applicable, have generally been regularly deposited with the
appropriate authorities.
According to the information and explanations given to us, no
undisputed amounts payable in respect of Provident fund, Employees'
state insurance, Income tax, Sales tax, Wealth tax, Service tax, Excise
duty, Custom duty, Value added tax, Cess and other material statutory
dues were in arrears as at 31 March 15 for a period of more than six
months from the date they became payable.
(b) According to the information and explanations given to us, and on
the basis of the records of the Company examined by us, there are no
dues of Income tax, Wealth tax, Service tax, Sales tax, Customs duty
and Excise duty which have not been deposited with the appropriate
authorities on account of any dispute except as mentioned below:
Amount in
Name of the Nature of the Rupees Amount
statute dues (lakhs) deposited
Customs Act, Customs duty 9,430.19 -
1962*
Name of the Statute Period to which Forum where
the amount relates dispute is pending
Customs Act, 1962 2010-11 and Commissioner,
2011-12 Customs, Central
Excise & Service Tax
*Amount as per the show cause notice.
(c) According to the information and explanations given to us, and on
the basis of the records of the Company examined by us, no amount is
required to be transferred to investor education and protection fund in
accordance with the relevant provisions of the Companies Act, 1956 (1
of 1956) and rules made thereunder.
(viii)The accumulated losses of the Company at the end of the financial
year are more than fifty percent of its net worth. The Company has
incurred cash losses during the financial year and in the immediately
preceding financial year.
(ix) In our opinion and according to the information and explanations
given to us, and on the basis of our examination of the books of
account and related records, the Company has defaulted in repayment of
dues to its bankers. The Company did not have any outstanding dues to
debenture holders during the year.
Nature of the
lender Nature of dues Amount in
rupees
(lakhs) Period to which it
relates
Andhra Bank Interest on
secured loans 3,498.79 July 2013-March 2015
Andhra Bank Principal amount 1,287.27 January 2014-
March 2015
Bank of Baroda Interest on secured
loans 2,384.74 July 2013-March 2015
Bank of Baroda Principal amount 1,274.29 January 2014-
March 2015
Corporation Bank Interest on secured
loans 3,223.80 April 2013- March
2015
Corporation Bank Principal amount 1,412.58 January 2014-
March 2015
Indian Bank Interest on secured
loans 2,414.33 April 2013-
March 2015
Indian Bank Principal amount 1,037.30 January 2014-
March 2015
Union Bank of
India Interest on
secured loans 5,446.97 April 2013-
March 2015
Union Bank of
India Principal amount 2,552.70 January 2014-
March 2015
Interest on
interest Interest on
secured loans 3,498.79 August 2014-
March 2015
(x) In our opinion and according to the information and explanations
given to us, the Company has not given any guarantee for loans taken by
others from banks or financial institutions;.
(xi) According to the information and explanations given to us, term
loans have been applied for the purpose for which such loans were
obtained.
(xii) According to the information and explanations given to us, no
fraud on or by the Company has been noticed or reported during the
course of our audit.
For B S R & Co. LLP
Chartered Accountants
Firm registration number: 101248W
VIKRAM ADVANI
Place:New Delhi Partner
Date :4 May, 2015 Membership No.: 091765
Mar 31, 2013
1. Report on the Financial Statements
We were engaged to audit the accompanying financial statements of
Indosolar Limited ("the Company"), which comprise the Balance Sheet as
at 31st March 2013, and the Statement of Profit and Loss and the Cash
Flow Statement for the year then ended, and a summary of significant
accounting policies and other explanatory information.
2. Management''s Responsibility for the Financial Statements
Management is responsible for the preparation of these 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 standards referred to in sub-section (3C) of section 211
of the Companies Act, 1956 ("the Act"). This responsibility includes
the design, implementation and maintenance of internal controls
relevant to the preparation and fair presentation of the financial
statements that are free from material misstatement, whether due to
fraud or error.
3. Auditor''s Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit in accordance with the Standards on
Auditing issued by the Institute of Chartered Accountants of India.
Because of the matter described in the Basis for Disclaimer of Opinion
paragraph, however, we were not able to obtain sufficient appropriate
audit evidence to provide a basis for an audit opinion.
4 . Basis for disclaimer of opinion
(i) Certain consignments relating to plant and machinery, imported in
connection with the expansion of the manufacturing facility, had been
lying at the bonded warehouse for a significant period of time until
31st March 2012. During the year, a substantial portion of such
machinery was removed and demurrage/ detention charges was paid at the
time of such removal amounting to Rs.1,365.93 lakhs and the same has
been considered as part of the cost of acquisition of an asset and
capitalised under capital work-in-progress accordingly, as at 31st
March 2013. Management is of the view that such expenses are directly
attributable to bringing the machinery to its current location and
condition and should be capitalized.
However, we are of the view that such charges should be treated as an
expense and accordingly should not be capitalised as they cannot be
considered as a cost that is directly attributable for getting the
asset ready for its intended use in accordance with the requirements of
AS 10 "Accounting for fixed assets". Had the Company accrued for such
demurrage/ detention charges, other expense would have been higher by
Rs.1,365.93 lakhs and the loss for the year ended 31st March 2013 would
have been higher by the corresponding amount.
