BCAJ | Bombay Chartered Accountant Journal

From Published Accounts

COMPILER’S NOTE

Given below is reporting on material weakness in internal controls for a large financial entity headquartered in Europe where it has been reported that the group has not maintained effective internal control over financial reporting based on COSO criteria.

UBS Group AG: (year ended 31^st December, 2024)

From Independent Auditors’ Report:

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of UBS Group AG

Opinion on Internal Control over Financial Reporting

We have audited UBS Group AG and subsidiaries’ internal control over financial reporting as of 31^st December 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the COSO criteria, the UBS Group AG and subsidiaries (“the Group”) has not maintained effective internal control over financial reporting as of 31^st December 2024, based on the COSO criteria.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Group’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness has been identified and included in management’s assessment related to the Group’s acquired Credit Suisse business. Prior to the acquisition, Credit Suisse management had identified and disclosed three material weaknesses, one of which related to controls to design and maintain an effective risk assessment process over internal controls. Management concluded that as of 31^st December 2024,changes made to the Credit Suisse risk assessment process were designed effectively, but that additional evidence of operation of the remediated controls, in part due to the broader integration and migration efforts, is required to conclude that these controls are operating effectively on a sustained basis.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Group as of 31^st December 2024 and 2023, the related consolidated income statements, statements of comprehensive income, statements of changes in equity and statements of cash flows for each of the three years in the period ended 31^st December, 2024, and the related notes. This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2024 consolidated financial statements,and this report does not affect our report dated 14^th March, 2025, which expressed an unqualified opinion thereon.

Basis for Opinion

The Group’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Group’s internal control over financial reporting based on our audit. We area public accounting firm registered with the PCAOB and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

Not reproduced

From Management’s report on internal control over financial reporting:

Management’s responsibility for internal control over financial reporting

The Board of Directors and management of UBS Group AG (UBS) are responsible for establishing and maintaining adequate internal control over financial reporting. UBS’s internal controls over financial reporting are designed to provide reasonable assurance regarding the preparation and fair presentation of published financial statements in accordance with IFRS Accounting Standards, as issued by the International Accounting Standards Board (IASB).

UBS’s internal controls over financial reporting include those policies and procedures that:

– pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets;

– provide reasonable assurance that transactions are recorded as necessary to permit preparation and fair presentation of financial statements, and that receipts and expenditures of the company are being made only in accordance with authorizations of UBS management; and

-provide reasonable assurance regarding the prevention or timely detection of unauthorised acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

UBS management has assessed the effectiveness of UBS’s internal control over financial reporting as of 31st December, 2024 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013 Framework). Based on this assessment for the reasons discussed below, management believes that, as of 31^st December 2024, UBS’s internal control over financial reporting was not effective because of the material weakness described below related to the Credit Suisse business acquired in 2023.

A material weakness is a deficiency or a combination of deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of a registrant’s financial statements will not be prevented or detected on a timely basis.

Prior to the acquisition, Credit Suisse management had identified and disclosed three material weaknesses, one of which related to controls to design and maintain an effective risk assessment process. Management concluded that as of 31^st December, 2024, changes made to the risk assessment process were designed effectively, but that additional time, in part due to the broader integration and migration efforts underway, is required to conclude that these controls are operating effectively on a sustained basis.

The effectiveness of UBS’s internal control over financial reporting as of 31st December, 2024 has been audited by Ernst & Young Ltd, UBS’s independent registered public accounting firm, as stated in their Report of the independent registered public accounting firm on internal control over financial reporting, which expresses an adverse opinion on the effectiveness of UBS’s internal control over financial reporting as of 31^st December, 2024.

Remediation of Credit Suisse material weaknesses

In March 2023, prior to the acquisition by UBS Group AG, the Credit Suisse Group and Credit Suisse AG disclosed that their management had identified material weaknesses in internal control over financial reporting as a result of which the Credit Suisse Group and Credit Suisse AG had concluded that, as of 31^st December 2022, their internal control overfinancial reporting was not effective, and for the same reasons, reached the same conclusion regarding 31 December 2021. Following the acquisition and merger of Credit Suisse Group AG into UBS Group AG in June 2023, Credit Suisse AG concluded that as of 31^st December 2023 its internal control over financial reporting continued to be ineffective. As permitted by SEC guidance in the year of an acquisition, UBS Group AG excluded Credit Suisse AG from its assessment of internal control over financial reporting for the year ended 31 December 2023 and concluded that its internal control over financial reporting was effective as of such date.

In May 2024, Credit Suisse AG and UBS AG merged with UBS AG as the surviving entity. Although Credit Suisse AG is no longer a separate legal entity, numerous of its booking, accounting and risk management systems remain in use for activities that have not yet been exited or migrated to UBS systems.

The material weaknesses that were identified by Credit Suisse related to the failure to design and maintain an effective risk assessment process to identify and analyse the risk of material misstatements in its financial statements and the failure to design and maintain effective monitoring activities relating to (i) providing sufficient management oversight over the internal control evaluation process to support Credit Suisse internal control objectives; (ii) involving appropriate and sufficient management resources to support the risk assessment and monitoring objectives; and (iii) assessing and communicating the severity of deficiencies in a timely manner to those parties responsible for taking corrective action.

These material weaknesses contributed to an additional material weakness, as the Credit Suisse Group management did not design and maintain effective controls over the classification and presentation of the consolidated statement of cash flows under US GAAP.

Since the Credit Suisse acquisition, we have executed a remediation program to address the identified material weaknesses and have implemented additional controls and procedures. As of 31^st December 2024, management has assessed that the changes to internal controls made to address the material weaknesses relating to the classification and presentation of the consolidated statement of cash flows as well as assessment and communication of the severity of deficiencies are designed and operating effectively.

The remaining material weakness relates to the risk assessment of internal controls. We have integrated the Credit Suisse control framework into the UBS internal control framework and risk assessment and evaluation processes in 2024. In addition, UBS has reviewed the processes, systems and internal control processes in connection with the integration of the financial accounting and controls environment of Credit Suisse into UBS, and implementation of updated or additional processes and controls to reflect the increase in complexity of the accounting and financial control environment following the acquisition.

Management has assessed that the risk assessment process was designed effectively. However, in light of the increased complexity of the internal accounting and control environment, the remaining migration efforts still underway and limited time to demonstrate operating effectiveness and sustainability of the post-merger integrated control environment, management has concluded that additional evidence of effective operation of the remediated controls is required to conclude that the risk assessment processes are operating effectively on a sustainable basis. In light of the above, management has concluded that there is a material weakness in internal control over financial reporting at 31^st December, 2024.

BCAJ Admin

From Published Accounts

COMPILER’S NOTE

National Financial Reporting Authority (NFRA) had case issued an order in 2023 against a company wherein it had questioned accounting policies followed for Revenue Recognition and disclosure of Operating Segments. Given below are the disclosures in the financial statements of the company for the same.

Mahindra Holidays & Resorts India Ltd (31^st March, 2024)

From Boards’ Report

Significant and Material Orders passed by the Regulators or Courts

There were no significant and material orders passed by the Regulators / Courts / Tribunals which would impact the going concern status of the Company and its operations in the future. The Company received an order from National Financial Reporting Authority (“NFRA”) (“the Order”) on 29^th March, 2023, wherein NFRA had made certain observations on identification of operating segments by the Company in compliance with the requirements of Ind AS 108 and the Company’s existing accounting policy for recognition of revenue on a straight line basis over the membership period under IND AS 115. In terms of the Order, the Company completed the review of its accounting policies and practices with respect to disclosure of operating segments and timing of recognition of revenue from customers and has taken necessary measures to address the observations made in the Order. Basis the said review, the existing accounting policies, practices and disclosures by the Company are in compliance with the respective Ind AS. Accordingly, the same have been applied by the Company in the preparation of financial results and a report to that effect has been submitted to NFRA.

As at 31^st March, 2024, the Management assessed the application of its accounting policies relating to segment disclosures and revenue recognition. Basis the current assessment by the Company after considering the information available as on date, the existing accounting policies, practices and disclosures are in compliance with the respective Ind AS and accordingly, have been applied by the Company in the preparation of the financial statements for the year ended 31^st March, 2024.

From Independent Auditors’ Report on Standalone Financial Statements

From Key Audit Matters

Directions by the Regulator (See Note 56 to standalone financial statements)

The key audit matter

Pursuant to a complaint made by a customer against the Company, National Financial Reporting Authority (‘NFRA’) passed an order dated 29^th March, 2023 (‘the Order’) providing directions to the Company. As per the order, NFRA has made certain observations in respect of:

the identification and disclosure of segments by the Company; and
Company’s accounting policy for recognition of revenue on a straight-line basis over the period of the membership fees and annual subscription fees. As per the Order, the Company has carried out review of policies and practices in areas of operating segments and timing of recognition of revenue from customers and submitted its response to NFRA.

Given the significance of the findings of NFRA on the policies and practices adopted by the Company, this has been considered as a key audit matter.

How the matter was addressed in our audit

Our procedures included the following:

Reading the Order received by the Company and us from NFRA;
Evaluating the findings in the Order with reference to segment reporting under Ind AS 108 and revenue recognition under Ind AS 115;
Communicating the findings of the Order with those charged with governance;
Inquiring and assessing the Company’s existing practices and policies followed by the Company in respect of the findings made by NFRA;
Reviewing Company’s response to NFRA as required by the Order;
Submitting our report to NFRA, based on our review of Company’s aforesaid response.

Segment Reporting

Inquiring with the Chief Operating Decision Maker (CODM) on the current process of identification of segments;
Obtaining and inspecting the operating results regularly reviewed by Company’s CODM.
Assessing the adequacy of disclosures of operating segments in accordance with Ind AS 108.

Revenue Recognition

Evaluating the accounting policy for recognition of revenue for contracts entered with members against requirements of Ind AS 115 with reference to fulfillment of performance obligations by the Company;
Inspecting and testing, on sample basis, relevant customer contracts and assessing revenue is recognised on satisfaction of performance obligation;
Assessing the adequacy of disclosures in accordance with Ind AS 115.

From Notes to Financial Statements

Note No.56

NFRA order The Company received an order (‘the Order’) from National Financial Reporting Authority (‘NFRA’) on 29^th March, 2023 wherein NFRA had made certain observations on identification of operating segments by the Company in compliance with requirements of Ind AS 108 and the Company’s existing accounting policy for recognition of revenue on a straight-line basis over the membership period. As per the order received from NFRA, the Company was required to complete its review of accounting policies and practices in respect of disclosure of operating segments and timing of recognition of revenue from customers and take necessary measures to address the observations made in the Order. The Company had submitted its assessment to NFRA and will consider further course of action, if any, basis directions from NFRA. As at 31^st March, 2024, the management has assessed the application of its accounting policies relating to segment disclosures and revenue recognition. Basis the current assessment by the Company after considering the information available as on date; the existing accounting policies, practices and disclosures are in compliance with the respective Ind AS and accordingly have been applied by the Company in the preparation of these financial statements.

BCAJ Admin

From Published Accounts

COMPILER’S NOTE

Given below are 3 typical ‘Emphasis of Matter’ paragraphs included in the audit reports for the year ended 31^st March, 2024.

1. Infosys Ltd

Emphasis of Matter regarding Cybersecurity Incidents

From Audit Report on Consolidated Financial Statements

Emphasis of Matter

As described in note 2.24.2 to the Consolidated Financial Statements, certain costs relating to possible damages or claims relating to a cybersecurity incident in a subsidiary are indeterminable as at the date of this report because of reasons stated in the note. Our opinion is not modified in respect of this matter.

From Notes to Consolidated Financial Statements Note 2.24.2: McCamish Cybersecurity incident in November 2023

Infosys McCamish Systems (McCamish), a step-down subsidiary of Infosys Limited, experienced a cybersecurity incident resulting in the non-availability of certain applications and systems. McCamish initiated its incident response and engaged cybersecurity and other specialists to assist in its investigation of and response to the incident and remediation and restoration of impacted applications and systems. By 31^st December, 2023, McCamish, with external specialists’ assistance, substantially remediated and restored the affected applications and systems. Loss of contracted revenues and costs incurred with respect to remediations, restoration, communication efforts, investigative processes and analysis, legal services and others amounted to $38 million (approximately ₹316 crore). Actions taken by McCamish included investigative analysis conducted by a third-party cybersecurity firm to determine, among other things, whether and the extent to which company or customer data was subject to unauthorized access or exfiltration. McCamish also engaged a third-party eDiscovery vendor in assessing the extent and nature of such data. McCamish in coordination with its third-party eDiscovery vendor has identified corporate customers and individuals whose information was subject to unauthorized access and exfiltration. McCamish’s review process is ongoing. McCamish may incur additional costs including indemnities or damages / claims, which are indeterminable at this time. On 6^th March, 2024, a class action complaint was filed in the U.S. District Court for the Northern District of Georgia against McCamish. The complaint arises out of the cybersecurity incident at McCamish initially disclosed on 3^rd November, 2023. The complaint was purportedly filed on behalf of all individuals within the United States whose personally identifiable information was exposed to unauthorized third parties as a result of the incident.

2. Indus Towers Ltd

Emphasis of Matter regarding material uncertainty at one of the largest customers and its consequential impact on the company’s business operations

From Audit Report on Consolidated Financial Statements

Emphasis of Matter

Material uncertainty at one of the largest customers of the Company and its consequential impact on the Company’s business operations. We draw attention to note 48 of the consolidated financial statements, which describes the potential impact on business operations, receivables, property, plant and equipment, and financial position of the Company on account of one of the largest customer’s financial conditions and its ability to continue as a going concern. Our opinion is not modified with respect to the above matter.

From Notes to Consolidated Financial Statements’

48. A large customer of the Group accounts for a substantial part of revenue from operations for the quarter and year ended 31^st March, 2024, and constitutes a significant part of outstanding trade receivables and unbilled revenue as of 31^st March, 2024.

a) The said customer in its latest published unaudited financial results for the quarter and nine months ended 31^st December, 2023, had indicated that its ability to continue as a going concern is dependent on its ability to raise additional funds as required, successful negotiations with lenders and vendors for continued support and generation of cash flow from operations that it needs to settle its liabilities as they fall due. The said customer had also disclosed in the aforesaid results that so far it has met all debt obligations to its lenders/ banks and financial institutions along with applicable interest till date. Further, the said customer had disclosed that one of its promoters has confirmed that it would provide financial support to the extent of ₹20,000 Mn to the said customer.

b) The Group, subject to the terms and conditions agreed between the parties, has a secondary pledge over the shares held by one of the customer’s promoters in the Group and a corporate guarantee provided by said customer’s promoter which could be triggered in certain situations and events in the manner agreed between the parties. However, these securities are not adequate to cover the total outstanding with the said customer.

c) During the quarter ended 30^th June, 2022, through the quarter ended 30^th September, 2022, the said customer had informed the Group that a funding plan was under discussion with its lenders and it had agreed to a payment plan to pay part of the monthly billing till December 2022 and 100% of the amounts billed from January 2023 onwards, which will be adjusted by the Group against the outstanding trade receivables. As regards the dues outstanding as of 31^st December, 2022, the customer had agreed to pay the dues between January 2023 and July 2023. However, the said customer has not made the committed payments pertaining to the outstanding amount due as of 31^st December, 2022. Based on Stock Exchange filings, the said customer (i) concluded its equity fund raise of ₹1,80,000 Mn through the FPO route on 22nd April, 2024, (ii) at its Board meeting held on 6th April, 2024 has, subject to the approval of the shareholders in the Extra-ordinary General Meeting to be held on 8^th May, 2024, approved the issuance of equity share aggregating to ₹20,750 Mn on a preferential basis to one of its promoter group entity, (iii) issued Optionally Convertible Debentures (OCDs) amounting to ₹16,000 Mn to one of its vendors in February 2023 of which ₹14,400 Mn worth of OCDs were converted into equity shares on 23^rd March, 2024, and (iv) is actively engaged with its lenders for tying-up the debt funding, which will follow the equity fund raise. The Group is in discussion with the said customer for a revised payment plan pertaining to the outstanding amount due. (d) As the said customer has been paying an amount largely equivalent to monthly billing since January 2023, hence, the Group continues to recognise revenue from operations relating to the said customer for the services rendered. The Group carries an allowance for doubtful receivables of ₹53,853 Mn as of 31^st March, 2024 relating to the said customer which covers all overdue outstanding as at 31^st March, 2024. (e) Further, as per Ind AS 116 “Leases”, the Group recognises revenue based on straight-lining of rentals over the contractual period and creates revenue equalisation assets in the books of accounts. During the quarter ended 31^st December, 2022, the Group had recorded an impairment charge of ₹4,928 Mn relating to the revenue equalisation assets up to September 30, 2022 for the said customer and presented it as an exceptional item in the statement of profit and loss. Further, the Group had stopped recognising revenue equalisation asset on account of straight-lining of lease rentals from 1^st October, 2022 onwards due to uncertainty of collection in the distant future. (f) It may be noted that the potential loss of the said customer (whose statutory auditors have reported material uncertainty related to going concern in its report on latest published unaudited results, which was issued before funding as mentioned above) due to its inability to continue as a going concern or the Group’s failure to attract new customers could have an adverse effect on the business, results of operations and financial condition of the Group and amounts receivable (including unbilled revenue) and carrying amount of property, plant and equipment related to the said customer.

3. Career Point Ltd.

Emphasis of Matter regarding legal action uncertainties on amounts receivable by the holding company and a subsidiary

From Audit Report on Consolidated Financial Statements

Emphasis of Matter

We draw attention to

a) Note no 49 of the consolidated financial statements which describes Srajan Capital Limited (‘SCL’), a Subsidiary Company has degraded (sub-standard and doubtful) its loans and advances to various parties as on 31st March, 2024 amounting to ₹ 782.63 lakhs (net of provision of ₹4,567.28 lakhs, including loan to related party of ₹4,397.33 lakhs, fully provided for) (as of 31^st March 2023 ₹721.44 lakhs (net of provision of ₹4,507.38 lakhs, including loan to related party of ₹4,397.33 lakhs, fully provided for)). During the financial year ended 31^st March, 2024, the related party has made a payment of ₹756.67 lakhs (total ₹1,707.40 lakhs up to 31^st March 2024) to SCL against its outstanding dues, which is treated as income by the subsidiary company. The auditor of the SCL has not modified its opinion in this regard.

b) Note no. 38 of the consolidated financial statements which describes the uncertainties relating to legal action pursued by the Holding Company against Rajasthan Skill and Livelihood Development Corporation (RSLDC) before Hon’ble Arbitrator for invocation of bank guarantee of ₹54.22 lakhs by RSLDC and recovery of the outstanding amount of ₹213.41 lakhs (including ₹159.19 lakhs receivable). Based on its assessment of the merits of the case, the management of the Holding Company is of the view that the aforesaid receivable balances are good and recoverable and hence, no adjustment is required as stated in the note no. 38 of the consolidated financial statements for the amount receivable as stated in the said note. Further, in the opinion of the management of the Holding Company, stated amount is good and full recoverable. Our opinion is not modified in respect of above matters.

From Notes to Consolidated Financial Statements

Note No 38

During the earlier years, the Holding Company has received principal amount of 1^st instalment of ₹216.90 lakhs from Rajasthan Skill and Livelihoods Development Corporation (RSLDC} for the Deen-DayalUpadhyayaGrameenKaushalyaYojana (DDU-GKY) project, against which the Holding Company had incurred ₹371.75 lakhs and Issued bank guarantee of ₹54.22 lakhs in terms of the agreement signed with RSLDC. During the year ended 31st March, 2022, RSLDC has invoked bank guarantee of ₹54.22 lakhs and has also demanded refund amounting to ₹334.76 lakhs (including interest of ₹117.36 lakhs) on termination of the above-stated project. The Holding Company has pursued the invocation of Bank Guarantee and other receivable of ₹213.41 lakhs (including ₹158.19 lakhs receivable) from RSLDC, before the Hon’ble Rajasthan High Court, Jaipur and the Rajasthan State Commercial Court under section 9 of Arbitration & Conciliation Act, 1996. The Hon’ble Rajasthan High Court, Jaipur Bench has appointed the sole arbitrator in the matter. The Holding Company has submitted its application before the Hon’ble Arbitrator. After submission of statement of defence by RSLDC, evidence and arguments, arbitral judge will pronounce the judgement. Based on its assessment of the merits of the case, the management is of the view that it has a creditable case in its favour and the aforesaid receivable balances are good and fully recoverable and hence, no adjustment is required as demanded by the RSLDC at this stage.

Note no 49

One of the Subsidiary Company Srajan Capital Limited (“SCL”), SCL has degraded (sub-standard and doubtful) its loans and advances to various parties as on 31^st March 2024 amounting to ₹782.63 lakhs (net of provision of ₹4,567.28 lakhs, including loan to related party of ₹4,397.33 lakhs, fully provided for)) (as at 31^st March 2023 ₹721.44 lakhs (net of provision of ₹4,507.38 lakhs, including loan to related party of ₹4,397.33 lakhs, fully provided for)). During the financial year ended 31^st March 2024, the related party has made payment of ₹756.67 lakhs (Total ₹1,707.40 lakhs upto 31^st March, 2024) to SCL against its outstanding dues and interest, which is treated as income by SCL

BCAJ Admin

From Published Accounts

COMPILER’S NOTE

As per the article in the Financial Times (FT), UK (9 December 2024), ‘Accounting errors force US companies to pull statements in record numbers’. The said article mentions that in the first 10 months of 2024, 140 (up from 122 in previous comparable period) public companies told investors that previous financial statements were unreliable and had to reissue them with corrected figures. It is also mentioned that a single ‘Big’ audit firm was involved in 26 of these cases.

In the US, the said restatements have been carried out in accordance with ASC 250 ‘Accounting changes and error corrections’ and in accordance with Staff Accounting Bulletin (“SAB”) No. 99, Materiality, and SAB No. 108, Considering the Effects of Prior Year Misstatements in Current Year Financial Statements. (corresponding to IAS 8 / IndAS 8).

Given below are instances and disclosures of 10 cases of companies listed on US markets where restatement has been carried out. (portions in bold highlight the reason and impact of the restatement). For reason of conciseness, tables giving the detailed impact of the restatement are not reproduced.

1. PLBY Group Inc. (Restatement of Interim period ended 30^th June, 2023)

Note 1: Basis of Presentation and Summary of Significant Accounting Policies

Subsequent to the issuance of the condensed consolidated financial statements as of and for the quarter ended 30^th June, 2023 included in the Form 10-Q originally filed with the Securities and Exchange Commission (the “SEC”) on 9^th August, 2023 (the “Original Filing”), the Company identified a correction required to be made in its historical condensed consolidated financial statements and related disclosures as of and for the three and six months ended 30^th June, 2023. The correction relates to the accounting treatment of impairment of a license agreement and the classification of commission expense adjustments related to all contract impairments recorded during the three months ended 30^th June, 2023. In the Company’s Original Filing, the Company impaired a license agreement (which was ultimately terminated in the fourth quarter of 2023) and recorded impairment expense in relation thereto. Additionally, commission expense reversals related to contract impairments were recorded as an offset to the impairment expense.

Pursuant to the Company’s completion of its year-end audit procedures for its 2023 fiscal year, the Company determined that the accounting treatment of the license agreement, as described above, was incorrect. Rather than recording impairment expense of $3.2 million, the Company should have reduced its deferred revenue balance which related to the impaired license agreement. In addition, commission expense reversals of $1.2 million should have been recorded to the Company’s cost of sales, rather than offsetting its impairment expense. Additionally, tax expense was increased by $1.1 million to account for the aforementioned reversal of the impairment expense and changes in jurisdictional location of certain other impairment expenses.

2. Pioneer Power Solutions Inc. (Fiscal Year ended 31^st December, 2022)

Note 2: Restatement Of Previously Issued Consolidated Financial Statements

In connection with the preparation of our consolidated financial statements for the years ended 31^st December, 2023 and 2022, the Company identified errors related to revenue and cost recognition in its previously issued consolidated financial statements as of and for the year ended 31^st December, 2022 included in its Annual Report on Form 10-K for the year ended 31^st December, 2022 (the “Annual Period”).

During 2022 and 2023, the Company recognized revenues associated with customer contracts with performance obligations satisfied over time (“Over Time Contracts”) using labour hours as the measure of progress. The Company’s underlying estimates of total labour hours required to complete Over Time Contracts were materially different from the actual labour hours required, which was determined to represent an error since the information underlying the estimate was known or knowable as of the balance sheet date and, as a result, the percentage of completion used to recognize revenue in the Affected Periods is materially different from the percentage of completion using actual labour hours incurred. As a result, the Company has restated revenues during the Affected Periods to adjust the percentage of completion based upon the actual labour hours incurred to complete each Over Time Contract (the “Revenues Adjustment”).

Additionally, the Company has determined that costs from Over Time Contracts should be recognized as incurred and, as a result, the Company has recorded an adjustment to its consolidated financial statements during the Affected Periods (together with the Revenues Adjustment, the “Restatement Adjustments”), as the Company was previously incorrectly deferring costs incurred to a future period.

The Company evaluated the materiality of these misstatements both qualitatively and quantitatively in accordance with Staff Accounting Bulletin (“SAB”) No. 99, Materiality, and SAB No. 108, Considering the Effects of Prior Year Misstatements in Current Year Financial Statements, and determined the effect of correcting these misstatements was material to the Affected Periods. As a result of the material misstatements, the Company has restated its consolidated financial statements for the Affected Periods in accordance with ASC 250, Accounting Changes and Error Corrections (the “Restated Consolidated Financial Statements”).

A reconciliation from the amounts previously reported for the Affected Periods to the restated amounts in the Restated Consolidated Financial Statements is provided for the impacted financial statement line items for: (i) the consolidated balance sheet as of 31^st December, 2022; (ii) the consolidated statement of operations for the year ended 31^st December, 2022; (iii) the consolidated statement of changes in stockholders’ equity for the year ended 31^st December, 2022; and (iv) the consolidated statement of cash flows for the year ended December 31, 2022. The amounts labelled “Restatement Adjustments” represent the effects of the Restatement Adjustments.

3. Gatos Silver Inc. (Restatement of Fiscal Year ended 31^st December, 2023)

Note 3: Restatement of Previously Issued Financial Statements

During the preparation of the financial statements for the three months ended 31^st March, 2024, the Company identified that the capital distributions received from its investment in affiliate classified as cash provided by investing activities on the Consolidated Statements of Cash Flows should have been classified as cash provided by operating activities. Based on management’s judgement, the Company considered the declaration of the capital distribution (in its legal form) to be the nature of the activity that generated the cash flow and, therefore, classified capital distributions as cash provided by investing activities on the Consolidated Statements of Cash Flows. On further analysis, it was determined that management should have considered the underlying source of the cash flow at the Los Gatos Joint Venture (“LGJV”) that generated the funds for the capital distributions when determining its classification on the Company’s Consolidated Statements of Cash Flows. The capital distributions received previously classified as cash flow provided by investing activities should have been classified as cash flows provided by operating activities.

The impact of the restatement on the Consolidated Statements of Cash Flows for the year ended 31^st December, 2023, is presented. The Consolidated Balance Sheets and balance of cash and cash equivalents as of 31^st December, 2023, and the Consolidated Statements of Income and Comprehensive Income, Consolidated Statements of Stockholders’ Equity for the year ended 31^st December, 2023, are not impacted by this error.

4. Reviva Pharmaceuticals Holdings, Inc (Fiscal Year ended 31^st December, 2022)

Note 2: Restatement Of Previously Issued Annual Consolidated Financial Statements for The Fiscal Year Ended 31^st December, 2022.

The need for the restatement arose out of the results of certain financial analysis the Company performed in the course of preparing its fiscal year-end 2023 financial statements. Principally, the Company completed a detailed lookback analysis to compare certain estimated accrued clinical trial expenses, specifically investigator fees, from one contract research organization to its actual clinical trial expenses that were incurred for the respective periods for that contract research organization during the Restatement Periods based on review of historical invoices. In the course of its analysis of the actual information gathered through the lookback process, the Company detected differences between the estimated accrued amounts of those clinical trial expenses and the actual expenses recorded due primarily to the Company’s failure to properly review and evaluate expenses incurred in those clinical trial contracts resulting in the Company not properly accruing for clinical trial expenses that were incurred but for which invoices were not yet received. In addition, the Company determined that an effective process for evaluating the completeness of the research and development expense accrual for investigator fees and related costs, for that contract research organization, was necessary. This included estimated patient site visits not yet reported, average site visit costs and average delay in site invoicing. This provides the Company with an effective estimate of the costs incurred as there can be a lag between receiving an invoice for the services provided from that contract research organization. Management and the audit committee of the Company’s board of directors have concluded that, in the ordinary course of closing its financial books and records, the Company previously excluded certain clinical trial expenses and associated accruals from the appropriate periods as required under applicable accounting guidelines. Therefore, the Company misstated research and development expenses, and accrued clinical expenses during the Restatement Periods. The Company received FDA authorisation in early 2022 to begin clinical trials and therefore, no similar error as of 31^st December, 2021, would be expected or identified. Further, management determined that any misstatements to the quarterly periods ended 31^st March, 2022, and 30^th June, 2022, included in its Quarterly Reports on Form 10-Q, were not material.

Therefore, the Company misstated R&D expenses and associated accrued liabilities during the Restatement Periods. The Company principally attributes the errors to a material weakness in our internal control activities due to a failure in the design and implementation of our controls to review clinical trial expenses, including the evaluation of the terms of clinical trial contracts. Specifically, we failed to properly review and evaluate progress of expenses incurred in clinical trial contracts resulting in us not properly accruing for clinical trial expenses that were incurred but for which invoices were not yet received This is disclosed in Item II, Part 9A of this Annual Report on Form 10-K. The Company has commenced procedures to remediate the material weaknesses. However, these material weaknesses will not be considered remediated until the applicable remedial actions have been fully implemented and the Company has concluded that these controls are operating effectively for a sufficient period of time.

5. Paragon 28, Inc (Restatement of Fiscal Year ended 31^st December, 2023)

Note 3: Restatement of Previously Issued Consolidated Financial Statements

Subsequent to the issuance of the Company’s consolidated financial statements as of and for the year ended 31^st December, 2023 and the Company’s unaudited condensed consolidated financial statements as of and for the fiscal quarter ended 31^st March, 2024, the Company identified errors in the calculation of its excess and obsolete inventory reserves, as well as its accounting for inventory variances, which resulted in a net overstatement of Inventories, net as of 31^st December, 2023 and a net understatement in Cost of goods sold for the fiscal year ended 31^st December, 2023. The consolidated financial statements (as restated) reflect the correction of this error and include adjustments to correct certain other previously identified misstatements relating to prior periods, including the fiscal year ended 31^st December, 2022, that the Company had determined to be immaterial both individually and in aggregate.

DESCRIPTION OF MISSTATEMENT ADJUSTMENTS

(a) Inventory Treatment

The Company recorded adjustments to correct the calculation of its excess and obsolete inventory reserve and valuation of purchase price variances. The corrections resulted in a decrease in Inventories, net of $8,016, an increase in the Cost of goods sold of $8,356, and a decrease in the beginning balance of Accumulated deficit of $340, respectively, as of and for the fiscal year ended 31^st December, 2023.

(b) Interest Rate Swap

The Company recorded adjustments to correct certain misstatements related to its interest rate swap previously corrected out of period in Q3 2023. The adjustments recognize the correction to prior periods.

6. ArhausInc (Restatement of Interim Period ended 30^th June, 2023 and 31^st March, 2023)

Note 16: Revision of Previously Issued Condensed Consolidated Financial Statements (Unaudited)

As described in Note 1 – Nature of Business, the Company identified an error within the consolidated balance sheets, related to certain leasehold and landlord improvements prior to showroom completion being incorrectly included in prepaid and other current assets rather than property, furniture and equipment, net. The error resulted in inaccurate cash flows ascribed to operating and investing activities in the consolidated statements of cash flows. The errors impacted the unaudited condensed consolidated balance sheets and unaudited condensed consolidated statements of cash flows as of and for the three months ended 31^st March, 2023 and 2022, as of and for the six months ended 30^th June, 2023 and 2022, and the unaudited condensed consolidated balance sheet as of 30^th September, 2022. The Company has evaluated the errors both quantitatively and qualitatively and concluded they were not material, individually or in the aggregate, to such prior period unaudited condensed consolidated financial statements and concluded to revise such prior period unaudited condensed consolidated financial statements.

In connection with the revision of the Company’s unaudited condensed consolidated financial statements, we determined it was appropriate to correct for certain other previously identified immaterial errors. The Company will effect the revision of the unaudited interim condensed consolidated financial information for the first two quarters of 2023 as part of our filing of the 2024 interim Form 10-Qs.

7. BitFarms Limited (Fiscal Years ended 31^st December, 2023)

Note No. 3: Basis of Presentation and Material Accounting Policy Information

Restatement of statement of cash flows:

The statement of cash flows has been restated to reclassify the cash proceeds from the sale of digital assets, which is accounted for as an intangible asset under IAS 38, from cash flows from operations to cash flows from investing activities. The Company has determined that this error was material to the previously issued consolidated financial statements and as such, has restated its consolidated financial statements, as applicable.

Adjustment on accounting for 2023 Warrants:

The Company is correcting an error in the fair value recorded for the 2023 exercises of warrants issued in connection with the private placement financing in 2023 (“2023 Warrants”). The correction resulted in an increase in the share capital and net financial expenses in the restated consolidated financial statements.

8. Cellectar Biosciences, Inc. (Fiscal Years ended December 31, 2023)

Note No. 2: Summary Of Significant Accounting Policies

Restatement of Previously Issued Consolidated Financial Statements — During the third quarter of 2024, and prior to the filing of the Company’s Form 10-Q for the quarter ended June 30, 2024, the Company determined that it was necessary to re-evaluate the Company’s accounting treatment for certain previously issued warrants and preferred stock. Additionally, the Company identified certain operating costs previously as research and development expenses which should have been classified as general and administrative expenses. In accordance with Staff Accounting Bulletins No. 99 (SAB No. 99) Topic 1.M, “Materiality” and SAB No. 99 Topic 1.N “Considering the Effects of Misstatements when Quantifying Misstatements in the Current Year Financial Statements,” the Company assessed the materiality of these errors to its previously issued consolidated financial statements. Based upon the Company’s evaluation of both quantitative and qualitative factors, the Company concluded the errors were material to the Company’s previously issued consolidated financial statements for the fiscal years ended 31^st December, 2023 and 2022. Accordingly, this Form 10-K/A presents the Company’s Restated Consolidated Financial Statements for the fiscal years ended December 31, 2023 and 2022. Additionally, the Company has restated its previously filed unaudited interim condensed consolidated financial statements for the periods ending 31^st March, 2023, 30^th June, 2023, 30^th September, 2023, 31^st March, 2022, 30^th June, 2022, and 30^th September, 2022, contained in its Quarterly Reports on Form 10-Q.
Note No. 14: Restatement Of Previously Issued Financial Statements

As described in Note 2 and detailed below, in July 2024 the Company determined that it was necessary to re-evaluate its accounting treatment for certain previously issued warrants and preferred stock. The Company identified five areas where the historical accounting treatment applied to previously issued warrants and preferred stock required modification:

Contractual terms contained within the agreements governing the warrants issued to its investors in prior periods required further evaluation under Topic 815. After consultation with external advisors and completing an extensive review process, management concluded that the classification of certain previously issued warrants as equity was not consistent with Topic 815 and has restated them as liabilities. This also results in the requirement to account for the change in the fair value of the liability classified warrants through the Consolidated Statements of Operations at each reporting date they remain outstanding. Additionally, upon the issuance of the 2022 common warrants, pre-funded warrants, and common stock, the Company determined the fair value of each security issued and booked a charge for the amount that the fair value exceeded the proceeds received.
Upon the issuance of the Series E Preferred Stock in September 2023, the contractual language required the 2022 Pre-Funded Warrants be reclassified from equity to liability.
The Series D Preferred Stock issued in 2020 was determined to be temporary, or mezzanine equity upon issuance and was so recorded.
The accounting treatment for the Tranche A and B warrants issued as part of the September 2023 financing (See Note 6) continues to be appropriate; however, as part of the work performed for the restatement, the warrant valuation was adjusted to correct prior errors in the valuation.
Certain operating costs previously recorded as research and development expenses were corrected to general and administrative expenses.

The impact on the consolidated financial statements is as follows (lettered for reference to the financial statement adjustments):

A. All the outstanding common warrants were corrected from permanent equity to Warrant Liability, and the Series D Preferred Stock was corrected from permanent equity to Mezzanine Equity as of 31^st December, 2021.

B. The proceeds from the October 2022 financing were adjusted as described in Note 6. Additionally, the cost of the 2022 financing allocated to the issuance of the 2022 Warrants, which was $463,000, was removed from Additional Paid-In Capital and charged to Other Expense.

C. After the issuance of the Series E Preferred in September 2023, the 2022 Pre-Funded Warrants were corrected from Additional Paid-In Capital to Warrant Liability.

D. At each reporting period the warrants accounted for as liabilities were marked to market with the adjustment reflected in Other Income (Expense).

E. Certain operating costs previously recorded as research and development expenses were corrected to general and administrative expenses.

F. Adjusted the balance sheet as of 31^st December, 2021, by reducing additional paid-in capital and increasing the accumulated deficit by $25,300,000 which was the change from the initial fair value amount of the warrants issued in 2017, 2018, and 2020 through 31^st December, 2021

9. Ranger Gold Corp. (Restatement of nine months ended as on December 31, 2023)

Note F: Correction of an Error / Prior Period Restatement

During our 2022 fiscal year-end reconciliation/close-out and subsequent audit, Management discovered that Accounts Payable amounts owed to Vendors and the related expenses incurred were incorrect in 2022. Some vendors had been paid outside of the bank account and directly by the owner which should have been recorded as an addition to the Additional Paid in Capital. In addition, some unpaid vendor invoices were not billed to Accounts Payable. Per ASC 250, since the error correction is material and material to financial statements previously issued, Management promptly corrected the errors and restated previously issued financial statements.
Fiscal Year 2023:

During our most recent reconciliation/close-out and subsequent audit, Management discovered that amounts paid and owed to Vendors and the related expenses incurred were incorrect in 2023. Expenses paid by the owner, which should have been recorded as expenses and as an addition to Accounts Payable and Paid in Capital Contributions were not properly posted. Per ASC 250-10, since the error correction is material and material to financial statements previously issued, Management is promptly correcting the errors and restating previously issued financial statements.

10. Sun Communities, Inc. (Restatement of 3 months ended 31^st March, 2023, 30^th June, 2023 and 30^th September, 2023)

Note No. 22: Quarterly Financial Data (Unaudited and Restated)

Restatement of Prior Quarterly 2023 Financial Statements (Unaudited)

During the course of preparation and review of our financial statements for the year end 31^st December, 2023, it was determined that we did not identify certain factors indicative of triggering events relevant to the valuation of the UK reporting unit, including reduced financial projections and increased interest rates when preparing our previously issued unaudited interim consolidated financial statements (collectively, the “Interim Financial Statements”) as of and for the period ended 31^st March, 2023, as of and for the period ended 30^th June, 2023, and as of and for the period ended September 30, 2023 (collectively, the “Interim Periods”), included in our Quarterly Reports on Form 10-Q for the quarters ended 31^st March, 2023, 30^th June, 2023 and 30^th September, 2023, respectively. Management undertook a full review of the valuations and determined that as of each of 31^st March, 2023, 30^th June, 2023 and 30^th September, 2023. we should have recognized non-cash impairments to goodwill for the UK reporting unit within our MH segment.

Pursuant to SEC Staff Accounting Bulletin (“SAB”) No. 99, Materiality, and SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, we evaluated these misstatements, and based on an analysis of quantitative and qualitative factors, determined that the impact of misstatements related to goodwill impairments was material to our Interim Periods. Accordingly, we have restated the unaudited consolidated financial statements for the Interim Periods and have included that restated unaudited financial information within this Annual Report.

The restated quarterly unaudited consolidated financial information for the interim periods ended 31^st March, 2023, 30^th June, 2023 and 30^th September, 2023 are provided. These adjustments have no impact on cash flows from operating activities as goodwill impairment is a non-cash adjustment to reconcile net income / (loss) to cash provided by operating activities.

BCAJ Admin

From Published Accounts

COMPILER’S NOTE

I. Interesting Key Audit Matters in Independent Auditors’ Report:

Assessing Carrying value of Inventory Oberoi Realty Limited (31^st March 2024)

Key audit matters

How our audit addressed the key audit matter

Assessing the carrying value of Inventory

(as described in note 1.2.15 of the standalone financial statements)

As at March 31, 2024, the carrying value of the inventory of ongoing and completed real-estate projects is Rs. 9,18,507.87 lakhs. The inventories are held at the lower of the cost and net realisable value (“NRV”).

The determination of NRV involves estimates based on prevailing market conditions and taking into account the stage of completion of the inventory, the estimated future selling price, cost to complete projects and selling costs.

We identified the assessment of the carrying value of inventory as a key audit matter due to the significance of the balance to the standalone financial statements as a whole and the involvement of estimates and judgement in the assessment.

Our audit procedures included, among others:

• We evaluated the design and operation of internal controls related to testing recoverable amounts with carrying amount of inventory, including evaluating management processes for estimating future costs to complete projects.

• As regards NRV, for a sample of selected projects, compared costs incurred and estimates of future cost to complete the project with costs of similar projects and compared NRV to recent sales or to the estimated selling price.

MATERIAL ACCOUNTING POLICIES

1.2.15 INVENTORIES

i. Construction materials and consumables

The construction materials and consumables are valued at lower of cost or net realisable value. The construction materials and consumables purchased for construction work issued to construction are treated as consumed.

ii. Construction work in progress

The construction work in progress is valued at lower of cost or net realisable value. Cost includes the cost of land, development rights, rates and taxes, construction costs, borrowing costs, other direct expenditure, allocated overheads and other incidental expenses.

iii. Finished stock of completed projects

Finished stock of completed projects and stock in trade of units is valued at lower of cost or net realisable value.

iv. Food and beverages

Stock of food and beverages are valued at lower of cost (computed on a moving weighted average basis, net of taxes) or net realisable value. Cost includes all expenses incurred in bringing the goods to their present location and condition.

II. Business Combination – Acquisition of business from Raymond Consumer Care Limited

Godrej Consumer Product Limited (GCPL) (31^st March 2024)

Key audit matters

Business Combination – Acquisition of business from Raymond Consumer Care Limited

(refer Note 55 to standalone financial statements)

How our audit addressed the key audit matter

The Company has completed the acquisition of FMCG business of Raymond Consumer Care Limited effective 8^th May 2023 pursuant to a business transfer agreement at a total consideration of ` 2,825 crores.

The Company has accounted for such acquisition as a business combination as per Ind AS 103 ‘Business Combinations’ by recognizing identifiable assets and liabilities at fair value.

The measurement of the identifiable assets and liabilities acquired at fair value is inherently judgmental.

Fair value of brands was determined by the Company with the assistance of an external valuation expert using income approach (royalty relief method), considering the assets being measured.

Given the complexity and judgement involved in fair value measurements and magnitude of the acquisition made by the Company, this is a key audit matter.

Our audit procedures included:

• We have read the business transfer agreement to understand the key terms and conditions of the acquisition;

• We have evaluated the accounting treatment followed by the Company with reference to Ind AS 103;

• We have evaluated the design and implementation and tested the operating effectiveness of key internal controls related to the Company’s valuation process;

• We have involved our valuation specialists;

• to gain an understanding of the work of the experts by examining the valuation reports.

• to critically evaluate the key assumptions (including revenue projections, royalty rate, terminal growth rate and discount rate) and purchase price allocation adjustments.

• to evaluate the valuation of acquired tangible and intangible assets based on our knowledge of the Company and the industry.

• We have assessed the adequacy of the Company’s disclosures in respect of the acquisition in accordance with the requirements of Ind AS 103.

NOTE 55: BUSINESS COMBINATION

ACQUISITION OF RAYMOND CONSUMER CARE BUSINESS

On 8^th May, 2023, the Company acquired the FMCG business of Raymond Consumer Care Limited (“RCCL”) through a slump sale for consideration of ₹2,825 crores which included the intellectual property rights of brands like ‘Park Avenue’ and ‘Kamasutra’.

The acquisition date is determined to be 8^th May, 2023, i.e. The date on which the Company obtained control of the business since the consideration was transferred and the business transfer agreement was executed on 8^th May, 2023.

The acquisition was in line with company’s strategy to build a sustainable and profitable personal care business in India by leveraging the categories of personal grooming and sexual wellness. RCCL was one of the key players in these categories with brands such as ‘Park Avenue’ and ‘Kamasutra’ which comprised of a wide product portfolio.

The acquisition had been accounted for using the acquisition accounting method under IND AS 103- “Business Combinations”. All identified assets acquired, and liabilities assumed on the date of acquisition were recorded at their fair value.

The transactions cost of ₹87.83 crores that were not directly attributable to the identified assets are included under exceptional items in the standalone statement of profit and loss comprising mainly stamp duty expenses, legal fees and due diligence costs.

For eleven months ended 31^st March, 2024, the RCCL acquired business contributed revenue from sales of products of ₹466 crores. If the acquisition had occurred on 1^st April, 2023, the management estimates that combined standalone revenue from sales of products would have been ₹8,336.04 crores. In determining these amounts management has assumed that the fair value adjustments, determined provisionally, that arose on the date of acquisition would have been the same if the acquisition had occurred on 1^st April 2023. The profit or loss since acquisition date and combined standalone profit or loss from the beginning of annual reporting period cannot be ascertained as the acquired business is already integrated with the existing business of the company, thereby making it impracticable to do so.

a. Purchase consideration transferred:

The total consideration was ₹2,825 crores which was cash settled. (Net of cash acquired)

b. Details of major assets acquired, and liabilities assumed:

Particulars	Amounts (In Crores)
Specified Tangible Asset
Property, Plant and Equipment
Owned Assets	4.10
Specified Intangibles Assets
Brands	2,199.69
Other Assets
Trade and other receivables	62.70
Inventories	44.30
Cash and cash equivalents	95.86
Bank Balances other than cash and cash equivalents	12.85
Others	18.40
Total identifiable assets (A)	2,437.90
Specified liabilities
Trade payables	70.60
Other liabilities	47.38
Other Provisions	61.22
Total identifiable liabilities (B)	179.20
Total identifiable net assets acquired (A)-(B)=(C)	2,258.70
Total Consideration (D)	2,825.00
Goodwill (D-C)	566.30

c. Measurement of fair values:

i. Specified Intangible Assets – Brands:

Brands were valued based on an independent valuation using the relief from royalty approach, which values the intangible asset by reference to the discounted estimated amount of royalty the acquirer would have had to pay in an arm’s length licensing arrangement to secure access to the same rights.

ii. Inventories:

The fair value is determined based on the estimated selling price in the ordinary course of business less the estimated cost of completion and sale, and a reasonable profit margin based on the effort required to complete and sell the inventory.

iii. Acquired Receivables:

The gross contractual value and fair value of trade and other receivables as at the dates of acquisition amounted to R62.70 crores which is expected to be fully recoverable.

d. Goodwill:

Goodwill amounting to ₹566.30 crores arising from acquisition has been recognised as the difference between total consideration paid and net identifiable assets acquired as shown above.

The goodwill is mainly attributable to the expected synergies to be achieved from integrating the business into the Company’s existing personal care business. None of the goodwill recognised is expected to be deductible for tax purposes.

III. The direct access of certain overseas foreign agents to fund collected on account of freight and other charges

Shipping Corporation of India Limited (31^st March, 2024)

Key audit matters

How our audit addressed the key audit matter

The direct access of certain overseas foreign agents to fund collected on account of freight and other charges:

Liner division of the Company has been carrying out its vessel’s operations and container marketing activities at various ports in India and abroad through its agency network. Agents perform various activities such as marketing, booking, clearing of cargo, port calls of vessels & also collection of freight on behalf of the Company.

The Company depends on its agents for the operation of Liner segment business.

Since all the activities are performed by the agents, there is a requirement of funds. The collection of income is done directly by agents and subsequently remitted to the Company. Therefore, it involves a risk on the part of the Company and hence is identified as a Key Audit Matter

We assessed the Company’s process to evaluate Agents on timely basis to identify the impact on the revenue and collection of funds.

• The Company has obtained bank guarantee from major agents & also reviewed the same periodically to confirm its validity and completeness with respect to risk exposure on revenue due to direct access to agents.

• The Company has provided Statement of Account (SOA) obtained from these foreign agents for confirmation of transactions and closing balance.

IV. Assessing the recoverability of carrying value of Inventory and advances paid towards land procurement (including refundable deposits paid under JDA)

Brigade Enterprises Limited (31^st March, 2024)

Key audit matters

How our audit addressed the key audit matter

Assessing the recoverability of carrying value of Inventory and advances paid towards land procurement (including refundable deposits paid under JDA)

As at 31^stMarch, 2024, the carrying value of the inventory of real estate projects is ₹395,591 lakhs and land advances/deposits is ₹39,944 lakhs respectively.

The inventories are carried at lower of cost and net realisable value (‘NRV’). The determination of the NRV involves estimates based on prevailing market conditions and taking into account the estimated future selling price, cost to complete projects and selling costs.

Deposits paid under joint development arrangements, in the nature of non-refundable amounts, are recognised as land advance under other assets and on the launch of the project, the same is transferred as land cost to work-in-progress. Further, advances paid by the Company to the seller/ intermediary towards outright purchase of land is recognized as land advance under other assets during the course of transferring the legal title to the Company, whereupon it is transferred to land stock under inventories.

The aforesaid deposits and advances are carried at the lower of the amount paid/payable and net recoverable value, which is based on the management’s assessment including the expected date of commencement and completion of the project and the estimate of sale prices and construction costs of the project.

We identified the assessment of the carrying value of inventory and land advances/deposits as a key audit matter due to the significance of the balance that involves estimates and judgement.

Our procedures in assessing the carrying value of the inventories and land advances/deposits included, among others, the following:

• We read and evaluated the accounting policies with respect to inventories and land advances/deposits.

• We assessed the Company’s methodology applied in assessing the carrying value under the relevant accounting standards including current market conditions in assessing the net realisable value
having regard to project development plan and expected future sales.

• We made inquiries with management with respect to inventory of properties on test check basis to understand key assumptions used in determination of the net realisable value/ net recoverable value.

• We enquired from the management regarding the project status and verified the underlying documents for related developments in respect of the land acquisition, project progress and expected recoverability of advances paid towards land procurement (including refundable deposits paid under JDA) on test check basis.

• We obtained and tested the computation involved in assessment of carrying value and the net realisable value/ net recoverable value on test check basis.

V. Accounting and valuation of Hedging Instrument

Dishman Carbogen Amcis Limited (31^st March, 2024)

Key audit matters

How our audit addressed the key audit matter

Accounting and valuation of Hedging Instrument

The Company hedges its foreign currency risk and interest rate risk through derivative instruments and applies hedge accounting principles for derivative instruments as prescribed by Ind AS 109. Receivable pertaining to derivative instruments as at March 31, 2024 is amounting to R9.69 Crores and debit balance of Cash Flow Hedge Reserve of R28.09 Crores as on that date.

These contracts are recorded at fair value and cash flow hedge accounting is applied, such that gains and losses arising from fair value changes are deferred in equity and recognised in the standalone statement of profit and loss when hedges mature and / or when the hedge item occurs.

The valuation of hedging instruments and consideration of hedge effectiveness has been identified as a key audit matter as it involves a significant degree of complexity and management judgment and are subject to an inherent risk of error.

Our procedures included the following:

• Obtained understanding of the Company’s overall hedge accounting strategy, forward contract valuation and hedge accounting process from initiation to settlement of derivative financial instruments including assessment of the design and implementation of controls and tested the operating effectiveness of those controls.

• Assessed Company’s accounting policy for hedge accounting in accordance with Ind AS.

• Tested the existence of hedging contracts by tracking to the confirmations obtained from respective counter parties.

• Tested management’s hedge documentation and contracts, on sample basis.

• Involved our valuation specialists to assist in reperforming the year end fair valuations of derivative financial instruments on a sample basis and compared these valuations with those records by the Company including assessing the valuation methodology and key assumptions used therein.

• Assessed the relevant disclosures of hedge transactions in the financial statements.

VI. Jai Balaji Industries Limited

Key audit matters

How our audit addressed the key audit matter

Accounting Software and Audit Trail

Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from April 1, 2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014.

We have examined that the company is using customised software and audit trail is enabled but the software and its trail need to be strengthen more.

The Company is in process of implementing more advance and latest ERP Software which will prove to be more efficient and effective for the company. with those records by the Company including assessing the valuation methodology and key assumptions used therein.

• Assessed the relevant disclosures of hedge transactions in the financial statements.

GMR Airports Infrastructure Limited

Key audit matters

How our audit addressed the key audit matter

Accounting for Business combination – composite scheme of amalgamation and arrangement among GMR Airports Limited (GAL), GMR Infra Development Limited (‘GIDL’) and the Company

(refer note 2.2(u) for the accounting policy and note 48 for disclosures of the accompanying standalone financial statements)

Subsequent to year end, the composite scheme of amalgamation and arrangement (the ‘Scheme’) amongst GAL, GIDL and GIL as under Sections 230 to 232 of the Companies Act, 2013 (“Scheme”) was approved by the Hon’ble National Company Law Tribunal (‘NCLT’), Chandigarh bench (‘‘the Tribunal’’) vide its order dated 11^th June 2024 (formal order received on 2^nd July 2024). Such NCLT order was filed with the Registrar of Companies by GAL, GIDL and GIL on 25^th July, 2024 thereby making the Scheme effective from such date.

Pursuant to the NCLT order, GAL and GIDL have been merged with the Company and all the assets, liabilities, reserves and surplus of the transferor companies have been transferred to and vested in the Company. Considering, the transaction is a common control business combination, these Standalone Financial Statements have been prepared by giving effect to the Scheme in accordance with Appendix C of Ind AS 103 by restating the financial statements from the earliest period presented consequent to receipt of approval to the Scheme from NCLT, as further disclosed in Note 48.

The determination of appropriateness of the accounting treatment and the complexities with respect to the control assessment and implementation of the terms of the approved Scheme required significant auditor attention. Accordingly, this matter is identified as a key audit matter for the current year audit.

Further, owing to the significant and pervasive impact of the merger on the accompanying standalone financial statements as disclosed in Note 48, the matter is also considered fundamental to the understanding of the users of the accompanying standalone financial statements.

Our audit procedures to assess the appropriateness of the accounting treatment of the business combination, included, but were not limited to the following:

• Obtained and read the Scheme and final order passed by the NCLT and submitted with the ROC to understand its key terms and conditions.

• Evaluated the design and tested the operating effectiveness of the internal financial controls relevant for recording the impact of the Scheme and related disclosures.

• Assessed the appropriateness of accounting policy of business combination of entities under common control by comparing with applicable accounting standard and that approved in the Scheme which involved assessment of control pre and post-merger.

• Tested the management’s computation for arriving at the value of fully paid-up equity shares to be issued and treatment of reserves as per the Scheme;

• Tested the management’s computation of the amount determined to be recorded in the amalgamation adjustment reserve; and

• Assessed the adequacy and appropriateness of the disclosures made with respect to the accounting of the transaction under the Scheme in note 48 to the accompanying standalone financial statements, as required by the applicable Indian Accounting Standards.

Material Accounting Policies

Note 2.2(u): Revised financial statements after approval of scheme of merger

The standalone financials of the Company for the year ended 31^st March, 2024 were earlier approved by the Board of directors at its meeting held on 29^th May, 2024 and reported upon by the statutory auditors vide their report dated 29^th May, 2024. The said standalone financial statement did not include the effect of scheme of merger of GAL with GIDL followed by merger of GIDL with the Company which was approved by the Hon’ble National Company Law Tribunal, Chandigarh bench (“the Tribunal”) vide its order dated 11^th June, 2024 (Certified copy of the order received on 2nd July, 2024). The said Tribunal order was filed with the Registrar of Companies by GAL, GIDL and the Company on 25^th July, 2024 thereby the Scheme becoming effective on that date from the appointed date of 1^st April, 2023 for merger. As a result, the aforesaid standalone financial statements have been revised by the Company so as to give effect to the Composite scheme of amalgamation and arrangement (‘Scheme’) in accordance with Appendix C of Ind AS 103 “Business Combination” from the earliest period presented consequent upon receipt of approval to the Scheme from National Company Law Tribunal (NCLT). Further, the subsequent events so in far it relates to the revision to the standalone financial statements are restricted solely to the aforesaid matter relating to the scheme and no effects have been given for any other events, if any, occurring after 29^th May, 2024 (being the date on which standalone financial statements were first approved by the board of directors of the company). Also refer note 48 to the standalone financial statements.

Note 48: Business Combination – Common control transaction

a. The Board of directors in its meeting held on 19^th March, 2023 had approved, a detailed Scheme of Merger of GAL with GIDL followed by merger of GIDL with the Company referred herein after as Meger Scheme. Subsequent to year ended 31^st March, 2024, the Merger Scheme has been approved by the Hon’ble National Company Law Tribunal, Chandigarh bench (“the Tribunal”) vide its order dated 11^th June, 2024 (Certified copy of the order received on 2^nd July, 2024). The said Tribunal order was filed with the Registrar of Companies by GAL, GIDL and the Company on 25^th July, 2024 thereby the Scheme becoming effective on that date.

Accordingly, GAL merged with GIDL and merged GIDL stands merged into the Company with an appointed date of 1^st April, 2023 and the standalone Financial Statements of the Company have been prepared by giving effect to the Composite scheme of amalgamation and arrangement in accordance with Appendix C of Ind AS 103 “Business Combination” from the earliest period presented consequent upon receipt of approval to the Scheme from National Company Law Tribunal (NCLT). The difference between the net identifiable assets acquired and consideration paid on merger has been accounted for as capital reserve on merger.

Pursuant to the Scheme of amalgamation, 3,41,06,14,011 equity shares and 65,111,022 Optionally Convertible Redeemable Preference Shares (OCRPS) will to be issued to Groupe ADP by the Company. These equity shares was presented under equity share capital pending issuance and OCRPS pending issuance respectively for the current period and comparative period. As part of the Scheme, the equity shares held by the Company in merged GIDL stands cancelled.

Accounting of amalgamation of the Merged GIDL with the Company

i. On the Scheme becoming effective on 25^th July, 2024 (“Effective Date”), the Company has accounted for the amalgamation in accordance with “Pooling of interest method” laid down by Appendix C of Ind AS 103 (Business combinations of entities under common control) notified under the provisions of the Companies Act, 2013.

ii. The cumulative carrying amount of investments held by the company in Merged GIDL in form of equity shares and OCRPS shall stand cancelled together with the cumulative corresponding unrealised gain recognised in FVTOCI reserve, and related deferred tax liability.

iii. The Company has recorded all the assets, liabilities and reserves of the Merged GIDL, vested in the Company pursuant to the Scheme, at their existing carrying amounts.

iv. The loans and advances or payables or receivables or any other investment or arrangement of any kind, held inter se, between the Merged GIDL and the Company have been cancelled.

v. The difference between the book value of assets, liabilities and reserves as reduced by the face value of the equity shares and OCRPS issued by the Company and after considering the cancellation of inter-company investments was recorded in other equity of the Company.

The book value of assets, liabilities and reserves acquired from Merged GIDL as at 1^st April, 2023 were:

Particulars	Amount (In Crores)
ASSETS
Non-current assets
Property, plant and equipment	2.43
Capital work-in-progress	46.49
Right of use assets	3.62
Financial assets
Investments	47,082.91
Loans	808.10
Other financial assets	37.16
Income tax assets (net)	22.73
Deferred tax assets (net)	107.28
Other non-current assets	20.01
Total	48,130.73
Current assets
Financial assets
Investments	445.45
Trade receivables	74.80
Cash and cash equivalents	41.20
Bank balances other than cash and cash equivalents	4.86
Loans	147.82
Other financial assets	222.89
Other current assets	33.17
Total	970.19
	49,100.92
LIABILITIES
Non-current liabilities
Financial liabilities
Borrowings	1,949.99
Lease liabilities	3.71
Other financial liabilities	143.39
Provisions	9.54
Deferred tax liabilities (net)	9,198.74
Other non current liabilities	20.67
Total	11,326.04
Current liabilities
Financial liabilities
Borrowings	3,122.18
Lease liabilities	0.07
Trade payables	102.75
Other financial liabilities	494.04
Other current liabilities	50.27
Provisions	4.46
Total	3,773.77
Total liabilities	15,099.81
Net assets acquired	34,001.11
Less: Investment in merged entity (net off fair valuation and deferred tax effect thereon)	-4,456.57
	29,544.54

Particulars	(` in crore)
Represented by:
Fair valuation through other comprehensive income (’FVTOCI’)	33,207.01
Special  Reserve  u/s  45IC of  Reserve Bank  of  India  (’RBI’)  Act	81.05
Securities Premium	1,251.36
Retained earnings	-2,228.82
Capital reserve	0.23
Equity share pending issuance	341.06
OCRPS pending issuance	260.44
Amalgamation adjustment deficit account	-3,367.81

b. The Board of Directors of the Company vide their meeting dated 17^th March, 2023 had approved the settlement regarding Bonus CCPS B, C and D between the Company, erstwhile GMR Airports Limited (GAL) and Shareholders of erstwhile GAL wherein cash earnouts to be received by Company were agreed to be settled at ₹550.00 crore, to be paid in milestone linked tranches and conversion of these Bonus CCPS B, C and D will take as per the terms of settlement agreement. Further, the Company, erstwhile GAL and Shareholders of erstwhile GAL had also agreed on the settlement regarding Bonus CCPS A whereby erstwhile GAL will issue such number of additional equity share to the Company and GMR Infra Developers Limited (‘GIDL’) (wholly owned subsidiary of the Company) which will result in increase of shareholding of Company (along with its subsidiary) from current 51 per cent to 55 per cent in erstwhile GAL. The settlement was subject to certain conditions specified in the settlement agreements. As part of the settlement agreement, the Company has received 4 tranches of ₹400.00 crore towards the sale of these CCPS till 31^st March, 2024. Subsequent to balance sheet date, on completion of conditions precedent the Company has received last tranche of ₹150.00 crore towards the sale of these CCPS. On 17^th July, 2024 the board of directors of erstwhile GAL has approved the conversion of CCPS A, B, C and D into equity shares of erstwhile GAL.

c. On 10^th December, 2015, the Company had originally issued and allotted the 7.5 per cent Subordinated Foreign Currency Convertible Bonds (FCCBs) aggregating to US$ 300 Mn due 2075 to Kuwait Investment Authority (KIA) and interest is payable on annual basis.

Pursuant to the Demerger of the Company’s non-Airport business into GMR Power and Urban Infra Limited (GPUIL) during January 2022, the FCCB liability was split between the Company and GPUIL. Accordingly, FCCBs aggregating to US$ 25 Mn. were retained and redenominated in the Company and FCCBs aggregating US$ 275 Mn. were issued to KIA by GPUIL. As per applicable RBI Regulations and the terms of the Agreements entered into between KIA and the Company, the Company had the right to convert the said FCCBs into equity shares at a pre-agreed SEBI mandated conversion price. Upon exercise of such conversion right, KIA would be entitled to 1,112,416,666 equity shares of the Company.

Subsequent to 31^st March, 2024, the US$ 25 Mn. 7.5 per cent Subordinated Foreign Currency Convertible Bonds (FCCBs), issued by the Company to KIA have been transferred by KIA to two eligible lenders i.e., Synergy Industrials, Metals and Power Holdings Limited (“Synergy”) (US$ 14 Mn) and to GRAM Limited (“GRAM”) (US$ 11 Mn).

The 7.5 percent US$ 25 Mn. FCCBs have been converted dated 10^th July, 2024 into 111,24,16,666 number of equity shares of ₹1/- each, proportionately to the above-mentioned two FCCB holders, as per the agreed terms and basis receipt of a conversion notice from the said FCCB holders. As the FCCB holders are equity investors, and as a part of the overall commercials between the parties, the outstanding interest on the FCCB’s of ₹100.43 crore was waived.

BCAJ Admin

From Published Accounts

Compiler’s Note

Key Audit Matters regarding:

Uncertainties on outcome of investigation conducted by SEBI and MCA
Litigation for termination of merger co-operation agreement
Litigation with Star India Private Limited for the ICC Contract

ZEE Entertainment Enterprises Ltd (31^st March, 2024)

From Independent Auditors’ Report

Key Audit matters

Key Audit Matter

How our audit addressed the key audit matter

Uncertainties on the ultimate outcome of the ongoing investigation being conducted by the Securities and Exchange Board of India (‘SEBI’) and the inspection being conducted by the Ministry of Corporate Affairs under Section 206(5) of the Act

(Refer to notes 56 of the standalone financial statements)

The Company, one the current KMP and one of its subsidiaries is involved in the ongoing investigation being conducted by the Securities and Exchange Board of India (‘SEBI’) with respect to certain transactions in earlier years with the vendors of the Company and one of the subsidiary companies. Pursuant to the above, SEBI has issued various summons and sought comments / information / explanations from the Company, its subsidiary and certain directors (including former directors), KMPs who have provided or are in process of providing the information requested.

The Company had also received a follow-up communication from the Ministry of Corporate Affairs (‘MCA’)

for the ongoing inspection under section 206(5) of the Companies Act, 2013 against which the Company had submitted its response.

The management has informed the Board that based on its review of records of the Company / subsidiary, the transactions (including refunds) relating to the Company / subsidiary were against consideration for valid goods and services received.

The Board of Directors of the Company continues to monitor the progress of aforesaid matters and have also appointed Independent advisory committee to review the allegations.

Based on the available information, the management does not expect any material adverse impact on the Company/ Subsidiary with respect to the above and accordingly, believes that no adjustments are required to the accompanying statement.

Considering the uncertainty associated with the ultimate outcome of the investigation / findings of independent advisory and significance of management judgement involved in assessing the future outcome and determining the required disclosure, this was considered to be a key audit matter in the audit of the standalone financial statements.

Further, the aforementioned matter as fully explained in Note 56 to the standalone financial statements is also considered fundamental to the user’s understanding of the standalone financial statements.

Our audit included, but was not limited to, the following procedures:

• Obtained understanding of management process and controls relating to identification and evaluation of proceedings and investigations at different levels in the Company;

• Evaluated the design and tested the operating effectiveness of key controls around above process;

• Obtained and reviewed the various show cause notices, orders, letters, summons and follow up requests from SEBI and MCA;

• Obtained and evaluated the response, information and documents submitted by the Company, its subsidiary, directors and KMPs;

• Reviewed the documents in hand (agreements, MOUs, purchase orders, invoices, bank statements, Board approvals and other required approvals) for transactions highlighted in the show cause notice and summons at Company/subsidiary level;

• Reviewed the work performed by Internal auditors on the agreed scope;

• Verified the conclusion of the erstwhile auditors and internal auditors including Advisory report submitted by SEBI based on Examination carried out in earlier years on the same transactions in earlier years;

• Obtained and evaluated the scope of work agreed with Independent Advisory Committee and the conclusions of the committee;

• Reviewed the legal opinion obtained by the management on the ongoing regulatory actions against the Company concluding that the investigation is at fact finding stage and no conclusion has been formed; and

• Evaluated the adequacy of disclosures given in the standalone financial statements with regard to regulatory action.

(ii)

Litigation for termination of Merger Co-operation agreement (Refer notes 30 and 55 of the standalone financial statements)

The Board of Directors of the Company, on 21st December, 2021, had approved the Scheme of Arrangement under Sections 230 to 232 of the Companies Act, 2013 (Scheme), whereby the Company and Bangla Entertainment Private Limited (BEPL) an affiliate of Culver Max Entertainment Private Limited (Culver Max). Both the parties had been engaged in the process of obtaining the necessary approvals for completing the merger. The Company has incurred expenses aggregating to ` 2,784 million during the year (and aggregating to ` 4,618 million upto date) pursuant to such scheme of merger which have been disclosed under exceptional items in the relevant period.

However, on 22nd January, 2024, Culver Max and BEPL have issued a notice to the Company purporting to terminate the Merger co-operation Agreement (‘MCA’) and sought termination fee of USD 90,000,000 (United States Dollars Ninety Million) and alleged breaches by the Company of the terms of the MCA, they have also initiated arbitration for the same before the Singapore International Arbitration Centre (SIAC) and is currently pending as at reporting date.

The Management, based on legal tenability, progress of the arbitration and relying on the legal opinion obtained from independent legal counsel has determined that the above claims against the Company including towards termination fees is not tenable and does not expect any material adverse impact on the Company with respect to the above and accordingly, no adjustments are required to the accompanying standalone financial statement.

and needs careful evaluation and significant judgement to be applied by the management, this matter is considered to be a key audit matter for the current period audit. Further, the aforementioned matter as fully explained in Note 55 to the standalone financial statements is also considered fundamental to the user’s understanding of the standalone financial statements.

Our audit included, but was not limited to, the following procedures:

• Obtained understanding of management process and controls relating to implementation of the Merger Scheme and evaluated the design and tested the operating effectiveness of key controls around above process;

• Obtained and reviewed the terms and conditions mentioned in the MCA and Company’s compliance position with those terms and conditions;

• Obtained and reviewed the correspondence (including termination notice, arbitration notice, replies, NCLT filings, SIAC filings) between the Company, Culver Max and BEPL to corroborate our understanding of the matter;

• Reviewed the legal opinion from independent legal counsel obtained by the management with respect to termination of MCA;

• Assessed management decision to continue to classify the excluded entities in the MCA as Non-current assets held for sale in accordance with Ind AS 105 – Non-Current Assets Held for Sale and Discontinued Operations on its intention to continue with merger;

• Tested on sample basis the merger cost recorded as exceptional items in the standalone financial statements; and

• Evaluated the adequacy of disclosures given in the standalone financial statements with regard to litigation.

(iii)

Litigation with Star India Private Limited for the ICC Contract (Refer notes 37 of the standalone financial statements)

On 26^th August, 2022, the Company had entered into an agreement with Star India Private Limited (“Star”) for setting out the basis on which Star would be willing to grant sub-license rights in relation to television broadcasting rights of the International Cricket Council’s (ICC) Men’s and Under 19 (U-19) global events for a period of four years (ICC 2024-2027) on an exclusive basis (‘Alliance Agreement’). The performance of the Alliance Agreement was subject to certain conditions precedent including submission of financial commitments, provision of bank guarantee and corporate guarantee and pending final ICC approval for sub-licensing to the Company.

Till date, the Company has accrued ` 721 million for Bank Guarantee Commission and interest expenses for its share of Bank Guarantee and Deposit as per the alliance agreement.

During the year, Star has sent letters to the Company through its legal counsel alleging breach of the Alliance agreement on account of non-payment of dues for the rights in relation to first instalment of the rights fee aggregating to USD 203.56 million (` 16,934 million) along-with the payment for Bank Guarantee commission and deposit interest aggregating ` 170 million and financial commitments including furnishing of corporate guarantee/ confirmation as stated in the Alliance Agreement.

On 14^th March, 2024, Star initiated arbitration proceedings against the Company under the Arbitration Rules of the London Court of International Arbitration and sought to specific performance of the Alliance Agreement (or alternatively, to pay damages).

Based on the legal advice, the management believes that Star has not acted in accordance with the Alliance Agreement, and has failed to obtain necessary approvals, execution of necessary documentation and agreements. The management also believes that Star by its conduct has breached the Alliance Agreement and is in default of terms thereof and consequently, the contracts stands repudiated and accordingly, the Company does not expect any material adverse impact with respect to the above and hence no adjustments were required to the accompanying standalone financial statements.

Considering the amounts involved are material and the application of accounting principles as given under Ind AS 37, Provisions, Contingent Liabilities and Contingent Assets, in order to determine the amounts to be recognised as liability or to be disclosed as a contingent liability or not, is inherently subjective and needs careful evaluation and significant judgement to be applied by the management, this matter is considered to be a key audit matter for the current period audit.

Further, the aforementioned matter as fully explained in Note 37 to the standalone financial statements is also considered fundamental to the user’s understanding of the standalone financial statements.

Our audit included, but was not limited to, the following procedures:

• Obtained an understanding of the Alliance agreement along with the conditions mentioned therein and management’s compliance with those conditions;

• Obtained and reviewed the correspondence between the Company and Star along with the letters sent through legal counsel and the arbitration application filed;

• Evaluated the response received from the external legal counsel to ensure that the conclusions reached are supported by sufficient legal rationale;

• Involved Auditor’s expert to corroborate conclusions reached by the external legal counsel;

• Verified the invoices received for interest cost on deposits and bank guarantee and also verified the payment made by the Company against those invoices; and

Evaluated the adequacy of disclosures given in the standalone financial statements with regard to litigation.

From Notes to Financial Statements

EXCEPTIONAL ITEMS

#During the year, as part of the restructuring, the employee termination related cost aggregating to `220 Million have been recorded as an exceptional item.

The Company has accounted R2,564 Million (R1,762 Million) for certain employee and legal expenses pertaining to proposed Scheme of Arrangement (refer note 55).

Previous Year

The Company had settled the dispute with Indian Performing Rights Society Limited (IPRS) in relation to the consideration to be paid towards royalty for the usage of literary and musical works. On 6^th March, 2023, the Company entered into the agreement with IPRS for settling its old disputes in light of the impending merger. The agreement entails settlement of the dues for the period 1^stApril, 2018 to 31^st March, 2023. Accordingly, all the legal cases and proceedings filed by IPRS at various forums stands withdrawn.

The Company recorded an additional liability of `270 Million pertaining to earlier years as an ‘Exceptional Item’ by virtue of this settlement.

*In an earlier year, the Company had purchased 650 unlisted, secured redeemable non-convertible debentures (NCDs) of Zee Learn Limited (ZLL or issuer) guaranteed by the Company for an aggregate amount of `445 Million. The entire NCD were to be redeemed in phased manner by 31^st March, 2024. The principal outstanding is `255 Million.

National Company Law Tribunal (NCLT), Mumbai bench has admitted Corporate Insolvency petition under Section 7 of The Insolvency and Bankruptcy Code filed by Yes Bank Limited against ZLL vide its Order dated 10^th February, 2023 which was subsequently stayed by National Company Law Appellate Tribunal (NCLAT). On account of the uncertainties with respect to recoverability of the balances and delays during the year in receipt of instalments, the Company had made provision for the principal outstanding during year ended 31^st March, 2023 and has disclosed same as part of ‘Exceptional items’.

On 26^th August, 2022, the Company had entered into an agreement with Star India Private Limited (‘Star’) for setting out the basis on which Star would be willing to grant sub-license rights in relation to television broadcasting rights of the International Cricket Council’s (ICC) Men’s and Under 19 (U-19) global events for a period of four years (ICC 2024-2027) on an exclusive basis (Alliance Agreement). The Company / Board had identified this acquisition of strategic importance ensuring the Company is present in all 3 segments of the media and entertainment business. The performance of the Alliance Agreement was subject to certain conditions precedent including submission of financial commitments, provision of bank guarantee and corporate guarantee and pending final ICC approval for sub-licensing to the Company.

Till date, the Company has accrued R721 Million for bank guarantee commission and interest expenses for its share of bank guarantee and deposit as per the Alliance Agreement.

During the year ended 31^st March, 2024, Star has sent letters to the Company through its legal counsel alleging breach of the Alliance agreement on account of non-payment of dues for the rights in relation to first instalment of the rights fee aggregating to USD 203.56 million (R16,934 Million) along with the payment for bank guarantee commission and deposit interest aggregating R170 Million and financial commitments including furnishing of corporate guarantee / confirmation as stated in the Alliance agreement. Based on the legal advice, the Management believes that Star has not acted in accordance with the Alliance Agreement and has failed to obtain necessary approvals, execution of necessary documentation and agreements. The Management also believes that Star by its conduct has breached the Alliance agreement and is in default of the terms thereof and consequently, the contract stands repudiated. The Company has already communicated to Star that the Alliance Agreement cannot be proceeded with for the reasons set out above and has also sought refund of R685 million paid to Star.

During the year ended 31^st March, 2024, Star initiated arbitration proceedings against the Company through its Notice of Arbitration dated 14^th March, 2024 (Arbitration Notice) by which it has sought specific performance of the Alliance agreement by the Company or in the alternative compensate Star for damages suffered which have not been quantified. The Company has taken necessary steps to defend Star’s claim in the Arbitration.

The Board continues to monitor the progress of aforesaid matter. Based on the available information and legal advice, the Management believes that the Company has strong and valid grounds to defend any claims. Accordingly, the Company does not expect any material adverse impact with respect to the above as in its view the contract has been repudiated and no adjustments are required to the accompanying statements.

The Board of Directors of the Company, at its meeting on 21^st December, 2021, had considered and approved the Scheme of Arrangement under Sections 230 to 232 of the Companies Act, 2013 (Scheme), whereby the Company and Bangla Entertainment Private Limited (BEPL) (an affiliate of Culver Max Entertainment Private Limited (Culver Max) (formerly known as Sony Pictures Networks India Private Limited) shall merge in Culver Max in accordance with terms of Merger Corporation Agreement (MCA). After receipt of requisite approvals / NOC’s from shareholders and certain regulators including NSE, BSE, SEBI, CCI, ROC, etc., the Scheme was sanctioned by the Hon’ble National Company Law Tribunal, Mumbai (NCLT) on 10^th August, 2023. Both the parties had been engaged in the process of obtaining the balance regulatory approvals, completion of closing formalities for the merger to be effective as per MCA.

Post expiry of the long stop date on 21^st December, 2023, as per the terms of the MCA, the Company initiated good faith discussions with Culver Max to agree on revised effective date. On 22^nd January, 2024, Culver Max and BEPL issued a notice to the Company purporting to terminate the MCA entered into by the parties in relation to the Scheme and have sought termination fee of USD 90,000,000 (United States Dollars Ninety Million) on account of alleged breaches by the Company of the terms of the MCA and initiated arbitration for the same before the Singapore International Arbitration Centre (SIAC).

Based on legal advice, during the year, the Company issued a reply to Culver Max and BEPL specifically denying any breach of its obligations under the MCA and reiterating that the Company has made all commercially reasonable efforts to fulfil its closing conditions precedents and obligations in good faith. The Company believes that the purported termination of the MCA is wrongful and the claim of termination fee by Culver Max and BEPL is legally untenable and the Company has disputed the same. The Company reserves its right to make claims including counter claims against Culver Max / BEPL for breaches of the MCA at the appropriate stage.

Further, Culver Max and BEPL sought emergency interim reliefs from an Emergency Arbitrator appointed by the SIAC requesting to injunct the Company from approaching the Hon’ble NCLT for implementation of the Scheme which was heard by SIAC and no relief was granted to Culver Max and BEPL vide the order rejected by the Emergency Arbitrator by an award dated 4^th February, 2024.

The Company had filed an application before the Hon’ble NCLT seeking directions to implement the Scheme as approved by the shareholders and sanctioned by the Hon’ble NCLT on 12^th March, 2024. Subsequent to the year end, the Company decided to withdraw the said application since despite all its efforts to implement the Scheme, Culver Max was opposing the same by filing multiple applications. Hon’ble NCLT has heard the application dated 17^th April, 2024, filed by the Company seeking to withdraw the implementation application, for which the order is reserved.

The Board of Directors continue to monitor the progress of aforesaid matters. Based on legal opinion, the management believes the above claims against the Company including towards termination fees are not tenable and does not expect any material adverse impact on the Company with respect to the above and accordingly, no adjustments are required to the accompanying statement.

The Securities and Exchange Board of India (SEBI) had passed an ex-parte interim order dated 12^th June 2023 and Confirmatory Order dated 14^th August, 2023 (SEBI Order) against one of the current KMP of the Company for alleged violation of Section 4(1) and 4(2)(f) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices (FUTP) relating to Securities Market) Regulations, 2003.

On 30^th October, 2023, the Hon’ble Securities Appellate Tribunal (SAT) set aside the above order passed by SEBI granting relief to the current KMP. The SAT order also recorded that the SEBI will continue with the investigation.

Pursuant to the above, SEBI has issued various summons and sought comments / information / explanation from Company, its subsidiary, directors under period of consideration and KMPs who have been providing information to SEBI from time to time, as requested.

