We were engaged to audit of accompanying financial state¬ments of IMP Powers Limited (“under liquidation”) (also"hereinafter referred to as the Company"), which comprise thestandalone Balance Sheet as at 31st March, 2024, thestandalone Statement of Profit and Loss, the standaloneCash Flow Statement, the standalone Statement of Changesin Equity for the year ended, and a summary of the significantaccounting policies and other explanatory information(hereinafter referred to as “the standalone financial state¬ments”).
We do not express an opinion on the accompanyingstandalone Financial Statements of the Company. Because ofthe significance of the matters described in the Basis for Dis¬claimer of Opinion section of our report, we have not beenable to obtain sufficient appropriate audit evidence to providea basis for an audit opinion on these Standalone FinancialStatements.
We draw attention to:
The NCLT, vide its order dated March 29, 2022 (“InsolvencyCommencement Date”) initiated the Corporate InsolvencyResolution Process (“CIRP”) of the Company under the Code.The said NCLT Order also records the appointment of Mr.Mukesh Verma as the Interim Resolution Professional (“IRP”)in accordance with Section 16 of the Code. Subsequently,pursuant to the meeting of the Committee of Creditors (the“CoC”) confirmed Mr. Mukesh Verma as the Resolution Pro¬fessional (“RP”) for the Company. Upon the application filedby CoC, the NCLT has approved the appointment of RP. Fur¬ther resolution plans did not find requisite majority and upondecision of the CoC on liquidation. Company went into Liqui¬dation vide NCLT order dated 19th December, 2023(“Liquidation Commencement Date”), pursuant to the saidliquidation order Hon'ble NCLT Ahmedabad Bench appointedMr. Ravindra Kumar Goyal as liquidator for the company.
In view of the on-going liquidation, the powers of Board ofDirectors remain suspended and hence, as explained to us,the powers of directs vests with RP/Liquidator. These auditedstandalone financial statements are prepared by the Manage¬ment of the Company and approved by the liquidator.
The financial statement for the year ended March 31, 2024have been prepared on the basis of the trial balance for theperiod ended March 31, 2024 which is on the basis of thecarrying balance of assets and liabilities as at March 31,2023. Prior to the commencement of CIRP, the Board of Di¬rectors, whose powers were subsequently suspended duringthe CIRP, had oversight on the management of the affairs ofthe company together with the KMPs for the year ended 31stMarch 2023. The primary purpose of preparing the financialstatements is for
the compliance with the provisions of the Companies Act, 2013, therules and regulations framed thereunder (“Act”).
We have been informed by RP/Liquidator that certain informationincluding the minutes of meetings of the Committee of Creditors(COC)/ Stakeholders Consultation Committee (SCC) and the outcomeof certain procedures carried out as a part of the CIRP are confidentialin nature and could not be shared. Accordingly, we are unable to Com¬ment on the possible financial impact, presentation and disclosures, ifany, that may arise if we have been provided access to that infor¬mation.
1. As per SA 510, para 10, read with SA 705 (Revised) as applicable,when an auditor is unable to obtain sufficient appropriate auditevidence regarding the opening balances, the auditor shall ex¬press an opinion (qualified opinion or a disclaimer of opinion), asappropriate, in accordance with SA 705 (Revised). Since we wereunable to obtain appropriate audit evidences pertaining to openingbalances to the extent as mentioned in subsequent paras andother financial information, (where applicable), we express a dis¬claimer of opinion.
2. The company has not carried out detailed assessment of the use¬ful life of Company's assets as company is in progress of updatingfixed assets register, so assets wise useful life working is not pos¬sible, hence depreciation has been adjusted, based on past histor¬ical trend and not as per the notification to Schedule II of the Com¬panies Act, 2013. We are unable to comment on the impact onstatement of Profit & Loss Account.
3. The company has not complied with Ind AS - 19, with respect toemployee benefits. Actuarial valuation certificate has not beenobtained for gratuity and other post-employment benefits.
4. The Company has, on the basis of their internal evaluation, valuedinventories for the period ended 31st March, 2024 at Rs.9,85,22,485. In the view of current Liquidation Process followedby liquidation process, and no production activities since long timeand in absence of valuation report and any supporting papers, weare unable to comment on the realizability of the inventories.