(ii) Attention is invited to note 28, which explains in detail the
substantial erosion of net worth as at the balance sheet date because
of which the reference required in case of erosion of more than 50% of
peak net worth has been made to BIFR during the year and also explains
the multiple uncertainties being faced by the company. The Company has
been unable to utilise its capacity as the cost of production of solar
cells continues to be higher than the prevailing market prices and the
plant has remained shut for a significant part of the current year and
for the other part of the year has been operational at significantly
low levels of capacity utilization. Key policy decisions such as those
relating to imposition of Anti Dumping Duty, Local Content requirement
and Company''s eligibility for certain incentives remain unresolved.
The actual net cash inflows during the year ended 31st March 2013 are
significantly lower than the projections for the same period
incorporated in the first CDR package. Accordingly the cash flow
projections approved as part of that CDR package can no longer be
relied upon. Due to continued liquidity issues the Company has
approached the bankers for a second Corporate Debt Restructuring
package. The response of the banks is awaited.
Overall the short term liabilities exceed the short term assets by Rs.
7,125.31 lakhs. In addition as per the terms of the first Corporate
Debt Restructuring package, an amount of Rs. 2,281.89 lakhs,
representing 3% of the outstanding Term Loans, Funded Interest Term
Loans, Working Capital Demand Loan and Priority Term Loan together with
quarterly interest thereon shall become payable in the year ending 31st
March 2014.
The above factors create multiple uncertainties and we are unable to
determine their possible effects on the financial statements. We are
also unable to conclude on the ability of the Company to carry on as a
going concern.
5 . Disclaimer of opinion
Because of the significance of the matters described, specifically
relating to the multiple uncertainties created due to factors such as
response of banks to the application filed for a 2nd Corporate Debt
Restructuring; key policy initiatives of the government relating to
anti dumping duty and local content requirement; we have not been able
to obtain sufficient appropriate audit evidence to provide a basis for
an audit opinion. Accordingly, we do not express an opinion on the
financial statements.
6. Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2003 ("the
Order") issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Act, we give in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the Order.
2. As required by section 227(3) of the Companies Act, 1956, we report
that:
(a) as described in the Basis for Disclaimer of Opinion paragraph, we
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) 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;
(c) 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
Balance Sheet, Statement of Profit and Loss and Cash Flow Statement
comply with the accounting standards referred to in sub-section (3C) of
section 211 of the Act; and
(e) on the basis of written representations received from the directors
as on 31st March 2013, and taken on record by the Board of Directors,
none of the directors is disqualified as on 31st March 2013, from being
appointed as a director in terms of clause (g) of sub-section (1) of
section 274 of the Companies Act, 1956.
ANNEXURE REFERRED TO IN PARAGRAPH 6 OF THE INDEPENDENT AUDITORS'' REPORT
TO THE MEMBERS OF INDOSOLAR LIMITED ON THE ACCOUNTS FOR THE YEAR ENDED
31ST MARCH 2013
(i) (a) According to the information and explanations given to us, the
Company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets.
(b) According to the information and explanations given to us, the
Company has a regular programme of physical verification of its fixed
assets by which all fixed assets are physically verified by the
management in a phased manner over a period of two years. In accordance
with such phased programme, certain categories of fixed assets have
been physically verified by the management during the year. In our
opinion, the frequency of physical verification is reasonable having
regard to the size of the Company and nature of its fixed assets. As
informed to us, discrepancies noticed on such verification were not
material and have been properly dealt with in the books of account.
(c) Fixed assets disposed of during the year were not substantial, and
therefore, do not affect the going concern assumption.
(ii) (a) According to the information and explanations given to us, the
inventories have been physically verified by the management during the
year. In our opinion, the frequency of such verification is reasonable.
Further, as informed, there are no stocks lying with third party.
(b) In our opinion and according to the information and explanations
given to us, the procedures for physical verification of inventory
followed by the management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) According to the information and explanations given to us, and on
the basis of our examination of the records of inventories, we are of
the opinion that the Company is maintaining proper records of
inventories. As informed to us, the discrepancies noticed on physical
verification of inventories as compared to the book records were not
material and have been properly dealt with in the books of account.
(iii) (a) The Company had taken interest free loan from a party covered
in the register maintained under Section 301 of the Companies Act, 1956
in the year ended 31st March 2012. The maximum amount outstanding
during the year in respect of such loan was Rs. 418.62 lakhs and the
year-end balance of such loan is Rs. 418.62 lakhs.
In our opinion, the terms and conditions on which interest free loan
was taken from such party are not, prima facie, prejudicial to the
interest of the Company.
In the case of interest free loan taken from a party listed in the
register maintained under Section 301, the Company is not permitted to
repay the loan under the terms and condition of restructuring agreement
approved by the CDR Cell, unless the same has been approved by CDR
Cell. As informed by the management and according to the terms and
conditions of restructuring agreement, the loan has accordingly not
been repaid by the Company during the year.
(b) According to the information and explanations given to us, the
Company has not granted any loans, secured or unsecured, to or from
companies, firms or other parties covered in the register maintained
under section 301 of the Companies Act, 1956. Accordingly, paras 4
(iii) (f) to (g) of the Order are not applicable.
(iv) In our opinion and according to the information and explanations
given to us, and having regard to the explanation that purchases of
certain items of inventories and fixed assets are for the Company''s
specialised requirements and suitable alternative sources are not
available to obtain comparable quotations, there is an adequate
internal control system commensurate with the size of the Company and
the nature of its business with regard to purchase of inventories and
fixed assets and with regard to sale of goods. The activities of the
Company do not involve rendering of services. We did not observe any
major weakness in internal controls during the course of our audit.