With respect to the ongoing enquiry being conducted by SEBI, a writ petition challenging the same has been filed by an ex-director before the Hon’ble Bombay High Court against SEBI during the quarter wherein the Company has been impleaded as a respondent. The Company has filed its reply to the writ petition. The final adjudication of the petition is pending.

The management has informed the Board of Directors that based on its review of records of the Company / subsidiary, the transactions (including refunds) relating to the Company / subsidiary were against consideration for valid goods and services received.

On 23^rd February, 2024, the Company has constituted an “Independent Investigation Committee” (Committee) headed by and under the chairmanship of Former Judge, Allahabad High Court and comprising of 2 independent directors of the Company, to review the allegations against the Company with a view to safeguard interest of the shareholders against widespread circulation of misinformation, market rumours, etc. The Committee is currently in progress of taking necessary steps as per aforesaid terms of reference.

The Board of Directors continues to monitor the progress of aforesaid matters. Based on the available information the management does not expect any material adverse impact on the Company with respect to the above and accordingly, believes that no adjustments are required to the financial statements.

The Company had also received a follow-up communication from the Ministry of Corporate Affairs (MCA) for the ongoing inspection under section 206(5) of the Companies Act, 2013 against which the Company had submitted its response.

From Directors’ Report

Composite Scheme of Arrangement

The Board of Directors of the Company, at its meeting held on 21^st December, 2021 had considered and approved a Scheme of Arrangement under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013, amongst the Company, Bangla Entertainment Private Limited (‘BEPL’) and Culver Max Entertainment Private Limited (formerly known as Sony Pictures Networks India Private Limited) (‘CMEPL’) (collectively, the ‘Parties’) and their respective shareholders and creditors (‘Scheme’). The Parties also executed a Merger Co-operation Agreement (‘MCA’) to record their mutual understanding and agreement in relation to the Scheme. The Scheme received the requisite approvals / no-objections from shareholders and regulatory authorities including Competition Commission of India (‘CCI’), Regional Director (Western Region), the BSE Limited (‘BSE’), National Stock Exchange of India Limited (‘NSE’) and Official Liquidator; and was sanctioned by the Hon’ble National Company Law Tribunal, Mumbai (‘NCLT’) vide its orders dated 10^th August, 2023, and 11^th August, 2023.

On 22^nd January, 2024, CMEPL and BEPL, (i) issued a notice to the Company purporting to terminate the MCA and seeking a termination fee of US$90 million on account of alleged breaches by the Company of the terms of the MCA; (ii) initiated arbitration against the Company before the Singapore International Arbitration Centre (‘SIAC’); (iii) sought emergency interim reliefs from an Emergency Arbitrator appointed by the SIAC.

On 23^rd January, 2024, the Company issued a reply to CMEPL and BEPL, denying the contents of their letter dated 22^nd January, 2024, and stating that the purported termination of the MCA was wrongful and the claim for termination fee was legally untenable. On 24^th January, 2024, the Company filed an application before the NCLT seeking directions to implement the Scheme as approved by the shareholders and sanctioned by the NCLT. On 4^thFebruary, 2024, the Emergency Arbitrator appointed by SIAC, passed an award rejecting the emergency interim reliefs sought by CMEPL and BEPL.

On 17thApril, 2024, the Company based on legal advice filed an application before the NCLT seeking to withdraw its earlier application for implementation of the Scheme. On 23^rd May, 2024, based on legal advice, the Company issued a notice to CMEPL and BEPL, terminating the MCA on account of their non-compliance/ omission to fulfil their obligations and hence, their breach of the MCA. On 24^th June, 2024, the NCLT allowed the application filed by the Company to withdraw its application seeking implementation of the Scheme with liberty to the Parties to pursue their respective remedies as and when warranted and in accordance with law.

Meanwhile, on 22^nd April, 2024, a three-member arbitral tribunal (‘Tribunal’) was constituted by SIAC. On 27^th July, 2024, the Company filed an application before the Tribunal seeking certain directions in relation to the arbitration proceedings. While the disputes between the Parties were pending before the Tribunal, on 27^th August, 2024, pursuant to approval of the Board of Directors of the Company, the Company entered into a Settlement Agreement with CMEPL and BEPL, inter alia, to (i) settle all disputes in relation to, arising out of or in connection with the Transaction Documents entered into by and amongst the Parties in respect of the Scheme, (ii) mutually terminate all such Transaction Documents, (iii) withdraw all application(s), claim(s), and / or counterclaim(s) before SIAC and relinquish all rights to file claim(s) and/or counterclaim(s) against each other in relation to and arising out of the Transaction Documents, including their termination and implementation, all claims for the US$90 million termination fee, damages, litigation and other costs incurred etc., and (iv) release each other from any and all claims in relation to the Transaction Documents entered into by the Parties in respect of the Scheme. The fact of the above settlement was also disclosed by the Company to the NSE and BSE on 27^th August, 2024.

On 29^th August, 2024, the Company filed an application before the NCLT seeking recall of the sanction order dated 10th August, 2023, and withdrawal of the Scheme. CMEPL and BEPL also filed a similar application seeking recall of the sanction order dated 11^th August, 2023, and withdrawal of the Scheme. Thereafter, on 30^th August, 2024, CMEPL and BEPL sent an email to the Registrar, SIAC, intimating SIAC that the Parties have entered into the Settlement Agreement, withdrawing their claim(s) and requesting that the Tribunal be discharged, and the arbitration proceedings be concluded. The Company also sent an email to the Registrar SIAC, confirming the contents of the above email sent by CMEPL and BEPL, relinquishing all rights to file claim(s) and / or counterclaim(s), withdrawing all pending application(s) and requesting SIAC to declare that the arbitration proceedings are concluded in light of the settlement. The above was also intimated by the Company to the BSE and NSE on 30^th August, 2024.

On 30^th August, 2024, CMEPL and BEPL also sent an email to the Tribunal informing them of the settlement between the parties and requesting the Tribunal to terminate the arbitration proceedings. The Company sent an email to the Tribunal on the same date, confirming the settlement.

On 30^th August, 2024, the Company also took the following steps in terms of the Settlement Agreement:

(i) sent an email to the CCI, attaching a letter dated 30^th August, 2024, informing the CCI that the MCA has been mutually terminated by the parties and the Company; (ii) sent a letter to the Ministry of Information and Broadcasting, Government of India (‘MIB’), informing the MIB that the MCA has been mutually terminated by the parties and therefore, the Scheme cannot be made effective; (iii) filed Form INC-28 with the Registrar of Companies, Mumbai (‘RoC’), informing the RoC that the Parties have mutually terminated the Transaction Documents entered into in connection with the Scheme and therefore, the Scheme cannot be made effective; and (iv) sent an email to the Collector of Stamps, Enforcement I, Mumbai (‘Stamp Authority’) attaching a letter dated 30^th August, 2024, informing them that the Scheme cannot be made effective. Similar intimations were also made by CMEPL and BEPL to the CCI, MIB, RoC and the Stamp Authority.

On 5^th September, 2024, the NCLT passed an order allowing the withdrawal of the Scheme and recalling the order dated 10^th August, 2023 by which the Scheme was sanctioned. On 17^th September, 2024, the Tribunal passed an order terminating the arbitration proceedings. Separately, on 9^th October, 2024, the NCLT passed an order in the application filed by CMEPL and BEPL allowing the withdrawal of the Scheme and recall of the order dated 11^th August, 2023.

Additionally, the appeals filed by Axis Finance Limited, IDBI Bank Limited, and IDBI Trusteeship Services Limited against the order dated 10^th August, 2023 were listed before National Company Law Appellate Tribunal (‘NCLAT’) on 20^th September, 2024. In view of the order passed by the NCLT on 5^th September, 2024, the Appellants sought permission to withdraw their respective appeals, which was allowed by the NCLAT and the appeals were dismissed as withdrawn by order dated 20^th September, 2024 passed by the NCLAT.

Separately, certain applications were filed by Phantom Studios India Private Limited (‘Phantom Studios’), a shareholder of the Company, seeking directions for implementation of the Scheme, and pending the disposal of its implementation application, restraining CMEPL and BEPL from taking actions contrary to the sanction of the Scheme. By order dated 9^th July, 2024, the Hon’ble NCLT reserved the aforesaid applications for orders.

Given that (i) the Company, CMEPL and BEPL have mutually terminated all Transaction Documents in relation to the Scheme; (ii) the arbitration proceedings have been terminated; and (iii) the sanction orders passed by the NCLT have been recalled and the Scheme withdrawn from the NCLT, the aforesaid legal proceedings have no impact whatsoever on the Company. Any pending proceedings are now infructuous in light of the aforesaid circumstances, and nothing survives therein.

BCAJ Admin

From Published Accounts

COMPILERS’ NOTE

Standard on Auditing (SA) 600 ‘Using the work of another Audior’ (issued in 2002 by ICAI) and revision thereof in view of changes in ISA 600 has been a matter of hot debate in last few weeks. NFRA has, besides issuing a consultation paper on 17^th September, 2024 for proposed revision of SA 600 (with detailed reasons for the change), also issued a circular on 3^rd October, 2024 for ‘Responsibilities of Principal Auditor and Other Auditors in Group Audits’. The circular is applicable on immediate basis and debate is on whether the same would apply to audits / reviews already completed / in progress.

In India, auditors have, so far, applying the existing SA 600 and SA 706, included an “Other matters” paragraph in their report, where reference is given to reliance placed on work of other auditors and details of the assets, revenues and cash flows for such reliance.

The compiler believes that based on the aforesaid NFRA circular and the revised SA 600 (when promulgated), the audit planning and reporting by the auditors can undergo a drastic change.

Given below are few instances of audit reporting on consolidated financial statements for the year ended 31^st March, 2024 in large companies having multiple subsidiaries, associates and join ventures. For ease of understanding, a summary table is given at end of each company (which is not part of the audit report).

TATA STEEL LIMITED

We did not audit the financial statements / financial information of fifteen subsidiaries, whose financial statements / financial information reflect total assets of ₹80,061.72 crores and net assets of ₹13,061.31 crores as at 31^st March, 2024, total revenue of ₹88,124.27 crores, total net (loss) after tax of ₹(19,506.59) crores, total comprehensive income (comprising of net loss and other comprehensive income) of ₹(22,934.77) crores and net cash flows amounting to ₹(7,738.62) crores for the year ended on that date, as considered in the consolidated financial statements. The consolidated financial statements / financial information of these subsidiaries also includes their step-down associate and companies jointly controlled entities constituting ₹15.66 crores and ₹28.58 crores respectively of the Group’s share of total comprehensive income for the year ended 31^st March, 2024. The consolidated financial statements also include the Group’s share of total comprehensive income (comprising of profit and other comprehensive income) of ₹75.05 crores for the year ended 31^st March, 2024, as considered in the consolidated financial statements, in respect of one associate company and three jointly controlled entities, whose financial statements / financial information have not been audited by us. These financial statements/financial information have been audited by other auditors whose reports have been furnished to us by the other auditors/Management, and our opinion on the consolidated financial statements insofar as it relates to the amounts and disclosures included in respect of these subsidiaries, associate company and jointly controlled entities and our report in terms of sub-section (3) of Section 143 of the Act including report on Other Information insofar as it relates to the aforesaid subsidiaries, associate company and jointly controlled entities, is based solely on the reports of the other auditors.

We did not audit the financial statements / financial information of thirteen subsidiaries, whose financial statements/financial information reflect total assets of ₹10,151.93 crores and net assets of ₹5,339.33 crores as at 31^st March, 2024, total revenue of ₹635.91 crores, total net profit after tax of ₹62.89 crores, total comprehensive income (comprising of net profit and other comprehensive income) of ₹182.74 crores and net cash flows amounting to ₹1.54 crores for the year ended on that date, as considered in the consolidated financial statements. The consolidated financial statements also include the Group’s share of net (loss) after tax and total comprehensive income (comprising of loss and other comprehensive income) of ₹(0.28) crores and ₹(0.28) crores respectively for the year ended 31^st March, 2024 as considered in the consolidated financial statements, in respect of three associate companies and one jointly controlled entity respectively, whose financial statements/financial information have not been audited by us. These financial statements / financial information are unaudited and have been furnished to us by the Management, and our opinion on the consolidated financial statements insofar as it relates to the amounts and disclosures included in respect of these subsidiaries, associate companies and jointly controlled entity and our report in terms of sub-section (3) of Section 143 (including Rule 11 of the Companies (Audit and Auditors) Rules, 2014) of the Act including report on Other Information insofar as it relates to the aforesaid subsidiaries, associate companies and jointly controlled entity, is based solely on such unaudited financial statements/financial information. In our opinion and according to the information and explanations given to us by the Management, this financial statements / financial information are not material to the Group.

In the case of one subsidiary, three associate companies and one jointly controlled entity, the financial statements / financial information for the year ended 31^st March, 2024, is not available. In absence of the aforesaid financial statements/financial information, the financial statements / financial information in respect of aforesaid subsidiary and the Group’s share of total comprehensive income of these associate companies and jointly controlled entity for the year ended 31^st March, 2024, have not been included in the consolidated financial statements. Accordingly, we do not report in terms of sub-section (3) of Section 143 (including Rule 11 of the Companies (Audit and Auditors) Rules, 2014) of the Act including report on Other Information insofar to the extent these relate to the aforesaid subsidiary, associate companies and jointly controlled entity. In our opinion and according to the information and explanations given to us by the Management, this financial statements / financial information are not material to the Group. Our opinion on the consolidated financial statements, and our report on Other Legal and Regulatory Requirements below, is not modified in respect of the above matters with respect to our reliance on the work done and the reports of the other auditors and the financial statements / financial information certified by the Management or not considered for the purpose of preparation of these consolidated financial statements.

Summary of above paras:

(₹in Crores)

Relationship with Holding Company	Audited/ unaudited	Number of entities	Total Assets	Total revenue	Net cash inflows/ (Outflows)
Subsidiaries	Audited	15	80,061.72	88,124.27	-7,738.62
Associate		1
Jointly controlled entity		1

Subsidiaries	Unaudited	13	10,151.93	635.91	1.54
Associates		3
Jointly controlled entity		1

Subsidiary	Data not available	1	Not available
Associates		3
Jointly controlled entity		1

As per consolidated financial statements of Holding Company (31^st March, 2024)			2,73,423.50	2,29,170.78	-5,047.76

RELIANCE INDUSTRIES LTD

The Consolidated Financial Statements include the financial statements / financial information of 197 subsidiaries, whose audited standalone / consolidated financial statements / financial information reflect total assets of ₹8,55,098 crore as at 31^st March, 2024, total revenues of ₹2,40,609 crore and net cash inflows amounting to ₹2,863 crore for the year ended on that date. The Consolidated Financial Statements also include the Group’s share of net profit of ₹37 crore for the year ended 31^st March, 2024, as considered in the Consolidated Financial Statements, in respect of 10 associates and 14 joint ventures. This financial statements / financial information have been audited by one of us either individually or jointly with other auditors.

We did not audit the financial statements / financial information of 143 subsidiaries, whose standalone / consolidated financial statements / financial information reflect total assets of ₹383,059 crore as at 31^st March, 2024, total revenues of ₹627,516 crore and net cash inflows amounting to ₹11,360 crore for the year ended on that date, as considered in the Consolidated Financial Statements. The Consolidated Financial Statements also include the Group’s share of net profit of ₹91 crore for the year ended 31^st March, 2024, as considered in the Consolidated Financial Statements, in respect of 77 associates and 19 joint ventures, whose financial statements / financial information have not been audited by us. These financial statements / financial information have been audited by other auditors whose reports have been furnished to us by the Management and our opinion on the Consolidated Financial Statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries, joint ventures and associates, and our report in terms of sub-section (3) of Section 143 of the Act, in so far as it relates to the aforesaid subsidiaries, joint ventures and associates is based solely on the reports of the other auditors.

We did not audit the financial statements / financial information of 9 subsidiaries, whose standalone / consolidated financial statements / financial information reflect total assets of ₹43 crore as at 31^st March, 2024, total revenues of ₹35 crore and net cash outflows amounting to ₹98 crore for the year ended on that date, as considered in the Consolidated Financial Statements. The Consolidated Financial Statements also include the Group’s share of net profit of ₹259 crore for the year ended 31^st March, 2024, as considered in the Consolidated Financial Statements, in respect of 38 associates and 28 joint ventures, whose financial statements / financial information have not been audited by us. This financial statements / financial information are unaudited and have been furnished to us by the Management and our opinion on the Consolidated Financial Statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries, joint ventures and associates, is based solely on such unaudited financial statements / financial information. In our opinion and according to the information and explanations given to us by the Management, this financial statements / financial information are not material to the Group.

Our opinion on the Consolidated Financial Statements above and our report on Other Legal and Regulatory Requirements below, is not modified in respect of the above matters with respect to our reliance on the work done and the reports of the other auditors and the financial statements / financial information certified by the Management.

Summary of above paras:

(₹in crores)

Relationship with Holding Company	Audited/ unaudited	Number of entities	Total Assets	Total revenue	Net cash inflows/ (Outflows)
Subsidiary	Audited by Principal Auditor	197	8,55,098.00	2,40,609.00	2,863.00
	Audited	143	3,83,059.00	6,27,516.00	11,360.00
	Unaudited	9	43.00	35.00	-98.00

Associates	Audited	77	Not available
Joint Ventures	Audited	19

Associates	Unaudited	38
Joint Ventures	Unaudited	28
As per consolidated financial statements of Holding Company (31^st March, 2024)			17,55,986.00	9,14,472.00	27,841.00

MAHINDRA & MAHINDRA LTD

We did not audit the financial statements of 109 subsidiaries, whose financial statements reflect total assets (before consolidation adjustments) of ₹146,449 crores as at 31^st March, 2024, total revenues (before consolidation adjustments) of ₹40,502 crores and net cash inflows (before consolidation adjustments) amounting to ₹406 crores for the year ended on that date, as considered in the consolidated financial statements. The consolidated financial statements also include the Group’s share of net profit after tax (and other comprehensive income) (before consolidation adjustments) of ₹391 crores for the year ended 31^st March, 2024, in respect of 24 associates and 18 joint ventures, whose financial statements have not been audited by us. These financial statements have been audited by other auditors whose reports have been furnished to us by the Management and our opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries, joint ventures and associates, and our report in terms of sub-section (3) of Section 143 of the Act, in so far as it relates to the aforesaid subsidiaries, joint ventures and associates is based solely on the reports of the other auditors. Our opinion on the consolidated financial statements, and our report on Other Legal and Regulatory Requirements below, is not modified in respect of the above matter with respect to our reliance on the work done and the reports of the other auditors.

The financial statements of 15 subsidiaries, whose financial statements reflect total assets (before consolidation adjustments) of ₹3,255 crores as at 31^st March, 2024, total revenues (before consolidation adjustments) of ₹2,777 crores and net cash outflows (before consolidation adjustments) amounting to ₹0 crores for the year ended on that date, as considered in the consolidated financial statements, have not been audited either by us or by other auditors. The consolidated financial statements also include the Group’s share of net profit after tax (and other comprehensive income) (before consolidation adjustments) of ₹90 crores for the year ended 31^st March, 2024, as considered in the consolidated financial statements, in respect of 8 associates and 6 joint ventures, whose financial statements have not been audited by us or by other auditors. These unaudited financial statements have been furnished to us by the Management and our opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries, joint ventures and associates, and our report in terms of sub-section (3) of Section 143 of the Act in so far as it relates to the aforesaid subsidiaries, joint ventures and associates, is based solely on such unaudited financial statements. In our opinion and according to the information and explanations given to us by the Management, these financial statements are not material to the Group. Our opinion on the consolidated financial statements, and our report on Other Legal and Regulatory Requirements below, is not modified in respect of this matter with respect to the financial statements certified by the Management.

Summary of above paras:

(₹in crores)

Relationship with Holding Company	Audited/ unaudited	Number of entities	Total Assets	Total revenue	Net cash inflows/ (Outflows)
Subsidiary	Audited by Principal Auditor	197	8,55,098.00	2,40,609.00	2,863.00
Subsidiary	Audited	143	3,83,059.00	6,27,516.00	11,360.00

Associates	Audited	77	Not available
Joint Ventures	Audited	19

Associates	Unaudited	38
Joint Ventures	Unaudited	28
As per consolidated financial statements of Holding Company (31^st March, 2024)			17,55,986.00	9,14,472.00	27,841.00

GRASIM INDUSTRIES LTD

a) The consolidated financial statements include the audited financial statements of:

i. 53 subsidiaries whose financial statements / financial information reflect total assets (before consolidation adjustments) of ₹2,82,585.45 crore as at 31^st March, 2024, total revenue (before consolidation adjustments) of ₹40,748.16 crore, and net cash outflow (before consolidation adjustments) of ₹158.42 crore for the year ended on that date, as considered in the consolidated financial statements, which have been audited singly by one of us or other auditors whose reports have been furnished to us by the management and our opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries, and our report in terms of sub-section (3) of Section 143 of the Act, in so far as it relates to the aforesaid subsidiaries, is based solely on the report of other auditors.

ii. 8 joint ventures and 8 associates whose financial statements / financial information include the Group’s share of total net profit after tax (before consolidation adjustments) of ₹250.43 crore for the year ended 31^st March, 2024, as considered in the consolidated financial statements, which have been audited singly by one of us or other auditors whose reports have been furnished to us by the management and our opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosures included in respect of these joint ventures and associates, and our report in terms of sub-section (3) of Section 143 of the Act, in so far as it relates to the aforesaid joint ventures and associates, is based solely on the report of such auditors.

Our opinion on the consolidated financial statements, and our report on Other Legal and Regulatory Requirements below, is not modified in respect of above matters with respect to our reliance on the work done and the reports of the one of the joint auditors of the Parent and other auditors.

b) 2 of the joint venture is located outside India whose financial statements / financial information have been prepared in accordance with accounting principles generally accepted in their respective countries and which have been audited by other auditors under generally accepted auditing standards applicable in their respective countries. The Parent Company’s management has converted the financial statements of such joint ventures located outside India from accounting principles generally accepted in their respective countries to accounting principles generally accepted in India. We have audited these conversion adjustments made by the Parent Company’s management. Our opinion in so far as it relates to the balances and affairs of such joint venture located outside India is based on the report of other auditor and the conversion adjustments prepared by the management of the Parent and audited by us.

c) The consolidated financial statements include the unaudited financial statements / financial information of:

i. 6 subsidiaries, whose financial statements/ financial information reflect total assets (before consolidation adjustments) of ₹14.49 crore as at 31^st March, 2024, total revenue (before consolidation adjustments) of ₹Nil crore and net cash flows (before consolidation adjustments) of ₹1.92 crore for the year ended on that date, as considered in the consolidated financial statements.

ii. 5 joint ventures and 4 associates whose financial statements/ financial information reflect Group’s share of total net loss after tax (before consolidation adjustments) of ₹147.27 crore for the year ended 31^st March, 2024, as considered in the consolidated financial statements.

d) These unaudited financial statements/financial information have been furnished to us by the Management and our opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries, joint ventures and associate and our report in terms of sub-section (3) of Section 143 of the Act in so far as it relates to the aforesaid subsidiaries, joint ventures and associate, is based solely on such unaudited financial statements / financial information. In our opinion and according to the information and explanations given to us by the Management, this financial statements / financial information are not material to the Group. Our opinion on the consolidated financial statements, and our report on Other Legal and Regulatory Requirements below, is not modified in respect of above matter with respect to the financial statements/financial information certified by the Management.

Summary of above paras:
(₹in crores)

Relationship with Holding Company	Audited/ Unaudited	Number of entities	Total Assets	Total revenue	Net cash inflows/ (Outflows)
Subsidiaries	Audited	53	2,82,585.45	40,748.16	158.42
	Unaudited	6	14.49	–	1.92
Associates	Audited	8
Joint Ventures	Audited	8

Associates	Unaudited	4
Joint Ventures	Unaudited	5

As per consolidated financial statements of Holding Company (31^st March, 2024)			4,12,539.08	1,30,978.48	75.65

ITC LTD

We did not audit the financial statements and other financial information, in respect of twenty-four subsidiaries, whose financial statements include total assets of ₹8,009.91 crores as at 31^st March, 2024, and total revenues of ₹3,666.49 crores and net cash inflows of ₹43.60 crores for the year ended on that date. These financial statement and other financial information have been audited by other auditors, which financial statements, other financial information and auditor’s reports have been furnished to us by the management. The consolidated Ind AS financial statements also include the Group’s share of net profit of ₹27.61 crores for the year ended 31^st March, 2024, as considered in the consolidated Ind AS financial statements, in respect of nine associates and three joint ventures, whose financial statements, other financial information have been audited by other auditors and whose reports have been furnished to us by the management. Our opinion on the consolidated Ind AS financial statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries, joint ventures and associates, and our report in terms of sub-section (3) of Section 143 of the Act, in so far as it relates to the aforesaid subsidiaries, joint ventures and associates, is based solely on the reports of such other auditors.

Certain of these subsidiaries are located outside India whose financial statements and other financial information have been prepared in accordance with accounting principles generally accepted in their respective countries and which have been audited by other auditors under generally accepted auditing standards applicable in their respective countries. The Holding Company’s management has converted the financial statements of such subsidiaries located outside India from accounting principles generally accepted in their respective countries to accounting principles generally accepted in India. We have audited these conversion adjustments made by the Holding Company’s management. Our opinion in so far as it relates to the balances and affairs of such subsidiaries located outside India is based on the report of other auditors and the conversion adjustments prepared by the management of the Holding Company and audited by us.

Summary of above paras:
(₹in crores)

Relationship with Holding Company	Audited/ unaudited	Number of entities	Total Assets	Total revenue	Net cash inflows/ (Outflows)
Subsidiary	Audited	24	8,009.91	3,666.49	43.60
Associate		9	Not Available
Joint Ventures		3	Not Available
As per consolidated financial statements of Holding Company (31^st March, 2024)			91,826.16	76,840.49	190.67

Our opinion above on the consolidated Ind AS financial statements, and our report on Other Legal and Regulatory Requirements below, is not modified in respect of the above matters with respect to our reliance on the work done and the reports of the other auditors.

INFOSYS LIMITED

The company has several subsidiaries and associates. There is no ‘other matters’ para in the Auditors’ report on Consolidated Financial Statements.

BCAJ Admin

From Published Accounts

COMPILERS’ NOTE

Accounting for real estate projects, joint development agreements and related inventory is governed by Ind AS 115. Companies follow varied policies for such accounting. Looking to the nature of activities in the industry and uncertainties, auditors also mention the above matters in Key Audit Matters in their reports. Given below are illustrations of disclosures in three large companies for the year ended 31st March, 2024 for the above.

DLF LIMITED

From Auditors’ Report

From Material accounting policies (extracts)

Revenue from contracts or services with customers and other streams of revenue

Revenue from contracts with customers is recognised when control of the goods or services is transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company has generally concluded that it is the principal in its revenue arrangements because it typically controls the goods and services before transferring them to the customers.

The disclosures of significant accounting judgements, estimates and assumptions relating to revenue from contracts with customers are provided in note 2.2(bb).

i. Revenue from Contracts with Customers:

Revenue is measured at the fair value of the consideration received / receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government, and is net of rebates and discounts. The Company assesses its revenue arrangements against specific criteria to determine if it is acting as principal or agent. The Company has concluded that it is acting as a principal in all of its revenue arrangements.

Revenue is recognised in the statement of profit and loss to the extent that it is probable that the economic benefits will flow to the Company and the revenue and costs, if applicable, can be measured reliably.

The Company has applied a five-step model as per Ind AS 115 ‘Revenue from contracts with customers’ to recognise revenue in the standalone financial statements. The Company satisfies a performance obligation and recognises revenue over time, if one of the following criteria is met:

a) The customer simultaneously receives and consumes the benefits provided by the Company’s performance as the Company performs; or

b) The Company’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or

c) The Company’s performance does not create an asset with an alternative use to the Company and the entity has an enforceable right to payment for performance completed to date.

For performance obligations where any of the above conditions is not met, revenue is recognised at the point in time at which the performance obligation is satisfied.

Revenue is recognised either at a point of time or over a period of time based on various conditions as included in the contracts with customers.

Point of Time:

Revenue from real-estate projects

Revenue is recognised at the Point in Time w.r.t. sale of real estate units, including land, plots, apartments, commercial units, development rights including development agreements as and when the control passes on to the customer which coincides with handing over of the possession to the customer.

Incremental cost of obtaining contract

The incremental cost of obtaining a contract with a customer is recognised as an asset if the Company expects to recover those costs subject to other conditions of the standard being met. These costs are charged to statement of profit and loss in accordance with the transfer of the property to the customer.

Over a period of time:

Revenue is recognised over period of time for following stream of revenues:

Revenue from Co-development projects

Co-development projects where the Company is acting as contractor, revenue is recognised in accordance with the terms of the co-developer agreements. Under such contracts, assets created do not have an alternative use for the Company, and the Company has an enforceable right to payment. The estimated project cost includes construction cost, development and construction material, internal development cost, external development charges, borrowing cost and overheads of such project.

The estimates of the saleable area and costs are reviewed periodically and effect of any changes in such estimates is recognised in the period in which such changes are determined. However, when the total project cost is estimated to exceed total revenues from the project, the loss is recognised immediately.

Construction and fit-out projects

Construction and fit-out projects where the Company is acting as contractor, revenue is recognised in accordance with the terms of the construction agreements. Under such contracts, assets created do not have an alternative use, and the Company has an enforceable right to payment. The estimated project cost includes construction cost, development and construction material and overheads of such project.

The Company uses cost-based input method for measuring progress for performance obligation satisfied over time. Under this method, the Company recognises revenue in proportion to the actual project cost incurred as against the total estimated project cost. The management reviews and revises its measure of progress periodically and is considered as change in estimates and accordingly, the effect of such changes in estimates are recognised prospectively in the period in which such changes are determined. However, when the total project cost is estimated to exceed total revenues from the project, the loss is recognised immediately.

As the outcome of the contracts cannot be measured reliably during the early stages of the project, contract revenue is recognised only to the extent of costs incurred in the statement of profit and loss.

Revenue from golf course operations

Income from golf course operations, capitation, sponsorship, etc., is fixed and recognised as per the management agreement with the parties, as and when Company satisfies performance obligation by delivering the promised goods or services as per contractual agreed terms.

Rental and Maintenance income

Revenue in respect of rental and maintenance services is recognised on an accrual basis, in accordance with the terms of the respective contract as and when the Company satisfies performance obligations by delivering the services as per contractual agreed terms.

Other operating income

Income from forfeiture of properties and interest from banks and customers under agreements to sell is accounted for on an accrual basis except in cases where ultimate collection is considered doubtful.

ii. Volume rebates and early payment rebates

The Company provides move in rebates / early payment rebates / down payment rebates to the customers. Rebates are offset against amounts payable by the customer and revenue to be recognised. To estimate the variable consideration for the expected future rebates, the Company estimates the expected value of rebates that is likely to be incurred in future and recognises the revenue net of rebates and the refund liability for expected future rebates.

Inventories

Land and plots other than area transferred to constructed properties at the commencement of construction are valued at lower of cost / as re-valued on conversion to stock and net realisable value. Cost includes land (including development rights and land under agreement to purchase) acquisition cost, borrowing cost if inventorisation criteria are met, estimated internal development costs and external development charges and other directly attributable costs.
Construction work-in-progress of constructed properties other than Special Economic Zone (SEZ) projects includes the cost of land (including development rights and land under agreements to purchase), internal development costs, external development charges, construction costs, overheads, borrowing cost if inventorisation criteria are met, development / construction materials and is valued at lower of cost / estimated cost and net realisable value.
In case of SEZ projects, construction work-in-progress of constructed properties includes internal development costs, external development charges, construction costs, overheads, borrowing cost if inventorisation criteria are met, development / construction materials and is valued at lower of cost / estimated cost and net realisable value.
Development rights represent amount paid under agreement to purchase land / development rights and borrowing cost incurred by the Company to acquire irrevocable and exclusive licenses / development rights in the identified land and constructed properties, the acquisition of which is either completed or is at an advanced stage. These are valued at lower of cost and net realisable value.
Construction / development material is valued at lower of cost and net realisable value. Cost comprises purchase price and other costs incurred in bringing the inventories to their present location and condition.
Stocks for maintenance facilities (including stores and spares) are valued at cost or net realisable value, whichever is lower.

Cost is determined on weighted-average basis.

Net realisable value is the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale.

MACROTECH DEVELOPERS LIMITED

From Auditors’ Report

Key audit matters	How our audit addressed the key audit matter
Revenue Recognition for Real Estate Projects
Refer Note 1(III)(11) of standalone financial statements with respect to the accounting policies followed by the Company for recognising revenue from sale of residential and commercial properties. The Company applies Ind AS 115 “Revenue from contracts with customers” for recognition of revenue from sale of commercial and residential real estate, which is being recognised at a point in time / over the time depending upon the Company, satisfying its performance obligation under the contract with the customer, and the control of the underlying asset gets transferred to the customer. Significant judgement / estimation is involved in identifying performance obligations for revenue recognition under point in time and over the time methods. Determining when control of the asset underlying the performance obligation is transferred to the customer and estimating stage of completion, basis which revenue is recognised as per Ind AS 115, has been considered as a key audit matter	Our audit procedures in respect of this area, among others, included the following: • Read the Company’s revenue recognition accounting policies and evaluated the appropriateness of the same with respect to principles of Ind AS 115 and their application to the significant customer contracts; • Obtained and understood the Company’s process for revenue recognition including identification of performance obligations and determination of transfer of control of the property to the customer; • Evaluated the design and implementation and verified, on a test check basis, the operating effectiveness of key internal controls over revenue recognition, including controls around transfer of control of the property and calculation of revenue recognition, which is based on various factors including contract price, total budgeted cost and actual cost incurred; • Obtained and read the legal opinion taken by the Company and provided to us to determine timing when the control gets transferred in accordance with the underlying agreements. • Verified the sample of revenue contract for sale of residential and commercial units to identify the performance obligations of the Company under these contracts and assessed whether these performance obligations are satisfied over time or at a point in time based on the criteria specified under Ind AS 115; • Verified, on a test check basis, revenue transaction with the underlying customer contract, Occupancy Certificates (OC) and other documents evidencing the transfer of control of the asset to the customer based on which the revenue is recognised; • Verified, on a test check basis, budgeted cost of certain projects, actual cost incurred, balance cost to be incurred and recomputed stage of project completion based on which the revenue is recognised; and • Assessed the adequacy and appropriateness of the disclosures made in standalone financial statements in compliance with the requirements of Ind AS 115 ‘Revenue from contracts with customers’.
Inventory Valuation
Refer Note 1(III)(5) to the standalone financial statements which includes the accounting policies followed by the Company for valuation of inventory. The Company’s properties under development and completed properties are stated at the lower of cost and NRV. As of 31^st March, 2024, the Company’s properties under development and inventory of completed properties amount to ₹2,92,454 million and ₹34,883 million, respectively. Determination of the NRV involves estimates based on prevailing market conditions, current prices, and expected date of commencement and completion of the project, the estimated future selling price, cost to complete projects and selling costs. The cost of the inventory is calculated using actual land acquisition costs, construction costs, development-related costs and interest capitalised for eligible project. We have considered the valuation of inventory as a key audit matter on account of the significance of the balance to the standalone financial statements and involvement of significant judgement in estimating future selling prices and costs to complete the project.	Our audit procedures in respect of this area, among others, included the following: • Obtained an understanding of the Management’s process and methodology of using key assumptions for determining the valuation of inventory as at the year-end; • Evaluated the design and implementation and verified, on a test check basis, operating effectiveness of controls over preparation and update of NRV workings and related to the Company’s review of key estimates, including estimated future selling prices and costs of completion for property development projects; • Assessed the appropriateness of the selling price estimated by the management and verified the same on a test check basis by comparing the estimated selling price to recent market prices in the same projects or comparable properties; • Compared the estimated construction cost to complete the project with the Company’s updated budgets; and • Assessed the adequacy and appropriateness of the disclosures made in the standalone financial statements with respect to inventory in compliance with the requirements of applicable Indian Accounting Standards and applicable financial reporting framework.

From Material Accounting Policies

Revenue Recognition (extracts)

The Company has applied five-step model as set out in Ind AS 115 to recognise revenue in this financial statement. The specific revenue recognition criteria are described below:

i. Income from Property Development

Revenue is recognised on satisfaction of performance obligation upon transfer of control of promised goods (residential or commercial units) or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services.

The Company satisfies the performance obligation and recognises revenue over time, if one of the following criteria is met:

The customer simultaneously receives and consumes the benefits provided by the Company’s performance as the Company performs; or
The Company’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or
The Company’s performance does not create an asset with an alternative use to the Company and an entity has an enforceable right to payment for performance completed to date.

For performance obligations where any one of the above conditions is not met, revenue is recognised at the point in time at which the performance obligation is satisfied. Revenue is recognised either at the point of time or over a period of time based on the conditions in the contracts with customers. The Company determines the performance obligations associated with the contract with customers at contract inception and also determines whether they satisfy the performance obligation over time or at a point in time.

The Company recognises revenue for performance obligation satisfied over time only if it can reasonably measure its progress towards complete satisfaction of the performance obligation.

In respect of contracts with customers which do not meet the criteria to recognise revenue over a period of time, revenue is recognised at the point in time with respect to such contracts for sale of residential and commercial units as and when the control is passed on to the customers which is linked to the application and receipt of occupancy certificate.

Revenue is recognised net of discounts, rebates, credits, price concessions, incentives, etc. if any.

ii. Sale of Materials, Land and Development Rights

Revenue is recognised at the point in time with respect to contracts for sale of Materials, Land and Development Rights as and when the control is passed on to the customers.

iii. Others Operating Revenue

Revenue from facility management service is recognised at value of service on accrual basis as and when the performance obligation is satisfied

Inventories

Stock of Building Materials and Traded Goods is valued at lower of cost and NRV. Cost is generally ascertained on a weighted average basis.

Finished Stock is valued at lower of Cost and NRV.

Land and Property Development Work-in-Progress is valued at lower of estimated cost and NRV.

Cost for this purpose includes cost of land, shares with occupancy rights, Transferrable Development Rights, premium for development rights, borrowing costs, construction / development cost and other overheads incidental to the projects undertaken.

NRV is the estimated selling price in the ordinary course of business, less estimated cost of completion and the estimated cost necessary to make the sale.

SHRIRAM PROPERTIES LIMITED

From Auditors’ Report:

Key Audit Matters

Revenue recognition for real estate projects

The Company applies Ind AS 115 ‘Revenue from Contracts with Customers’ for recognition of revenue from real estate projects. Refer notes 1.2(g), 23 and 45 to the standalone financial statements for accounting policy and related disclosures.

For the sale of constructed properties, revenue is recognised by the Company as per the requirements of Ind AS 115 over a period of time and is being recognised in the financial year when sale deeds are registered with the revenue authorities of the prevailing State as the management considers that the contract becomes binding on both the parties only upon registering the sale deed, as until such registration, the customer has the right to cancel the contract without compensating the Company for the costs incurred along with a reasonable margin (as specified in Ind AS 115).

Significant judgments are required in identifying the contract obligations, determining when the obligations are completed and recognising revenue over a period of time. Further, for determining revenue using percentage of completion method, budgeted project cost is a critical estimate, which is subject to inherent uncertainty as it requires ascertainment of progress of the project, cost incurred till date and balance cost to be incurred to complete the project.

For revenue contract forming part of Joint Development Arrangements (JDA), the arrangement comprises sale of development rights in lieu of construction services provided by the Developer and transfer of constructed area and / or revenue sharing arrangement based on the standalone selling price, which is measured at the fair value of the estimated construction service. Significant estimates are used by the Company in determining the fair value of ‘non-cash consideration’, i.e., receipt of development rights in lieu of the construction service and recognising revenue using percentage of completion method.

Considering the significance of management judgement involved and the materiality of amounts involved, revenue recognition was identified as a key audit matter for the current year audit.

Our audit procedures included but were not limited to the following:

• Evaluated the appropriateness of accounting policy for revenue recognition of the Company in terms of principles enunciated under Ind AS 115;

• Evaluated the design and implementation of Company’s key financial controls in respect of revenue recognition around transfer of control and tested the operating effectiveness of such controls for a sample of transactions;

On sample basis, we have performed the following procedures in relation to revenue recognition from sale of constructed properties:

• Read, analysed and identified the distinct performance obligations in the customer contracts;

• Assessed management evaluation of determining revenue recognition from sale of constructed property over a period of time in accordance with the requirements under Ind AS 115;

• Inspected sale deeds evidencing the transfer of control of the property to the customer based on which revenue is recognised;

• Tested costs incurred and accrued to date on the balance sheet by examining underlying invoices and signed work orders and compared it with budgeted cost to determine percentage of completion of the project;

• Reviewed management’s internal budgeting approvals process, on a sample, for cost to be incurred on a project and for any changes in initial budgeted costs; and

• Discussed exceptions, if any, to the revenue recognition policy of the management and obtained appropriate management approvals and representations regarding the same.

For projects executed during the year through JDA, we have performed the following procedures on a sample basis:

• Evaluated estimates involved in determining the fair value of development rights in lieu of construction services in accordance with principles under Ind AS 115;

• Evaluated whether the accuracy of revenue recognised by the Company based on ratio of constructed area or revenue sharing arrangement as agreed in the revenue sharing arrangement as entered with the Developer over a period of time is in accordance with the requirements under Ind AS 115;

• Compared the fair value of the estimated construction service to the project cost estimates and mark up considered by the management; and

• Ensured that the disclosure requirements of Ind AS 115 have been complied with.

Revenue recognition in development management arrangements

The Company renders development management (DM) services involving multiple performance obligations such as Sales and Marketing, Project Management and Consultancy (PMC) services, Customer Relationship Management (CRM) Services and Financial Management services to other real estate developers pursuant to separate Development Management Arrangements executed with them.

Refer notes 1.2(g), 23 and 45 to the standalone financial statements for accounting policy and revenue recognised during the year.

The assessment of such services rendered to customers involves significant judgment in:

• Identifying different performance obligations;

• Allocating transaction price to these performance obligations;

• Assessing whether these obligations are satisfied over a period of time or at the point in time for the purposes of revenue recognition;

• Assessing whether the transaction price has a significant financing element; and

• Assessing for any liability arising on guarantee contracts entered by the Company.

Considering the significance of management judgements involved as mentioned above and the materiality of amounts involved, we have identified this as a key audit matter.

Our audit procedures included, but were not limited to the following:

• Evaluated the appropriateness of the accounting policy for revenue recognition of the Company in terms of principles enunciated under Ind AS 115;

• Evaluated the design and implementation of the Company’s key financial controls in respect of revenue recognition for DM contracts and tested the operating effectiveness of such controls for a sample of transactions;

On a sample of contracts, we have performed the following procedures in relation to revenue recognition in DM contracts:

• Read, analysed and identified the distinct performance obligations in these contracts

• Assessed the Management’s evaluation of identifying different performance obligations, allocating transaction price (adjusted with financing element) and determining timing of revenue recognition, i.e., over a period of time or at the point in time in accordance with the requirements under Ind AS 115;

• On a sample basis, inspected the sale agreements entered with respect to sale of units in DM projects;

• Recomputed the amount to be billed in terms of DM contract and compared that with amount billed and investigated the differences if any and held discussions with management;

• Reviewed communications between the Company and DM customers regarding construction progress for contract obligations that involve recognising revenue over a period of time; and

• For contracts modified during the period without change in the scope of services such as incentives, we have reviewed whether
the accounting for contract modification is made in accordance with the principles of Ind AS 115; and

• Ensured that the disclosure requirements of Ind AS 115 have been complied with.

Assessing the recoverability of advances paid for land purchase and refundable deposit paid under JDAs

As of 31^st March, 2024, the carrying value of land advance is R19,602 lakhs and refundable deposit paid under JDA is ₹4,914 lakhs.

Advances paid by the Company to the landowner / intermediary towards purchase of land is recognised as land advance under other assets
on account of pending transfer of the legal title to the Company, post which it is recorded as inventories.

Further, for land acquired under joint development agreement, the Company has paid refundable deposits for acquiring the development rights.

The aforesaid deposits and advances are carried at the lower of the amount paid / payable and net recoverable value, which is based on the management’s assessment which includes, among other things, the likelihood when the land acquisition would be completed, expected
date of completion of the project, sale prices and construction costs of the project.

Considering the significance of the amount and assumptions involved in assessing the recoverability of these balances, the aforementioned areas have been determined as
a key audit matter for the current
year audit.

Our audit procedures included, but were not limited to, the following procedures:

• Evaluated the design and implementation of the Company’s key financial controls in respect of recoverability assessment of the advances and deposits and tested the operating effectiveness of such controls for a sample of transactions;

• Obtained and tested the computation involved in the assessment of carrying value of advances;

• Obtained status of the project / land acquisition from the management and enquired for the expected realisation of deposit amount;

• Assessed the appropriateness and adequacy of the disclosures made by the management in accordance with applicable Ind AS.

Assessing the recoverability of carrying values of inventories

The accounting policies for Inventories are set out in Note 1.2 (h) to the Standalone financial statements.

As of 31^st March, 2024, inventory of the Company comprises properties held for development, properties under development, properties held for sale and as referred in note 10 to the standalone financial statements and represents 14 per cent of the Company’s total assets.

Inventory is valued at cost and NRV, whichever is less. In case of properties under development and properties held for sale, determination of the NRV involves estimates based on the prevailing market conditions, current prices, expected date of completion of the project, the estimated future selling price, cost to complete projects and selling costs. For NRV assessment, the estimated selling price is determined for a phase, sometimes comprising multiple units.

We have identified the assessment of the carrying value of inventory as a key audit matter due to the significance of the balance to the standalone financial statements as a whole and the involvement of estimates and judgement in the NRV assessment.

Our audit procedures included, but were not limited to, the following procedures:

• Assessed the appropriateness of the Company’s accounting policy by comparing with applicable Ind AS;

• Evaluated the design and implementation of the Company’s key financial internal controls related to testing recoverable amounts with carrying amount of inventory, including evaluating the Company’s management processes for estimating future costs to complete projects and tested the operating effectiveness of such controls for a sample of transactions. We carried out a combination of procedures involving inquiries and observations and inspection of evidence in respect of operation of such key controls;

• Performed re-computation of NRV and compared it with the recent sales or estimated selling price (usually contracted price) to test inventory units are held at the lower of cost and NRV;

• Compared the estimated construction costs to complete each project with the Company’s updated budgets; and

• Assessed the appropriateness and adequacy of the disclosures made by the management in accordance with applicable Ind AS.

FROM MATERIAL ACCOUNTING POLICIES

Revenue recognition (extracts)

Revenue from contracts with customers

Revenue from contracts with customers is recognised when control of the goods or services is transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Revenue is measured based on the transaction price, which is the consideration, adjusted for discounts and other credits, if any, as specified in the contract with the customer. The Company presents revenue from contracts with customers net of indirect taxes in its statement of profit and loss.

The Company considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated. In determining the transaction price, the Company considers the effects of variable consideration, the existence of significant financing components, non-cash consideration and consideration payable to the customer (if any).

a) The customer simultaneously receives and consumes the benefits provided by the Company’s performance as the Company performs; or

b) The Company’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or

c) The Company’s performance does not create an asset with an alternative use to the Company, and the entity has an enforceable right to payment for performance completed to date.

For performance obligations where any of the above conditions is not met, revenue is recognised at the point in time at which the performance obligation is satisfied.

Revenue is recognised either at a point of time or over a period of time based on various conditions as included in the contracts with customers.

i. Sale of constructed / developed properties

Revenue is recognised over the time from the financial year in which the registration of sale deed is executed based on the percentage-of-completion method (POC method) of accounting with cost of project incurred (input method) for the respective projects determining the degree of completion of the performance obligation.

The revenue recognition of real estate property under development requires forecasts to be made of total budgeted costs with the outcomes of underlying construction contracts, which further require assessments and judgments to be made on changes in work scopes and other payments to the extent they are probable and they are capable of being reliably measured. In case, where the total project cost is estimated to exceed total revenues from the project, the loss is recognised immediately in the Statement of Profit and Loss.

Further, for projects executed through joint development arrangements not being jointly controlled operations, wherein the landowner / possessor provides land and the Company undertakes to develop properties on such land and in lieu of landowner providing land, the Company has agreed to transfer certain percentage of constructed area or certain percentage of the revenue proceeds, the revenue from the development and transfer of constructed area / revenue sharing arrangement in exchange of such development rights / land is being accounted on gross basis on launch of the project. Revenue is recognised over time using input method, on the basis of the inputs to the satisfaction of a performance obligation relative to the total expected inputs to the satisfaction of that performance obligation.

The revenue is measured at the fair value of the land received, adjusted by the amount of any cash or cash equivalents transferred. When the fair value of the land received cannot be measured reliably, the revenue is measured at the fair value of the estimated construction service rendered to the landowner, adjusted by the amount of any cash or cash equivalents transferred. The fair value so estimated is considered as the cost of land in the computation of percentage of completion for the purpose of revenue recognition as discussed above.

For contracts involving sale of real estate unit, the Company receives the consideration in accordance with the terms of the contract in proportion of the percentage of completion of such real estate project and represents payments made by customers to secure performance obligation of the Company under the contract enforceable by customers. Such consideration is received and utilised for specific real estate projects in accordance with the requirements of the Real Estate (Regulation and Development) Act, 2016. Consequently, the Company has concluded that such contracts with customers do not involve any financing element since the same arises for reasons explained above, which is other than for provision of finance to / from the customer.

ii. Sale of services

Development management fees

The Company renders development management services involving multiple elements such as Sales and Marketing, PMC services, CRM Services and financial management services to other real estate developers. The Company’s performance obligation is satisfied either over a period of time or at a point in time, which is evaluated for each service under development management contract separately. Revenue is recognised upon satisfaction of each such performance obligation.

Administrative income

Revenue in respect of administrative services is recognised on an accrual basis, in accordance with the terms of the respective contract as and when the Company satisfies performance obligations by delivering the services as per contractual agreed terms.

iii. Other operating income

Income from transfer / assignment of development rights

The revenue from transfer / assignment of development rights is recognised in the year in which the legal agreements are duly executed and the performance obligations thereon are duly satisfied and there exists no uncertainty in the ultimate collection of consideration from customers.

Maintenance income

Revenue in respect of maintenance services is recognised on an accrual basis, in accordance with the terms of the respective contract as and when the Company satisfies performance obligations by delivering the services as per contractual agreed terms.

Others

Interest on delayed receipts, cancellation / forfeiture income and transfer fees, etc., from customers are recognised based upon underlying agreements with customers and when reasonable certainty of collection is established.

Unbilled revenue disclosed under other financial assets represents revenue recognised over and above the amount due as per payment plans agreed with the customers. Progress billings which exceed the costs and recognised profits to date on projects under construction are disclosed under other current liabilities. Any billed amount that has not been collected is disclosed under trade receivables and is net of any provisions for amounts doubtful of recovery.

Inventories

Properties held for development

Properties held for development represent land acquired for future development and construction and is stated at cost including the cost of land, the related costs of acquisition and other costs incurred to get the properties ready for their intended use.

Properties under development

Properties under development represent construction work in progress which are stated at the lower of cost and NRV. This comprises cost of land, construction-related overhead expenditure, borrowing costs and other net costs incurred during the period of development.

Properties held for sale

Completed properties held for sale are stated at the lower of cost and NRV. Cost includes cost of land, construction-related overhead expenditure, borrowing costs and other costs incurred during the period of development.

NRV is the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale.

BCAJ Admin

From Published Accounts

COMPILERS’ NOTE

Accounting for business combinations (mergers, amalgamations, etc.) is governed by Ind AS 103, including the Appendix thereof which governs mergers under Common Control. As per the Companies Act, 2013, the schemes also require approval from the National Company Law Tribunal (NCLT). Given below are illustrations of disclosures in a few large companies.

ASIAN PAINTS LIMITED (31ST MARCH 2024)

From Notes to Consolidated Financial Statements Mergers, Acquisitions, and Incorporations

a) Equity infusion in Weatherseal Fenestration Private Limited (Weatherseal):

During the previous year on 14th June, 2022, the Parent Company subscribed to 51 per cent of the equity share capital of Weatherseal for a cash consideration of ₹18.84 crores. Accordingly, Weatherseal became a subsidiary of the Parent Company. Weatherseal is engaged in the business of interior decoration / furnishing, including manufacturing PVC windows and door systems. The acquisition will enable the Group to widen its offerings in the home decor space and is a step forward in the foray of being a complete home decor solution provider.

In accordance with the Shareholders Agreement and Share Subscription Agreement, the Parent Company has agreed to acquire a further stake of 23.9 per cent in Weatherseal from its promoter shareholders, in a staggered manner. The Parent Company has also entered into a put contract for the acquisition of a 25.1 per cent stake in Weatherseal. Accordingly, on the day of acquisition, a gross obligation towards acquisition is and recognized for the same, initially measured at ₹18.08 crores. On 31st March, 2024, the fair value of such gross obligation is ₹9.53 crores (on 31st March, 2023 — ₹21.46 crores). A fair valuation gain of ₹11.93 crores is recognized in the Consolidated Statement of Profit and Loss for the year ended 31st March, 2024 (Previous Year — fair valuation loss of ₹3.38 crores).

b) Acquisition of stake in Obgenix Software Private Limited

The Parent Company entered into a Share Purchase Agreement and other definitive documents (agreement) with the shareholders of Obgenix Software Private Limited (popularly known by the brand name of ‘White Teak’) on 1st April, 2022. White Teak is engaged in designing, trading, or otherwise dealing in all types and descriptions of decorative lighting products and fans, etc. The acquisition will enable the Group to widen its offerings in the home decor space and is a step forward in the foray of being a complete home decor solution provider.

During the previous year, on 2nd April, 2022, the Parent Company acquired 49 per cent of the equity share capital of White Teak for a cash consideration of ₹180 crores along with an earn-out, payable after a year, subject to achievement of mutually agreed financial milestones. Accordingly, White Teak became an associate of the Group. On 31st March, 2023, the fair value of the earn-out was ₹58.97 crores.

During the year, on 23rd June, 2023, the Parent Company further acquired 11 per cent of the equity share capital of White Teak from the existing shareholders of White Teak for a consideration of ₹53.77 crores. The Parent Company holds 60 per cent of the equity share capital of White Teak, by virtue of which White Teak has become a subsidiary of the Parent Company. On such date, the fair value of earn out stood at ₹59.45 crores which was paid to the promoters of White Teak. Fair valuation loss towards earn out paid of ₹0.48 crores has been recognized in the Consolidated Statement of Profit & Loss (Previous Year — ₹5.17 crores).

In accordance with the agreement, the remaining 40 per cent of the equity share capital would be acquired in FY 2025–26. Accordingly, on the day of acquisition, gross obligation towards further stake acquisition is recognized for the same, initially measured at ₹225.92 crores. On 31st March, 2024, the fair value of such gross obligation is ₹186.22 crores. A fair valuation gain of ₹39.70 crores is recognized in the Consolidated Statement of Profit and Loss for the year ended 31st March, 2024.

(₹in crores)

Assets acquired and liabilities assumed on acquisition date:	30th June, 2023
Property, plant, and equipment	9.13
Intangible Assets	220.06
Right-of-Use Assets	34.06
Income Tax Assets (Net)	0.01
Deferred Tax Assets	2.21
Inventories	24.54
Financial Assets
Trade Receivables	7.47
Cash and bank balances	0.72
Other Financial Assets	4.43
Other Current Assets	4.03
Total Assets	306.66
Provisions	1.63
Deferred Tax Liabilities	1.09
Financial Liabilities
Borrowings	13.86
Lease Liabilities	35.11
Trade payables and other liabilities	7.92
Other payables	2.35
Total Liabilities	61.96
Net assets acquired	244.70

Trade receivables of ₹7.47 crores represent the gross contractual amounts. There are no contractual cash flows expected to be collected on the acquisition date.

(₹in crores)

Goodwill arising on the acquisition of a stake in White Teak	30th June, 2023
Cash consideration transferred (i)	53.77
Net Fair Value of Derivative Asset and Liability (ii)	2.27
Fair Value of 49 per cent stake in White Teak, as one of the acquisition dates (iii)	256.11
Total consideration transferred [(iv) = (i)+(ii)+(iii)	312.15
Fair Value of identified assets acquired (v)	244.70
Group share of Fair Value of identified assets acquired (vi)	146.82
Group share of Goodwill arising on acquisition White Teak [(iv)-(vi)]	165.33

The goodwill of ₹165.33 crores comprises the value of the acquired workforce, revenue growth, future market developments, and expected synergies arising from the business combination.

A gain of ₹33.96 crores on re-measurement of the fair value of 49 per cent stake held in White Teak is recognized under Other Income in the Consolidated Statement of Profit and Loss.

(₹in crores)

Net cash outflow on acquisition	30th June, 2023
Cash consideration transferred	53.77
Less: Cash and cash equivalent acquired (including overdraft)	(7.92)
Net cash and cash equivalent outflow	61.69

The amount of non-controlling interest recognised at the acquisition date was ₹97.88 crores, measured at no controlling interest’s proportionate share in the recognised amounts of White Teak’s identifiable net assets.

Impact of acquisition on the results of the Group:

Revenue from operations of ₹107.46 crores and Profit after tax of ₹1.22 crores of White Teak has been included in the current year’s Consolidated Statement of Profit and Loss. If the acquisition had occurred on 1st April, 2023, the consolidated revenue of the Group would have been higher by ₹25.96 crores, and the consolidated profit of the Group for the year would have been higher by ₹0.59 crores.

No material acquisition costs were charged to the Consolidated Statement of Profit and Loss for the year ended 31st March, 2024.
.
e) Acquisition of stake in Harind Chemicals and Pharmaceuticals Private Limited:

On 20th October, 2022, the Parent Company entered into Share Purchase Agreements and other definitive documents with shareholders of Harind Chemicals and Pharmaceuticals Private Limited (‘Harind’), for the acquisition of a majority stake in Harind, in a staggered manner, subject to fulfilment of certain conditions precedent. Harind is a specialty Chemicals Company engaged in the business of nanotechnology-based research, manufacturing, and sale of a range of additives and specialized coatings. Nanotechnology has the potential to be the next frontier in the world of coatings, and the acquisition will enable the Group to manufacture commercially viable high–performance coatings and additives with this technology.

Upon fulfilment of the conditions precedent for acquisition of the first tranche, the Parent Company has acquired 51 per cent of the equity share capital of Harind for consideration of ₹14.28 crores on 14th February, 2024. Accordingly, Harind and Nova Surface-Care Centre Private Limited, a wholly owned subsidiary of Harind, have become subsidiaries of the Parent Company. Further, the Parent Company has agreed to acquire a further 39 per cent stake in Harind in a staggered manner, over the next 3 years period. Accordingly, gross obligation towards acquisition is recognized at ₹48.88 crores as of 31st March, 2024.

(₹in crores)

Assets acquired and liabilities assumed on acquisition date:	31st Jan, 2024
Property, plant, and equipment	1.47
Right-of-Use Assets	0.34
Deferred Tax Assets (Net)	0.11
Inventories	3.18
Financial Assets
Trade Receivables	6.72
Cash and bank balances	0.97
Other Balances with Banks	9.12
Other Financial Assets	0.24
Other Current Assets	0.18
Total Assets	22.33
Financial Liabilities
Lease Liabilities	0.37
Trade payables	3.68
Other Financial Liabilities	0.37
Other Current Liabilities	0.55
Provisions	0.42
Income Tax liabilities	0.65
Total Liabilities	6.04
Net assets acquired	16.29

Trade receivable with a fair value of ₹6.72 crores had gross contractual amounts of ₹6.74 crores. The best estimate on the acquisition date of the contractual cash flows not expected to be collected is ₹0.02 crores.

Goodwill arising on the acquisition of a stake in White Teak	31st Jan, 2024
Cash consideration transferred (i)	14.28
Fair Value of Derivative liability (ii)	11.90
Total consideration transferred [(iii) = (i)+(ii)]	26.18
Fair Value of identified assets acquired (iv)	16.29
Group share of fair value of identified assets acquired (v)	8.31
Group share of Goodwill arising on the acquisition of Harind [(iii)-(v)]	17.87

The goodwill of ₹17.87 crores comprises the value of the acquired workforce, revenue growth, future market developments, and expected synergies arising from the business combination.

(₹in crores)

Net cash outflow on acquisition	31st Jan, 2024
Cash consideration transferred	14.28
Cash and cash equivalents acquired	0.97
Net cash and cash equivalent outflow	13.31

The amount of non-controlling interest recognized at the acquisition date was ₹7.98 crores, measured at non-controlling interest’s proportionate share in the recognized amounts of Harind’s identifiable net assets.

Impact of acquisition on the results of the Group:

Revenue from operations of ₹6.49 crores and Profit after tax of ₹1.60 crores of Harind has been included in the current year’s Consolidated Statement of Profit and Loss. If the acquisition had occurred on 1st April, 2023, the consolidated revenue of the Group would have been higher by ₹28.50 crores, and the consolidated profit of the Group for the year would have been higher by ₹4.00 crores.

No material acquisition costs were charged to the Consolidated Statement of Profit and Loss for the year ended 31st March, 2024.

f) Amalgamation of Sleek International Private Limited and Maxbhumi Developers Limited:

The Board of Directors at their meeting held on 28th March, 2024 had approved the Scheme of Amalgamation (‘the Scheme’) of Maxbhumi Developers Limited and Sleek International Private Limited, wholly owned subsidiaries of Asian Paints Limited
(Parent Company) with the Parent Company in accordance with the provisions of the Companies Act, 2013 and other applicable laws with the appointed date of 1st April 2024. The Scheme is subject to necessary statutory and regulatory approvals, including approval of the Hon’ble National Company Law Tribunal, Mumbai. There is no impact of the Scheme on the Consolidated Financial Statements

CRISIL LIMITED (31ST MARCH 2024)

From Notes to Consolidated Financial Statements

Business Combinations

Business combinations are accounted for using the acquisition accounting method as at the date of the acquisition, which is the date at which control is transferred to the Group. The consideration transferred in the acquisition and the identifiable assets acquired and liabilities assumed are recognised at fair values on their acquisition date. Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred over the net identifiable assets acquired and liabilities assumed.

Merger of CRISIL Irevna US LLC and Greenwich Associates LLC

The Board of Directors of CRISIL Irevna US LLC and Greenwich Associates LLC vide board resolution dated 21st October, 2022 had approved a scheme of amalgamation. The scheme has received approval from the competent authorities and accordingly, Greenwich Associates LLC has been merged with CRISIL Irevna US LLC with effect from 1st April, 2023. The merger has no impact on the consolidated financial results of the Group. In accordance with Appendix C to Ind AS 103 ‘Business Combination’, the financial information of CRISIL Irevna US LLC in the consolidated financial statements in respect of the prior period has been restated as if the business combination had occurred from the beginning of the preceding period.

The merger of CRISIL Risk and Infrastructure Solutions Limited (CRIS) and Pragmatix Services Private Limited (PSPL)

i) The Board of Directors of the Company has approved the arrangement for the amalgamation of two wholly owned subsidiaries (CRISIL Risk and Infrastructure Solutions Limited and Pragmatix Services Private Limited — Transferor Company) with the Company in its Board meeting held on 13th December, 2021. The Company filed necessary applications to the National Company Law Tribunal (NCLT) on 27th December, 2021. The Scheme has been sanctioned by the National Company Law Tribunal (NCLT) with the appointed date as 1st April 1, 2022 and the Scheme became effective on 1st September, 2022. The merger has no impact on the consolidated financial results of the Group.

ii) The authorized equity share capital of the Company has been increased by the authorized equity share capital of the former CRIS and PSPL in accordance with the Scheme of Merger vide Board resolution dated 13th December, 2022.

Acquisition of Bridge To India Energy Private Limited

The Company completed the acquisition of a 100 per cent stake in ‘Bridge To India Energy Private Limited’ (Bridge To India) on 30th September, 2023. Bridge To India is a renewable energy (RE) consulting & knowledge services provider to financial and corporate clients in India. The acquisition will augment CRISIL’s existing offerings and bolster our market positioning in the renewable energy space. The transaction is at a total consideration of R721 lakh. Accordingly, Bridge To India became a wholly owned subsidiary of the Company with effect from the said date.

Assets acquired, and liabilities assumed are as under:

Particulars	(₹ In lakhs)
Total identifiable assets (A)	550
Total identifiable liabilities (B)	293
Goodwill (C)	464
Total net assets (A-B+C)	721

Acquisition of Peter Lee Associates Pty. Limited

CRISIL Limited, through its subsidiary, CRISIL Irevna Australia Pty Limited has completed the acquisition of a 100 per cent stake in Peter Lee Associates Pty. Limited (Peter Lee) on 17th March, 2023.

Peter Lee is an Australian research and consulting firm providing benchmarking research programs to the financial services sector. Peter Lee conducts annual research programs across Australia and New Zealand in various areas of banking, markets, and investment management. The acquisition will complement CRISIL’s existing portfolio of products and expand offerings to new geographies and segments across financial services including commercial banks and investment management. The deal will accelerate CRISIL’s strategy in the APAC region to be the foremost player in the growing market.

The total consideration is ₹3,421 lakh (AUD 6.18 million), which includes upfront and deferred consideration.

Assets acquired, and liabilities assumed are as under:

Particulars	(₹ In lakhs)
Total identifiable assets (A)	2,746
Total identifiable liabilities (B)	1,019
Goodwill (C)	1,694
Total net assets (A-B+C)	3,421

HINDUSTAN UNILEVER LIMITED

(31ST MARCH 2024)

From Notes to Consolidated Financial Statements

Business Combinations

As per Ind AS 103, Business combinations are accounted for using the acquisition accounting method as at the date of the acquisition, which is the date at which control is transferred to the Group. The consideration transferred in the acquisition and the identifiable assets acquired and liabilities assumed are recognised at fair values on their acquisition date. Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. The Group recognizes any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are recognised in the consolidated statement of profit and loss.

Transaction costs are expensed in the consolidated statement of profit and loss as incurred, other than those incurred in relation to the issue of debt or equity securities which are directly adjusted in other equity. Any contingent consideration payable is measured at fair value at the acquisition date. Subsequent changes in the fair value of contingent consideration are recognized in the consolidated statement of profit and loss.

Business combinations under common control entities

Business combinations involving companies in which all the combining companies are ultimately controlled by the same holding party, both prior to and after the business combination are treated as per the pooling of interest method.

The pooling of interest method involves the following:

(i) The assets and liabilities of the combining entities are reflected in their carrying amounts.

(ii) No adjustments are made to reflect fair values or recognize any new assets or liabilities.

(iii) The financial information in the financial statements in respect of prior periods is restated as if the business combination had occurred from the beginning of the preceding period in the financial statements, irrespective of the actual date of the combination.

The identity of the reserves is preserved, and they appear in the financial statements of the transferee company in the same form in which they appeared in the financial statements of the transferor company. The difference, if any, between the consideration and the amount of share capital of the transferor company is transferred to capital reserve.

The merger of Ponds Exports Limited (‘PEL’) and Jamnagar Properties Private Limited (“JPPL’’) with Unilever India Exports Limited (‘UIEL’)

Pursuant to a scheme of arrangement, the below entities were merged with Unilever India Exports Limited (‘UIEL’), a wholly owned subsidiary of HUL w.e.f. 13th February, 2024:

i. Pond’s Export Limited (‘PEL’), a subsidiary of HUL, where HUL held 90 per cent and UIEL held 10 per cent of share capital;

ii. Jamnagar Properties Private Limited, a wholly-owned subsidiary of HUL.

PEL and JPPL had no business activity.

As part of the ‘Merger Order’ from NCLT vide order dated 16th January, 2024, the consideration to each equity shareholder of PEL and JPPL is:

a) 1 equity share of the merged entity of ₹10 each, against 1,99,00,147 paid-up equity shares of ₹1 each of PEL

b) 1 equity share of the merged entity of ₹10 each, against 50,00,000 paid-up equity shares of ₹10 each of JPPL

Since the merger is of entities under common control, it is accounted for using the pooling of interest method as per Ind AS 103.

In the current financial year, ₹7 crores have been transferred from retained earnings to capital reserves, on account of the merger of PEL and JPPL with UIEL under common control as per IND AS 103.

Acquisition of Zywie Ventures Private Limited

On 10th January, 2023, the Holding Company acquired a 53.34 per cent stake (51.00 per cent on a fully diluted basis) in ZVPL, an unlisted company incorporated in India and engaged in the business of Health and well-being products under the brand name of ‘OZiva’.

As part of the Shareholders Agreement (‘SHA’), Holding Company has acquired substantive rights that give control over relevant activities of the business and the right to variable returns through inter alia composition of Board, decision-making rights, management control, and hence ZVPL is treated as a subsidiary.

A) Purchase consideration transferred

The amount of consideration transferred on acquisition is ₹264 crores in cash.

B) Financial liability on the acquisition

On the acquisition date, the Holding Company acquired a stake in ZVPL through equity shares and compulsorily convertible preference shares (‘CCPS’), and forward rights on the non-controlling interests (‘NCI’) by way of Share Subscription and Share Purchase Agreement (‘SSSPA’). In respect of this, the Group has recognized a financial liability for the forward rights on the non-controlling interests at its estimated present value. The said financial liability was recognized through a corresponding impact to Other Equity of ₹375 crores. Subsequent measurement of this liability is at Fair value through Profit and Loss and currently stands at ₹265 crores.

C) Assets acquired, and liabilities assumed are as under:

	Amount
Total identifiable assets (A)	605
Total identifiable liabilities (B)	225
Total identifiable net assets acquired [(A) – (B)]	380

D) Acquisition of brand OZiva

The Holding Company also acquired the OZiva brand, as part of the acquisition deal. The brand was valued at ₹361 crores using the multi-period excess earnings method.

E) Goodwill

	Amount
Upfront cash consideration transferred	264
Non-controlling interest on the date of acquisition	185
Less: Total identifiable net assets acquired	(380)
Goodwill	69

Goodwill of ₹69 crores was recognized on account of synergies expected from the acquisition of ZVPL.

Amalgamation of GlaxoSmithKline Consumer Healthcare Limited

On 1st April, 2020, the Holding Company completed the merger of GlaxoSmithKline Consumer Healthcare Limited [‘GSK CH’] via an all-equity merger under which 4.39 shares of HUL (the Holding Company) were allotted for every share of GSK CH. With this merger, the Holding Company acquired the business of GSK CH including the Right to Use assets of brand Horlicks and Intellectual Property Rights of brands like Boost, Maltova, and Viva. The Holding Company also acquired the Horlicks intellectual property rights, being the legal rights to the Horlicks brand for India from GlaxoSmithKline Plc.

The scheme of merger (‘scheme’) submitted by the Holding Company was approved by the Hon’ble National Company Law Tribunal by its order dated 24th September, 2019 (Mumbai bench) and 12th March, 2020 (Chandigarh bench). The Board of Directors approved the scheme between the Holding Company and GSK CH, on 1st April, 2020. The scheme was filed with the Registrar of Companies on the same date. Accordingly, 1st April, 2020 was considered as the acquisition date, i.e., the date at which control is transferred to the Holding Company.

The merger had been accounted for using the acquisition accounting method under Ind AS 103 – Business Combinations. All identified assets acquired and liabilities assumed on the date of the merger were recorded at their fair value.

A) Purchase consideration transferred:

The total consideration paid was ₹40,242 crores which comprised of shares of the Holding Company, valued based on the share price of the Holding Company on the completion date. Refer to the details below:

As per the scheme, the Holding Company issued its shares in favour of existing shareholders of GSK CH such that 4.39 of the Holding Company’s shares were allotted for every share of GSK CH as below.

	Amount
Total number of GSK CH shares outstanding	4,20,55,538
Total number of Holding Company’s shares issued to GSK CH shareholders i.e.,4.39 of Company’s shares per share of GSK CH	18,46,23,812
Value of the Holding Company share (closing price of the Company share on NSE as of 1^st April, 2020)	2,179.65
Total consideration paid to acquire GSK CH ( ₹ crores)	40,242

(a) Total costs relating to the issuance of shares amounting to ₹44 crores as recognized against equity.

(b) Transaction cost of ₹146 crores that were not directly attributable to the issue of shares was included under exceptional items in the consolidated statement of profit and loss.

B) Assets acquired, and liabilities assumed is as under:

	Amount
Total number of GSK CH shares outstanding	4,20,55,538
Total number of Holding Company’s shares issued to GSK CH shareholders i.e.,4.39 of Company’s shares per share of GSK CH	18,46,23,812
Value of the Holding Company share (closing price of the Company share on NSE as of 1^st April, 2020)	2,179.65
Total consideration paid to acquire GSK CH ( ₹ crores)	40,242

The main assets acquired were Right to use Horlicks and Boost brand which were valued using the income approach model by estimating future and cash flows generated by these assets and discounting them to present value using rates in line with a market participant expectation.

In addition, as applicable, Property plant & equipment have been valued using the market comparison technique and replacement cost method.

C) Acquisition of Horlicks Brand:

The Holding Company also acquired the Horlicks Intellectual Property Rights (IPR), being the legal rights to the Horlicks brand for India from GlaxoSmithKline Plc for a consideration of ₹3,045 crores. The transaction has been accounted as an asset acquisition in line with Ind AS 38 (Intangible assets).

The Holding Company incurred a transaction cost of ₹91 crores for the above asset acquisition which was capitalised along with Horlicks IPR. A total value of ₹3,136 crores is recognised under Intangible assets in the consolidated financial statements.

TECH MAHINDRA LIMITED

(31ST MARCH, 2024)

Notes forming part of the Consolidated Financial Statement for the year ended 31st March, 2024

Business Combinations

Acquisition during the year ended 31st March, 2024

Pursuant to a share purchase agreement on 19th February, 2024 the Company through its wholly owned subsidiary, V Customer Phillippines Inc., acquired100 per cent stake in Orchid Cybertech Services Inc. (OCSI) for a consideration of AUD 5 million (₹296 Million) of which AUD 5 million (₹290 million) was paid upfront. Contractual obligation as of 31st March, 2024 AUD 0.1 million (₹6 Million).

OSCI is primarily engaged in Information Technology call center operations.

Particulars	OCSI
Particulars	AUD in million	₹ in million
Fair value of net assets / (liabilities) as of the date of acquisition	3	153
Customer Relationship	3	143
The fair value of net assets / (liabilities)	5	296
Purchase Consideration	5	296

For the one month ended 31st March, 2024 Orchid Cybertech Services Incorporated contributed revenue of ₹379 million and profit of ₹83 million to the Group’s results. If the acquisition had occurred on 1st April, 2023, management estimates that the consolidated revenue of the Group would have been ₹521,607 million, and the consolidated profit of the Group for the year would have been ₹24,098 million. The pro forma amounts are not necessarily indicative of the results that would have occurred if the acquisition had occurred on the date indicated or that may result in the future.

Details of acquisition during the year ended 31st March, 2024

Pursuant to a share purchase agreement, the Company acquired a 100 per cent stake in Thirdware Solution Limited and its subsidiaries, on 3rd June, 2022, for a consideration of ₹7,838 million out of which ₹6,708 million was paid upfront. The agreement also provides for contingent consideration linked to the financial performance of the financial year ending 2022 to 2024. As of 31st March, 2023, contractual obligation towards the said acquisition amounts to ₹735 million (31st March, 2024 ₹150 million)

Thirdware Solution Limited offers consulting, design, implementation, and support of enterprise applications services with a focus on the Automotive industry.

The summary of PPA is:

Particulars	Thirdware Solutions Limited
Fair value of net assets / (liabilities)as of the date of acquisition	5,397
Customer Relationship	1,005
Goodwill	1,436
Fair value of net assets / (liabilities)including Goodwill	7,838
Purchase Consideration	7,838

The aforesaid said purchase price allocation was determined provisionally and has been finalized in the current year.

For the ten months ended 31st March, 2023, Thirdware Solution Limited contributed revenue of ₹2,838 million and profit of ₹564 million to the Group’s results. If the acquisition had occurred on 1st April, 2022, management estimates that the consolidated revenue of the Group would have been ₹533,366 Million, and the consolidated profit of the Group for the year would have been ₹48,749 million. The pro-forma amounts are not necessarily indicative of the results that would have occurred if the acquisition had occurred on the date indicated or that may result in the future.

ULTRATECH CEMENT LIMITED

(31ST MARCH, 2024)

Notes to Consolidated Financial Statements

Acquisition of the Cement Business of Kesoram Industries

The Board of Directors has approved a Composite Scheme of Arrangement between Kesoram Industries Limited (“Kesoram”), the Company, and their respective shareholders and creditors, in compliance with sections 230 to 232 and other applicable provisions of the Companies Act, 2013 (“Scheme”). The Scheme, inter alia, provides for:

(a) Demerger of the Cement Business of Kesoram into the Company; and

(b) Reduction and cancellation of the preference share capital of Kesoram.

The Appointed Date for the Scheme is 1st April, 2024. The Cement Business of Kesoram consists of 2 integrated cement units at Sedam (Karnataka) and Basantnagar (Telangana) with a total installed capacity of 10.75 mtpa and a 0.66 mtpa packing plant at Solapur, Maharashtra. The Company will issue 1 (one) equity share of the Company of face value ₹10 each for every 52 (fifty-two) equity shares of Kesoram of face value ₹10 each to the shareholders of Kesoram as on the record date defined in the Scheme.

The Competition Commission of India has by its letter dated 19th March, 2024 approved the proposed combination under Section 31(1) of the Competition Act, 2002. The Scheme is, inter alia, subject to receipt of requisite approvals from statutory and regulatory authorities, including from the stock exchanges, the Securities and Exchange Board of India (SEBI), the National Company Law Tribunals, and the shareholders and creditors of the Company.

The merger of UltraTech Nathdwara Cement Limited (UNCL) (a wholly-owned subsidiary of the Company) and its wholly-owned subsidiaries viz. Swiss Merchandise Infrastructure Limited and Merit Plaza Limited (Ind AS 103).

The National Company Law Tribunal (“NCLT”), Mumbai and Kolkata Benches have by their order dated 18th December, 2023 and 3rd April, 2024 approved the Scheme of Amalgamation (“Scheme”) of UltraTech Nathdwara Cement Limited (UNCL)(a wholly-owned subsidiary of the Company) and its wholly-owned subsidiaries viz. Swiss Merchandise Infrastructure Limited (“Swiss”) and Merit Plaza Limited (“Merit”) with the Company. The Appointed date of the Scheme is 1st April, 2023. The said scheme has been made effective from 20th April, 2024. Consequently, the above-mentioned wholly owned subsidiaries of the Company stand dissolved without winding up.

Since the amalgamated entities are under common control, the accounting of the said amalgamation in the Standalone Financials has been done applying the Pooling of Interest method as prescribed in Appendix C of Ind AS 103 ‘Business Combinations’. While applying the Pooling of Interest method, the Company has recorded all assets, liabilities, and reserves attributable to the wholly owned subsidiaries at their carrying values as appearing in the consolidated financial statements of the Company.

The aforesaid scheme has no impact on the Consolidated Financial Statements of the Group since the scheme of amalgamation was within the parent company and wholly owned subsidiaries.

Consequent to the amalgamation of the wholly owned subsidiaries into the Company, the Company has not recognized Deferred Tax Assets on the unabsorbed Depreciation, business losses, and other temporary differences since the scheme was made effective from 20th April, 2024. Costs related to amalgamation (including stamp duty on assets transferred) have been charged to Statement of Profit and Loss, shown under exceptional item during the year.

Business Combination (Ind AS 103)

A) During the previous year, the Company had entered into a Share Sale and Purchase Agreement on 29th January, 2023 with Seven Seas Company LLC and His Highness Al-Sayyid Shihab Tariq Taimur Al Said for the acquisition of 70 per cent equity share of Duqm Cement project International LLC Located in Oman. The Company is mainly in the business of mining and extracting limestone. The acquisition allows the Company to secure raw materials for the growing requirements of India Operations and create value for shareholders.