5. For the period ended 31st March 2024, the company has GrossTrade Receivables for Rs. 39,82,93,341 out of which no provisionfor doubtful debt/ECL has been created in the previous financialyears. Further the said balances are aged more-than three yearshence, In the view of current Liquidation Process followed by liqui¬dation process, and no production activities during review periodand in absence of valuation report and any supporting papers, weare unable to comment on the carrying value of the said receiva¬bles. Further in the absence of sufficient appropriate audit evi¬dence we are unable to review said receivables and accordinglynecessary audit procedures couldn't be performed on the same.
6. In absence of independent bank confirmations for 4 current ac¬counts, as required under SA 505 - External Balance Confirma¬tion, having a book balance of Rs. 1,52,464.88 as on March 31,2024 also non-availability of Bank account statements for 4 cur¬rent accounts having a book balance of Rs. 1,52,464.88 as onMarch 31, 2024 led to incomplete supporting for our audit opin¬ion. Hence, we are unable to comment on the bank transactionsas well as the closing balances as appearing in the books of ac¬counts for the said bank balances.
7. For the period ended 31st March 2024, the company has reported“Other Current Assets” includes interest accrued/receivables Rs.
6,81,34,772, EMD/ Margin Money and Other Deposits Rs.1,26,09,438 and Balance with Government AuthoritiesRs. 49,98,779. The said balances are aged and are sub¬ject to confirmations. In the view of current LiquidationProcess followed by liquidation process, and no produc¬tion activities during review period and in absence of anysupporting papers, we are unable to comment on the car¬rying value of the said balances of “Other Current Assets”.Further in the absence of sufficient appropriate audit evi¬dence we are unable to review said receivables and ac¬cordingly necessary audit procedures couldn't be per¬formed on the same.
8. Property, Plant & Equipment - The company has not car¬ried out detailed assessment of the useful life of Compa¬ny's assets as company is in progress of updating fixedassets register, so assets wise useful life working is notpossible, hence depreciation has been adjusted, based onpast historical trend and not as per the notification toSchedule II of the Companies Act, 2013. We are unable tocomment on the impact on statement of Profit & LossAccount.
9. In respect of Finance cost we draw attention to note no.47 of the standalone financial statement of the Company,that it has not provided finance cost related with interestexpenses for the year ended on March 31, 2024 as theaccount of the Company has been classified as Non¬Performing Assets (NPA) by all lenders on financial facili¬ties availed from them. Due to non-provision of the inter¬est expenses, Loss for the year ended on March 31, 2024is understated. Amount is not determinable.
10. The Company is in the process of reconciling direct/indirect tax related balances as per books of account andas per tax records. Accordingly, we are unable to commentwhether these balances are fairly stated in the books
11. Material Uncertainty related to Going Concern:
a) the company has accumulated losses and its networth has been eroded. The company has incurred netloss during the current year and in the earlier year(s),the company's current liabilities exceed its currentassets and the company has a high debt-equity ratioas at 31st March, 2024, earnings per share is nega¬tive.
b) Uncertainty in Going Concern due to initiation of liqui¬dation vide order date 19th December, 2023 ofHon'ble NCLT Ahmedabad Bench. Accordingly, auditedconsolidated financial results of the Company for yearended March 31, 2024 have been reviewed by Liqui¬dator. The status of the Company being under liquida¬tion and impact arising therefrom as such cannot becommented upon by us. However, the standalonefinancial statements are prepared on the going con¬cern assumption.
Emphasis of Matter
1. We draw attention to Note 41 of the standalone Ind ASfinancial statements, which states that Powers of theBoard of directors have been suspended on account ofongoing liquidation process. These financial statementsare signed by the Liquidator Mr. Ravindra Kumar Goyalconfirming the accuracy and completeness of the financialstatements and thereafter taken on record by the Liquida-
tor. Liquidation process has commenced with effect from Decem¬ber 19, 2023.