(v) (a) In our opinion, and according to the information and
explanations given to us, the particulars of contracts or arrangements
referred to in section 301 of the Companies Act, 1956 have been entered
in the register required to be maintained under that section.
(b) In our opinion, and according to the information and explanations
given to us, there are no transactions made in pursuance of contracts
or arrangements entered in the register maintained under section 301 of
the Companies Act, 1956, and exceeding Rs. 5 lakhs with any party
during the year.
(vi) According to the information and explanations given to us, the
Company has not accepted any deposits from the public during the year.
(vii) The Company has an internal audit system. In our opinion, the
scope of work and coverage of internal audit needs to be enlarged to
make it commensurate with the size of the Company and the nature of its
business.
(viii) We have broadly reviewed the books of account maintained by the
Company pursuant to the rules prescribed by Central government for
maintenance of cost records under section 209(1)(d) of the Companies
Act, 1956 and are of the opinion that prima facie, the prescribed
accounts and records have been made and maintained. We have not,
however, made a detailed examination of the records with a view to
determine whether they are accurate or complete.
(ix) (a) According to the information and explanations given to us and
on the basis of our examination of the records of the Company, amounts
deducted/ accrued in the books of account in respect of undisputed
statutory dues including Wealth tax, Customs duty, Excise duty and
other material statutory dues, to the extent applicable, have generally
been regularly deposited with the appropriate authorities. In respect
of Provident Fund, Employees'' State Insurance, Income Tax, Service Tax
and Work Contract Tax, the deposits have not been regularly deposited
with the appropriate authorities and there have been serious delays in
large number of cases. As explained to us, the Company did not have any
dues on account of Investor Education and Protection Fund and Customs
duty.
According to the information and explanations given to us, no
undisputed amounts payable in respect of Provident Fund, Investor
Education and Protection Fund, Employees State Insurance, Income tax,
Sales tax, Wealth tax, Service tax, Customs duty, Excise duty and other
material statutory dues were in arrears as at 31st March 2013 for a
period of more than six months from the date they became payable.
(b) According to the information and explanations given to us, and on
the basis of the records of the Company examined by us, there are no
dues of Income-tax, Wealth-tax, Service tax, Sales-tax, Customs duty
and Excise duty which have not been deposited with the appropriate
authorities on account of any dispute except as mentioned below:
Name of the Nature of the Amount in Amount
statute dues Rupees* deposited
Customs Act, 1962 Customs duty 9,223,204 8,690,510
Central Excise Excise duty 112,249,935 18,198,763
Act, 1944
Finance Act, 1994 Service tax 190,371,164 13,706,745
Name of the statute Period to which Forum where
the amount relates dispute is pending
Customs Act,1962 2009-2011 Office of settlement
commission
Central Excise Act,1944 2009-2011 Office of settlement
commission
Finance Act,1994 2009-2011 Office of settlement
commission
*amount as per demand orders, including interest and penalty wherever
quantified in the order.
(x) The accumulated losses of the Company at the end of the financial
year are more than fifty percent of its net worth. The Company has
incurred cash losses during the financial year and in the immediately
preceding financial year.
(xi) In our opinion and according to the information and explanations
given to us, and on the basis of our examination of the books of
account and related records, the Company has not defaulted in repayment
of dues to its bankers. The Company did not have any outstanding dues
to financial institutions or debenture holders during the year.
(xii) According to the information and explanations given to us, the
Company has not granted any loans and advances on the basis of security
by way of pledge of shares, debentures and other securities.
(xiii) According to the information and explanations given to us, the
Company is not a chit fund or a nidhi/ mutual benefit fund/ society.
xiv) According to the information and explanations given to us, the
Company is not dealing or trading in shares, securities, debentures and
other investments.
(xv) In our opinion and according to the information and explanations
given to us, the Company has not given any guarantee for loans taken by
others from banks or financial institutions.
(xvi) According to the information and explanations given to us, term
loans have been applied for the purpose for which such loans were
obtained.
(xvii) According to the information and explanations given to us and on
an overall examination of the Balance Sheet of the Company, we are of
the opinion that the funds raised on short-term basis amounting to Rs.
4,843.11 lakhs have been used for long-term investments.
(xviii) The Company has not made any preferential allotment of shares
to companies/firms or parties covered in the register maintained under
Section 301 of the Companies Act, 1956.
(xix) The Company did not have any outstanding debentures during the
year.
(xx) We have verified the end-use of money raised by public issues as
disclosed in the notes to the financial statements.
(xxi) According to the information and explanations given to us, no
fraud on or by the Company has been noticed or reported during the
course of our audit.
For B S R and Associates
Chartered Accountants
Firm Registration No.: 128901 W
VIKRAM ADVANI
Place:New Delhi Partner
Date :29.05.2013 Membership No.: 091765
Mar 31, 2012
1. We have audited the attached Balance Sheet of Indosolar Limited
("the Company") as at 31st March, 2012 and the Statement of Profit and
Loss and Cash Flow Statement for the year ended on that date
("financial year"), annexed thereto. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3. As required by the Companies (Auditor's Report) Order, 2003 ('the
Order') issued by the Central Government of India in terms of
Sub-Section (4A) of Section 227 of the Companies Act, 1956, we enclose
in the Annexure a statement on the matters specified in paragraphs 4
and 5 of the said Order.