B) Fair value of the consideration transferred

As per Ind AS 103 — Business combinations, purchase consideration has been allocated on the basis of fair valuation determined by an independent value. Total enterprise value works out to ₹159.47 crores. The effective purchase consideration of ₹111.62 crores. The Fair value of identifiable assets acquired, and liabilities assumed as of the acquisition date are as under:

Particulars	R in crores
Capital Work in Progress	11.30
Mining Reserve	148.16
Cash and Bank	0.04
Total Assets	159.50
Other Current liabilities	0.04
Fair Value of Assets	159.46

C) Fair value of the consideration transferred

Particulars	R in crores
Fair value of the consideration (70 per cent)	111.62
Total Enterprise Value	159.47
Less: Fair value of net assets acquired	159.46
Goodwill	0.01

BCAJ Admin

From Published Accounts

COMPILERS’ NOTE

The Companies Act, 2013 does not require any mandatory transfer to Reserves based on quantum of dividend declared by a company. Companies may now want to utilise such Reserves (created based on provisions of the earlier Companies Act, 1956) for payment of dividend or other purposes. Given below are instances of two companies who have obtained the approval of the National Company Law Tribunal (NCLT) or have filed an application for the same for such transfer from General Reserve to Retained Earnings.

NESTLE INDIA LIMITED (15 MONTHS ENDED 31ST MARCH, 2024)

Disclosures for Scheme of Arrangement in Standalone Financial Statements:

A) From Director’s Report

Scheme of Arrangement

The Board of Directors, at its meeting held on 28th July, 2021, had approved the Scheme of Arrangement between the Company and its members under Section 230 of the Companies Act, 2013 as amended (“the Act”) read with other applicable provisions of the Act and Rules made thereunder (“the Scheme”), which envisaged transfer of the entire balance of ₹8,374.3 million standing to the credit of the General Reserves to Retained Earnings. Your Company had filed an application with Hon’ble National Company Law Tribunal, Delhi Bench (Hon’ble NCLT) on 22nd March, 2022, for the sanction of Scheme. After requisite formalities, the Hon’ble NCLT, vide its Order dated 15th September, 2023, had sanctioned the Scheme. Certified copy of the Order sanctioning the Scheme was filed with the Registrar of Companies, Delhi, and the Scheme became effective from 19th October, 2023. Accordingly, the entire amount of ₹8,374.3 million standing to the credit of the General Reserves of the Company was reclassified and credited to the ‘Retained Earnings’ of your Company and constitute accumulated profits of your Company for the previous financial years, arrived at after providing for depreciation in accordance with the provisions of the Act and remaining undistributed in the manner provided in the Act and other applicable laws. Pursuant to the Scheme, the amount so transferred is available for utilization and payout in accordance with the terms of the Scheme.

B) From Statement of Changes in Equity

a) Other Equity

	Reserves and Surplus				Items of Other Comprehensive Income		Total
	General Reserves	Share-based Payment	Capital Reserve	Retained Earning	Equity Instrument through Other Comprehensive Income	Effective portion of Cash Flow Hedges	Total
Balance as on 31^st December, 2021	8,374.3	–	(250.8)	10,694.9	(330.0)	11.2	18,499.6
Profit after tax	–	–	–	23,905.2	–	–	23,905.2
Other comprehensive income	–	–	–	1,139.2	(17.7)	(2.1)	1,119.4
Total comprehensive income	–	–	–	25,044.4	(17.7)	(2.1)	25,024.6
Transfer of Equity Instruments through other	–	–	–	(347.7)	347.7	–	–
Comprehensive income to Retained Earnings
Dividend (Refer note 43)	–	–	–	(20,247.3)	–	–	(20,247.3)
Share-based Payment Expense	–	143.7	–	–	–	–	143.7
Recognition of liability towards Share Based Payments	–	(143.7)	–	–	–	–	(143.7)
Other changes in net assets of Pet Food Business	–	–	350.6	–	–	–	350.6
Balance as on 31^st December, 2022	8,374.3	–	99.8	15,144.3	–	9.1	23,627.5
Profit after tax	–	–	–	39,328.4	–	–	39,328.4
Other comprehensive income	–	–	–	(429.0)	–	(0.4)	(429.4)
Total comprehensive income	–	–	–	38,899.4	–	(0.4)	38,899.0
Transfer of General Reserve to Retained Earnings*	(8,374.3)	–	–	8,374.3	–	–	–
Dividend (Refer note 43)	–	–	–	(30,081.8)	–	–	(30,081.8)
Share Based Payment Expense	–	206.8	–	–	–	–	206.8
Recognition of liability towards Share Based Payments	–	(206.8)	–	–	–	–	(206.8)
Balance as on 31^st March, 2024	–	–	99.8	32,336.2	–	8.7	32,444.7

* The Shareholders of the Company had, at the Court Convened Meeting held on 25th July, 2022, approved the Scheme of Arrangement (‘Scheme’) which envisages transfer of the entire balance of ₹8,374.3 million standing to the credit of the General Reserves to Retained Earnings. The Company had accordingly filed a petition for sanction of the Scheme with the Hon’ble National Company Law Tribunal, New Delhi Bench (“Hon’ble NCLT”). The Hon’ble NCLT, vide its order dated 15th September, 2023 (“Order”), has sanctioned the Scheme. The Appointed Date as fixed in the Scheme is 1st January, 2022. The Scheme has been made effective on and upon filing of the certified copy of the Order with the Registrar of Companies.

C) From Notes to Accounts: Note 17: Other Equity

a) Nature and description of reserve

(i) General Reserve: General reserve are free reserves of the Company which are kept aside out of Company’s profits to meet the future requirements as and when they arise. The Company had transferred a portion of the profit after tax (PAT) to general reserve pursuant to the earlier provisions of the erstwhile Companies Act, 1956. It is not mandatory to transfer the profit to reserve under the provisions of the Companies Act, 2013 (“Act”).

The Shareholders of the Company had, at the Court Convened Meeting held on 25th July, 2022, approved the Scheme which envisages transfer of the entire balance of ₹8,374.3 million standing to the credit of the General Reserves to Retained Earnings. The Company had accordingly filed a petition for sanction of the Scheme with the Hon’ble National Company Law Tribunal, New Delhi Bench (“Hon’ble NCLT”). The Hon’ble NCLT, vide its order dated 15th September, 2023 (“Order”), had sanctioned the Scheme. The Appointed Date as fixed in the Scheme is 1st January, 2022, and the Scheme became effective from 19th October, 2023, the date on which the certified copy of the order was filed with the concerned Registrar of Companies.

VEDANTA LIMITED – YEAR ENDED 31ST MARCH, 2024

A) From Director’s Report

Scheme of Arrangement between Vedanta Limited and its Shareholders under Section 230 and other applicable provisions of the Companies Act, 2013

The Board of Directors of the Company, basis the recommendation of the Audit & Risk Management Committee and Committee of Independent Directors of the Company, at its meeting held on 29th October, 2021, approved the Scheme between the Company and its shareholders under Section 230 and other applicable provisions of the Act. The Scheme provides for capital reorganisation of the Company, inter alia, providing for transfer of amounts standing to the credit of the General Reserves (as defined in the Scheme) to the Retained Earnings (as defined in the Scheme) of the Company with effect from the Appointed Date.

The NCLT, Mumbai Bench vide its order dated 26th August, 2022 (“NCLT Order”), inter alia, directed the Company to convene meeting of its equity shareholders to seek their approval to the Scheme; and file consent affidavits of all the secured creditors and unsecured creditors of at least value of 90% of unsecured creditors, at the time of filing the Company Scheme Petition.

In this regard, a meeting of the equity shareholders of the Company was held on 11th October, 2022, and the proposed Scheme was approved by the equity shareholders with requisite majority. The Company is in the process of complying with the further requirements specified in the NCLT Order.

Pursuant to the Scheme, the Company will possess greater flexibility to undertake capital-related decisions and reflect a much efficient balance sheet of the Company. The Scheme is in the interest of all stakeholders including public shareholders.

B) From Notes to Accounts: Note 15: Other equity

a) General reserve: Under the erstwhile Companies Act, 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total dividend distribution is less than the total distributable reserves for that year. Consequent to introduction of Companies Act, 2013 (“Act”), the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn.

The Board of Directors of the Company, on 29th October, 2021, approved the Scheme of Arrangement between the Company and its shareholders under Section 230 and other applicable provisions of the Act (“Scheme”). The Scheme provides for capital reorganisation of the Company, inter alia, providing for transfer of amounts standing to the credit of the General Reserves to the Retained Earnings of the Company with effect from the Appointed Date.

Post the requisite approvals obtained from Stock Exchanges and pursuant to the National Company Law Tribunal (“NCLT”), Mumbai Bench Order dated 26th August, 2022 (“NCLT Order”), the proposed scheme was approved by the shareholders with requisite majority on 11th October, 2022.

The Company is in the process of complying with the further requirements specified in the NCLT Order.

HINDUSTAN UNILEVER LIMITED – FY 2018–19

A) Director’s Report

Scheme of Arrangement

The Members of the Company, had, at the Court Convened Meeting held on 30th June, 2016, approved the Scheme for transfer of the balance of R2,187 crores standing to the credit of the General Reserves to the Profit and Loss Account. The Company had accordingly filed the petition for sanction of the Scheme of Arrangement with the Hon’ble High Court of Mumbai (jurisdiction later changed to NCLT). The Hon’ble NCLT, Mumbai Bench, vide its order dated 30th August, 2018, has sanctioned the aforesaid Scheme. With Scheme becoming effective, the balance of R2,187 crores standing to the credit of the General Reserves has been transferred to the Profit and Loss Account.

B) Statement of changes in equity

	Reserves and Surplus							Items of Other Comprehensive Income (OCI)		Total
	Capital reserve	Capital Redemption Reserve	Securities Premium	Employee Stock Options Outstanding Account	General Reserve	Retained Earnings	Other Reserves	Remeasurements of net defined benefit plans	Debt instruments through OCI	Total
As on 31^st March, 2017	4	6	116	30	2,187	3,953	9	(32)	1	6,274
Profit for the year	–	–	–	–	–	5,237	–	–	–	5,237
Other comprehensive income for the year	–	–	–	–	–	–	–	(11)	(1)	(12)
Total comprehensive income for the year	–	–	–	–	–	5,237	–	(11)	(1)	5,225
Dividend on equity shares for the year (Note: 37)	–	–	–	–	–	(3,896)	–	–	–	(3,896)
Dividend distribution tax (Note: 37)	–	–	–	–	–	(755)	–	–	–	(755)
Issue of equity shares on exercise of employee stock options	–	–	11	(11)	–	–	–	–	–	–
Equity settled share-based payment credit	–	–	–	11	–	–	–	–	–	11
As on 31^st March, 2018	4	6	127	30	2,187	4,539	9	(43)	0	6,859
Profit for the year	–	–	–	–	–	6,036	–	–	–	6,036
Other comprehensive income for the year	–	–	–	–	–	–	–	(4)	1	(3)
Total comprehensive income for the year	–	–	–	–	–	6,036	–	(4)	1	6,033
Dividend on equity shares for the year (Note: 37)	–	–	–	–	–	(4,546)	–	–	–	(4,546)
Dividend distribution tax (Note: 37)	–	–	–	–	–	(913)	–	–	–	(913)
Transfer to retained earnings (refer note b below)	–	–	–	–	(2,187)	2,187	–	–	–	–
Issue of equity shares on exercise of employee stock options	–	–	15	(15)	–	–	–	–	–	–
Equity settled share-based payment credit	–	–	–	10	–	–	–	–	–	10
As on 31^st March, 2019	4	6	142	25	–	7,303	9	(47)	1	7,443

C) The Shareholders of the Company, had, at the Court Convened Meeting held on 30th June, 2016, approved the Scheme for transfer of the balance of ₹2,187 crores standing to the credit of the General Reserves to the Profit and Loss Account. The Company had accordingly filed a petition for sanction of the Scheme with the Hon’ble High Court of Mumbai [jurisdiction later changed to NCLT). The Hon’ble NCLT, Mumbai Bench, vide its order dated 30th August, 2018, has sanctioned the aforesaid Scheme. The Company has received the said Order on 27th September, 2018 and filed the Order and the Scheme with Registrar of Companies (ROC) on 5th October, 2018 and has subsequently reclassified the amount standing to the credit of the General Reserves to the Retained Earnings.

D) Note 18: Other Equity

(a) General Reserve: The Company had transferred a portion of the net profit of the Company before declaring dividend to general reserve pursuant to the earlier provisions of Companies Act, 1956. Mandatory transfer to general reserve is not required under the Companies Act, 2013. During the year, the Company has reclassified the amount standing to the credit of the General Reserves to the Retained Earnings subsequent to approval by Hon’ble NCLT on the Scheme.

BCAJ Admin

From Published Accounts

COMPILERS’ NOTE

As per the amendments to the Companies Act, 2013 and Rules thereto, for Financial Years commencing on or after 1st April, 2023, i.e., audit reports issued for FY 2023–24, the auditor needs to report on whether the accounting software used by a company has a feature of recording audit trail (edit log) facility and whether the same has been operated throughout the year and it has not been tampered. To assist auditors on this new reporting requirement, ICAI has, in February 2024, issued an Implementation Guide on Reporting on Audit Trail under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (Revised 2024) Edition.

Given below are instances of modified reporting on the above for the year ended 31st March, 2024. (One such instance was also given in June 2024 issue.)

HINDUSTAN UNILEVER LIMITED

Report on Other Legal and Regulatory Requirements

As required by Section 143(3) of the Act, we report that:

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books, except for certain matters in respect of audit trail as stated in the paragraph 2B(f) below;

….

f) The modifications relating to the maintenance of accounts and other matters connected therewith in respect of audit trail are as stated in the paragraph 2A(b) above on reporting under Section 143(3)(b) of the Act and paragraph 2B(f) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.

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:

f) Based on our examination which included test checks and in accordance with requirements of the
Implementation Guide on Reporting on Audit Trail under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014, except for the instances mentioned below, the Company has used accounting software for maintaining its books of account, which have a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the respective software:

(i) The feature of recording audit trail (edit log) facility was not enabled at the database layer to log any direct data changes for the accounting software used for trade scheme masters;

(ii) We are unable to comment if the audit trail (edit log) facility was enabled at the database layer to log any direct data changes for accounting software operated by a third-party service provider and used for maintaining purchase orders in absence of independent auditor’s report in relation to controls at the third-party service provider;

(iii) For one accounting software, changes to the application layer by a super user does not have feature of a concurrent real time audit trail.

Further, where audit trail (edit log) facility was enabled and operated throughout the year, we did not come across any instance of audit trail feature being tampered with during the course of our audit.

The back-up of audit trail (edit log) maintained on the server physically located in India for the financial year ended 31st March, 2024, except for the back-up of audit trail (edit log) of trade scheme masters (maintained on servers physically in India from 1st January, 2024 onwards) and for back up of audit trail (edit log) of purchase orders (not maintained on servers physically in India).

TATA CONSUMERS PRODUCTS LIMITED

Report on Other Legal and Regulatory Requirements

As required by Section 143(3) of the Act, based on our audit, we report that:

b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books, except for not complying with the requirement of audit trail to the extent stated in (i) and (vi) below.

……

f) The modification relating to the maintenance of accounts and other matters connected therewith is as stated in paragraph (b) above.

……

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, as amended, in our opinion and to the best of our information and according to the explanations given to us;

vi. Based on our examination, which included test checks, the Company, has used accounting software systems for maintaining its books of account for the financial year ended 31st March, 2024 which have a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software systems, except in respect of maintenance of records of a hospital which was maintained in an accounting software system in which the audit trail feature did not operate from 1st April, 2023 till 31st August, 2023.

Further, during the course of our audit, we did not come across any instance of audit trail feature being tampered with, in respect of accounting softwares for the period for which the audit trail feature was operating.

As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from 1st April, 2023, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 on preservation of audit trail as per the statutory requirements for record retention is not applicable for the year ended 31st March, 2024.

AMBUJA CEMENTS LIMITED

Report on Other Legal and Regulatory Requirements

As required by Section 143(3) of the Act, we report, to the extent applicable, that:

b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books, except for the matters stated in the paragraph (vi) below on reporting under Rule 11(g);

…..

h) The modification relating to the maintenance of accounts and other matters connected therewith are as stated in the paragraph (b) above on reporting under Section 143(3)(b) and paragraph (vi) below on reporting under Rule 11(g).

……

vi. Based on our examination which included test checks, the Company has used accounting software and a payroll application for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software / application. However, audit trail feature is not enabled for certain direct changes to data when using certain access rights at the application level for the accounting software; and at the database level for the accounting software and payroll application, as described in Note 70 to the financial statements. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with in respect of the accounting software and payroll application.

From Notes to Accounts

Note 70 – Audit Trail

The Company uses an accounting software and a payroll application for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the accounting software and the payroll application, except that a) audit trail feature is not enabled for certain direct changes to the data for users with the certain privileged access rights to the SAP application and b) audit trail feature is not enabled at the database level for the payroll application and HANA database. Further, no instance of audit trail feature being tampered with was noted in respect of the accounting software and payroll application.

Presently, the log has been activated at the application and the privileged access to HANA database continues to be restricted to a limited set of users who necessarily require this access for maintenance and administration of the database.

SULA VINEYARDS LIMITED

Report on Other Legal and Regulatory Requirements

Further to our comments in Annexure I, as required by section 143(3) of the Act based on our audit, we report, to the extent applicable, that:

b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; except for the matter stated in paragraph 17(h)(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (as amended);

…..

f) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in paragraph 17(b) above on reporting under section 143(3)(b) of the Act and paragraph 17(h)(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (as amended);

…..

h) 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 (as amended), in our opinion and to the best of our information and according to the explanations given to us:

vi. As stated in Note 49 to the accompanying standalone financial statements, and based on our examination which included test checks, except for instance mentioned below, the Company in respect of financial year commencing on 1st April, 2023, has used accounting software for maintaining its books of accounts which have a feature of recording audit trail (edit log) facility and the same have been operated throughout the year for all relevant transactions recorded in the software. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with in respect of the accounting software where such feature is enabled.

Nature of exception noted	Details of exception
Instance of accounting software for maintaining books of account which did not have a feature of recording audit trail (edit log) facility.	The accounting software (OnePos and IDS) used for maintenance of sales records for the hospitality services of the Company did not have a feature of recording audit trail (edit log) facility.

From Notes to Accounts

Note 49: Audit Trail

The Ministry of Corporate Affairs (MCA) has prescribed a new requirement for companies under the proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 inserted by the Companies (Accounts) Amendment Rules 2021 requiring companies, which use accounting software for maintaining its books of accounts, to use only such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in the books of accounts along with the date when such changes were made and ensuring that the audit trail cannot be disabled.

The Company uses accounting software (SAP ECC 6.0 and HROne) for maintaining its books of account which has a feature of recording audit trail (edit log) facility, and the same has operated throughout the year for all relevant transactions recorded in the accounting software.

The Company also uses accounting software (OnePos and IDS) for maintaining sales records of the hospitality services which does not have a feature of recording audit trail (edit log) facility. Based on management assessment, the non-availability of audit trail functions will not have any impact on the performance of the accounting software, as management has all other necessary controls in place which are operating effectively.

ICICI LOMBARD GENERAL INSURANCE COMPANY LIMITED

Report on Other Legal and Regulatory Requirements

As required by paragraph 2 of Schedule C to the IRDAI Financial Statement Regulations read with Section 143(3) of the Act, in our opinion and according to the information and explanations given to us, we report to the extent applicable that:

b) Proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books except for the matters stated in the paragraph 2 (j) (vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014;

…..

h) The observation relating to the maintenance of accounts and other matters connected therewith are as stated in the paragraph 2 (b) above on reporting under Section 143(3)(b) of the Act and paragraph 2 (j) (vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.

…..

j) 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:

vi. As stated in Note 5.2.30 to the financial statements and based on our examination which included test checks on the software applications, except for instances mentioned below, the Company, in respect of the financial year commencing on 1st April, 2023, has used software applications for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has been operated throughout the year for all relevant transactions recorded in the respective software applications. Further, during the course of our audit, we did not come across any instance of audit trail feature being tampered with.

Instance of accounting software for maintaining books of account which did not have a feature of recording audit trail (edit log) facility.	In case of one of the policy and claim administration applications, discontinued w.e.f. 31^st October, 2023, used for maintaining policy and claim records related to the insurance business demerged from Bharti Axa General Insurance Company Limited and forming part of the Company’s business, we are unable to test whether the audit trail feature was enabled or tampered with.
Instances of accounting software for maintaining books of account for which the feature of recording audit trail (edit log) facility was not operated throughout the year for all relevant transactions recorded in the software.	The audit trail feature was not enabled up to 15^th March, 2024, at the database level for accounting software used for maintenance of commission and reinsurance records by the Company to log any direct database level changes.

From Notes to Accounts

The Company has implemented a framework to identify relevant applications from the overall IT universe as “Books of account” as per the Companies Act 2013. The Company’s books of account maintained in the electronic mode comply with the requirements to the Companies Act 2013, read with relevant rules and notifications, except:

The Company follows a specific procedure for direct database changes in a controlled environment which includes logging of changes into a ticketing approval tool with an integrated approval process. This tool records all the specific details regarding audit trail requirements for capturing timing, the executor and the details of the change. Further, this information was available for the entire fiscal year. In respect of Applications used for maintenance of commission and reinsurance records, the Company has implemented logs at the application level to record audit trail (edit logs) of transactions directly impacting the database from the backend, starting 15th March, 2024.

The Company has discontinued one of the policy and claim administration applications (used for maintenance of policy and claim records of business demerged from Bharti Axa General Insurance Company Limited and forming part of the Company) on 31st October, 2023 and all open transactions have been migrated to its other policy and claim administration applications. As of 31st March, 2024, access to this specific application and its database is no longer available to the Company to demonstrate the audit trail feature in a live environment.

ARCHEAN CHEMICALS INDUSTRIES LIMITED

Report on Other Legal and Regulatory Requirements

As required by Section 143(3) of the Act, we report that:

k) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books except for the matters stated in paragraph (h)(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.

…..

g) The observation relating to the maintenance of accounts and other matters connected therewith are as stated in the paragraph (b) above on reporting under Section 143(3)(b) and paragraph (h)(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.

h) With respect to the other matters to be included in the Auditors’ Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

vi) Relying on representations / explanations from the Company and based on our examination which includes test checks on the software application, the Company has used accounting software (ERP) for maintaining its books of account, which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded, and we did not come across any instance of audit trail feature being tampered with during the course of our audit.

However, audit trail was not enabled to log any direct data changes at database level both in application layer and database layer of the accounting software.

INDIAN HOTELS COMPANY LIMITED

Report on other Legal and Regulatory Requirements

As required by Section 143(3) of the Act, we report that:

b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books except for the matter stated in the paragraph 2B(f) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.

…..

f) The modification relating to the maintenance of accounts and other matters connected therewith are as stated in the paragraph 2A(b) above on reporting under Section 143(3)(b) and paragraph 2B(f) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.

With respect to the other matters to be included in the Auditors’ Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

f. Based on our examination which included test checks, except for the instances mentioned below and as explained in note 47 of the standalone financial statements, the Company has used accounting software for maintaining its books of account, which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the respective software:

i. The feature of recording audit trail (edit log) facility was not enabled, for a portion of the year at the application layer of the accounting software used for maintaining general ledgers for master fields and direct data changes to transactions; the audit trail feature was enabled in a phased manner between June 2023 and July 2023.

ii. In case of the accounting software used for maintaining general ledger for one of its hotel units, the audit trail (edit log) facility for data changes performed by users having privileged access was enabled from 21st December, 2023 onwards at the application layer and accordingly, such audit trail feature was not enabled for the period from 1st April, 2023 to 20th December, 2023.

iii. The feature of recording audit trail (edit log) facility was not enabled at the database level to log any direct data changes for the accounting software used for maintaining the books of accounts. Further, for the periods where audit trail (edit log) facility was enabled and operated for the respective accounting software, we did not come across any instance of the audit trail feature being tampered with.

From Notes to Accounts

Note 47 – Audit Trail

In the ERP, audit trail at transaction level on application layer has an embedded audit trail in sub-ledger accounting tables which creates unique events for every transaction along with dates of creating and updating transactions with the identity of users. General ledger journals are not allowed to be modified after posting and the date and creator of journals are tracked. This feature cannot be disabled. Additionally, audit trail was enabled for masters and transactions in a phased manner from June to July 2023. Audit trail feature with respect to application layer changes in accounting software has worked effectively during the year. PMS and POS (Property Management and Point of Sales software) has inbuilt audit trail feature from 1st April, 2023. Post publication of ICAI implementation guide, direct database level changes was also included in audit trial scope. In respect of ERP, access to direct database level changes is available only to privileged users and for PMS and POS, it is not available to any of the Company personnel. However, the software product owners have confirmed that there is no audit trail enabled for database level changes.

VIVRITI CAPITAL LIMITED

Report on Other Legal and Regulatory Requirements

As required by Section 143(3) of the Act, we report that:

b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books except for the matters stated in the paragraph 2B(f) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.

…..

f) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the paragraph 2A(b) above on reporting under Section 143(3)(b) and paragraph 2B(f) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.

f. Based on our examination which included test checks, except for the instances mentioned below, the Company has used accounting software for maintaining its books of account, which has a feature of recording audit trail (edit log) facility and the same has been operating throughout the year for all relevant transactions recorded in the software:

With respect to one accounting software, the feature of recording audit trail (edit log) facility was not enabled at the database layer for the period from 1st April, 2023 to 28th November, 2023. Further, the feature of audit trail (edit log) was not enabled in full at the application layer of such core accounting software in respect of account payable and payment interface. With respect to maintaining loan management information, the feature of recording the audit trail (edit log) has not been enabled.

Further, for the periods where audit trail (edit log) facility was enabled for the respective accounting software, we did not come across any instance of the audit trail feature being tampered with.

BCAJ Admin

From Published Accounts

Compilers’ Note

Given below is an instance of modified reporting on the above.

TCS Ltd – 31st March 2024

From Auditors’ Report on Consolidated Financial Statements

Report on Other Legal and Regulatory Requirements

1 …

2A) As required by Section 143(3) of the Act, we report, to the extent applicable, that:

a) …

b) In our opinion, proper books of account as required by law relating to preparation of the aforesaid consolidated financial statements have been kept so far as it appears from our examination of those books except for the matters stated in paragraph 2(B)(f) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014;

…

2(B) 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:

a) …

b) …

c) …

d) …

e) …

f) The reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 is applicable from 1st April, 2023.

Based on our examination which included test checks, and as communicated by the respective auditor of three subsidiaries, except for the instances mentioned below, the Holding Company and its subsidiary companies incorporated in India have used accounting softwares for maintaining its books of account, which have a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the respective softwares:

i) In case of the Holding Company and its three subsidiary companies incorporated in India, the feature of recording audit trail (edit log) facility was not enabled at the database level to log any direct data changes for the accounting softwares used for maintaining the books of account relating to payroll and certain non-editable fields/tables of the accounting software used for maintaining general ledger;

ii) In case of the Holding Company, the feature of recording audit trail (edit log) facility was not enabled at the database level to log any direct data changes for the accounting software used for maintaining the books of account relating to consolidation;

iii) In case of the Holding Company and its three subsidiary companies incorporated in India, the feature of recording audit trail (edit log) facility was not enabled at the application layer of the accounting softwares relating to revenue, trade receivables and general ledger for the period from 1st April, 2023 to 13th November, 2023 and relating to property, plant and equipment for the period from 1st April, 2023 to 14th December, 2023. Further, in case of a subsidiary incorporated in India, the feature of recording audit trail (edit log) facility was not enabled at the application layer of the accounting software relating to payroll for the period from 1st April, 2023 to 15th February, 2024;

iv) In case of a subsidiary incorporated in India, as communicated by the auditor of such subsidiary, the feature of recording audit trail (edit log) facility of the accounting software used for maintaining general ledger was not enabled for the period from 1st April, 2023 to 30th April, 2023.

Further, for the periods where audit trail (edit log) facility was enabled and operated throughout the year for the respective accounting softwares, we did not come across any instance of the audit trail feature being tampered with.

From Auditors’ Report on Standalone Financial Statements

Report on Other Legal and Regulatory Requirements

1 …

2A)

a) …

2B) 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:

a) …

b) …

c) …

d) …

e) …

f) The reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 is applicable from 1st April, 2023.

Based on our examination which included test checks, except for the instances mentioned below, the Company has used accounting softwares for maintaining its books of account, which have a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the respective software:

i. The feature of recording audit trail (edit log) facility was not enabled at the database level to log any direct data changes for the accounting softwares used for maintaining the books of account relating to payroll, consolidation process and certain non-editable fields/tables of the accounting software used for maintaining general ledger;

ii. The feature of recording audit trail (edit log) facility was not enabled at the application layer of the accounting softwares relating to revenue, trade receivables and general ledger for the period 1st April, 2023 to 13th November, 2023 and relating to property, plant and equipment for the period 1st April, 2023 to 14th December, 2023.

Further, for the periods where audit trail (edit log) facility was enabled and operated throughout the year for the respective accounting software, we did not come across any instance of the audit trail feature being tampered with.

BCAJ Admin

From Published Accounts

Accounting Policy on Revenue Recognition for a Company in Information Technology

Disclosure thereof in Financial Statements
Considered as a Key Audit Matter by Statutory Auditor

Infosys Ltd – 31st March, 2024

1.4 Critical accounting estimates and judgments

a. Revenue recognition

The Company’s contracts with customers include promises to transfer multiple products and services to a customer. Revenues from customer contracts are considered for recognition and measurement when the contract has been approved, in writing, by the parties to the contract, the parties to the contract are committed to performing their respective obligations under the contract, and the contract is legally enforceable. The Company assesses the services promised in a contract and identifies distinct performance obligations in the contract. Identification of distinct performance obligations to determine the deliverables and the ability of the customer to benefit independently from such deliverables, and allocation of transaction price to these distinct performance obligations involves significant judgement.

Fixed price maintenance revenue is recognized rateably on a straight-line basis when services are performed through an indefinite number of repetitive acts over a specified period. Revenue from fixed price maintenance contract is recognized rateably using a percentage of completion method when the pattern of benefits from the services rendered to the customer and the Company’s costs to fulfil the contract is not even through the period of the contract because the services are generally discrete in nature and not repetitive. The use of a method to recognize the maintenance revenues requires judgment and is based on the promises in the contract and the nature of the deliverables.

The Company uses the percentage-of-completion method in accounting for other fixed-price contracts. Use of the percentage-of-completion method requires the Company to determine the actual efforts or costs expended to date as a proportion of the estimated total efforts or costs to be incurred. Efforts or costs expended have been used to measure progress towards completion as there is a direct relationship between input and productivity. The estimation of total efforts or costs involves significant judgment and is assessed throughout the period of the contract to reflect any changes based on the latest available information.

Contracts with customers include subcontractor services or third-party vendor equipment or software in certain integrated services arrangements. In these types of arrangements, revenue from sales of third-party vendor products or services is recorded net of costs when the Company is acting as an agent between the customer and the vendor, and gross when the Company is the principal for the transaction. In doing so, the Company first evaluates whether it obtains control of the specified goods or services before they are transferred to the customer. The Company considers whether it is primarily responsible for fulfilling the promise to provide the specified goods or services, inventory risk, pricing discretion and other factors to determine whether it controls the specified goods or services and therefore, is acting as a principal or an agent.

Provisions for estimated losses, if any, on incomplete contracts are recorded in the period in which such losses become probable based on the estimated efforts or costs to complete the contract.

2.18 REVENUE FROM OPERATIONS

Accounting Policy

The Company derives revenues primarily from IT services comprising software development and related services, cloud and infrastructure services, maintenance, consulting and package implementation, and licensing of software products and platforms across the Company’s core and digital offerings (together called “software related services”). Contracts with customers are either on a time-and-material, unit-of-work, fixed-price or on fixed-time frame basis.

Revenues from customer contracts are considered for recognition and measurement when the contract has been approved in writing, by the parties, to the contract, the parties to the contract are committed to performing their respective obligations under the contract, and the contract is legally enforceable. Revenue is recognized upon transfer of control of promised products or services (“performance obligations”) to customers in an amount that reflects the consideration the Company has received or expects to receive in exchange for these products or services (“transaction price”). When there is uncertainty as to collectability, revenue recognition is postponed until such uncertainty is resolved.

The Company assesses the services promised in a contract and identifies distinct performance obligations in the contract. The Company allocates the transaction price to each distinct performance obligation based on the relative standalone selling price. The price that is regularly charged for an item when sold separately is the best evidence of its standalone selling price. In the absence of such evidence, the primary method used to estimate standalone selling price is the expected cost plus a margin, under which the Company estimates the cost of satisfying the performance obligation and then adds an appropriate margin based on similar services.

The Company’s contracts may include variable considerations including rebates, volume discounts and penalties. The Company includes variable consideration as part of transaction price when there is a basis to reasonably estimate the amount of the variable consideration and when it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.

Revenue on time-and-material and unit of work-based contracts, are recognized as the related services are performed. Fixed price maintenance revenue is recognized ratably either on a straight-line basis when services are performed through an indefinite number of repetitive acts over a specified period or ratably using a percentage of completion method when the pattern of benefits from the services rendered to the customer and Company’s costs to fulfil the contract is not even through the period of contract because the services are generally discrete in nature and not repetitive. Revenue from other fixed-price, fixed-timeframe contracts, where the performance obligations are satisfied over time is recognized using the percentage-of-completion method. Efforts or costs expended are used to determine progress towards completion as there is a direct relationship between input and productivity. Progress towards completion is measured as the ratio of costs or efforts incurred to date (representing work performed) to the estimated total costs or efforts. Estimates of transaction price and total costs or efforts are continuously monitored over the term of the contracts and are recognized innet profit in the period when these estimates change or when the estimates are revised. Revenues and the estimated total costs or efforts are subject to
revision as the contract progresses. Provisions for estimated losses, if any, on incomplete contracts are recorded in the period in which such losses become probable based on the estimated efforts or costs to complete the contract.

The billing schedules agreed upon with customers include periodic performance-based billing and / or milestone-based progress billings. Revenues in excess of billing are classified as unbilled revenue while billing in excess of revenues is classified as contract liabilities (which we refer to as “unearned revenues”).

In arrangements for software development and related services and maintenance services, by applying the revenue recognition criteria for each distinct performance obligation, the arrangements with customers generally meet the criteria for considering software development and related services as distinct performance obligations. For allocating the transaction price, the Company measures the revenue in respect of each performance obligation of a contract at its relative standalone selling price. The price that is regularly charged for an item when sold separately is the best evidence of its standalone selling price. In cases where the Company is unable to determine the standalone selling price, the Company uses the expected cost plus margin approach in estimating the standalone selling price. For software development and related services, the performance obligations are satisfied as and when the services are rendered since the customer generally obtains control of the work as it progresses.

Certain cloud and infrastructure services contracts include multiple elements which may be subject to other specific accounting guidance, such as leasing guidance. These contracts are accounted in accordance with such specific accounting guidance. In such arrangements where the Company is able to determine that hardware and services are distinct performance obligations, it allocates the consideration to these performance obligations on a relative standalone selling price basis. In the absence of a standalone selling price, the Company uses the expected cost-plus margin approach in estimating the standalone selling price. When such arrangements are considered as a single performance obligation, revenue is recognized over the period and a measure of progress is determined based on promise in the contract.

Revenue from licenses where the customer obtains a “right to use” the licenses is recognized at the time the license is made available to the customer. Revenue from licenses where the customer obtains a “right to access” is recognized over the access period.

Arrangements to deliver software products generally have three elements: license, implementation and Annual Technical Services (ATS). When implementation services are provided in conjunction with the licensing arrangement and the license and implementation have been identified as two distinct separate performance obligations, the transaction price for such contracts are allocated to each performance obligation of the contract based on their relative standalone selling prices. In the absence of standalone selling price for implementation, the Company uses the expected cost-plus margin approach in estimating the standalone selling price. Where the license is required to be substantially customized as part of the implementation service the entire arrangement fee for license and implementation is considered to be a single performance obligation and the revenue is recognized using the percentage-of-completion method as the implementation is performed. Revenue from client training, support and other services arising due to the sale of software products is recognized as the performance obligations are satisfied. ATS revenue is recognized rateably on a straight-line basis over the period in which the services are rendered.

A contract modification is a change in the scope price or both of a contract that is approved by the parties to the contract. A contract modification that results in the addition of distinct performance obligations is accounted for either as a separate contract if the additional services are priced at the standalone selling price or as a termination of the existing contract and creation of a new contract if they are not priced at the standalone selling price. If the modification does not result in a distinct performance obligation, it is accounted for as part of the existing contract on a cumulative catch-up basis.

The incremental costs of obtaining a contract (i.e., costs that would not have been incurred if the contract had not been obtained) are recognized as an asset if the Company expects to recover them.

Certain eligible, nonrecurring costs (e.g. set-up or transition or transformation costs) that do not represent a separate performance obligation are recognized as an asset when such costs (a) relate directly to the contract; (b) generate or enhance resources of the Company that will be used in satisfying the performance obligation in the future; and (c) are expected to be recovered.

Capitalized contract costs relating to upfront payments to customers are amortized to revenue and other capitalized costs are amortized to expenses over the respective contract life on a systematic basis consistent with the transfer of goods or services to the customer to which the asset relates. Capitalized costs are monitored regularly for impairment. Impairment losses are recorded when the present value of projected remaining operating cash flows is not sufficient to recover the carrying amount of the capitalized costs.

The Company presents revenues net of indirect taxes in its Statement of Profit and Loss.

Revenue from operations for the year ended 31^st March, 2024 and 31^st March, 2023 is as follows:

Particulars	Year ended March 31,
	2024	2023
Revenue from software services	128,637	123,755
Revenue from products and platforms	296	259
Total revenue from operations	128,933	124,014

Products & platforms

The Company derives revenues from the sale of products and platforms including Infosys Applied AI which applies next-generation AI and machine learning.

The percentage of revenue from fixed-price contracts for the Year ended 31^st March, 2024, and 31^st March, 2023, is 56 per cent and 55 per cent respectively.

Trade receivables and Contract Balances

The timing of revenue recognition, billing and cash collections results in receivables, unbilled revenue, and unearned revenue on the Company’s Balance Sheet. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g. monthly or quarterly) or upon achievement of contractual milestones.

The Company’s receivables are rights to consideration that are unconditional. Unbilled revenues comprising revenues in excess of billings from time and material contracts and fixed price maintenance contracts are classified as financial assets when the right to consideration is unconditional and is due only after a passage of time.

Invoicing to the clients for other fixed-price contracts is based on milestones as defined in the contract and therefore the timing of revenue recognition is different from the timing of invoicing to the customers. Therefore unbilled revenues for other fixed-price contracts (contract assets) are classified as non-financial assets because the right to consideration is dependent on the completion of contractual milestones.

Invoicing in excess of earnings is classified as unearned revenue.

Trade receivables and unbilled revenues are presented net of impairment in the Balance Sheet.

During the year ended 31^st March, 2024 and 31^st March, 2023, the company recognized revenue of ₹4,189 crore and ₹4,391 crore arising from opening unearned revenue as of 1^st April, 2023 and 1^st April, 2022 respectively.

During the year ended 31^st March, 2024 and 31^st March, 2023, ₹6,396 crore and ₹5,378 crore of unbilled revenue pertaining to other fixed price and fixed time frame contracts as of 1^st April, 2023 and 1^st April, 2022, respectively has been reclassified to Trade receivables upon billing to customers on completion of milestones.

Remaining performance obligation disclosure

The remaining performance obligation disclosure provides the aggregate amount of the transaction price yet to be recognized as at the end of the reporting period and an explanation as to when the Company expects to recognize these amounts in revenue. Applying the practical expedient as given in Ind AS 115, the Company has not disclosed the remaining perforated obligation-related disclosures for contracts where the revenue recognized corresponds directly with the value to the customer of the entity’s performance completed to date, typically those contracts where invoicing is on time-and-material and unit of work-based contracts. Remaining performance obligation estimates are subject to change and are affected by several factors, including terminations, changes in the scope of contracts, periodic revalidations, adjustments for revenue that has not materialized and adjustments for currency fluctuations.

The aggregate value of performance obligations that are completely or partially unsatisfied as of 31^st March, 2024, other than those meeting the exclusion criteria mentioned above, is ₹80,334 crore. Out of this, the Company expects to recognize revenue of around 53.7 per cent within the next one year and the remaining thereafter. The aggregate value of performance obligations that are completely or partially unsatisfied as of 31^st March, 2023 is ₹70,680 crore. The contracts can generally be terminated by the customers and typically include an enforceable termination penalty payable by them. Generally, customers have not terminated contracts without cause.

From Auditors’ Report

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone Financial Statements of the current period. These matters were addressed in the context of our audit of the Standalone Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

Sr. No.	Key Audit Matter	Auditor’s Response
1	Revenue recognition The Company’s contracts with customers include contracts with multiple products and services. The Company derives revenues from IT services comprising software development and related services, maintenance, consulting and package implementation, licensing of software products and platforms across the Company’s core and digital offerings and business process management services. The Company assesses the services promised in a contract and identifies distinct performance obligations in the contract. Identification of distinct performance obligations to determine the deliverables and the ability of the customer to benefit independently from such deliverables involves significant judgement. In certain integrated services arrangements, contracts with customers include subcontractor services or third-party vendor equipment or software. In these types of arrangements, revenue from sales of third-party vendor products or services is recorded net of costs when the Company is acting as an agent between the customer and the vendor, and gross when the Company is the principal for the transaction. In doing so, the Company first evaluates whether it obtains control of the specified goods or services before it is transferred to the customer. The Company considers whether it is primarily responsible for fulfilling the promise to provide the specified goods or service, inventory risk, pricing discretion and other factors to determine whether it controls the products or service and therefore, is acting as a principal or an agent. Fixed price maintenance revenue is recognized ratably either on (1) a straight-line basis when services are performed through an indefinite number of repetitive acts over a specified period or (2) using a percentage of completion method when the pattern of benefits from the services rendered to the customer and the Company’s costs to fulfil the contract is not even through the period of contract because the services are generally discrete in nature and not repetitive. The use of method to recognize the maintenance revenues requires judgment and is based on the promises in the contract and nature of the deliverables. As certain contracts with customers involve management’s judgment in (1) identifying distinct performance obligations, (2) determining whether the Company is acting as a principal or an agent and (3) whether fixed price maintenance revenue is recognized on a straight-line basis or using the percentage of completion method, revenue recognition from these judgments were identified as a key audit matter and required a higher extent of audit effort. Refer Notes 1.4 and 2.18 to the Standalone Financial Statements.	Principal Audit Procedures Performed included the following: Our audit procedures related to the (1) identification of distinct performance obligations, (2) determination of whether the Company is acting as a principal or agent and (3) whether fixed price maintenance revenue is recognized on a straight-line basis or using the percentage of completion method included the following, among others: •We tested the effectiveness of controls relating to the (a) identification of distinct performance obligations, (b) determination of whether the Company is acting as a principal or an agent and (c) determination of whether fixed price maintenance revenue for certain contracts is recognized on a straight-line basis or using the percentage of completion method. •We selected a sample of contracts with customers and performed the following procedures: – Obtained and read contract documents for each selection, including master service agreements, and other documents that were part of the agreement. – Identified significant terms and deliverables in the contract to assess management’s conclusions regarding the (i) identification of distinct performance obligations (ii) whether the Company is acting as a principal or an agent and (iii) whether fixed price maintenance revenue is recognized on a straight-line basis or using the percentage of completion method.
2	Revenue recognition – Fixed price contracts using the percentage of completion method Fixed price maintenance revenue is recognized ratably either (1) on a straight-line basis when services are performed through an indefinite number of repetitive acts over a specified period or (2) using a percentage of completion method when the pattern of benefits from services rendered to the customer and the Company’s costs to fulfil the contract is not even through the period of contract because the services are generally discrete in nature and not repetitive. Revenue from other fixed-price, fixed-timeframe contracts, where the performance obligations are satisfied over time is recognized using the percentage-of-completion method. Use of the percentage-of-completion method requires the Company to determine the actual efforts or costs expended to date as a proportion of the estimated total efforts or costs to be incurred. Efforts or costs expended have been used to measure progress towards completion as there is a direct relationship between input and productivity. The estimation of total efforts or costs involves significant judgment and is assessed throughout the period of the contract to reflect any changes based on the latest available information. Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the estimated efforts or costs to complete the contract. We identified the estimate of total efforts or costs to complete fixed price contracts measured using the percentage of completion method as a key audit matter as the estimation of total efforts or costs involves significant judgement and is assessed throughout the period of the contract to reflect any changes based on the latest available information. This estimate has high inherent uncertainty andrequires consideration of the progress of the contract, efforts or costs incurred to date and estimates of efforts or costs required to complete the remaining contract performance obligations over the term of the contracts. This required a high degree of auditor judgment in evaluating the audit evidence and a higher extent of audit effort to evaluate the reasonableness of the total estimated amount of revenue recognized on fixed-price contracts. Refer Notes 1.4 and 2.18 to the Standalone Financial Statements.	Principal Audit Procedures Performed included the following: Our audit procedures related to estimates of total expected costs or efforts to complete for fixed-price contracts included the following, among others: • We tested the effectiveness of controls relating to (1) recording of efforts or costs incurred and estimation of efforts or costs required to complete the remaining contract performance obligations and (2) access and application controls pertaining to time recording, allocation and budgeting systems which prevents unauthorised changes to recording of efforts incurred. We selected a sample of fixed price contracts with customers measured using percentage-of-completion method and performed the following: – Evaluated management’s ability to reasonably estimate the progress towards satisfying theperformance obligation by comparing actual efforts or costs incurred to prior year estimates of efforts or costs budgeted for performance obligations that have been fulfilled. – Compare efforts or costs incurred with the Company’s estimate of efforts or costs incurred to date to identify significant variations and evaluate whether those variations have been considered appropriately in estimating the remaining costs or efforts to complete the contract. –Tested the estimate for consistency with the status of delivery of milestones and customer acceptances and signed off from customers to identify possible delays in achieving milestones, which require changes in estimated costs or efforts to complete the remaining performance obligations.

Sr. No.

Key Audit Matter

Auditor’s Response

Revenue recognition

The Company’s contracts with customers include contracts with multiple products and services. The Company derives revenues from IT services comprising software development and related services, maintenance, consulting and package implementation, licensing of software products and platforms across the Company’s core and digital offerings and business process management services. The Company assesses the services promised in a contract and identifies distinct performance obligations in the contract. Identification of distinct performance obligations to determine the deliverables and the ability of the customer to benefit independently from such deliverables involves significant judgement.

In certain integrated services arrangements, contracts with customers include subcontractor services or third-party vendor equipment or software. In these types of arrangements, revenue from sales of third-party vendor products or services is recorded net of costs when the Company is acting as an agent between the customer and the vendor, and gross when the Company is the principal for the transaction. In doing so, the Company first evaluates whether it obtains control of the specified goods or services before it is transferred to the customer. The Company considers whether it is primarily responsible for fulfilling the promise to provide the specified goods or service, inventory risk, pricing discretion and other factors to determine whether it controls the products or service and therefore, is acting as a principal or an agent.

Fixed price maintenance revenue is recognized ratably either on (1) a straight-line basis when services are performed through an indefinite number of repetitive acts over a specified period or (2) using a percentage of completion method when the pattern of benefits from the services rendered to the customer and the Company’s costs to fulfil the contract is not even through the period of contract because the services are generally discrete in nature and not repetitive. The use of method to recognize the maintenance revenues requires judgment and is based on the promises in the contract and nature of the deliverables.

As certain contracts with customers involve management’s judgment in (1) identifying distinct performance obligations, (2) determining whether the Company is acting as a principal or an agent and (3) whether fixed price maintenance revenue is recognized on a straight-line basis or using the percentage of completion method, revenue recognition from these judgments were identified as a key audit matter and required a higher extent of audit effort.

Refer Notes 1.4 and 2.18 to the Standalone Financial Statements.

Principal Audit Procedures Performed included the following:

Our audit procedures related to the (1) identification of distinct performance obligations, (2) determination of whether the Company is acting as a principal or agent and (3) whether fixed price maintenance revenue is recognized on a straight-line basis or using the percentage of completion method included the following, among others:

•We tested the effectiveness of controls relating to the (a) identification of distinct performance obligations, (b) determination of whether the Company is acting as a principal or an agent and (c) determination of whether fixed price maintenance revenue for certain contracts is recognized on a straight-line basis or using the percentage of completion method.

•We selected a sample of contracts with customers and performed the following procedures:

– Obtained and read contract documents for each selection, including master service agreements, and other documents that were part of the agreement.

– Identified significant terms and deliverables in the contract to assess management’s conclusions regarding the (i) identification of distinct performance obligations (ii) whether the Company is acting as a principal or an agent and (iii) whether fixed price maintenance revenue is recognized on a straight-line basis or using the percentage of completion method.

Revenue recognition – Fixed price contracts using the percentage of completion method

Fixed price maintenance revenue is recognized ratably either (1) on a straight-line basis when services are performed through an indefinite number of repetitive acts over a specified period or (2) using a percentage of completion method when the pattern of benefits from services rendered to the customer and the Company’s costs to fulfil the contract is not even through the period of contract because the services are generally discrete in nature and not repetitive. Revenue from other fixed-price, fixed-timeframe contracts, where the performance obligations are satisfied over time is recognized using the percentage-of-completion method.

Use of the percentage-of-completion method requires the Company to determine the actual efforts or costs expended to date as a proportion of the estimated total efforts or costs to be incurred. Efforts or costs expended have been used to measure progress towards completion as there is a direct relationship between input and productivity. The estimation of total efforts or costs involves significant judgment and is assessed throughout the period of the contract to reflect any changes based on the latest available information. Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the estimated efforts or costs to complete the contract.

We identified the estimate of total efforts or costs to complete fixed price contracts measured using the percentage of completion method as a key audit matter as the estimation of total efforts or costs involves significant judgement and is assessed throughout the period of the contract to reflect any changes based on the latest available information. This estimate has high inherent uncertainty andrequires consideration of the progress of the contract, efforts or costs incurred to date and estimates of efforts or costs required to complete the remaining contract performance obligations over the term of the contracts.

This required a high degree of auditor judgment in evaluating the audit evidence and a higher extent of audit effort to evaluate the reasonableness of the total estimated amount of revenue recognized on fixed-price contracts.

Refer Notes 1.4 and 2.18 to the Standalone Financial Statements.

Principal Audit Procedures Performed included the following:

Our audit procedures related to estimates of total expected costs or efforts to complete for

fixed-price contracts included the following, among others:

• We tested the effectiveness of controls relating to (1) recording of efforts or costs incurred and estimation of efforts or costs required to complete the remaining contract performance obligations and (2) access and application controls pertaining to time recording, allocation and budgeting systems which prevents unauthorised changes to recording of efforts incurred.

We selected a sample of fixed price contracts with customers measured using percentage-of-completion method and performed the following:

– Evaluated management’s ability to reasonably estimate the progress towards satisfying theperformance obligation by comparing actual efforts or costs incurred to prior year estimates of efforts or costs budgeted for performance obligations that have been fulfilled.

– Compare efforts or costs incurred with the Company’s estimate of efforts or costs incurred to date to identify significant variations and evaluate whether those variations have been considered appropriately in estimating the remaining costs or efforts to complete the contract.

–Tested the estimate for consistency with the status of delivery of milestones and customer acceptances and signed off from customers to identify possible delays in achieving milestones, which require changes in estimated costs or efforts to complete the remaining performance obligations.

BCAJ Admin

From Published Accounts

Compilers’ Note:

Many companies publish information on the steps taken to alleviate the possible climate impact of their business. Details of all such steps are normally stated in the Sustainability Reporting under various frameworks. The effect of such possible climate impact on the financial results and financial statements is also an important aspect of financial reporting. Given below are instances where such disclosure is given in the Notes to the Financial Statements which are subjected to audit by the Statutory Auditors.

Hindustan Zinc Limited (year ended 31^st March, 2023)
From Notes to Standalone Financial Statements
Significant management estimates and judgements

a) Restoration, rehabilitation and environmental costs

Provision is made for costs associated with restoration and rehabilitation of mining sites as soon as the obligation to incur such costs arises. Such restoration and closure costs are typical of extractive industries and they are normally incurred at the end of the life of the minefields. The costs are estimated on an annual basis on the basis of mine closure plans and the estimated discounted costs of dismantling and removing these facilities and the costs of restoration are capitalised when incurred reflecting the Company’s obligations at that time. The Company has not considered salvage value for the estimates of provision for decommissioning calculated as at 31^st March, 2023.

The provision for decommissioning liabilities is based on the current estimate of the costs for removing and decommissioning producing facilities, the forecast timing of settlement of decommissioning liabilities and the appropriate discount rate.

b) Climate change

The Company aims to achieve net carbon neutrality by 2050 or sooner & committed to reduce its GHG emissions (Scope- 1 & 2) by 14 per cent by 2026 & Scope 3 by 20 per cent by 2026 from 2017 baseline, five times water positive by 2025 from the current 2.41 times, etc. as part of their climate mitigation and adaptation efforts and sustainability strategy. The Company conducted a climate risk assessment and outlined its risks and opportunities in the Task Force on Climate-Related Financial Disclosures (“TCFD”) report. Climate change may have various impacts on the Company in the medium to long term. These impacts include the risks and opportunities related to the demand of products, impact due to transition to a low-carbon economy, disruption to the supply chain, risk of physical harm to the assets due to extreme weather conditions, regulatory changes, etc. The accounting related measurement and disclosure items that are most impacted by our commitments, and climate change risk more generally, relate to those areas of the financial statements that are prepared under the historical cost convention and are subject to estimation uncertainties in the medium to long term.

The potential effects of climate change may be on assets and liabilities that are measured based on an estimate of future cash flows. The main ways in which potential climate change impacts have been considered in the preparation of the financial statements, pertain to (a) inclusion of capex in cash flow projections, (b) recoverable amounts of existing assets, (c) review of estimates of useful lives of property, plant and equipment, (d) assets and liabilities carried at fair value, etc.

The Company’s strategy consists of mitigation and adaptation measures and is committed to reduce its carbon footprint by limiting its exposure to coal based projects and reducing its GHG emissions through high impact initiatives such as investment in Renewable Energy (450 MW Power delivery agreement (‘PDA’) signed on a group captive basis, fuel switch, electrification of vehicles and mining fleet and energy efficiency opportunities. However, renewable sources have limitations in supplying round the clock power, so existing power plants would support transition and fleet replacement is part of normal life cycle renewal. We have also taken certain measures towards water management such as commissioning of zero liquid discharge plants, sewage treatment plants, dry tailing plants, rainwater harvesting, thus reducing freshwater consumption. These initiatives are aligned with the Company’s ESG strategy and no material changes were identified to the financial statements as a result.

As the Company’s assessment of the potential impacts of climate change and the transition to a low-carbon economy continues to mature, any future changes in the Company’s climate change strategy, changes in environmental laws and regulations and global decarbonisation measures may impact the Company’s significant judgments and key estimates and result in changes to financial statements and carrying values of certain assets and liabilities in future reporting periods. However, as of the balance sheet date, the Company believes that there is no material impact on carrying values of its assets or liabilities.

Vedanta Ltd (year ended 31^st March, 2023)
From Significant management estimates and judgements

Climate Change

The Company aims to achieve net carbon neutrality by 2050, has committed reduction in emission by 25 per cent by 2030 from 2021 baseline, net water positivity by 2030 as part of its climate risk assessment and has outlined its climate risk assessment and opportunities in the ESG strategy. Climate change may have various impacts on the Company in the medium to long term. These impacts include the risks and opportunities related to the demand of products and services, impact due to transition to a low-carbon economy, disruption to the supply chain, risk of physical harm to the assets due to extreme weather conditions, regulatory changes etc. The accounting related measurement and disclosure items that are most impacted by our commitments, and climate change risk more generally, relate to those areas of the financial statements that are prepared under the historical cost convention and are subject to estimation uncertainties in the medium to long term. The potential effects of climate change may be on assets and liabilities that are measured based on an estimate of future cash flows. The main ways in which potential climate change impacts have been considered in the preparation of the financial statements, pertain to (a) inclusion of capex in cash flow projections, (b) review of estimates of useful lives of property, plant and equipment, (c) recoverable amounts of existing assets, (d) assets and liabilities carried at fair value. The Company’s strategy consists of mitigation and adaptation measures. The Company is committed to reduce its carbon footprint by limiting its exposure to coal-based projects and reducing its GHG emissions through high impact initiatives such as investment in Renewable Energy (1,826 MW on a group captive basis), fuel switch, electrification of vehicles and mining fleet and energy efficiency opportunities. Renewable sources have limitations in supplying round the clock power, so existing power plants would support transition and fleet replacement is part of normal life cycle renewal. The Company has also taken certain measures towards water management such as commissioning of sewage treatment plants, rainwater harvesting, and reducing freshwater consumption. These initiatives are aligned with the group’s ESG strategy and no material changes were identified to the financial statements as a result. As the Company’s assessment of the potential impacts of climate change and the transition to a low-carbon
economy continues to mature, any future changes in the Company’s climate change strategy, changes in environmental laws and regulations and global decarbonisation measures may impact the Group’s significant judgments and key estimates and result in changes to financial statements and carrying values of certain assets and liabilities in future reporting periods. However, as of the balance sheet date, the Group believes that there is no material impact on carrying values of its assets or liabilities.

From notes to financial statements

The Ministry of Environment, Forest and Climate Change (“MOEF&CC”) has revised emission norms for coal-based power plants in India. Accordingly, both captive and independent coal-based power plants in India are required to comply with these revised norms for reduction of sulphur oxide (SO2) emissions for which the current plant infrastructure is to be modified or new equipment have to be installed. The Company is required to comply with the norms by 31^st December, 2026 via MoEF&CC’s notification dated 5^th September, 2022.

BCAJ Admin

From Published Accounts

Compilers’ Note:

Illustration of disclosure and reporting for compliances to be carried out as directed by the Reserve Bank of India (RBI) regarding authorisation to setup payment system by a Subsidiary and strengthening of KYC / AML process of an Associate. The RBI had subsequently imposed restrictions on certain business operations to be carried out by the said Subsidiary and the Associate.

ONE 97 COMMUNICATIONS LIMITED (QUARTER AND 9 MONTHS ENDED 31ST DECEMBER, 2023)

From Notes to Unaudited Consolidated Financial Results

7. Notes given by the subsidiary and associate in their respective Unaudited Special Purpose Interim Condensed Financial Statements/Information:

a) Paytm Payments Services Limited (Subsidiary): “The Company filed an application for authorization to set up Payment System (‘PA application’) under sub-section (1) of Section 5 of the Payment and Settlement Systems Act, 2007 with the Department of Payment and Settlement Systems, Reserve Bank of India (“RBI”) on 8th January, 2021, in response to which, the Company received a letter from the RBI on 25th November, 2022. As per the letter, the Company was required to obtain necessary approval for past downward investment from its parent company, One 97 Communications Limited (“OCL”), in compliance with Foreign Direct Investment (“FDI”) Guidelines and resubmit the PA application within 120 calendar days. Pursuant to the aforesaid, the Company had applied to the requisite government authorities seeking approval for the past downward investment made by OCL on 14th December, 2022, which is still under process. Further, the Company had received an extension of time from RBI, vide its letter dated 23rd March, 2023, for resubmission of the application. As per RBl’s letter, the Company can continue with the online payment aggregation business (except that the Company cannot on board new merchants), while it awaits approval from Government of India (‘GoI’) for past downward investment from OCL into the Company and needs to resubmit the PA application within 15 days of receipt of the approval from GoI and to inform RBI immediately, if any adverse decision is taken by the Gol. Management has assessed that this does not have a material impact on the financial results and the business and revenues since the communication from R.81 is applicable only to on boarding of new merchants. Accordingly, no adjustment has been made in these financial results.”

b) Paytm Payments Bank Limited (Associate): “During FY 2022, pursuant to a supervisory process, RBl directed the Bank to stop the on boarding of new customer’s w.e.f. 11th March, 2022. During FY 2023, RBI appointed an external auditor for conducting a comprehensive systems audit of the Bank. On 21st October, 2022, the Bank received the final report thereof from RBI outlining the need for continued strengthening of IT outsourcing processes and operational risk management, including KYC / AML at the Bank. Pursuant to a supervisory engagement thereafter, RBI recommended remediating action steps (including further steps to be taken by the Bank) in a time-bound manner. The Bank has submitted the compliance to these instructions of RBI. Further, the Bank as per RBl’s communication received in October 2023, is continuously engaged with RBI in closing out of all persisting deficiencies. The Bank is in the process of complying with all remedial actions with respect to the supervisory engagement with the RBI in respect of the above communication and restrictions imposed on onboarding of new customers since 11th March, 2022. The RBI has levied a penalty amounting to ₹ 5.39 Crores on the Bank in respect of above vide RBI order dated12th October, 2023.”

From Auditors’ Report

EMPHASIS OF MATTERS

We draw attention to Note 7(a) to the Financial Results which describes that the Company’s subsidiary application for authorization to set up Payment System, to the Department of Payment and Settlement Systems, Reserve Bank of India (“RBI”), is in process due to the reasons stated in the said note. Accordingly, no adjustment has been made by the management in these Unaudited consolidated financial results. Our conclusion is not modified in respect of this matter.

We draw attention to Note 7(b) to the Financial Results regarding progress on the Comprehensive Systems IT Audit (RBI) report received during the year ended 31st March, 2023, recommending strengthening of KYC/AML at the Paytm Payments Bank Limited, an Associate of the Company. A penalty as stated in the said note has been levied by the RBI and the supervisory engagement with the RBI is still in progress in respect of communications received in October 2023, restrictions imposed on the on boarding of new customers since 11th March, 2022 and compliance with related remedial actions. Our conclusion is not modified in respect of this matter.

BCAJ Admin

From Published Accounts

COMPILERS’ NOTE

Illustration of disclosure and reporting for disputed income tax purposes regarding deductions claimed. Also, for the first time, NFRA after examining the process followed by 2 Chartered Accountants (other than the auditor) who certified the said deductions and passed an adverse order commenting on the verification process followed by the said Chartered Accountants. On an appeal to the Delhi High Court by the said Chartered Accountants, the Show Cause Notice of NFRA levying penalty on the said Chartered Accountants has been stayed till date of next hearing.

Quess Corp Ltd (31st March, 2023)

From Notes to Financial Statements

INCOME TAX MATTERS

During the year that ended 31st March, 2023, the Company received assessment order (‘Order’) under section 143(3) read with section 144C(13) of the Income Tax Act after completion of Dispute Resolution Panel (‘DRP’) proceedings for fiscal 2017-2018 resulting in disallowances primarily relating to deduction under section 80JJAA of the Income Tax Act and depreciation on goodwill. The Company has filed an appeal with the Income Tax Appellate Tribunal relating to these disallowances. Further, during the year ended 31st March, 2023, the Company also received a draft assessment order for fiscal 2018-2019 under section 144C(1) of the Income Tax Act in which a primary deduction under section 80JJAA of the Income Tax Act and depreciation on goodwill has been disallowed. The Company has filed objections before the DRP against the draft assessment order.

The Company intends to vigorously contest its position and interpretative stance of these sections on merits, including judicial precedents, and believes it can strongly defend its position through the legal process as defined under the Income Tax Act. Based on its internal evaluation, the Company has disclosed a contingent liability of R740 million for fiscal 2017-2018 and fiscal 2018-2019, excluding interest and penalties, if any. The contingent liability will be updated as developments unfold in future.

The Company continues to maintain its stand on the manner of claiming the 80JJAA deduction, and accordingly, 80JJAA deduction of R1,824.01 million is claimed for the year ended 31st March, 2023, respectively. The Company believes that such deduction, including its quantum, has been validly and consistently claimed, in conformity with its interpretation of the statute.

From Auditors’ Report

EMPHASIS OF MATTERS

We draw attention to Note 37.4 of the standalone financial statements relating to disallowance by the Income Tax authorities primarily relating to depreciation on goodwill and deduction under section 80JJAA of the Income Tax Act, 1961 for financial year ended 31st March, 2018 and 2019, and Company’s evaluation relating to these disallowances. Our opinion is not modified in respect of these matters.

EXTRACT FROM EXECUTIVE SUMMARY OF ORDER PASSED BY NFRA (ORDER DATED 3RD JANUARY, 2024)

In August 2022 the Director General of Income Tax (Investigation), Bengaluru (IT department) shared information about claim of deduction under section 80 JJAA of Income Tax Act totalling R1135.41 crores by Quess based on form 10 DA issued by two chartered accountants for Financial Years 2016-17, 2017-18, 2018-19, 2019-20 & 2020-21. NFRA Suo motu initiated action under Section 132(4) of the Companies Act 2013 (‘Act’ hereafter) to look into the professional conduct of the chartered accountants and their firms involved in the said certification.

NFRA’s investigations inter alia revealed that the CA failed to exercise due diligence and obtain sufficient information before issuing reports under the Income Tax Act. The CA failed to apply the necessary checks, e.g.,

(a) verify reorganisation of business with various parties;

(b) exclude employees whose EPS contribution was paid by the Government;

(c) correctly report the number of additional employees during FY 2020-21;

(d) verify that payment of additional employee cost was made by account payee cheque/draft/electronic means; and

(e) verify salary limit of ₹25,000 per month for new employees, etc.

Based on investigation and proceedings under section 132 (4) of the Companies Act 2013 and after giving the CA an opportunity to present their case, NFRA found the CA, who issued reports under Income Tax Act to Quess Corp Ltd, guilty of professional misconduct and imposes through this Order a monetary penalty of ₹ fifty (50) lakhs which take effect from a period of 30 days from issuance of this Order.

BCAJ Admin

From Published Accounts

Compilers’ Note:

Illustration of accounting treatment and disclosures for a proposed scheme of arrangement under implementation and pending regulatory approvals.

Zee Entertainment Enterprises Ltd (31st March, 2023)

From Auditors’ Report

(₹ million)

Key audit matter	How our audit addressed the key audit matter
Proposed Merger with Sony Pictures Networks India Private Limited (Refer to note 30, 40 and 58 of Standalone financial statements): The company has entered into a proposed Scheme of arrangement with Sony Pictures Networks India Private Limited in the current year. The Company has obtained approvals from stock exchanges, the Competition Commission of India (CCI), Shareholders of the Company and the Registrar of Companies (ROC) for the proposed scheme of arrangement and the draft scheme is currently pending for final approval with NCLT as at 31^st March, 2023. As per the above approvals and condition precedents of the Merger Co-Operation Agreement (MCA), the management is in the process of either liquidating or selling the components not forming part of the aforesaid Scheme of the merger. Accordingly, investment and other balances in relation to these components are classified as Non-current Assets held for sale / disposal in accordance with IND AS 105 (Non-current Assets Held for Sale and Discontinued Operations). Considering these assets are held for sale, the assets have been recorded at their realisable value and an impairment loss of R3,313 million has been recorded in the financial statements which has been disclosed as an exceptional item. Further, to expedite the merger process, the company settled certain objection applications / insolvency proceedings	Our audit included, but was not limited to, the following procedures: • Obtained an understanding of management’s process to identify key financial reporting elements of the Scheme of arrangement, Merger Cooperation agreement; • Evaluated the design, implementation and tested the operating effectiveness of key controls that the Company has in relation to the aforesaid process; • Evaluated the orders received from BSE, NSE, NCLT and CCI; • Obtained and examined the details of objection filed against the merger in the NCLT, reply filed by the Company and settlement agreement entered into by the Company; • Assessed the trigger to classify the excluded entities as business held for sale in line with management action and NCLT approval as Non-current assets held for sale in accordance with Ind AS 105 — Non-current Assets Held for Sale and Discontinued Operations; • Tested on a sample basis the merger cost recorded as exceptional items in the standalone financial statements; • Evaluated the adequacy of
filed by operational creditors and bankers for a total amount of ₹2,230 million (₹1960 million already provided). Accordingly, an additional charge of ₹270 million has been recorded as an exceptional item. The Company has also incurred expenses aggregating to R1,762 million pursuant to such scheme of merger which has also been disclosed under exception items. Considering the uncertainty of the impact on standalone financial statements because of the entire merger process including approvals from various regulatory authorities, the outcome of various litigations and materiality of the amount allocated for expenses in relation to the merger, the above matter has been considered as a Key Audit Matter for the current period audit.	disclosures given in the standalone financial statements with regard to the merger.

Key audit matter

How our audit addressed the key audit matter

Proposed Merger with Sony Pictures Networks India Private Limited (Refer to note 30, 40 and 58 of Standalone financial statements):

The company has entered into a proposed Scheme of arrangement with Sony Pictures Networks India Private Limited in the current year. The Company has obtained approvals from stock exchanges, the Competition Commission of India (CCI), Shareholders of the Company and the Registrar of Companies (ROC) for the proposed scheme of arrangement and the draft scheme is currently pending for final approval with NCLT as at 31^st March, 2023.

As per the above approvals and condition precedents of the Merger Co-Operation Agreement (MCA), the management is in the process of either liquidating or selling the components not forming part of the aforesaid Scheme of the merger. Accordingly, investment and other balances in relation to these components are classified as Non-current Assets held for sale / disposal in accordance with IND AS 105 (Non-current Assets Held for Sale and Discontinued Operations). Considering these assets are held for sale, the assets have been recorded at their realisable value and an impairment loss of R3,313 million has been recorded in the financial statements which has been disclosed as an exceptional item.

Further, to expedite the merger process, the company settled certain objection applications / insolvency proceedings

Our audit included, but was not limited to, the following procedures:

• Obtained an understanding of management’s process to identify key financial reporting elements of the Scheme of arrangement, Merger Cooperation agreement;

• Evaluated the design, implementation and tested the operating effectiveness of key controls that the Company has in relation to the aforesaid process;

• Evaluated the orders received from BSE, NSE, NCLT and CCI;

• Obtained and examined the details of objection filed against the merger in the NCLT, reply filed by the Company and settlement agreement entered into by the Company;

• Assessed the trigger to classify the excluded entities as business held for sale in line with management action and NCLT approval as Non-current assets held for sale in accordance with Ind AS 105 — Non-current Assets Held for Sale and Discontinued Operations;

• Tested on a sample basis the merger cost recorded as exceptional items in the standalone financial statements;

• Evaluated the adequacy of

filed by operational creditors and bankers for a total amount of ₹2,230 million (₹1960 million already provided). Accordingly, an additional charge of ₹270 million has been recorded as an exceptional item.

The Company has also incurred expenses aggregating to R1,762 million pursuant to such scheme of merger which has also been disclosed under exception items.

Considering the uncertainty of the impact on standalone financial statements because of the entire merger process including approvals from various regulatory authorities, the outcome of various litigations and materiality of the amount allocated for expenses in relation to the merger, the above matter has been considered as a Key Audit Matter for the current period audit.

disclosures given in the standalone financial statements with regard to the merger.

From Notes to financial statements

30. EXCEPTIONAL ITEMS

(₹ million)

	Mar–23	Mar–22
Provision for trade and other receivables (Refer note 43(d)(ii)A)	1,068	527
Provision for diminution in value of investments classified as held for sale (Refer note 40)	3,313	–
Provision for diminution in value of investment *	255	–
Other exceptional expenses #	2,032	744
Total	6,668	1,271

# During the previous year, the Board of Directors approved payment of a one-time bonus as part of the Talent Retention Plan, payable in two tranches. Accordingly, an amount aggregating ₹671 million was accounted for during the previous year.

Further, during the year, the Company has accounted for ₹1,762 million (₹73 million) for certain employee and legal expenses pertaining to the proposed Scheme of Arrangement. The said amount is disclosed as a part of ‘Exceptional items’ (Refer to note 54).

During the year, the Company has settled the dispute with Indian Performing Rights Society Limited (IPRS) in relation to the consideration to be paid towards royalty for the usage of literary and musical works. On 6th March, 2023, the Company entered into agreement with IPRS to settle its old disputes in light of the impending merger. The agreement entails the settlement of the dues for the period 1st April, 2018 to 31st March, 2023. Accordingly, all the legal cases and proceedings filed by IPRS at various forums stand withdrawn. During the year ended 31st March, 2023, the Company has recorded an additional liability of 270 million pertaining to earlier years as an ‘Exceptional Item’ by virtue of this settlement.

40. NON-CURRENT ASSET CLASSIFIED AS HELD FOR SALE

(₹ million)

	Mar–23	Mar–22
Investment in subsidiary and others #	3,850	–
Less: Provision for diminution in value of investment	3,313	–
	537	–
Receivables from subsidiary#	372	–
Freehold land and building $	573	–
Total	1,482	–

# The Management as part of its portfolio rationalisation initiative and conditions of impending merger; is in the process of either liquidating / discontinuing / selling certain entities (primarily Margo Networks Private Limited). Based on the same, the Management has classified the investment in relation to these entities as Non-current Assets held for sale / disposal under IND AS 105 (‘Non-current Assets Held for Sale and Discontinued Operations’). Considering these assets are held for sale, the assets have been recorded at their realisable value. Accordingly, the Company recorded an impairment of ₹3,313 million on such assets which has been disclosed as an exceptional item.

$ The Company has entered into a memorandum of understanding for the disposal of freehold land which it no longer intends to use and the sale transaction is in progress and is expected to be completed in the next 12 months. Accordingly, the same has been classified as a Non-current asset classified as held for sale.

58. The Board of Directors of the Company, at its meeting on 21st December, 2021, has considered and approved the Scheme of Arrangement under Sections 230 to 232 of the Companies Act, 2013 (Scheme), whereby the Company and Bangla Entertainment Private Limited (an affiliate of Culver Max Entertainment Private Limited (formerly known as Sony Pictures Networks India Private Limited)) shall merge in Culver Max Entertainment Private Limited. After receipt of requisite approvals / NOCs from shareholders and certain regulators including SEBI, CCI, ROC etc., the Company has filed a petition with NCLT for approval of the Scheme which shall be effective NCLT approval and balance regulatory approvals / completion formalities.

From Directors’ report

8. COMPOSITE SCHEME OF ARRANGEMENT

The Board of Directors of the Company at its Board Meeting held on 21st December, 2021 had considered and approved (subject to requisite approvals consents) the Scheme of Arrangement under Sections 230 to 232 and other applicable provisions of the Act amongst the Company, Bangla Entertainment Private Limited (BEPL) and Culver Max Entertainment Private Limited (formerly known as Sony Pictures Networks India Private Limited) (CMEPL) and their respective shareholders and creditors (Scheme). The Scheme provides for, inter alia, the merger of the Company and BEPL into CMEPL; the consequent issue of equity shares of CMEPL to the shareholders of the Company and BEPL, in accordance with Sections 230 to 232 of the Act; dissolution without winding up of the Company and BEPL; appointment of Mr. Punit Goenka, Managing Director & Chief Executive Officer of CMEPL on the terms set out in the Scheme; and amendment of the Articles of Association of CMEPL. The Scheme is sanctioned/approved by:

The BSE Limited and the National Stock Exchange of India Limited vide their observation letters dated 29th July, 2022;
The Competition Commission of India vide its letter dated 4th October, 2022;
Shareholders of the Company at the meeting held on 14th October, 2022 convened under the directions of the National Company Law Tribunal, Mumbai Bench (‘NCLT’);
The Official Liquidator by way of report dated 3rd January, 2023 on the Scheme, inter alia, stating that the affairs of the Company have been conducted in a proper manner and raising no objections to the Scheme;
The Regional Director, Western Region, Ministry of Corporate Affairs, by way of the report dated 10th January, 2023, inter alia, stating that he did not have any objections to the Scheme; and
On the basis of the above no-objections and approvals, the NCLT by order dated 10th August, 2023 sanctioned the Scheme.

The Company is in the process of making an application with the Ministry of Information and Broadcasting for the transfer of the licenses relating to the up-linking and down-linking of television channels obtained by the Company to CMEPL, pursuant to the Scheme.

The Scheme shall become effective upon fulfilment of all the conditions and precedents mentioned in the Scheme.

The Scheme is in the interest of the shareholders, creditors, and all other stakeholders of the Company, CMEPL, BEPL and the public at large.

BCAJ Admin

From Published Accounts

COMPILERS’ NOTE:

Post Covid, companies are undertaking several mergers and acquisitions. Accounting for the same is primarily governed by Ind AS 103 and the schemes as approved by NCLT. Given below are disclosures by two companies on mergers and acquisitions for the year ended 31st March, 2023.

Asian Paints Ltd

MERGERS, ACQUISITIONS AND INCORPORATIONS

(a) Scheme of amalgamation of Reno Chemicals Pharmaceuticals and Cosmetics Private Limited with the Parent Company:

On 2nd September, 2021, the National Company Law Tribunal, Mumbai approved Scheme of amalgamation (“the Scheme”) of Reno Chemicals Pharmaceuticals and Cosmetics Private Limited (“Reno”), a wholly owned subsidiary of the Parent Company, with the Parent Company. Pursuant to the necessary filings with the Registrars of Companies, Mumbai, the Scheme has become effective from 17th September, 2021 with the appointed date of 1st April, 2019. There is no impact of amalgamation on the Consolidated Financial Statements. The accounting treatment is in accordance with the approved scheme and Indian accounting standards.

(b) Scheme of amalgamation of Asian Paints (Lanka) Ltd. with Causeway Paints Lanka (Pvt) Ltd:

On 1st April, 2021, the Registrar General of Companies in Sri Lanka approved the Scheme of amalgamation of Asian Paints (Lanka) Ltd. with Causeway Paints Lanka (Pvt) Ltd., subsidiaries of Asian Paints International Private Limited (‘APIPL’). APIPL is a wholly owned subsidiary of Asian Paints Limited. This is a common control transaction and has no impact on the Consolidated Financial Statements.

The Parent Company entered into a Shareholders Agreement and Share Subscription Agreement with the promoters of Weatherseal Fenestration Private Limited (“Weatherseal”) on 1st April, 2022. Weatherseal is engaged in the business of interior decoration/furnishing, including manufacturing uPVC windows and door systems. The Parent Company subscribed to 51 per cent of the equity share capital of Weatherseal for a cash consideration of Rs.18.84 crores on 14th June, 2022. Accordingly, Weatherseal became a subsidiary of the Parent Company. Further, in accordance with the Shareholders Agreement and the Share Subscription Agreement, the Parent Company has agreed to acquire a further stake of 23.9 per cent in Weatherseal from its promoter shareholders, in a staggered manner, over the next 3 year period. The Parent Company has also entered into a put contract for the acquisition of a 25.1 per cent stake in Weatherseal. Accordingly, on the day of acquisition, a gross obligation towards acquisition is recognised for the same, initially measured at fair value amounting to Rs.18.08 crores. On 31st March, 2023, the fair value of the derivative asset / liability (net) was Rs.21.46 crores. Fair valuation impact of Rs.3.38 crores is recognised in the Consolidated Statement of Profit and Loss for the year ended 31st March, 2023 towards gross obligation.

Rs. In crores

Assets acquired and liabilities assumed on acquisition date:	14^th June, 2022
Property, plant and equipment	0.92
Intangible assets	12.98
Current Assets
Inventories	1.68
Trade Receivables	1.87
Cash and bank balances	18.85
Other receivables and repayments	1.65
Total Assets	37.95
Current Liabilities
Trade Payables and other liabilities	4.96
Other payables	14.14
Total Liabilities	19.10
Net Assets Acquired	18.85

Goodwill arising on acquisition of stake in Weatherseal	14^th June, 2022
Cash consideration transferred (i)	18.84
Net Fair Value of Derivative Asset and Liability (ii)	1.86
Total consideration transferred [(iii) = (i)+(ii)]	20.70
Fair Value of identified assets acquired (iv)	18.85
Group share of fair value of identified assets acquired (v)	9.61
Group share of Goodwill arising on acquisition of Weatherseal [(iii)-(v)]	11.09

Net cash inflow on acquisition	14^th June, 2022
Cash consideration transferred	18.84
Cash and cash equivalent acquired	18.85
Net cash and cash equivalent inflow	0.01

Impact of acquisition on the results of the Group: Revenue from operations of Rs.24.74 crores and Loss after tax of Rs.3.34 crores of Weatherseal has been included in the current year’s Consolidated Statement of Profit and Loss.