2. We draw attention to Note 42 of the standalone Ind AS financialstatements, that Liquidation Process under Section 33 of theInsolvency and Bankruptcy Code, 2016 has been admittedagainst the Company vide Honourable National Company LawTribunal, Ahmedabad bench vide Order dated 19.12.2023 andMr. Ravindra Kumar Goyal (having registration no. IBBI/ IPA-001 / IP-P-02019/2020-2021/13098} has been appointed asLiquidator of the company under section 34 of the Insolvencyand Bankruptcy Code, 2016 and Resolution Professional hasbeen discharged. Upon the order of Hon'ble NCLT, all the powersof board of directors shall cease to have effect and shall be vest¬ed in the Liquidator.
3. Balances of Trade Receivables, Trade Payables and Loans andadvances are subject to confirmations and reconciliations.
Our opinion is not modified in respect of these matters.
Key Audit Matters
Key audit matter is the matter that, in our professional judgment,was of most significance in our audit of the standalone financialstatements of the current period. This matter was addressed in thecontext of our audit of the standalone financial statements as awhole, and in forming our opinion thereon, and we do not provide aseparate opinion on this matter.
Other Information
The Company's erstwhile Management, Resolution Professional andLiquidator are responsible for the other information. The other infor¬mation comprises the information related with Annual Report is notyet compiled.
Our opinion on the financial statements does not cover the otherinformation and we do not express any form of assurance conclu¬sion thereon.
In connection with our audit of the financial statements, our respon¬sibility is to read the other information and, in doing so, considerwhether the other information is materially inconsistent with thefinancial statements or our knowledge obtained in the audit or oth¬er-wise appears to be materially misstated. If, based on the workwe have performed, we conclude that there is a material misstate¬ment of this other information, we are required to report that fact.We have nothing to report in this regard.
Liquidator's/ Management's responsibilities for thestandalone financial statement
The Statement has been prepared on the basis of thestandalone annual financial statements. The Liquidator/Management of the Company are responsible for the mat¬ters stated in section 134(5) of the Act with respect tothese standalone Ind AS financial Statements that gives atrue and fair view of the financial position , financial per¬formance including other comprehensive income, cashflows and changes in equity of the Company and otherfinancial information in accordance with the applicableaccounting standards prescribed under Section 133 of theAct, read with relevant rules issued thereunder and otheraccounting principles generally accepted in India. Thisresponsibility also includes maintenance of audit trail andadequate accounting records in accordance with the provi¬sions of the Act for safeguarding of the assets of the Com¬pany and for preventing and detecting frauds and otherirregularities; selection and application. of appropriateaccounting policies; making judgments and estimates thatare reasonable and prudent; and the design, implementa¬tion and maintenance of adequate internal financial con¬trols, that were operating effectively for ensuring the accu¬racy and completeness of the accounting records, relevantto the preparation and presentation of the Statement thatgive a true and fair view and are free from material mis¬statement, whether due to fraud or error.
In preparing the standalone financial statements, Liquida-tor/management is responsible for assessing the Compa¬ny’s ability to continue as a going concern, disclosing, asapplicable, matters related to going concern and using thegoing concern basis of accounting unless Liquidator/management either intends to liquidate the Company or tocease operations, or has no realistic alternative but to doso. Liquidator/ management are also responsible for over¬seeing the Company’s financial reporting process.
Auditor's Responsibilities for the Audit of the StandaloneFinancial Results
Our objectives are to obtain reasonable assurance aboutwhether the Statement as a whole is free from materialmisstatement, whether due to fraud or error, and to issuean auditor’s report that includes our opinion. Reasonableassurance is a high level of assurance but is not a guaran¬tee that an audit conducted in accordance with SAs willalways detect a material misstatement when it exists. Mis¬statements can arise from fraud or error and are consid¬ered material if, individually or in the aggregate, they couldreasonably be expected to influence the economic deci¬sions of users taken on the basis of the Statement.
As part of an audit in accordance with SAs, we exerciseprofessional judgment and maintain professional skepti¬cism throughout the audit. We also:
? Identify and assess the risks of material misstatementof the Statement, whether due to fraud or error, designand perform audit procedures responsive to those risks,and obtain audit evidence that is sufficient and appropri¬ate to provide a basis for our opinion. The risk of not de¬tecting a material misstatement resulting from fraud ishigher than for one resulting from error, as fraud may in¬
volve collusion, forgery, intentional omissions, misrepresentations,or the override of internal control.