4. Further to our comments in the Annexure referred to above, we
report that:
(i) we have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purpose of our
audit;
(ii) 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;
(iii) 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;
(iv) in our opinion, the Balance Sheet, the Statement of Profit and
Loss and the Cash Flow Statement dealt with by this report comply with
the accounting standards referred to in Sub-Section (3C) of Section 211
of the Companies Act, 1956, to the extent applicable;
(v) on the basis of written representations received from the Directors
of the Company, as on 31st March, 2012, and taken on record by the
Board of Directors, we report that none of the directors is
disqualified as on 31st March, 2012 from being appointed as a director
in terms of clause (g) of sub-Section (1) of Section 274 of the
Companies Act, 1956;
(vi) without qualifying our opinion, attention is invited to Note 28,
with regard to impairment assessment carried out by management as of
31st March, 2012 based on cash flows determined after taking into
account the current business realities and which has been incorporated
in the Corporate Debt Restructuring ('CDR') package approved by the
consortium of banks ('CDR Cell'). Such cash flows do not indicate
impairment as at 31st March, 2012.
As elaborated in the note, the achievement of such cash flows is
dependent upon sustaining reasonable gross margins despite low selling
prices; ability of project developers reaching financial closure; the
Company being able to garner a reasonable share of the demand both
under National Solar Missions and State Solar Missions and the ultimate
outcome of various policy interventions that are required for the
viability of the sector. The result of all of the above significant
possible changes in the business dynamics and its consequent effect on
the Company's cash flows will be known in the ensuing period.
Accordingly, the cash flows that were prepared by management and as
approved by the CDR cell have been considered by us for impairment
assessment; and
(vii) Without qualifying our opinion, attention is invited to note 6
(iii) (f) that highlights that one of the lending banks has not signed
the joint Master Restructuring Agreement. However for purposes of the
attached financial statements, the owings to this particular bank
including interest due at lower rates have been disclosed / calculated
in accordance with the terms of the CDR package per Letter of Approval
dated 7th March, 2012 received from the CDR cell. As informed to us the
owings to this particular bank have been reclassified / interest
calculated in accordance with the CDR package as the necessary
stipulated majority of the CDR cell has agreed to the CDR package.
Accordingly, short term borrowings comprising cash credit amounting to
Rs. 1,223.92 lakhs and devolved Letter of Credit amounting to Rs.
511.57 lakhs have been reclassified as Long Term Borrowing (Rs
1,402.43) and Short Term Borrowings (Rs. 333.06 lakhs) as at 31st
March, 2012. The existing term loan of Rs. 5,996.79 lakhs has been
disclosed as long term borrowing with nil current maturities. The
interest due w.e.f 1st July, 2011 till 31st March, 2012 at revised
rates amounting to Rs. 549.73 lakhs has been reclassified as a Funded
Interest Term Loan. The above reclassifications and interest
calculations are subject to reconciliation and approval by this
particular bank.
(viii) in our opinion, and to the best of our information and according
to the explanations given to us, the said accounts give the information
required by the Companies Act, 1956, in the manner so required and give
a true and fair view in conformity with the accounting principles
generally accepted in India:
a. in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2012;
b. in the case of the Statement of Profit and Loss, of the loss of the
Company for the year ended on that date; and
c. in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) The Company has a regular programme of physical verification of its
fixed assets by which all fixed assets are verified in a phased manner
over a period of two years. In accordance with the policy, the Company
has carried out physical verification of majority of its fixed assets
during the year. In our opinion, the frequency of physical verification
is reasonable having regard to the size of the Company and the nature
of its assets. As informed to us, no material discrepancies were
noticed on such verification.
(c) Fixed assets disposed of during the year were not substantial, and
therefore, do not affect the going concern assumption.
(ii) (a) The inventory has been physically verified by the management
during the year. In our opinion, the frequency of such verification is
reasonable.
(b) The procedures for physical verification of inventories followed by
the management are reasonable and adequate in relation to the size of
the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory. As informed
to us, no material discrepancies were noticed on verification between
the physical stocks and the book records.
(iii) (a) The Company had taken interest free loan from a party covered
in the register maintained under Section 301 of the Companies Act,
1956. The maximum amount outstanding during the year in respect of such
loan was Rs 418.62 lakhs and the year-end balance of such loan is Rs
418.62 lakhs.
In our opinion, the terms and conditions on which interest free loan
had been taken from such party are not, prima facie, prejudicial to the
interest of the Company.
In the case of interest free loan taken from a party listed in the
register maintained under Section 301, the Company is not permitted to
repay the loan under the terms and condition of restructuring agreement
approved by the CDR Cell, unless the same has been approved by CDR
Cell. As informed by the management and according to the terms and
conditions of restructuring agreement, the loan has accordingly not
been repaid by the Company during the year.
(b) The Company has not granted any loans, secured or unsecured, to
companies, firms or other parties covered in the register maintained
under Section 301 of the Companies Act, 1956.
(iv) In our opinion and according to the information and explanations
given to us, and having regard to the explanation that purchases of
certain items of inventories and fixed assets are for the Company's
specialized requirements and suitable alternative sources are not
available to obtain comparable quotations, there is an adequate
internal control system commensurate with the size of the Company and
the nature of its business with regard to purchase of inventories and
fixed assets and with regard to sale of goods. The activities of the
Company do not involve rendering of services. We did not observe any
major weakness in internal controls during the course of our audit.
(v) (a) In our opinion and according to the information and
explanations given to us, the particulars of contracts or arrangements
referred to in Section 301 of the Companies Act, 1956 have been entered
in the register required to be maintained under that section.