(d) Investment in Obgenix Software Private Limited:

The Parent Company entered into a Share Purchase Agreement and other definitive documents with the shareholders of Obgenix Software Private Limited (popularly known by the brand name of ‘White Teak’) on 1st April, 2022. White Teak is engaged in designing, trading or otherwise dealing in all types and descriptions of decorative lighting products and fans, etc. In accordance with the agreement, the remaining 51 per cent of the equity share capital would be acquired in a staggered manner. The Parent Company acquired 49 per cent of the equity sharecapital of ‘White Teak’ on 2nd April, 2022 for a cash consideration of Rs.180 crores along with an earn-out, payable after a year, subject to achievement of mutually agreed financial milestones. Accordingly, White Teak became an Associate of the Group. On the day of acquisition, the Parent Company estimated and recognised gross obligation towards earn-outfor acquiring 49 per cent stake amounting to Rs.37.71 croresand derivative asset / liability (net) for acquiring the remaining 51 per cent stake in White Teak at fair value with a corresponding adjustment in the cost of investment amounting to Rs.1.32 crores. On 31st March, 2023, the fair value of earn-out is Rs 58.97 crores and that of derivative asset / liability (net) is Rs 3.85 crores. Fair valuation impact of Rs.21.26 crores and Rs.5.17 crores is recognised in the Consolidated Statement of Profit and Loss for the year ended 31st March, 2023 towards earn out and derivative contracts respectively.

(e) Incorporation of Asian Paints (Polymers) Limited:

On 11th January, 2023, the Parent Company incorporated a wholly owned subsidiary named Asian Paints (Polymers) Private Limited (‘APPPL’) for manufacturing of Vinyl Acetate Monomer and Vinyl Acetate Ethylene Emulsion in India. The Parent Company invested Rs.200 crores in the equity share capital of APPPL in the current year, thus subscribing to 20 crore equity shares of APPPL having a face value of Rs.10 each.

(f) Agreement for the acquisition of a stake in Harind Chemicals and Pharmaceuticals Private Limited:

The Parent Company entered into a Share Purchase Agreement and other definitive documents with the shareholders of Harind Chemicals and Pharmaceuticals Private Limited (‘Harind’) on 20th October, 2022 for the purchase of a majority stake over a period of five years, subject to fulfilment of certain conditions precedent in a staggered manner. Harind is a speciality chemicals company engaged in the business of nanotechnology-based research, manufacturing, and sale of a range of additives and specialized coatings. On fulfilment of the pre-condition, the acquisition would happen in the following manner: (i) First tranche of 51 per cent would be acquired for a consideration of 12.75 crores (approx.); and (ii) Second tranche of 19 per cent and third tranche of 20 per cent would be acquired during the FY 2023-24 and FY 2027-28, respectively, on such consideration as agreed between the Parent Company and the existing shareholders based on achievement of certain financial targets.

(g) Incorporation of Asian White Cement Holding Limited:

The Parent Company has incorporated a subsidiary Company – Asian White Cement Holding Limited (‘AWCHL’) along with other partners in Dubai International Financial Centre, UAE on 2nd May, 2023 as the holding Company for the purpose of setting up an operating Company in Fujairah, UAE. The Parent Company is currently in the process of infusing capital in AWCHL and will hold a 70 per cent stake.

Tata Steel Ltd

BUSINESS COMBINATIONS

i. On 26th July, 2022, the Company completed the acquisition of itemised assets of Stork Ferro Alloys and Mineral IndustriesPrivate Limited (‘SFML’) to produce ferro alloys. The asset acquisition will provide aninorganic growth opportunity for Tata Steel Limited to augment its ferro alloys processing capacities. The asset acquisitionwas carried out for a purchase considerationof Rs1155.00 crore. The acquisition has been accountedfor in accordance with Ind AS 103 – ‘Business Combinations’. Fair value of identifiable assets acquired, and liabilities assumed as on the date of acquisition is as below:

Rs. In crores

	Fair value as on acquisition date
Non-current assets Property, plant and equipment	138.55
Right-of-use assets	17.94
Total assets [A]	156.49
Non-Current liabilities Lease liabilities	4.56
Other Liabilities	0.15
Total liabilities [B]	4.71
Fair value of identifiable net assets acquired [C=A-B]	151.78

	Fair value as on acquisition date
Cash consideration paid	130.00
Deferred consideration	25.00
Total consideration paid [D]	155.00
Goodwill [D-C]	3.22

ii. Goodwill is attributable to the benefit of expected synergies, revenue growth and future market developments. These benefits are not recognised separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets.

iii. From the date of acquisition, SFML has contributed Rs.28.42 crore to revenue from operations and a loss of Rs.16.07 crore to profit before tax. Had the acquisition been effected at 1st April, 2022, the revenue of the Company would have been higher by Rs.13.24 crore and profit would have been lower by Rs.6.50 crore.

The Board of Directors of the Company had considered and approved the amalgamation of Tata Steel Long Products Limited (‘TSLP’), Tata Metaliks Limited (‘TML’), The Tinplate Company of India Limited (‘TCIL’), TRF Limited (‘TRF’), The Indian Steel & Wire Products Limited (‘ISWP’), Tata Steel Mining Limited (‘TSML’) and S & T Mining Company Limited (‘S & T Mining’) into and with the Company by way of separate schemes of amalgamation and had recommended a share exchange ratio / cash consideration. The equity shareholders of the entities will be entitled to fully paid up equity shares of the Company or cash consideration in the ratio as set out in the scheme. As part of the scheme of amalgamations, equity shares and preference shares, if any, held by the Company in the above entities shall stand cancelled. No shares of the Company shall be issued, nor any cash payment shall be made whatsoever by the Company in lieu of cancellation of shares of TSML and S & T Mining (both being wholly owned subsidiary companies). The proposed amalgamations will enhance management efficiency, drive sharper strategic focus and improveagility across businesses based on the strong parental support from the Company’s leadership. The amalgamations will also drive synergies through operational efficiencies, raw material security and better facility utilisation. As part of the defined regulatory process, the schemes of TSLP into and with the Company, TCIL into and with the Company, TML into and with the Company, TRF into and with the Company and ISWP into and with the Company have received approval(s) from stock exchanges and Security Exchange Board of India. Further, the schemes have been filed and are pending with the Hon’ble National Company Law Tribunal.

The Board of Directors of the Company had considered and approved the scheme of amalgamation of Angul Energy Limited (‘AEL’) into and with the Company by way of a scheme of amalgamation and had recommended a cash consideration for every fully paid-up equity share held by the shareholders (except the Company) in AEL as set out in the scheme. Upon the scheme coming into effect, the entire paid-up share capital of AEL shall stand cancelled in its entirety. The amalgamation will ensure the consolidation of all power assets under a single entity, which will increase system agility for power generation and allocation. It will help the Company to improve its plant reliability, ensuring a steady source of power supply while optimising cost. Further, such restructuring will lead to the simplification of group structure by eliminating multiple companies in similar operations, optimum use of infrastructure, and rationalisation of cost in the areas of operations and administrative overheads, thereby maximising shareholder value of the Company post-amalgamation. The scheme is subject to a defined regulatory approval process, which would require approval by stock exchanges and the Hon’ble National Company Law Tribunal.

BCAJ Admin

Miscellaneous

From Published Accounts

1 Change in Accounting Policy for Toolings Pursuant to
Opinion of EAC of ICAI

Vesuvius India Limited — (31-12-2009)

From Significant Accounting Policies :

Fixed Assets :

(a) Cost :

Fixed assets are stated at cost of acquisition (net of CENVAT)
less accumulated depreciation/amortisation. Cost of acquisition includes taxes,
duties, freight and other costs that are directly attributable to bringing
assets to their working condition for their intended use. Spares that can be
used only with particular items of plant and machinery and such usage is
expected to be irregular are capitalised.

During the year, the Company has changed its accounting
policy for toolings to comply with the opinion of the Expert Advisory Committee
of the Institute of Chartered Accountants of India in this regard. Consequent to
such change, toolings used for the production of finished goods have been
recognised as fixed assets. Depreciation for the year on such toolings have been
provided for based on their estimated useful lives of 3 years. Hitherto, such
toolings were considered as inventories and were being amortised over their
estimated useful lives of 3 years. Consequently, during the year :

— Cost of acquisition aggregating Rs.140,561 (previous year
Rs.106,886) of toolings that had not been fully amortised till the previous
year-end has been added to gross block of fixed assets as at the beginning of
the year.

— Amortised Cost aggregating Rs.92,644 (previous year
Rs.65,751) of toolings that had not been fully amortised till the previous
year-end has been added to accumulated depreciation at the beginning of the
year.

— Cost of acquisition of toolings purchased during the year
aggregating Rs.18,005 (previous year Rs.33,675) has been recognised as addition
to fixed assets

— Depreciation for the year on toolings Rs.27,904 (previous
year Rs.26,893) has been provided for based on their aforesaid useful lives.

Had the Company continued to recognise toolings as inventory
:

— inventory of toolings at the year-end would have been
higher by Rs.38,018 (previous year Rs.47,917) and net block of fixed assets at
the year-end and at the previous year-end would have been lower by corresponding
amounts.

— toolings consumed during the year would have been higher by
Rs. 27,904 [previous year Rs.26,893] and depreciation charge for the year and
the previous year would have been lower by corresponding amounts.

The above reclassification had no impact on profit after tax
for the year.

2 Approval pending for transactions covered u/s.297 of
Companies Act, 1956

Castrol India Limited — (31-12-2009)

From Notes to Accounts
:

The Company has
entered into transactions for rendering of services and secondment of personnel
with two private limited companies incorporated in India, which are a part of
the BP group of companies worldwide. The said agreements attracted the
provisions of Section 297 of the Companies Act, 1956 as there were common
Directors between the Company and the two private limited companies. The Company
is applications to the Regional Director (Ministry of Corporate Affairs) for
necessary approvals. The Regional Director (Ministry of Corporate Affairs) has
sought clarifications and requested the Company to make fresh applications with
additional information. The Company has made fresh applications in relation to
both the private limited companies to the Regional Director (Ministry of
Corporate Affairs) and is currently awaiting approval.

Non-provision of impairment loss

Ciba India Limited — (31-3-2009)

From Notes to Accounts :

13. The Company has fixed assets on the leased
premises at Goa. The carrying value of the fixed assets at the said leased
premises Rs.120,633 including the assets which cannot be moved is Rs.70,177 as
at the year-end. The lease of the premises expired on August 31, 2008 and
pending the final outcome of the Company’s negotiations in respect of the same,
no impairment is assessed on the fixed assets at the leased premises and
depreciation on these assets is provided as per the Company‘s policy. The
company has relied on independent valuation report of January, 2008 and as the
value of assets is more than the carrying value, no impairment is deemed
necessary.

From Auditors’ Report

5. As more fully described in Note 13 to the
financial statements, pending the final outcome of the Company’s negotiations in
respect of premises leased to it, the Company has not assessed the fixed assets
at the said premises for impairment, if any. The carrying value of fixed assets
at the said leased premises is Rs.120,633 thousands including immovable assets
of Rs.70,117 thousands as identified by the Company. We are unable to comment
the effect of adjustments, if any, had such assessment for impairment been
carried out.

6. Further to our comments in the Annexure referred
to in para 3 above, and except for matter referred to in para 4 above, we report
that :

(vi) In our opinion and to the best of our
information and according to the explanations given to us except for matter
referred to in para 4 above, 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

levitra

BCAJ Admin

Miscellaneous

4. Revenue recognition for income from wind mills

Madras Cements Ltd. — (31-3-2009)

Significant Accounting Policies :

1. Under wheeling and banking arrangement :

Units generated from windmills are adjusted against the consumption of power at our factories. The monetary value of the units so adjusted, calculated at the prevailing EB rates net of wheeling charges has been included in power and fuel. The value of unadjusted units as on the Balance Sheet date has been included in Advances recoverable in cash or in kind under the schedule loans and advances.

2. Under power purchase agreement :

Units generated from windmills are sold to State Electricity Board at agreed rates and the income is included in value of power generated from wind mills.

5. CFS not prepared since subsidiary held for taking over for a specific purpose

Kirloskar Oil Engines Ltd. — (31-3-2009)

From Notes to Accounts :

The Company has promoted and incorporated a wholly-owned subsidiary in the name of Kirloskar Engines India Limited on 12 January 2009. The said Company will be used for the purpose of taking over the Engine and Auto Component business of demerged company on a going-concern basis pursuant to the proposed Scheme of Arrangement.

As such investment in subsidiary is held exclusively for such a purpose, in view of para 11(a) of Accounting Standard (AS-21) ‘Consolidated Financial Statement’ prescribed by the Companies (Accounting Standards) Amendment Rules, 2009, the consolidated accounts have not been prepared.

Moreover, first financial year of the subsidiary company is from 12 January 2009 to 31 March 2010. In view of the extended financial year of the subsidiary, its accounts are not attached in this Annual Report as required under Section 212 of the Companies Act, 1956.

6. Scheme for Demerger of Passive Infrastructure at Nil value to a subsidiary, and loss arising therefrom adjusted against ‘Reserve for Business Restructuring’

IDEA Cellular Ltd. — (31-3-2009)

From Notes to Accounts :

A Scheme of Arrangement was filed with the High Court of Gujarat at Ahmedabad to de-merge Passive Infrastructure (PI) assets in the telecom service areas of Andhra Pradesh, Delhi, Gujarat, Uttar Pradesh (both East & West including Uttaranchal), Harayana, Kerala, Rajasthan and Mumbai at nil consideration with an appointed date of 1st January 2009 to Idea Cellular Towers Infrastructure Limited (ICTIL), a 100% subsidiary of Aditya Birla Telecom Limited (ABTL). ABTL is a 100% subsidiary of the company. The High Court of Delhi at New Delhi and the High Court of Gujarat at Ahmedabad approved the scheme on 3rd August 2009 and 31st August 2009, respectively. The scheme became effective on 29th September 2009. As per the scheme :

(i) PI assets having book value of Rs.16,227.76 Mn. as on 31st December 2008 has been debited to the Profit & Loss Account.

(ii) Investment in ABTL has been increased by the book value of PI assets vested with ICTIL as part of this scheme, by creating ‘Reserve for Business Restructuring’.

(iii) An amount equal to net book values of PI assets as per point (i) above, has been withdrawn from ‘Reserve for Business Restructuring’ recognised as per point (ii) above.

Had the scheme not mandated the above accounting treatment, the value of investment in ABTL would not have included the book values of Rs.16,227.76 Mn. of the PI assets de-merged to ICTIL but would have remained at Rs.100.00 Mn. Consequently, there would have been no creation of ‘Reserve for Business Restructuring’ of Rs.16,227.76 Mn. and withdrawal of the same to the credit of P&L.

7. Disclosures regarding changes due to Migration to ERP system

BEML Ltd. — (31-3-2009)

From Notes to Accounts :

ERP System :

(i) Change in costing methodology consequent to introduction of ERP

With the introduction of ERP system, stage level production orders are opened vis-à-vis batch work orders under the Legacy system. The valuation of such stage level production orders is done on standard cost basis. There is a provision to review the cost and revise the same to bring it as close as possible to actual cost. Thus the closing stock of work-in-progress and finished goods though valued at standard cost are adjusted to nearly the actual cost and the difference, if any, is not material. Variances arising on account of difference between standard cost and the actual cost, on account of change in the nature of inputs from bought-out to internally manufactured or vice versa, timing difference between standard cost and actual occurrence during the financial period and fluctuations in the material prices and the exchange rate, is adjusted in the Cost of Production in order not to carry forward period variances to subsequent financial period. Cost redistributions between work orders have been made to reduce the impact of material variances between standard cost and actual cost.

(ii) Provision towards Obsolescence is made as per provisioning norms consistently followed and is based on ageing of inventory as per ERP.

iii) Physically verified and reconciled inventory balances have been uploaded in ERP at the time of migration to ERP. Physical verification has been done on a perpetual basis while reconciliation of the physical balance with ERP balance could not be online. No significant discrepancies have been noticed on subsequent reconciliation of physical balances as per stock verification with ERP balances to the extent identified.

iv) Balances with Government Departments are subject to reconciliation and consequential adjustment, if any.

v) Consequent to migration from Legacy to ERP system covering all Regional offices, District offices and Marketing divisions at KGF and Mysore during Financial year 2008-09, the date of entry of transactions including sale of spares in certain cases is after 31-3-2009 though the transactions have occurred on or before 31-3-2009.

BCAJ Admin

Miscellaneous

From Published Accounts

5 Audit Report in case of a
company where in earlier years, manipulations admitted by the erstwhile
management and previous years’ audit reports withdrawn by earlier auditors

Satyam Computer Services
Ltd. — (31-3-2009)

Appointment :

1. We have been appointed as
statutory auditors of SATYAM COMPUTER SERVICES LIMITED (‘the Company’) for the
year ended March 31, 2009 by the Board of Directors of the Company (hereinafter
referred to as the ‘Board’) subject to the ratification by the shareholders of
the Company, pursuant to the order of the Honourable Company Law Board (CLB),
dated October 15, 2009. This report is addressed to the members of the Company,
subject to the ratification of our appointment.

Report on the Financial
Statements :

2. We have audited the
attached Balance Sheet of the Company as at March 31, 2009, the Profit and Loss
Account and the Cash Flow Statement of the Company for the year ended on that
date, both annexed thereto.

Management’s responsibility for
the Financial Statements :

3. 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.

Auditors’ responsibility :

4. Subject to the matters
discussed in this report, we conducted our audit in accordance with the 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 misstatements. An audit includes examining, on a
test basis, evidence supporting the amounts and the disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
the significant estimates made by the Management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

Companies (Auditor’s Report)
Order, 2003 (CARO) :

5. As required by the
Companies (Auditor’s Report) Order, 2003 (CARO) issued by the Central Government
in terms of S. 227(4A) of the Companies Act, 1956 (‘the Act’) we give in the
Annexure a statement on the matters specified in paragraphs 4 and 5 of the said
Order, which is subject to the matters discussed in this report.

Basis for opinion :

6. As stated in Note 3 of
Schedule 18 :

(a) On January 7, 2009, in a communication (‘the letter’) addressed to the then-existing Board of Directors of the Company and copied to the Stock Exchanges and Chairman of Securities and Exchange Board of India (‘SEBI’), the then Chairman of the Company, Mr. B. Ramalinga Raju (‘the erstwhile Chairman’) admitted that the Company’s Balance Sheet as at September 30, 2008 carried inflated cash and bank balances, non-existent accrued interest, understated liability and overstated debtors position. As per the letter, the gap in the Company’s Balance Sheet had arisen purely on account of inflated profits over a period of last several years. Consequently, various regulators have initiated their investigations and legal proceedings, which are ongoing and are more fully described in the said Note.

(b) The Government-nominated Board of Directors appointed an independent counsel (‘Counsel’) to conduct an investigation of the financial irregularities that would enable preparation of the financial statements of the Company. The Counsel appointed forensic accountants to assist in the investigation (referred to as ‘forensic investigation’) and preparation of the financial statements. The forensic accountants have expressed certain reservations and limitations in their investigation process, which are more fully described in the said Note.

(c) Pursuant to the investigations conducted by the Central Bureau of Investigation (‘the CBI’)/other regulatory authorities, most of the relevant documents in the possession of the Company were seized by the CBI/other authorities and partial access was granted to the Company including for taking photo-copies of the relevant documents as may be required in the presence of the CBI officials.

(d) The former statutory auditors of the Company vide their letter dated January 13, 2009 to the Board of Directors have indicated that their reports and opinions in relation to the financial statements of the Company from the quarter ended June 30, 2000 until the quarter ended September 30, 2008 should no longer be relied upon.

(e) As confirmed by the order of the CLB, and in accordance with Accounting Standard 5 — ‘Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies’, adjustments resulting from financial irregularities and errors relating to periods prior to April 1, 2008, to the extent identified, have been accounted for as ‘Prior Period Adjustments’ in these financial statements.

(f) As per the assessment of the Management, based on the forensic investigation carried out through an independent counsel/forensic accountants, and the information available at this stage, all identified/required adjustments/disclosures arising from the financial irregularities, have been made in these financial statements.

The Management is of the view that since matters relating to several of the financial irregularities are sub judice and various investigations are ongoing, any further adjustments/disclosures to the financial statements, if required, would be made in the financial statements of the Company as and when the outcome of the above uncertainties is known and the consequential adjustments/disclosures are identified.

In view of the above, we are unable to comment on the adjustments/disclosures which may become necessary as a result of further findings of the ongoing investigations and the consequential impact, if any, on these financial statements.

7. As stated in Note 3.3(ii) of Schedule 18, the Company has, based on the forensic investigation, accounted for the opening balance differences (net debit) of Rs.11,221 million as at April 1, 2002, other differences (net debit) of Rs.166 million during the period from April 1, 2002 to March 31, 2008 and Rs.7 million relating to the period from April 1 to December 31, 2008 aggregating Rs.11,394 million under ‘Unexplained Differences Suspense Account (Net)’ under Schedule 12 due to non-availability of complete information. These net debit amounts aggregating Rs.11,394 million have been fully provided for on grounds of prudence.

In the absence of complete/required information, we are unable to comment on the accounting treatment/ disclosure for the aforesaid unexplained amounts accounted under ‘Unexplained Differences Suspense Account (Net)’ in these financial statements.

8. As stated in Note 6.1 of Schedule 18, the alleged advances amounting to Rs.12,304 mil-lion (net) have been presented separately under ‘Amounts Pending Investigation Suspense Account (Net)’ in the Balance Sheet. In this regard, there are certain claims by thirty-seven companies seek-ing repayment of the amounts allegedly paid by them to the Company as temporary advances which were earlier not recorded in the books of ac-count of the Company. These companies have also claimed damages/compensation/interest on these amounts. Further, these companies have also filed recovery suits/petitions against the Company. The details of these claims are more fully described in the said Note. The Company has not acknowledged any liability to any of the thirty-seven companies and has replied to the legal notices stating that the claims are legally untenable.

The Directorate of Enforcement (‘ED’), Govern-ment of India, is conducting an investigation under the Prevention of Money Laundering Act, 2002 on the amounts allegedly advanced by the aforesaid parties and has directed the Company not to return the amounts until further instructions from the ED.

The Management has represented that since the matter is sub judice and the investigations by various Government agencies are in progress, the Management, at this point of time is not in a position to predict the ultimate outcome of the legal proceedings initiated by these thirty-seven companies.

In view of the above, we are unable to determine whether any adjustments/disclosures will be required in respect of the aforesaid alleged advances amounting to Rs.12,304 million (net) and in respect of the non-accounting of any damages/compensation/interest in these financial statements.

9. As stated in Note 6.3 of Schedule 18, sub-sequent to the letter by the erstwhile Chairman of the Company relating to various financial irregularities in the Company’s financial statements, a number of persons claiming to have purchased the Company’s securities have filed class action lawsuits in various courts in the United States of America. These class action suits are more fully described in the said Note. Based on the legal advice obtained by the Company, the Company is contesting the above lawsuits.

Since the matter is sub judice, the outcome of which is uncertain at this stage, we are unable to comment on the consequential impact, if any, on these financial statements.

10. As stated in Note 8.1(vi) of Schedule 18, an amount of Rs.674 million has been paid as interim dividend for the year 2008-09. Since there are no profits for the purpose of declaring dividend, there is a non-compliance of S. 205 of the Act. Further, as stated in Note 8.1(vii) of Schedule 18, the consequen-tial transfer of the stipulated minimum amounts of profits to General Reserves in accordance with the Companies (Transfer of Profits to Reserves Rules), 1975, has also not been effected due to inadequate balance in the Profit and Loss Account. The Management is proposing to make an application to the appropriate authority for condoning these non-compliances. Refer to paragraph 17 below also.

The possible impact of these non-compliances in the event the Company’s condonation requests are not granted has not been determined or recognised in these financial statements.

11. Attention is invited to the following matters:

(a) As stated in Note 9.2 of Schedule 18, in the absence of certain documents/information, adjustments required in respect of the opening balances as at April 1, 2008 (including the adjustments consequent to the assessment of consistent application of accounting policies) have been carried out to the extent feasible by the Management, based on available alternate evidences/information.

In the absence of the aforesaid documents/ information for the periods prior to April 1, 2008, we could not perform some of the required auditing procedures on the opening balances to the extent deemed necessary by us. Furthermore, due to inadequate records, we are unable to fully assess whether the Company’s accounting policies have been applied on a basis consistent with that of the preceding period.

(b) As stated in Note 9.3 of Schedule 18, certain reconciliations between the sub-systems/sub-ledgers and the general ledger could not be performed completely due to non-availability of all the required information. The Company has identified certain amounts aggregating Rs.27 million (net debit), comprising of Rs.494 million (gross debits) and Rs.467 million (gross credits) appearing in the general ledger, for which complete details are not available and, hence, these amounts have been accounted under ‘Unexplained Differences Suspense Account (Net)’ under Schedule 12 and the Management has made provision for the net unexplained debit amounts aggregating Rs.27 million as at March 31, 2009 on grounds of prudence. Further, there are certain differences in data between inter-connected sub-systems, ultimately interfaced to the general ledger, for which complete details are not available.

In the absence of the required information, we are unable to determine the additional impact, if any, of such unexplained amounts/ differences on these financial statements.
(c) Responses were not received in 3,047 number of cases out of our total sample of 3,746 number of requests sent out for confirmations of balances/other details in respect of parties reflected under Sundry Debtors, Loans and Advances, Current Liabilities, etc. Further, confirmations could not be sent in 47 number of cases due to the non-availability of complete records/ addresses relating to these parties. Refer Note 9.4 of Schedule 18.

Had all the confirmations been received and reconciled, there may have been additional adjustments required to these financial statements which are not determinable, at this stage.

12. Attention is invited to the following matters:

(a) Further to our comments in paragraph 8 above, the amounts received during the year and shown under ‘Amounts Pending Investigation Suspense Account (Net)’ has been presented in the cash flow statement separately since the Management could not identify the nature of the same and, hence, could not categorise the same as operating, investing or financing cash flows.

This is not in accordance with Accounting Standard (AS) 3 — Cash Flow Statements.
(b) Identification of companies/firms/other parties covered in the Register maintained u/s. 301 of the Act, companies under the same management within the meaning of S. 370(1B) of the Act, firms/ private limited companies in which a director is a member or a partner, the non-scheduled banks where a director of the Company is interested and the related parties as required under AS-18 — Related Party Disclosures as stated in Notes 19(iv) and 30 of Schedule 18 has been done by the Management based on available information. For the reasons stated in the said Notes, there may be additional related parties whose relationship would not have been disclosed to the Company, and, hence, not known to the Management.

We are unable to comment on the completeness/correctness of the above-referred details in the absence of all the required information.

(c) As stated in Note 12.4 of Schedule 18, the Company has given as finance lease, vehicles to the employees under the Associates Car Purchase Scheme, the gross original cost of which aggregates Rs.654 million (net book value Rs.382 million as at March 31, 2009), which have not been accounted for as finance leases in accordance with AS-19 — Leases in the absence of complete/adequate information.

In the absence of complete/adequate information, we are unable to determine the extent to which fixed assets and depreciation have been overstated and the impact of the non-compliance with AS-19 — Leases on these financial statements.
(d) As stated in Notes 14.5 and 37 of Schedule 18, the Company has not maintained proper records of its inventories during the year though the required adjustments to account for the inventory in the books of account were made based on the available information with the Management as at the year end. Further, the Company has not disclosed the quantitative details of purchase and sale of hardware equipment and other items as required under Schedule VI of the Act in the absence of complete information.

13. The Management has evaluated and accounted for certain transactions/made the relevant disclosures based on and to the extent of the information available with the Company in respect of the following Notes of Schedule 18:

(a)   Adjustment of unapplied receipts against Sundry Debtors, classification of Sundry Debtors and provisioning for doubtful debts as stated in Note 14.1.
(b)   Accounting for contracts under percentage of completion method and unbilled revenue as stated in Notes 14.2 and 14.3.
(c)   Accounting for multiple deliverable elements, hardware equipments and other items, etc., as stated in Notes 14.4 and 14.5.

(d) Accounting for unearned revenue as stated in Note 14.7.
(e) Accounting for reimbursements/recoveries from customers as stated in Note 14.9.

In the absence of the required information, we are unable to determine the additional impact, if any, of the above matters on these financial statements.

14. As stated in Note 6.6(vi) of Schedule 18, the Company is carrying a total amount of Rs.4,371 million (net of payments) as at March 31, 2009 towards provision for taxation which was made primarily on the basis of the past financial statements. Considering the effects of financial irregularities, status of disputed tax demands, appeals/claims pending before the various authorities, the consequent uncertainties regarding the outcome of these matters and the significant uncertainties in determining the tax liability, the Company has been professionally advised that it is not appropriate to make adjustments to the outstanding balance of tax provision as at March 31, 2009.

In view of the above, we are unable to comment on the adequacy or otherwise of the provision for taxation carried in these financial statements.

15. In view of the matters described in paragraph 6 above and as stated in Note 39 of Schedule 18, information relating to the previous year has been provided only for the purpose of statutory requirements and the same cannot be used for any comparison purposes or otherwise.

16. Without qualifying our opinion, we invite attention to the following Notes of Schedule 18 relating to various claims and contingencies:

(a) Note 6.2 regarding the settlement amount of Rs.3,274 million (equivalent to USD 70 million) deposited into the escrow account payable to Upaid Systems Limited.
(b) Note 6.4 regarding the Division of Enforcement of the United States Securities and Exchange Commission conducting a formal investigation into misstatements in the financial statements of the Company for the prior years pursuant to the letter of the erstwhile Chairman and recommending enforcement action against the Company.

(c) Notes 6.6 to 6.8 regarding the various demands/disputes raised by the direct and indirect tax authorities both in India as well as overseas jurisdictions.

As stated in Note 6.13 of Schedule 18, the Company has made appropriate provision for contingencies as at March 31, 2009 which, in the opinion of the Management, is adequate to cover any probable losses in respect of the above litigations and claims.

17. Without qualifying our opinion, we invite attention to the following Notes of Schedule 18 relating to certain regulatory non-compliances/breaches:

(a)   Note 8.1 regarding various non-compliances with the provisions of the Act.
(b)   Note 8.2 regarding certain non-compliances of the guidelines issued by the SEBI with respect to allotment of stock options to the employees.
(c)   Note 8.3 regarding certain non-compliances of the provisions of the Foreign Exchange Management Act, 1999.
(d)   Note 8.5 regarding certain non-compliances of the provisions of the Income-tax Act, 1961.

(e) Note 8.6 regarding delay in filing of tax returns in overseas jurisdictions.

The Management has represented that:

(i) the various non-compliances and breaches by the Company of the statutory requirements which have been noticed/observed, duly considering the findings of the forensic investigation/other ongoing regulatory investigations have been summarised in the aforesaid Notes.

(ii) the Company is proposing to make an application to the appropriate authorities, where applicable, for condoning these non-compliances and breaches relatable to the Company.

(iii) the possible impact of these non-compliances and breaches in the event the Company’s condonation requests, where applicable, are not granted has not been determined or recognised in these financial statements.

18. Without qualifying our opinion, we invite attention to the following Notes of Schedule 18 relating to certain accounting and other matters:

(a) Note 9.1 regarding the Management’s identification of several deficiencies in the Company’s internal control over financial reporting as at March 31, 2009 along with certain remediation action taken subsequently.

(b) Note 9.5 regarding various risks and uncertainties relevant to the Company’s financial condition as identified by the Management.

(c) Note 12.8 regarding adjustments that may be required on account of the physical verification of fixed assets conducted subsequent to the year end.

(d) Note 13.9 regarding the provisions made for the diminution in the value of investments and Note 19(iii) regarding the provision made for the dues from the subsidiaries.

19. Without qualifying our opinion, we invite attention to Note 22 of Schedule 18 regarding provision for statutory audit fees of Rs.57 million (including for the audit of prior period items) debited to the profit and loss account which is subject to the approval of the shareholders.

Opinion:

20.   Further to our comments in the Annexure referred to in paragraph 5 above and paragraphs 16 to 19 above and subject to our comments in paragraphs 6 to 15 above, we report that:
(a)   we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;
(b)   in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;
(c)   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;
(d)   in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in S. 211(3C) of the Act;
(e)   in our opinion and to the best of our information and according to the explanations given to us, the said Accounts, read together with the notes thereon, give the information required by the Act in the manner so required and, subject to the consequential effects of our comments in paragraphs 6 to 15 above which are not quantifiable, give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2009;

(ii) in the case of the Profit and Loss Account, of the loss of the Company for the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

Reporting requirements relating to S. 274(1)(g):

21. Since all the Directors as on March 31, 2009 were Government nominees, the reporting requirement relating to S. 274(1)(g) of the Act does not arise.

Compiler’s Note:

The other disclosures in the Notes to Accounts referred to in the audit report are voluminous and hence not reproduced here. The same can be made available by the compiler on request.

BCAJ Admin

Miscellaneous

From Published Accounts

1 Disclosures in respect of
derivative losses, corporate debt restructuring, winding up petitions, etc.

WOCKHARDT LIMITED — (15
months ended 31st March 2010)

From Significant Accounting
Policies :

Derivative Financial
Instruments :

The Company uses derivative
financial instruments such as option contracts and interest rate swaps to hedge
its risk associated with foreign currency fluctuations and interest rates.

As per the Institute of
Chartered Accountants of India (ICAI) Announcement, accounting for derivative
contracts, other than those covered under AS-11, are marked to market on a
portfolio basis, and the net loss is charged to the income statement. Net gains
are ignored.

From Notes to Accounts :

32. Corporate Debt
Restructuring (CDR) Scheme is effective from April 15, 2009. The outstanding
liabilities of the Company are being restructured under the aegis of Corporate
Debt Restructuring (CDR) Scheme. As required under the Scheme, the Master
Restructuring Agreement (MRA) and other necessary documents have been executed
and effected. The CDR Scheme comprehensively covers the FCCB liabilities and
crystallised derivatives/hedging liabilities.

35. CONTINGENT LIABILITIES
NOT PROVIDED FOR :

(e) Certain
derivative/hedging contracts have been unilaterally cancelled by the banks. The
Company has treated the demand of ‘8,483.22 million (previous year — ‘4,895.24
million) as a contingent liability and has not acknowledged the same as debt,
since the liability cannot be currently ascertained even on a best-effort basis
till the final outcome of the matter.

The Company is of the view
that these are contingent liabilities as these arise from past events and
existence of which will be confirmed only by the occurrence or non-occurrence of
one or more uncertain future events not wholly within control of the Company and
therefore, has not acknowledged these claims against Company as debts.

36. Winding-up petitions are
filed by certain lenders/banks in the Bombay High Court and the Company has
filed affidavit in reply. ICICI Bank, as empowered by CDR and Employee Union
have filed intervention application against the winding-up. The matter is sub-judice
and outcome of which cannot be currently ascertained.

From Auditors’ Report :

5. Without qualifying our
opinion, we draw attention

(a) to Note 32 of the
financial statements, wherein as explained, the Company’s outstanding
liabilities are being restructured under the aegis of Corporate Debt
Restructuring Scheme (CDR) with effect from April 15, 2009 and as required
by the Scheme, the Master Restructuring Agreement (MRA) and other necessary
documents have been executed and are effective.

(b) to Note 36 of the
financial statements, wherein as explained, certain lenders have filed
winding-up petitions against the Company in the Bombay High Court and the
Company has filed affidavit in reply. The matter is sub-judice and outcome
of which cannot be currently ascertained.

The Company’s ability to
continue as a going concern is dependent on the Company being able to
successfully implement the actions proposed in the CDR Scheme and outcome of the
winding-up petitions in favour of the Company.

6. (a) With regard to
outstanding derivative contracts as on March 31, 2010, the premiums
aggregating ‘1,843.79 million are unconfirmed and we are informed that the
relevant documents are being put in place. The consequential effect of
subsequent adjustment/s — if any — on relevant assets and liabilities and
loss for the period is not ascertainable.

(b) In respect of
crystallised derivative losses of ‘11,303.80 million forming part of
‘exceptional items’, we have relied on appropriate written representations.

7. As explained in Note
35(e) to the financial statements, the Company had, on certain derivative
contracts with banks, stopped payment of margins called by the banks. The banks,
based on the Early Termination clause in the agreement, terminated these
contracts and claimed an amount of ‘8,483.22 million, being the loss incurred on
termination of such contracts, which the Company has disputed and not
acknowledged as debt. No provision has been made in the accounts for the above
amount, which has been considered as contingent liability. The consequential
impact upon relevant assets and liabilities and loss for the period is not
ascertainable.

8. In our opinion, and to
the best of our information and according to the explanations given to us,
subject to the matter included in paragraph 6 and 7 above, the effect of which
cannot be currently ascertained, the said accounts give the information required
by the Act in the manner so required and also give a true and fair view in
conformity with the accounting principles generally accepted in India.

From Annexure to Auditor’s
Report :

(vii) In our opinion,
the Company has an internal audit system commensurate with the size and
nature of its business, except that scope needs to be enlarged in respect of
Treasury Operations.

(ix)(a) In our opinion and according to the information and explanations given to us, considering the loan liabilities being re-structured under the aegis of Corporate Debt Restructuring (CDR) Scheme and Master Restructuring Agreement being signed by lenders, as per the terms of CDR Scheme, there has been no default in repayment of principal and interest to CDR lenders.

b) With respect to Foreign Currency Convertible Bonds aggregating ‘4,464.02 million which were due for repayment in October 2009, no repayment has been made and as informed, CDR Scheme comprehensively covers FCCB liabilities.

c) As informed, the Company is in dispute with certain lenders whose liabilities as per books of accounts aggregate ‘1,490.70 million. Further, as stated in Note 35(e), the Company has not acknowledged as debt the demand raised on account of unilateral termination of certain derivative contracts. We are unable to comment in respect of such liabilities whether there has been any default in view of the dispute.

From Directors’ Report?:

With regard to qualification and emphasis of matter contained in the Auditors’ Report, explanations are given below?:

a) Point 5(a) of Auditor’s Report — Note 32 of Notes to Accounts to the financial statements?:
Corporate Debt Restructuring (CDR) Scheme is effective from April 15, 2009. The Outstanding liabilities of the Company are being restructured under the aegis of Corporate Debt Restructuring Scheme. As required under the Scheme, the Master Restructuring Agreement (MRA) and other necessary documents have been executed and effective. The CDR Scheme comprehensively covers the FCCB liabilities and crystallised derivatives/ hedging liabilities.

b) Point 5 (b) of Auditor’s Report — Note 36 of Notes to Accounts to the financial statements?:
Winding-up petitions are filed by certain lenders/banks in the Bombay High Court and the Company has filed affidavit in reply. ICICI Bank, as empowered by CDR and Employee Union have filed intervention application against the winding-up. The matters are sub-judice and outcome of which cannot be currently ascertained.

c) Point 6 of Auditor’s Report?:
The Company has charged the crystallised derivative losses to the Profit & Loss Account and some of the documentation trail is being corelated, for which the Company has formed a task force and necessary actions are being taken.

d) Point 7 of Auditor’s Report?:
Certain derivatives/hedging contracts have been unilaterally cancelled by banks. The Company has treated the demand of ‘8,483.22 million as a contingent liability and has not acknowledged as debt, since the liability cannot be currently ascertained even on a best-effort basis till the final outcome of the matter. The Company is of the view that these are contingent liabilities as these arise from past events and existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within control of the Company and therefore, has not acknowledged these claims against the Company as debts.

e) Point (vii) of Annexure to Auditor’s Report?:
The Company has an internal audit system which it believes to be commensurate to the size of its operations. The Company has already commenced the process of further strengthening the internal audit system to enlarge its scope in respect of Treasury Operations. Further, as per the CDR Scheme the Company cannot execute any new derivative transactions (excluding forwards strictly for hedging purposes for a maximum period of 180 days) without prior approval of CDR Empowered Group and accordingly the treasury operations of the Company have been significantly reduced.

BCAJ Admin

Miscellaneous

Creation of business reconstruction reserve to adjust impairment of fixed assets, goodwill on consolidation and other costs

Hindalco Industries Ltd.

— (31-3-2009) (standalone)

From Notes to Accounts :

(a) The Company has formulated a scheme of financial restructuring to deal with various costs associated with its organic and inorganic growth plan. The recent economic downturn particularly in the commodity space is also expected to result in impairment/diminution in value of certain assets/investments. Accordingly, as per a scheme of Arrangement under Sections 391 to 394 of the Companies Act 1956 (‘the Scheme’) between the Company and its equity shareholders approved by the High Court of Judicature of Bombay, a separate reserve account titled as Business Reconstruction Reserve (‘BRR’) has been created by transferring balance standing to the credit of Securities Premium Account of the Company for adjustment of certain expenses as prescribed therein. Accordingly, Rs.8,647.37 crores has been transferred to BRR and following expense incurred during the year have been adjusted against the same as per the Scheme :

(i) Impairment of fixed assets amounting Rs.66.80 crores, net of deferred tax of Rs.34.40 crores (refer Note no. 24 in this schedule).

(ii) Certain costs amounting to Rs.0.18 crores in connection with the Scheme.

(b) Had the Scheme not prescribed aforesaid treatment, the impact would have been as under:

(i) in the Profit and Loss Account

From Auditors’ Report:

6. Without qualifying our opinion, attention is drawn to the following:

b) As per Scheme of Arrangement u/ s.391 to 394 of the Companies Act 1956 approved by the Honourable High Court of Mumbai vide its Order dated 29th June, 2009 the company has been allowed to create Business Reconstruction Reserve by transferring balance standing to the credit of Securities Premium Account for adjusting certain expenses as defined in the scheme. Accordingly, the management of the Company, during the year has identified and adjusted Impairment of Fixed Assets amounting to Rs.66.80 crores (Net of Tax) and certain expenses amounting to Rs.0.18 crores against Business Reconstruction Reserve. This has resulted in the profit before tax and profit after tax for the year being higher by Rs.101.38 crores and Rs.66.98 crores respectively and deferred tax asset being lower by Rs.34.40 crores. Refer Note No. 22 in Schedule 19.

From Directors’ Report:

Scheme of arrangement:

The Company has formulated a scheme of financial restructuring to deal with various costs associated with its organic and inorganic growth plan. The recent economic downturn particularly in the commodity space is also expected to result in impairment/diminution in value of certain assets/investments. The Board of Directors of the Company at its meeting held on 14th February, 2009 had approved said Scheme of Arrangement. Accordingly, as per the Scheme of Arrangement under Sections 391 to 394 of the Companies Act 1956 (‘the Scheme’) between the Company and its equity shareholders approved by the High Court of Judicature of Bombay, a separate reserve account titled as Business Reconstruction Reserve (‘BRR’) has been created by transferring balance standing to the credit of Securities Premium Account of the Company for adjustment of certain expenses as prescribed therein. Accordingly, Rs.8,647 crares has been transferred to BRR and Rs.67 crores in standalone accounts and Rs.4,617 crores in Consolidated accounts have been adjusted against the same as per the Scheme during the year.

HINDALCO INDUSTRIES LTD. – (31-3-2009) (consolidated)

From Notes to Accounts:

8.(a) The Company has formulated a scheme of financial restructuring to deal with various cost!’ associated with its organic and inorganic growth plan: The recent economic downturn particularly in the commodity space is also expected to result in impairment/ diminution in value of certain assets Zinvestments, Accordingly, as per a scheme of Arrangement under sections 391 to 394 of the Companies Act 1956 (‘the Scheme’) between the Company and its equity shareholders approved by the High Court of judicature of Bombay, a separate reserve account titled as Business Reconstruction Reserve (‘BRR’) has been created by transferring balance standing to the credit of Securities Premium Account of the Company for adjustment of certain expenses as prescribed therein. Accordingly, Rs.8,647.37 crores has been transferred to BRR and following expenses incurred during the year have been adjusted against the same as per the Scheme:

i) Impairment of goodwill amounting Rs.3,597.30 crores arises on consolidation of Novelis Inc. while preparing consolidated accounts of the Company.

ii) Impairment of fixed assets amounting Rs.111.30 crores (net of deferred tax of Rs.34.40 crares).

iii) Interest and Finance Charges amounting Rs.544.47 crores on loan taken by A. V. Minerals (Netherlands) B. V., subsidiary of the Company, for acquisition of Novelis Inc. by the Company.

iv) Costs amounting to Rs.363.62 crores in connection with exiting business.

v) Certain costs amounting to Rs.0.18 crores in connection with the Scheme.

b) Had the Scheme not prescribed aforesaid treatment, the impact would have been as under:

i) in the Profit and Loss Account

From Auditors’ Report:

5. Without qualifying our opinion, attention is drawn to the following:

c) As per Scheme of Arrangement u/s.391 to 394 of the Companies Act 1956 approved by the Honourable High Court of Mumbai vide its Order dated 29th June, 2009 the company has been allowed to create Business Reconstruction Reserve by transferring balance standing to the credit of Securities Premium Account for adjusting certain expenses as defined in the scheme. Accordingly, the management of the Company, during the year has identified and adjusted Impairment of Goodwill in a subsidiary amounting to Rs. 3,597.30 crores, Impairment of Fixed Assets amounting to Rs. 111.30 crores (Net of Tax) and certain expenses amounting to Rs. 908.27 crores against Business Reconstruction Reserve. This has resulted in loss for the year before tax being understated by Rs. 4,651.27 crores and profit for the year after tax of Rs.485.31 crores of the group would have been converted in a loss for the year of Rs. 4,165.96 crores. Refer Note No. 8 in Schedule 20.

BCAJ Admin

Section B : Miscellaneous

New Page 1

Suggestion of Expert Advisory Committee of ICAI for AS-22 not
followed pending revision of AS-22 by ICAI

Power Finance Corporation Ltd.

— (31-3-2008)

From Notes to Accounts :

20. The Deferred Tax Assets/Liabilities have been created
in terms of the Accounting Standard 22 issued by the Institute of Chartered
Accountants of India (ICAI) since the year it became applicable to the
company, i.e., 2001-02 except on account of ‘Special reserve created
and maintained under Section 36(1)(viii) of the Income Tax Act’ on which the
DTL was created by debiting profit & loss account for 2004-05 and by charging
revenue reserve for 2001-02 to 2003-04. However, PFC has taken up the issue
for total withdrawal of DTL on Special Reserve with the ICAI and with the
Ministry of Corporate Affairs. The Institute in its letter dated 4-4-2007
stated that the Accounting Standard Board examined AS-22, Accounting for Taxes
on Income, in the light of the opinion of the Expert Advisory Committee. It is
further stated that “the Board decided to take up the revision of the standard
on the lines of the corresponding IAS, namely, IAS-12, Income taxes, as a part
of its convergence with IFRS project. It was argued that since IAS-12 is based
on the ‘balance sheet approach’ as against ‘income statement approach’ on
which the existing AS-22 is based, the problem being encountered by the
company may not arise”. The Ministry of Corporate Affairs also endorsed the
letter issued by ICAI to PFC.

In view of this, rectification as suggested by the ICAI
vide their letter dated 31-1-2006 regarding creation of DTL on Special Reserve
created and maintained under Section 36(1)(viii) of the Income-tax Act, 1961
for the period 2001-02 to 2003-04 by charging to P&L Account and crediting the
reserves by Rs.539.39 crores has not been carried out and pending revision of
AS-22, the Company has maintained status quo and continued the practice
of creating the DTL on the Special Reserve created and maintained under
Section 36(1)(viii) of the Income-tax Act, 1961.

From Auditors’ Report :

Attention is drawn to the following Notes in Schedule 18 :

(j) Note No. 20 regarding the suggestion of the Expert
Advisory Committee of the ICAI suggesting the rectification by creating the
Deferred Tax Liability on ‘Special Reserve created and maintained’ under
Section 36(1)(viii) of the Income-tax Act, 1961 for the period 2001-02 to
2003-04, by charging the Profit & Loss Account (Prior Period Items) and
crediting the Reserves by Rs.539.39 crores, has not been carried out by the
Company pending the decision of the ICAI on the Company’s request for total
withdrawal of provision of AS-22 regarding creation of Deferred Tax Liability
for the Special Reserve Created and Maintained under Section 36(1)(viii) of
the Income-tax Act, 1961. Pending the decision of the ICAI, the Company has
not given effect to the suggestion of the Expert Advisory Committee of the
ICAI.

Intangible assets, etc. acquired under a Business Transfer
Agreement adjusted against General Reserve pursuant to High Court Order

Blue Star Ltd. — (31-3-2008)

From Notes to Accounts :

7. The Company has acquired the electrical contracting business of Naseer Electricals Private Ltd. (NEPL) under a business purchase agreement on a slump sale basis for Rs.48,09.77 lakhs (including Rs.5,00.00 lakhs held in Escrow account till the conditions stipulated in the said agreement are fulfilled) with effect from January 24, 2008. After adjusting the value of tangible fixed assets acquired of Rs.1,16.65 lakhs, the balance consideration along with the incidental expenses have been allocated towards various intangible assets and goodwill as valued by an independent valuer as detailed hereunder :

8. As per the Scheme of Arrangement approved by the shareholders at the Extra-ordinary General Meeting held on March 4,2008 and duly approved by the Hon’ble High Court at Bombay vide its order dated April 11, 2008, the Company has, in accordance with the accounting treatment prescribed therein, adjusted the following amounts against the General Reserve of the Company:

(a) The intangible assets of Rs.41,18.62 lakhs and Goodwill of Rs.8,32.32Iakhs arising on acquisition of electrical contracting busi-ness of NEPL.

(b) Loss of Rs.35.10 lakhs on sale of 3,98,000 equity shares of Blue Star Design & Engineering Ltd.

3. Qualification in Auditors’ Report on Consolidated Financial Statements

NAVIN FLUORINE INTERNATIONAL LTD. – (31-3-2008)

From Auditors’ Report:

5. Attention is invited to the following in Schedule 17, out of which points i and ii were also the subject matter of our report similarly modified in the previous year:

(i) Note 3.a, regarding accounts of the joint venture company not having been consolidated which is in contravention of the provisions of AS-27, ‘Financial Reporting of Interests in Joint Ventures’.

(ii) Note 16, regarding non-accounting of rent/ recovery of expenses of Rs.Nil; aggregate to date as at the year end, Rs.108.83 lacs (previous year, Rs.Nil; aggregate to date as at the previous year end, Rs.108.83 lacs);.

(iii) Note 12, regarding recognition of deferred tax asset of Rs.285.94 lacs (previous year, Rs.Nil) by the associate in respect of unabsorbed depreciation and carry-forward losses.

We further report that without considering item 5(i) above, the effect of which on the financial statements for the year ended 31st March 2008 and on the corresponding figures in the previous year ended 31st March, 2007, could not be determined, had the observation made by us in item 5(ii) and (iii) been considered, there would have been a loss of Rs.145.53 lacs, as against the reported profit of Rs.56.83 lacs (previous year, a profit of Rs.1,719.09 lacs, as against the reported figure of profit of Rs.1622.47 lacs), reserves and surplus would have been Rs.18,091.65 lacs, as against the reported figure of Rs.18,294.01 lacs (as at 31st March, 2007, Rs.18,450.90 lacs, as against the reported figure of Rs.18,354.28 lacs), investments would have been 1,464.55 lacs, as against the reported figure of Rs.1,750.49 lacs, loans and advances would have been Rs.6,227.21 lacs, as against the reported figure of Rs.6,118.38 lacs (as at 31st March, 2007, Rs.3,124.99lacs, as against the reported figure of Rs. 3,016.16 lacs) and provisions would have been Rs. 842.52 lacs, as against the reported figure of Rs.817.27lacs (as at 31st March, 2007, Rs.880.65 lacs, as against the reported figure of Rs.868.44 lacs).

Subject to the foregoing………….

BCAJ Admin

Miscellaneous

Qualifications in Audit Report on Consolidated Financial Statements (CFS)

Significant Accounting Policies :

Particulars of consolidation :

(ii) Borg Warner Morse TEC Murugappa Private Limited ceased to be a Joint Venture with effect from 30th September 2008, consequent to the sale of shares held in them by the Company. Accordingly, the Unaudited financial statements/information from 1st January 2008 to 30th September 2008 available with the Management have been considered for the purpose of the Consolidated Financial Statements.

From Notes to Accounts (CFS) :

Joint Ventures :

8(a) Provisioning for Standard Assets and Capital Reduction :

Considering the overall economic environment, CDFL has reviewed its past practice of provisioning for its loan portfolio and, as against the practice hitherto followed and, having regard to the principle of prudence and conservatism, has decided to voluntarily create a Provision for Standard Assets in respect of the Standard Assets in the Books of Account as at 31st March 2009 and apply such provisioning norms for the Standard Assets, suo moto, on an ongoing basis, though statutorily not required under the Non-Banking Financial (Non-deposit Accepting or Holding) Companies ‘Prudential Norms (Reserve Bank) Directions, 2007.

Pursuant to the Capital Reduction Proposal under Sections 78, 100 to 103 of the Companies Act, 1956 as approved by the shareholders of CDFL through postal ballot and the Capital Reduction Proposal confirmed by the Hon’ble High Court of Judicature at Madras on 29th April 2009, whose Order and minute dated 20th April 2009 was registered with the Registrar of Companies on 30th April 2009, an amount of Rs.323.53 Cr. (Share of the Group Rs.100.08 Cr.), being the balance in the Securities Premium Account of CDFL as at 31st March 2008 has been withdrawn for meeting the specific purposes as indicated below.

According to the Capital Reduction Order as approved by the Hon. High Court of Judicature at Madras, the following can be utilised/adjusted/set off against the balance of Rs.323.53 Cr. (Share of Group Rs.100.08 Cr.) available in the Securities Premium Account of CDFL as at 31st March 2008 :

Utilisation towards creation of Provision for Standard Assets for an amount not exceeding Rs.200 Cr. (Share of the Group Rs.61.87 Cr.) in respect of the existing standard assets in the books of account of CDFL as at 31st March 2009 based on the provisioning norms approved by the Management for various categories of loan portfolios.

Adjustments of the write-off of the bad debts/loan losses/other non-recoverable assets, if any, existing in the books of account of CDFL as at 31st March 2009, whether provided for or not, for an amount not exceeding Rs.100 Cr. (Share of the Group Rs.30.93 Cr.). Provisions existing for such bad debts/loan losses/other non-recoverable assets, if available, as at 31st March 209 will be credited back to the Profit and Loss Account on such write-off of bad debts/loan losses/other non-recoverable assets.

Setting off of the provision for diminution, other than temporary, if any, in the value of the investments made by CDFL in one of its subsidiary companies, M/s. DBS Cholamandalam Distribution Limited, and setting off the provision for doubtful receivables, if any, from the said subsidiary in the books of account of CDFL as at 31st March 2009 for an amount not exceeding Rs.23.53 Cr. (Share of the Group Rs.7.28 Cr.).

Such utilisation/adjustment/set-off has been made by withdrawal of such sums from the Securities Premium Account of CDFL to the Provision for Standard Assets Account, Loss Assets Written Off Account and Provision for Diminution in the Value of Investments Account in the Profit and Loss Account.

Hence, for the year ended 31st March 2009, such Provision for Standard Assets amounting to Rs.200 Cr. (Share of the Group Rs.61.87 Cr.), Write-off of the Bad Debts/Loan Losses amounting to Rs.100 Cr. (Share of the Group Rs.30.93 Cr.) and Provision for Diminution in the Value of the Investments amounting to Rs.23.53 Cr. (Share of the Group Rs.7.28 Cr.), as determined by the Management, have been debited to the Profit and Loss Account and such sums have been withdrawn from the Securities Premium Account and credited to the Profit and Loss Account into the respective heads of account.

The said adjustments are not in accordance with the Accounting Standards notified by the Government of India under Section 211(3C) of the Companies Act, 1956 and other relevant Pronouncements of the Institute of Chartered Accountants of India.

Had CDFL not made Provision for Standard Assets in accordance with its revised provisioning policy and had the aforesaid adjustments to Securities Premium not been effected, the consequent impact on the consolidated results of the Group would have been as indicated in the table below under the head ‘Proforma Results of the Group’ :

b) Bank reconciliation :

There are certain outstanding open items in some of the bank reconciliations of CDFL (Bank Cash Credit Accounts – Net total excess of book balance over the bank statement balance as at 31.3.2009-Rs.63.35 Cr. : and Bank Current Accounts – Net total excess of book balance over the bank statement balance as at 31.3.2009 – Rs.6.74 Cr.), which CDFL is in the process of resolving. The Management of CDFL is of the opinion that adjustments, if any, arising out of clearance of such reconciling items should not have a material impact on the reported amount of assets, liabilities, income and expenses and, consequently, on the financial statements of CDFL as well as the Consolidated Financial Statements for the year ended 31st march 2009.

c) Assets de-recognised – Share of the Group:

Notes:
(i) During the current year, the Gujarat High Court, in the case of Kotak Mahindra Bank v. O.L. of M/s. APS Star India Limited, held that Banks are prohibited from transferring or purchasing debts. Consequent to the above, the petitioners have filed a Special Leave Petition (SLP) with the Supreme Court. In its interim order, the Supreme Court has held that in the event of dismissal of the SLP, the assignment deals entered into by banks would be deemed not to have materialised.

However, CDFL is hopeful (If a favourable outcome to the aforesaid Special Leave Petition (SLP) filed in the Supreme Court given: that such deals are widely prevalent in the banking and financial services industry and the RBI has itself issued specific guidelines in respect of Securitisation transactions and hence, no adjustments to the financial statements have been considered necessary at this stage by the Management in this regard.

ii) There have been no Securitisation of Receivables during the current year as well as the previous year and hence the disclosure requirements under RBI Circular No. DBOD. NO.BP.BC.60/21.04.048/2005-06 have not been given. The details given above relate to Securitisation transactions prior to 31st March 2007.

d) Change in Accounting Estimates for Non-Performing Assets Provisions:

During the year, the Management of CDFL has reviewed the provisioning norms applied for Non-Performing Assets and has streamlined the same duly taking into account the stipulated minimum provisioning requirements of the Reserve Bank of India (RBI), the current economic environment and the voluntary Provision for Standard Assets of Rs.200 Cr. (Share of the Group Rs.61.87 Cr.) as at 31st March 2009 [Refer Note 8(a) above]. Such changes in the provisioning estimates by the Management used for the year ended 31st March 2009 in respect of assets identified for 100% provision as compared to the previous year ended 31.3.2008 has resulted in the share of the Group in the Provision for Non-Performing Assets for the current year being lower by Rs.20.70 Cr. and, consequently, the profit before tax for the year ended 31.3.2009 of the Group is higher by that amount.

e) Exceptional items:

The year 2008-2009 saw a global financial crisis, both in terms of liquidity and volatile interest movement. The schemes of DBS Chola Mutual Fund also were impacted as there were redemption pressures at various points of time. Therefore to protect the interest of unit holders, one of the subsidiaries of CDFL – DBS Cholamandalam Asset Management Limited absorbed the losses of Rs16.12 Cr. on account of securities (including loss of Rs.8.37 crores on Non-Convertible Debentures purchased and sold back to Mutual Fund Schemes) to correct the valuation of the securities. Accordingly the Group’s share of .such losses amounting to Rs.4.99 Cr. has been shown under Exceptional Items in the Consolidated Financial Statements.

From Auditors’ Report on CFS :

4. As stated in Note 2(ii) of Schedule 17, in the case of one of the JVs which ceased to be a JV with effect from 30.9.2008, the figures used for the consolidation are based on the unaudited financials statements/information available with the management. The Company’s share of total revenues and net profit after tax for the period 1.01.2008 to 30.9.2008 relating to the said JV considered in the Consolidated Financials Statements is Rs.6.75 crores and Rs.0.12 crores, respectively.

5. In the case of one of the joint ventures of the Company, M/ s. Cholamandalam DBS Finance Limited (CDFL) :

a) Attention is invited to Note 8(b) of Schedule 18 regarding certain outstanding open items in some of the Bank Reconciliations of CDFL, which CDFL is in the process of resolving. The Management of CDFL is of the opinion that adjustments, if any, arising out of clearance of such reconciling items should not have a material impact on the reported amounts of assets, liabilities, income and expenses and, consequently, on the financial statements for the year. Pending clearance of such outstanding open items and completion of the said Reconciliations we are unable to form an opinion in the matter.

b) Without qualifying our report, we invite attention to Note 8(a) of Schedule 18 on capital reduction by CDFL regarding utilisation/ adjustment/set-off of the Securities Premium Account towards creation of Provision for Standard Assets for an amount of Rs.200 crores, adjustment of write-off the bad debts/loan losses and other non-recoverable assets for an amount of Rs.I00 crores and setting off of the provision of diminution, other than temporary, in the value of investments in one of CDFL’s subsidiaries, M/ s. DBS Cholamandalam Distribution Limited amounting to Rs.23.53 crores, by withdrawal of such sums from the Securities Premium Account to the Profit and Loss Account of CDFL, made in accordance with the Capital Reduction Proposal under Sections 78, 100 to 103 of the Companies Act, 1956 and confirmed by the Hon. High Court of Judicature at Madras on 29th April 2009, whose Order and minute dated 20th April 2009 was registered with the Registrar of Companies, Chennai on 30.4.2009. This is not in accordance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956 and the relevant Pronouncements of the Institute of Chartered Accountants of India.

As stated in the aforesaid Note, had CDFL not made Provision for Standard Assets in accordance with its revised provisioning policy and had the aforesaid adjustments to Securities Premium not been effected, the profit after tax of the Group for the year would have been Rs.16.22 crores as against the profit after tax of the Group of Rs.54.43 crores.

c) Without qualifying our report, we invite attention to Note 8(d) of Schedule 18 regarding the change in the provisioning norms of certain loan portfolios of CDFL during the year ended 31 March 2009 by the Management of CDFL for the reasons stated therein.

6. In the case of one of CDFL’s subsidiaries, M/ s. DBS Cholamandalam Asset Management Limited (DCAML):

Without qualifying our report, we invite attention to Note 8(e) of Schedule 18 regarding the Group’s share of loss of RS.2.59 crores relating to the purchase and sale back of securities to the Mutual Fund Schemes by DCAML for the reasons stated therein.

7. In the case of one of the subsidiaries, M/ s. Cholamandalam MS General Insurance Company Limited (CMSGICL), the other auditors’ report on its financial statements for the year ended 31.3.2009 includes the following matters:

a) The actuarial valuation in respect of Incurred But Not Reported (IBNR) Claims and Incurred But Not Enough Reported (ffiNER) Claims, included under Sundry Creditors in the financial statements as at 31.3.2009, is the responsibility of the subsidiary’s appointed actuary. The actuarial valuation of liabilities as at 31.3.2009 has assumptions considered by him for such valuation are appropriate and are in accordance with the requirements of Insurance Regulatory and Development Authority (IRDA) and Actuarial Society of India in concurrence with IRDA. The auditors have relied upon the actuary’s certificate in this regard.

b) Without qualifying the opinion, attention is invited to Note 1(n) of Schedule 18 regarding a fire claim repudiated by the Company and accordingly no provision is considered necessary based on legal opinion.

8. We report that the Consolidated Financial Statements have been prepared by the Company’s Management in accordance with the requirements of Accounting Standard 21 Consolidated Financial Statements and Accounting Standard 27 Financial Reporting of Interests in Joint Ventures and on the basis of the separate audited financial statements of the Company, its subsidiaries and joint ventures included in the Consolidated Financial Statements except for the unaudited financial statements in the case of one of the joint ventures as indicated in Para above.

9. Subject to our comments in paragraphs 5(a) above and the consequential effects thereof, if any, which are not determinable at this stage, based on our audit and on consideration of the reports of the other auditors on the separate financial statements and other financial information of the entities referred to in paragraph 3 above and read with our comments in paragraphs 4, 5(b), 5(c), 6 & 7 above, and to the best of our information and according to the explanations given to us, we are of the opinion that the aforesaid Consolidated Financial Statements give a true and fair view in conformity with the accounting principles generally accepted in India.

BCAJ Admin

Exploration and development costs

New Page 1GAIL (INDIA) LTD. — (31-3-2007)

5. Exploration and development costs :

‘Successful Efforts Method’ is being followed for accounting
of oil and gas exploration and production activities which include :

(a) Survey costs are expensed in the year in which these
are incurred.

(b) Cost of exploratory wells is carried as ‘Exploratory
wells in progress’. Such exploratory wells in progress are capitalised in the
year in which the producing property is created or is expensed in the year
when determined to be dry/abandoned.

(c) All wells appearing as ‘Exploratory wells in progress’
which are more than two years old from the date of completion of drilling are
charged to Profit and Loss Account except those wells which have proved
reserves and the development of the fields in which the wells are located has
been planned. Such wells, if any, are written back on commencement of
commercial production.

Revenue recognition :

12. Sale proceeds are accounted for, based on the consumer
price inclusive of statutory levies and charges up to the place where ownership
of goods is transferred.

13. The interest allocable to operations in respect of assets
commissioned during the year is worked out by adopting the average of debt
equity ratios at the beginning and closing of that year and applying the average
ratio of debt thus worked out to the capitalised cost.

14. Pre-project expenditure relating to projects which are
considered unviable/closed is charged off to revenue in the year of
declaration/closure.

levitra

BCAJ Admin

Exploration and Development Costs

New Page 1Hindustan Oil Exploration Company Ltd. — (31-3-2007)

2. Exploration and Development Costs :

The Company generally follows the ‘Successful Efforts Method’
of accounting for its exploration and production activities as explained below :

(i) Cost of exploratory wells, including survey costs, is
expensed in the year when determined to be dry/abandoned or is transferred to
the producing properties on attainment of commercial production.

(ii) Cost of temporary occupation of land, successful
exploratory wells, development wells and all related development costs,
including depreciation on support equipment and facilities, are considered as
development expenditure. These expenses are capitalised as producing
properties on attainment of commercial production.

(iii) Producing properties, including the cost incurred on
dry wells in development areas, are depleted using ‘Unit of Production’ method
based on estimated proved developed reserves. Any changes in reserves and/or
cost are dealt with prospectively. Hydrocarbon reserves are estimated and/or
approved by the management committees of the joint ventures, which follow the
International Reservoir Engineering Principles.

Explanatory Notes :

1. All exploration costs including acquisition of geological
and geophysical seismic information, licence and acquisition costs are initially
capitalised as ‘Capital Work in Progress-Exploration Expenditure’, until such
time as either exploration well(s) in the first drilling campaign is determined
to be successful, at which point the costs are transferred to ‘Producing
Properties’ or it is unsuccessful in which case such costs are written off
consistent with para 2 below.

2. Exploration costs associated with drilling, testing and
equipping exploratory well and appraisal well are initially capitalised as
‘Capital Work in Progress — Exploration Expenditure’, until such time as such
costs are transferred to ‘Producing Properties’ on attainment of commercial
production or charged to the Profit and Loss Account, unless :

(a) such well has found potential commercial reserves; or

(b) such well test result is inconclusive and is subject to
further exploration or appraisal activity like acquisition of seismic, or
re-entry of such well, or drilling of additional exploratory/step out well in
the area of interest, such activity to be carried out no later than 2 years
from the date of completion of such well testing;

Management makes quarterly assessment of the amounts included
in ‘Capital Work in Progress-Exploration Expenditure’ to determine whether
capitalisation is appropriate and can continue. Exploration well(s) capitalised
beyond 2 years are subject to additional judgment as to whether facts and
circumstances have changed and therefore the conditions described in (a) and (b)
no longer apply.

Site restoration :

Estimated future liability relating to dismantling and
abandoning producing well sites and facilities whose estimated producing life is
expected to end during next ten years is expensed in proportion to the
production for the year and remaining estimated proved reserves of hydrocarbons
based on latest technical assessment available with the Company.

Revenue recognition :

(i) Revenue from the sale of crude oil and gas net of
Government’s share of Profit oil and Value Added Tax is recognised on transfer
of custody to refineries/others.

(ii) Sale is recorded at the invoiced price, which is
subject to the approval of the Government of India, Ministry of Petroleum &
Natural Gas (MOP&NG). The difference between the invoiced price and the final
approved price, if any, is adjusted in the year in which the aforesaid
approval is received.

levitra

BCAJ Admin

Miscellaneous

CARO Audit Report in case of a company where in earlier years, manipulations admitted by the erstwhile management and previous years audit reports withdrawn by earlier auditors

Satyam Computer Services Ltd. — (31-3-2009)

Compiler’s Note:

The main Audit Report of the Company was published in February 2011 (pages 87-92) issue of BCAJ. Given hereunder are relevant extracts from the CARO report. Since disclosures in the Notes to Accounts referred to in the audit report are voluminous, the same are not reproduced here. The same can be made available by BCAS on request.

Annexure to the Auditors’ Report:

(Referred to in paragraph 5 of our report of even date)

(i) Having regard to the nature of the Company’s business/activities/result/transactions, etc., clauses (viii), (xii), (xiii), (xiv), (xix) and (xx) of CARO are not applicable.

(ii) In respect of its fixed assets:

(a) The Company has maintained records of fixed assets showing particulars, including quantitative details and situation of the fixed assets situated within India except that quantitative details, asset description, etc., in respect of some of the fixed assets, need to be updated in the Fixed Assets Register. According to the information and explanations given to us, in respect of the fixed assets situated at the overseas branches of the Company, the Company has not maintained complete records showing the quantitative details and situation of fixed assets.

(b) The fixed assets were not physically verified during the year by the Management. Refer to paragraph 18(c) of the Auditors’ Report also.

(c) The fixed assets disposed of during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

(iii) In respect of its inventory:

(a) As explained to us, the inventories were not physically verified during the year by the Management.

(b) Since no physical verification was conducted, reporting on the procedures followed by the Management does not arise.

(c) In our opinion and according to the information and explanations given to us, the Company has not maintained proper records of its inventories during the year, though the required adjustments to account for the inventory in the books of account were made based on the information available with the Management as at the year end. Refer to Paragraph 12(d) of the Auditors’ Report also.

(iv) Subject to the comments in paragraphs 8 and 12(b) of the Auditors’ Report, in respect of loans, secured or unsecured, granted by the Company to companies, firms or other parties covered in the Register u/s.301 of the Act :

(a) With respect to the transactions recorded for the period from 1st April to 31st December, 2008, as the Register maintained by the Company (updated as at that date) has been seized by the Income Tax Department, only photocopies were made available for our verification. Subject to our reliance on such photocopies, the Company has not granted or taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the Register maintained in pursuance of section 301 of the Act, during the period from 1st April to 31st December, 2008.

(b) According to the information and explanations given to us, the Company has not granted or taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the Register maintained in pursuance of section 301 of the Act for the period from 1st January to 31st March, 2009.

(v) In our opinion and according to the information and explanations given to us, there was no adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and the sale of goods and services. During the course of our audit, we have observed several major weaknesses in such internal control system. Refer to paragraph 18(a) of the Auditors’ Report also.

(vi) Subject to the comments in paragraphs 8 and 12(b) of the Auditors’ Report, in respect of contracts or arrangements entered in the Register maintained in pursuance of section 301 of the Act, to the best of our knowledge and belief and according to the information and explanations given to us and subject to our reliance on the photocopies of the Register for the period from 1st April to 31st December, 2008 [Refer Item (iv)(a) above]:

(a) The particulars of contracts or arrangements referred to in section 301 of the Act that needed to be entered in the Register maintained under the said section have been so entered.

(b) There were no transactions in excess of Rs.5 lakhs in respect of any party.

(vii) Subject to our comments in paragraph 8 of the Auditors’ Report, according to the information and explanations given to us, the Company has not accepted any deposit from the public during the year.

(viii) In our opinion, read with our comments in paragraph 18(a) of the Auditors’ Report, the Company did not have an internal audit system commensurate with its size and nature of its business.

(ix) According to the information and explanations given to us in respect of statutory dues:

(a) Whilst the Company has been generally regular in depositing undisputed dues relating to Investor Education and Protection Fund, Wealth Tax and other material statutory dues applicable to it with the appropriate authorities, there were significant delays in depositing undisputed dues in respect of Provident Fund, Employees’ State Insurance, Tax Deducted at Source, Sales Tax/VAT, Works Contract Tax and Service Tax.

(b) There were no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Wealth Tax, Sales Tax/VAT, Service Tax, Cess and other material statutory dues in arrears as at 31st March, 2009 for a period of more than six months from the date they became payable except in respect of Tax Deducted at Source amounting to Rs.171,945 and certain overseas taxes amounting to Rs.866,456. As regards to income tax, we are unable to comment on the dues in arrears as on 31st March, 2009 for a period of more than six months from the date they became payable in view of the matters described under paragraph 14 of the Auditors’ Report.

c) Details of dues of Income Tax, Sales Tax, Service Tax and Cess which have not been deposited as on 31st March, 2009 on account of disputes are given below:
(not reproduced here)

x) The accumulated losses of the Company at the end of the financial year have exceeded the net worth of the Company. Further, the Company has incurred cash losses in the financial year ended 31st March, 2009. For the reasons stated in paragraph 15 of the Auditors’ Report, we are unable to comment on the cash losses for the immediately preceding financial year.

xi) In our opinion and according to the explanations given to us, the Company has not defaulted in the repayment of dues to banks. The Company does not have any dues to financial institutions and has not issued any debentures.

xii) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by some of its sub-sidiaries from banks and financial institutions, as made available to us for our verification, are not prima facie prejudicial to the interests of the Company considering the nature of the guarantees, purposes and needs.

xiii) In our opinion and according to the information and explanations given to us, term loans have been applied for the purposes for which they were obtained, other than temporary deployment pending application.

xiv) In view of our comments in paragraph 8 of the Auditors’ Report, we are unable to comment whether the funds raised on short-term basis have been used during the year for long-term investment.

xv) The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained u/s.301 of the Companies Act, 1956 during the year.

xvi)To the best of our knowledge and according to the information and explanations given to us, the details of fraud on or by the Company noticed or reported during the year are given below:

a) As stated in paragraph 6 of the Auditors’ Report, there were various financial irregularities which are more fully described in Note 3 of Schedule 18.

b) Various other instances of fraud noticed by the Management involving the employees of the Company/vendors of the Company, the amounts whereof were not material and the same have been suitably dealt with in the financial statements of the Company.

BCAJ Admin

Miscellaneous

From Published Accounts

Section B : Miscellaneous

9 Non disclosure of items in companies wherein Joint Control
is exercised (as required by AS 27)

Electrosteel Castings Ltd. — (31-3-2009)

From Notes to Accounts

26(a)The Company has invested in equity shares of Domco
Private Limited (DPL), a Company incorporated in India and has joint control
(proportion of ownership interest of the Company being 50%) over DPL along with
other venturers (the Venturers). The Venturers had filed a petition before the
Company Law Board, Principal Bench, New Delhi (CLB) against the Company on
various matters, including for forfeiture of the Company’s investment in equity
shares of DPL. The Company had inter alia filed a petition before the Hon’ble
High Court of Jharkhand at Ranchi. The Hon’ble High Court of Jharkhand at Ranchi
upheld the Company’s appeal and decided that the matter would have to be
referred for Arbitration. The Venturer has challenged the aforesaid judgment in
the Divisional Bench of the Hon’ble High Court of Jharkhand at Ranchi. Pending
final outcome of the matter and since, the other Venturers are not providing the
financial statements of DPL, disclosures as regards contingent liability and
capital commitments, if any, aggregate amounts of each of the assets,
liabilities, income and expenses related to the Company’s interest in DPL have
not been made in these accounts.

10 Change in accounting policy on account of change of
management estimates for warranty provision and depreciation

MRF Ltd — (30-9-2009)

From Notes to Accounts

Changes in Accounting Policies

i) The warranty provision has been recognised based on
management estimates regarding possible further outflow on servicing the
customers during the warranty period, on the sales affected during the year.
These estimates are computed on a scientific basis, as per past trends of such
claims, which hitherto were accrued and recognised based on claims preferred.
Due to this change, the profit for the year is lower by Rs.21.25 Crore.

ii) The Company has hitherto been charging depreciation on
windmills on the Straight Line Method, as Continuous Process Plant at the rates
and on the basis specified in Schedule XIV to the Companies Act, 1956. The
management has thought it prudent to switchover from the Straight Line Method to
the Reducing Balance Method to follow a uniform practice and has re-calculated
the depreciation from the date of such assets coming into use. As a result, the
charge for depreciation is more by Rs. 15.75 Crore (including Rs. 8.11 Crore net
for Deferred Tax of Rs. 4.17 Crore for the earlier years) and the profit for the
year is lower by the said amount.

From the Auditors’ Report

In our opinion and to the best of our information, and
according to the explanations given to us, the said accounts, read with Note No.
I (Q) in the notes forming part of the accounts, in respect of changes in
accounting policies relating to provision for warranty and change in the basis
of providing depreciation, resulting in the profit for the year and the reserves
being stated lower by Rs. 37 Crore and read together with other notes thereon,
give the information required by the Companies Act, 1956, in the manner so
required and also give a true and fair view, in conformity with the accounting
principles generally accepted in India;

Nature of Provisions

Warranties

Sales Tax / VAT

Excise Duty

2008-09

2007-08

2008-09

2007-08

2008-09

2007-08

Carrying amount at thebeginning of the year

26.09

15.06

18.14

7.00

1.82

Nature
of Provisions

Liquidated damages

Other Litigation Claims

Total

Carrying
amount at the

2008-09

2007-08

2008-09

2007-08

2008-09

2007-08

beginning
of the year

11.88

9.09

–

57.93

31.58

Additional provision

made
during the year

–

2.79

1.98

–

27.98

32.27

Amounts used

during
the year

–

2.49

1.77

Unused amount reversed

during
the year

–

9.18

4.15

Carrying amount at the

end of
the year

11.88

1.98

–

74.24

57.93

11. Disclosures for nature of and movement in provisions as per AS 29
Crompton Greaves Ltd — (31-3-2009)
From Notes to Accounts
(a)Movement in provisions:

(b)Nature of Provisions:

Product Warranties: The Company gives warran-ties on certain products and services in the nature of repairs / replacement, which fail to perform satisfactorily during the warranty period. Provi-sion made represents the amount of the expected cost of meeting such obligation on account of rec-tification / replacement. The timing of outflows is expected to be within a period of two years.

Provision for sales tax represents sales tax liability on account of non-collection of declaration forms and other legal matters which are in appeal under the Act / Rules.

Provision for excise duty represents the differen-tial duty liability that is expected to materialise in respect of matters in appeal.

Provision for liquidated damages has been made on contracts, for which delivery dates are exceeded and computed in a reasonable and prudent manner.

Provision for litigation related obligations represents liabilities that are expected to materialise in respect of matters in appeal.

(c)Disclosure in respect of contingent liabilities:
Refer Schedule 19.

12. Forfeiture of advance received against sale of immovable property not recognised in the Profit and Loss account
Crompton Greaves Ltd— (31-3-2009)

From Notes to Accounts

Other liabilities include Rs. 8.30 Crore received as ad-vance against sale of immovable property of the Com-pany. As per agreements with buyers, the Company is entitled to forfeit the said amounts, if the buyers do not comply with the conditions of sale within the stipulated time. Since, the buyers have failed to comply with the conditions and hence, the Company has forfeited these amounts received in accordance with the terms of the agreements. The buyers have filed suits in the Courts for recovery of the advances paid by them. The Com-pany contends that as per the force majeure clause of the agreements is not required to be refunded. Pending disposal of the cases by the Courts, the Company, as a measure of prudence, has not recognised the said

amount in the profit and loss account.

BCAJ Admin

Miscellaneous

From Published Accounts

2. Deferral of Income of
Restructuring Fees received

Tech Mahindra Limited —
(31-3-2010)

From Notes to Accounts :

During the year, a customer
has restructured long-term contracts with the Company from April 1, 2009, which
involves changes in commercial, including rate reduction, and other agreed
contract terms. As per the amended contracts the customer has paid the Company
restructuring fees of Rs.9,682 million. The services under the restructured
contracts would continue to be rendered over the life of the contract. The
restructuring fees received would be amortised and recognised as revenue over
the term of the contract on a straight-line basis. An amount of Rs.2,005 million
has been recognised as revenue for the year from April 1, 2009 to March 31, 2010
and the balance amount of Rs.7,677 million has been carried forward and
disclosed as deferred revenue in the Balance Sheet.