? Obtain an understanding of internal control relevant to the auditin order to design audit procedures that are appropriate in the cir¬cumstances. Under Section 143(3) (i) of the Act, we are also re¬sponsible for expressing our opinion on whether the company hasadequate internal financial controls with reference to financialstatements in place and the operating effectiveness of such con¬trols.
? Evaluate the appropriateness of accounting policies used andthe reasonableness of accounting estimates and related disclo¬sures made by the Liquidator/Management.
? Conclude on the appropriateness of the Liquidators"/ Manage¬ments" use of the going concern basis of accounting and, based onthe audit evidence obtained, whether a material uncertainty existsrelated to events or conditions that may cast significant doubt onthe Company’s ability to continue as a going concern. If we con¬clude that a material uncertainty exists, we are required to drawattention in our auditor’s report to the related disclosures in thefinancial results or, if such disclosures are inadequate, to modifyour opinion. Our conclusions are based on the audit evidence ob¬tained up to the date of our auditor’s report. However, future eventsor conditions may cause the Company to cease to continue as agoing concern.
? Evaluate the overall presentation, structure and content of theStatement, including the disclosures, and whether the Statementrepresents the underlying transactions and events in a manner thatachieves fair presentation.
? We communicate with those charged with governance regarding,among other matters, the planned scope and timing of the auditand significant audit findings, including any significant deficienciesin internal control that we identify during our audit.
? We also provide those charged with governance with a state¬ment that we have complied with relevant ethical requirementsregarding independence, and to communicate with them all rela¬tionships and other matters that may reasonably be thought to bearon our independence, and where applicable, related safeguards.
Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditor’s Report) Order, 2020 (“theOrder”), issued by the Central Government of India in terms of sub¬section (11) of section 143 of the Companies Act, 2013, we give inthe “Annexure A” a statement on the matters specified in para¬graphs 3 and 4 of the Order, to the extent applicable.
As required by Section 143(3) of the Act, we report that:
1. We have sought and except for effects (to the extent ascer¬tained) of the matters described in the basis of qualified opinionparagraph, obtained all the information and explanations which tothe best of our knowledge and belief were necessary for the pur¬poses of our audit.
2. Except for the effects (to the extent ascertained) of the matterdescribed in our basis of opinion paragraph, in our opinion, properbooks of account as required by law have been kept by the Compa¬ny so far as it appears from our examination of those books andproper returns adequate for the purposes of our audit.
3. The Balance Sheet, the Statement of Profit and Loss, and theCash Flow Statement dealt with by this Report are in agreementwith the books of account.
4. In our opinion, the aforesaid standalone financial statementscomply with the Accounting Standards specified under Section 133of the Act, read with Rule 7 of the Companies (Accounts) Rules,2014.
5. Pursuant to the Liquidation Order dated December 19, 2023 byHon'ble NCLT, the erstwhile Directors of the Company are deemedto have Suspended/resigned/vacated the office. Hence, none ofthe erstwhile Directors continue as Members of the Board.
6. The qualification relating to the maintenance of accounts andother matters connected therewith are as stated in the Basis foropinion paragraph
7. With respect to the adequacy of the internal financial controlsover financial reporting of the Company and the operating effec¬tiveness of such controls, refer to our separate Report in“Annexure B”.
8. With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit andAuditors) Rules, 2014, in our opinion and to the best of our infor¬mation and according to the explanations given to us:
? The Company has disclosed the impact of pending litigations onits financial position in its financial statements- Refer NoteNo.34.1 in its financial position in its standalone Ind AS financialstatements
? The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeablelosses.
? An amount of Rs. 1,33,831 which was required to be trans¬ferred to the Investor Education and Protection Fund by the Com¬pany which has not been transferred.
For SHYAM GUPTA & ASSOCIATES.,
Chartered Accountants
Firm Registration Number: 0007309C
CA Nirav SaiyaPartner
Membership No. 179919
Date: 23-05-2024Place: Mumbai
UDIN: 24179919BKGWSX5581