(b) In our opinion, and according to the information and explanations
given to us, there are no contracts or arrangement referred to in (a)
above that exceeds the value of Rs. 5 lakh during the year except
interest free loan taken from a party covered in the register
maintained under Section 301 of the Companies Act, 1956. Refer to our
comments in respect of transaction related to loan taken in para (iii)
(a) above.
(vi) The Company has not accepted any deposits from the public.
(vii) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
(viii) We have broadly reviewed the books of account maintained by the
Company pursuant to the rules prescribed by the Central Government for
maintenance of cost records under section 209(1)(d) of the Companies
Act, 1956 and are of the opinion that prima facie, the prescribed
accounts and records have been made and maintained. However, we have
not made a detailed examination of the records.
(ix) (a) According to the information and explanations given to us and
on the basis of our examination of the records of the Company, the
amounts deducted/ accrued in the books of accounts in respect of
undisputed statutory dues including Income tax, Provident Fund,
Employees' State Insurance, Sales tax, Wealth tax, Excise duty and
other material statutory dues have generally been regularly deposited
with the appropriate authorities except Service tax and work contract
tax where there have been serious delays in few cases. As explained to
us, the Company did not have any dues on account of Investor Education
and Protection Fund and Customs duty.
According to the information and explanations given to us, no
undisputed amounts payable in respect of Provident Fund, Employees'
State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Excise
duty and other material statutory dues were in arrears as at 31st
March, 2012 for a period of more than six months from the date they
became payable.
(b) According to the information and explanations given to us, there
are no amounts in respect of Income tax, Sales tax, Service tax, Wealth
tax and Excise duty that have not been deposited with appropriate
authorities on account of any dispute. As explained to us, the
provisions relating to Customs duty are not applicable to the Company.
(x) The accumulated losses of the Company at the end of the financial
year are more than fifty percent of its net worth. The Company has
incurred cash losses during the financial year and in the immediately
preceding financial year.
(xi) In our opinion and according to the information and explanations
given to us, and on the basis of our examination of the books of
account and related records, we observed following delays in the
repayment of principal sums and interest thereon to banks:
Name of the
lender Period of
default Minimum
amount of Maximum amount of
in days default (Rs.
in lakhs) default (Rs. in
lakhs)
Corporation Bank 1 to 271 0.64 3,522.47
Bank of Baroda 6 to 274 74.59 3,303.07
Indian bank 18 to 274 70.58 2,977.80
Union Bank of
India 1 to 212 20.12 1,806.11
Andhra Bank 6 to 308 14.52 4,174.46
However, as explained in Note 6 of financial statements the Corporate
Debt Restructuring Empowered Group approved a restructuring package on
28th March, 2012 in terms of which the Existing loans were restructured
with effect from 1st July, 2011. As a consequence, there are no overdue
amounts outstanding towards interest and principal as at year end.
(xii) The Company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
(xiii) In our opinion and according to the information and explanations
given to us, the Company is not a chit fund or a nidhi/mutual benefit
fund/society.
(xiv) According to the information and explanations given to us, the
Company is not dealing or trading in shares, securities, debentures and
other investments.
(xv) In our opinion and according to the information and explanations
given to us, the Company has not given any guarantee for loans taken by
others from banks or financial institutions.
(xvi) In our opinion and according to the information and explanations
given to us, the term loans taken by the Company have been applied for
the purpose for which they were raised.
(xvii) According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company, we are of
the opinion that funds raised on short-term basis amounting to Rs.
2,254.50 lakhs have been used for long-term investment.
(xviii) The Company has not made any preferential allotment of shares
to companies, firms or parties covered in the register maintained under
Section 301 of the Companies Act, 1956.
(xix) The Company did not have any outstanding debentures during the
year.
(xx) We have verified the end-use of money raised by public issues as
disclosed in the notes to the financial statements.
(xxi) According to the information and explanations given to us, no
fraud on or by the Company has been noticed or reported during the
course of our audit.
ForB S R and Associates
Chartered Accountants
Firm Registration No.: 128901 W
VIKRAM ADVANI
Place : Gurgaon Partner
Date : 30.05.2012 Membership No.: 091765
Mar 31, 2011
1. We have audited the attached Balance Sheet of Indosolar Limited
(formerly known as Robin Solar Private Limited) ("the Company") as at
31 March 2011 and the Profit and Loss Account and Cash Flow Statement
for the year ended on that date ("financial year"), annexed thereto.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3. As required by the Companies (Auditor's Report) Order, 2003 (Ãthe
Order') issued by the Central Government of India in terms of
Sub-Section (4A) of Section 227 of the Companies Act, 1956, we enclose
in the Annexure a statement on the matters specified in paragraphs 4
and 5 of the said Order.