3. Non availability of
financial statements of step-down associate for consolidation purposes

Tech Mahindra Limited —
(31-3-2010)

From Notes to Accounts to
Consolidated Financial Statements :

TML through Venturbay
Consultants Private Limited, a wholly-owned subsidiary has acquired stake in
Satyam Computer Services Limited (SCSL), on May 5, 2009 through preferential
allotment, representing 31% of equity share capital. Thereafter the share
holding has further increased to 42.70% by July 10, 2009 through a combination
of open offer and a further preferential allotment. As per the share
subscription agreement dated April 13, 2009, these investments have a lock-in
period of three years from the date of allotment. As a result of this investment
SCSL has become an associate of TML as per Accounting Standard 23 ‘Accounting
for Investments in Associates in Consolidated Financial Statements’. Venturbay
Consultants Private Ltd. holds 42.67% of the shareholding of SCSL as of March
31, 2010.

SCSL is in the process of
restating its financial statements. The Honourable CLB vide its order dated
April 16, 2009 has given extension of time till December 31, 2009 to SCSL for
filing of the documents with various statutory authorities already due or to
become due, the same is further extended till June 30, 2010 vide the Honourable
CLB order dated October 15, 2009.

In the absence of audited
financials the amount of goodwill/capital reserve in the investment value as at
March 31, 2010 could not be computed and the investment in SCSL as at March 31,
2010 has been accounted for at cost. TML’s share of profit/loss in SCSL and its
subsidiaries for the year ended March 31, 2010 in accordance with Accounting
Standard 23 ‘Accounting for investments in associates in consolidated financial
statements’ has not been accounted in the consolidated financial statements of
the Company.

From Auditors’ Report :

4. As stated in Note 23 to
the consolidated financial statements, Venturbay Consultants Private Limited
(100% subsidiary of the Company) has acquired 31% stake in Satyam Computer
Services Limited (SCSL) on 5th May 2009 and subsequently increased the stake to
42.70% on 10th July 2009. SCSL is in the process of restating its financial
statements. The Honorable CLB vide its order dated October 15, 2009 has given
extension of time till June 30, 2010 to SCSL for filing of the documents with
various statutory authorities already due or to become due. We are informed that
the Accounts of SCSL are not available for consolidation and in the absence of
financial statement of SCSL we are unable to comment on the impact of
post-acquisition profit/loss of SCSL on ‘share of profit of associate’,
investment in associates and reserve and surplus in the consolidated financial
statement of the group.

5. . . . . . .

6. Based on our audit and on
consideration of the separate audit reports on individual financial statements
of the Company, its aforesaid subsidiaries and to the best of our information
and according to the explanations given to us, subject to our
observations in Para 4 above, in our opinion, . . . . . .

4. Adoption of Exposure
Draft of AS-10 (revised) for change in the method of accounting of costs on
major repairs and maintenance of its engines.

Kingfisher Airlines Limited
— (31-3-2010)

From Notes to Accounts :

During the year, the Company
has adopted the exposure draft on Accounting Standard-10 (Revised) ‘Tangible
Fixed Assets’ which allows such costs on major repairs and maintenance incurred
to be amortised over the incremental life of the asset. The Company has extended
the same treatment to costs and maintenance for engines pertaining to aircrafts
acquired on operating lease. Earlier, the Company used to charge off the cost of
such repairs and maintenance of its engines to the Profit and Loss Account as
and when incurred. Had the Company not changed its method of accounting, the
loss before and after tax for the year would have been higher by Rs.16,390.25
lacs and Rs.10,945.82 lacs, respectively. This revised accounting policy has
been confirmed by an independent expert and in the opinion of the management,
this accounting treatment has resulted in a fair depiction of the working
results and the state of affairs of the Company.

From Statement of
Significant Accounting Policies :

Fixed assets and Intangible
assets :

Fixed assets and intangible assets are stated at cost of acquisition less accumulated depreciation/ amortisation and impairment losses (if any). Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use and also includes cost of modification and improvements to leased assets.

Borrowing costs relating to acquisition of fixed assets are also included to the extent they relate to the period till such assets are ready to be put to use.

Advances paid towards the acquisition of fixed assets and the cost of fixed assets not ready for intended use as of the balance sheet date are disclosed under capital work-in-progress.

Depreciation:

Depreciation on fixed assets, except non-compete fees, trademarks, design — aircraft interiors, software, leasehold improvements, is provided on a straight-line basis at the rates prescribed under Schedule XIV to the Companies Act, 1956 which are estimated to be the useful life of fixed assets by the management. Additions are depreciated on a pro-rata basis from the date of installation till the date the assets are sold or disposed.

— Non-compete fees are amortised over the period of agreement (i.e., five years).

— Trademarks are amortised over the period of four years.
— Design — Aircraft Interiors are amortised over the period of seven years.
— Software is depreciated over a period of 1-4 years, based on estimated useful life as ascertained by the management.
— Leasehold improvements on operating leases are depreciated over the shorter of the period of the lease and their estimated useful lives.
— Cost of major maintenance and overhaul of the engines are amortised over the period of estimated useful life of the repairs.
— Movable cabins and mobile phones are depreciated over the period of five and two years, respectively, on a straight-line method.

From Auditors’ Report:

…….

Attention is invited to Note 29 of Schedule 21 regarding change in the method of accounting of costs incurred on major repairs and maintenance of engines of aircrafts taken on operating lease during the year aggregating to Rs.20,700.76 lacs which have been included under fixed assets and amortised over the estimated useful life of the repairs. In our opinion, the revised accounting treatment is not in accordance with current accounting standards.

From Directors’ Report:
……

As regards the observations in para 6 of the Auditors’ Report, your Company has adopted the Exposure draft on Accounting Standard-10 (Revised) ‘Tangible Fixed Assets’, which allows such costs on major repairs and maintenance incurred to be amortised over the incremental life of the asset. Your Company has extended the same treatment to costs incurred on major repairs and maintenance for engines pertaining to aircrafts acquired on operating lease.

BCAJ Admin

Miscellaneous

From Published Accounts

Section B: Miscellaneous

4 Qualification regarding non-provision of disputed statutory
liabilities

Sterlite Technologies Ltd. — (31-3-2010)

From Notes to Accounts :

The Company had in an earlier year received an order of
CESTAT upholding the demand of Rs.188 crores (including penalties and excluding
interest) (Rs.188 crores as at March 31, 2009) in the pending excise/custom
matters on various grounds. The Company’s appeal with the Honourable High Court
of Mumbai was rejected on the grounds of jurisdiction. The Company preferred an
appeal with the Honourable Supreme Court of India against the order of CESTAT,
which has been admitted. The Company has reevaluated the case on admission of
appeal by the Supreme Court. Based on their appraisal of the matter, the legal
advisors/consultants are of the view that under the most likely event, the
provision of Rs.5 crores made by the Company against the above demand is
adequate. The management is confident of a favourable order and hence no further
provision is considered against the said demand.

From Auditors’ Report :

As stated in Note No. 8 of Schedule 21, the Company had in an
earlier year received an order of CESTAT upholding a demand of Rs.188 crores
(including penalties and excluding interest) (Rs.188 crores as at March 31,
2009) in a pending excise/customs matter. The Company’s appeal against this
order with the Supreme Court has been admitted. Based on the current status and
legal advice received, provision for liability as recorded in the accompanying
financial statements is considered adequate by the management. In the event the
decision of the Supreme Court goes against the Company on any of the grounds of
appeal, additional provision against the said demand may be required. Pending
disposal of the matter by the Supreme Court, the amount of excise/customs duty
payable, if any, is currently unascertainable. Our audit report on the financial
statements for the year ended March 31, 2009 was qualified in respect of this
matter.

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
subject to the effect of the matter referred to in paragraph vi above give a
true and fair view in conformity with the accounting principles generally
accepted in India.

5 Provisions made in earlier year towards loss of inventory,
expected higher sales returns and expected reversal of export benefits partly
reversed during the year

Ranbaxy Laboratories Ltd. — (31-12-2009)

From Notes to Accounts :

On 16 September 2008, the Company received two warning
letters and an Import Alert from the United States of America (USA) FDA,
covering 30 generic drugs being manufactured at its Paonta Sahib and Dewas
manufacturing facilities in India. The issue raised in the warning letters
relate to ‘Current Good Manufacturing Practice’ being followed at the said
plants and does not in any way raise questions on product’s quality, safety or
effectiveness.

In 2008, consequent to Import Alert, the Company was not able
to sell the products covered under Import Alert, and accordingly, it had
recorded a

provision of Rs.2,631.11 million in that year, towards inventory, expected sales
return and related exports benefits.

On 25 February 2009, the Company received a letter from the
US FDA indicating that the Agency had invoked its Application Integrity Policy
(‘AIP’) against the Paonta Sahib facility (the ‘facility’). The management of
the Company believes that there was no falsification of data generated at the
facility and also believes that there is no indication of a pattern and practice
of submitting untrue statements of

material facts and there was no other improper conduct. Accordingly, the
Company, based on opinion from its legal council, believes that there is no

incremental present obligation existing at the balance sheet date on account of
these notices.

The Company continues to fully cooperate with the concerned
authorities for their final clearance, pending which there would be delays for
new

product approvals and sale of existing products in the United States of America.
During the current year, the Company has performed a re-assessment of the amount
of provisions created in 2008 and reversed a provision of Rs.937.81 million
which is included in unclaimed balances/excess provisions written back, which in
view of the Company is no longer required now.

In the year 2008, the Department of Justice (DOJ), USA had
filed certain charges against the Company citing possible issues with the data
submitted by the Company, in support of product filing. The Company continues to
work diligently with the concerned authorities towards resolution of the issue.

From Auditors’ Report :

Without qualifying our opinion, we draw attention to Note 2
on Schedule 23 of the financial statements. Consequent to the Food and Drug
Administration (FDA) of the United States of America import alerts and the FDA
letter dated 25 February 2009 imposing the Application Integrity Policy, the
Company had recorded provision of Rs.2,631.11 million during the year ended 31
December 2008 towards loss of inventory in hand, expected higher sales returns
and, expected reversal of export benefits. The basis and assumptions used by the
management in calculating these provisions were based on significant judgment
and estimates due to involvement of uncertainty, and actual result could have
been different from the management’s estimate.

6 Non-provision of diminution in Consolidated Financial
Statements (CFS) for fall in value of loan given by Joint Venture company to
ESOP Trust

Godrej Consumer Products Ltd. — (31-3-2010)

From Notes to Accounts to CFS :

Stock options have been granted to eligible
employees of the Joint Venture of the Company under an ESOP scheme instituted
by the Joint Venture company. The equity shares of Godrej Industries Ltd. are
the underlying equity shares for the stock option scheme. The ESOP is
administered by an independent ESOP trust created with IL&FS Trust Company
Limited which acquires by subscription/purchase or otherwise, the shares of
Godrej Industries Ltd. equivalent to the number of options proposed to be granted.
The Joint Venture Company has given a loan of Rs.5,940.00 lac to the ESOP trust
to finance the purchase of such equity shares. As at March 31, 2010, the market
value of the equity shares of Godrej Industries Ltd. are lower by Rs.2,239.69
lac as compared to the cost of acquisition of these equity shares. The
repayment of the loan granted to the ESOP trust is dependant on the exercise of
the options by the employees and the market price of the underlying shares of
the unexercised options at the end of the exercise period. The fall in the
value of the underlying equity shares is on account of current market
volatility and the loss, if any, can be determined only at the end of the
exercise period. In view of the aforesaid, provision for diminution of
Rs.2,239.69 lac has not been considered necessary in the accounts of the Joint
Venture. The Group’s 40% share in the above diminution amounts to Rs.1097.45
lac.

From Auditor’s Report on CFS :

We draw attention to Note 15(i), Schedule
15 : Notes to Consolidated Accounts, where it has been stated that a Joint
Venture company has given a loan of Rs.5,940.00 lac to its ESOP trust to
finance the purchase of the equity shares of Godrej Industries Ltd., being the
underlying equity shares for the stock option scheme. As at March 31, 2010, the
market value of the equity shares of Godrej Industries Ltd. are lower by
Rs.2,239.69 lac as compared to the cost of acquisition of these equity shares.
The repayment of the loan granted to the ESOP trust is dependant on the
exercise of the options by the employees and the market price of the underlying
shares of the unexercised options at the end of the exercise period. The fall
in the value of the underlying equity shares is on account of current market
volatility and the loss, if any, can be determined only at the end of the
exercise period. In view of the aforesaid, provision for diminution of
Rs.2,239.60 lac has not been considered necessary in the accounts of the Joint
Venture. The Group’s 49% share in the above diminution amounts to Rs.1,097.45
lac.

BCAJ Admin

Section B : Miscellaneous

BCAJ Admin

From Published Accounts

COMPILERS’ NOTE

The Companies Act, 2013 prohibits companies from holding their own shares. However, in certain cases, companies hold their own shares as ‘treasury shares’ due to amalgamation schemes approved by Courts / NCLT or under Employee Benefit schemes. Given below are disclosures in ‘Statement of Significant Accounting Policies’ for the year ended 31st March, 2023, by companies for such shares.

ORACLE LTD

Treasury Shares

The Company had created an Employee Benefit Trust (‘EBT’) to provide share-based payment to its employees. The EBT was used as a vehicle for distributing shares to employees under the employee remuneration schemes. The shares held by EBT are treated as treasury shares.

Own equity instruments (treasury shares) are recognised at cost and deducted from equity. Gain or loss is recognised in Other Equity on the sale of the Company’s own equity instruments.

INDIAN OIL CORPORATION LTD (IOCL)

Treasury Shares

Pursuant to the Scheme of Amalgamation, IOC Shares Trust has been set up by IOCL for holding treasury shares in relation to IBP and BRPL mergers. The shares held by IOC Shares Trust are treated as treasury shares.

Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in the Statement of Profit and Loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments.

MARICO LTD

Treasury Shares

The Company has created a “Welfare of Mariconians Trust” (WEOMA) for providing share-based payment to its employees under the STAR scheme. To fund the STAR schemes, the Trust, upon intimation from the Company, carries out secondary market acquisition of the equity shares of the Company. They are equivalent to STARs granted to its employees. The Company provides a loan to the Trust to enable such secondary acquisition. As and when the STARs vest in eligible employees, upon intimation of such details by the Company, the Trust sells the equivalent shares and hands over the net proceeds to the Company in accordance with the Trust Rules framed. The company treats WEOMA as its extension, and shares held by WEOMA are treated as treasury shares.

Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in profit or loss on the purchase or sale of the Company’s own equity instruments. Any difference between the carrying amount and the consideration is recognised in the WEOMA reserve.

UNITED SPIRITS LTD

Equity

Own shares represent shares of the Company and those held in treasury by USL Benefit Trust. Pursuant to orders of the High Court of Karnataka and the High Court of Bombay, shares held in the aforesaid trust have been treated as an investment.

Note below Reserves and Surplus

Treasury Shares

Pursuant to the terms of the composite scheme of arrangement approved by the Honourable High Courts of Karnataka and Bombay, upon amalgamating various companies with United Spirits Ltd, USL Benefit Trust (of which the Company is the sole beneficiary) held 17,295,450 (post-split) shares in the Company (own shares). As per the term of the aforesaid scheme of arrangement, the Company has carried the aggregate value of such shares as per the books of the concerned transferor companies as investment in its standalone financial statements. For consolidated financial statements, such investment has been shown as treasury shares.

BCAJ Admin

From Published Accounts

Section B:

• No provision diminution in value of investment in subsidiary

• Subsidiary has recognised impairment in value of its assets and effect of such provision for impairment given in CFS

Tata Power Ltd (31-3-2012)

From Notes to Accounts (Standalone financial statements)

The Company has a long term investment of Rs. 4,112.08 crore (including advance towards equity) (31st March, 2011 – Rs. 3,172.50 crore) and has extended loans amounting to Rs. 248.88 crore (including interest accrued) (31st March, 2011 Rs. 221.06 crore) to Coastal Gujarat Power Limited (CGPL) a wholly owned subsidiary of the Company which is implementing the 4000 MW Ultra Mega Power Project at Mundra (“Mundra UMPP”).

CGPL has agreed to not charge escalation on 55% of the cost of coal in terms of the 25 year power purchase agreement relating to the Mundra UMPP. As a result of the changes in the fuel prices, CGPL’s management has assessed the recoverability of the carrying amount of the assets under construction at Mundra as of 31st March, 2012 of Rs. 16,366.50 crore and concluded that the cash flows expected to be generated (on completion of construction and commencement of commercial operations) over the useful life of the asset of 40 years, would not be sufficient to recover the carrying amount of such assets and has therefore recorded in CGPL’s books as at 31st March, 2012, a provision for an impairment loss of Rs. 1,800.00 crore.

In estimating the future cash flows, management has, based on externally available information, made certain assumptions relating to the future fuel prices, future revenues, operating parameters and the asset’s useful life which management believes reasonably reflects the future expectation of these items. In view of the estimation uncertainties, the assumptions will be monitored Himanshu V. Kishnadwala Chartered Accountant From published accounts on a periodic basis and adjustments will be made if external conditions relating to the assumptions indicate that such adjustments are appropriate.

The company’s investments in Indonesian coal companies through its wholly owned subsidiaries, Bhira Investments Limited and Khopoli Investments Limited, were made to secure long term coal supply. The management believes that cash inflows (in the nature of profit distribution) from these investments from an economic perspective, provide protection from the risk of price volatility on coal to be used in power generation in CGPL, to the extent not covered by price escalations. In order to provide protection to CGPL and to support its cash flows, the Management has committed to a future restructuring under which the Company will transfer at least 75% of its equity interests in the Indonesian coal companies to CGPL, subject to receipt of regulatory and other necessary approval, which are being pursued and will also evaluate other alternative options.

Having regard to the overall returns expected from the Company’s investments in CGPL, including the proposed future restructuring no provision for diminution in value of long term investment in CGPL is considered necessary as at 31st March, 2012.

From Auditor’s Report

Without qualifying our opinion, we draw attention to the following matters referred to in the Notes forming part of the financial statements:

(i) xxxx

(ii) provision for investment in a subsidiary referred to in Note 32(j), which describes the key source of estimation uncertainty as at 31st March, 2012 relating to the Company’s assessment of the recoverability of carrying amounts of assets including assets under construction that could result in material adjustment to the carrying amount of the long-term investment in the subsidiary.

From Notes to Accounts (Consolidated Financial Statements) Coastal Gujarat Power Limited (CGPL) is implementing the 4000 MW Ultra Mega Power Project at Mundra (“Mundra UMPP”). During the year, CGPL has declared commercial operations for its first Unit of 800 MW and continues the construction activities for the balance 4 unit of 800 MW each at its project site at Mundra

In terms of the 25 year Power Purchase Agreement (PPA), CGPL has agreed to charge no escalation on 55% of the cost of coal. As at 31st March, 2012, CGPL has in pursuance of Accounting Standard 28 (AS 28) –

“Impairment of Assets”, assessed impairment of its Mundra UMPP, having regard to the upward revision in the fuel prices. Based on such assessment, CGPL has accounted an impairment loss of Rs. 1,800 crore in respect of its Mundra UMPP, which has been recognised as an exceptional item-impairment loss in the Statement of Profit and Loss. The recoverable amount of the relevant assets has been determined on the basis of their value in use. The discount rate used in the current period and the previous year in measuring value in use is 10.57% per annum.

In estimating the future cash flows, CGPL’s management has based on externally available information, made certain assumptions relating to the future fuel prices, future revenues, operating parameters and the assets’ useful life, which CGPL’s management believes reasonably reflects the future expectation of these items. However, if these assumptions change consequent to change in future conditions, there could be future adverse/favourable effect on the recoverable amount of the asset. The assumptions will be monitored on periodic basis by CGPL’s management and adjustments will be made, if external conditions relating to the assumptions indicate that such adjustments are appropriate.

Consequent to the impairment loss in respect of Mundra UMPP, certain financial covenants in the loan agreements in respect of loans borrowed for construction of the project have not been met as at 31st March, 2012. No notice has been served by the lenders, declaring the loans taken as immediately due and payable. Meanwhile, CGPL has approached the lenders to seek waiver from the compliance with the financial covenants to the extent that such breach is due to the changes in foreign exchange rates and increases in coal prices and CGPL’s Management expects to receive such waivers. Accordingly, loans aggregating to Rs. 11,162.12 crore are considered to be long-term borrowings (including current maturities of long term borrowings of Rs. 566.57 crore).

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From published accounts

Section B:

Consolidated Financial Statements: Accounting Policy adopted by respective foreign jurisdictions followed and not aligned to accounting policy followed in standalone financial statements

Tata Global Beverages Ltd. (Year ended 31-03-2013)

From Significant Accounting Policies on CFS

Employee Benefits

iii) With regard to overseas subsidiaries and associates, liabilities for retirement benefits are determined as per the regulations and principles followed in the respective countries. Defined benefit obligation of overseas subsidiaries accounted for in the reserves in its financial statements, in compliance with the local generally accepted accounting principles, are recognised in Group’s Reserve and Surplus (Refer Note 41(d)).

From Notes to Accounts on CFS

Post Retirement Employee Benefits

d) The Group has substantial international operations with approximately 65% of its revenues coming from overseas operations. For the purposes of consolidated financial statements, actuarial gains and losses relating to defined benefit pension scheme of overseas subsidiaries has been accounted for in the Reserves instead of the statements of profit and loss, applying the accounting principles of consolidation under Accounting Standard 21 and the policy followed by the overseas subsidiaries and as recognised by the relevant overseas accounting framework. Adoption of the above policy is required to reflect a consistent framework amenable for better inter-firm comparison and to reflect the underlying performance. Overseas actuarial gains/losses principally relate to a defined benefit retirement scheme of an overseas subsidiary which is closed for future accruals. These gains/losses represent increase in the value of future long-term payment obligations due to changes in interest rates and other actuarial assumptions based on the market position as at the year end. The actuarial assumptions are subject to significant fluctuations especially under volatile market conditions. Had the company followed the policy of accounting overseas actuarial gain/ (loss) in the statement of profit and loss, the profit before tax, profit after tax before shares of results of Associate & Minority interest and profit after tax would have been lower by Rs. 4215.20 lakh (Rs. 10215.00 lakh), Rs. 3245.70 lakh (Rs. 8516.00 lakh) and Rs. 2695.23 lakh (Rs. 7071.71 lakh) respectively.

From Auditor’s Report

Emphasis of Matter

As mentioned in Note 41(d) to the financial statements, the overseas subsidiaries of the group have defined benefit schemes relating to which the actuarial losses or gains are allowed to be recognised in the Reserves as per the local generally accepted accounting practices followed in those respective jurisdictions. For the purpose of consolidated financial statements, the holding company management has adopted the accounting policy in respect of actuarial gains or losses for its overseas defined benefit schemes to reflect the applicable accounting framework of the respective jurisdictions and consequently accounted it in the Reserves instead of in the Statement of Profit and Loss. Had the company followed the practice of recognition of actuarial losses on the aforesaid defined benefit plans in the Statement of Profit and Loss as per Accounting Standard (AS 15) on Employee Benefits, the charge to employee benefits expenses would have been higher by Rs. 4215 lakh, the deferred tax credit would have been higher by Rs. 969 lakh, the consolidated profit before taxes and minority interest would have been lower by Rs. 4215 lakh and the profit after taxes after minority interest would have been lower by Rs. 2695 lakh.

Profit recorded on sale/exchange of shares in entities under common control Mawana Sugars Ltd. (18 months ended 30-09-2012)

From Notes to Accounts
A Memorandum of Understanding (MOU) was signed between the Company and Government of Punjab in 1933 for setting up an Industrial Estate in Punjab. Siel Industrial Estate Limited (Siel – IE) was incorporated in an earlier year as a wholly owned subsidiary of the Company for setting up the Industrial Estate. The clear and unencumbered title and possession of the land for the aforesaid Industrial Estate came to Siel – IE in October, 2011 and now Siel – IE holds approximately 455 acres of land at Rajpura, Punjab.

The Company, Siel – IE and Siel Infrastructure and Estate Developers Private Limited (Siel – IED), which was acquired from Usha International Limited, the holding company, and consequently, became a wholly owned subsidiary for the Company during the period, have entered into a Joint Development Agreement for the development of the Industrial Estate.

During the period, the Company has sold 13,475,000 equity shares of Rs.10/- each of Siel – IE to Siel – IED for a consideration aggregating to Rs. 1350.20 million, as determined though an independent valuation of Siel – IE based on the Net Asset Value method wherein the market value of the aforesaid land of 455 acres has been considered for the valuation. The consideration has been received by the Company in the form of 13,501,950 equity shares of Rs. 100/- each fully paid up of Siel – IED. Accordingly, the Company has recognised a profit of Rs. 1215.45 million in the Statement of Profit and Loss as an exceptional item.

From Auditor’s Report

4(b) Note 49 of the financial statements explains the transactions underlying the recognition of profit on transfer of shares of Siel – IE, a wholly owned subsidiary of the Company, to Siel – IED, another wholly owned subsidiary of the Company.

In our opinion, as the amount recorded as profit on sale of shares of Siel – IE to Siel – IED represents surplus arising out of recognition of the fair value of Siel – IE shares exchanged for the additional shares acquired in Siel – IED and since this exchange of shares in Siel – IE for shares in Siel – IED is an exchange of shares in entities under common control without dilution in the Company’s control over Siel – IE even after the non-monetary transfer of shares to Siel – IED, the Loss after tax for the period is understated by Rs. 1215.45 million.

6. Subject to our comments and the effects of the matters discussed in paragraph 4 above, and further to our comments in paragraph 3 and the Annexure referred to in paragraph 5 above, we report that:

….. (not reproduced)

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From published accounts

Section A:

Revision to Financial Statements

Compiler’s Note

The Companies Act, 2013 vide sections 130/131 permits revision of financial statements under the circumstances mentioned in the said sections. The Companies Act, 1956 does not contain similar provisions. However, some companies have resorted to revision of financial statements adopted by the Board of Directors, but before the same were adopted by the shareholders in the Annual General Meeting. Given below is one such instance where the financial statements have been revised for reversing the decision of the Board of Directors for recommendation of dividend. (Readers interested in similar instances can also refer BCAJ February 2013)

Nagarjuna Fertilizers and Chemicals Ltd 31st March 2013

From Notes to Accounts

Revision of Financial Statements

The Board of Directors at their meeting held on 3rd May, 2013 had considered and approved the Audited Financial Statements of the Company comprising of the Balance sheet as on 31st March, 2013, the statement of Profit and Loss and Cash Flow Statement for the year then ended together with significant accounting policies and other explanatory information.

The Directors had recommended a Dividend at a rate of 100% 1.e. Rs. 1/- per share on the fully paid up capital of the Company to be paid in accordance with the Articles of Association of the Company out of the profits of the Company, absorbing a sum of Rs. 5,980.65 lakh, apart from dividend tax of Rs. 1,016.41 lakh.

The recommendation of the Board for payment of Divided was based on Profits available and the expectation of realisation of government subsidy, and market outstanding which ensure the ability of the Company to meet its commitment in respect of Dividend payment and repayment obligations to the Lenders.

Consequent to the approval of the Board of Directors on a review of the financial position of the Company, the Board noted that in view of the non-receipt of subsidy from the Government of India which has accumulated to substantial amounts and the unlikelihood of receipt in the near term having regard to the increasing uncertainty in the economic situation, market realisations not being to the expectations, higher commitments and outlays on account of appreciated value of dollar, there could be a stress on the cash flows as the same would be required for the operations. The Company accordingly may not be able to meet its commitments of payment of dividend which is required to be paid out immediately on approval by the shareholders at the ensuing Annual General Meeting.

In view of the changed circumstances as stated above, the Board has reconsidered the decision to recommend the dividend payment as stated above and resolved to withdraw the recommendation made earlier and accordingly, the Board has resolved to cause revision of the financial statements of the year 2012-2013.

In view of the above decision, financial statements which were considered and approved at the meeting held on 3rd May, 2013 have been revised for reversal of the provisions made for proposed dividend and dividend tax aggregating to Rs. 6,997.06 lakh and consequent reversal of transfer to General Reserve Rs. 850.00 lakh.

From Auditors’ Report

As stated in Note 3, the financial statements for the year ended on March 31, 2013 approved by the Board of Directors and reported by us on May 3, 2013 have been revised to give effect of reversal of provision made for proposed dividend and dividend tax of Rs. 5,980.65 lakh and Rs. 1,016.41 lakhs respectively consequent to the Board’s decision

Your Directors consequent to a review of the financial position of the company, in view of the company facing severe financial stress owing to the non-receipt of subsidy from the Government on India which has accumulated to substantial amounts, market realisations not being to the expectations, higher commitments and outlays on account of appreciated value of dollar, the unlikelihood of the cash flow improving in view of the increasing uncertainty in the economic situation, have re-considered the Audited Annual accounts and Audited Financial Results of the company for the year ended 31st March, 2013.

The Board of Directors after careful re-consideration of the Audited Accounts and having explored all available options have approved the Audited Accounts and decided to withdraw the recommendation for payment of dividend to conserve the funds for the future in view of the present outlook of the Industry.

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From published accounts

Section A: Goodwill adjusted against Securities Premium pursuant to scheme of arrangement approved by High Court

Cairn India Ltd (31-03-2013)

From Notes to Financial Statements

Scheme of arrangement

The shareholders of the Company had in February 2010 approved a Scheme of Arrangement (‘Scheme’) between the Company and four of its wholly owned subsidiaries, Cairn Energy India Pty Ltd (‘CEIPL’), Cairn Energy India West BV (‘CEIW’), Cairn Energy Cambay BV (‘CEC’), Cairn Energy Gujarat BV (‘CEG’), (collectively the ‘transferor companies’), with an Appointed date of 1 January 2010. The Scheme of Arrangement had been approved by the Hon’ble High Court of Madras and Hon’ble High Court of Bombay and was subsequently approved by other relevant regulatory authorities on 18th October 2012. Accordingly, from 1st January 2010, the Indian undertakings of the transferor companies stood transferred to and vested in the Company on a going concern basis.

In accordance with the provisions of the aforesaid Scheme,

i) The Indian undertakings of the transferor companies relating to exploration, development and production of crude, natural gas and related by-products have been transferred to the Company on a going concern basis. The transfer of assets and liabilities representing the Indian undertakings has been effected from the “Appointed date” of 1st January 2010, as defined in the Scheme.

ii) Assets and liabilities transferred from the transferor companies are as under:

Not reproduced here

The above mentioned deferred tax liabilities (net) have been further reduced by Rs. 4,563 lakh on account of application of tax rate as applicable to the Company and fixed assets have been further decreased by Rs. 530 lakh due to alignment of accounting policy (on depreciation) as consistently followed by the Company, and adjustments in respect of these have been recorded in the Statement of profit and loss.

iii) As a consideration for the transfer of the above mentioned assets and liabilities and consequential expected future cash flows from the transferor companies to the Company, the Company has reduced the value of its investment in its direct subsidiary Cairn India Holdings Limited (‘CIHL’) by Rs. 1,495,278 lakh and consequentially a goodwill of Rs. 1,016,703 lakh, after adjusting the net assets taken over of Rs. 478,575 lakh, has been recorded in the books of accounts in accordance with the provisions of Accounting Standard (AS)-10 of the Companies (Accounting Standard) Rules, 2006 (as amended). The reduction in value of investments in CIHL has been considered on the basis of an independent valuation of the future discounted cash flows from CIHL as at 31st December 2009.

iv) Further, in accordance with the Special Resolution passed by the shareholders of the Company u/s. 78 and 100 to 103 of the Companies Act, 1956, which was an integral part of the aforesaid Scheme approved the Courts, the goodwill of Rs. 1,016,703 lakh as mentioned in (iii) above has been adjusted against the securities premium account and as a result both goodwill and securities premium account are stated lower by Rs. 1,016,703 lakh each. This accounting, although different from that prescribed under the Accounting Standards, is in conformity with the accounting principles generally accepted in India, as the same has been approved by the Courts and has no impact on the profit for the year.

v) Since the Scheme received all the requisite approvals in the current year, operations of the Indian undertakings of the transferor companies from 1st January 2010 to 31st March 2012, as detailed below, have been accounted for in the current year’s statement of profit and loss as a separate line item.

Not reproduced here

Further, net cash flows for the period 1st January 2010 to 31st March 2012 pertaining to the transferor companies on account of operating, investing and financing activities aggregating to Rs. 795,008 lakh, Rs. (441,815) lakh and Rs. (4,778) lakh respectively have been included in the current year’s statement of cash flows as a separate line item under the respective heads.

From Independent Auditors’ Report

Emphasis of Matter
Without qualifying our opinion, we draw attention to note no. 26 of the accompanying financial statements, relating to the accounting treatment adopted by the Company pursuant to a Scheme of Arrangement approved by the Honorable High Court of Bombay and by the Honorable High Court of Madras and other relevant regulatory authorities, whereby the Company has adjusted goodwill aggregating to Rs. 1,016,703 lakh, which arose upon implementation of the said scheme, against the securities premium account. This accounting of showing both goodwill and securities premium account lower by Rs. 1,016,703 lakh, although different from that prescribed under the Accounting Standards, is in conformity with the accounting principles generally accepted in India, as the same has been approved by the Courts.

From Directors’ Report

Auditors’ Report
In the accompanying financial statements, the Company has adjusted goodwill against the securities premium account pursuant to the Scheme of Arrangement approved by the Honorable High Court of Bombay and by the Honorable High Court of Madras and other relevant regulatory authorities. This accounting although different from that prescribed under the Accounting Standards, is in conformity with the accounting principles generally accepted in India, and the same has been approved by the Courts. The same has been reported by the Auditors under “Emphasis of Matter” in their report.

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From published accounts

Section B:
Losses on account of Robbery of Plant and Machinery, Factory shed and building etc.

Vikash Metal & Power Ltd (15 months ended 30-06-2012)

From Notes to Financial Statements
As the incident of the Robbery had taken place on 12th April, 2012, depreciation on the item lost was taken till that date and removed from the gross block and accumulated depreciation and booked as Loss Due to Robbery under Extraordinary Item. The Written Down Value as on date of incident was booked as Loss under the Profit & Loss Account. The company has filled the Insurance Claim but as the company predicts the time period will be long to get the claim thus loss was booked to show the clear picture of Financial Statements

Note on inventories:

a) Raw Materials

b) Work in progress

c) Finished goods

d) Stock in trade
(in respect of goods
acquired for trading)
e) Stores & Spares

f) Others (Steel Scrap)

C.Y (Rs.)

–

P.Y (Rs.)

684,043,644

12,556,443

396,346,810

1,916,244

13,746,757

108,972,788

– 1,217,582,686

Note – As the incident of the Robbery had taken place on 12th April, 2012, Inventory item lost was booked as “Loss Due To Robbery” under Exceptional Item. The company has filed the Insurance Claim but as the company predict the time period will be long to get the claim thus loss was booked to show the true and fair view of Financial Statements.

From Auditor’s Report

1. We have audited the Balance sheet of VIKASH METAL & POWER LIMITED as on 30th June, 2012 and also the Profit & Loss Account and the Cash Flow Statement for the period from 01.04.2011 to 30.06.2012, 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 have conducted our audit in accordance with auditing standards generally accepted in India. Those standards required that we plan 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 but restricted to the following:-

Since in the referred period, a major incident took place at the work site of the company. A robbery took place at the works site and major parts of plants has been reported lost and looted thus putting the question on the going concern concept of the company and moreover the company operation was suspended from October, 2011.

The management of the company has explained to us that in the said robbery, many important papers were found missing and the company is trying to recreate all the missing papers.

Further, the management has explained that during the said period the company has loss to tune of Rs. 16,064.84 lakh which has eroded the company capital and the net worth becomes negative and still the liabilities on the company are huge. The company is indebted to bankers; statutory liabilities are also here and not being paid up from more than six months and outstanding liabilities to many trade payables which is again a point of concern.

4. Further to our comments in the annexure referred to in paragraph 3 above, we report that:

a) The management could not provide us all the information and documents due to papers destroyed in robbery as explained by the management.

b) Limitation of Scope, In our opinion, proper books of account, are maintained as required by law, and kept by the Company so far as appears from our examination of those books kept at the company’s office, but we are unable to form any opinion on factory accounts as we were not in a position to examine the books kept at factory due to its destruction during robbery.

c) The management has not ascertained the impairment loss, if any, required to be provided form in accordance with the requirement of mandatory Accounting Standard-28 “Impairment of Assets” issued by the Institute of Chartered Accountants of India. In view of it involving judgment of the management, we are unable, to quantify the same;

d) As explained by the management, no actuary valuation for gratuity has been made by the actuarial as no employees was there as on 30th June, 2012.

e) The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of accounts maintained.

f) In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in s/s. (3C) of Section 211 of the Companies’ Act, 1956;

g) On the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors of the Company is disqualified as on 30th June, 2012 from being appointed as a director in terms of clause (g) of s/s. (1) of Section 274 of the Companies Act, 1956;

h) In our opinion and to the best of our information and according to the explanation given to us, the said statement of accounts, read with the Accounting Policies & Notes thereon, 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 principle generally accepted in India:

1) in the case of the Balance Sheet, of the state of affairs as on 30th June, 2012,

2) in the case of the Profit and Loss Account, of the Company for the period from 01-04-2011 to 30-06-2012, and

3) in the case of the Cash Flow Statement, of the cash flows of the Company for the period from 01-04-2011 to 30-06-2012.

BCAJ Admin

From Published Accounts

Section B: Disclosure on Financial Information in Management Discussion and Analysis

Compiler’s Note
Management Discussion and Analysis (MD&A) is a very important element of an annual report. Most companies as part of MD&A give adequate disclosures on the company’s overall performance, future prospects, SWOT analysis, etc. However, very few companies give a detailed item-wise analysis of the financial performance in a easily readable language. Given below is an extract the disclosure on various items of the Balance Sheet given in the Financial Condition section MD&A of Infosys Ltd for 31st March 2013. The full disclosures are available in the MD&A section of the annual report for 2012-13.

Infosys Ltd (Year ended 31-03-2013)

Financial Condition

Sources of Funds

1. Share Capital

At present, we have only one class of share – equity shares of par value Rs. 5/- each. Our authorized share capital is Rs. 300 crore, divided into 60 crore equity shares of Rs. 5/- each. The issued, subscribed and paid up capital stood at Rs. 287 crore as at 31st March, 2013 (same as the previous year).

During the year, employees exercised 6,165 equity shares issued under the 1999 Stock Option Plan. Consequently, the issued, subscribed and outstanding shares increased by 6,165. The details of options granted, outstanding and vested as at 31st March, 2013, are provided in the Notes to the consolidated financial statements section in the Annual Reports.

2. Reserves and Surplus

Capital Reserve
The balance as at 31st March, 2013 amounted to Rs. 54 crore, same as the previous year.

Securities Premium

The addition to the securities premium account of Rs. 1 crore during the year is on account of premium received on issue of 6,165 equity shares, on exercise of options under the 1999 Stock Option Plan.

General Reserves
An amount of Rs. 911 crore representing 0 of the net profit for the year ended 31st March, 2013 (previous year Rs. 847 crore) was transferred to the general reserves account from the Statement of Profit and Loss.

Statement of Profit and Loss
The balance retained in the Statement of Profit and Loss as at 31st March, 2013 is Rs. 25,383 crore, after providing the interim and final dividend for the year of Rs. 862 crore and Rs. 1,550 crore, respectively; and dividend tax of Rs. 403 crore thereon. He total amount of profits appropriated to dividend including dividend tax was Rs. 2,815 crore, as compared to Rs. 3,137 crore in the previous year.

On 7th October, 2011, the Board of Directors of Infosys Consulting Inc., approved the termination and winding down of the entity, entered into a scheme of amalgamation and initiated its merger with Infosys Limited. The termination of Infosys Consulting Inc., became effective on 12th January, 2012. Consequent to this, there was a reduction of Rs. 84 crore in the Statement of Profit and Loss of the previous year.

Shareholders Funds
The total shareholders funds increased to Rs. 36,059 crore as at 31st March, 2013 from Rs. 29,757 crore as at 31st March, 2012.

The book value per share increased to Rs. 627.95 as at 31st March, 213 compared to Rs. 518.21 as at 31st March, 2012.

Application of Funds

3. Fixed Assets

Capital Expenditure
We incurred a capital expenditure of Rs. 1,847 crore (Rs. 1,296 crore in the previous year) comprising additions to gross block of Rs. 1,422 crore for the year ended 31st March, 2013. The entire capital expenditure was funded out of internal accruals.

Additions to gross block
During the year, we capitalised Rs. 1,422 crore to our gross block comprising Rs. 640 crore for investment in computer equipment, Rs. 30 crore on Intellectual Property Rights, Rs. 1 crore on vehicles and the balance of Rs. 751 crore on infrastructure investments. We invested Rs. 145 crore to acquire 119.35 acres of land in Bangalore, Mysore, Thiruvananthapuram and Hubli. The expenditure on buildings, plant and machinery, office equipments and furniture and fixtures, were Rs. 326 crore, Rs. 114 crore, Rs. 58 crore and Rs. 108 crore, respectively for the year.

During the previous year, we capitalised Rs. 807 crore to our gross block, including investment in computer equipment of Rs. 245 crore (includes computer equipment having gross book value of Rs. 10 crore transferred from Infosys Consulting Inc. on its termination), Rs. 17 crore on Intellectual Property Rights, Rs. 543 crore on infrastructure investments and Rs. 2 crore on vehicles. We invested Rs. 158 crore to acquire 371 acres of land in Bangalore, Bhubhaneshwar, Mangalore, Nagpur and Indore.

Deductions to gross block
During the year, we deducted Rs. 521 crore (net book value of Rs. Nil) from the gross block on retirement of assets and Rs. 14 crore on disposal of various assets. During the previous year, we retired/ transferred various assets with a gross block of Rs. 559 crore (net book value of Rs. Nil) and Rs. 9 crore on disposal of various assets.

Capital expenditure commitments
We have a capital expenditure commitment of Rs. 1,139 crore, as at 31st March, 2013 as compared to Rs. 949 crore as at 31st March, 2012.

4. Investments

We made several strategic investments during the past years aimed at procuring business benefits and operational efficiency.

Majority-owned subsidiary
Infosys BPO Limited as a majority-owned and controlled subsidiary on 3rd April, 2002. To provide BPM services. Infosys BPO seeks to leverage the benefits of service delivery globalisation, process redesign and technology to drive efficiency and cost effectiveness in customer business processes.

On 4th January, 2012, Infosys BPO acquired 100% voting interest in Portland Group Pty. Limited, a leading strategic sourcing and category management service provider based in Sydney, Australia for a cash consideration of Rs. 200 crore.

Lodestone Holding AG
On 22nd October, 2012, Infosys acquired 100% of outstanding share capital of Lodestone Holding AG. A global management consultancy firm headquartered in in Zurich, Switzerland. The acquisition was executed through a share purchase agreement for an upfront cash consideration of Rs. 1,187 crore and a deferred consideration of Rs. 608 crore.

Wholly-owned subsidiaries
During the year, we invested in our subsidiaries, for the purpose of operations and expansion, as follows:

Please refer statement pursuant to Section 212 of the Companies Act. 1956 for the summary financial performance of our subsidiaries. The audited financial statements and related information of subsidiaries will be available on our website, www. infosys.com.

During the year the assets and liabilities of Infosys Australia were transferred to the company.

5. Deferred tax assets / liabilities

We recorded deferred tax assets of Rs. 640 crore as at 31st March, 2013 (Rs. 459 crore as at 31st March, 2012) and deferred tax liability of Rs. 318 crore as at 31st March, 2013 (Rs. 270 crore as at 31st March, 2012).

Deferred tax assets primarily comprises of deferred taxes on fixed assets, unavailed leave, trade receivables, and other provisions which are not tax deductible in the current year.

The movement in deferred tax liabilities is on account of the increase in provision for branch profit tax for our overseas branches.

We assess the likelihood that our deferred tax assets will be recovered from future taxable income. We believe it is more likely than not that we will realize the benefits of these deductible differences.

6. Trade receivables

Trade receivables amounted to Rs. 6,365 crore (net of provision for doubtful debts amounting to Rs. 85 crore) as at 31st March, 2013, compared to Rs. 5,404 crore (net of provision for doubtful debts amounting to Rs. 80 crore) as at 31st March, 2012. These debts are considered good and realisable. Debtors are at 17.3% of revenues for the year ended 31st March, 2013, same as the previous year, representing a Days Sales Outstanding of 63 days, same as in the previous year. The age profile of debtors is as follows:

Provisions are generally made of all debtors’ outstanding for more than 180 days as also for others, depending on the Management’s perception of the risk. The need for provision is assessed based on various factors, including collectability of specific dues, risk perceptions of the industry in which the customer operates and general economic factors that could affect the customer’s ability to settle. The movement in provisions for doubtful debts during the year is as follows:

Provision for bad and doubtful debts as a percentage of revenue is 0.08% for the year ended 31st March, 2013, as against 0.19% for the year ended 31st March, 2012. The unbilled revenues as at 31st March, 2013 and 31st March, 2012, amounted to Rs. 2,217 crore and Rs. 1,766 crore, respectively.

7. Cash and cash equivalents

The bank balances in India include both rupee accounts and foreign currency accounts. The bank balances in overseas current accounts are maintained to meet the expenditure of the overseas branches and project related expenditure overseas.

Deposits with financial institutions and corporate bodies represent surplus money deployed in the form of short- term deposits.

Our treasury policy calls for investing cash surplus in a combination of instruments. (a) Deposits in highly-rated scheduled banks and financial institutions (b) Debt mutual funds (c) Tax free bonds in highly-rated and Government-backed entities (d) Certificate of deposits, Commercial paper or any other similar instrument issued by highly-rated banks and financial institutions.

8. Loans and Advances

An amount of Rs. 724 crore (Rs. 461 crore as at 31st March, 2012) deposited with the Life Insurance Corporation of India to settle leave obligations as and when they arise during the normal course of business. The amount is considered as restricted cash and hence not considered as ‘cash and cash equivalents’.

Loans to subsidiaries comprised of Rs. 116 crore to Lodestone Holding AG and Rs. 68 crore to Infosys Public Services Inc.

The withholding and other taxes receivable represents transaction taxes paid in various domestic and overseas jurisdictions which are recoverable.

Unbilled revenues consist primarily of costs and earnings in excess of billings to the client on fixed-price, fixed time-frame, and time-and-material contracts.

Capital advances represent amount paid in advance on capital expenditure.

The details of advance income tax are as follows:

Our loan schemes provide for personal loans and salary advances that are provided primarily to employees in India who are not executive officers or directors. The loans and advances are recoverable in 24 months.

Electricity and other deposits represent electricity deposits, telephone deposits, insurance deposits and advances of similar nature. Rent deposits are for buildings taken on lease by us for our software development centers and marketing offices located across the world.

9. Liabilities

Liabilities for accrued salaries and benefits include the provision for bonus and incentive payable to staff. Provision for expenses represent amounts accrued for other operational expenses. Retention monies represent monies withheld on contractor payments pending final acceptance of their work. Withholding and other taxes payable represent local taxes payable in various countries in which we operate and the same will be paid in due course.

Effective 1st July, 2007, we revised the employee death benefits provided under the gratuity plan, and included all eligible employees under consolidated term insurance cover. Accordingly, the obligations under gratuity plan reduced by Rs. 37 crore, which is being amortised on straight line basis to the Statement of Profit and Loss over 10 years representing the average future service period of employees. An amount of Rs. 3 crore was amortised during the year. The unamortised balance as at 31st March, 2013 was Rs. 15 crore.

Payable for acquisition of business represents deferred consideration, payable to shareholders of Lodestone at the end of three years of acqui-sition, contingent upon employment for a period of three years and is recognised proportionately.

Advances received from clients represent monies received for the delivery of future services. Unearned revenue consists primarily of advanced client billing on fixed-price, and fixed-time frame contracts for which related costs were not yet incurred. Unclaimed dividends represent dividends paid, but not encashed by shareholders, and are represented by bank balance of an equivalent amount.

10. Provisions

Proposed dividend includes the final dividend recommended. On approval by our shareholders, this will be paid after the Annual General Meeting.

Provision for taxation represent estimated income tax liabilities, both in India and overseas. Provisions for taxations as at 31st March, 2013 is Rs. 1,274 crore compared to Rs. 967 crore as at 31st March, 2012.

Provisions for unavailed leave is towards our liability for leave encashment valued on an actuarial basis. The provisions for post-sales-client support and warranties is towards likely expenses for providing post-sales-client support on fixed-price contracts.

BCAJ Admin

From published accounts

Section B:
Gain on sale of Investments in subsidiaries considered in books of account in Consolidated Financial Statements

Adani Enterprises Ltd (CFS) (31-3-2013)

From Notes to Financial Statements
Exceptional Items

(a)
The Company has disposed off its investment in a wholly owned
subsidiary, ‘Adani Infrastructure and Developers Private Limited
(‘AIDPL’) representing the Real Estate Business, to its promoters at a
valuation done by an independent valuer. The Company has accounted a
gain of Rs. 453.63 crore against the disposal of the above said
Investment.

(b) During the financial year 2012-13, during the
year, Adani Ports & Special Economic Zone Limited (APSEZ) a
subsidiary of the Company had initiated and recorded the divestment of
its entire equity holding in Adani Abbot Point Terminal Holdings Pty
Limited (AAPTHPL) and entire Redeemable Preference Shares holding in
Mudra Port Pty Ltd (MPPL) representing Australia Abbot Point operations
to promoter Company, Abbot Point Port Holdings Pte Ltd, Singapore for
consideration of AUD 235.71 million. The Company entered Share Purchase
Agreement (‘SPA’) on 30th March, 2013 to sell its holdings in AAPTHPL
and MPPL. In terms of the SPA the conditionality as regards regulatory
and lenders approvals was obtained except in respect of approval from
one of the lenders who have given specific line of credit to MPPL, which
the APSEZ is following up with lender and is confident of obtaining the
same.

The Company, based on the legal counsel opinion,
concluded that on the date of signing of SPA, AAPTHPL and MPPL cease to
be subsidiaries of the Company w.e.f. 31st March, 2013 and accordingly
not been consolidated as per provisions of Accounting Standard 21
“Consolidated Financial Statements” notified in Companies (Accounting
Standards), Rules, 2006. Adani Ports & Special Economic Zone Limited
(APSEZ) has accounted gain of Rs. 419.57 crore against disposal of
investment.

From Auditors Report
We draw attention to
Note 41(b) to the consolidated financial statements recording sale of
investments in Australia step down subsidiaries, on the basis indicated
in the note, whereby gain of Rs. 419.57 crore have been recognised in
the books. Our opinion is not qualified in respect of this matter.

Reliance placed on judgement of the management on various matters

Lok Housing & Constructions Ltd (31-3-2013) From Notes to Financial Statements Accounting Policies Revenue Recognition

a)
The Company in respect of its construction activity follows substantial
completed contract method of accounting. Under this method profit in
respect of units sold is recognised only when work in respect of the
relevant units is substantially completed which is determined on
technical estimates as certified by management. The auditors have relied
upon such management certificate.

b) Revenue recognition in
respect of transactions for sale of properties/development rights is
done on the date on the date of execution of agreement and the same are
subject to conclusion of formalities such as conveyance and compliance
of applicable legal formalities.

c) Revenue recognition in
respect of constructed premises is on the basis of booking done by the
prospective customers and the same is subject to execution of registered
sale deed under the Maharashtra Ownership Flats Act (MOFA) and payment
of consideration.

d) Sales in respect of a particular project are accounted net of cancellation during the same accounting period.

e)
The completion status of a project at the end of each accounting
period, the estimated cost for completion of the construction and
development work relating to the units sold, which are considered for
profit are estimated on the basis of technical evaluation and are so
certified by the management. The auditors have relied upon such
management certificate.

Other Notes (extracts)

a) The
Company is in the process of restructuring and renegotiating its
outstanding unsecured loans. Consequently provision for interest due on
the outstanding unsecured loans has been made on simple interest basis
@18% p.a. Interest is not provided on the original/ last contracted rate
and also no provision for interest is made on the unpaid interest
amount. On account payments made by the Company to its lenders, this
practice results in reduction in the provision.

b) The Company
has entered into debt resettlement with Ranbaxy Laboratories Ltd.
However the Company has failed in its re-structured debt obligations to
Ranbaxy Laboratories Ltd. At the time of resettlement the Company has
received benefit of interest waiver amounting to Rs. 21.77 lakh which
was credited to Work in Progress account. In the opinion of the Company
the revised liabilities as per the settlement with Ranbaxy Laboratories
Ltd is valid and subsisting, because the Company has not received any
legal notice from the concerned Lender for termination of the
settlement. The liability in respect of Ranbaxy Laboratories Ltd., as
reflected in the Books of Accounts of the Company is Rs. 70.77 lakh
(previous year Rs. 60 lakh).

c) In case of disputed/defaulted
loans taken by the Company, provision for interest due on the
outstanding secured loans has been made at the last contractual rate of
interest. No provision is being made for interest on unpaid interest as
also for any penal interest and other charges.

d) The balances
in overdue secured and unsecured loans are subject to confirmation. The
management has been advised that for tactical reasons not to obtain
confirmations from its lenders as the same would impact the ongoing
negotiations of the Company. The Company has also requested the auditors
not to directly write to the lenders to obtain confirmations. The
auditors have relied on the judgement of the management in this regard.

e)
The balances in trade payables, secured and unsecured loans are subject
to confirmation. During the year under review balances in the accounts
of the several trade payables and other current liabilities have been
written off, as in the opinion of the management the same are no longer
payable. The auditors have relied on the judgment of the management in
this regard.

f) The balances in receivables are subject to
confirmation. The management is of the opinion that all the receivables
reflected in the financial statements are fully realisable and that
there is no impairment in them. During the year under review balances in
the accounts of the several receivables have been written off because
in the opinion of the management the same are no longer receivable. The
auditors have relied on the judgement of the management in this regard.

levitra

BCAJ Admin

From published accounts

Compiler’s Note

Companies incur expenditure on construction/development of certain assets to facilitate construction of a project or to subsequently facilitate its operations. Such assets are referred to as ‘Enabling Assets’. The Expert Advisory Committee of ICAI has in an opinion published in January 2011 issue of ‘The Chartered Accountant’ opined that expenditure on such assets cannot be treated as capital expenditure.

ICAI has recently issued an Exposure Draft of Limited Revision to AS-10 ‘Accounting for Fixed Assets’ which when made applicable may have an impact on treatment of such expenditure.

Given below are disclosures of accounting policies followed by some companies in respect of expenditure on such ‘Enabling Assets’.

levitra

BCAJ Admin

From published accounts

Section B:
• Reclassification of loans between current and non-current
• Accounting of interest on certain borrowings on cash basis as per Court order
• Adoption of hedge accounting principles in respect of commodity derivative contracts
• Exceptional Items

Essar Oil Ltd (31-3-2013)

From Notes to Financial Statements

Notes below Schedule 7: Long Term Borrowings: The classification of loans between current liabilities and non-current liabilities continues based on repayment schedule under respective agreements as no loans have been recalled due to noncompliance of conditions under any of the loan agreements. The non-compliance of conditions under the loan agreements are primarily arising out of the order of the Hon’ble Supreme Court dated 17th January, 2012 (refer note 36). This is in accordance with the guidance issued by the Institute of Chartered Accountants of India on Revised Schedule VI to the Companies Act, 1956.

Repayment and other terms:

a) Secured redeemable non–convertible debentures (‘NCDs’) of Rs. 105/- each consists of:

13,868,050 (Previous year 16,918.250) – 12.50% NCDs of Rs. 105/- each amounting to Rs. 145.61 crore (Previous year Rs. 177.64 crore).

7,00,000 (Previous year 7,00,000) – 12.50% NCDs, of Rs. 100/- each on private placement basis partly paid up at Rs. 93.86 per debenture amounting to Rs. 6.57 crore (Previous year Rs. 6.57 crore).

During the year, the Company refinanced its Rupee borrowings with one of its existing lenders into an External Commercial Borrowing (ECB). This resulted in conversion of debentures having face value of Rs. 32.03 crore also into the ECD loan. Further, as per the common Loan Agreement (‘the CLA’) entered with lenders post exit from the Corporate Debt Restructuring (CDR) Scheme, the Company has agreed to pay interest on a monthly/quarterly basis, on debentures held by the erstwhile CDR lenders at a floating rate linked to the base rate of the respective bank prevailing on 8th August, 2012, with effect from 1st January, 2012, resulting in the interest rates ranging from 12.32% p.a. to 12.75% p.a. The Company is also in the process of sending offer letters to the remaining debentures holders (i.e., other than lenders) given them, inter alia, an option for prepayment of debentures along with accumulated interest in full. The principal amount of debentures is otherwise payable from December 2014 to June 2018 and accumulated interest from December 2014 to March 2027, with an option to prepay certain portion of interest at a discounted rate. As an alternative, these debenture holders can opt for revising the terms and conditions applicable to debentures in line with the terms contained in the CLA.

The Hon’ble High Court of Gujarat has, in response to the Company’s petition, ruled vide its orders dated 4th August, 2006 and 11th August, 2006 that the interest on certain categories of debentures should be accounted on cash basis. In accordance with the said petition/ order, funded/accrued interest liabilities amounting to Rs. 417.72 crore (Previous year Rs. 428.24 crore) as at 31st March, 2013 have not been accounted for. This amount carries interest rate ranging from fixed rate of 5% to a floating rate of 12.75% and is repayable from December 2014 to March 2027.

c) During the year, the Company exited Corporate Debt Restructuring Scheme resulting in termination of the MRA dated 17th December, 2004 and entered into a CLA dated 25th March, 2013 with the lenders for the loan facilities which were hitherto being governed by the MRA. The MRA gave an option, subject to consent of lenders, to the Company to prepay certain funded interest loans (the FS loans) of Rs. 2,471.63 crore on or before 24th April, 2012 without interest. The FS loan has not been prepaid before 24th April, 2012 and is now governed by the CLA.

In order to give accounting effect to reflect substance of the transaction, the FS loan was, since inception, measured by the Company in accordance with the principles of IAS 39, Financial Instruments, Recognition and Measurement, in the absence of specific guidance in Indian GAAP to cover the specific situation. In continuance of the above said principle and applying the principle of Accounting Standard AS 30, Financial Instruments, Recognition and Measurement, the FS loan has, upon signing of the CLA, been remeasured since inception, considering present value of cash flows inclusive of interest. Accordingly, the gross liability of Rs. 3,163.84 crore of the FS loans and funded interest thereon as at 31st March, 2013 (comprising of Rs. 2,126.36 crore to the banks and Rs. 1,037.48 crore to the financial institutions) have been measured at Rs. 1,833.84 crore (comprising of Rs. 1,234.34 crore to the banks and Rs. 599.50 crore to the financial institutions). Consequently, borrowing cost of Rs. 536.71 crore attributable to construction of the Refinery Project based on such remeasurement has been capitalised as part of cost of Fixed Assets and balance borrowing cost of Rs. 110.94 crore has been recognised in the statement of profit and loss.

The FS Loans of Rs. 2,471.63 crore is repayable in various installments from March 2021 to March 2026 and the Funded Interest thereon as at 31st March, 2013 amounting to Rs. 692.19 crore is repayable in 40 equal quarterly installments beginning 30th June, 2013.

A funded interest loan of Rs. 206.88 crore (previous year Rs. 206.88 crore) is payable in a single bullet payment in 2031 and is continued to be measured in accordance with the aforementioned principles at Rs. 34.95 crore (Previous year Rs. 31.67 crore).

Note below ‘Other Current / Non Current Assets’

Rs. 2,177.82 crore receivable from Essar House Limited (EHL) being the amount paid under the defeasment agreement of the sales tax liability covered by the scheme (refer note 36). The Company has agreed to recover these dues in eight equal quarterly installments along with interest, coinciding with the installment facility made available by the Hon’ble Supreme Court to the Company for repayment of the Gujarat Sales Tax dues. To secure this amount further, the Company is in the process of obtaining an additional guarantee from the parent company of EHL.

Note below ‘Revenue from Operations’

During the previous year, the Company deferred payment of sales tax/VAT liability amounting to Rs. 1,507.01 crore for the period 1st April, 2011 to 31st December, 2011 and defeased the same to a related party at its present value amounting to Rs. 528.42 crore. Sales tax/VAT amounting to Rs. 1,387.36 crore shown above as deduction from ‘Revenue from operations (gross)’ includes the defeased value of sales tax/Vat liability of Rs. 582.42 crore as per the defeasance agreement pursuant to which the assignee has undertaken to discharge the sales tax/VAT liability on the due dates. Pursuant to the Supreme Court Order dated 17th January, 2012, the Company subsequently reversed the entire amount of income recognised as an exceptional item (refer note 36).

Note on Hedge Accounting

During the year, the Company adopted hedge accounting principles of AS 30 – Financial Instruments and Derivatives for accounting of certain commodity hedges. Accordingly, Rs. 104.90 crore (gain) has been carried over to cash flow hedge reserve as of 31st March, 2013 pertaining to highly probable forecast of sales proceeds. If hedge accounting principles of AS 30 had not been adopted for the year ended 31st March, 2013, sales would have been higher by Rs. 18.48 crore, consumption of raw materials would have been lower by Rs. 5.69 crore, profit after tax would have been higher by Rs. 24.17 crore and receivables would have been lower by Rs. 80.73 crore.

The Hon’ble Supreme Court of India had vide its order dated 17th January, 2012 set aside the order of the Hon’ble High Court of Gujarat dated 22nd April, 2008 which had earlier confirmed the Company’s eligibility to the Sales tax incentive Scheme (‘the scheme’) and accordingly the Company had reversed the net defeased income (net) of Rs. 778.25 crore recognised during 1st April, 2011 to 31st December, 2011 as exceptional items during the financial year 2011-12. Rs. 83.39 crore represents interest payable by the company on sales tax liability arising out of the Supreme Court order dated 13th September, 2012.

From Auditor’s Report
(a) Note 7(ii)(c) to the financial statements detailing the recognition and measurement of the borrowings by a Common Loan Agreement which were hitherto covered by the Master Restructuring Agreement as per the accounting policy consistently followed by the Company; and Note 34 to the financial statements detailing the adoption of hedge accounting
principles in respect of commodity derivative contracts, as set out in Accounting Standards (AS) 30, Financial instruments: Recognition and Measurement, in absence of specific guidance under the Accounting Standards referred to in s/s. (3C) of section 211 of the Act.

(b) Note 7(ii)(c) to the financial statements describing the fact about accounting of interest on certain categories of debentures on a cash basis as per the Court order.

(c) Note 19 [footnote (ii)] to the financial statement regarding receivable of Rs. 2, 177.82 crore from Essar House Limited and the management plans of securing the dues as explained therein.

BCAJ Admin

From published accounts

Section A:

Illustrations of Audit Reports with multiple qualifications

Compiler’s Note
On August 13, 2012, SEBI issued a circular directing Stock exchanges on the manner of dealing with audit reports filed by listed companies. As per the said circular, all stock exchanges will carry out a review of all audit reports filed with them. After such a review, in case the reports are ‘qualified/ subject to/except for’, the same shall be referred to a newly formed committee of SEBI called “Qualified Audit Reports Committee” (QARC). The QARC will after due deliberations can refer the case to the Financial Reports Review Board (FRRB) of ICAI for its opinion thereon. If the FRRB, opines that the qualification is justified, SEBI may direct the company to restate its financial statements. The above process by the stock exchanges, QARC and FRRB is to be completed in a time bound manner. The said process will be applicable to all annual audited financial results submitted for the period ending on or after December 31, 2012.

Given below are 2 Audit Report of listed companies, one of a private sector company and another of a PSU where, in the view of the compiler, restatement may become necessary in case the various qualifications and remarks recur in the audit of financial statements for 2012-13.

Kingfisher Airlines Limited (31-3-2012)

Note: Portions of the report as printed in italics in the annual report is reproduced accordingly

1. … not reproduced
2. … not reproduced
3. … not reproduced

4. Other Income for the fifteen months ended June 30, 2006 included a sum of Rs. 2,672.20 lakh towards certain subsidy provided to the Company by one of its suppliers in conjunction with lease of aircrafts on operating lease basis. The previous auditors had reported that they were of the opinion that such accounting treatment was not in accordance with Accounting Standard 19 on “Leases” and the subsidy should be recorded on a straightline basis over the period of the lease. Their audit report on the financial statements for the fifteen months ended June 30, 2006 was modified in this matter. We concur with the views of the said auditors in principle that such subsidy should be recognized on a systematic basis in the Statement of Profit and Loss over the periods necessary to match them with the related costs, which they are intended to compensate although the matter does not appear to be covered explicitly by the said AS 19.

5. Attention is invited to note 48 of the Notes forming part of the Financial Statements (‘Notes’) regarding method of accounting of costs incurred on major repairs and maintenance of engines of aircrafts taken on operating lease during the year aggregating to Rs. 28,480.24 lakh (year ended March 31, 2011 Rs. 12,256.85 lakh) (aggregate amount as at March 31, 2012 Rs. 36,978.84 lakh), which have been included under fixed assets and amortized over the estimated useful life of the repairs. In our opinion, this accounting treatment is not in accordance with current accounting standards.

6. As reported in paragraph 6 of our report dated July 28, 2009, the Company novated its rights in certain aircrafts purchase agreements during the year ended March 31, 2009 in favor of certain lessors and took such aircrafts back on operating lease from the same persons. The Company incurred a loss of Rs. 8,110.36 lakh on such novation (including interest on loans borrowed for making predelivery payments to aircraft manufacturers of Rs. 2,706.77 lakh) (after eliminating loss in respect of redelivered aircrafts). As already reported in the said report, in the absence of an independent valuation report, we had relied on the representations of the management that the novation was not established at fair value, the fair value of the aircrafts is at least equal to or more than the cost of acquisition and the preconditions specified in AS 19 for deferring the said loss are satisfied. We do not express any independent opinion in the matter.

7. Attention is invited to note 49 of the Notes regarding use fees/hourly and cyclic utilization charges payable by the Company in respect of certain assets taken on operating lease aggregating to Rs. 6,033.53 lakh (year ended March 31, 2011 Rs. 5,576.45 lakh) (aggregate amount till March 31, 2012 Rs. 12,418.61 lakh), as maintenance reserves, in accordance with its understanding. Pending formalization of understanding with the relevant lessor, we do not express any independent opinion in the matter.

8. Attention of the members is invited to note 52 of the Notes regarding write back of withholding tax earlier accrued and non-provision for withholding tax for the year, on amounts paid/provided as payable to certain non-residents/ interest thereon, based on professional advice. This is subject to receipt of certain documentation from the relevant payees, the Company complying with the requisite formalities under the relevant tax laws and validation of the position stated in the books of account.

9. Attention of the members is invited to note 36(b) of the Notes regarding write back/non provision for guarantee and security commission to guarantors, which we understand was done at the behest of the consortium bankers (aggregate amount Rs.13,772.30 lakh). We understand that consent of the concerned guarantors has not been received. We cannot express any opinion in the matter.

10. Attention of the members is invited to note 39 of the Notes regarding recognition of deferred tax crediton account of unabsorbed losses and allowances during the year aggregating to Rs.111,808.46 lakh (year ended March 31, 2011 Rs. 49,341.80 lakh) (Total amount recognized up to March 31, 2012 Rs. 404,586.77 lakh). This does not satisfy the virtual certainty test for recognition of deferred tax credit as laid down in Accounting Standard 22.

11. We further report that, except for the effect, if any, of the matters stated in paragraphs 6 to 9 above, paragraph 1(b) of the annexure to this report and notes 34(a), 44, 46 and 53 of the Notes, whose effect are not ascertainable, had the observations made in paragraphs 4, 5 and 10 above been considered,the loss after tax for the year ended March 31, 2012 would have been Rs. 344,402.41 lakh (March 31, 2011 – Rs. 155,349.03 lakh) as against the reported loss of Rs. 232,800.75 lakh (March 31, 2011-Rs. 102,739.80 lakh), earnings per share would have been Rs.(68.92) (March 31, 2011 – Rs.(59.90)) as against the reported figure of Rs. (46.92) (March 31, 2011- Rs. (40.16)), debit balance in statement of profit and loss as at March 31, 2012 vide note 4 of the Notes would have been Rs.1,192,423.76 lakh (March 31, 2011 – Rs. 848,021.34 lakh) as against the reported figure of Rs.767,648.18 lakh (March 31, 2011 – Rs. 534,847.43 lakh), Other current liabilities would have been Rs. 321,876.74 lakh (March 31, 2011 – Rs. 202,878.92 lakh) as against the reported figure of Rs. 321,864.34 lakh (March 31, 2011 – Rs. 202,600.40 lakh), fixed assets would have been Rs.124,126.34 lakh (March 31, 2011- Rs. 137,071.61 lakh) as against the reported figure of Rs.144,302.75 lakh (March 31, 2011 – Rs. 157,188.69 lakh), deferred tax asset (net) as at March 31, 2012 would have been Nil (March 31, 2011 – Nil) as against the reported figure of Rs. 404,586.77 lakh (March 31,2011 – Rs.292,778.31 lakh). Data for the year ended March 31, 2011 recast from that stated in our previous year’s report taking into account deferred tax credit to be derecognized.

12. Attention of the members is invited to note 45 of the Notes regarding the financial statements of the Company having been prepared on a going concern basis, notwithstanding the fact that its net worth is completely eroded. The appropriateness of the said basis is inter alia dependent on the Company’s ability to infuse requisite funds for meeting its obligations, rescheduling of debt and resuming normal operations.

Further to our comments in the annexure referred to above, we report that:

13. 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.

14. In our opinion, the Company has kept proper books of account as required by Law so far as appears from our examination of those books.

15. 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.

16. In our opinion, subject to the effect of the matters stated in paragraphs 4 to 6 and 10 above, the Balance Sheet, Statement of Profit & Loss and Cash Flow Statement dealt with by this report comply in all material respects, with the mandatory Accounting Standards referred to in sub-section (3C) of section 211 of the Act.

17. … (not reproduced)

18. In our opinion and to the best of our knowledge and according to the information and explanations given to us, the said accounts subject to note 43 of the Notes and read with other notes, give the information required by the Act in the manner so required and subject to the effect of the matters stated in paragraphs 4 to 11 above, foot note to note 38(a) regarding carve out of certain costs from their natural heads based on estimates made by management and presentation of the same as ‘Restructuring/Idle costs’ and note 46 of the Notes regarding the basis of computation of unearned revenue (including refunds due on account of cancelled tickets/ flights) as at March 31, 2012 (Data of number of unflown tickets and their aggregate average value, based on which management has estimated the amount of unearned revenue, not being drawn from accounting records, have not been verified by us) (Effect thereof on revenue not ascertainable) give a true and fair view in conformity with the accounting principles generally accepted in India.

…..

Mahanagar Telephone Nigam Limited (31-3-2012)

Note: None of the portions of the report as printed in the annual report is in bold/italics.

4. Further to our comments in the Annexure referred to in paragraph 3 above and subject to:

a) Point No.6 (a) to Note No. 40 regarding deduction u/s. 80IA of the Income Tax Act claimed by the company of which 75% has already been allowed upto Tribunal level and the company has preferred an appeal for the remaining 25% with the High Court. The company is maintaining a provision for income tax amounting to Rs. 4003.31 million for the years 1997-98 to 1999-2000 on this account, whereas the similar claims for subsequent years involving a tax liability of Rs. 3948.46 million have been shown as Contingent Liability. In view of the pending disputes with the Income Tax Departments at the High Court level, we are unable to comment on the adequacy or requirement of the provision or contingency held in this regard.

b) Point No. 6 (b) to Note No. regarding accounting of appeal to the effect of Rs. 1015.43 million including accrued Interest of Rs.412.04 million (Rs.101.86 million for the year) as recoverable, is subject to adjustment as per the final orders to be passed by the Income Tax Department. Besides, the balances appearing in Advance Tax, Provisions for Income Tax and Interest on Income Tax Refund are subject to reconciliation with the figures of the Income Tax Department.

c) Points No.11 & 14 to Note No. 40 regarding the amounts recoverable from BSNL/DOT are subject to reconciliation and confirmation and in view of various pending disputes regarding each other’s claims, we are unable to comment on the impact of the same on the profitability of the company.

d) Point No. 1(k) of Note 40 regarding disclosure of contingent liability of Rs. 1403.63 million, instead of actual provision on account of License Fee to the DOT which is being worked out on accrual basis as against the terms of License Agreements according to which the expenditures/ deductions from the Gross revenue are allowed on actual payment basis.

e) The company has allocated the establishment overheads as per Note 25 and Administrative overheads as per Note 28.The company’s policy in this regard needs to be made more scientific and the same should avoid capitalising the loss due to idle time of labour and machines.

f) Point No.32 of Note No. 40 regarding no impairment adjustment required to the carrying value of the fixed assets as at 31st March 2012. In our view, due to recurring losses incurred by the Company and uncertainty in the achievement of projections made by the Company, we are unable to comment on the provisions, if any, required in respect of impairment of carrying value of the fixed assets (including capital work in progress), other than land, and its consequential impact, if any, on the loss for the year, accumulated balance in the Profit and Loss Account and the carrying value of the fixed assets as at 31st March 2012.

g) Point No. 27 (ii) of Note No.40 regarding the provision for employees benefits which have been made on the basis of actuarial valuation. The issue being technical, we are unable to comment on the adequacy or otherwise of these provisions.

h) Point No. 28 of Note No. 40 regarding Non provision of actuarial liability on account of medical expenses for retired employees and continuing employees as the Insurance policy has been taken by the company and yearly premium is only charged.

i) Insurance claim for the fire loss in Data Center in July, 2009 amounting to Rs. 40 million has been considered as good despite of the same being still pending with the Insurance Company.

j) Accounting Policy No.2 (iv) regarding valuation of scrapped/ decommissioned assets which are not being revalued every year.

k) Accounting Policy No. 1(ii)(b) regarding exclusion of dues from operators for making provision for Doubtful debts and non-provision of disputed cases which are outstanding for less than three years in Basic and less than six months in wire-less services.

l) Point No. 22 of Note No. 40 regarding non valuation of vacant land and Guest Houses/Inspection quarters at fair market value as at the year-end for the purpose of wealth tax provisions.

m) Point No.18 of Note No.40 regarding non confirmation and reconciliation of amounts receivable and payable from various parties.

n) Point No.14(b) regarding balance in subscriber’s deposits account of Rs. 588.81 million, unlinked receipts from subscribers Rs. 412.60 million are subject to reconciliation. Balance of sundry debtors as per Ageing Summary is short by Rs. 94.70 million with comparison to balance in general ledger though the same has been fully provided for (Refer Note No. 14(c)). The reconciliation of metered and billed calls in various units and leased, operational and billed circuits is in process. The final impact of above on the accounts is presently not ascertainable and the same may have an impact on the Profitability of the company.

o) The matching of Billings for roaming receivables/payable with the actual traffic intimated by the MACH is not being made and the amounts received are allocated on estimated basis. The impact thereof, on profitability, if any, is unascertainable.

p) The system of issuance of completion certificates by engineering department needs to be strengthened. The impact due to the delay in issuance of completion certificate on Fixed Assets and Depreciation is not ascertainable.

q) Point No.23 of Note No. 40 regarding provision for ADCC recoverable from Project Development Company amounting to Rs. 91.25 million and non-accounting of interest thereon in absence of explicit agreement to that effect.

r) Point No. 34 of Note No. 40 regarding non deduction of tax at source on services received from BSNL and treatment of the expenditure on account of Pension liability on the basis of actuarial valuation as an allowable expense based on experts opinion.

s) The Company had accounted for Rs. 2850.00 million towards wet lease for infrastructure and other services provided in respect of Commonwealth Games during the year 2010-11 of which Rs. 430 million is subject to acceptance and final settlement.

t) The reconciliation of Income from Re-charge Coupons, ITC Cards, Prepaid calling cards and stock of recharge coupons and leased circuits is not available for our verification.

u) No service tax is being charged on the revenue sharing with BSNL for inward circuits for which no bills are being raised.

v) The material sent to BSNL on barter basis, the VAT liability on this account has not been ascertained and provided for.

w) Point No 26 of Note No 40 regarding the requisite information & details for the identification of Micro, Small & Medium enterprises, as such we are unable to comment upon the compliance of section 15 & 22 of the Micro Small & Medium Enterprises Development Act-2006.

x) The Company has not made following disclosures required under Schedule VI of the Companies Act, 1956 as per references given after each item:

i.    Consumption of imported and indigenous stores and spares and Percentage to the total consumption;
ii.    The classification of Trade Receivable as unsecured, without considering the security deposit that the company has received from subscribers;
iii.    Trade Receivable figures outstanding for more than six months and up to six months, are ascertained by the management and relied upon by the auditors.
iv.    The Land and Buildings transferred from DOT have been classified as Leasehold as there was no breakup available.
v.    The bifurcation of assets and liabilities into Current and Non Current, has been made by the company as per their own assessment of their recoverability and likely payments. In absence of any scientific basis, we are unable to comment on the same.
vi.    Classification of amount recoverable from BSNL as loan & advances instead of Trade Receivable.
vii.    The reclassification of previous year figures to make it comparable with the revised schedule VI requirements have been made by the management as per their assessment and relied upon by us.

The overall impact of matters referred to in the preceding paras on the loss for the year is unascertainable.

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 purposes 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 except that the following items are consistently accounted on cash basis, instead of on accrual basis as required u/s. 209 of the Companies Act, 1956:

a)    Interest Income / Liquidated Damages, when realisability is uncertain;
b)    Annual recurring charges of amount up to Rs. 0.10 million each for overlapping period
c)    Revenue on account of service connections is being accounted for when the recovery for the same is established.

iii. The Balance Sheet, 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, 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 except AS – 2 regarding Valuation of Inventories (Refer Significant Accounting Policy No.3); AS-4 regarding Contingencies and Events Occurring after the date of Balance Sheet; AS -5 regarding Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies [Refer Significant Accounting Policy No.1(i)(b) and ii(a)];AS- 6 regarding Depreciation Accounting [Refer Significant Accounting Policy No. 2(v)];- AS – 9 regarding Revenue Recognition [Refer Accounting Policy No 1(ii); AS- 10 regarding Accounting of Fixed Assets (Refer Significant Accounting Policy No.2);AS- 15 regarding Accounting for Retirement Benefits in the Financial Statements of Employers (Refer Note No.27);AS17 regarding Segmental Reporting; AS- 18 regarding related party transactions: AS 19 regarding Leases: AS -28 regarding Impairment of Assets ; AS-29 on Provisions for Contingent Liabilities and Contingent Assets.

v. Since the company is a Government company, clause (g) of sub-section (1) of section274 of the Companies Act, 1956 regarding obtaining written representations from the directors of the company, is not applicable to the Company in terms of Notification No.GSR-829 (E) dated 21.10.2003);

vi. Attention is further invited to the following without making them a subject matter of qualification: –

a) Point No.13 of Note No.40 regarding over dues of Rs.1000 million on account of Cumulative preference Shares of one of the Govt Company which are considered good on the basis of comfort letter issued by the concerned Ministry.

b) Point No.16 (e) to Note No.40 regarding the issue of pension liability on account of absorbed employees is yet to be settled with the DOT, which may have substantial impact on the profitability of the company which could not be ascertained by the company.

c) Point No.20 of Note No 40, regarding retaining of outstanding liability of Rs. 736.20 millions on account of decommissioned assets pending arbitration case.

d) Point No. 17 of Note No. 40 regarding non provision of diminution in the value of investments in joint ventures as these diminutions are considered temporary in nature.

vii. In our opinion, and to the best of our information and according to the explanations given to us, the said accounts read with the significant Accounting Policies and together with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and also give, subject to our observations in paragraph 4foregoing, a true and fair view in conformity with the accounting principles generally accepted in India.

BCAJ Admin

From published accounts

Section A:

I. Change in accounting policy in Consolidated Financial Statements (CFS)

II. Adjustment of loss on exiting of business adjusted to Business Restructuring Reserve in Consolidated Financial Statements (CFS)

Hindalco Industries Ltd (31-3-2012)

From Notes to CFS
47. Effective from financial year 2011-12, the Company has changed its accounting policy for preparation of consolidated financial statements relating to actuarial gains or losses arising out of actuarial valuation of long term employee benefits and post employment benefits with respect to one of its overseas subsidiaries (Novelis Inc.). Till the previous year, the amount of actuarial gains or losses was accounted, though the along with related deferred tax have been adjusted against Reserves and Surplus. The adjustment is cash neutral. Had the Company not changed the accounting policy as above, Employee Benefits Expenses would have been higher by Rs. 1,014.91 crore, Tax Expenses would have been lower by Rs. 299.88 crore, Net Profit for the year would have been lower by Rs. 715.03 crore and Foreign Currency Translation Reserve in Reserves and Surplus would have been lower by Rs. 44.39 crore. Consequently, the Basic and Diluted Earnings per Share for the period is higher by Rs. 3.73.

46. Pursuant to a court approved scheme of financial restructuring under sections 391 to 394 of the Companies Act, 1956, Business Reconstruction Reserve (BRR) was established during 2008-09 for adjustment of certain specified expenses. Accordingly, costs in connection with exiting certain business during the year have been adjusted against the BRR in consolidated financial statements. Had this adjustment not been done, Other Expenses would have been higher by Rs. 536.33 crore, Tax Expenses would have been lower by Rs. 35.86 crore and Net Profit for the year would have been lower by Rs. 500.47 crore. A summary of adjustments made so far against BRR is given in the following table Had the Scheme not prescribed aforesaid treatment of certain specified expenses, the Profit for the period and the Earnings per Share (EPS) thereof would have been higher/(lower) by:

Table 2

From Auditor’s Report on CFS

4) Without qualifying our opinion, attention is drawn to the following:

a) Note no.47 of Notes to Consolidated Financial Statement regarding change in accounting policy with respect to recognition of actuarial losses of Rs. 759.42 crore (net of Deferred Tax) relating to pension and other post-retirement benefit plans in the Actuarial Gain/(Loss) Reserve under Reserves and Surplus of Novelis Inc. (the Company) and its subsidiaries and associates (Novelis Group) for reasons as stated therein. Had the Novelis group followed the earlier practice of recognition of actuarial losses on the aforesaid defined benefit plans in the Statement of Profit and Loss as per the Accounting Standard (AS 15) on Employee Benefits, Employee Benefits expenses would have been higher by Rs. 1,014.91 crore, tax expenses would have been lower by Rs. 299.88 crore, the consolidated profit before taxes and minority interest would have been lower by Rs. 1,041.91 crore, Actuarial Gain/(Loss) Reserve would have been Rs. Nil and Foreign Currency Translation Reserve would have been lower by Rs. 44.39 crore.

b) Note no.46 of notes to Consolidated Financial Statement relating to loss on exiting foil and packing business in one of the foreign subsidiaries amounting to Rs. 500.47 crore (Net of deferred tax of Rs. 35.86 crore) has been adjusted with Business Reconstruction Reserve as per the scheme of arrangement u/s.391 of 394 of the Companies Act 1956 as approved by the High Court at Mumbai. Had the aforesaid treatment been not done, the reported group profit before tax would have been lower by Rs. 536.33 crore and Business Reconstruction Reserve would have been higher by Rs. 500.47 crore and deferred tax assets would have been higher by Rs. 35.86 crore.

c) Note no.4 of notes to consolidated financial statements regarding consolidation of accounts of an associate including for the year ended 31st March, 2011, resulting in profit for the year being higher by Rs. 62.02 crore.

From Directors’ Report on CFS

4. Changes in Accounting Policy

Effective from the Financial Year 2011-12, the Company has changed its accounting policy for preparation of the consolidated financial statements relating to actuarial gains or losses arising out of actuarial valuation of long term employee benefits and post employment benefits with respect to one of its overseas subsidiaries (Novelis Inc.). Until the previous year, the amount of actuarial gains or losses was accounted through the Statement of Profit and Loss. Consequent to the change in accounting policy, actuarial gains or loss along with related deferred tax have been adjusted against Reserves and Surplus. This is a noncash item. Had the Company not changed the accounting policy as above, the Employee Benefits Expenses would have been higher by Rs. 1,014.91 crore, Tax Expenses would have been lower by Rs. 299.88 crore, Net Profit for the year would have been lower by Rs. 715.03 crore and Foreign Currency Translation Reserve in Reserves and Surplus would have been lower by Rs. 44.39 crore.

5. Business Reconstruction Reserve

Pursuant to a court approved scheme of financial restructuring u/s. 391 to 394 of the Companies Act, 1956, Business Reconstruction Reserve (BRR) was established during 2008-09 for adjustment of certain specified expenses. Accordingly, costs in connection with exiting certain business during the year have been adjusted against the BRR in the consolidated financial statements. Had this adjustment not been done, Other Expenses would have been higher by Rs. 536.33 crore, Tax Expenses would have been lower by Rs. 35.86 crore and Net Profit for the year would have been lower by Rs. 500.47 crore. A summary of adjustments made so far against BRR is given in the following table:

levitra

BCAJ Admin

From published accounts

Section A:
Disclosures in quarterly results (Q1 of FY 2014-15) regarding adoption of revised norms for depreciation as per Schedule II of Companies Act, 2013

Compilers’ Note:
The Companies Act, 2013 has, effective 1st April 2014, made it mandatory to apply the revised norms of depreciation as per Schedule II to the Act. Schedule II requires re-assessment of useful life of the tangible fixed assets of a company vis-à-vis the useful life mentioned by the Schedule as well as requires depreciation to be provided on separate components of fixed assets based on the components individual useful life.

Given below are some diverse practices followed by listed companies in their unaudited results (which have been subjected to limited review by the statutory auditors) for the quarter ended 30th June 2014 for calculation of depreciation as per Schedule II. The disclosures are as submitted by the respective companies to the stock exchanges.

Bajaj Auto Limited:
Consequent to the enactment of the Companies Act, 2013 (the Act) and its applicability for accounting periods commencing after 1st April 2014, the Company has reworked depreciation with reference to the estimated economic lives of fixed assets prescribed by Schedule II to the Act or actual useful life of assets, whichever is lower. In case of any asset whose life has completed as above, the carrying value, net of residual value, as at st April 2014 has been adjusted to the General Reserve and in other cases the carrying value has been depreciated over the remaining of the revised life of the assets and recognized in the Statement of Profit and Loss.

As a result the charge for depreciation is higher by Rs.16 crore for the quarter ended 30th June 2014.

Century Textiles & Industries Limited
In accordance with the provisions of the Companies Act 2013, effective from 1st April, 2014, the Company has reassessed the remaining useful lives of its fixed assets. As a consequence of such reassessment, the charge for depreciation for the period is lower than the previously applied rates by Rs. 2,822 lakh, correspondingly as the transitional impact of Rs. 2,234 lakh (net of deferred tax Rs.1,151 lakh) has been adjusted to retained earnings.

TVS Motor Company Limited
During the quarter ended 30th June 2014, in accordance with Part A of Schedule II to the Companies Act 2013, the Management, based on Chartered Engineer’s technical evaluation, has reassessed the remaining useful life of assets with effect from 1st April 2014. As a result of the above, depreciation is higher by Rs. 0.71 crore for the quarter ended 30th June 2014. For assets that had completed their useful life as on 1st April 2014, the net residual value of Rs. 2.74 crore has been adjusted to Reserves.

Oberoi Realty Ltd.
The useful life of fixed assets has been revised in accordance with Schedule II to the Companies Act, 2013. The impact of change in useful life of fixed assets on depreciation expense for the quarter amounts to Rs. 323.45 lakh and on opening balance of general reserve amounts to Rs. 33.50 lakh (net of deferred tax).

Reliance Infrastructure Ltd.
During the quarter, the useful life of the fixed assets other than in respect of Electricity business has been revised in accordance with Part C of Schedule II to the Companies Act, 2013. Accordingly depreciation expense for the quarter ended 30th June, 2014 is higher by Rs. 3.88 crore. Similarly, in case of assets whose life has been completed as on 31st March, 2014 the carrying value (net of residual value) of those assets amounting to Rs. 4.75 crore has been debited to General Reserve.

Exide Industries Ltd.
Effective from 1st April, 2014, the Company has charged depreciation based on the revised remaining useful life of the assets as per the requirement of Schedule II of the Companies Act, 2013. Due to the above, depreciation charge for the quarter ended 30th June, 2014 is higher by Rs. 0.55 crore. Further based on transitional provision provided in Note 7(b) of Schedule II, an amount of Rs. 2.41 crore (net of deferred tax) has been adjusted with retained earnings.

PI Industries Ltd.
The useful lives of fixed assets have been revised in accordance with the Schedule II to the Companies Act, 2013 which is applicable from accounting periods commencing on or after 1st April 2014. Accordingly, an amount of Rs. 3.86 crore (net of deferred tax) representing assets beyond their useful life as of 1st April 2014 has been charged to General Reserve and in respect of the remaining assets, an additional depreciation amounting to Rs. 1.55 crore has been charged to the Profit and Loss statement for the current quarter based on residual useful life. Further, in respect of plant and machinery, management is evaluating useful life of certain components, impact of which, if any, would be accounted for in subsequent quarter(s).

Tata Coffee Ltd.
Pending detailed assessment of the useful life and clarification from the Ministry of Corporate Affairs, the depreciation charge for the quarter has been provided as in earlier period. Necessary effect, if required, will be given in the subsequent quarters.

From Limited Review Report
Without qualifying our report, we draw attention to: Note regarding depreciation being provided based on existing method pending evaluation of estimated useful life as required under Schedule II of the Companies Act, 2013.

Thermax Ltd.
Depreciation for the quarter has been computed based on the Company’s evaluation of useful lives of its fixed assets (including significant components thereof, if any) which in certain cases are different from those mentioned in Schedule II to the Companies Act, 2013. The auditors have qualified their report in this regard as in their opinion it is not permissible to have useful lives longer than specified for same class of assets in Schedule II.

From Limited Review Report Basis of Qualified Conclusion
Depreciation for the quarter has been computed based on company’s internal evaluation of useful lives of its fixed assets (including significant components thereof, if any) which in certain cases are more than those mentioned in Schedule II to the Companies Act, 2013. In our opinion useful lives of assets cannot be longer than those indicated in Schedule II. The impact of this on depreciation and profit and loss for the quarter under review has not been computed by the company hence we are unable to comment on the same.

Tata Steel Ltd.
During the quarter, the company and some of its subsidiaries have revised depreciation rate on certain fixed assets as per the useful life specified in the Companies Act, 2013 or re-assessed by the company based on technical evaluation. Accordingly, depreciation of Rs. 136.82 crs (net of deferred tax Rs. 69.64 crore) [Rs. 129.01 crore (net of deferred tax Rs. 66.43 crore) in the stand-alone] on account of assets whose useful life is already exhausted as on 1st April 2014 has been adjusted to retained earnings. Had there been no change in useful life of assets, depreciation for the quarter would have been lower by Rs. 22.74 crore (Rs. 22.33 crore in the stand-alone).

Tata consultancy services ltd.
The group has revised its policy of providing depreciation on fixed assets effective 1st April, 2014. Depreciation is now provided on straight line basis for all assets as against the policy of providing on written down value basis for some assets and straight line basis for others. Further, the remaining useful life has also been revised wherever appropriate based on evaluation. The carrying amount as on 1st april, 2014 is depreciated over the revised remaining useful life. as a result of these changes, the depreciation charge for the quarter ended 30th june, 2014 is higher by rs. 6,063 lakh and the effect relating to the period prior to 1st april, 2014 is not credit of rs. 48,975 lakh (excluding deferred tax of rs. 11,890 lakh) which has been shown as an “exceptional item’ in the statement of profit and loss.

Hindustan Petroleum Corporation Ltd.
Pending the determination of useful life and componentisation of assets, as required under schedule ii of the Companies act, 2013, the company has provided depreciation at the rates and in the manner as prescribed in the schedule XiV of the Companies act, 1956. The impact of the same is not quantified and will be recognised in subsequent quarters. the PSU oil marketing Companies, have made representation to MCA for providing extension to comply with schedule ii of the Companies act, 2013 by mandating application only for annual accounts for 2014-15 and not for quarterly accounts during 2014-15.

From Limited Review Report
As stated in Note No. 5 of the financial results, the company has continued to provide depreciation at the rates and in the manner as prescribed in the schedule XiV of the Companies act, 1956 pending determination of estimated useful life and componentisation of assets as required under schedule ii to the Companies act 2013. As informed to us, the company has also made representation to the ministry of Corporate affairs for providing extension to comply with requirements schedule ii of the Companies act, 2013. The impact of this matter on depreciation and profit for the quarter under review, is not quantified. Hence, we are unable to comment on the same. Based on our review conducted as above, except for the effects of the matter described in the above paragraph, …

Godrej Industries Ltd
Consequent to the enactment of the Companies act, 2013, (the act) and its applicability for accounting periods commencing on or after 1st april, 2014, the Company has adopted the estimated useful life of fixed assets as stipulated by schedule ii to the act, except in the case of plant and machinery where the Company, based on the condition of the plants, regular maintenance schedule, material of construction and past experience, has considered useful life of plant and machinery as 30 years instead of 20 years useful life as prescribed in schedule ii of the act.

Accordingly, the Company has re-worked depreciation with reference to the estimated useful lives of fixed assets as prescribed by schedule ii to the act. in case of assets whose useful life has been completed based on such estimates, the carrying value, net of residual value and taxes, as at 1st april, 2014, amounting to rs. 3.67 crore has been adjusted in the opening balance of retained earnings and in other cases the carrying value is being depreciated over the remaining useful life of the assets and recognised in the Statement of Profit and Loss. As a result of the above mentioned changes, the charge for depreciation is lower by rs. 3.07 crore for the quarter ended 30th june, 2014.

BCAJ Admin

From published accounts

Section A:
Modified report on account on unconfirmed advances and deposits to related parties, etc. – Part II

United Spirits Ltd. (31-03-2014)

From Notes to Accounts

26. Provision for doubtful receivable, advances and deposits

Compilers’ Note
Disclosures from Notes to Accounts, Auditors’ Report and Directors’ Report for the above were reproduced in the October 2014 issue of BCAJ. Given below are the remarks/qualifications in the CARO report, and the explanation thereof in the Directors’ Report.

FROM CARO Report
Paragraph (iii) (a)
According to the information and explanations given to us, the Company has granted an unsecured loan to a company covered in the register maintained u/s. 301 of the Companies Act, 1956 (‘the Act’) by way of conversion of certain pre-existing loans/advances/deposits due to the Company and its subsidiaries (refer paragraph 3 under ‘basis for qualified opinion’). The year-end balance of the loan and the maximum amount outstanding during the year amounted to Rs.13,374 million.

Further, as mentioned in paragraph 1 under ‘basis for qualified opinion’, certain parties alleged that they have advanced certain amounts to certain alleged UB Group entities and linked the confirmation of amounts due to the Company to repayment of such amounts to such parties by the alleged UB Group entities. Also, some of these parties stated that the dues to the Company will be paid/ refunded only upon receipt of their dues from such alleged UB Group entities. Considering the matters disclosed in paragraphs 1 and 4 of ‘basis for qualified opinion’, we are unable to comment whether any such arrangements represent transactions with any company/ firm/other party covered in the register maintained under section 301 of the Act.

Directors’ Response: Information and explanation on the qualification at paragraph (iii)(a) of Annexure to the Auditor’s report is provided in Note 26(a) to the Statement. Further, the Management has certified to the Board that, on the basis of the Management’s current information, particulars of contracts or arrangements that are required to be entered in the register maintained u/s. 301 of the Companies Act, 1956 (the Act) have been so entered. As mentioned in Note 26(c) to the financial statement, the Board has ordered a detailed and expeditious inquiry in relation to the matters disclosed in paragraphs 1 and 4 of ‘basis for qualified opinion’ in the auditor’s report. On completion of such inquiry, appropriate action if any will be taken.

Paragraph (iii)(b):
In our opinion, the rate of interest and other terms and conditions on which the above unsecured loan has been granted to the company covered in the register maintained u/s. 301 of the Act as stated in sub-Clause (a) above, are prima facie, prejudicial to the interest of the Company.

Based on its assessment of recoverability, the Company has during the current year, made a provision of Rs. 3,303 million against the loan and has not recognised any interest income (amounting to Rs. 963 million on the said loan).

Further, as mentioned in paragraph 1 under ‘basis for qualified opinion’, a provision of Rs. 6,495.4 million has been made with respect to amounts due from certain parties who alleged that they have advanced certain amounts to alleged UB Group entities.

Directors’ Response:
Management informed the Board that: (i) pursuant to a previous resolution passed by the board of directors of the Company on 11th October 2012, certain dues (together with interest) aggregating to Rs.13,374 Million were consolidated into, and recorded as, an unsecured loan by way of an agreement entered into between the Company and UBHL on 3rd July 2013; (ii) the interest rate of 9.5% p.a. was in accordance with section 372A of the Companies Act, 1956, read with the circular issued by the Reserve Bank of India publishing the bank rate in terms section 49 of the Reserve Bank of India Act, 1934.

The management and the nominee directors of the controlling shareholder have informed the Board that they will take all the necessary steps within their power and authority as management and directors of the Company to fully protect the interest of the shareholders in this regard.

Further, the Board has directed the management to review the underlying loan agreement(s) and/or other relevant documents (“Loan Documents”), to inter-alia assess: (i) whether any event of default(s) under the Loan Documents has occurred on the part of UBHL; (ii) the legal rights and remedies which the Company has under the Loan Documents; (iii) whether the Company should invoke any of the remedies available to it under the Loan Documents (including recalling of the entire loan); and (iv) whether there is any scope of renegotiating the terms and conditions under the Loan Documents.

In this regard, the management should expeditiously take all the necessary steps to fully protect the interest of the Company and shareholders.

Paragraph (iii)(c):
According to the information and explanations given to us, in case of the unsecured loan granted to the company covered in the register maintained u/s. 301 of the Act as stated in sub-Clause (a) above, no amounts were repayable during the year as per the terms of the loan agreement.

Considering the matters disclosed in paragraphs 1 and 4 under ‘basis for qualified opinion’, we are unable to comment on the regularity in the receipt of the principal amount and interest relating to any other loan, secured or unsecured, that may have been granted to any company/ firm/other party covered in the register maintained u/s. 301 of the Act, as a result of the transactions disclosed in paragraphs 1 and 4 under ‘basis for qualified opinion’

Directors’ Response: The Management has certified to the Board that, on the basis of the Management’s current information, particulars of contracts or arrangements that are required to be entered in the register maintained u/s. 301 of the Act have been so entered. As mentioned in Note 8 to the Statement, the Board has ordered a detailed and expeditious inquiry in relation to the matters disclosed in paragraphs 1 and 4 of ‘Basis for Qualified opinion’ in the auditor’s report. On completion of such inquiry, appropriate action, if any, will be taken.

Paragraph (iii)(d):
According to the information and explanations given to us, in case of the unsecured loan granted to the company covered in the register maintained u/s. 301 as stated in sub-Clause (a) above, there is no overdue amount of more than Rs. 1 lakh in respect of the said loan.

Considering the matters disclosed in paragraphs 1 and 4 under ‘basis for qualified opinion’, we are unable to comment whether there is overdue amount of more than Rs. 1 lakh in respect of any other loan, secured or unsecured, that may have been granted to any company/ firm/ other party covered in the register maintained u/s. 301 of the Act, as a result of the transactions disclosed in paragraphs 1 and 4 under ‘basis for qualified opinion’.

Directors’ Response: The Management has certified to the Board that, on the basis of the Management’s current information, particulars of contracts or arrangements that are required to be entered in the register maintained u/s. 301 of the Act have been so entered. As mentioned in Note 8 to the Statement, the Board has ordered a detailed and expeditious inquiry in relation to the matters disclosed in paragraphs1 and 4 of ‘Basis for qualified opinion’ in the auditor’s report. On completion of such inquiry, appropriate action, if any, will be taken.

Paragraph (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 the sale of goods and services during the year.

Except for the matter discussed below, we have not observed any major weaknesses in the internal control system during the course of the audit.

Considering the matters stated under ‘basis for qualified opinion’, we are unable to comment on the adequacy of the internal control system of the Company at certain points in time during the earlier years with respect to such instances as stated under ‘basis for qualified opinion.’

Directors’ Response: The matters stated under ‘basis for qualified opinion’ relate to the period prior to 1st April 2013. The Management believes that the Company has an internal control system commensurate with the size of the Company and the nature of its business. The Board has instructed the Management that, depending on the outcome of the inquiry, further strengthening of the internal control system should be carried out, as may be required.

Paragraph (v)(a):

In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements entered into during the year referred to in section 301 of the Act have been entered in the register required to be maintained under that section.

However, considering the matters stated under ‘basis for qualified opinion’, particularly paragraphs 1 and 4 thereof, we are unable to comment whether the particulars of any such contracts or arrangements that may result from the transactions disclosed under ‘basis for qualified opinion’ and that need to be entered in the register maintained u/s. 301 of the Act, have been so entered.

Directors’ Response: The Management has certified to the Board that, on the basis of the Management’s current information, particulars of contracts or arrangements that are required to be entered in the register maintained u/s. 301 of the Act have been so entered. As mentioned in Notes 26(a), 26(b) and 30(f) to the Statement, the Board has ordered a detailed and expeditious inquiry in relation to the matters disclosed in paragraphs 1 and 4 of ‘Basis for qualified opinion’ in the auditor’s report. On completion of such inquiry, appropriate action, if any will be taken.

Paragraph (vii):

In our opinion, the Company has an internal audit system commensurate with the size and nature of its business during the year, except in relation to matters stated under ‘basis for qualified opinion’, where the internal audit system needs to be strengthened. Directors’ Response: The matters stated under ‘basis for qualified opinion’ relate to the period prior to 1st April, 2013. The Management believes that the Company has an internal audit system commensurate with the size of the Company and the nature of its business. The Board has instructed the Management that, depending on the outcome of the inquiry, further strengthening of the internal audit system should be carried out, as may be required.

Paragraph (x):

The accumulated losses of the Company at the end of the year are not less than 50% of its net worth. The Company has incurred cash losses in the financial year. However, no cash losses were incurred in the immediately preceding financial year.

Directors’ Response: The Board notes that the accumulated losses of the Company at the end of the year is 52 % of its peak net worth in the previous four financial years. Therefore, the Company will be required to file a report u/s. 23 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), The Board believes this report u/s. 23 would arise as a technical requirement under SICA and does not reflect upon the long-term prospects of the Company given the profitable nature of its business and as the accumulated losses are principally on account of exceptional items during the year.

Paragraph (xi):

In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to a bank or to any financial institution except that in case of loans due to banks, principal amounting to Rs. 410 million an interest amounting to Rs. 474 million were repaid with a delay of up to 67 days and 37 days, respectively. The Company did not have any outstanding debentures during the year.

Directors’ Response: The Management has informed the Board that as of 31st March 2014, there were no outstanding defaults by the Company of any dues to a bank or any financial institution.

Paragraph (xvi):

In our opinion and according to the information and explanations given to us, the term loans taken by the Company and applied during the year were for the purpose for which they were raised.

However, considering the matters stated under ‘basis for qualified opinion’, particular paragraphs 1, 3 and 4, we are unable to comment whether any transactions relating to such matters represent application of term loans for the purpose for which they were raised.

Directors’ Response: The Management has certified to the Board that, on the basis of the Management’s current information, the Company has applied term loans taken by the Company during the year for the purpose for which they were raised. However, as mentioned in Note 26(c) to the Statement, the Board has ordered a detailed and expeditious inquiry in relation to the matters disclosed in paragraphs 1, 3 and 4 of ‘basis for qualified opinion’ in the auditor’s report. On completion of such inquiry, appropriate action will be taken, as may be required.

Paragraph (xxi):

As mentioned in detail in paragraphs 1 and 2 under ‘basis for qualified opinion wherein it is stated that:

Certain parties alleged that they have advanced certain amounts to certain alleged UB Group entities and linked the confirmation of amounts aggregating to Rs. 5,846.9 million due to the Company to repayment of such amounts to such parties by the alleged UB Group entities. Further, some of these parties stated that the dues to the Company will be paid/refunded only upon receipt of their dues from such alleged UB Group entities; and an alleged instance of a purported agreement to create a lien on certain investments of the Company as security against loans given by an Alleged Claimant to Kingfisher Airlines Limited (KFA) in earlier years was noted. However, in a letter dated 31st July, 2014 from the Alleged Claimant, it was stated that the allegation made earlier did not take into account an addendum to the loan agreement; and after examining the aforesaid addendum and the agreement, the Alleged Claimant does not have any claim or demand of any nature against the Company. Subsequently, in September 2014, scanned copies of the purported agreements were furnished to the Management by KFA.The Management has represented to us that the Company had no knowledge of these purported agreements; that the Board of Directors of the Company have not approved any such purported agreements; and it is not liable under any such purport agreements.

Pending the completion of the inquiry as mentioned in paragraph 4 under ‘basis for qualified opinion’, we are unable to conclude whether these instances can be termed as ‘fraud’ and whether there are other instances of a similar nature.

Directors’ Response: See responses to paragraphs 1 to 3 of the Auditor’s Report to the Financial Statement. As mentioned in the note 30(f) to the Statement, the Board has directed a detailed and expeditious inquiry in relation to the matters disclosed in paragraphs 1 to 5 of “basis for qualified opinion” in the Auditors’ Report. Pending the completion of such inquiry, the Board is unable to conclude whether there have been any instances of fraud against the Company. Based on the findings of such inquiry, appropriate action, including action for recovery of the Company’s assets or amounts owing to the company, will be taken.

BCAJ Admin

From published accounts

Section B:

• Disclosure as per AS 29 SKF India Ltd (year ended 31st December 2013)

From Notes to Financial Statements
Additional disclosures relating to other provisions (as per Accounting Standard 29)

(Rs. in million)

(i) Provision for disputed statutory and other matters: This represents provisions made for probable liabilities/claims arising out of pending disputes/litigations with various regulatory authorities and those arising out of commercial transactions with vendors/others. Above provisions are affected by numerous uncertainties and the management has taken all the efforts to make a best estimate. The timing of outflow of resources will depend upon the timing of decision of cases.

(ii) Provision for warranties: A provision is estimated for expected warranty claims in respect of products sold during the year on the basis of a technical evaluation and past experience regarding failure trends of products and costs of rectification or replacement. The timing and amount of cash flows that will arise from these matters will be determined at the time of receipt of claims.

(iii)The provision for other obligations is on account of coupons given on products sold by the Company and other retailers and distributors incentive schemes. The provision for coupons is based on the historic data/estimated figures. The timing and amount of the cash flows that will arise will be determined at the time of receipt of claims from customers.

• Disclosure of foreign currency exposures and contracts
Nestle India Ltd. (year ended 31st December 2013)

From Notes to Financial Statements

(a) Category wise quantitative data*

(b) All the forward contracts are for hedging foreign exchange exposures relating to the underlying transactions and firm commitments or highly probable forecast transactions.

• Disclosure under AS 18 regarding dependence on Related Party Transactions

Honeywell Automation India Ltd (year ended 31st December 2013)

From Notes to Financial Statements

Note below AS 18 disclosures

The Company generates a large percentage of its sales and profits from its business with the Honeywell group (Honeywell), its major shareholder. Sales to Honeywell accounted for approximately 30% and 35% of our total net sales in the fiscal years 2013 and 2012 respectively. The Company’s ability to maintain or grow its business with Honeywell depends upon a number of performance factors. However, the Company cannot be assured that its level of sales and profits associated with its relationship with Honeywell will continue. Honeywell-specific business consideration (independent of its shareholding in the Company), including changes in Honeywell’s strategies regarding utilisation of alternate opportunities available to it to source products and services currently provided by the Company (including from alternate sources which Honeywell may acquire or develop within its own group), may also reduce the level and/or mix of Honeywell’s business with the Company.

levitra

BCAJ Admin

From published accounts

Section A:
• Qualification regarding significant financial exposure to subsidiaries

United Breweries (Holdings) Ltd: 31-3-2013
From Notes to Accounts
32 Investments:

a) The Company has pledged 2,24,51,587 shares of United Spirits Limited,1,49,61,610 shares of Mangalore Chemicals & Fertilizers Limited, 62,69,728 shares of UB Engineering Limited, 19,46,33,555 shares of Kingfisher Airlines Limited and 34,20,239 shares of McDowell Holdings Limited to secure the borrowings of the company along with the borrowings of subsidiary companies and an associate company.

b) Investment as on 31st March, 2013, includes 21,870,156 shares of Kingfisher Airlines Limited, 7,196 shares of McDowell Holdings Limited,1,00,00,000 shares of Mangalore Chemicals & Fertilizers Limited and 24,46,352 shares of United Spirits Limited held in custody of lenders after they have invoked the pledge of these shares.

c) 2,18,70,156 shares of Kingfisher Airlines Limited, 2,15,000 shares of McDowell Holdings Limited, 1,00,00,000 shares of Mangalore Chemicals & Fertilizers Limited, 24,46,155 shares of United Spirits Limited held by the Company and pledged with banks for credit facilities extended to Kingfisher Airlines Limited have been sold by them, subsequent to Balance Sheet date.

d) T he Company’s investment of Rs. 26.512 million with IDFC Mutual Fund is given as a lien to secure the borrowings of an associate company.

e) The investment in subsidiaries (including step down subsidiaries) have been considered as long term strategic investments and diminution in their market value/net worth, though significant is considered temporary and hence no provision is considered necessary.

36.The Company, over the years has advanced significant amounts to subsidiaries including overseas subsidiaries aggregating to Rs. 1,709.556 million (Per year Rs.1,627.300 million) which have not yet been repaid. Even though there is erosion in the net worth of these subsidiaries, the Management is of the view that all the amounts are ultimately recoverable, taking into consideration their business plans and growth strategies.

40. Events occurring after the date of the Balance sheet

a) Kingfisher Airlines Limited (KFA) lenders have sold the following investments belonging to the company:

i) 24,46,155 equity shares in United Spirits Limited
ii) 2,15,000 equity shares in McDowell Holdings Limited
iii) 1,00,00,000 equity shares in Mangalore Chemicals & Fertilizers Limited
iv) 2,18,70,156 equity shares in Kingfisher Airlines Limited

b) KFA lenders have invoked company’s Corporate Guarantee and demanded payment of dues, due from KFA amounting to Rs. 64,932.900 million

c) The Company and others have filed a suit in the Hon’ ble Bombay High Court against the Consortium of Lenders who have advanced loans to Kingfisher Airlines Ltd., inter alia seeking the following reliefs:

i) for a declaration that the corporate guarantee agreement and pledge agreement, both dated 21st December, 2010 and executed by the Company are void ab-initio and non-est;

ii) for a permanent order and injunction, restraining Consortium of Bankers, their servants, agents or assigns, or any other person claiming by, through or under them or any of them, from acting upon, in furtherance or in any manner giving effect to the impugned notices dated 16th March, 2013, or from taking any other or further steps to act upon or in furtherance of the Pledge Agreement dated 21st December, 2010 save and except in accordance with the procedure set out in Clause 8.1 of the MDRA, including issuing a notice thereunder.

iii) for a permanent order and injunction restraining Consortium of Bankers, their servants, agents or assigns, or any other person claiming by or through or under or any of them, from acting upon or in furtherance of the Corporate Guarantee dated 21st December, 2010 given by the company and Pledge Agreement dated 21st December, 2010.

iv) that an order and decree for damages of sum of Rs. 31,996.800 million as set out in the particulars of claim be awarded to the plaintiffs.

v) that the maximum limit under the Companys’ Corporate Guarantees be Rs.16,014.300 million for reasons set out in the Suit.

43. The Company along with its subsidiaries has significant financial exposure on various counts to Kingfisher Airlines Limited (KFA). Although KFA’s license has expired on 31st December, 2012, under Civil Aviation Regulations, KFA has period of 24 months to reinstate the same. As at 31st March, 2013, the financial exposure includes equity investment of Rs. 20,953.043 million, loans and advances Rs. 23,592.484 million and other receivables Rs. 3,104.505 million and corporate guarantees to banks/ aircraft lessors, some of which have been invoked. Such invocations are being contested in court. The Management is reasonably confident that none of the guarantees would eventually devolve upon the Company. The ultimate diminution of investments and non-recovery of loans and advances are not presently quantifiable and hence no provision has been considered in the accounts.

From Auditors’ Report
Basis for Qualified Opinion
a) The company has significant financial exposure to Kingfisher Airlines Limited (KFA). These exposures are in the form of investments in equity of Rs. 20,953.043 million, loans and advances of Rs. 23,592.484 million, other receivables of Rs. 3,104.505 million and corporate guarantee of Rs. 89,643.800 million. KFA’s licence to operate the airline business stands suspended (refer note 43 to financial statements). Its net worth is completely eroded. It is under severe financial stress and has defaulted in honouring its financial obligations on several counts. Having regard to the financial condition of KFA, the company has discontinued charging it interest, guarantee/ security commission and logo fee.

Consortium of Lenders of KFA led by State Bank-of India have recalled’ their loans. They have invoked the corporate guarantee of Rs. 64,932.900 million and demanded the company to honour its obligation under its guarantee agreements (refer note 40 to financial statements). Certain aircraft lessors of KFA have invoked the corporate guarantee given by the company and have also instituted-proceedings u/s. 433/434 of the Companies Act, 1956 before the Honourable High Court of Karnataka (refer note 42 to financial statements). Above factors have resulted in substantial erosion in carrying value of company’s investments in KFA and significantly impaired the recovery of loans and advances made to them. Similar losses may also arise on account of invocation of corporate guarantee given by the company. The management has not quantified and provided for erosion in the value of investments and the probable losses. Had the company made such provisions, the loss disclosed in the Statement of Profit and Loss would have been higher by such amount and the carrying amount of investments and loans and advances would have been lower by that amount

b) Company carries Investments in certain subsidiaries. The carrying value of such investments is Rs. 700.610 million. There are significant declines in the carrying value of these investments but the company has not quantified and provided for such declines. Had the company provided for such decline, the loss stated in the Statement of Profit and Loss would have been higher by such amount and the carrying value of those investments would have been lower by an equal amount (refer note 32(e) to financial statements).

a) Certain subsidiaries owe to the company Rs. 1,709.556 millions. Net worth of these companies are eroded, significantly impairing the recovery of such loans and advances. Company has not quantified and provided for the probable loss. Had the company provided for such loss, the loss stated in the Statement of Profit and Loss would have been higher by such amount and the loans and advances stated in the Balance Sheet would have been lower by that amount (refer note 36 to financial statements).

QUALIFIED OPINION
In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the “Basis for Qualified Opinion” paragraph, the 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:
….

EMPHASIS OF MATTER
Attention is invited to the following;
a) Note 40 (a) to financial statements dealing with sale of pledged investments by lenders of Kingfisher Airlines Limited.
(b) to financial statements dealing with invocation of corporate guarantee by lenders of Kingfisher Airlines Limited.

FROM DIRECTORS’ REPORT
With reference to observations in the Auditors Report regarding accrual of guarantee/security commission from an Associate Company (erstwhile subsidiary), inclusion of interest from Subsidiaries and Associates, non-provision for loans and advances to certain Subsidiaries and an Associate Company and for decline in value of investment in certain Subsidiaries and an Associate Company, the relevant notes to the accounts comprehensively explain the management’s views on such matters.

BCAJ Admin

From Published Accounts

Accounting for multiple schemes of amalgamation/arrangement and acquisition:

Sesa Sterlite Ltd . (31-3-2014)

From Notes to Accounts
The Scheme of Amalgamation and Arrangement (the “Scheme-1”) amongst Sterlite Energy Limited (‘SEL’), Sterlite Industries (India) Limited (‘Sterlite’), Vedanta Aluminium Limited (‘VAL’), Madras Aluminium Company Limited (‘Malco’) and the Company was sanctioned by the High Court of Judicature of Bombay at Goa vide its order dated April 3, 2013 and the Honourable High Court of Madras vide its order dated July 25, 2013. The Scheme became effective for Sterlite and Malco on August 17, 2013; and for SEL and VAL the scheme became effective on August 19, 2013.

The Honourable Supreme Court of Mauritius by an order dated August 24, 2012 and the Honourable High Court of Judicature of Bombay at Goa by an Order dated April 03, 2013, approved the Scheme of Amalgamation (the “Scheme-2”) of Ekaterina (holding 70.5% shareholding in Vedanta Aluminum Limited), with the Company. The effective date of amalgamation is August 17, 2013.

The summary of the appointed dates and effective dates of the schemes are as follows:

The above schemes have been given effect to in the financial statements for the year ended March 31, 2014.

I. Amalgamation of SEL with the Company:
(a) SEL was engaged in the generation of commercial power in the State of Odisha and was a wholly owned subsidiary of erstwhile Sterlite.

(b) In accordance with the Scheme-1:
(i) SEL stands dissolved without winding up with effect from January 01, 2011, on the effective date.

(ii) A ll assets, debts and liabilities of SEL have been deemed transferred to and vested in the Company with effect from January 01, 2011.

(iii) SEL carried on the business for and behalf of the Company for the period from the appointed date to the effective date, in trust as per the Scheme -1.

(iv) In accordance with the Scheme-1, upon Chapter 2 of the Scheme-1, becoming effective, SEL became a wholly owned subsidiary of SGL, and accordingly no shares were issued and allotted by SGL.

(c) The amalgamation has been accounted under the ‘Pooling of Interests’ method as envisaged in the Accounting Standard (AS) – 14 on Accounting for amalgamations specified in the Companies (Accounting Standard) Rules 2006, whereby:

(i) In accordance with the Scheme-1, the assets, liabilities and reserves (excluding share premium) of SEL as at January 01, 2011 along with subsequent additions/ deletions up to March 31, 2013 have been recorded at their book values. Further, equity share capital, share premium account of SEL, and investments in the equity shares of SEL has been eliminated and resultant balance amount of Rs. 2.48 crore has been debited to General Reserve of the Company.

(ii) The profits of SEL from appointed date January 01, 2011 to March 31, 2013 have been transferred to the Surplus in Statement of Profit and Loss of the Company. The operations of SEL during the year have been accounted for in the current year’s Statement of Profit and Loss of SEL as at April 01, 2013 Rs. 194.02 crore (after the alignment of accounting policies of SEL in line with SGL accounting policies) has been included in Surplus in Statement of Profit and Loss of the Company.

(iii) In terms of the Scheme-1 inter-company balance (payable, receivables, loans, advances, etc.) between SEL and the Company (after giving effect of Sterlite amalgamation) as at appointed date have been cancelled.

II. Amalgamation of Sterlite with the Company:
(a) Sterlite was engaged in the copper smelting business:

(b) In accordance with the Scheme-1 :
(i) Sterlite stands dissolved without winding up with effect from April 01, 2011, on the effective date.

(ii) 1,656,179,625 number of equity shares have been issued to the equity shareholders of Sterlite, except for equity shares of Sterlite held by MALCO and excluding shares against which Ads were issued in the ratio of 3 equity shares of face value of Rs.1/- each in the Company for every 5 equity shares held in Sterlite. 72,173,625 ADS of the Company representing 288,694,500 equity shares of the Company have been issued in the ratio of 3 ADS of the Company for every 5 ADS of Sterlite.

(iii) A ll assets, debts and liabilities of Sterlite have been deemed transferred to and vested in the Company with effect from April 01, 2011.

(iv) Sterlite carried on the business for and behalf of the Company for the period from the appointed date to the effective date, in trust as per the Scheme -1.

(c) T he amalgamation has been accounted under the ‘Pooling of Interests’ method as envisaged in the Accounting Standard [AS] – 14 on Accounting for Amalgamations specified in the Companies [Accounting Standard] Rules 2006, whereby:

(i) In accordance with the Scheme – 1, the assets, liabilities and reserves of Sterlite as at April 01, 2011 along with subsequent addition/deletion up to March 31, 2013 have been recorded at their book values. The difference between the value of total assets, total liabilities and the face value of share capital allotted to the shareholders of Sterlite amounting to Rs. 134,45 crore and credit balance in the General Reserve of Rs. 2,770.29 crore has been credited to the General Reserve in accordance with the Scheme – 1.

(ii) In terms of the Scheme – 1, inter-company balances [payables, receivables, loans, advances, etc.] between VAL – Aluminium and the Company [after giving effect of Sterlite amalgamation] as at appointed date have been canceled.

(iii) The profits of Sterlite from the appointed date April -1, 2011 to March 31, 2013 have been transferred to Surplus in the Statement of Profit and Loss of the Company. The operations of Sterlite during the year have been accounted for in the current year’s Statement of Profit and Loss of the Company. The balance in Surplus in Statement of Profit and Loss of Sterlite as at April 01, 2013, Rs. 3,069.67 crore [after the alignment of the accounting policies of Sterlite in line with SGL accounting policies] has been included in Surplus in Statement of Profit and Loss of the Company.

III. Aluminum Division of Vedanta Aluminium Limited [“VAL -Aluminium”] with the Company:

(a) Vedanta Aluminium Limited was engaged in the production of aluminium with associated captive power plants. “VAL-aluminium” consisting of 0.5 mtpa aluminium smelter at Jharsuguda and 1.0 mtpa alumina refinery at Lanjigarh in the State of Odisha.

(b) In accordance with the Scheme -1:
(i) VAL-Aluminium demerged from VAL and merged with the Company from appointed date April 01, 2011.

(ii) N o shares have been issued and allotted by the Company to Vedanta Aluminium Limited for the demerger of the VAL-Aluminium and merger with the Company.

(iii) All assets, debts and liabilities of VALAluminium have been deemed transferred to and vested in the Company with effect from April 01, 2011.

(iv) Vedanta Aluminium Limited carried on VALAluminium business for and behalf of the Company for the period from the appointed date to the effective date, in trust as per the Scheme -1.

(i) In accordance with the Scheme-1, the assets and liabilities of VAL-Aluminium as at April 01, 2011 along with subsequent addition/deletion up to March 31, 2013 have been recorded at their book values. Further, in accordance with the Scheme-1, excess of book values of assets over liabilities of VAL-Aluminium business amounting to Rs. 532.46 crore has been credited to General Reserve of the Company.

ii. amalgamation of sterlite with the company:
(a) Sterlite was engaged in the copper smelting business:

(b) In accordance with the Scheme-1 :
(i) Sterlite stands dissolved without winding up with effect from April 01, 2011, on the effective date.

(ii) 1,656,179,625 number of equity shares have been issued to the equity shareholders of Sterlite, except for equity shares of Sterlite held by maLCo and excluding shares against which Ads were issued in the ratio of 3 equity shares of face value of Rs.1/- each in the Company for every 5 equity shares held in Sterlite. 72,173,625 adS of the Company representing 288,694,500 equity shares of the Company have been issued in the ratio of 3 adS of the Company for every 5 ADS of Sterlite.

(iii) All assets, debts and liabilities of Sterlite have been deemed transferred to and vested in the Company with effect from april 01, 2011.

(iv) Sterlite carried on the business for and behalf of the Company for the period from the appointed date to the effective date, in trust as per the Scheme -1.

(c) The amalgamation has been accounted under the ‘Pooling of interests’ method as envisaged in the accounting Standard [AS] – 14 on accounting for Amalgamations specified in the Companies [Accounting Standard] Rules 2006, whereby:

(i) In accordance with the Scheme – 1, the assets, liabilities and reserves of Sterlite as at april 01, 2011 along with subsequent addition/deletion up to march 31, 2013 have been recorded at their book values. The difference between the value of total assets, total liabilities and the face value of share capital allotted to the shareholders of Sterlite amounting to Rs. 134,45 crore and credit balance in the General reserve of Rs. 2,770.29 crore has been credited to the General reserve in accordance with the Scheme – 1.

(iii) The profits of Sterlite from the appointed date april -1, 2011 to march 31, 2013 have been transferred to Surplus in the Statement of Profit and Loss of the Company. The operations of Sterlite during the year have been accounted for in the current year’s Statement of Profit and Loss of the Company. the balance in Surplus in Statement of Profit and Loss of Sterlite as at april 01, 2013, Rs. 3,069.67 crore [after the alignment of the accounting policies of Sterlite in line with SGL accounting policies] has been included in Surplus in Statement of Profit and Loss of the Company.

iii. Aluminum Division of vedanta aluminium limited [“val-aluminium”] with the company:

(a) Vedanta Aluminium Limited was engaged in the production of aluminium with associated captive power plants. “VAL-aluminium” consisting of 0.5 mtpa aluminium smelter at jharsuguda and 1.0 mtpa alumina refinery at Lanjigarh in the State of Odisha.

(b) In accordance with the Scheme -1:

(i) VAL-Aluminium demerged from VAL and merged with the Company from appointed date april 01, 2011.

(ii) no shares have been issued and allotted by the Company to Vedanta Aluminium Limited for the demerger of the VAL-Aluminium and merger with the Company.

(iii) All assets, debts and liabilities of VAL- aluminium have been deemed transferred to and vested in the Company with effect from april 01, 2011.

(iv) Vedanta Aluminium Limited carried on VAL- aluminium business for and behalf of the Company for the period from the appointed date to the effective date, in trust as per the Scheme -1.

(i) In accordance with the Scheme-1, the assets and liabilities of VAL-Aluminium as at April 01, 2011 along with subsequent addition/deletion up to march 31, 2013 have been recorded at their book values. Further, in accordance with the Scheme-1, excess of book values of assets over liabilities of VAL-Aluminium business amounting to rs. 532.46 crore has been credited to General reserve of the Company.

(ii) In terms of the Scheme, inter-company balance (payables, receivable, loans, advances, etc.) between VAL-Aluminium and the Company (after giving effect of Sterlite amalgamation) as at appointed date have been cancelled.

(iii) The losses of VAL-Aluminium during the period april 01, 2011 to march 31, 2013 have been transferred to Surplus in Statement of Profit and Loss of the Company. The operations of VAL-Aluminium during the year have been accounted for in the current year’s Statement of Profit and Loss of the Company. The debit balance of Surplus in Statement of Profit and Loss of VAL-Aluminum as of April 01,2013 rs. 4,389.54 crore (after the alignment of accounting policies of VAL-Aluminium in line with SGL accounting policies) has been included in Surplus in Statement of Profit and Loss of the Company.

(iv) In accordance with the Scheme-1, post the vesting of VAL-Aluminium business with the Company, shortfall of book values of assets over the liabilities of the aluminium business after adjusting the carrying value of equity share investment in VAL as on the effective date not representing by the net assets value of VAL as on effective date amounting to Rs. 1,471.63 crore has been debited to General reserve of the Company.

iv. Residual business of The Madras aluminium company limited (‘Malco- residual’) with the company:

(a) The madras aluminium Company Limited (malco) was engaged in the production of aluminium and commercial power generation business in the State of Tamilnadu.

(b) In accordance with the Scheme-1:

(i) In accordance with the Scheme-1, the power business of malco consisting of 100 MW coal based power plant was sold at a consideration of Rs. 150.00 crore to VAL with appointed date of april 01, 2012. Residual business of malco merged with the Company from appointed date august 17, 2013 and malco ceased to exist.

(ii) 78,724,989 number of equity shares have been issued to the equity shareholders of Malco in the ratio of 7 equity shares of face value of Re. 1/- each in the Company for every 10 equity shares held in malco.

(iii) All assets, liabilities and reserves of malco- residual business were deemed transferred to and vested in the Company with effect from august 17, 2013.

(c) The amalgamation has been accounted under the ‘Pooling of interests’ method as envisaged in the accounting Standards (AS) – 14 on accounting for Amalgamations specified in the Companies (Accounting Standard) Rules 2006, whereby:

(i) The assets, liabilities and reserves of malco- residual (except investment in the equity shares of Sterlite) as at appointed date have been recorded at their respective carrying values in the books of the Company. in accordance with the Scheme-1, the difference between the value of total assets (excluding investment in Sterlite), total liabilities, reserves and the face value of share capital allotted to the shareholders of malco Rs. 14.62 crore and credit balance in the General reserve of Rs. 231.24 crore has been credited to General reserve of the Company.

(ii) In terms of the Scheme-1, as at appointed date the investment in the equity shares of Sterlite in the books of malco-residual has been cancelled and resultant balance amount of Rs. 312.26 crore has been debited to General reserve of the Company.

(iii) In terms of the Scheme-1, inter-company balances (payables, receivables, loans, advances, etc.) between malco-residual and the Company as at the appointed date have been cancelled.

(iv) The balance in Surplus in Statement of Profit and Loss of malco-residual as at august 17, 2013 rs. 351.06 crore (after the alignment of accounting policies of malco-residual business in line with SGL accounting policies) has been included in Surplus in Statement of Profit and Loss of the Company.

(d) Upon the Scheme becoming effective and with effect from the appointed date, the assets and liabilities of the power business undertaking, as appearing in the books of malco at the close of business on the day preceding the appointed date as vested in the Company, are recorded by Vedanta Aluminium Company (“VAL”) at a value derived by apportioning the cash consideration paid amongst all assets and liabilities pertaining to the power business of the undertaking. In terms thereof, VAL has recorded assets of Rs. 216.98 crore and liabilities of Rs. 66.98 crore by apportioning the cash consideration of Rs. 150 crore as stated above.

Subsequently, the name of VAL has been changed to malco energy Limited w.e.f. october 24, 2013.

v. Amalgamation of Ekaterina limited (ekaterina) with the company:

(a) The honourable high Court of judicature of Bombay at Goa, by an order dated april 03, 2013, and the honourable Supreme Court of mauritius by an order dated august 24, 2012, approved the Scheme of amalgamation (the “Scheme-2”) of Ekaterina (holding 70.5% shareholding in Vedanta aluminium Limited), with the Company effective from the appointed date april 01, 2012. the effective date of amalgamation is august 17, 2013.

(b) In accordance with the Scheme-2 :
(i) 72,034,334 number of equity shares were issued to the equity shareholders of Ekaterina in the ratio of 1 equity shares of face value Re. 1 each in the Company for every 25 shares held in ekaterina.

(ii) In accordance with the Scheme-1, the assets, liabilities and reserves of ekaterina as at april 01, 2012 along with subsequent addition/ deletion up to march 31, 2013 have been recorded in the books of the Company at their respective book values.

(iii) Ekaterina stands dissolved without winding up with effect from april 01, 2012.

(iv) Ekaterina carried on the business for and behalf of the Company for the period from the appointed date to the effective date, in trust as per the Scheme-2.

(c) The amalgamation has been accounted under the ‘Pooling of interests’ method as envisaged in the accounting Standard (aS) – 14 on accounting for Amalgamations specified in the Companies (Accounting Standard) Rules 2006, whereby:

(i) The assets, liabilities and reserves of ekaterina as at appointed date have been recorded at their respective carrying values in the books of the Company. in accordance with the Scheme-2, difference between total assets, total liabilities, reserves and the face of value shares capital allotted to the shareholders of EKTL amounting to Rs. 917.48 crore credited to General reserve of the Company.

(ii) In terms of the Scheme-2 inter-company balances (payables, receivables, loans, advances, etc.) between ekaterina and the Company as at the appointed date have been cancelled.

VI. Consequent to the above and utilising the carry forward unabsorbed tax losses of VAL-Aluminium and SeL, the Company has recognised a current tax credit of Rs. 1,755.09 crore during the year.

VII. Subsequent to the effectiveness of the Scheme, a Special Leave petition challenging the order of the high Court of judicature of Bombay at Goa has been filed by the income tax department, a creditor and a shareholder have challenged the Scheme in the high Court of madras. The said petitions are pending for admission/hearing.

VIII. Subsequent to the effectiveness of the Scheme, all the subsidiaries of erstwhile Sterlite industries (india) Limited have become subsidiaries of the Company. Consequent to the above, such subsidiaries have been consolidated in the Group Consolidated Financial Statements from april 1, 2013 and an amount of Rs. 47,151.30 crore has been accounted under reserves & Surplus [refer note no 6) as an adjustment “Pursuant to Scheme of Amalgamation”, which includes the adjustments to the General Reserves and the adjustments to the General reserves and Surplus in Consolidated Statement of Profit and Loss, as referred to in Notes I to V above.

34. Acquistion of val’s power business through slump sale:

By way of Slump sale agreement dated august 19, 2013 between VAL and the Company, the power business consisting of 1,215 mW (9X135MW) captive power plants situated at jharsuguda and 300MW co-generation facility (90mW operational and 210mW under development) at Lanjigarh together with the assets and liabilities, has been purchased by the Company on a going concern basis at its carrying value at a consideration of ` 2,893 Crore.

35. Pursuant to the share purchase agreement, dated February 25, 2012 between Bloom Fountain Limited (‘BFL’), a wholly owned subsidiary of the Company and Vedanta Resources Holdings Limited (‘VRHL’), BFL acquired 38.68% shareholding in Cairn India Limited and associated debts of $5,998 million by way of acquisition of Twin Star Energy Holdings Limited (‘tehL’), for a nominal cash consideration of $1. Consequently w.e.f. August 26, 2013, TEHL, twin Star mauritius holdings Limited (‘tmhL’) and Cairn india Limited (including all its subsidiaries) have become subsidiaries of the Company.

The effect of acquisition of TEHL, TMHL and Cairn India Limited on the financial position and results as included in the consolidated financial statements for the year ended March 31, 2014 are given below:

From the auditors’ report
EMPHASIS OF MATTER

We draw attention to Note 31 to the financial statements which describes the Scheme of amalgamation and Arrangement and its effects given in the financial statements.

Our opinion is not qualified in respect of this matter.

BCAJ Admin

From Published Accounts

Section A: Acc ounting for expenditure for assets not owned by the company (enabling assets) by ‘Rate Regulated Entities’

Compiler’s Note
The
EAC of ICAI had in July 2011 opined that expenditure on enabling assets
not owned by the company should be charged off to revenue in the
accounting period in which such expenditure is incurred. ICAI has
subsequently issued ED of AS 10 (revised) wherein the matter was sought
to be addressed. The ICAI has also subsequently issued GN on Rate
Regulated Activities effective from 1st April 2015 with an earlier
adoption permitted.

Given below are instances of accounting
treatment on expenditure incurred by ‘rate regulated entities’ and
earlier adoption of the ICAI GN on Rate Regulated Activities in some
cases.

NTPC Ltd. (31-3-2015)
From Significant Accounting Policies
Fixed Assets

4.
Capital expenditure on assets not owned by the Company relating to
generation of electricity business is reflected as a distinct item in
capital work-inprogress till the period of completion and thereafter in
the tangible assets. However, similar expenditure for community
development is charged off to revenue.

Extract from notes below ‘Tangible Assets’ schedule
h)
The Company has received an opinion from the EAC of the ICAI on
accounting treatment of capital expenditure on assets not owned by the
Company, wherein it was opined that such expenditure are to be charged
to the Statement of Profit and Loss as and when incurred. The Company
has represented that such expenditure being essential for setting up of a
project, the same be accounted in the line with the existing accounting
practice and sought a review.

During the year, ICAI has issued
an exposure draft of AS- 10 ‘Property, Plant & Equipment’ which
would replace the existing AS-10 ‘Accounting for Fixed Assets’. Para 9
of the said exposure draft and explanation thereto provides for
capitalisation of such expenditure alongwith the project cost. The final
AS-10 ‘Property, Plant & Equipment’ is yet to be issued by the
Ministry of Corporate Affairs (MCA), GOI. Pending receipt of
communication from the ICAI regarding the review of opinion &
notification of the Revised AS-10 by the MCA, the Company continues to
account for the said expenditure as per accounting policy no.E-4.

From Comments of C&AG u/s. 143(6)(b) and management reply thereon

Capital work-in-progress – (Note No.13)

Capital Expenditure on assets not owned by the Company – Rs.76.37 crore
As
per provisions of AS-10 highlighted by the Expert Advisory Committee
(EAC) of the Institute of Chartered Accountants of India (ICAI) in their
opinion of May 2010 reiterated in July 2011, the expenditure incurred
on enabling assets not owned by the Company should be charged off to
revenue in the accounting period in which such expenditure is incurred.

The
Company, however, capitalised the expenditure incurred on assets not
owned by the Company. The Company was requested (September 2014) by
Audit, to revise its Accounting Policy in line with the opinion given by
EAC of ICAI, if the decision of EAC on the review application of NTPC
of October 2011 is not received till finalisation of annual accounts of
the Company for 2014- 15. Though the decision of EAC of ICAI in the
matter raised by the Company was not received till finalisation of the
accounts for 2014-15, the Company did not revise its Accounting Policy
on enabling assets not owned by the Company in the current year.

The Company stated that based on their follow up, ICAI issued Exposure Draft of AS-10 which would replace the existing AS-10. The issue is being addressed in the revised AS-10. The reply is to be viewed against the fact that Revised AS-10 has not yet been notified and is likely to have prospective application. Therefore, booking of expenditure on enabling assets not owned by the Company under Tangible Assets and Capital work in progress up to March 2015 has resulted in understatement of “Expenses” by Rs.130.77 crore and overstatement of “Tangible Assets” (Net block) by Rs.54.40 crore as well as “Capital work in progress” by Rs.76.37 crore. Consequently, profit for the year is also overstated by Rs.130.77 crore.

Management Reply
The Company is a Rate Regulated Entity. Accounting of capital expenditure on the assets not owned by the Company was being done by the Company considering the Guidance Note on ‘Treatment of Expenditure during Construction Period’ since long. With the withdrawal of the above guidance note, accounting of such expenditure is being done in line with the provisions of Para 9.1 and 10 of AS 10 on ‘Accounting for Fixed Assets’ which provides that expenditure on assets which is directly attributable to the construction of the power project should be capitalised.

The balances appearing under the head ‘Capital expenditure on assets not owned by the Company’ in Tangible Assets and Capital Work-in-Progress represents expenditure incurred on roads, construction power lines, etc.

Expenditure incurred on these assets is directly attributable to the construction of the power projects without which the construction of projects of the Company would not be possible. In the opinion of the Management, such expenditure is necessary for bringing the asset to the location and condition necessary for it to be capable for operating in the manner intended by the management.

Accordingly, a reference has been made to the Expert Advisory Committee of the Institute of Chartered Accountants of India for review of its opinion which is still awaited. Pending disposal of the reference, the company has continued its existing practice of capitalisation of such expenditure which has been followed consistently over the years. This has also been disclosed in Note No.12 (h) of the financial statements.

NHPC Ltd . (31-3-2015)
From Notes to Accounts

10. Construction activities at site of Subansiri Lower Project have been interrupted w.e.f. 16.12.2011 due to protest of anti-dam activists. Technical and administrative work is however continuing. Management is making all out efforts to restart the work at site. In line with the opinion of Expert Advisory Committee (EAC) of the Institute of Chartered Accountants of India (ICAI), borrowing cost of Rs. 406.83 crore (up to previous year Rs. 766.90 crore) and administration and other cost of Rs. 115.12 crore (upto previous year Rs. 341.54 crore) have been charged to the Statement of Profit & Loss.

The company has, however, adopted the accounting as per Guidance Note on Rate Regulated Activities issued by the Institute of Chartered Accountants of India which allows recognition of ‘Regulatory Asset’ and corresponding ‘Regulatory Income’ of the right to recover such expense which are not allowed to be capitalised as part of cost of relevant fixed asset in accordance with the Accounting Standards, but are nevertheless permitted by Central Electricity Regulatory Commission (CERC), the regulator, to be recovered from the beneficiaries in future through tariff. (Detailed disclosure as per the ibid Guidance Note is given at para no.23 below of this Note)

23. Disclosure relating to creation of Rate Regulated Assets & recognition of Rate Regulated Income as per the ‘Guidance Note on Accounting for Rate Regulated Activities’ issued by the Institute of Chartered Accountants of India (ICAI) :
The company is engaged in construction & operation of hydroelectric power projects. The price (tariff) to be charged by the company for electricity sold to its customers, is determined by Central Electricity Regulatory Commission (CERC) under applicable CERC (terms & conditions of tariff) Regulations. The said price (tariff) is based on allowable costs like interest costs, depreciation, operation & maintenance including a stipulated return. This form of rate regulation is known as cost-of-service regulations. The basic objective of such regulations is to give the entity the opportunity to recover its costs of providing the goods or service plus a fair return.

For the purpose, the company is required to make an application to CERC based on capital expenditure incurred duly certified by the Auditors or already admitted by CERC or projected to be incurred upto date of commercial operation and additional capital expenditure duly certified by the Auditor or projected to be incurred during tariff year. The tariff determined by CERC is recovered from the customers (beneficiaries) on whom the same is binding.

The above rate regulation does result into creation of right (asset) or an obligation (liability) as envisaged in the accounting framework which is not the case in other industries. The ICAI has issued a Guidance Note on accounting for Rate Regulated Activities, which is applicable to entities that provide goods or services whose prices are subject to cost-of-service regulations and the tariff determined by the regulator is binding on the customers (beneficiaries). As per guidance note, a regulatory asset is recognised when it is probable (a reasonable assurance) that the future economic benefits associated with it will flow to the entity as a result of the actual or expected actions of the regulator under applicable regulatory framework and the amount can be measured reliably.

As explained above, all operating activities of the Company are subject to cost-of-service regulations as it meets the criteria set out in the guidance note hence it is applicable to the Company. Though the Guidance Note is effective from 01.04.2015, the Company has opted to adopt it from the Financial Year 2014-15, since earlier adoption is permitted.

The guidance note also provides that in some cases, a regulator permits an entity to include in the rate base, as part of the cost of self-constructed (tangible) fixed assets or internally generated intangible assets, amounts that would otherwise be recognised as expense in the statement of profit and loss in accordance with Accounting Standards. After the construction is completed, the resulting cost is the basis for depreciation or amortisation and unrecovered investment for rate determination. A regulatory asset is to be recognised by the entity in respect of such costs since the same is recoverable from the customers (beneficiaries) in future through tariffs.

As stated in para 10 above, the borrowing cost of ` 406.83 crore (up to previous year Rs.766.90 crore) and administration and other cost of Rs.115.12 crore (up to previous year Rs.341.54 crore) incurred on ‘Subansiri Lower Project’, wherein the active construction is interrupted since 16.12.2011, have been charged to the Statement of Profit & Loss in compliance of provision of Accounting Standard 10, Accounting for fixed asset & Accounting Standard-16, Borrowing Cost as notified under the Companies Act, 2013. However such expenditure is permitted under CERC (Terms and Conditions of Tariff) Regulations, 2014 to be recovered through future tariffs.

In pursuance of the above, the company has created regulatory assets and has recognised corresponding regulatory income for the Financial Year 2014-15/ credit to the opening balance of surplus against the amount pertaining to the period 16.12.2011 to 31.03.2014 using transition provision as per the ibid Guidance Note as below:

Regulatory
asset

For the period

For the finan-

Total

created in relation to:

16.12.2011 to

cial year

31.03.2014

2014-15

Borrowing Costs

766.90

406.83

1173.73

Administrative & other

341.54

115.12

456.66

Costs

Total

1108.44*

521.95**

1630.39

*by corresponding credit to opening balance of Surplus by Rs.876.10 crore (Rs. 1108.44 crore less provision for Income Tax for Rs.232.34 crore) [refer- Note No.3-Reserves and Surplus].

** by corresponding credit to current year’s profit through “Regulatory Income”. From Auditors’ Report Emphasis of Matters a) ..b) .. c) .. d) .. e) ..

f) Note No. 29 para 23 read with significant accounting policy no. 4 to the Financial Statements regarding earlier adoption (duly permitted) of Guidance Note on Accounting for Rate Regulated Activities issued by The Institute of Chartered Accountants of India.

Our opinion is not modified in respect of these matters.

Nuclear Power Corporation of India Ltd (31-3-2015) From Significant Accounting Policies

Capital Work-in-Progress

Capital work in progress (CWIP) includes all expenditure for acquisition and construction of assets. Such expenditure includes cost of preparing project report, conducting feasibility study, land survey and location study etc. CWIP also includes all direct incidental expenditure during construction (EDC). All common costs are allocated on a rational basis. EDC is allocated on a pro rata basis to the assets capitalised on commencement of commercial operation.

Major Renovation, Modernisation and Upgradation of Units of Stations needing long shut down resulting in increased efficiency of the unit are considered as projects.

All direct expenditure during such major renovation, modernisation & upgradation is considered as ‘CWIP’ and capitalised on its completion.

Any payment in relation to the development schemes/ creation of facilities at projects as per the approval/ directive of Department of Atomic Energy (i.e. regulator for fixation of tariff) and recoverable through tariff is considered as ‘Capital Work in Progress’ and capitalised on completion of the relevant projects.

From Notes to Financial Statements

Department of Atomic Energy (DAE) in consultation with the Tamil Nadu State Government has directed to release funds amounting to Rs.200.00 crore to Tamil Nadu State Authorities (TSAs) towards the approved development schemes for the project affected people of KKNPP. As per the directive of DAE, the said amount released to TSAs is required to be included in the overall project cost of KKNPP 3 & 4 and a sum of Rs.89.34 crore (Rs.45.00 crore in FY 2012-13 and Rs.44.34 crore in FY 2014-15) has been released to TSAs. Further, the said amount released to TSAs is recoverable through tariff on the completion of the said project. The Institute of Chartered Accounts of India in its Guidance note on ‘Accounting for rate regulated activities’ has advised to recognise such nature of payments as regulatory ‘Asset’ as they met the recognition criteria given in the framework. Accordingly, the said amounts released have been accounted under the capital work in progress (Note-12).

Keeping in view the above, a new clause in the significant accounting policies related to Capital Work in Progress (CWIP) has been introduced during the current year ended on 31.03.2015 (Refer Accounting Policy No. G – CWIP). Had this guidance note not been followed , this may result in decrease in CWIP by a sum of Rs.89.34 crore and also decrease in profit before tax by a sum of Rs.89.34 crore.

BCAJ Admin

From published accounts

Section A:
Multiple schemes of arrangement effected during the year Mahindra & Mahindra Ltd. (31-03-2014)

Scheme 1
From Notes to Accounts
Pursuant to the Scheme of Arrangement (‘The Scheme’) between Mahindra Trucks and Buses Limited (MTBL), a subsidiary of the Company, and the Company, as sanctioned by the Honourable High Court of Bombay vide its order dated 7th March 2014, the entire assets and liabilities, duties and obligations of the Trucks Business of MTBL was transferred to and vested in the Company, from 1st April, 2013 (the appointed date). The scheme became effective on 30th March, 2014.

The accounting of this arrangement was done as per the scheme approved by the Honourable High court of Bombay and the same has been given effect to in the financial statements as under:

(a) The assets and liabilities of the Trucks Business of MTBL were recorded in the books of the Company at their book values.

(b) MTBL reorganised its Equity Share Capital and Securities Premium account by writing off it’s accumulated losses and the excess of assets over liabilities given up, first against Securities Premium Account and the Balance against the reorganisation of Share Capital by reducing the face value and paid up value of the Equity Share Capital of Rs. 10 each to Rs. 0.20.

(c) Consequent to the transfer of Trucks Business, the Company reorganised its investment cost in MTBL in proportion to the net worth of the remaining business of MTBL and the net worth of the Trucks Business leading to a reduction in investment value of Rs. 819.79 crore.

(d) The excess of the reduction in investment value over the assets taken over amounting to Rs. 565.85 crore was debited to General Reserve.

The result for the year ended 31st March, 2014 also include a tax benefit of Rs. 297.78 crore arising from the carry forward unabsorbed past losses (including unabsorbed depreciation) and deferred tax positions of the Trucks business of MTBL.

The current year figures are therefore not strictly comparable with that of the previous year.

Scheme 2
From Notes to Accounts
The Board of Directors of the Company during the year approved entering into a transaction in the Auto Components business with CIE Automotive S.A., Spain (CIE). The transaction is to be completed in parts.

The first part involving the following has been completed during the year:

(a) The Company transferred its entire shareholding in Mahindra Gears & Transmissions Private Limited at a fair value determined by an independent valuer to its wholly-owned subsidiary Mahindra Investments (India) Private Limited (MIPL). The excess of Rs. 23.62 crore over the cost has not been recognised in these results having regard to the principles of prudence and the substance of this transaction, and will be dealt with on completion of the related parts.

(b) The Company sold 99.4% of its holdings in Mahindra CIE Automotive Limited (MCIE) (formerly known as Mahindra Forgings Limited) and 100% of its holdings in both Mahindra Composites Limited (MCL) and Mahindra Hinoday Industries Limited (MHIL) to one of the subsidiaries of CIE at a price that is lower than the carrying value of these investments by Rs. 147.76 crore, which amount has been debited to the Investment Fluctuation Reserve (IFR). IFR is expected to be credited, having regard to the substance of the transaction, with an amount not less than the amount debited above, when the second part of the transaction, described below, takes place.

(c) Consequently MHIL, Mahindra Forgings International Limited, Mahindra Forgings Europe AG, Gesenkschmiede Schneider GmbH, JECOJellinghaus GmbH, Falkenroth Umformtechnik GmbH, Stokes Group Limited, Stokes Forgings Dudley Limited, Stokes Forgings Limited, Mahindra Forgings Global Limited, Schoneweiss & Co. GmbH ceased to be subsidiaries of the Company. MCL ceased to be an associate of the Company.

MCIE ceased to be a subsidiary and became an associate of the Company.

(d) The Company acquired a 13.5% stake in CIE through its wholly owned subsidiary Mahindra Overseas Investment Company (Mauritius) Limited (MOICML), making it an associate of the Company, in view of its contractual representation on the Board of CIE.

(e) Completion of open offer by CIE through its subsidiary in both MCIE and MCL.

The second part of the transaction involves the merger of Mahindra Ugine Steel Company Limited, Mahindra Gears International Limited and Mahindra Investments (India) Private Limited, and MHIL, MCL and a CIE subsidiary with MCIE effective 1st October, 2013 through Schemes of Arrangement u/s. 391 to 394 of the Companies Act, 1956. On completion of both parts above:

(a) CIE will hold approximately 53% in MCIE;

(b) The Company will hold 20.04% in MCIE; and

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From Published Accounts

Section A: Disclosure in Limited Review Results regarding nonappointment of independent directors, etc. as per Companies Act 2013 and listing agreement

Compiler’s Note
Sections 149, 177 and 178 of the Companies Act, 2013 as well as Clause 49 IIIB of the listing agreement require companies to have a minimum number of independent directors. There are several PSUs where the respective ministry of the Government of India has not appointed / re-appointed the required number of independent directors since several months. Following are 2 instances of listed PSUs where the auditors have given observations in the quarterly limited review reports for same.

Dredging Corporation of India Ltd . (period ended 30th Sept., 2015)

From Notes below unaudited quarterly results

8. Statutory Auditors have qualified in their limited review report as under:
Quote: The Company had not complied with the provisions of section 135, 149(1), 149(4), 177 and 178 of the Companies Act, 2013. At this stage, we are unable to comment on the consequential impact of non-compliance of these provisions if any.

9. Company’s Reply to Statutory Auditor’s Qualification is as under:
The Company is a Government of India Undertaking and as per the Articles of Association of the Company, the Directors are to be appointed by the President of India. The issue of appointment of requisite number of independent directors, women director, has been taken up with the administrative Ministry – Ministry of Shipping and the same is pending with them. Constitution of different committees as required under the Act will be taken up after the appointment of the said Directors by the Ministry of Shipping. The said qualification has no impact on the profit of the Company for the year.

From Limited Review Report

4. Basis for qualified conclusion
The company had not complied with the provisions of section 135, 149(1), 149(4), 177 and 178 of the Companies Act, 2013. At this stage, we are unable to comment on the consequential impact of noncompliance of these provisions if any.

5. Based on our review conducted as above, subject to effect of the non compliance of provisions of the Companies Act, 2013 as mentioned in para 4, nothing has …..

Hindustan Petroleum Corporation Ltd . (period ended 30th Sept., 2015)

From Limited Review Report

Emphasis of Matter
4. Without qualifying our review report, we refer to Note to the Statement relating to review and recommendation of the financial results to the Board of Directors by the Audit Committee of the Company. The Company has only one independent director. The Audit Committee consisting of only one Independent Director recommended the results to the Board of Directors of the Company. However, as per clause 49 III B of the Listing Agreement, minimum two independent members should be present to form quorum of the Audit Committee and accordingly, the said meeting had no requisite quorum in terms of the provision of the Listing Agreement.

BCAJ Admin

From Published Accounts

Section B: Disclosure regarding Corporate Social Responsibility as per the Companies Act, 2015

Reliance Industries Ltd. (31-3-2015)

From Director’s Report
The Corporate Social Responsibility and Governance Committee (CSR&G Committee) has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which has been approved by the Board.

The CSR Policy may be accessed on the Company’s website at the link: http://www.ril.com/getattachment/ d5fd70ef-e019-47e5-bb83-de2077874505/Corporate- Social-Responsibility-Policy.aspx. The key philosophy of all CSR initiatives of the Company is guided by three core commitments of Scale, Impact and Sustainability. The Company has identified six focus areas of engagement which are as under:

Rural Transformation: Creating sustainable livelihood solutions, addressing poverty, hunger and malnutrition.

Health: Affordable solutions for healthcare through improved access, awareness and health seeking behaviour.

Education: Access to quality education, training and skill enhancement.

Environment: Environmental sustainability, ecological balance, conservation of natural resources.

Protection of National Heritage, Art and Culture: Protection and promotion of India’s art, culture and heritage.

Disaster Response: Managing and responding to disaster.

The Company would also undertake other need based initiatives in compliance with Schedule VII to the Act.

During the year, the Company has spent Rs. 761 crore (around 2.85% of the average net profits of last three financial years) on CSR activities. The Annual Report on CSR activities is annexed herewith marked as Annexure II. (not reproduced)

Raymond Ltd. (31-3-2015)

From Director’s Report

As a part of its initiative under the “Corporate Social Responsibility” (CSR) drive, the Company has undertaken projects in the area of rural development and promoting health care. These projects are in accordance with Schedule VII of the Companies Act, 2013 and the Company’s CSR policy. The report on CSR activities as required under Companies (Corporate Social Responsibility Policy) Rules, 2014 is set out as Annexures – C (not reproduced) forming part of this Report. Apart from the CSR activities under the Companies Act, 2013 the Company continues to voluntarily support the following social initiatives:

i) Smt. Sulochanadevi Singhania School at Thane, Maharashtra run by Smt. Sulochanadevi Singhania School Trust (“the School Trust”), a public charitable educational trust,

ii) Kaliashpat Singhania High School in Chhindwara, Madhya Pradesh, run by an educational society, both the schools have an overall strength of about 8,000 students,

iii) Dr. Vijayapat Singhania School at Vapi, Gujarat run by the School Trust provides quality education not only to the Raymond employees’ children, but also to the children of the local populace.

iv) R aymond Rehabilitation Centre set-up for the welfare of under-privileged youth at Jekegram, Thane. This initiative enables less fortunate youth to be selfsufficient in life. This Centre provides free vocational training workshops to young boys over the age of 16. The three-month vocational courses comprises of basic training in electrical, air-conditioning & refrigeration and plumbing activities, and

v) A Tailoring Trust named ‘STIR’ (Skilled Tailoring Institute by Raymond) set up as a social initiative that provides tailoring skills to the underprivileged, school drop-outs, women and youth and helps improve their income generating capability and also retain the art of tailoring. Under the aegis of this Trust, Raymond Tailoring Centres have come up at Patna, Jaipur, Jodhpur and Lucknow.

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From Published Accounts

Section A: Reporting on Consolidated Financial Statements (CFS) as per Companies Act, 2013

Compilers’ Note:
Section 143 of the Companies Act, 2013 lays down the reporting requirements by the Statutory Auditor. The said reporting requirements (including those for reporting under CARO, 2015) also apply to audit reports on CFS since preparation of CFS (barring a few exemptions for 2014-15) is mandated by the Companies Act, 2013.

The ICAI has vide Announcement dated 1st May 2015 given guidance on preparation of audit reports on CFS and has also inserted illustrative reports on CFS to SA 700 and SA 705.

Inspite of the above guidance, auditors have been faced with several challenges in reporting on CFS since they have to mainly depend on the information available in the reports issued by the Component Auditors. The challenges also increase since there could be subsidiaries and associates outside India whose auditors follow the reporting requirements of the respective jurisdictions.

Given below are some illustrations on different reporting on “Other legal and regulatory requirements’ in the audit report on CFS for the year ended 31st March 2015.

Housing Development Finance Corporation Ltd .
As required by section 143(3) of the Act, we report, to the extent applicable, that:

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid consolidated financial statements;

d) not reproduced …

Bajaj Auto Ltd .

As required by section 143(3) of the Act, we report to the extent applicable, that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid consolidated financial statements;

(b) In our opinion, proper books of account as required by law maintained by the Holding Company, including relevant records relating to preparation of the aforesaid consolidated financial statements have been kept so far as it appears from our examination of those books and records of the Holding Company. The two subsidiaries and one associate of subsidiary company of the Holding Company are incorporated outside India hence requirement of section 143(3) is not applicable to them;

(c) The Consolidated Balance Sheet, the Consolidated Statement of Profit and Loss and the Consolidated Cash Flow Statement dealt with by this report are in agreement with the relevant books of account maintained by the Holding Company including relevant records relating to preparation of consolidated financial statements. The 2 subsidiaries and 1 associate of subsidiary company of the Holding Company are incorporated outside India hence requirement of section 143(3) is not applicable to them;

(d) not reproduced …

Tata Global Beverages Ltd .
As required by section 143(3) of the Act, we report, to the extent applicable, that:

b) In our opinion, proper books of account as required by law maintained by the Holding Company, its subsidiaries included in the Group, associate companies and jointly controlled entities incorporated in India including relevant records relating to preparation of the aforesaid consolidated financial statements have been kept so far as it appears from our examination of those books and records of the Holding Company and the reports of the other auditors;

c) The Consolidated Balance Sheet, the Consolidated Statement of Profit and Loss, and the Consolidated Cash Flow Statement dealt with by this Report are in agreement with the relevant books of account maintained by the Holding Company, its subsidiaries included in the Group, associate companies and jointly controlled entities incorporated in India including relevant records relating to the preparation of the consolidated financial statements;

d) Not reproduced …

YES Bank Ltd .
As required by section 143 (3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

(b) In our opinion, the aforesaid consolidated financial statements comply with the Accounting Standards specified u/s. 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

ICICI Bank Ltd .
As required by section 143 (3) of the Act, based on our audit and on the consideration of report of the other auditors on separate financial statements as also the other financial information of certain subsidiaries and an associate, consideration of work of the joint auditor of a subsidiary and on consideration of unaudited financial statements of certain associates as furnished by the management as noted in the ‘other matter’ paragraph, we report that:

a) All the information and explanations which to the best of our knowledge and belief were necessary for the purpose of audit have been sought and obtained;

b) In our opinion, proper books of account as required by law have been kept by the various constituents of the Group so far as it appears from the examination of those books;

c) The Consolidated Balance Sheet, the Consolidated Profit and Loss Account and the Consolidated Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d) Not reproduced…

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From Published Accounts

Restatement of published results in terms of SEBI circular and directions for restatement to give effect to audit qualifications:

Compilers’ Note
SEBI had issued a circular No CFD/DIL/7/2012 dated 13th August 2012, whereby in its continuous endeavor to enhance quality of financial reporting had put in place a system to monitor audit qualifications contained in the audit report accompanying the audited financial statements submitted by listed companies. Given below is an instance where pursuant to the above circular and the due procedure followed by SEBI, the company has restated its published results to give effect to the audit qualifications.

Shreyas Shipping & Logistics Ltd
Proforma restated results as filed with stock exchange for the year ended 31st March 2014 (similar restated results were also filed for the year ended 31st March 2013)

Notes:
1) T his represents the restated results of the Company in terms of Securities and Exchange Board of India (SEBI) letter CFD/DIL/HB/OW/35709/2014 dated 12th December, 2014 whereby SEBI has directed the financial results for the year ended 31st March, 2013 to be restated giving effect to the impact of audit qualifications in terms of SEBI Circular No.CIR/CFD/ DIL/7/2012 dated 13th August, 2012 read with SEBI Circular CIR/CFD/DIL/9/2013 dated 5th June, 2013.

2) T he restatement for the year ended 31st March, 2013 and consequent restatement for the year ended 31st March, 2014 have been reviewed by the Audit Committee & approved by the Board in the meeting held on 11th February, 2015.