4. Further to our comments in the Annexure referred to above, we
report that:
(i) we have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purpose of our
audit;
(ii) 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;
(iii) the Balance Sheet, the Profit and Loss Account and the Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
(iv) in our opinion, the Profit and Loss Account and the Cash Flow
Statement dealt with by this report comply with the accounting
standards referred to in Sub-Section (3C) of Section 211 of the
Companies Act, 1956, to the extent applicable;
(v) on the basis of written representations received from the Directors
of the Company, as on 31 March 2011, and taken on record by the Board
of Directors, we report that none of the directors is disqualified as
on 31 March 2011 from being appointed as a director in terms of clause
(g) of sub-Section (1) of Section 274 of the Companies Act, 1956; and
(vi) in our opinion, and to the best of our information and according
to the explanations given to us, the said accounts give the information
required by the Companies Act, 1956, in the manner so required and give
a true and fair view in conformity with the accounting principles
generally accepted in India:
a. in the case of the Balance Sheet, of the state of affairs of the
Company as at 31 March 2011;
b. in the case of the Profit and Loss Account, of the loss of the
Company for the year ended on that date; and
c. in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) The Company has a regular programme of physical verification of its
fixed assets by which all fixed assets are verified in a phased manner
over a period of two years. In accordance with the policy, the Company
has carried out physical verification of majority of its fixed assets
during the year. In our opinion, the frequency of physical verification
is reasonable having regard to the size of the Company and the nature
of its assets. As informed to us, no material discrepancies were
noticed on such verification.
(c) Fixed assets disposed of during the year were not substantial, and
therefore, do not affect the going concern assumption.
(ii) (a) The inventory, except goods-in-transit, has been physically
verified by the management during the year. In our opinion, the
frequency of such verification is reasonable.
(b) The procedures for physical verification of inventories followed by
the management are reasonable and adequate in relation to the size of
the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory, except in
respect of spares where adequate records were not being maintained for
identifying the quantity of each item of spares received, issued and
the closing balances and appropriate bifurcation between spares
received free of cost and those purchased. As at year end, however the
same has been rectified and the complete data and records for spares
have been updated. As informed to us, no material discrepancies were
noticed on verification between the physical stocks and book records.
(iii) (a) The Company had taken interest free loans from parties
covered in the register maintained under Section 301 of the Companies
Act, 1956. The maximum amount outstanding during the year in respect of
such loans was Rs 70,000,000 and the year-end balance of such loans is
Rs. Nil.
In our opinion, the terms and conditions on which loans had been taken
from such parties were not, prima facie, prejudicial to the interest of
the Company.
In the case of interest free loans taken from parties listed in the
register maintained under Section 301, the Company has been regular in
repaying the principal amounts according to the agreed terms and
conditions.
(b) The Company has not granted any loans, secured or unsecured, to
companies, firms or other parties covered in the register maintained
under Section 301 of the Companies Act, 1956.
(iv) In our opinion and according to the information and explanations
given to us, and having regard to the explanation that purchases of
certain items of inventories and fixed assets are for the Company's
specialized requirements and suitable alternative sources are not
available to obtain comparable quotations, there is an adequate
internal control system commensurate with the size of the Company and
the nature of its business with regard to purchase of inventories and
fixed assets and with regard to sale of goods. The activities of the
Company do not involve rendering of services. We did not observe any
major weakness in internal controls during the course of our audit,
except in respect of spares where the adequate records were not being
maintained for identifying the quantity of each item of spares
received, issued and the closing balances and appropriate bifurcation
between spares received free of cost and those purchased. As at year
end, however the same has been rectified and the complete data and
records for spares have been updated.
(v) (a) In our opinion and according to the information and
explanations given to us, the particulars of contracts or arrangements
referred to in Section 301 of the Companies Act, 1956 have been entered
in the register required to be maintained under that section.
(b) In our opinion, and according to the information and explanations
given to us, there are no contracts or arrangement referred to in (a)
above that exceeds the value of Rs. 5 lakh during the year.
(vi) The Company has not accepted any deposits from the public.
(vii) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
(viii) According to the information and explanations given to us, the
Central Government has not prescribed the maintenance of cost records
under section 209(1)(d) of the Companies Act, 1956 for any of the
products manufactured or any of the service rendered by the Company.
(ix) (a) According to the information and explanations given to us and
on the basis of our examination of the records of the Company, the
amounts deducted/ accrued in the books of accounts in respect of
undisputed statutory dues including Provident Fund, Employees' State
Insurance, Income tax, Sales tax, Wealth tax, Service tax, Excise duty
and other material statutory dues have generally been regularly
deposited with the appropriate authorities though there have been some
delays in a few cases. As explained to us, the Company did not have any
dues on account of Investor Education and Protection Fund and Customs
duty. According to the information and explanations given to us, no
undisputed amounts payable in respect of Provident Fund, Employees'
State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Excise
duty and other material statutory dues were in arrears as at 31 March
2011 for a period of more than six months from the date they became
payable.
There are no dues on account of Cess under Section 441A of the
Companies Act 1956, since the date from which the aforesaid Section
comes into force has not yet been notified by the Central Government.
(b) According to the information and explanations given to us, there
are no amounts in respect of Income tax, Sales tax, Service tax, Wealth
tax and Excise duty that have not been deposited with appropriate
authorities on account of any dispute. As explained to us, the
provisions relating to Customs duty are not applicable to the Company.
In respect of Cess, refer to our comments in para (ix)(a).
(x) The accumulated losses at the end of the financial year are less
than fifty percent of its net worth. The Company has incurred cash
losses during the financial year and in the immediately preceding
financial year.
(xi) In our opinion and according to the information and explanations
given to us, and on the basis of our examination of the books of
account and related records, we observed following delays in the
repayment of principal sums and interest thereon to banks:
Name of the lender Period of default Minimum
amount of Maximum amount
in days default
(Rs.) of default (Rs.)