3) The restatement gives effect to the two qualifications in the audit report for the year ended 31st March, 2014:

a) T he Company has a policy of amortising Dry dock Expenses over 30 months. Accordingly Rs. 256.32 lakh out of unamortised amount at the beginning of the quarter have been charged to statement of profit and loss and balance amount of Rs. 469.09 lakh have been deferred to be amortised over the balance period. The Auditors have qualified their Review Report stating that this treatment is not in accordance with Accounting Standard and dry dock expenses are overstated to the extent of Rs. 256.32 lakh for the quarter and overstated by Rs.128.67 lakh for the previous quarter. Cumulatively the profit is overstated by Rs. 469.09 lakh as on 31st March, 2014 (to the extent carried forward), and the entire expenses should have been charged off to statement of Profit and Loss in the respective quarter itself.

b) T he Company has exercised the option provided by the Government notification dated 29th December, 2011, in furtherance to the earlier Government Notification dated 31st March, 2009, under Accounting Standard 11 to capitalise/adjust the foreign exchange differences arising on reporting of long term foreign currency monetary items in so far as they relate to acquisition of depreciable capital assets. Ministry of Corporate Affairs has clarified that borrowing costs as defined in Para 4(e) of Accounting Standard 16 (borrowing costs) need not be excluded for such capitalisation under Accounting Standard 11 notification w.e.f. 1st April, 2011. This has vindicated the Company’s stand on the issue but only from 1st April, 2011. If the capitalisation had been done after adjusting the borrowing cost, depreciation for the quarter would have been less to the extent of Rs. 2.94 lakh, Rs. 3.01 lakh for previous quarter, Rs.11.94 lakh for the year ended 31st March, 2014, Rs. 11.94 lakh for the year ended 31st March, 2013 & cumulative depreciation overstated by Rs. 59.88 lakh, Rs. 212.28 lakh would have been charged to statement of profit and loss as a prior year expenses & the Fixed assets and Reserves would have been less by Rs. 152.30 lakh. The Auditors had qualified this due to non-adoption of FA Q issued by ICAI (till 31st March, 2011).

c) Cumulative Impact of the above two qualifications is given effect to as follows:

4) The above restatement:

a) has not been given effect to the books of accounts and as per SEBI Circular CIR/CFD/DIL/9/2013 dated 5th June, 2013 will be given effect to in the books of accounts for year ended 31st March, 2015 as a ‘prior period item’ in accordance with Accounting Standard-6 ‘Net profit or loss for the period, prior period items & change in the accounting policies’.

b) is without giving effect to other Accounting Standards such as AS-4 – ‘Contingencies & events occurring after the balance sheet date’.

c) does not require any provision for income tax as the Company is covered by Tonnage Tax.

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BCAJ Admin

From published accounts

Section B:
• Reporting in case of previous years’ financial statements audited by another firm

SKF India Ltd. (year ended 31st December, 2013)
From Auditor’s Report
Other Matter
The financial statements of the Company as at 31st December, 2012 and for the year then ended were audited by another firm of chartered accountants who, vide their report dated 21 February, 2013, expressed an unmodified opinion on those financial statements.

• Basis of preparation of financial statements (in view of section 133 of the Companies Act, 2013)

Infosys Ltd (year ended 31st March, 2014)
From Significant Accounting Policies

The financial statements are prepared in accordance with Indian Generally Accepted Accounting Principal (GAAP) under the historical cost convention on the accrual basis except for certain financial instruments which are measured at fair values. GAAP comprises mandatory accounting standards as prescribed by the Companies (Accounting Standards) Rules, 2006, the provisions of the Companies Act, 2013 (to the extent notified) and the Companies Act, 1956 (to the extent applicable) and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

• Disclosure for Contingent Liabilities and Commitments
Infosys Ltd (year ended 31st March 2014)
From Notes to Accounts

Claims against the company not acknowledged as debts include demands from the Indian Income tax authorities for payment of additional tax of Rs. 1,548 crore (Rs. 1,088 crore) including interest of Rs. 430 crore (Rs. 313 crore) upon completion of their tax review for fiscal 2006, fiscal 2007, fiscal 2008 and fiscal 2009. These income tax demands are mainly on account of disallowance of a portion of the deduction claimed by the company u/s. 10A of the Income-tax Act. The deductible amount is determined by the ratio of export turnover to total turnover. The disallowance arose from certain expenses incurred in foreign currency being reduced from export turnover but not reduced from total turnover. The tax demand for fiscal 2007, fiscal 2008 and fiscal 2009 also includes disallowance of portion of profit earned outside India from the STP units and disallowance of profits earned from SEZ units. The matter for fiscal 2006, fiscal 2007, fiscal 2008 and fiscal 2009 are pending before the Commissioner of Income-tax (Appeals), Bangalore. The company is contesting the demand and the management including its tax advisors believes that its position will likely be upheld in the appellate process. The management believes that the ultimate outcome of these proceedings will not have a material adverse effect on the Company’s financial position and result of operations.

As of the Balance Sheet date, the Company’s net foreign currency exposures that are not hedged by a derivative instrument or otherwise are nil (Rs. 1,189 crore as at 31st March, 2013).

The foreign exchange forward and options contracts mature between 1 to 12 months. The table below analyses the derivative financial instrument into relevant maturity groupings based on the remaining period as of the balance sheet date:

The Company recognised a gain on derivative financial instruments of Rs. 217 crore and Rs. 68 crore during the year ended 31st March, 2014 and 31st March, 2013, respectively, which is included in other income.

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BCAJ Admin

From Published Accounts

Section A: Depreciation provision as per Schedule II of Companies Act, 2013

Compilers’ Note:
Schedule II to the Companies Act, 2013 lays down the recommended useful lives and residual value to compute depreciation for tangible assets. It also provides that if a company adopts a useful life different from what is specified in Schedule II or uses a different residual value, the financial statements shall disclose such difference and provide justification in this behalf duly supported by technical advice. Schedule II also requires that where cost of a part of the asset is significant to total cost of the asset and useful life of that part is different from the useful life of the remaining asset, useful life of that significant part shall be determined separately (component approach).

Following Schedule II as against the erstwhile Schedule XIV to the Companies Act, 1956 will, in most cases, result in changes in the amount of depreciation provision from the minimum rates prescribed by the erstwhile Schedule XIV. ICAI has issued an Application Guide to the provisions of Schedule II to the Companies Act, 2013.

Given below are some illustrative disclosures on adoption of Schedule II.

Sobha Limited (31-3-2015)

From Significant Accounting Policies
Till the year ended March 31, 2014, Schedule XIV to the Companies Act, 1956, prescribed requirements concerning depreciation of fixed assets. From the current year, Schedule XIV has been replaced by schedule II to the Companies Act, 2013. The applicability of Schedule II has resulted in the following changes related to depreciation of fixed assets.

i. Useful lives/depreciation rates
Till the year ended March 31, 2014, depreciation rates prescribed under Schedule XIV were treated as minimum rates and the Company was not allowed charge depreciation at lower rates even if such lower rates were justified by the estimated useful life of the asset. Schedule II to the Companies Act, 2013 prescribes useful lives for fixed assets which, in many cases, are different from lives prescribed under the erstwhile Schedule XIV. However, Schedule II allows companies to use higher/lower useful lives and residual values if such useful lives and residual values can be technically supported and justification for difference is disclosed in the financial statements.

Considering the applicability of Schedule II, the management has re-estimated useful lives and residual values of all its fixed assets. The management believes that depreciation rates currently used fairly reflect its estimate of the useful lives and residual values of fixed assets, though these rates in certain cases are different from lives prescribed under Schedule II. Accordingly, the carrying amount as at April 01, 2014 is being depreciated over the revised remaining useful life of the asset. The carrying value of Rs.16.66 million, in case of assets with Nil revised remaining useful life as at April 01, 2014, is reduced after tax adjustment from the retained earnings as at such date. Further, had the Company continued with the previously assessed useful lives, charge for depreciation for the year ended March 31, 2015 would have been lower by Rs. 96 million and the profit before tax for the year ended March 31, 2015 would have been higher by such amount, with a corresponding impact on net block of fixed assets as at March 31, 2015.

ii. Depreciation on assets costing less than Rs.5,000/-
Till year ended March 31, 2014, to comply with the requirements of Schedule XIV to the Companies Act, 1956, the Company was charging 100% depreciation on assets costing less than Rs.5,000/- in the year of purchase. However, Schedule II to the Companies Act 2013, applicable from the current year, does not recognise such practice. Hence, to comply with the requirement of Schedule II to the Companies Act, 2013, the Company has changed its accounting policy for depreciations of assets costing less than Rs. 5,000/-. As per the revised policy, the Company is depreciating such assets over their useful life as assessed by the management. The management has decided to apply the revised accounting policy prospectively from accounting periods commencing on or after April 1, 2014.

The change in accounting for depreciation of assets costing less than Rs. 5,000/- did not have any material impact on financial statements of the Company for the current year.

Depreciation on tangible fixed assets
Depreciation on fixed assets is calculated on written down value basis using the following useful lives prescribed under Schedule II, except where specified.

Steel scaffolding items are depreciated using straight line method over a period of 6 years, which is estimated to be the useful life of the asset by the management based on planned usage and technical advice thereon. These lives are higher than those indicated in Schedule II.

Leasehold land where title does not pass to the Company and leasehold improvements are amortised over the remaining primary period of lease or their estimated useful life, whichever is shorter, on a straight-line basis.

TCS Limited (31-3-2015)

From Significant Accounting Policies

Fixed assets
Fixed assets are stated at cost, less accumulated depreciation/amortisation. Costs include all expenses incurred to bring the asset to its present location and condition. Fixed assets exclude computers and other assets individually costing Rs. 50,000 or less which are not capitalised except when they are part of a larger capital investment programme.

Depreciation/amortisation
In respect of fixed assets (other than freehold land and capital work-in-progress) acquired during the year, depreciation/amortisation is charged on a straight line basis so as to write-off the cost of the assets over the useful lives and for the assets acquired prior to April 1, 2014, the carrying amount as on April 1, 2014 is depreciated over the remaining useful life based on an evaluation.

Fixed assets purchased for specific projects are depreciated over the period of the project or the useful life stated above, whichever is shorter.

From Notes to Financial Statements

The Company has revised its policy of providing depreciation on fixed assets effective April 1, 2014. Depreciation is now provided on a straight line basis for all assets as against the policy of providing on written down value basis on some assets and straight line basis on others. Further the remaining useful life has also been revised wherever appropriate based on an evaluation. The carrying amount as on April 1, 2014 is depreciated over the revised remaining useful life. As a result of these changes, the depreciation charge for the year ended March 31, 2015 is higher by Rs.131.16 crore and the effect relating to the period prior to April 1, 2014 is a net credit of Rs.528.38 crore (excluding deferred tax of Rs.129.62 crore) which has been shown as an ‘Exceptional Item’ in the statement of profit and loss.

Reliance Industries Limited (31-03-2015)

From Significant Accounting Policies

Tangible Assets
Depreciation on Fixed Assets is provided to the extent of depreciable amount on the Written Down Value (WDV) Method except in case of assets pertaining to Refining segment and SEZ units/developer where depreciation is provided on Straight Line Method (SLM). Depreciation is provided based on useful life of the assets as prescribed in Schedule II to the Companies Act, 2013 except in respect of the following assets, where useful life is different than those prescribed in Schedule II are used;

In respect of additions or extensions forming an integral part of existing assets and insurance spares, including incremental cost arising on account of translation of foreign currency liabilities for acquisition of Fixed Assets, depreciation is provided as aforesaid over the residual life of the respective assets.

From Note on Fixed Assets (EXTRACTS)
Pursuant to the enactment of Companies Act 2013, the company has applied the estimated useful lives as specified in Schedule II, except in respect of certain assets as disclosed in Accounting Policy on Depreciation, Amortisation and Depletion. Accordingly the unamortised carrying value is being depreciated / amortised over the revised/ remaining useful lives. The written down value of Fixed Assets whose lives have expired as at 1st April 2014 have been adjusted net of tax, in the opening balance of Profit and Loss Account amounting to Rs.318 crore.

Raymond Limited (31-05-2015)

From Significant Accounting Policies

Method of Depreciation/ Amortisation:

i.   Depreciation on Factory buildings, Plant and machinery, Aircrafts, Electrical installations, and Equipment is provided on a Straight Line Method and in case of other assets on Written Down Value Method, over the estimated useful life of assets.
ii.   Effective 1st April 2014, the Company depreciates its fixed assets over the useful life in the manner prescribed in Schedule II of the Act, as against the earlier practice of depreciating at the rates prescribed in Schedule XIV of the Companies Act, 1956.
iii.   Based on independent technical evaluation, the useful life of Plant and Machinery has been estimated as 24 years (on shift basis), which is different from that prescribed in Schedule Ii of the Act.
iv.   In case of pre-owned assets, the useful life is estimated on a case to case basis.
v.   Cost of Technical Know-how capitalised is amortised over a period of six years thereof.
vi.   Cost of Software capitalised is amortised over a period of three years.
vii.   Cost of Leasehold land is amortised over the period of lease.
viii.   Depreciation on additions to assets or on sale/ discardment of assets, is calculated on pro rata from the month of such addition or upto the month of such sale/discardment, as the case may be.

From Note on Fixed Assets (EXTRACTS)
In accordance with the provisions of Schedule II of the Act, in case of fixed assets which have completed their useful life as at 1st April, 2014, the carrying value (net of residual value) amounting to Rs.441.10 lakh (net of deferred tax at Rs.227.13 lakh) as a transitional provision has been recognized in the Retained Earnings.

– Further in case of assets acquired prior to 1st April, 2014, the carrying value of assets (net of residual value) is depreciated over the remaining useful life of as determined effective 1st April, 2014.
– Depreciation and amortisation expenses for the year would have been higher by Rs.1,380.60 lakh, had the Company continued with the previous assessment of useful life of such assets.

Hindustan Unilever Limited (31-03-2015)

Significant Accounting Policies

Tangible Assets

Tangible assets are stated at acquisition cost, net of accumulated depreciation and accumulated impairment losses, if any. Subsequent expenditures related to an item of tangible asset are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.

Items of tangible assets that have been retired from active use and are held for disposal are stated at the lower of their net book value and net realisable value and are shown separately in the financial statements under “Other current assets”. Any expected loss is recognised immediately in the Statement of Profit and Loss.

Tangible assets not ready for the intended use on the date of Balance Sheet are disclosed as “Capital work-in- progress”.

Losses arising from the retirement of, and gains or losses arising from disposal of tangible assets which are carried at cost are recognised in the Statement of Profit and Loss.

Depreciation is provided on a pro-rata basis on the straight line method at the rates prescribed under Schedule II to the Companies Act, 2013 with the exception of the following:
–   plant and equipment is depreciated over 2 to 21 years based on the technical evaluation of useful life done by the management.
–   certain assets lying at salons and training centre, included in plant and equipment, furniture and fixtures and office equipment, are depreciated over five to nine years.
–   assets costing Rs. 5,000 or less are fully depreciated in the year of purchase.

From Note on Fixed Assets (EXTRACTS)
Depreciation of Rs. 11.97 crore on account of assets whose useful life is already exhausted on April 01, 2014 has been adjusted against General Reserve pursuant to adoption of estimated useful life of fixed assets as stipulated by Schedule II of Companies Act, 2013.

asian paints (31-05-2015)

Significant Accounting Policies

Depreciation and Amortisation

Depreciation on tangible fixed assets is provided using the Straight Line Method based on the useful life of the assets as estimated by the management and is charged to the Statement of Profit and Loss as per the requirement of Schedule II of the Companies Act, 2013. The estimate of the useful life of the assets has been assessed based on technical advice which considered the nature of the asset, the usage of the asset, expected physical wear and tear, the operating conditions of the asset, anticipated technological changes, manufacturers warranties and maintenance support, etc.

The estimated useful life of Tangible Fixed Assets is mentioned below:

years

Factory
building

Buildings
(Other than factory buildings)

Plant and
Equipment (including continuous process plants)

10-20

Furniture
and fixtures

Office
equipment and vehicles

Information
Technology Hardware

Scientific
Research and Equipment

Depreciation on tinting systems leased to dealers, is provided under Straight Line Method over the estimated useful life of nine years as per technical evaluation.

From Note on fixed assets (Extracts)
In accordance with Schedule II of the Companies Act, 2013, the Company has reassessed the estimated useful life of certain class of assets through technical evaluation during the year. The reassessed estimated useful life is in line with existing useful life of the assets used by the Company for the purpose of depreciation. This reassessment does not materially impact the financials of the Company.

BCAJ Admin

From published accounts

Section A:
Modified report on account on unconfirmed loans, advances and deposits to related parties, etc. (Part I)

United Spirits Ltd (31-3-2014)

From Notes to Accounts

26. Provision for doubtful receivable, advances and deposits

26(a) Certain parties who had previously given the required undisputed balance confirmations for the year ended 31st March 2013,claimed in their balance confirmations to the Company for the year ended 31st March 2014 that they have advanced certain amounts to certain alleged UB Group entities, and that the dues owed by such parties to the Company will, to the extent of the amounts owing by such alleged UB Group entities to such parties in respect of such advances, be paid/refunded by such parties to the Company only upon receipt of their dues from such alleged UB Group entities. These dues of such parties to the Company are on account of advances by the Company in the earlier years under agreements for enhancing capacity, obtaining exclusivity and lease deposits in relation to Tie-up Manufacturing Units (TMUs); agreements for specific projects; or dues owing to the Company from customers. These dues wereHI duly confirmed by such parties as payable to the Company in such earlier years. However, such parties have now disputed such amounts as mentioned above. Details are as below:

In response to these claims, under the instruction of the Board, a preliminary internal inquiry was initiated by the Management. The results of this inquiry were as follows:

i. One party (which falls under (a) above), who owes certain amounts to the Company, has disputed an amount of Rs. 2,240.7 million (including interest claimed by it as due from an alleged UB Group entity), alleging that it had advanced monies to such alleged UB Group entity based on an understanding that, to the extent of the amounts owed to it from such alleged UB Group entity in respect of such advance, it could withhold from the amounts payable by it to the Company, and such party has said that it would not pay its dues to the Company to the extent of the amounts claimed by it from such alleged UB Group entity as mentioned above, unless it received repayment of the amount advanced by it to such alleged UB Group entity along with interest.

ii. Certain parties (which falls under (a) above), who owes certain amounts to the Company, have disputed an aggregate amount of Rs. 984.5 million (including interest claimed by them as due from alleged UB Group entities), alleging that they had advanced monies to such alleged UB Group entities and that, to the extent of such dues from such alleged UB Group entity as mentioned above, unless it received repayment of the amount advanced by it to such alleged UB Group entity along with interest.

iii. Certain other parties (which fall under [(b) and (c)] above) changed their original stand and acknowledged that their dues from the alleged UB Group entities were based on transactions that were independent of their dealings with the Company. These parties have subsequently provided appropriate confirmations of the relevant balances due from them to the Company. The related balances are Rs. 2,681.8 million.

iv. In addition to the above, there is an additional party, being a TMU, whose allegations are on a similar basis to those of the parties mentioned at (iii) above and who has subsequently provided an appropriate confirmation of the balance due from it to the Company. However, this party’s undertaking has closed down and the related balance of Rs. 648.5 Million (including interest) has been provided in the current year.

v. The claims made in relation to the advances to the parties (including the additional party) mentioned above may indicate that all or some of such amounts may have been improperly advanced from the Company to such parties for, in turn, being advanced to the alleged UB Group entities. The aforesaid, however can only be confirmed by a detailed inquiry which has been authorised by the Board as mentioned below.

vi. The Company is proposing to more fully inquire into the allegations or claims by the parties in detail and does not acknowledge the correctness of the same. In any event, the Management does not believe that the parties referred to above are entitled to withhold payment/ repayment to the Company as claimed by them. The Management further believes that the Company is entitled to recover all the above amounts, including those disputed by certain parties as mentioned in notes (i) and (ii) above, as and when due from these parties. However, the Management has also examined the financial capability of some of these parties, based on which the Management has concluded that the ability of these parties to pay, and consequently the recoverability of, the relevant amounts is doubtful. After considering the above and other considerations and though the above claims were received only when the Company sought balance confirmations from the relevant parties for the year ended 31 March 2014, as a matter of prudence, a provision has been made in the accounts in respect of the dues from these parties (including interest claimed up to the various dates of the balance confirmations from these parties) as detailed below, and as these transactions relate to the period prior to 1 April 2013 they have been reflected as prior period items in the financial statements:

Based on the current knowledge of the Management, the Management believes that the aforesaid provision is adequate and no additional material adjustments are likely to be required in relation to this matter.

As mentioned in Note 26(c), the Board has: (i) directed a detailed and expeditious inquiry into this matter and (ii) authorised the initiation of suitable action and proceedings as considered appropriate by the Managing Director and Chief Executive Officer (MD) for recovering the Company’s dues. Appropriate other action will also be taken commensurate with the outcome of that inquiry.

Pending completion of the inquiry mentioned in note 26(c), the Company is unable to determine whether, on completion of the inquiry, there could be any impact on these financial statements; and these financial statements should be read and construed accordingly.

26(b) Certain pre-existing loans/deposits/advances due to the Company and its wholly-owned subsidiaries from United Breweries (Holdings) Limited (UBHL) which were in existence as on 31st March 2013, had been taken into consideration in the consolidated annual accounts of the Company drawn up as of that date. Pursuant to a previous resolution passed by the board of directors of the Company on 11th October 2012, such dues (together with interest) aggregating to Rs.13,374 million were consolidated into, and recorded as, an unsecured loan by way of an agreement entered into between the Company and UBHL on 3rd July 2013. Further, the amounts owed by UBHL to wholly-owned subsidiaries have been assigned by such subsidiaries to the Company and are recorded as loan from such subsidiaries in the books of the Company. The merger of one of such subsidiaries with the Company is currently under process. The interest rate under the above mentioned loan agreement dated 3rd July 2013 is at 9.5% p.a. to be paid at six months intervals starting at the end of 18 months from the effective date of the loan agreement. The loan has been granted for a period of 8 years and is payable in three annual installments commencing from the end of 6th anniversary of the effective date of the loan agreement.

Certain lenders have filed petitions for winding up against UBHL. UBHL has provided guarantees to lenders and other vendors of Kingfisher Airlines Limited (KFA), a UB Group entity. Most of these guarantees have been invoked and are being challenged in Courts. The Company has also filed its affidavit opposing the aforesaid winding up petitions and the matter is sub-judice.

The management has performed an assessment of the recoverability of the loan and has reviewed valuation reports in relation to UBHL prepared by reputed independent valuers that were commissioned by UBHL, and shared by UBHL with the Company. As a result of the abovementioned assessment and review by the management, in accordance with the recommendation of the management, the Company, as a matter of prudence, has not recognised interest income of Rs. 963.069 million and has provided Rs. 3,303.186 million towards the principal outstanding as at 31st march 2014. the management believes that it should be able to recover, and no further provision is required for the balance amount of rs. 9,956.806 million, though the Company will attempt to recover the entire amount of rs.14,223.061 million. however, the management will continue to assess the recoverability of the said loan on an ongoing basis.

26(c) the Board has directed a detailed and expeditious inquiry in relation to the matters stated in Notes 26(a), 26(b) and 30(f), the possible existence of any other transaction of a similar nature; the role of individuals involved; and potential non-compliance (if any) with the provisions of the Companies act, 1956 and other regulations applicable to the Company in relation to such transactions. The Board has directed the managing director (“md”) to engage independent advisers and specialists as required for the inquiry. The Board has also authorised the MD to take suitable action and proceedings as considered appropriate by him for recovering the Company’s dues. Appropriate other action will also be taken commensurate with the outcome of that inquiry. On the basis of the knowledge and information of the management, the management believes that no additional material adjustments to the financial statements are likely to be required in relation to the matters mentioned above in this note. However, pending completion of the detailed inquiry mentioned above, the Company is unable to determine the impact on the financial statements (if any), on completion of such detailed inquiry, and these financial results should be read and construed accordingly.

30(f) Subsequent to the balance sheet date, the Company received a letter dated 5th may 2014 from the lawyers of an entity (alleged Claimant) alleging that it had given loans amounting to rs. 2,000 million to Kfa at an interest rate of 15% p.a. purportedly on the basis of agreements executed in december 2011 and january 2012. this matter came to the knowledge of the Board for the first time only after the management informed the Board of the letter dated 5th may 2014. the letter alleges that amongst several obligations under these purported agreements, certain investments held by the Company were subject to a lien, and requires the Company, pending the repayment of the said loan, to pledge such investments in favour of the alleged Claimant to secure the aforesaid loans. the Company has responded to this letter received from the lawyers of the alleged Claimant vide its letter dated 3rd june 2014, wherein the Company has disputed the claim and denied having created the alleged security or having executed any document in favour of the alleged Claimant. the Company has reiterated its stand vide a follow-up letter dated 28th july 2014 and has asked for copies of purported documents referred to in the letter dated 5th May 2014. Subsequent to the above, the Company has received a letter dated 31st july 2014 from the alleged Claimant stating that in light of certain addendums to the aforesaid purported agreements (which had inadvertently not been informed to their lawyers) the alleged Claimant has no claim or demand of any nature whatsoever against inter alia the Company, including any claim or demand arising out of or connected with the documents / agreements referred to their lawyer’s letter dated 5th May 2014. The Company has replied to the alleged Claimant vide a letter dated 6th august 2014, noting the above mentioned confirmation of there being no claim or demand against the Company, and asking the alleged Claimant to immediately provide to the Company all the alleged documents referred to in the letter dated 5th may 2014 and the addendum referred to in the letter dated 31st july 2014, and to also confirm the identity and capacity of the signatory to the letter dated 31st july 2014.

Subsequently, in September 2014, the Company obtained scanned copies of the purported agreements (including the purported power of attorney) and various communications between KFA and the alleged Claimant. these documents indicate that while the purported agreements may have sought to create a lien on certain investments of the Company, subsequently, the Alleged Claimant and KFA sought to negotiate the release of the purported obligation to create such lien, which was formalised vide a second addendum in September 2012.

The Management has verified from a perusal of the minutes of meetings of the board of directors of the Company that the board of directors of the Company at the relevant time had not approved or ratified any such purported agreement. the management has represented to the Board that till the receipt of scanned copies of the purported agreements in September 2014, the Company had no knowledge of these purported agreements. The management, based on legal advice received, does not expect any liability or obligation to arise on the Company out of these purported agreements.

From auditors’ report (given in italics in the original report) Basis for Qualified Opinion
1. As stated in Note 26(a) to the financial statements, certain parties who had previously given the required undisputed balance confirmations for the year ended 31st march 2013, alleged during the current year, that they have advanced certain amounts to certain alleged UB Group entities and linked the confirmation of amounts due to the Company to repayment of such amounts to such parties by the alleged uB Group entities. Also, some of these parties stated that the dues to the Company will be paid/refunded only upon receipt of their dues from such alleged UB Group entities. These dues of such parties are on account of advances by the Company in the earlier years under agreements for enhancing capacity, obtaining exclusivity and lease deposits in relation to tie-up Manufacturing Units; agreements for specific projects; or dues owing to the Company from customers. These claims received in the current year may indicate that all or some of such amounts may have been improperly advanced from the Company to such parties for, in turn, being advanced to the UB Group entities. however, this can only be confirmed after a detailed inquiry. Based on the findings of the preliminary internal inquiry by the management, under the instructions of the Board of Directors; and Management’s assessment of recoverability, an aggregate amount of rs. 6,495.4 million has been provided in the financial statements and has been disclosed as prior period items. Based on its current knowledge, the management believes that the aforesaid provision is adequate and no additional material adjustments to the financial statements are likely to be required in relation to this matter. As stated in paragraph 4 below, the Board of directors have instructed the management to undertake a detailed inquiry into this matter. Pending such inquiry, we are unable to comment on the nature of these transactions; the provision established; or any further impact on the financial statements;

2. As stated in Note 30(f) to the financial statements, subsequent to the balance sheet date, the Company received a letter dated 5th may 2014 from the lawyers of an entity (alleged Claimant) alleging that the alleged Claimant had advanced loans amounting to rs. 2,000 million to Kingfisher Airlines Limited (hereinafter referred to as “KFA”), a UB Group entity, in an earlier year on the basis of agreements, executed in december 2011 and january 2012, through which the Company was alleged to have created a lien on certain investments in favour of the alleged Claimant as security for the aforesaid loans. The letter alleged that KFA had defaulted in repayment of the foresaid loans as well as interest of Rs. 790 million due thereon and demanded that the Company should pay the aforesaid amounts and pending such repayments, create a valid pledge on the specified investments. The Company responded to the aforesaid letter vide its letters dated 3rd june 2014 and 28th july 2014, wherein the Company denied knowledge of the purported loan transactions and the purported agreements for the creation of security on such investments held by the Company. A letter dated 31st july 2014 was received from the alleged Claimant wherein they have stated that the notice sent earlier did not take into account an addendum to the loan agreement; and after examining the aforesaid addendum, they have no claim or demand of any nature against the Company. In September 2014, scanned copies of the purported agreements and certain related documents were obtained by the Company. These documents indicate that while the agreements may have sought to create a lien on certain investments of the Company; subsequently, the Alleged Claimant and KFA sought to negotiate the release of the lien, which was formalised vide a second addendum in September 2012.

The management has represented to us that the Company had no knowledge of these purported agreements; that the Board of directors of the Company have not approved any such purported agreements; and it is not liable under any such purported agreements. We are unable to conclude on the validity of these agreements; any required compliance with the provisions of the Companies act, 1956; and any consequential impact of the same;

3. As stated in Note 26(b) to the financial statements, the Company and its subsidiaries had various preexisting loans/advances/deposits due from united Breweries (holdings) limited (hereinafter referred to as “uBhl”). During the current year, pursuant to a previous resolution passed by the Board of directors on 11th october 2012, these dues (together with interest) were consolidated into an unsecured loan aggregating rs. 13,374 million vide an agreement dated 3rd july 2013.

The loan has been granted for a period of 8 years with a moratorium period of 6 years. Certain lenders have filed petitions for winding-up against UBHL. UBHL has provided guarantees to lenders and other vendors of Kingfisher Airlines Limited, which have been invoked and are currently being challenged in courts. the Company has also filed its affidavit opposing the aforesaid winding up petition and the matter is sub- judice. Based on its assessment of the recoverability of the loan, the Company has made a provision of rs. 3,303 million against the loan outstanding and has not recognised the interest income of Rs. 963 million on the loan. Given the various uncertainties involved with respect to the litigations involving UBHL as aforesaid and the extended period for repayment of the loan, we are unable to comment on the level of provision established;

4. As stated in Note 26(c) to the financial statements, the Board of directors have instructed the management to undertake a detailed inquiry in relation to the matters stated in the paragraphs above; the possible existence of any other transaction of a similar nature; the role of individuals involved; and potential non-compliance (if any) with the provisions of the Companies act, 1956 and other regulations applicable to the Company. The Board has also instructed the management to engage independent advisers and specialists, as required, for the inquiry. As the inquiry is yet to be carried out, we are unable to comment on any further adjustment that could be identified as a result of the inquiry; its resultant impact on the financial statements; and any potential non-compliances with the provisions of the Companies act, 1956 and other regulations; and

5. Though the observations in paragraph 1 above relate to claims received in the current year, the underlying transactions were entered into in earlier years. Accordingly, the financial statements of those earlier years and consequently the opening balances may be incorrectly stated to that extent. Further, the detailed inquiry as referred to in paragraph 4 above may result in further adjustments that may have an impact on the opening balances.

Opinion
In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, the 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. …

From Directors’ Report
BOARD OF DIRECTORS’ RESPONSES TO OBSERVATIONS, QUALIFICATIONS AND ADVERSE REMARKS IN AUDITOR’S REPORT

The Statutory Auditors have qualified their opinion in relation to the matters specified in Notes 26(a), 26(b), 26(c) and 30(f) of the Financial Statement as follows:

1. Auditor’s observations under Paragraph 1 of the Auditor’s report to the financial statement (“the Statement”): Not reproduced

Director’s Response: Information and explanation on the qualification on paragraph 1 of the audit report is provided in Note 26(a) to the Statement. In particular, as stated in note 26(a), the transactions referred to in the said note are on account of amounts that were advanced by the Company in the earlier years and were duly confirmed by the relevant parties as payable to the Company in such earlier years, but were disputed by such parties for the first time when the Company sought balance confirmations from them for the year ended 31st march 2014. This was brought to the attention of the Board after 31st march 2014. Accordingly, as mentioned in note 26(a), as a matter of prudence, the amounts mentioned in the note 26(a) have now been provided for. Since the transactions referred to in the said note 26(a) were entered in to prior to 31st March 2013, they have been reflected as prior period items in the financial statements.

Further, as mentioned in Note 26(a), the Board has:
(i) Directed a detailed and expeditious inquiry into this matter and (ii) authorised the initiation of suitable action and proceedings as considered appropriate by the Managing Director and Chief Executive Officer (MD) for recovering the Company’s dues. Appropriate other action will also be taken commensurate with the outcome of that inquiry.

2. Auditor’s observations under Paragraph 2 of the Auditor’s report to the financial statement: not reproduced

Directors’ Response: Information and explanation on the qualification at paragraph 2 of the audit report is provided in Note 30(f) to the Statement. In particular, as stated in note 30(f), the claim is based on documents purportedly executed by the Company in the months of december 2011 and january 2012. however, the claim was received by the Company only after the year ended 31st march 2014. this matter was only thereafter brought to the knowledge of the Board by the management. a letter dated 31st july 2014 was received from the alleged Claimant wherein they have stated that the notice sent earlier did not take into account an addendum to the loan agreement; and after examining the aforesaid addendum, they have no claim or demand of any nature against the Company. Subsequently, in September 2014, the Company obtained scanned copies of the purported agreements (including the purported power of attorney) and various communications between KFA and the alleged Claimant. These documents indicate that while the purported agreements may have sought to create a lien on certain investments of the Company, subsequently, the Alleged Claimant and KFA sought to negotiate the release of the purported obligation to create such lien, which was formalised vide a second addendum in September 2012.

The Management has verified from a perusal of the minutes of meetings of the board of directors of the Company that the board of directors at the relevant time had not approved or ratified any such documents. accordingly, the Company has, in its responses to the alleged Claimant, disputed the alleged claim and denied having created the alleged security or having executed any document in favour of the alleged Claimant. Further, the management, based on legal advice received, does not expect any liability or obligation to arise on the Company out of these allegations.

3. Auditor’s observations under Paragraph 3 of the Auditor’s report to the financial statement: Not reproduced

Directors’ Response: Information and explanation on the qualification at paragraph 3 of the audit report is provided in Note 26(b) to the Statement. In particular, as stated in note 26(b), the management has performed an assessment of the recoverability of the loan and has reviewed valuation reports in relation to UBHL prepared by reputed independent valuers that were commissioned by UBHL, and shared by UBHL with the Company. As a result of the above mentioned assessment and review by the management, in accordance with the recommendation of the management, the Company, as a matter of prudence, has not recognised interest income of Rs. 963 million and has provided Rs. 3,303 million towards the principal outstanding as at 31st march 2014. The management believes that it should be able to recover, and no further provision is required for the balance amount of Rs. 9,957 million, though the Company will attempt to recover the entire amount of Rs.14,223 million. However, the management will continue to assess the recoverability of the said loan on an ongoing basis.

Further, the Board has directed the management to review the underlying loan agreement(s) and / or other relevant documents (“loan documents”), to inter-alia assess: (i) whether any event of default(s) under the loan documents has occurred on the part of UBHL;
(ii) the legal rights and remedies which the Company has under the loan documents; (iii) whether the Company should invoke any of the remedies available to it under the loan documents (including recalling of the entire loan); and (iv) whether there is any scope of renegotiating the terms and conditions under the loan documents.

In this regard, the management should expeditiously take all the necessary steps to fully protect the interest of the Company and shareholders.

4. Auditor’s observations under Paragraph 4 of the Auditor’s report to the financial statement: Not reproduced

Directors’ Response: Information and explanation on the qualification at paragraph 4 of the audit report is provided in Note 26(c) to the Statement. In particular, as stated in note 26 (c) above, in addition to commissioning the inquiry, the Board has also authorised the md to take suitable action and proceedings as considered appropriate by him for recovering the Company’s dues. Appropriate other action will also be taken commensurate with the outcome of the inquiry commissioned by the Board. on the basis of the current knowledge and information of the management, the management believes that no additional material adjustments to the financial statements are likely to be required in relation to the matters mentioned above in notes 26(a), 26(b) and 30(f). However, pending completion of the detailed inquiry mentioned above, the Company is unable to determine whether, on completion of such detailed inquiry, there could be any impact on the financial statements.

5. Auditor’s observations under Paragraph 5 of the Auditor’s report to the financial statement: Not reproduced

Directors’ response: Information and explanation on the qualification at paragraph 5 of the audit report is provided in Note 26(a) to the Statement. In particular, as stated in note 26 (a), while the claims referred to in note 26(a) were received only when the Company sought balance confirmations from the relevant parties for the year ended 31st march 2014, the transactions referred to in the said note were entered in to prior to 31st march 2013 and therefore, they have been reflected as prior period items in the financial statements. Further, as stated in note 26(a) (iii), the management has stated to the Board that, on the basis of their current knowledge, no additional material adjustments to the financial statements are likely to be required in relation to the matters mentioned in the said Note. As mentioned in Note 26(c) to the financial statement, the Board has commissioned the inquiry referred to in note 26(c). Upon completion of the inquiry, the Board will consider impact on the financial statements, if any.

Compilers’ note
The Auditors’ Report also contains qualifications in the CARO report, which are in turn explained in the Directors’ report. the same will be reproduced in the next issue of BCAJ.

BCAJ Admin

From Published Accounts

Section A: Impairment of Goodwill in Consolidated Financial Statements (CFS)

Vedanta Ltd . (31-3-2015)

From Notes to Financial Statements

Exceptional Items (Extracts)

Provision for impairment of goodwill includes:
(i) Non-cash impairment charge of acquisition goodwill, in respect of the group’s ‘Oil and Gas’ business aggregating Rs.19,180 crore. The impairment of goodwill was triggered by significant fall in the crude oil prices. For the purpose of impairment testing, goodwill has been allocated to the ‘Oil and Gas’ cash generating unit (“CGU”). The recoverable amount of the CGU was determined based on the net selling price approach, as it more accurately reflects the recoverable amount based on management view of the assumptions that would be used by a market participant. This is based on the cash flows expected to be generated by the projected oil or natural gas production profiles up to the expected dates of cessation of production sharing contract (PSC)/ cessation of production from each producing field based on current estimates of reserves and resources. It has been assumed that the PSC for Rajasthan block would be extended till 2030 on the same commercial terms. Discounted cash flow analysis used to calculate net selling price uses assumption for short term (five years) oil price and the long term nominal price of US$ 84 per barrel derived from a consensus of various analyst recommendations. Thereafter, these have been increased at a rate of 2.5% per annum. The cash flows are discounted using the post-tax nominal discount rate of 10.32% derived from the post-tax weighted average cost of capital. The impairment loss relates to the ‘Oil and Gas’ business reportable segments, however this has been shown as exceptional items and does not form part of the segment result for the purpose of segment reporting.

(ii) The mining operations at Copper Mines of Tasmania Pty Limited (“CMT”), Australia were temporarily suspended in January 2014 following a mud rush incident at the mines. On June 27, 2014, a rock fall occurred in the Prince Lyell mine affecting an access drive which connects the lower levels of the mine to surface. As a consequence, mining operations were put into Care and Maintenance. Non-cash impairment charge of acquisition goodwill, in respect of CMT aggregating to Rs.281.28 crore was recognised during the year ended March 31, 2015. The impairment of goodwill was as a result of continued care & maintenance of the operations with nil production and consequent delay in startup of operations which is dependent on fresh exploration efforts. For the purpose of impairment testing, goodwill has been allocated to the ‘CMT’ cash generating unit (“CGU”). The recoverable amount of the CGU was determined based on the net selling price approach. This is based on the cash flows expected to be generated by projected exploration & production profile of copper reserves. Discounted cash flow analyses used to calculate net selling price uses assumption for prices derived from the market projections. The cash flows are discounted using the post-tax nominal discount rate of 9.14% derived from the post-tax weighted average cost of capital. The impairment loss relates to the ‘Copper’ business reportable segment; however this has been shown as exceptional item and does not form part of the segment result for the purpose of segment reporting.

Tata Global Beverages Ltd . (31-3-2015)

From Notes to Financial Statements
During the year the Group recognised a non-cash impairment loss relating to its businesses in China and Eastern Europe. The impairment relating to the China business, a subsidiary company under joint venture control, of Rs.2,484 lakh within tea segment is on account of delays in start-up and stabilisation of technology for an enhanced product range. A pre-tax discount rate of 15.1% has been used for value in use computation.

In the case of Eastern Europe, the goodwill impairment mainly relates to Russia within coffee segment and to a lesser extent to Czech Republic within tea segment. In Russia, the impairment of Rs.4,480.51 lakh is arising due to adverse macroeconomic environment with resultant adverse impact on interest and discounting rates used for impairment assessment. A pre-tax discount rate of 20.4% has been used for value in use computation. In the case of Czech Republic, the impairment of Rs.2,573.91 lakh has been recognised based on current expectation of business performance. A pre-tax discount rate of 6.3% has been used for value in use computation. The impact of impairment has been accounted under exceptional items and is disclosed as unallocated items in the segment report.

Tata Steel Ltd . (31-3-2015)

From Notes to Financial Statements

Exceptional Items (Extracts)

During the year the Company has recognised a non-cash write down of goodwill and fixed assets of Rs.6,052.57 crore. The impairment is primarily due to the external economic environment and macro-economic conditions in each geography of operation, the underlying demandsupply imbalance facing the global steel industry, significant volatility in iron ore and coal prices in the last twelve months and the current long term view of steel and its raw material prices.

The impairment review was performed for cash generating units (CGUs) which were generally taken as legal entities or businesses within the group. The recoverable amount of CGUs and other assets were primarily based on their value in use. The discounting rates used for the value in use calculations were based on the pre-tax weighted average cost of capital and are in the range of 6% – 12%.

The impairment loss on tangible and intangible assets relate to the following primary business reportable segments, however the same has been shown as an exceptional item and does not form part of segment result for the purpose of segment reporting.

Tata Chemicals Ltd . (31-3-2015)

From Notes to Financial Statements

Exceptional Items (Extracts)

During the current year, the Group has recognised a noncash write down of goodwill of Rs.8.52 crore (previous year Rs.619.77 crore) and other assets (including capital work-in-progress and commitments in respect thereof) aggregating to Rs.188.43 crore (previous year Rs.363.91 crore) primarily relating to the Chemical and Bio-fuel overseas business (previous year relating to the Group’s Kenyan operations and the Fertiliser and Biofuel operations in India).

levitra

BCAJ Admin

From Published Accounts

Section A: Disclosures regarding ‘Going Concern’ in airline companies for FY 2013-14 and unaudited financial results for Q2 2014-15

Jet Airways (India) Ltd . FY 2013-14

From Auditors’ Report
Emphasis of Matter
We draw attention to the following notes to the financial statements:

(a) …. Not reproduced
(b) Note 42 regarding preparation of financial statements of the Company on going concern basis for the reasons stated therein. The appropriateness of assumption of going concern is dependent upon realisation of the synergies from alliance with the Strategic Partner and/ or the Company’s ability to raise requisite finance/ generate cash flows in future to meet its obligations, including financial support to its subsidiary.

From Notes to Financial Statements
42. The Airline Industry has been adversely affected by the general economic slowdown. This coupled with high fuel cost significantly impacted the performance and cash flows of the Company and its major subsidiary resulting in substantial erosion of the net worth. With the strategic investment by Etihad PJSC, the Management expects to improve operating cash flows through cost synergies, revenue management, network synergy, leasing out aircraft etc. These measures are expected to result in sustainable cash flows and accordingly the Financial Statements continue to be presented on a going concern basis, which contemplates realisation of assets and settlement of liabilities in the normal course of business.

Q2 2014-15
From Limited Review Report

Attention is invited to: Note no.7 of the Statement regarding preparation of the Statement on a going concern basis for the reasons stated therein. The appropriateness of assumption of going concern is dependent upon realisation of the synergies from alliance with the Strategic Partner and/or the Company’s ability to raise requisite finance/generate cash flows in future to meet its obligations, including financial support to its subsidiary.

Our report is not qualified in respect of the above matters.

From Notes to Unaudited Financial Results
7. With Strategic investment by Etihad Airways PJSC and gradual implementation of the recommendations provided by a domain expert, the Management expects to achieve required operating cash inflows through cost synergies, revenue management, network synergy, leasing out aircraft, etc. These measures coupled with on-going initiatives to raise funds are expected to result in sustainable cash flows and accordingly the statement of financial results continue to be prepared on a going concern basis, which contemplates realisation of assets and settlement of liabilities in the normal course of business.

SpiceJet Ltd . FY 2013-14

From Auditors’ Report
Emphasis of Matter
Without qualifying our opinion, we draw attention to Note 2 (a) which indicates that the Company has incurred a net loss of Rs. 10,032.44 million during the year ended 31st March, 2014 and as of that date; the Company’s total liabilities exceed its total assets by Rs 10,194.76 million. These conditions, along with other matters as set forth in Note 2 (a), indicate the existence of a material uncertainty regarding the Company’s ability to continue as a going concern. Management’s plans in this regard are more fully described in the said note.

From Notes to Financial Statements

Summary of significant accounting policies
a) Basis of preparation of financial statements

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (‘Indian GAAP’). The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies Act, 1956, read with General Circular 8/2014 dated 4th April, 2014, issued by the Ministry of Corporate Affairs.

The financial statements have been prepared on an accrual basis and under the historical cost convention. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year. The Company’s operating results continue to be materially affected by various factors, particularly high aircraft fuel costs, significant depreciation in the value of the currency, pricing pressures from competition and general economic slowdown. The Company has incurred a net loss of Rs. 10,032.44 during the year ended 31st March, 2014, and as of that date, the Company’s total liabilities exceeded its total assets by Rs.10,194.76. The Company is implementing various long-term measures to improve its product offering and enhancing customer experience. Considerable investments are also simultaneously being made by the Company to improve selling and distribution channels, revenue management and marketing functions. The Company has undertaken a comprehensive review of its current network to maximise profitability and improve efficiency in its operations. These measures along with consistent improvement in yields and enhancement in ancillary revenues are expected to drive growth in revenues in the future. The Company is also implementing various measures to optimise aircraft utilisation, improving operational efficiencies, renegotiation of contracts and other cost control measures to improve the Company’s operating results and cash flows. In addition, the Company continues to explore various options to raise finance in order to meet its short term and long term obligations. The Company believes that these measures will not only result in sustainable cash flows, but also enhance the Company’s plans for expansion.

The promoters continue to be committed to providing the required operational and financial support to Company in the foreseeable future. During the year, the Promoter has converted 15,000,000 warrants into equity shares of the Company thereby infusing additional funds of Rs. 407.03 into the Company.

Further, the Company’s promoters have subscribed to 64,169,000 warrants (convertible into equivalent no. of equity shares) for which 25% upfront money amounting to Rs. 333.04 has been received in the current year. In addition to the above, the Company has availed of an unsecured loan of Rs. 750.00 from the promoter, as well as an amount of Rs. 250.00 which has been provided as an advance against the remaining subscription money to be received consequent to the conversion of the warrants issued during the year. The Company also believes that the amendment to FDI policy has improved the investor sentiment towards the Indian aviation industry as evidenced by entry of large international players into the Indian market. In view of the foregoing, the Company’s financial statements have been prepared on a going concern basis, whereby the realisation of assets and discharge of liabilities are expected to occur in the normal course of business.

Q2 2014-15
From Limited Review Report

A1. Without qualifying our conclusion, we draw attention to Note 7 of the Statement which indicate that the Company has incurred a net loss of Rs. 1,044.6 lakh during the quarter ended 30th September, 2014, and as of that date, the Company’s total liabilities exceed its total assets by Rs. 145,973.0 lakh. These conditions, along with other matters as set forth in Note 7, indicate the existence of a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern.

From Notes to Unaudited Financial Results

7 (a) The Company has incurred losses of Rs. 31,044.7 lakhs for the quarter ended 30th September, 2014, and has accumulated losses of Rs. 295,829.8 lakh as at that date against shareholder’s funds of Rs. 149,856.7 lakh. As of this date, the Company’s total liabilities exceeded its total assets by Rs. 145,973.1 lakh. The Company’s operating results continue to be materially affected by various factors, particularly high aircraft fuel costs, significant depreciation in the value of the currency, pricing pressures from competition and general economic slowdown. The Company continues to implement various measures to improve its product offering and enhancing customer experience, along with simultaneous investments to improve selling and distribution channels, revenue management and marketing functions. The Company has also terminated certain aircraft leases ahead of schedule in the current and previous quarters in order to rationalise its fleet size and capacity in the near term while it implements its turnaround plan. These measures, along with consistent improvement in aircraft loads and RASK, as well as enhancement in ancillary revenues, are expected to drive growth in revenues in the future. The Company also continues to implement various measures to optimise aircraft utilisation, redeployment of capacity in key focus markets, improving operational efficiencies, renegotiation of contracts and other cost control measures to improve its operating results and cash flows. In addition, the Company continues to explore various options, both operating and strategic to raise financing in order to meet its short term and long term obligations. The Company believes that these measures will not only result in sustainable cash flows, but also enhance its plans for expansion in the future.

7 (b) On account of its operational and financial position, the Company has delayed payments to various parties, including vendors and its dues to statutory authorities. The Company has accrued for any known and determinable amounts of interest on such delays in accordance with contractual terms/applicable laws and regulations. However, it is not practically possible to determine the amount of any other dues, including penalties, consequent to such delays or other non-compliances of contracts or laws and regulations. Further, in view of the proposed plans of management to continue the Company as a going concern as discussed in Note 7(a) above, management is confident that it will be able to negotiate settlements with parties to whom monies are owed, to avoid any penalties. In view of the foregoing, no amounts of penalties have been recorded in these financial results.

BCAJ Admin

From published accounts

Section A: Reporting in case of Managerial Remuneration in excess of statutory limits

1) Jyothy Laboratories Limited (31-03-2013)

From Notes to Financial Statements

Employee benefit expenses include Rs. 1, 113.72 lakh paid/payable during the year towards remuneration payable to its Whole Time Directors. The maximum remuneration payable under para (1) (B) of Section II of Part II of Schedule XIII of the companies Act, 1956(‘Act’) is Rs. 192 lakh. Based on the legal advice received by the Company, management has computed the maximum remuneration payable to Whole Time Directors amounting to Rs. 1, 025 lakh.

The company has filed an application with the Central Government and is in the process of obtaining necessary approval from shareholders for remuneration payable to its Whole Time Directors. Pending receipts of such approval, the excess remuneration paid to the directors is held in trust by the said Directors.

From Auditor’s Report

Emphasis of Matter

Without qualifying our report, we draw attention to Note 40 to the Financial Statements regarding managerial remuneration amounting to Rs. 1,113 lakh paid/provided during the year of which Rs. 921 lakh is in excess of the limits prescribed under Schedule XIII of the companies Act, 1956. As informed to us, the company has filed an application with the central government and is in the process of obtaining necessary approval from shareholders for approval of such excess remuneration.

2) Gillette India Limited 30-6-2013)

From Notes to Financial Statements

Commission to Non – Executive Directors

During the current year, an aggregate amount of Rs. 80 lakh has been paid as commission to the Non – Executive Directors which is within the overall limits of commission payable to such directors under schedule XIII to the Companies Act, 1956. The said payment constitutes 53% of the aggregate amount of Rs. 153 lakh (excluding service tax of Rs. 19 lakh) which is payable to the Non – Executive Directors and is provided for in the financial statements.

The aggregate amount of Commission of Rs. 172 lakh (including service tax Rs. 19 lakh) payable and charged for the year in the financial statements as is stated above, exceeds the maximum amount payable based on 1% of the net profits of the Company amounting to Rs. 148 lakh (as per computation below) for the year ended 30th June, 2013, by an amount of Rs. 24 lakh (including service tax of Rs. 3 lakh). The said excess amount of Rs. 24 lakh which is provided but not paid, is subject to by approval of the Members of the Company by way of a special resolution at the ensuing 29th Annual General Meeting of the Company, and the Central Government.

During the previous year ended 30th June, 2012, also the Company had to paid commission to Non – Executive Directors amounting to Rs. 160 lakhs, of which an amount of Rs. 48 lakh (including service tax of Rs. 10 lakh), being amount in excess of 1% of net profits for the year ended 30th June, 2012. This was paid during the current year and the same was ratified by the members at the 28th Annual General Meeting of the Company. The Company has made an application to the Central Government on 3rd January, 2013 for the waiver of the excess commission, which is as yet pending for approval by the Central Government.

Computation of Net Profit in accordance with section 349 and section 309 (5) of the Companies Act, 1956 (not reproduced here)

From Auditor’s Report

Emphasis of Matter

We draw attention to Note 36(b) to financial statements regarding excess commission provided but not paid to the Executive Directors amounting to Rs. 24 lakh (including Rs. 3 lakh of service tax), which is subject to the approval of the members at the ensuring Annual General Meeting of the company and the Central Government. Further, as reported for previous year ended 30th June, 2012, the Company had provided excess commission amounting to Rs. 48 lakh, (including service tax of Rs. 10 lakh) which was since ratified by the members of the company at the 28th Annual General Meeting of the company and paid during the current year, application for which is as yet pending for approval with Central Government.

3) Jindal Stainless Limited (31-03-2013)

From Notes to Financial Statements

i. For the remuneration amounting to Rs. 16.20 lakh and Rs. 18.11 lakh paid to whole time director for the years 2008-09 and 2009-10 respectively, company’s representation is pending before Central Government;

ii. For the remuneration amounting to Rs. 63.60 lakh and Rs. 160.57 lakh paid to whole time director for year 2011-12 and 2012-13 respectively, company’s representation is pending before the Central Government.

From Auditor’s Report

Emphasis Of Matter

Note no. 51(C) (i) regarding pending necessary approvals for managerial remuneration as explained in the said note.

4) Ranbaxy Laboratories Limited (31-12-2012)

From Notes to Financial Statements

On the basis of a legal advice, the Company is of the view that the appointment and payment of remuneration to Mr. Arun Sawhney, CEO and Managing Director for the full year ended 31st December 2011 is in accordance with the conditions stipulated under the Notification no. GSR 534(E) dated 14th July 2011 read with the clarification dated 16th August 2012 issued by the Ministry of Corporate Affairs.

From Auditor’s Report

Emphasis Of Matter

Without qualifying our opinion, we draw attention to Note 37 of the financial statements, wherein it has been stated that on the basis of a legal advice, the company is of the view that the appointment of and payment of remuneration to Mr. Arun Sawhney, CEO and Managing Director for the full year ended on 31st December, 2011 is in accordance with the stipulated under notification no. GSR 534(e) dated 14th July 2011 read with the clarification dated 16th August 2012 issued by the Ministry of Corporate Affairs.

5) Network 18 Media & Investments Limited (31-03-2013)

From Notes to Financial Statements

Managerial remuneration paid, up to 31st March 2013, by the Company amounting to Rs. 26,388,400 (31st March 2012 – Rs 20,100,400) is in excess of the limits prescribed under the Companies Act, 1956 (“the Act”). The Company is in the process of obtaining the necessary approvals as per the Act.

From Auditor’s Report

Qualified Opinion

The company has paid Rs. 2, 63, 88,400/- as managerial remuneration to its Managing Director upto 31st March 2013 (upto 31st March, 2012 Rs. 1, 01, 00,400/-), which is in excess of the limits prescribed under the Act. Had the company accounted for the remuneration in accordance with the Act, the net loss after tax for the year ended 31st March, 2013 would have been lower by Rs. 2,63,88,400/- and short term loans and advance would have been higher by Rs. 2,63,88,400/-. Our report on the FS for the year ended 31st March, 2012 was also qualified in respect of this matter.

From Director’s Report

In regard to reservations/qualifications in the Auditors’ Report, the relevant notes on the accounts are self- explanatory and therefore do not call for any further comments of Directors. However, your Directors wish to offer the explanations in regard to note no. 6 of the Auditors Report. It is clarified that the Central Government has partially accepted the Company’s application for approval of the remuneration paid to the Managing Director and the Company has filed a representation for reconsideration of the matter and approval is awaited.

6) Mafatlal Industries Limited (31-03-2013)

From Notes to Financial Statements

Mafatlal Denim Limited (MDL), the erstwhile company which has amalgamated with the Company had re – appointed Mr. Rajiv Dayal as Managing Director & Executive Officer and Mr. Vishad P. Mafatlal as Joint Managing Director of MDL with effect from 1st April, 2011 for a term of 5 years. Managerial Remuneration of Rs. 139.28 lakh had been paid during the year 2011-12. As stipulated by the provisions of the Companies Act, 1956 requiring the approval of the Central Government for the appointment and remuneration of Managerial personnel in the case, inter alia, of a company that is in default in payment of its debts, erstwhile MDL had made the applications to the Government on 20th June, 2011 seeking approval for re – appointment and payment of remuneration to Mr. Rajiv Dayal and Mr. Vishad P. Mafatlal.

The erstwhile MDL was technically in default to SICOM Limited, a secured lender pending the Sanction of the section 391 Scheme pending before the Hon’ble Gujarat High Court. SICOM declined to give their No Objection Certificate for the re – appointments for the reason that they already had their debts adjudicated by the Hon’ble Debt Recovery Tribunal, Mumbai. The Government rejected the applications of MDL on 23rd September, 2011 for the reason that MDL had not submitted No Objection Certificate from SICOM, one of the secured lenders. MDL has made an application for reconsideration, as default to the secured lenders no longer exists.

Subsequently, SICOM Limited assigned the entire Debt in favour of M/s. Mishapar Investments Limited (another Company that amalgamated with the company) on 26th July, 2012. Thereafter, MDL obtained the No Objection Certificate from the said assignee and approached the MCA once again on 5th September, 2012. Pursuant to the said letter, MCA advised MDL to file applications afresh. Accordingly, MDL has filed Fresh Applications on 25th October, 2012 and awaits their approval.

From Auditor’s Report

Qualified Opinion
Attention is invited to Note no. 32.1 (a) to the financial statements, in the earlier year, erstwhile Mafatlal Denim Limited (the Amalgamating Company) had made representation to the Ministry of Corporate Affairs against the rejection of application u/s. 269, 198, 309 and 310 of the Act, relating to re – appointment and payment of remuneration with effect from 1st April, 2011 to 31st March, 2013. The said approval is pending from the Ministry Of Corporate Affairs and accordingly, we are unable to comment on the impact, if any arising out of the same in these financial statements.

From Director’s Report

The specific notes forming part of the Accounts referred to in the Auditor’s Report are self – explanatory and give complete information.

BCAJ Admin

From Published Accounts

Section b: Illustration of Auditors’ Report as per The Companies Act, 2015 for 2 Companies infosys ltd. (31-3-2015))

Report of The financial Statements
We have audited the accompanying standalone financial statements of infosys Limited (‘the Company’), which comprise the balance sheet as at 31st march 2015, 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.

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 and presentation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in india, including the accounting Standards specified u/s. 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.

Auditor’s Responsibility
Our responsibility is to express an opinion on these standalone 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 u/s. 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 audit opinion on the standalone financial statements.

Opinion
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone 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 31st march 2015 and its profit and its cash flows for the year ended on that date.

Report on Other legal and Regulatory Requirements
1. As required by the Companies (auditor’s report) order, 2015 (“the order”) issued by the Central Government of india in terms of sub-section (11) of section 143 of the act, we give in the annexure a statement on the matters specified in the paragraph 3 and 4 of the order, to the extent applicable.

2. As required by section 143(3) of the act, we report that:

a)   We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.
b)   In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;
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)   In our opinion, the aforesaid standalone financial statements comply with the accounting Standards specified u/s. 133 of the Act, read with Rule 7 of the Companies (accounts) rules, 2014;
e)   On the basis of the written representations received from the directors as on 31st march 2015 taken on record by the Board of directors, none of the directors is disqualified as on 31st March 2015 from being appointed as a director in terms of section 164 (2) of the act; and
f)   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 2.20 and 2.37 to the financial statements;
ii.   The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long- term contracts including derivative contracts – Refer Note 2.7 to the financial statements;

iii.   There has been no delay in transferring amounts, required to be transferred, to the investor education and Protection fund by the Company.

Annexure To The Independent Auditors’ Report
The annexure referred to in our independent auditors’ report to the members of the Company on the standalone financial statements for the year ended 31st March 2015, we report that:

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 fixed assets are verified in a phased manner over a period of three years. in accordance with this programme, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.

ii. The Company is a service company, primarily rendering software services. accordingly, it does not hold any physical inventories. thus, paragraph 3(ii) of the order is not applicable.

iii.   (a) The Company has granted loans to three bodies corporate covered in the register maintained u/s.189 of the Companies act, 2013 (‘the act’).
(b)   In the case of the loans granted to the bodies corporate listed in the register maintained u/s.189 of the act, the borrowers have been regular in the payment of the interest as stipulated. The terms of arrangements do not stipulate any repayment schedule and the loans are repayable on demand. Accordingly, paragraph 4(iii)(c) of the order is not applicable to the Company in respect of repayment of the principal amount.
(c)   There are no overdue amounts of more than Rs. 1 lakh in respect of the loans granted to the bodies corporate listed in the register maintained u/s. 189 of the act.

iv. In our opinion and according to the information and explanations given to us, 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 fixed assets and sale of services. The activities of the Company do not involve purchase of inventory and the sale of goods. We have not observed any major weakness in the internal control system during the course of the audit.

v. The Company has not accepted any deposits from the public.

vi. The Central Government has not prescribed the maintenance of cost records u/s. 148(1) of the act, for any of the services rendered by the Company.

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, income tax, sales tax, wealth tax, service tax, duty of customs, value added tax, cess and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities. As explained to us, the Company did not have any dues on account of employees’ state insurance and duty of excise. According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, income tax, sales tax, wealth tax, service tax, duty of customs, value added tax, cess and other material statutory dues were in arrears as at 31st march 2015 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 material dues of wealth tax, duty of customs and cess which have not been deposited with the appropriate authorities on account of any dispute. however, according to information and explanations given to us, the following dues of income tax, sales tax, service tax and value added tax have not been deposited by the Company on account of disputes: (List not reproduced)

(c) According to the information and explanations given to us the amounts which were required to be transferred to the investor education and protection fund in accordance with the relevant provisions of the Companies act, 1956 (1 of 1956) and rules there under has been transferred to such fund within time.

viii. The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the financial year and in the immediately preceding financial year.

ix. The Company did not have any outstanding dues to financial institutions, banks or debenture holders during the year.

x. In our opinion and according to the information and the explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

xi. The Company did not have any term loans outstanding during the year.

xii. According to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the course of our audit.

Gruh Finance ltd. (31-3-2015)

Report of the financial Statements
We have audited the accompanying financial statements of Gruh finance Limited (“the Company”), which comprise the Balance Sheet as at 31st march, 2015, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

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 specified u/s. 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.

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 u/s. 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 auditors 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 audit opinion on the financial statements.

Opinion
In our opinion and to the best of our information and according to the explanations given to us, 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 31st March, 2015, and its profit and its cash flows for the year ended on that date.

2. As required by section 143(3) of the act, we report that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from the branches not visited by us.

(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 and with the returns received from the branches not visited by us.

(d) In our opinion the aforesaid financial statements comply with the Accounting Standards specified u/s. 133 of the act, read with the rule 7 of the Companies (accounts) rules, 2014.

(e) On the basis of the written representations received from the directors as on 31st march, 2015 taken on record by the Board of directors, none of the directors is disqualified as on 31st March, 2015 from being appointed as a director in terms of section 164(2) of the act.

(f) 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 give to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements – Refer Note 27.1 to the financial statements.

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

iii. There has been no delay in transferring amounts, required to be transferred, to the investor education and Protection fund by the Company.

Annexure to the Independent Auditors’ report
Referred to in Paragraph 1 under the heading “report on other legal and regulatory requirements” 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) All the fixed assets were physically verified by the management during the year. We are informed that no material discrepancies were noticed on such verification.

(ii) (a) The stocks of acquired and/or developed properties have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of stock of acquired and/or developed properties 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 acquired and developed properties. no discrepancy was noticed on verification between the physical properties and the book records.

(iii) The Company has not granted any loans, secured and unsecured to Companies, firms or other parties covered in the register maintained u/s. 189 of the act. Consequently, requirement of clauses (iii,a) and (iii,b) of paragraph 3 of the order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there exists an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to acquisition of properties, fixed assets and with regard to the sale of properties and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

(v) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of sections 73 to 76 of the act and the housing finance Companies (NHB) directions, 2010 with regard to the deposits accepted from the public. No order has been passed by the Company Law Board or national Company Law tribunal or reserve Bank of india or any Court or any other tribunal.

(vi) The Company is not engaged in production, processing, manufacturing or mining activities. Therefore, the provisions of clause (vi) of paragraph 3 of the order are not applicable.

(vii) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including Provident fund, investor education and Protection fund, income tax, Wealth tax, Service tax, CESS and other material statutory dues applicable to it. according to the information and explanations given to US, no undisputed amounts payable in respect of outstanding statutory dues were in arrears as at 31st march, 2015 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, following amounts have not been deposited as on 31st March, 2015 on account of any dispute:

(c) According to the information and explanations given to us, the amount 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 has been transferred to such fund within time.

(viii) The Company neither has any accumulated losses nor has incurred any cash losses during the financial year covered by our audit and the immediately preceding financial year.

(ix) According to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks or debentures holders.

(x) To the best of our knowledge and belief and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions.

(xi) To the best of our knowledge and belief and according to the information and explanations given to us, in our opinion, the term loans obtained during the year were, prima facie, applied by the Company for the purpose for which they were obtained, other than temporary deployment pending application.

(xii) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year, although there have been few instances of loans becoming doubtful of recovery consequent upon fraudulent misrepresentation by borrowers, the amounts whereof are not material in the context and size of the Company and the nature of its business and which have been provided for.

BCAJ Admin

From published accounts

Section B:

Revision of Consolidated Financial Statements pursuant to subsequent amalgamation of 2 subsidiaries with another subsidiary

Sun Pharmaceutical Industries Ltd. (31-03-2013) From the Notes to the Consolidated Financial Statements

The
consolidated financial statements of the Company for the year ended
31st March, 2013 were earlier approved by the Board of Directors at
their meeting held on 28th May, 2013 on which the Statutory Auditors of
the Company had issued their report dated 28th May, 2013. Consequent to
the Order dated 26th July, 2013 of the Hon’ble High Court of Bombay
sanctioning the scheme of arrangement u/s. 391 and 394 of the Companies
Act, 1956 for amalgamation, with effect from 1st September, 2012, the
appointed date, of Sun Pharma Medication Private Ltd and Sun Pharma
Drugs Private Ltd into Sun Pharma Laboratories Limited (SPLL), all
wholly owned subsidiaries of the Company, the financial statements of
SPLL were revised only to give effect to the said scheme of arrangement,
effective from 1st September, 2012. In view of the above, the earlier
approved consolidated financial statements are revised only to
incorporate the revised financial statements of SPLL.

From Auditor’s report on Consolidated Financial Statements (Extracts)

(a)
The consolidated financial statements of the Company for the year ended
31st March, 2013 were earlier approved by the Board of Directors at
their meeting held on 28th May, 2013 which were audited by us and our
report dated 28th May, 2013, addressed to the Board of Directors,
expressed an unqualified opinion on those financial statements.
Consequent to the Order dated 26th July, 2013 of the Hon’ble High Court
Bombay sanctioning the Scheme of arrangement for amalgamation of two of
the wholly owned subsidiaries of the Company, namely, Sun Pharma
Medication Private Limited and Sun Pharma Drugs Private Limited into
another wholly owned subsidiary of the Company, namely, Sun Pharma
Laboratories Limited, the financial statements of Sun Pharma
Laboratories Limited were revised to give effect to the said
amalgamation, effective from 1st September, 2012, the appointed date. In
view of the above, the earlier approved consolidated financial
statements are revised by the Company to incorporate the revised
financial statements of Sun Pharma Laboratories Limited. (Refer Note 56)

(b) Apart from the foregoing event, the attached consolidated
financial statements do not take into account any events subsequent to
the date on which the consolidated financial statements were earlier
approved by the Board of Directors and reported upon by us as aforesaid.

Our opinion is not qualified in respect of these matters.

Dated: 28th May, 2013 (9th August, 2013 as to effect the amendment discussed in the ‘Emphasis of Matter’ paragraph above).

Effect of amalgamation not given in view of pending approvals from all High Courts

Tech Mahindra Ltd. (31-03-2013)

From the Notes to the Financial Statements

The
Board of Directors of Tech Mahindra Limited in their meeting held on
21st March, 2012 have approved the scheme of amalgamation and
arrangement (the “Scheme”) which provides for the amalgamation of
Venturbay Consultants Private Limited (Venturbay), Satyam Computer
Services Limited (MSAT), C&S System Technologies Private Limited
(C&S), Mahindra Logisoft Business Solutions Limited (Logisoft) and
CanvasM Technologies Limited (CanvasM) with Tech Mahindra Limited
(TechM) u/s. 391 to 394 read with Sections 78, 100 to 104 and other
application provisions of the Companies Act, 1956. The Scheme also
provides for the consequent reorganisation of the securities premium of
TechM. The Appointed date of the Scheme is 1st April, 2011.

The
Board of Directors of TechM has recommended to issue two fully paid up
Equity Shares of Rs. 10 each of TechM for every 17 fully paid Equity
Shares of Rs. 2 each of MSAT. As the other amalgamating companies are
wholly owned by TechM/MSAT, no shares would be issued to shareholders of
these companies.

The Bombay Stock Exchange and the National
Stock Exchange have conveyed to the Company, their no-objection under
Clause 24(f) of the Listing Agreement to the said Scheme. TechM has also
received approval of Competition Commission of India for the said
Scheme. The Scheme was approved by the requisite majority of the equity
shareholders of TechM and MSAT in the court convened meetings held on
7th June, 2012 and 8th June, 2012 respectively. A Separate Special
Resolution was also passed at the above mentioned meeting of the equity
shareholders of TechM held on 7th June, 2012, whereas the requisite
majority of the equity shareholders approved the reduction of its
securities premium account. Thereafter, TechM, Venturbay, C&S,
Logisoft and CanvasM had filed Petitions on 25th June, 2012 respectively
with the Honourable Bombay High Court seeking approval for the proposed
Scheme. The Petitions were admitted by the Honourable Bombay High Court
on 20th July, 2012 and the Honourable Bombay High Court has approved
the Scheme of Amalgamation and passed an order to that effect on 28th
September, 2012. MSAT had filed its Petition on 27th June, 2012 with the
Honourable High Court of Andhra Pradesh, and the said petition was
admitted on 9th July, 2012. Hearing in the matter is concluded before
the Honourable High Court of Andhra Pradesh closed for summer vacation
and the order is awaited.

The merger is effective only on the
last of the dates on which the certified copies of the orders of the
High Court of Judicature at Bombay and the High Court of Judicature at
Andhra Pradesh are filed with the Registrar of Companies (‘ROC’), Mumbai
and Pune, Maharashtra, and the ROC, Hyderabad, Andhra Pradesh
respectively; and as the Approvals of High Court of judicature at Andhra
Pradesh is yet to be received, the effect of the merger is not
considered in the financial statements.

levitra

BCAJ Admin

From published accounts

Section B: IAASB’s Revised Format of Auditors’ Report

Compiler’s Note
The
International Auditing and Assurance Standards Board (IAASB) had in
June 2012 started a project “Enhancing the Auditor’s Report” and had
issued an Exposure Draft of a revised format of the Auditor’ Report.
While issuing the ED, IAASB observed that “The auditor’s report is the
auditor’s primary means of communication with an entity’s
stakeholders—as such, it has to be meaningful and have value for them.
More than ever before, users of audited financial statements are calling
for more pertinent information for their decision-making in today’s
global business environment with increasingly complex financial
reporting requirements. The global financial crisis also has spurred
users, in particular institutional investors and financial analysts, to
want to know more about individual audits and to gain further insights
into the audited entity and its financial statements. And while the
auditor’s opinion is valued, many perceive that the auditor’s report
could be more informative. Change, therefore, is essential”.

After
considering the several responses to the ED from stakeholders,
regulators, accounting bodies from across the world (including ICAI) and
others, the IAASB in its meeting in September 2014 issued the final
revised standard on Auditor Reporting. Different jurisdictions across
the world are likely to adopt the revised standard from 2015 onwards.

Some of the key changes in the revised standard are:

Additional
information in the auditor’s report to highlight matters that, in the
auditor’s judgment, are likely to be most important to users’
understanding of the audited financial statements or the audit, referred
to as “Auditor Commentary.” This information would be required for
public interest entities (PIEs) –which includes, at a minimum, listed
entities –and could be provided at the discretion of the auditor for
other entities.

Auditor conclusion on the appropriateness of
management’s use of the going concern assumption in preparing the
financial statements and an explicit statement as to whether material
uncertainties in relation to going concern have been identified.

Auditor
statement as to whether any material inconsistencies between the
audited financial statements and other information have been identified
based on the auditor’s reading of other information, and specific
identification of the information considered by the auditor.

Prominent placement of the auditor’s opinion and other entity-specific information in the auditor’s report.

Further suggestions to provide clarity and transparency about audits performed in accordance with ISAs.

Though
the revised standard will become applicable from 2015 onwards, given
below is an illustration of a company whose auditors chose to use the
revised standard for issuing its report to the members.

Independent Auditor’s Report

to the members of Rolls-Royce Holdings plc only

Opinions and conclusions arising from our audit
1
Our opinion on the financial statements is unmodified We have audited
the financial statements of Rolls- Royce Holdings plc for the year ended
31st December 2013 set out on pages 75 to 129. In our opinion the
financial statements give a true and fair view of the state of the
Group’s and of the parent company’s affairs as at 31st December 2013 and
of the Group’s profit for the year then ended; the Group financial
statements have been properly prepared in accordance with International
Financial Reporting Standards as adopted by the European Union (Adopted
IFRS); the parent company financial statements have been properly
prepared in accordance with UK Accounting Standards; and the financial
statements have been prepared in accordance with the requirements of the
Companies Act 2006 and, as regards the Group financial statements,
Article 4 of the IAS Regulation.

2 Our assessment of risks In
arriving at our opinions set out in this report, the risks that had the
greatest effect on our audit and the key procedures we applied to
address them are set out below. Those procedures were designed in the
context of the financial statements as a whole and, consequently, where
we set out findings we do not express any opinion on these individual
risks.

The basis of accounting for revenue and profit in the Civil aerospace business
Refer
to page 81 (Key areas of judgement – Long-term aftermarket contracts),
page 83 (Significant accounting policies – Revenue recognition) and page
44 (Audit committee report – Financial reporting)

The risk
The
amount of revenue and profit recognised in a year on the sale of
engines and aftermarket services is dependent, inter alia, on the
appropriate assessment of whether or not each long-term aftermarket
contract for services is linked to or separate from the contract for
sale of the related engines. As the commercial arrangements can be
complex, significant judgement is applied in selecting the accounting
basis in each case. The most significant risk is that the Group might
inappropriately account for sales of engines and long term service
agreements as a single arrangement for accounting purposes as this would
usually lead to revenue and profit being recognised too early because
the margin in the long term service agreement is usually higher than the
margin in the engine sale agreement

Our response
We
made our own independent assessment, with reference to the relevant
accounting standards, of the accounting basis that should be applied to
each long-term aftermarket contract entered into during the year and
compared this to the accounting basis applied by the Group.

Our findings
We
found that the Group has developed a framework for selecting the
accounting basis to be used which is consistent with accounting
standards and has applied this consistently. For almost all the
agreements entered into during this year, it was clear which accounting
basis should apply. Where there was room for interpretation, we found
the Group’s judgement to have been balanced.

The measurement of revenue and profit in the Civil aerospace business
Refer
to page 81 (Key areas of judgement – Long-term aftermarket contracts),
page 83 (Significant accounting policies – Revenue recognition) and page
44 (Audit committee report – Financial reporting)

The risk
The
amount of revenue and profit recognised in a year on the sale of
engines and aftermarket services is dependent, inter alia, on the
assessment of the percentage of completion of long-term aftermarket
contracts and the forecast cost profile of each arrangement. As
long-term aftermarket contracts can extend over significant periods and
the profitability of these arrangements typically assumes significant
life-cycle cost improvement over the term of the contracts, the
estimated outturn requires significant judgement to be applied in
assessing engine flying hours, time on wing and other operating
parameters, the pattern of future maintenance activity and the costs to
be incurred. The inherent nature of these estimates means that their
continual refinement can have an impact on the profits of the Civil
aerospace business that can be significant in an individual financial
year. The assessment of the estimated outturn for each arrangement
involves detailed calculations using large and complex databases with a
significant level of manual intervention.

Our response
We tested the controls designed and applied by the Group to provide assurance that the estimates used in assessing revenue and cost profiles are appropriate and that the resulting estimated cumulative profit on such contracts is accurately reflected in the financial statements; these controls operated over both the inputs and the outputs of the calculations. We challenged the appropriateness of these estimates for each programme and assessed whether or not the estimates showed any evidence of management bias. our challenge was based on our assessment of the historical accuracy of the Group’s estimates in previous periods, identification and analysis of changes in assumptions from prior periods and an assessment of the consistency of assumptions across programmes, detailed discussions and assessments of the achievability of the Group’s plans to reduce life-cycle costs and an analysis of the impact of these plans on forecast cost profiles taking account of contingencies and analysis of the impact of known technical issues on cost forecasts. Our analysis considered each significant airframe that is powered by the Group’s engines and was based on our own experience supplemented by discussions with an aircraft valuation specialist engaged by the Group. We assessed whether the valuer was objective and suitably qualified. We also checked the mathematical accuracy of the revenue and profit for each arrangement and considered the implications of identified errors and changes in estimates.

Our findings
Our testing identified weaknesses in the design and operation of controls. in response to this we assessed the effectiveness of the Group’s plans for addressing these weaknesses and we increased the scope and depth of our detailed testing and analysis from that originally planned. We found no significant errors in calculation. overall, our assessment is that the assumptions and resulting estimates (including appropriate contingencies) resulted in mildly cautious profit recognition.

Recoverability of intangible assets (certification costs and participation fees, development expenditure and recoverable engine costs) and amounts recoverable on contracts primarily in the civil aerospace business
Refer to page 82 (Key sources of estimation uncertainty
– Forecasts and discount rates), pages 86 and 87 (Significant accounting policies – Certification costs and participation fees, Research and development, Recoverable engine costs and Impairment of non-current assets), page 99 (Note 9 to the financial statements – Intangible assets) and page 44 (Audit committee report– Financial reporting)

The risk
The recovery of these assets depends on a combination of achieving sufficiently profitable business in the future as well as the ability of customers to pay amounts due under contracts often over a long period of time. assets relating to a particular engine programme are more prone to the risk of impairment in the early years of a programme as the engine’s market position is established. In addition, the pricing of business with launch customers makes assets relating to these engines more prone to the risk of impairment.

Our response
We tested the controls designed and applied by theGroup to provide assurance that the assumptions are regularly updated, that changes are monitored, scrutinised and approved by appropriate personnel and that the final assumptions used in impairment testing have been appropriately approved. We challenged the appropriateness of the key assumptions in the impairment test (including market size, market share, pricing, engine and aftermarket unit costs, individual programme assumptions, price and cost escalation, discount rate and exchange rates) focusing particularly on those assets with a higher risk of impairment (those relating to the trent 900 programme and launch customers on the trent 900 and 1000 programmes). Our challenge was based on our assessment of the historical accuracy of the Group’s estimates in previous periods, our understanding of the commercial prospects of key engine programmes, identification and analysis of changes in assumptions from prior periods and an assessment of the consistency of assumptions across programmes and customers and comparison of assumptions with publicly available data where this was available. We considered the appropriateness of the related disclosures in note 9 to the financial statements.

Our findings
Our testing did not identify any deviation in the operation of controls which would have required us to amend the nature or scope of our planned detailed test work. We found that the assumptions and resulting estimates were balanced and that the disclosures in note 9 appropriately describe the inherent degree of subjectivity in the estimates and the potential impact on future periods of revisions to these estimates. We found no errors in calculations.