Corporation Bank 1 to 77 2,747,399 45,000,000
Bank of Baroda 1 to 89 701,854 45,000,000
Indian Bank 2 to 82 1,086,526 40,000,000
Union Bank 1 to 63 15,781 70,000,000
Andhra Bank 2 to 89 1,500,000 40,000,000
However, there are no overdue amounts outstanding towards interest and
principal payable as at year end.
(xii) The Company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
(xiii) In our opinion and according to the information and explanations
given to us, the Company is not a chit fund or a nidhi/mutual benefit
fund/society.
(xiv) According to the information and explanations given to us, the
Company is not dealing or trading in shares, securities, debentures and
other investments.
(xv) In our opinion and according to the information and explanations
given to us, the Company has not given any guarantee for loans taken by
others from banks or financial institutions.
(xvi) In our opinion and according to the information and explanations
given to us, the term loans taken by the Company have been applied for
the purpose for which they were raised.
(xvii) According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company, we are of
the opinion that funds raised on short-term basis have not been used
for long-term investment.
(xviii) The Company has not made any preferential allotment of shares
to companies, firms or parties covered in the register maintained under
Section 301 of the Companies Act, 1956.
(xix) The Company did not have any outstanding debentures during the
year.
(xx) The management has properly disclosed the end use of money raised
by public issue during the year and the same has been verified.
(xxi) According to the information and explanations given to us, no
fraud on or by the Company has been noticed or reported during the
course of our audit.
For B S R and Associates
Chartered Accountants
Firm Registration No.: 128901 W
VIKRAM ADVANI
Place:New Delhi Partner
Date :09.05.2011 Membership No.: 091765
Mar 31, 2010
1. We have audited the attached Balance Sheet of Indosolar Limited
(formerly known as Robin Solar Private Limited) ("the Company") as at
31 March 2010 and the Profit and Loss Account and Cash Flow Statement
for the year ended on that date ("financial year"), annexed thereto.
These financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3. As required by the Companies (Auditors Report) Order, 2003 (Ãthe
Order) issued by the Central Government of India in terms of
Sub-Section (4A) of Section 227 of the Companies Act, 1956, we enclose
in the Annexure a statement on the matters specified in paragraphs 4
and 5 of the said Order.
4. Further to our comments in the Annexure referred to above, we
report that:
(i) we have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purpose of our
audit;
(ii) 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;
(iii) the Balance Sheet, the Profit and Loss Account and the Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
(iv) in our opinion, the Profit and Loss Account and the Cash Flow
Statement dealt with by this report comply with the accounting
standards referred to in Sub-Section (3C) of Section 211 of the
Companies Act, 1956, to the extent applicable;
(v) on the basis of written representations received from the Directors
of the Company, as on 31 March 2010, and taken on record by the Board
of Directors, we report that none of the directors is disqualified as
on 31 March 2010 from being appointed as a director in terms of clause
(g) of Sub-Section (1) of Section 274 of the Companies Act, 1956; and
(vi) without qualifying our report, attention is invited to Note 18 of
Schedule 19 regarding managerial remuneration amounting to Rs.
24,353,250 paid for the period 26 September to 31 March 2010, in excess
of the limits prescribed under Schedule XIII of the Companies Act, 1956
and being held in trust by such managerial personnel. The Company has
filed an application with the Central government for such excess
remuneration for the financial year in respect of which the appointment
is effective. The management believes that the Company shall be able to
get the approval.
(vii) in our opinion, and to the best of our information and according
to the explanations given to us, the said accounts give the information
required by the Companies Act, 1956, in the manner so required and give
a true and fair view in conformity with the accounting principles
generally accepted in India:
a. in the case of the Balance Sheet, of the state of affairs of the
Company as at 31 March 2010;
b. in the case of the Profit and Loss Account, of the loss of the
Company for the year ended on that date; and
c. in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
Annexure referred to in paragraph 3 of our report of even date
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) The Company has a regular programme of physical verification of its
fixed assets by which all fixed assets are verified in a phased manner
over a period of two years. In accordance with the policy, the Company
has carried out physical verification of majority of its fixed assets
during the year. In our opinion, the frequency of physical verification
is reasonable having regard to the size of the Company and the nature
of its assets. As informed to us, no material discrepancies were
noticed on such verification.
(c) The Company has not disposed off any fixed assets during the year.
(ii) (a) The inventory, except goods-in-transit, has been physically
verified by the management during the year. In our opinion, the
frequency of such verification is reasonable.
(b) The procedures for physical verification of inventories followed by
the management are reasonable and adequate in relation to the size of
the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory. As informed
to us, no material discrepancies were noticed on verification between
the physical stocks and book records.
(iii) (a) The Company has taken interest free loans from parties
covered in the register maintained under Section 301 of the Companies
Act, 1956. The maximum amount outstanding during the year in respect of
such loans was Rs 70,000,000 and the year- end balance of such loans
was Rs. 70,000,000.
In our opinion, the terms and conditions on which loans have been taken
from such parties are not, prima facie, prejudicial to the interest of
the Company.
In the case of such loans, repayment of principal has been stipulated
and according to information and explanations provided by the
management, the Company was not required to repay any principal during
the year.
(b) The Company has not granted any loans, secured or unsecured, to or
from companies, firms or other parties covered in the register
maintained under Section 301 of the Companies Act, 1956.
(iv) In our opinion and according to the information and explanations
given to us, and
having regard to the explanation that purchases of certain items of
inventories and fixed assets are for the Companys specialised
requirements and suitable alternative sources are not available to
obtain comparable quotations, there is an adequate internal control
system commensurate with the size of the Company and the nature of its
business with regard to purchase of inventories and fixed assets and
with regard to sale of goods. The activities of the Company do not
involve rendering of services. We have not observed any major
weaknesses in internal control system during the course of our audit.
(v) (a) In our opinion and according to the information and
explanations given to us, the particulars of contracts or arrangements
referred to in Section 301 of the Companies Act, 1956 have been entered
in the register required to be maintained under that section.
(b) In our opinion, and according to the information and explanations
given to us, there are no contracts or arrangement referred to in (a)
above that exceeds the value of Rs. 5 lakh during the year, except the
interest free loan taken from directors of the Company. Refer to our
comments in respect of transactions related to loans taken in para
(iii) (a) above.
(vi) The Company has not accepted any deposits from the public.
(vii) The Companys paid up share capital and reserves are less than
Rs. 50 lakhs at the beginning of the financial year and average annual
turnover does not exceed five crores for a period of three consecutive
financial years immediately preceding the financial year. Thus,
provision of clause 4(vii) of the order is not applicable to the
Company.
(viii) According to the information and explanations given to us, the
Central Government
has not prescribed the maintenance of cost records under section
209(1)(d) of the Companies Act, 1956 for any of the products
manufactured/services rendered by the Company.
(ix) (a) According to the information and explanations given to us and
on the basis of our examination of the records of the Company, the
amounts deducted/ accrued in the books of accounts in respect of
undisputed statutory dues including Provident Fund, Employees State
Insurance, Income tax, Sales tax, Wealth tax, Service tax, Excise Duty
and other material statutory dues have generally been regularly
deposited with the appropriate authorities. As explained to us, the
Company did not have any dues on account of Investor Education and
Protection Fund and Customs duty.
According to the information and explanations given to us, no
undisputed amounts payable in respect of Provident Fund, Employees
State Insurance, Income tax, Sales tax, Wealth tax Service tax, Excise
duty and other material statutory dues were in arrears as at 31 March
2010 for a period of more than six months from the date they became
payable.
There are no dues on account of Cess under Section 441A of the
Companies Act 1956, since the date from which the aforesaid Section
comes into force has not yet been notified by the Central Government.
(b) According to the information and explanations given to us, there
are no amounts in respect of Income tax, Sales tax, Service tax, Wealth
tax and Excise duty that have not been deposited with appropriate
authorities on account of any dispute. As explained to us, the
provisions relating to Customs duty are not applicable to the Company.
In respect of Cess, refer to our comments in para (ix)(a).
(x) The Company has been registered for a period less than five years,
thus paragraph 4 (x) of the Order is not applicable.
(xi) In our opinion and according to the information and explanations
given to us, the Company has delayed in repayment of interest dues to
its bankers. However, such dues have been repaid within 30 days from
the respective due dates. Delays of 2 to 15 days in payment of interest
on term loan taken from Andhra Bank for various months amounting to Rs.
3,961,853, Rs. 6,490,521, Rs. 7,411,060, Rs. 7,905,951, Rs. 7,982,059
and Rs. 7,213,589; Delays of 3 to 15 days in payment of interest on
term loan taken from Bank of Baroda for various months amounting to Rs.
8,790,411, Rs. 8,516,121, Rs. 8,811,993, Rs. 8,861,631 and Rs.
7,985,126; Delays of 3 to 8 days in payment of interest on term loan
taken from Corporation Bank for various months amounting to Rs.
8,472,171, Rs. 8,208,624, Rs. 8,500,507, and Rs. 7,901,752; Delays of
3 to 14 days in payment of interest on term loan taken from Union Bank
of India for various months amounting to Rs. 11,465,723, Rs.
11,105,499, Rs. 11,485,794, Rs. 11,479,914and Rs. 10,405,699; and
Delays of 3 to 16 days in payment of interest on term loan taken from
Indian Bank for various months amounting to Rs. 8,323,288, Rs.
8,063,175, Rs. 8,339,524, Rs. 8,345,734 and Rs. 7,556,966.
The Company did not have any outstanding dues to any financial
institutions or debenture holders during the year.
(xii) The Company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
(xiii) In our opinion and according to the information and explanations
given to us, the Company is not a chit fund or a nidhi/mutual benefit
fund/society.
(xiv) According to the information and explanations given to us, the
Company is not dealing or trading in shares, securities, debentures and
other investments.
(xv) In our opinion and according to the information and explanations
given to us, the Company has not given any guarantee for loans taken by
others from banks or financial institutions.
(xvi) In our opinion and according to the information and explanations
given to us, the term loans taken by the Company have been applied for
the purpose for which they were raised.
(xvii) According to the information and explanations given to us and on
an overall examination of the Balance Sheet of the Company, we are of
the opinion that the funds amounting to Rs. 538,534,660 raised on
short-term basis have been used for long-term investment.
(xviii) The Company has made preferential allotment of shares to
parties covered in the register maintained under Section 301 of the
Companies Act, 1956, In our opinion, the price at which shares have
been issued is not prejudicial to the interest of the Company.
(xix) The Company did not have any outstanding debentures during the
year.
(xx) The Company has not raised any money by public issues during the
year.
(xxi) According to the information and explanations given to us, no
fraud on or by the Company has been noticed or reported during the
course of our audit.
For B S R and Associates
Chartered Accountants
Firm Registration No.: 128901W
Sd/-
Vikram Advani
Partner
Membership No.: 091765
Place: Gurgaon
Date : May 6, 2010
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