Accounting for the consolidation of rolls- royce Power systems holding Gmbh and valuation of Daimler AG’s put option
Refer to page 81 (Key areas of judgement – Rolls-Royce Power Systems Holding GmbH), page 82 (Key sources of estimation uncertainty – Intangible assets arising on consolidation of Rolls-Royce Power Systems AG and put option on Rolls-Royce Power Systems Holding GmbH), page 83 (Accounting policies – Basis of consolidation) and page 44 (Audit committee report – Financial reporting) Control of Rolls-Royce Power Systems Holding GmbH

The risk
rolls-royce Power Systems holding Gmbh (a special purpose vehicle owned equally by the Group and daimler aG (RRPSh)) acquired a controlling interest in rolls-royce Power Systems AG (RRPS) on 25 august 2011. From that date, the Group equity accounted for its joint venture interest in RRPSh as control was shared with Daimler AG. On 1 January 2013, conditions were fulfilled which the Group considered gave it control over RRPSh and from that date the Group’s 50 per cent interest has been classified as a subsidiary and RRPSH has been consolidated in the Group financial statements. Assessing whether or not the Group controls RRPSh is a critical accounting judgement. The rights of the Group and daimler AG are encapsulated in shareholder agreements and assessing whether the Group’s rights are sufficient to give it control over RRPSh requires detailed consideration of the relevant provisions and a commercial assessment as to which rights are most important.

Our response
We analysed the shareholder agreements with particular reference to rights relating to key matters including the existence of a casting vote in respect of key matters described on page 81 at the shareholders meeting and Shareholders’ Committee of RRPSh.

Our findings
We found that the terms of the agreements provide the Group with the power to establish key operating and capital decisions of rrPSh and to appoint, remove and set the remuneration of key management personnel. the agreements also provide daimler AG with rights (in particular over matters that would significantly change the scale, scope and financing of RRPSH’s business, certain significant supplier relationships and changes to contractual arrangements between RRPSh with rolls- royce) which we have determined provide protection to daimler AG over its interest in RRPSh but are not sufficient to prevent the Group from controlling RRPSH. on that basis, we consider that it is appropriate that RRPSh (and hence RRPS) has been consolidated from 1 january 2013.

Consolidation of Rolls-Royce Power systems holding GmbH

The risk
estimating the fair value of intangible assets of rrPS at the date of consolidation involved the use of complex valuation techniques and the estimation of future cash flows over a considerable period of time. To the extent that greater or lesser value is attributed to intangibles (which are subject to amortisation), lesser or greater value is attributed to goodwill (which is not).

Our response
We evaluated the basis upon which the Directors identified and assessed the fair value of each significant asset, liability and contingent liability of rrPS and its subsidiaries having regard to the relevant accounting standards. for the intangible assets, we assessed whether the measurement basis and assumptions underlying the estimate of the fair values were reasonable, taking account of our experience of similar assets in other comparable situations and of the work performed by a valuer engaged by the Group. We assessed whether the valuer was objective and suitably qualified, had been appropriately instructed and had been provided with complete, accurate data on which to base its evaluation. We also assessed whether or not the estimates showed any evidence of management bias with a focus on whether there was any indication of value being inappropriately attributed to goodwill rather than depreciable assets.

Our findings
We found that the intangible assets identified were typical for acquisitions of similar businesses and that the valuation bases used were in accordance with accounting standards. We have no concerns with the basis on which the valuer had been instructed by the Group and found that (i) the valuer was objective and competent, (ii) the estimates used in the valuations were balanced and did not result in either too much or too little goodwill being recognised and (iii) the valuations arrived at by the valuer had been adopted by the Group without adjustment.

Valuation of Daimler AG’s put option

The risk
As part of the shareholder agreements, for a period of six years from 1 january 2013 daimler aG has the option to require the Group to purchase its 50 per cent interest in RRPSH. The estimated amount of the purchase price of this option has been recognised as a financial liability on the Group balance sheet. The purchase price is based on averaging three valuations, which are based on both internal and external metrics, at the date the option is exercised. The external metrics include price/earnings ratios for comparable companies and those implicit in comparable transactions. There is judgement involved in choosing appropriate comparable companies and transactions and in predicting what these might be at a future date.

Our response
We analysed the shareholder agreements and tested the reasonableness of the estimate of the purchase price of the option, including assessing whether the Group’s judgement as to which external metrics should be used was appropriate, and the accuracy of its calculation. We also assessed whether or not the estimates showed any evidence of management bias with a particular focus on the risk that the liability might be understated given its visibility.

Our findings
We found that the resulting estimate was acceptable but mildly optimistic resulting in a somewhat lower liability being recorded than might otherwise have been the case.

Liabilities arising from sales financing arrangements
Refer to page 82 (Key areas of judgement – financing support), page 88 (Significant accounting policies – Sales financing support, page 112 (Note 18 to the financial statements – Provisions for liabilities and charges) and page 44 (Audit committee report – Financial reporting)

The risk
The Group has contingent liabilities in respect of financing and asset value support provided to customers. this support typically takes the form of either a guarantee with respect to the value of an aircraft at a future date or a guarantee of a customer’s future payments under an aircraft financing arrangement. Judgement is required to assess the likelihood of these liabilities crystallising, in order to assess whether a provision should be recognised and if so the amount of that provision. The total potential liability is significant and can be affected by the assessment of the residual value of the aircraft and the creditworthiness of the customers.

Our response
We analysed the terms of guarantees on aircraft delivered during the year in detail and obtained aircraft values from and held discussions with aircraft valuation specialists engaged by the Group. We assessed whether the valuer was objective and suitably qualified, had been appropriately instructed and had been provided with complete, accurate data on which to base its evaluation. for all contracts on delivered aircraft, we assessed the commercial factors relevant to the likelihood of the guarantees being called, including the credit ratings and recent financial performance of the relevant customers and their fleet plans, and critically assessed the Group’s estimate of the required provisions for those liabilities. We considered movements in aircraft values and potential changes in the assessed probability of a liability crystallising since the previous year end and considered whether the evidence supported the Group’s assessment as to whether or not a liability needs to be recognised and the amount of the liability recognised or contingent liability disclosed. We considered the appropriateness of the related disclosure in note 18 to the financial statements.

Our findings
We found that the assumptions and estimates were balanced and that note 18 appropriately discloses the potential liability in excess of the amount provided for in the financial statements for delivered aircraft and highlights the significant but unquantifiable contingent liability in respect of aircraft which will be delivered in the future.

Accounting for risk and revenue sharing arrangements refer to page 81 (Key areas of judgement – risk and revenue sharing arrangements), page 84 (Significant accounting policies – risk and revenue sharing arrangements), page 11 (Chief Financial Officer’s review) and page 44 (audit committee report – financial reporting)

The risk
The Group receives non-refundable cash payments under risk and revenue sharing arrangements (which are referred to as entry fees). The assessment of when these entry fees should be recognised in the income statement involves analysis of their commercial substance in the context of the agreement as a whole. As there is no single accounting standard that directly addresses these types of agreements, management has to apply very significant judgement in deciding how to apply the various provisions of accounting standards that are relevant to different aspects of the agreements. These arrangements are complex and have features that could be indicative of: a collaboration agreement, including sharing of risk and cost in a development programme; a long-term supply agreement; sharing of intellectual property; or a combination of these.

Our response
We independently analysed the agreements under which significant entry fees have been received to establish the range of possible accounting treatments that could be adopted and to assess which of these would in our view most appropriately reflect the requirements of accounting standards. The most significant accounting standards considered were iaS 8 accounting policies, changes in accounting estimates and errors, IAS 18 revenue, IFRS 11 joint arrangements in terms of the timing of recognition of the entry fees and IAS 1 Presentation of financial statements in respect of their presentation as an offset against the expenditure to which they relate. We also had regard to the definitions of assets, liabilities, income and expenses in the ifrS framework and, to the extent they did not conflict with Adopted IFRS, to pronouncements of other standard-setting bodies that more explicitly address accounting for payments from suppliers and collaborative arrangements. We examined correspondence between the Group and the financial reporting Council and attended meetings between them. We sought to identify the accounting applied in similar circumstances by other companies including the Group’s direct competitors and compare these to the approach adopted by the Group and the requirements of adopted IFRS. We assessed whether the change to the accounting policy made in the year was appropriate and recalculated the resulting amounts in the financial statements. We considered the appropriateness of the related disclosures.

Our findings
Our analysis indicated that in substance, from the point of view of both the Group and the risk and revenue sharing workshare partners, the entry fees represent the reimbursement of expenditure incurred by the Group as part of an engine development programme and that this represented a significant transfer of development risk from the Group to the partners that should be reflected in the income statement at the time the reimbursed expenditure is recognised. on that basis, we found that the revised accounting policy most appropriately reflects the commercial substance of the entry fees. So far as it was possible to tell, we found that the accounting applied by the Group was similar to the approach taken by others. We found that the change to the accounting policy made by the Group was appropriate given the incidence of entry fees in the year and the costs capitalised on the programmes to which these entry fees relate. We found that the disclosures in the financial statements properly describe the accounting treatment adopted by the Group and the directors’ basis for applying that treatment bribery and corruption
Refer to page 120 (Note 23 to the financial statements– Contingent liabilities) and page 44 (Audit committee report – Financial reporting)

The risk
A large part of the Group’s business is characterised by competition for individually significant contracts with customers which are often directly or indirectly associated with governments and the award of individually significant contracts to suppliers. The procurement processes associated with these activities are highly susceptible to the risk of corruption. In addition the Group operates in a number of territories where the use of commercial intermediaries is either required by the government or is normal practice. The Group is currently under investigation by law enforcement agencies, primarily the Serious Fraud Office in the UK and the US Department of justice. Breaches of laws and regulations in this area can lead to fines, penalties, criminal prosecution, commercial litigation and restrictions on future business.

Our response
We evaluated and tested the Group’s policies, procedures and controls over the selection and renewal of intermediaries, contracting arrangements, ongoing management, payments and responses to suspected breaches of policy. We sought to identify and tested payments made to intermediaries during the year, made enquiries of appropriate personnel and evaluated the tone set by the Board and the executive Leadership team and the Group’s approach to managing this risk. having enquired of management, the audit committee and the Board as to whether the Group is in compliance with laws and regulations relating to bribery and corruption, we made written enquiries of the Group’s legal advisers to corroborate the results of those enquiries and maintained a high level of vigilance to possible indications of significant non-compliance with laws and regulations relating to bribery and corruption whilst carrying out our other audit procedures. We discussed the areas of potential or suspected breaches of law, including the ongoing investigation, with the audit committee and the Board of directors as well as the Group’s legal advisers and assessed related documentation. We assessed whether the financial effects of potential or suspected breaches of law or regulation have been properly disclosed in note 23 to the financial statements.

Our findings
We found that the disclosures in note 23 to the financial statements reflect appropriately the matters required to be disclosed by accounting standards and highlighted that, as the investigation is at too early a stage to assess the consequences (if any), including in particular the size of any possible fines, no provision can be made at year end.

The presentation of ‘underlying’ profit
Refer to page 10 (Chief Financial Officer’s review), page 89 (Note 2 to the financial statements – Segmental analysis) and page 44 (Audit committee report – Financial reporting)

The risk
In addition to its Adopted IFRS financial statements, the Group presents an alternative income statement on an ‘underlying’ basis. the directors believe the ‘underlying’ income statement reflects better the Group’s trading performance during the year. the basis of adjusting between the adopted ifrS and ‘underlying’ income statements and a full reconciliation between them is set out in note 2 to the financial statements on pages 89 and 91. A significant recurring adjustment between the adopted ifrS income statement and the ‘underlying’ income statement relates to the foreign exchange rate used to translate foreign currency transactions. The Group uses forward foreign exchange contracts to manage the cash flow exposures of forecast transactions denominated in foreign currencies but does not generally apply hedge accounting in its adopted IFRS income statement. the ‘underlying’ income statement translates these amounts at the achieved foreign exchange rate on forward foreign exchange contracts settled in the period, retranslates assets and liabilities at exchange rates forecast to be achieved from future settlement of such contracts and excludes unrealised gains and losses on such contracts which are included in the adopted IFRS income statement. In addition, adjustments are made to exclude one-off past-service credits on post-retirement schemes and the effect of acquisition accounting and a number of other items.

Alternative performance measures can provide investors with appropriate additional information if properly used and presented. in such cases, measures such as these can assist investors in gaining a better understanding of a company’s financial performance and strategy. However, when improperly used and presented, these kinds of measures might mislead investors by hiding the real financial position and results or by making the profitability of the reporting entity seem more attractive.

Our response
We assessed the appropriateness of the basis for the adjustments between the adopted ifrS income statement and the ‘underlying’ income statement and recalculated the adjustments with a particular focus on the impact of the foreign exchange rate used to translate foreign currency amounts in the ‘underlying’ income statement. As the Group has discretion over which forward foreign exchange contracts are settled in each financial year, which could impact the achieved rate both for the period and in the future, we assessed whether or not this showed any evidence of management bias. We also assessed: (i) the extent to which the prominence given to the ‘underlying’ financial information and related commentary in the annual report compared to the Adopted IFRS financial information and related commentary could be misleading;
(ii) Whether the Adopted IFRS and ‘underlying’ financial information are reconciled with sufficient prominence given to that reconciliation; (iii) whether the basis of the ‘underlying’ financial information is clearly and accurately described and consistently applied; and (iv) whether the ‘underlying’ financial information is not otherwise misleading in the form and context in which it appears in the annual report.

Our findings
We have no concerns regarding the basis of the ‘underlying’ financial information or its calculation and found no indication of management bias in the way the Group managed forward foreign exchange contracts during the year. We consider that there is sufficient appropriate disclosure of the nature and amounts of the adjustments to allow shareholders to understand the implications of the two bases on the financial measures being presented. We consider that the ‘underlying’ financial information is useful to shareholders as an adjunct to the adopted IFRS financial information particularly in the context of isolating trends resulting from trading performance from trends that result from other factors. We found the presentation of the ‘underlying’ financial information to be balanced.

In addition to these key audit risks, we also focused on the recognition of revenue and profit on other long-term contracts; the implementation of a new consolidation system; warranties and guarantees; valuation of derivative contracts; valuation of post-retirement scheme liabilities; and the recoverability of tax assets and the adequacy of provisions for tax contingencies.

3 our application of materiality and an overview of the scope of our audit the materiality for the Group financial statements as a whole was set at £86 million. this has been calculated with reference to a benchmark of profit before taxation (representing 4.9% of reported and ‘underlying’ profit before taxation) which we consider to be one of the principal considerations for members of the company in assessing the financial performance of the Group.

We agreed with the audit committee to report to it the following misstatements that we identified through our audit: (i) all material corrected misstatements; (ii) uncorrected misstatements with a value in excess of £4 million for income statement items (or £8 million for balance sheet reclassifications); and (iii) other misstatements below that threshold that we believe warranted reporting on qualitative grounds.

In order to gain appropriate audit coverage of the risks described above and of each individually significant reporting component:

(a) Audits for Group reporting purposes were carried out at 13 key reporting components located in the following countries: United Kingdom (9 key reporting components), uSa (1), Germany (2) and norway (1). in addition, audits for Group reporting purposes were performed at a further 20 reporting components. Together these covered 90 % of revenue, 87 % of underlying profit before taxation and 85 % of total assets; and

(b) Specified reporting procedures were carried out over key risk areas at a further 12 reporting components, none of which are considered to be key.

In total our procedures covered 98 % of revenue, 99 % of underlying profit before taxation and 94 % of total assets. detailed audit instructions were sent to the auditors of all these reporting components. these instructions covered the significant audit areas that should be covered by these audits (which included the relevant risks of material misstatement detailed above) and set out the information required to be reported back to the group audit team. The group audit team visited the following locations: united Kingdom, USA, Germany, norway and Singapore. Telephone meetings were also held with the auditors at these locations and the majority of the other locations that were not physically visited.

The audits undertaken for Group reporting purposes at the reporting components were all performed to materiality levels set by, or agreed with, the group audit team. These materiality levels were set individually for each such component and ranged from £0.5 million to £50 million.

4 our opinion on other matters prescribed by the Companies Act 2006 is unmodified In our opinion: the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the Companies act 2006; and the information given in the Strategic report and directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements.

5 We have nothing to report in respect of the matters on which we are required to report by exception under ISA (UK and Ireland) we are required to report to you if, based on the knowledge we acquired during our audit, we have identified other information in the annual report that contains a material inconsistency with either that knowledge or the financial statements, a material misstatement of fact, or that is otherwise misleading. in particular, we are required to report to you if:

We have identified material inconsistencies between the knowledge we acquired during our audit and the directors’ statement that they consider that the annual report and financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group’s performance, business model and strategy; or the audit committee report does not appropriately address matters communicated by us to the audit committee.

Under the Companies act 2006 we are required to report to you if, in our opinion:

Adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or the parent company financial statements and the part of the directors’ remuneration report to be audited are not in agreement with the accounting records and returns; or certain disclosures of directors’ remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit. Under the Listing Rules we are required to review: the directors’ statement, set out on page 72, in relation to going concern; and the part of the corporate governance report on page 39 relating to the Company’s compliance with the nine provisions of the UK Corporate Governance Code (2010) specified for our review.

We have nothing to report in respect of the above responsibilities.

Scope of report and responsibilities as explained more fully in the directors’ responsibilities statement set out on pages 72 and 73, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. A description of the scope of an audit of accounts is provided on the financial reporting Council’s website at www.frc.org. uk/auditscopeukprivate. this report is made solely to the Company’s members as a body and is subject to important explanations and disclaimers regarding our responsibilities, published on our website at which are incorporated into this report set out in full and should be read to provide an understanding of the purpose of this report, the work we have undertaken and the basis of our opinions.

BCAJ Admin

From published accounts

Section B:
• Creation of Reserve for Corporate Social Responsibility

Power Finance Corporation Ltd (31-03-2013)

From Notes to Accounts

The Company has formulated a Corporate Social Responsibility (CSR) policy in line with the guidelines issued by the Ministry of Heavy Industries and Public Enterprises (Department of Public Enterprises) vide Office Memorandum F.No.15(3)/2007 -DPE(GM)-GL-99 dated 09-04-2010. As per the CSR policy of the Company, a minimum of 0.5% of the consolidated profit after tax of the previous year will be allocated every financial year for CSR Activities, and Company was creating CSR provision for this purpose up to FY 2011-12. Now, the Expert Advisory Committee of the Institute of Chartered Accountants of India (ICAI) has given opinion that unspent expenditure on CSR activities should not be recognized as provision, but a reserve may be created as an appropriation of profits. Accordingly, CSR provision of Rs. 16.39 crore (amount unspent as at 01-04-2012) has been reversed to the credit of the statement of profit & loss through prior period account, and CSR reserve of Rs 18.36 crore has been created as appropriation of profit, the details of which are as under:

Coal India Ltd (31-3-2013)
From Notes to Accounts
CSR Reserve
As per CSR Policy of the company a reserve equivalent to 2.5% of the retained profit of previous year is created for meeting expenses relating to CSR activities of Coal India Ltd. The same is utilised for execution of CSR activities in the states which are not covered by any subsidiary company and also for supporting CSR activities in loss making subsidiaries.

The subsidiaries of CIL also create a reserve equivalent to 5% of the retained earnings of previous year subject to a minimum of Rs. 5 per tonne of coal production of previous year, for meeting expense relating to CSR activities in the state to which the subsidiary belongs.

ECL & BCCL although have earned profits in the relevant previous year are still having accumulated losses which does not make it possible to create such reserves. As such, CSR reserve created by CIL continues to be utilised for CSR activities of ECL& BCCL also.

The actual expenses incurred and accounted for during the year is Rs. 23.73 crore transferred to General Reserve from CSR Reserve as utilised.

Further CSR expenses of Rs. 1.67 crore charged to statement of profit & loss in earlier years and remaining to be transferred to General Reserve from CSR Reserve is also transferred to General Reserve during the year.

• No provision for impairment of Goodwill arising on Consolidation

Mahindra Forgings Ltd (31-3-2013)

From Notes to Accounts of CFS

Goodwill amounting to Rs. 60,065 lakh arises on consolidation of wholly owned subsidiaries the subsidiaries namely MFGL and MFIL and their step down subsidiaries Mahindra Forgings Europe AG (MFE AG) and its wholly owned subsidiary companies namely Jeco Jellinghaus GmbH, Schoneweiss & Co GmbH, Gesenkschmiede Schneider GmbH and Falkenroth Unfirmtechnik GmbH (collectively referred to as step-down subsidiaries). Due to downturn in the economic situation in Europe, the market demand declined significantly impacting the sales and profitability of MFE AG and the step down subsidiaries.

Necessary actions are being taken in MFE AG to:

• Improve the operating efficiencies and align the cost structure in line with current market demand.
• Enhanced Focus on exploiting the synergies of business in Europe and India.
• Closely monitor the performance with increased periodic reviews to facilitate timely corrective actions to improve profitability.

The management also considers the current market situations, to be temporary and expects that together with its above actions the company should turnaround its performance in the next few years planned.

Therefore, in the opinion of the management, there is no impairment of the goodwill.

From Auditors’ Report on CFS
Emphasis of Matter

We draw attention to Note no. XXVI(8) of the consolidated financial statements and for the reasons detailed therein the management of the Company does not perceive any impairment in the value of Goodwill of Rs. 60,065 lakh arising on consolidation of the subsidiaries in view of the measures for improving financial performance being taken by the management of the Company. Our opinion is not qualified in respect of this matter.

• Change of period of operating cycle

Tecpro systems ltd (31-03-2013)

From Notes to Accounts

In the previous year, the operating cycle was determine to be 12 months in view of the varying nature of contracts, customers, payment terms, project duration etc. Basis further analysis and considering additional guidance/clarity available related to implementation of revised schedule VI, the management is of the view that the Company has multiple operating cycles which are determined on the basis of the distinguishing features and characteristics of various categories of contracts.

Due to change in operating cycle during the current year, figures for the previous year have been regrouped for meaningful comparison of current and previous year classification. The impact of regrouping on significant financial statement items if summarised below:

levitra

BCAJ Admin

From published accounts

Section B:
• Provisions made pursuant to consent decree filed by FDA, USA prohibiting the company from manufacturing and distributing from one facility in to the US market and consequent comments in Audit Report (including CARO)
• Change in accounting policy for ESOPs pursuant to opinion of EAC of ICAI
• Write-down of inventory due to intentional incorrect inventory management systems followed

Ranbaxy Laboratories Limited: (15 months ended 31-03-2014)

From Significant Accounting Policies
Employee stock option based compensation
The Company follows SEBI guidelines for accounting of employee stock options. The cost is calculated based on the intrinsic value method, i.e., the excess of market price of underlying equity shares, as of the date of the grant of options over the exercise price of such options, is regarded as employee compensation and in respect of the number of options that are expected to ultimately vest, such cost is recognised on a straight line basis over the period over which the employees would become unconditionally entitled to apply for the shares. The cost recognised at any date at least equals the intrinsic value of the vested portion of the option at that date. Adjustment, if any, for difference in the initial estimate for number of options that are expected to ultimately vest and related actual experience is recognised in the Statement of Profit and Loss of that period. In respect of vested options that expire unexercised, the cost is reversed in the Statement of Profit and Loss of that period.

During the current period, the Company has changed its policy with respect to treatment of shares issued to Ranbaxy ESOP trust (‘ESOP trust’). As per a recent opinion of the Expert Advisory Committee (‘EAC’) of The Institute of Chartered Accountants of India, as on the reporting date, the shares issued to an ESOP trust but yet to be allotted to employees be shown as a deduction from the Share Capital with a corresponding adjustment to the loan receivable from ESOP Trust. Accordingly, the Company has shown shares held by the ESOP Trust on the reporting date as a deduction from the share capital.

Compilers’ Note: The EAC opinion referred above is reproduced in March 2014 issue of ‘Chartered Accountant’ of ICAI.

From Notes to Accounts
41 b) (i) The US FDA conducted an inspection at the Company’s manufacturing facility located in Toansa in January 2014. Consequent to the findings of the inspection, on 23rd January, 2014, the US FDA invoked the Consent Decree prohibiting the Company from manufacturing and distributing APIs from its Toansa manufacturing facility and finished drug products containing APIs, manufactured at this facility, into the US regulated market. The Company has since progressed in investigating the findings of the US FDA (as contained in Form 483) and has submitted its response to the US FDA.

(ii) Subsequent to the imposition of the Consent Decree at the Toansa manufacturing facility as mentioned above, regulators in some jurisdictions including those of European Union (‘EU’) countries have sought clarifications/took actions in respect of shipments from Toansa manufacturing facility. The Company is in dialogue with these regulatory agencies and is addressing their concerns. The Company expects to resume API bulk shipments to the EU countries from Toansa manufacturing facility upon receipt of clearances from relevant regulatory authorities.

(iii) The Department of Justice of the USA (‘US DOJ’), United States Attorney’s Office for the District of New Jersey has issued an administrative subpoena, dated 13th March, 2014, to the Company seeking information primarily related to the Company’s API Toansa manufacturing facility in India for which a Form 483 was issued by US FDA in January, 2014 (as explained in (i) above). The Company is fully cooperating with this information request and is in dialogue with the US DOJ for submission of the requisite information.

(iv) During the quarter ended 31st March, 2014, the Company has temporarily put on hold its operations from the API manufacturing facilities at Toansa to examine the manufacturing and quality processes and controls, voluntarily as a precautionary measure. The same is expected to be resumed shortly.

(v) The management is taking all necessary steps to resolve the above matters to the satisfaction of the concerned authorities. However, considering the above matters relating to the Toansa manufacturing facility, provisions (primarily relating to inventories, trade commitments, sales return etc.), amounting to Rs. 2,862.78 have been recognised in these financial statements. In calculating these provisions, the management has used the best information and estimates, presently available. Since the matter involves significant judgement and in view of the inherent uncertainty of the present situation, the actual amounts may differ eventually.

41(c) During the quarter ended 31st March, 2014, the Company has temporarily put on hold its operations from API manufacturing facility at Dewas to examine the manufacturing and quality processes and controls, consequent to receipt of certain internal information. Consequent to the findings of the above exercise, the carrying amount of inventory has been written down by Rs. 424. The attribution of this amount to any particular period/ year is not possible. The Company expects to resume the operations shortly.

From Auditors’ Report
Emphasis of Matter
Without qualifying our opinion, we draw attention to note 41 b) of the financial statements which explains in detail the prohibition imposed by the Food and Drug Administration of the United States of America on the Toansa manufacturing unit of the Company, and the communications received from/ actions taken by other regulators including the Department of Justice of the United States of America and regulators in European Union countries. Consequently, the Company has made provisions, to the extent of Rs. 2,862.78 million, on the basis of best information and estimates presently available with the Company. The basis and assumptions used by the management in calculating these provisions involve significant judgment and estimates (including those relating to inventories, sales return, trade commitments, realisability of tax assets, etc.). There are inherent uncertainties regarding the future actions of the regulators, the impact of which is not ascertainable at this stage and therefore, the actual amounts may eventually differ.

FROM CARO Report
Clause 10
The accumulated losses of the Company at the end of the current period are not less than 50% of its net worth (without adjusting accumulated losses). As explained to us, these are primarily due to provision created (net of reversal) for settlement with the Department of Justice (DOJ) of the United States of America for resolution of civil and criminal allegations by the DOJ (refer to note 8 of the financial statements) in the earlier years. The Company has incurred cash losses in the current period, though it had not incurred cash losses in the immediately preceding financial year.

Clause 17
According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company as at 31st March, 2014, we are of the opinion that short term funds of Rs. 35,175.73 million have been used for long-term purposes primarily on account of accumulated losses including those related to settlement with the DOJ of the United States of America for resolution of civil and criminal allegations by the DOJ (refer to note 8 of the financial statements).

Clause 21
As explained in note 41 c) of the financial statements; during the current period, the Company has written-down carrying amount of inventory by rs. 424 million, consequent to the findings of an exercise carried out by the management in response to certain internal information received by it. The findings primarily concluded intentional incorrect inventory management of certain intermediate products by certain manufacturing unit level staff resulting in yield mismanagement and consequent incorrect higher quantity of inventories. Being a pharmaceutical quality related technical matter, we have relied on the management’s assessment of the said adjustment. as informed to us, appropriate actions have been taken by the Company including strengthening of internal controls. subject to these comments, 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.

From Directors’ Report
With regard to the comments contained in the auditors’ report, explanations are given below:-
(i) The accumulated losses of the Company at the end of the current period are more than 50% of its net worth (Computed without adjusting accumulated losses) and the Company incurred cash losses in the current period (Clause x of the annexure to the auditors’ report).

The accumulated losses are primarily due to provision created (net of reversal) for settlement with the department of justice (DOJ) of the united states of america for resolution of civil and criminal allegations by the DOJ (refer to note 8 of the financial statements) in earlier years. The Company has incurred cash losses during the current period primarily due to US FDA related remediation costs and certain exceptional items including loss on foreign exchange option derivatives and inventory provision/write- off and other costs at toansa and mohali plants.

(ii) Short-term funds used for long-term purposes (Clause xvii of the annexure to the auditors’ report). the Company had created a provision for settlement (net of reversal during the current period) with the doj during the year ended 31st December, 2011, which is currently reflected as payable of rs.29,238.60 million to a subsidiary (refer to note 8 of the financial statements). This has resulted in long-term funds being lower by rs. 35,175.73 million compared to long-term assets as at 31st march 2014. accordingly, short-term funds of rs. 35,175.73 million have been used for long-term purposes. the Company expects to overcome the situation in the near future.

(iii) Procedures of physical verification of inventories and maintaining proper records of inventories and fraud reported on the Company (Clause (ii)(b), (c) and Clause (xxi) of the annexure to the auditors’ report) during the current period, the Company has written-down carrying amount of inventory by rs. 424 million, consequent to the findings of an exercise carried out by the management in response to certain internal information received by it. The findings primarily concluded intentional incorrect inventory management of certain intermediate products by certain manufacturing unit level staff resulting in yield mismanagement and consequent incorrect higher quantity of inventories. appropriate actions have been taken by the Company including strengthening of internal controls.

BCAJ Admin

From Published Accounts

Audit Reporting as per revised

Standard on Auditing (SA 701)

Compilers’ Note

The
International Auditing and Assurance Standards Board (IAASB) has issued revised
and new International Standards on Auditing (ISAs) for audit reporting. These
audit reporting ISAs are applicable for all reports issued after 15^th
December 2016 onwards.

With a view
to align the Standards on Auditing (SAs) in India, ICAI has also issued revised
reporting standards which are effective for audits of financial statements for
periods beginning on or after April 1, 2017. The said date was subsequently
deferred by 1 year to now become effective for audits of financial statements
for periods beginning on or after April 1, 2017. ICAI has also, in March 2018,
issued an implementation guide to SA 701.

One of the
key features of the revised audit reports is the inclusion of a paragraph
called “Key Audit Matters” (KAM). KAM are defined as those matters that, in the
auditor’s professional judgement, were of most significance in the audit of the
financial statements of the current period. KAM are selected from matters communicated
with TCWG.

Given below
are 2 illustrations of the KAM paragraph included in the audit reports for the
year 2017 of two entities listed overseas.

Unilever N.V. / PLC

Key Audit
Matters – Consolidated Financial
Statements

Recurring risks Revenue recognition

Indirect
tax contingent liabilities

Direct
tax provisions

Event driven Business combinations –

Carver

Disposal
of Spreads business –
presentation
in the financial statements

KEY AUDIT
MATTERS: OUR ASSESSMENT OF RISKS OF MATERIAL MISSTATEMENT

Key audit
matters are those matters that, in our professional judgement, were of most
significance in the audit of the Financial Statements and include the most
significant assessed risks of material misstatement (whether or not due to
fraud) identified by us, including those which had the greatest effect on: the
overall audit strategy; the allocation of resources in the audit; and directing
the efforts of the engagement team.

We summarise
below the key audit matters, in decreasing order of audit significance, in
arriving at our audit opinions above, together with our key audit procedures to
address those matters and, as required, where relevant, by law for public
interest entities, our results from those procedures.

These
matters were addressed, and our results are based on procedures undertaken, in
the context of, and solely for the purpose of, our audit of the Financial
Statements as a whole, and in forming our opinion thereon, and consequently are
incidental to that opinion, and we do not provide a separate opinion on these
matters.

The
Risk

Our
Response and results

Revenue
recognition

Refer
to page 41 (Report of the Audit Committee), page 93 (accounting policy) and
pages 94 to 95 (financial disclosures).

Revenue is measured net of
discounts, incentives and rebates earned by customers on the Group’s sales.
Within a number of the Group’s markets, the estimation of discounts,
incentives and rebates recognised based on sales made during the year is
material and considered to be complex and judgemental. Therefore, there is a
risk of revenue being misstated as a result of faulty estimations over
discounts, incentives and rebates. This is an area of significant judgement
and with varying complexity, depending on nature of arrangement. There is also a risk that revenue may be
overstated due to fraud through manipulation of the discounts, incentives and
rebates recognised resulting from the pressure local management may feel to
achieve performance targets.

Revenue is recognised when
the risks and rewards of the underlying products have been transferred to the
customer. There is a risk of revenue being overstated due to fraud resulting
from the pressure local management may feel to achieve performance targets at
the reporting period end.

Our
procedures included:

u Accounting
policies: Assessing the appropriateness of the Group’s revenue
recognition accounting policies, including those relating to discounts,
incentives and rebates by comparing with applicable accounting standards;

u Control
testing: Testing the effectiveness of the Group’s controls over the
calculation of discounts, incentives and rebates and correct timing of
revenue recognition;

u Tests
of details: Obtaining supporting documentation for sales transactions
recorded either side of year end as well as credit notes issued after the
year end date to determine whether revenue was recognised in the correct
period.

u Within a number of the Group’s markets,
comparing current year rebate accruals to the prior year and, where relevant,
completing further inquiries and testing.

u Agreeing a sample of claims and rebate
accruals to supporting documentation.

u Critically assessing manual journals posted
to revenue to identify unusual or irregular items;

u Our
sector experience: Challenging the Group’s assumptions used in estimating
rebate accruals using our experience of the industry in which it operates;

u Expectation
vs. outcome: Developing an expectation of the current year revenue based
on trend analysis information, taking into account historical weekly sales
and returns information, and our understanding of each market. We compared
this expectation against actual revenue and, where relevant, completed
further inquiries and testing; and

u Assessing
disclosures: Considering the adequacy of the Group’s disclosures in
respect of revenue.

u Our
results

The results of our testing
were satisfactory and we considered the estimate of the accrual relating to
discounts, incentives and rebates and the amount of revenue recognised to be
acceptable and recorded in the correct period.

Indirect
tax contingent liabilities

Refer
to page 41 (Report of the Audit Committee), page 131(accounting policy) and
page 132 (financial disclosures).

Contingent liability
disclosures for indirect tax require the directors to make judgements and
estimates in relation to the issues and exposures. In Brazil, one of the
Group’s largest markets, the complex nature of the local tax regulations and
jurisprudence make this a particular area of judgement.

Our
procedures included:

u Control
testing: Testing the effectiveness of controls around the recording and
re assessment of indirect tax contingent liabilities;

u Our
tax expertise: Use of our own local indirect tax specialists to assess
the value of the contingent liabilities in light of the nature of the
exposures, applicable regulations and related correspondence with the
authorities;

u Enquiry of lawyers:
Assessing relevant historical and recent judgements passed by the court
authorities in considering any legal precedent or case law, as well as
assessing legal opinions from third party lawyers and obtaining formal
confirmations from the Group’s external counsel, where appropriate; and

u Assessing disclosures:
Considering the adequacy of the Group’s disclosures made in relation to
indirect tax contingent liabilities.

u Our
results

The results of our testing
were satisfactory and we considered the indirect tax contingent liability
disclosures to be acceptable.

Direct
tax provisions

Refer
to page 41 (Report of the Audit Committee), page 105 (accounting policy) and
pages 105 to 107 (financial disclosures).

The Group has extensive
international operations and in the normal course of business the directors
make judgements and estimates in relation to transfer pricing tax issues and
exposures. This is a key judgement due to the Group operating in a number of
tax jurisdictions, the complexities of transfer pricing and other
international tax legislation.

Our
procedures included:

u Control testing:
Testing the effectiveness of the Group’s controls around the recording and
re-assessment of transfer pricing provisions;

u Our tax expertise: Use
of our own tax specialists to perform an assessment of the Group’s related
correspondence with relevant tax authorities, to consider the valuation of
transfer pricing provisions;

u Challenging the assumptions using our own
expectations based on our knowledge of the Group, considering relevant
judgements passed by authorities, as well as assessing relevant opinions from
third parties; and

u Assessing disclosures:
Considering the adequacy of the Group’s disclosures in respect of tax and
uncertain tax positions.

Our
results

u The results of our testing were
satisfactory and we found the level of tax provisioning to be acceptable.

Business
combinations –

Carver

Refer
to page 41 (Report of the Audit Committee), page 132 (accounting policy) and
pages 132 to 135 (financial disclosures).

On 1^st November
2017, the Group acquired approximately 98% of the share capital of Carver
Korea for €2.28 billion, recognising identifiable assets and liabilities
acquired at fair value. The measurement of the assets acquired at fair value
is inherently judgemental. In particular, judgement is required in
determining the royalty rate and discount rate to be applied in the relief from
royalty valuation of the acquired brand intangible asset. Small changes in
the royalty rate and discount rate assumptions can have a significant impact on the valuation of
the brand.

Our
procedures included

u Control testing:
Testing the effectiveness of controls over the review of assumptions used in
the brand valuation;

u Assessing principles:
Assessing the principles of the relief from royalty valuation model;

u Benchmarking assumptions:
Evaluating assumptions used, in particular those relating to: i) the royalty
rate used and ii) the discount rate used; using our own valuation specialists
to compare these rates with externally derived data; and

u Assessing disclosures:
Considering the adequacy of the Group’s disclosures relating to the business
combination.

Our
results

u The results of our testing were
satisfactory and we considered the valuation of the acquired brand to be
acceptable.

Disposal
of Spreads business

–
presentation in the financial statements

Refer
to page 41 (Report of the Audit Committee), page 136 (accounting policy) and
page 136 (financial disclosures).

On 15^thDecember
2017, Unilever announced that it had received a binding offer to sell its
Spreads business.

The Spreads business
continues to be reported within continuing operations. The related assets
held for sale and liabilities held for sale amount to €3,184 million and €170
million respectively.

The presentation of the
event in the financial statements is an area of judgement, particularly
whether the Spreads business represents a separate major line of business or
component of the Group, and therefore should be presented as a discontinued
operation.

Our
procedures included:

u Control testing:
Testing the effectiveness of the Group’s controls over the presentation of the
event;

u Tests of details:
Inspecting the terms of the Share Purchase Agreement to identify the assets
and liabilities relating to the Spreads business and assess the directors’
conclusion to present them as
held for sale;

u Agreeing the assets and liabilities
presented as held for sale to relevant supporting evidence;

u Testing application:
Assessing the directors’ judgement that the Spreads business does not
represent a separate major line of business, considering quantitative and
qualitative factors such as the financial contribution of the business to the
Group and whether discrete financial information is regularly reviewed by the
Unilever Leadership Executive (ULE); and

u Assessing disclosures:
Considering the adequacy of the Group’s disclosures.

Our
results

u The results of our testing were
satisfactory and we consider the presentation of the Spreads business within
continuing operations to be acceptable.

Investment
in subsidiaries

Unilever N.V.

Refer
to page 148 (accounting policy) and page 150 (financial disclosures).

Unilever PLC

Refer
to page 153 (accounting policy) and page 154 (financial disclosures).

The carrying amount of the
investments in subsidiaries held at cost less impairment represent 87% and
68% of Unilever PLC and Unilever N.V. total assets respectively.

We do not consider the
valuation of these investments to be at a high risk of significant
misstatement, or to be subject to a significant level of judgement. However,
due to their materiality in the context of the NV Company Accounts and PLC
Company Accounts, this is considered to be an area which had the greatest
effect on our overall audit strategy and allocation of resources in planning
and completing our audits of Unilever PLC and
Unilever N.V.

Our
procedures included:

u Control design:
Testing the design of controls over the review of the investment impairment
analysis;

u Tests of details:
Comparing the carrying amount of investments with the relevant subsidiaries’
draft balance sheet to identify whether their net assets, being an
approximation of their minimum recoverable amount, were in excess of their
carrying amount and assessing whether those subsidiaries have historically
been profit-making;

u Our sector experience: For
the investments where the carrying amount exceeded the net asset value,
comparing the carrying amount of the investment with the expected value of
the business based on a suitable multiple of the subsidiaries’ earnings or
discounted cash flow analysis;

u Benchmarking assumptions:
Challenging the assumptions used in the discounted cash flow analysis based
on our knowledge of the Group and the markets in which the subsidiaries
operate; and

u Assessing disclosures:
Considering the adequacy of Unilever PLC and Unilever N.V. disclosures in
respect of the investment in subsidiaries.

Our
results

u The results of our testing were
satisfactory and we found the Group’s assessment of the recoverability of the
investment in subsidiaries to be acceptable.

Intangible
assets

Unilever N.V.

Refer
to page 148 (accounting policy) and page 149 (financial disclosures).

The carrying amount of
intangible assets represent 4% of Unilever N.V. total assets.

We do not consider the
valuation of these intangible assets to be at a high risk of significant
misstatement, or to be subject to a significant level of judgement. However,
due to their materiality in the context of the NV Company Accounts this is
considered to be an area which had the greatest effect on our overall audit
strategy and allocation of resources in planning and completing our audit of
Unilever N.V.

Our
procedures included:

u Control design:
Testing the design of controls over the review of the intangible assets
impairment analysis;

u Tests of details:
Assessing the directors’ triggering event review relating to the intangible
assets having regard to the performance of the related brands and trademarks;

u Our sector experience:
Evaluating assumptions used, in particular those relating to forecast revenue
growth and royalty rates;

u Benchmarking assumptions: Comparing
assumptions to externally derived data in relation to key inputs such as
royalty rates and discount rates;

u Sensitivity analysis:
Performing sensitivity analysis on the assumptions noted above; and

u Assessing disclosures:
Considering the adequacy of Unilever N.V. disclosures in respect of the
intangible assets.

Our
results

u The results of our testing were
satisfactory and we found the resulting estimate of the recoverable amount of
intangible assets to be acceptable.

Diageo
PLC

Key audit matters

Key audit matters are those matters that, in
the auditors’ professional judgement, were of most significance in the audit of
the financial statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to fraud)
identified by the auditors, including those which had the greatest effect on:
the overall audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. These matters, and any comments we
make on the results of our procedures thereon, were addressed in the context of
our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters. This is not
a complete list of all risks identified by our audit.

Key audit
matter

How our audit
addressed the key audit matter

Carrying value of
goodwill and intangible assets (group)

Refer to the Report of the Audit Committee
and note 10 –

Intangible assets

The group has goodwill of £2,723 million,
indefinite-lived brand intangibles of £8,229 million and other intangible
assets of £1,614 million as at 30 June 2017, contained within 21 cash
generating units (‘CGUs’).

Goodwill and
indefinite-lived intangible assets must be tested for impairment on at least
an annual basis. The determination of recoverable amount, being the higher of
value-in-use and fair value less costs to dispose, requires judgement on the
part of management in both identifying and then valuing the relevant CGUs. Recoverable
amounts are based on management’s view of variables and market conditions
such as future price and volume growth rates, the timing of future operating
expenditure, and the most appropriate discount and long-term growth rates.

Management has determined
that the CGUs containing the USL goodwill and the Meta brand are sensitive to
reasonably possible changes in the assumptions used, which could result in
the calculated recoverable amount being lower than the carrying value of the
CGU. Additional sensitivity disclosures have been included in the group
financial statements in respect of these CGUs.

We evaluated the
appropriateness of management’s identification of the group’s CGUs and tested
the operation of the group’s controls over the impairment assessment process,
which we found to be satisfactory for the purposes of our audit.

Our audit
procedures included challenging management on the appropriateness of the
impairment models and reasonableness of the assumptions used, focusing in
particular on USL goodwill, certain USL brands and the Meta brand, through
performing the following:

u Benchmarking Diageo’s key market-related
assumptions in the models, including discount rates, long term growth rates
and foreign exchange rates, against external data, using our valuation
expertise;

u Assessing the reliability of cash flow
forecasts through a review of actual past performance and comparison to
previous forecasts;

u Testing the mathematical accuracy and
performing sensitivity analyses of the models;

u Understanding the commercial prospects of
the assets, and where possible comparison of assumptions with external data
sources;

u For USL goodwill and USL brands, assessing
the reasonableness of forecasts by challenging assumptions in respect of
growth strategies in the Indian market; and

u For
USL goodwill and the USL brands, assessing the intermediary period in the
context of market conditions and forecast consumption per capita.

We assessed the
appropriateness and completeness of the related disclosures in note 10 of the
group financial statements, including the sensitivities provided in respect
of USL goodwill and the Meta brand, and considered them to be reasonable.

Based on our
procedures, we noted no material exceptions and considered management’s key
assumptions to be within reasonable ranges.

Taxation
matters (group)

Refer to the
Report of the Audit Committee, note 7 – Taxation, and note 18

– Contingent
liabilities and legal proceedings

The group operates
across a large number of jurisdictions and is subject to periodic challenges
by local tax authorities on a range of tax matters during the normal course
of business, including transfer pricing, direct and indirect taxes, and
transaction related tax matters. As at 30^thJune 2017, the group
has current taxes payable of £294 million, deferred tax assets of £134
million and deferred tax liabilities of £2,112 million.

Where the amount
of tax payable is uncertain, the group establishes provisions based on
management’s judgement of the probable amount of the liability.

We focused on the
judgements made by management in assessing the quantification and likelihood
of potentially material exposures and therefore the level of provision
required. In particular we focused on the impact of changes in local tax
regulations and ongoing inspections by local tax authorities, which could
materially impact the amounts recorded in the group financial statements.

This included
evaluating the recent assessment under the Diverted Profits Tax regime issued
by HM Revenue & Customs in the UK and the assessments issued by the tax
authorities in France.

We evaluated the
design and implementation of controls in respect of identifying uncertain tax
positions, which we found to be satisfactory for the purposes of our audit.
We also evaluated the related accounting policy for provisioning for tax
exposures and found it to be appropriate.

We used our tax specialists
to gain an understanding of the current status of tax assessments and
investigations and to monitor developments in ongoing disputes. We read
recent rulings and correspondence with local tax authorities, as well as
external advice received by the group where relevant, to satisfy ourselves
that the tax provisions had been appropriately recorded or adjusted to
reflect the latest developments.

We challenged
management’s key assumptions, in particular on cases where there had been
significant developments with tax authorities, noting no significant
deviations from our expectations.

This included
review of the legal advice received, supporting relevant decisions where no
provision is recorded.

We assessed the
appropriateness of the related disclosures in notes 7 and 18 of the group
financial statements and considered them to be reasonable.

Presentation of
exceptional items (group)

Refer to the
Report of the Audit Committee and note 4 –

Exceptional items

In the past few
years, the group has reported significant levels of exceptional items
separately within the consolidated income statement which are excluded from
management’s reporting of the underlying results of the group.

We evaluated the
design and implementation of controls in respect of exceptional items, which
we found to be satisfactory for the purposes of our audit.

We considered the
judgements within management’s accounting papers for the one-off transactions
and obtained corroborative evidence for the items presented as exceptional items.
We considered these to be reasonable.

The nature of
these exceptional items is explained within the group accounting policy and
includes gains or losses arising on acquisitions or disposals, impairment
charges or reversals, and costs resulting from non-recurring legal or
regulatory matters.

This year the
group has reported £42 million of net operating exceptional costs and £20
million of non-operating exceptional income before tax, which relate
primarily to:

u The release of liabilities recorded in the
year ended 30^th June 2016 in respect of disengagement agreements
relating to United Spirits Limited (£23 million);

u A charge in respect of a customer claim in
India (£32 million);

u A charge in respect of a claim received from
the competition authorities in Turkey (£33 million); and

u A gain in respect of the finalisation of the
disposal of the group’s wine interests in the US and UK (Percy Fox) (£20
million).

Our specific are
of focus was to assess whether the items identified by management as exceptional
met the definition of the group’s accounting policy (i.e. are exceptional in
nature and value) and have been treated consistently, as the identification
of such items requires judgement by management. Consistency in the
identification and presentation of these items is important to ensure the
comparability of year on year reporting.

The audit
procedures pertaining to the claims in India and Turkey are summarised under
the “Provisions and contingent liabilities” section below.

We challenged
management’s rationale for the designation of certain items as exceptional
and assessed such items against the group’s accounting policy considering the
nature and value of the items.

We assessed the
appropriateness and completeness of the disclosures in note 4 and other
related notes to the group financial statements and checked that these
reflected the output of management’s accounting papers, noting no significant
deviations from our expectations.

We also considered
whether there were items that were recorded within underlying profit that we
determined to be exceptional in nature and should have been reported within
‘exceptional items’.

No such material
items were identified.

Provisions and
contingent liabilities (group and company)

Refer to the
Report of the Audit Committee, note 14(d) – Working capital (provisions) and
note 18 – Contingent liabilities and legal proceedings

The group faces a
number of threatened and actual legal and regulatory cases. There is a high
level of judgement required in estimating the level of provisioning and/or
the level of disclosures required.

We evaluated the
design and implementation of controls in respect of litigation and regulatory
matters, which we found to be satisfactory for the purposes of our audit.

Our procedures
included the following:

u Where
relevant, reading external legal advice obtained by management;

u Discussing open matters and developments
with the group and regional general counsel;

u Meeting
with regional and local management and reading relevant correspondence;

u Assessing and challenging management’s
conclusions through understanding precedents set in similar cases; and

u Circularising relevant third party legal
representatives, together with follow up discussions, where appropriate, on
certain cases.

Based on the
evidence obtained, whilst noting the inherent uncertainty with such legal and
regulatory matters, we determined that the level of provisioning at 30^th
June 2017 is appropriate.

We assessed the
appropriateness of the related disclosures in notes 14(d) and 18 of the group
financial statements and consider them to be reasonable.

Post-employment
benefit obligations (group)

Refer to the
Report of the Audit Committee and note 13 – Post-employment benefits

The group has
approximately 40 defined benefit post-employment plans. The total present
value of obligations is £9,716 million at 30^th June 2017, which is
significant in the context of the overall balance sheet of the group. The
group’s most significant plans are in the UK, Ireland and North America.

The valuation of
pension plan liabilities requires judgement in determining appropriate
assumptions such as salary increases, mortality rates, discount rates,
inflation levels and the impact of any changes in individual pension plans.
Movements in these assumptions can have a material impact on the
determination of the liability. Management uses external actuaries to assist
in determining these assumptions.

We evaluated the
design and implementation of controls in respect of post-employment benefit
obligations, which we found to be satisfactory for the purposes of our audit.

We used our
actuarial specialists to assess whether the assumptions used in calculating
the liabilities for the United Kingdom, Ireland and North America pension
plans were reasonable, by performing the following:

u Assessing
whether salary increases and mortality rate assumptions were consistent with
the specifics of each plan and, where applicable, with relevant national and
industry benchmarks;

u Verifying that the discount and inflation
rates used were consistent with our internally developed benchmarks and in
line with other companies’ recent external reporting; and

u Reviewing the calculations prepared by
external actuaries to assess the consistency of the assumptions used.

Based on our
procedures, we noted no exceptions and considered management’s key
assumptions to be within reasonable ranges.

How we tailored
the audit scope

We tailored the
scope of our audit to ensure that we performed enough work to be able to give
an opinion on the financial statements as a whole, taking into account the
structure of the group and the company, the accounting processes and
controls, and the industry in which the group operates.

The group operates
as 21 geographically based markets across five regions, together with the
supply and corporate functions. These markets report through a significant
number of individual reporting components, which are supported by the group’s
five principal shared service centres in Hungary, Kenya, Colombia, India and
the Philippines. The outputs from these shared service centres are included
in the financial information of the reporting components they service, and
therefore are not separate reporting components. In establishing the overall
approach to the group audit, we determined the type of work that needed to be
performed at reporting components by us, as the group engagement team, or
component auditors from either other PwC network firms or non-PwC firms
operating under our instruction. This included consideration of the
procedures required to be performed by our audit teams at the group’s shared
service centres to support our component auditors.

We identified two
reporting components which, in our view, required an audit of their complete
financial information, due to their financial significance to the group.
Those reporting components were North America and USL (India). A further 12
reporting components had an audit of their complete financial information,
either due to their size or their risk characteristics, which included six
operating and three treasury reporting components. We audited specific
balances and transactions at a further six reporting components, obtaining
reporting over the financial information of Moet Hennessy, the group’s
principal associate, from its auditor, primarily to ensure appropriate audit
coverage. The work performed at each of the five shared services centres,
including testing of transaction processing and controls, supported the
financial information of the reporting components they serve.

Certain specific
audit procedures over central corporate functions and areas of significant
judgement, including goodwill and intangible assets, taxation, and material
provisions and contingent liabilities, were performed at the group’s head
office. We also performed work centrally on systems and IT general controls,
consolidation journals and the one-off transactions undertaken by the group
during the year.

Together, the
central and component locations at which work was performed by the group
engagement team and component auditors accounted for 72% of consolidated net
sales, 84% of the consolidated total assets, and 64% of the consolidated
profit before tax and exceptional items, with work performed by the group
engagement team over exceptional items contributing a further 1% coverage
over the consolidated profit before tax (total of 65%). At the group level,
we also carried out analytical and other procedures on the reporting
components not covered by the procedures described above.

Where the work was
performed by component auditors, including by our shared service centre
auditors, we determined the level of involvement we needed to have in the
audit work at those locations to be able to conclude whether sufficient
appropriate audit evidence had been obtained as a basis for our opinion on
the group financial statements as a whole. We issued formal, written
instructions to component auditors setting out the work to be performed by
each of them and maintained regular communication throughout the audit cycle.
These interactions included attending component clearance meetings and
holding regular conference calls, as well as reviewing and assessing matters
reported.

Senior members of
the group engagement team also visited eleven component locations (in six
countries) in scope for an audit of their complete financial information, as
well as four of the shared centre locations and six of the component
locations (in four countries) where audits of specific balances and
transactions took place. The team also met with the Moet Hennessy audit team.
These visits included meetings with local management and with the component
auditors, as well as certain operating site tours. The group engagement
partners also attended the year-end clearance meetings for North America and
USL, and the group engagement team reviewed the audit working papers for
these components and certain other components.

BCAJ Admin

From Published Accounts

Accounting Policy for Revenue Recognition as per Ind AS for different industries (year ended 31st March 2017)

TATA CONSULTANCY SERVICES LIMITED

The Company earns revenue primarily from providing information technology and consultancy services, including services under contracts for software development, implementation and other related services, licensing and sale of its own software, business process services and maintenance of equipment.

The Company recognises revenue as follows:

Revenue from bundled contracts that involve supplying computer equipment, licensing software and providing services is allocated separately for each element based on their fair values.

Revenue from contracts priced on a time and material basis is recognised as services are rendered and as related costs are incurred.

Revenue from software development contracts, which are generally time bound fixed price contracts, is recognised over the life of the contract using the percentage-of-completion method, with contract costs determining the degree of completion. Losses on such contracts are recognised when probable. Revenue in excess of billings is recognised as unbilled revenue in the Balance Sheet; to the extent billings are in excess of revenue recognised, the excess is reported as unearned and deferred revenue in the Balance Sheet.

Revenue from Business Process Services contracts priced on the basis of time and material or nit of delivery is recognised as services are rendered or the related obligation is performed.

Revenue from the sale of internally developed and manufactured systems and third party products which do not require significant modification is recognised upon delivery, which is when the absolute right to use passes to the customer and the Company does not have any material remaining service obligations.

Revenue from maintenance contracts is recognised on a pro-rata basis over the period of the contract.

Revenue is recognised only when evidence of an arrangement is obtained and other criteria to support revenue recognition are met, including the price is fixed or determinable, services have been rendered and collectability of the resulting receivables is reasonably assured.

Revenue is reported net of discounts, indirect and service taxes.

WIPRO LIMITED

The Company derives revenue primarily from software development, maintenance of software/hardware and related services, business process services, sale of IT and other products.

a) Services

The Company recognizes revenue when the significant terms of the arrangement are enforceable, services have been delivered and the collectability is reasonably assured. The method for recognising revenues and costs depends on the nature of the services rendered:

A. Time and materials contracts

Revenues and costs relating to time and materials contracts are recognised as the related services are rendered.

B. Fixed-price contracts

Revenues from fixed-price contracts, including systems development and integration contracts are recognized using the “percentage-of completion” method. Percentage of completion is determined based on project costs incurred to date as a percentage of total estimated project costs required to complete the project. The cost expended (or input) method has been used to measure progress towards completion as there is a direct relationship between input and productivity. If the Company does not have a sufficient basis to measure the progress of completion or to estimate the total contract revenues and costs, revenue is recognized only to the extent of contract cost incurred for which recoverability is probable. When total cost estimates exceed revenues in an arrangement, the estimated losses are recognized in the statement of profit and loss in the period in which such losses become probable based on the current contract estimates.

‘Unbilled revenues’ represent cost and earnings in excess of billings as at the end of the reporting period. ‘Unearned revenues’ represent billing in excess of revenue recognised. Advance payments received from customers for which no services have been rendered are presented as ‘Advance from customers’.

C. Maintenance contracts

Revenue from maintenance contracts is recogniswed ratably over the period of the contract using the percentage of completion method. When services are performed through an indefinite number of repetitive acts over a specified period of time, revenue is recognized on a straight-line basis over the specified period unless some other method better represents the stage of completion.

In certain projects, a fixed quantum of service or output units is agreed at a fixed price for a fixed term. In such contracts, revenue is recognised with respect to the actual output achieved till date as a percentage of total contractual output. Any residual service unutilised by the customer is recognised as revenue on completion of the term.

b) Products

Revenue from products are recognised when the significant risks and rewards of ownership have been transferred to the buyer, continuing managerial involvement usually associated with ownership and effective control have ceased, the amount of revenue can be measured reliably, it is probable that economic benefits associated with the transaction will flow to the Company and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

c) Multiple element arrangements

Revenue from contracts with multiple-element arrangements are recognised using the guidance in Ind AS 18, Revenue. The Company allocates the arrangement consideration to separately identifiable components based on their relative fair values or on the residual method. Fair values are determined based on sale prices for the components when it is regularly sold separately, third-party prices for similar components or cost plus an appropriate business-specific profit margin related to the relevant component.

d) Others

? The Company accounts for volume discounts and pricing incentives to customers by reducing the amount of revenue recognized at the time of sale.

? Revenues are shown net of sales tax, value added tax, service tax and applicable discounts and allowances.

? The Company accrues the estimated cost of warranties at the time when the revenue is recognised. The accruals are based on the Company’s historical experience of material usage and service delivery costs.

? Costs that relate directly to a contract and incurred in securing a contract are recognised as an asset and amortised over the contract term as reduction in revenue

? Contract expenses are recognised as expenses by reference to the stage of completion of contract activity at the end of the reporting period.

BHARTI AIRTEL LIMITED

Revenue is recognised when it is probable that the entity will receive the economic benefits associated with the transaction and the related revenue can be measured reliably. Revenue is recognised at the fair value of the consideration received or receivable, which is generally the transaction price, net of any taxes / duties, discounts and process waivers.

In order to determine if it is acting as a principal or as an agent, the Company assesses whether it has exposure to the significant risks and rewards associated with the sale of goods or the rendering of services.

a. Service revenues

Service revenues mainly pertain to usage subscription and activation charges for voice, data, messaging and value-added services. It also includes revenue towards interconnection charges for usage of the Company’s network by other operators for voice, data, messaging and signaling services.

Usage charges are recognised based on actual usage. Subscription charges are recognised over the estimated customer relationship period or subscription pack validity period, whichever is lower. Activation revenue and related activation costs are amortised over the estimated customer relationship period. However, any excess of activation costs over activation revenue are expensed as incurred.

The billing/ collection in excess of revenue recognised is presented as deferred revenue in the balance sheet whereas unbilled revenue is recognised within other current financial assets.

Revenues from long distance operations comprise of voice services and bandwidth services (including installation), which are recognised on provision of services and over the period of arrangement respectively.

b. Multiple element arrangements

The Company has entered into certain multiple element revenue arrangements which involve the delivery or performance of multiple products, services or rights to use assets. At the inception of the arrangement, all the deliverables therein are evaluated to determine whether they represent separately identifiable component basis. It is perceived from the customer perspective to have value on standalone basis.

Total consideration related to the multiple element arrangements is allocated among the different components based on their relative fair values (i.e., ratio of the fair value of each element to the aggregated fair value of the bundled deliverables).

c. Equipment sales

Equipment sales mainly pertain to sale of telecommunication equipment and related accessories. Such transactions are recognised when the significant risks and rewards of ownership are transferred to the customer. However, in case of equipment sale forming part of multiple-element revenue arrangements which is not separately identifiable component, revenue is recognised over the customer relationship period.

d. Capacity Swaps

The exchange of network capacity is recognised at fair value unless the transaction lacks commercial substance or the fair value of neither the capacity received nor the capacity given is reliably measurable.

e. Interest income

The interest income is recognised using the EIR method. For further details, refer Note 2.9.

f. Dividend income

Dividend income is recognised when the Company’s right to receive the payment is established.

DR. REDDY’S LABORATORIES LIMITED

Sale of goods

Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods and the amount of revenue can be measured reliably. Revenue from the sale of goods includes excise duty and is measured at the fair value of the consideration received or receivable, net of returns, sales tax and applicable trade discounts and allowances. Revenue includes shipping and handling costs billed to the customer.

Revenue from sales of generic products in India is recognised upon delivery of products to distributors by clearing and forwarding agents of the Company. Significant risks and rewards in respect of ownership of generic products are transferred by the Company when the goods are delivered to distributors from clearing and forwarding agents. Clearing and forwarding agents are generally compensated on a commission basis as a percentage of sales made by them. Revenue from sales of active pharmaceutical ingredients and intermediates in India is recognised on delivery of products to customers (generally formulation manufacturers), from the factories of the Company.

Revenue from export sales and other sales outside of India is recognised when the significant risks and rewards of ownership of products are transferred to the customers, which occurs upon delivery of the products to the customers unless the terms of the applicable contract provide for specific revenue generating activities to be completed, in which case revenue is recognised once all such activities are completed.

Profit share revenues

The Company from time to time enters into marketing arrangements with certain business partners for the sale of its products in certain markets. Under such arrangements, the Company sells its products to the business partners at a non-refundable base purchase price agreed upon in the arrangement and is also entitled to a profit share which is over and above the base purchase price. The profit share is typically dependent on the business partner’s ultimate net sale proceeds or net profits, subject to any reductions or adjustments that are required by the terms of the arrangement. Such arrangements typically require the business partner to provide confirmation of units sold and net sales or net profit computations for the products covered under the arrangement.

Revenue in an amount equal to the base purchase price is recognised in these transactions upon delivery of products to the business partners. An additional amount representing the profit share component is recognised as revenue in the period which corresponds to the ultimate sales of the products made by business partners only when the collectability of the profit share becomes probable and a reliable measurement of the profit share is available. Otherwise, recognition is deferred to a subsequent period pending satisfaction of such collectability and measurability requirements. In measuring the amount of profit share revenue to be recognised for each period, the Company uses all available information and evidence, including any confirmations from the business partner of the profit share amount owed to the Company, to the extent made available before the date the Company’s Board of Directors authorises the issuance of its financial statements for the applicable period.

Milestone payments and out licensing arrangements

Revenues include amounts derived from product out-licensing agreements. These arrangements typically consist of an initial up-front payment on inception of the license and subsequent payments dependent on achieving certain milestones in accordance with the terms prescribed in the agreement. Non-refundable up-front license fees received in connection with product out-licensing agreements are deferred and recognised over the period in which the Company has continuing performance obligations. Milestone payments which are contingent on achieving certain clinical milestones are recognised as revenues either on achievement of such milestones, if the milestones are considered substantive, or over the period the Company has continuing performance obligations, if the milestones are not considered substantive. If milestone payments are creditable against future royalty payments, the milestones are deferred and released over the period in which the royalties are anticipated to be paid.

Sales Returns

The Company accounts for sales returns accrual by recording an allowance for sales returns concurrent with the recognition of revenue at the time of a product sale. This allowance is based on the Company’s estimate of expected sales returns. The Company deals in various products and operates in various markets. Accordingly, the estimate of sales returns is determined primarily by the Company’s historical experience in the markets in which the Company operates. With respect to established products, the Company considers its historical experience of sales returns, levels of inventory in the distribution channel, estimated shelf life, product discontinuances, price changes of competitive products, and the introduction of competitive new products, to the extent each of these factors impact the Company’s business and markets. With respect to new products introduced by the Company, such products have historically been either extensions of an existing line of product where the Company has historical experience or in therapeutic categories where established products exist and are sold either by the Company or the Company’s competitors.

Services

Revenue from services rendered, which primarily relate to contract research, is recognised in the statement of profit and loss as the underlying services are performed. Upfront non-refundable payments received under these arrangements are deferred and recognised as revenue over the expected period over which the related services are expected to be performed.

License fee

The Company enters into certain dossier sales, licensing and supply arrangements with various parties. Income from licensing arrangements is generally recognised over the term of the contract. Some of these arrangements include certain performance obligations by the Company. Revenue from such arrangements is recognised in the period in which the Company completes all its performance obligations.

ALLCARGO LOGISTICS LIMITED

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is being made. The Group has concluded that it is the principal in all of its revenue arrangements since it is the primary obligor in all the revenue arrangements as it has pricing latitude and is also exposed to credit risks. Since service tax is tax collected on value added to the service provided by the service provider, on behalf of the government, the same is excluded from revenue. The specific recognition criteria described below must also be met before revenue is recognised.

Multimodal transport income

Export revenue is recognised on sailing of vessel and import revenue is recognised upon rendering of related services.

Container freight station income

Income from Container Handling is recognised as and when related services are performed. Income from Ground Rent is recognised for the period the container is lying in the Container Freight Station. However, in case of long standing containers, the income is accounted on accrual basis to the extent of its recoverability.

Contract logistic income

Contract logistic service charges and management fees are recognised as and when the services are performed as per the contractual terms.

Project and equipment income

Revenue for project related services includes rendering of end to end logistics services comprising of activities related to consolidation of cargo, transportation, freight forwarding and customs clearance services. Income and fees are recognized on percentage of completion method. Percentage of completion is arrived at on the basis of proportionate costs incurred to date of total estimated costs, milestones agreed or any other suitable basis, provided there is a reasonable completion of activity and provision of services.

Income from hiring of equipments including trailers cranes etc. is recognised on the basis of actual usage of the equipments as per the contractual terms.

Vessel operating business

In case of vessel operating business, freight and demurrage earnings are recognised on percentage of completion. Charter hire earnings are accrued on time basis.

Others

Reimbursement of cost is netted off with the relevant expenses incurred, since the same are incurred on behalf of the customers.

Interest income is recognised on time proportion basis. Interest income is included in finance income in the Statement of Profit and Loss.

Dividend income is recognised when the Group’s right to receive the payment is established, which is generally when shareholders approve the dividend.

Rental income arising from operating leases on investment properties is accounted for on a straightline basis over the lease terms and is included in revenue in the Statement of profit and loss due to its operating nature.

BIOCON LIMITED

i. Sale of goods

Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimate reliably, there is no continuing management involvement with the goods and the amount of revenue can be measured reliably. The timing of transfers of risks and rewards varies depending on the individual terms of sale. Revenue from the sale of goods includes excise duty and is measured at the fair value of the consideration received or receivable, net of returns, sales tax and applicable trade discounts and allowances.

ii. Milestone payments and out licensing arrangements

The Company enters into certain dossier sales, licensing and supply arrangements that, in certain instances, include certain performance obligations. Based on an evaluation of whether or not these obligations are inconsequential or perfunctory, we recognise or defer the upfront payments received under these arrangements. The deferred revenue is recognised in the consolidated statement of operations in the period in which we complete our remaining performance obligations.

These arrangements typically also consist of subsequent payments dependent on achieving certain milestones in accordance with the terms prescribed in the agreement. Milestone payments which are contingent on achieving certain clinical milestones are recognized as revenues either on achievement of such milestones, if the milestones are considered substantive, or over the period we have continuing performance obligations, if the milestones are not considered substantive. If milestone payments are creditable against future royalty payments, the milestones are deferred and released over the period in which the royalties are anticipated to be paid.

iii. Contract research and manufacturing services income

In respect of contracts involving research services, in case of ‘time and materials’ contracts, contract research fee are recognised as services are rendered, in accordance with the terms of the contracts. Revenues relating to fixed price contracts are recognised based on the percentage of completion method determined based on efforts expended as a proportion to total estimated efforts. The Group monitors estimates of total contract revenue and cost on a routine basis throughout the contract period. The cumulative impact of any change in estimates of the contract revenue or costs is reflected in the period in which the changes become known. In the event that a loss is anticipated on a particular contract, provision is made for the estimated loss.

In respect of contracts involving sale of compounds arising out of contract research services for which separate invoices are raised, revenue is recognised when the significant risks and rewards of ownership of the compounds have passed to the buyer, and comprise amounts invoiced for compounds sold. In respect of services, the Group collects service tax as applicable, on behalf of the government and, therefore, it is not an economic benefit flowing to the Group. Hence, it is excluded from revenue.

iv. Sales Return Allowances

The Group accounts for sales return by recording an allowance for sales return concurrent with the recognition of revenue at the time of a product sale. The allowance is based on Group’s estimate of expected sales returns. The estimate of sales return is determined primarily by the Group’s historical experience in the markets in which the Group operates.

v. Dividends

Dividend is recognised when the Group’s right to receive the payment is established, which is generally when shareholders approve the dividend.

vi. Rental income

Rental income from investment property is recognised in statement of profit and loss on a straight-line basis over the term of the lease except where the rentals are structured to increase in line with expected general inflation. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease.

vii. Contribution received from customers/co-development partners towards plant and equipment

Contributions received from customers/co-development partners towards items of property, plant and equipment which require an obligation to supply goods to the customer in the future, are recognised as a credit to deferred revenue. The contribution received is recognised as revenue from operations over the useful life of the assets. The Group capitalises the gross cost of these assets as the Group controls these assets.

LARSEN & TOUBRO LIMITED

Revenue is recognised based on nature of activity when consideration can be reasonably measured and recovered with reasonable certainty. Revenue is measured at the fair value of the consideration received or receivable and is reduced for estimated customer returns, rebates and other similar allowances.

(i) Revenue from operations

Revenue includes excise duty and adjustments made towards liquidated damages and price variation wherever applicable. Escalation and other claims, which are not ascertainable/acknowledged by customers are not taken into account.

A. Sale of goods

Revenue from sale of manufactured and traded goods is recognised when the goods are delivered and titles have passed, provided all the following conditions are satisfied:

1. significant risks and rewards of ownership of the goods are transferred to the buyer;

2. the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the good sold;

3. the amount of revenue can be measured reliably;

4. it is probable that the economic benefits associated with the transaction will flow to the Group; and

5. the costs incurred or to be incurred in respect of the transaction can be measured reliably

B. Revenue from construction/project related activity and contracts for supply/commissioning of complex plant and equipment is recognised as follows:

1. Cost plus contracts: Revenue from cost plus contracts is recognised by reference to the recoverable costs incurred during the period plus the margin as agreed with the customer.

2. Fixed price contracts: Contract revenue is recognised only to the extent of cost incurred till such time the outcome of the job cannot be ascertained reliably subject to the condition that it is probable such cost will be recoverable.

When the outcome of the contract is ascertained reliably, contract revenue is recognised at cost of work performed on the contract plus proportionate margin, using the percentage of completion method. Percentage of completion is the proportion of cost of work performed to-date, to the total estimated contract costs.

The estimated outcome of a contract is considered reliable when all the following conditions are satisfied:

i. the amount of revenue can be measured reliably;

ii. it is probable that the economic benefits associated with the contract will flow to the Group;

iii. the stage of completion of the contract at the end of the reporting period can be measured reliably; and

iv. the costs incurred or to be incurred in respect of the contract can be measured reliably

Expected loss, if any, on a contract is recognised as expense in the period in which it is foreseen, irrespective of the stage of completion of the contract.

For contracts where progress billing exceeds the aggregate of contract costs incurred to date plus recognised profits (or recognised losses as the case may be), the surplus is shown as the amount due to customers. Amounts received before the related work is performed are included in the consolidated Balance Sheet, as a liability towards advance received. Amount billed for work performed but yet to be paid by the customer are disclosed in the consolidated Balance Sheet as trade receivables. The amount of retention money held by the customers is disclosed as part of other current assets and is reclassified as trade receivables when it becomes due for payment.

C. Revenue from construction/project related activity and contracts executed in joint arrangements under work-sharing arrangement [being joint operations, in terms of Ind AS 111 “Joint Arrangements”], is recognised on the same basis as adopted in respect of contracts independently executed by the Group.

D. Revenue from property development activity which are in substance similar to delivery of goods is recognised when all significant risks and rewards of ownership in the land and/or building are transferred to the customer and a reasonable expectation of collection of the sale consideration from the customer exists.

Revenue from those property development activities in the nature of a construction contract is recognised based on the ‘Percentage of completion method’ (POC) when the outcome of the contract can be estimated reliably upon fulfillment of all the following conditions:

1. all critical approvals necessary for commencement of the project have been obtained;

2. contract costs for work performed (excluding cost of land/developmental rights and borrowing cost) constitute atleast 25% of the estimated total contract costs representing a reasonable level of development;

3. at least 25% of the saleable project area is secured by contracts or agreements with buyers; and

4. at least 10% of the total revenue as per the agreements of sale or any other legally enforceable documents is realised at the reporting date, in respect of each of the contracts and the parties to such contracts can be reasonably expected to comply with the contractual payment terms.

The costs incurred on property development activities are carried as “Inventories” till such time the outcome of the project cannot be estimated reliably and all the aforesaid conditions are fulfilled. When the outcome of the project can be ascertained reliably and all the aforesaid conditions are fulfilled, revenue from property development activity is recognised at cost incurred plus proportionate margin, using percentage of completion method. Percentage of completion is determined based on the proportion of actual cost incurred to the total estimated cost of the project. For the purpose of computing percentage of construction, cost of land, developmental rights and borrowing costs are excluded.

Expected loss, if any, on the project is recognised as an expense in the period in which it is foreseen, irrespective of the stage of completion of the contract.

In the case of the developmental project business and the realty business, revenue includes profit on sale of stake in the subsidiary and/or joint venture companies as the divestments are inherent in the business model.

E. Rendering of services

Revenue from rendering services is recognised when the outcome of a transaction can be estimated reliably by reference to the stage of completion of the transaction. The outcome of a transaction can be estimated reliably when all the following conditions are satisfied:

1. the amount of revenue can be measured reliably;

2. it is probable that the economic benefits associated with the transaction will flow to the Group;

3. the stage of completion of the transaction at the end of the reporting period can be measured reliably; and

4. the costs incurred or to be incurred in respect of the transaction can be measured reliably

Stage of completion is determined by the proportion of actual costs incurred to date to the estimated total costs of the transaction. Unbilled revenue represents value of services performed in accordance with the contract terms but not billed. In respect of information technology (IT) business and technology services business, revenue from contracts awarded on time and material basis is recognised when services are rendered and related costs are incurred. Revenue from fixed price contracts is recognised using the proportionate completion method.

F. Revenue from contracts for rendering of engineering design services and other services which are directly related to the construction of an asset is recognised on similar basis as stated in (i) B above.

G. Income from hire purchase and lease transactions is accounted on accrual basis, pro-rata for the period, at the rates implicit in the transaction. Income from bill discounting, advisory and syndication services and other financing activities is accounted on accrual basis. Income from interest-bearing assets is recognised on accrual basis over the life of the asset based on the constant effective yield.

H. Revenue on account of construction services rendered in connection with Build-Operate-Transfer (BOT) projects undertaken by the Group is recognised during the period of construction using percentage of completion method. After the completion of construction period, revenue relatable to toll collections of such projects from users of facilities are accounted when the amount is due and recovery is certain. License fees for way-side amenities are accounted on accrual basis.

I. Commission income is recognised as and when the terms of the contract are fulfilled.

J. Income from investment management fees is recognised in accordance with the contractual terms and the SEBI regulations based on average Assets Under Management (AUM) of mutual fund schemes over the period of the agreement in terms of which services are performed. Portfolio management fees are recognised in accordance with the related contracts entered with the clients over the period of the agreement. Trusteeship fees are accounted on accrual basis.

K. Revenue from port operation services is recognised on completion of respective services or as per terms agreed with the port operator, wherever applicable.

L. Revenue from charter hire is recognised based on the terms of the time charter agreement.

M. Revenue from operation and maintenance services of power plant receivable under the Power Purchase Agreement is recognised on accrual basis.

N. Other operational revenue:

Other operational revenue represents income earned from the activities incidental to the business and is recognized when the right to receive the income is established as per the terms of the contract.

(ii) Other income

A. Interest income is accrued on a time basis by reference to the principal outstanding and the effective interest rate.

B. Dividend income is accounted in the period in which the right to receive the same is established.

C. Other Government grants, which are revenue in nature and are towards compensation for the qualifying costs, incurred by the Group, are recognised as income in the Statement of Profit and Loss in the period in which such costs are incurred.

D. Other items of income are accounted as and when the right to receive arises and it is probable that the economic benefits will flow to the group and the amount of income can be measured reliably.

MAHINDRA LIFESPACE DEVELOPERS LIMITED

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.

Income from projects

Income from real estate sales is recognised on the transfer of all significant risks and rewards of ownership to the buyers and it is not unreasonable to expect ultimate collection and no significant uncertainty exists regarding the amount of consideration. However, if at the time of transfer substantial acts are yet to be performed under the contract, revenue is recognised on proportionate basis as the acts are performed, i.e. on the percentage of completion basis.

When the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the end of the reporting period, measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs, except where this would not be representative of the stage of completion. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.

When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

When contract costs incurred to date plus recognised profits less recognised losses exceed progress billings, the surplus is shown as amounts due from customers for contract work. For contracts where progress billings exceed contract costs incurred to date plus recognised profits less recognised losses, the surplus is shown as the amounts due to customers for contract work. Amounts received before the related work is performed are included in the balance sheet, as a liability, as advances received. Amounts billed for work performed but not yet paid by the customer are included in the consolidated balance sheet under trade receivables, whereas amounts not billed for work performed are included as unbilled revenue under other current assets. Further, in accordance with the Guidance Note on Accounting for Real Estate Transactions (for entities to whom Ind AS is applicable) issued by the Institute of Chartered Accountants of India, revenues will be recognized from these real estate projects only when

i. All critical approvals necessary for commencement of the project have been obtained and

ii. the actual construction and development cost incurred is at least 25% of the total construction and development cost (without considering land cost) and

iii. when at least 10% of the sales consideration is realised and

iv. where 25% of the total saleable area of the project is secured by contracts of agreement with buyers.

Income from sale of land and other rights

Revenue from sale of land and other rights are considered upon transfer of all significant risks and rewards of ownership of such real estate/property as per the terms of the contract entered into with the buyers, which generally with the firmity of the sale contracts/agreements.

Income from Project Management

Project Management Fees receivable on fixed period contracts is accounted over the tenure of the contract/agreement. Where the fee is linked to the input costs, revenue is recognised as a proportion of the work completed based on progress claims submitted. Where the management fee is linked to the revenue generation from the project, revenue is recognised on the percentage of completion basis.

Land Lease Premium

Land lease premium is recognized as income upon creation of leasehold rights in favour of the lessee or upon an agreement to create leasehold rights with handing over of possession. Property lease rentals, income from operation & maintenance charges and water charges are recognized on an accrual basis as per terms of the agreement with the lessees.

Dividend and interest income

Dividend income from investment in mutual funds is recognised when the unit holder’s right to receive payment has been established (provided that it is probable that the economic benefits will flow to the company and the amount of income can be measured reliably).

Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.

SHOPPERS STOP LIMITED

Revenue is recognised when it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably.

Retail Sale of Products

Revenue from Retail sales is measured at the fair value of the consideration received or receivable. Revenue is reduced for discounts and rebates, and, value added tax and sales tax. Retail sales are recognised on delivery of the merchandise to the customer, when the property in goods and significant risks and rewards are transferred for a price and no effective ownership control is retained. Where the Group is the principal in the transaction the Sales are recorded at their gross values. Where the Group is effectively the agent in the transaction, the cost of the merchandise is disclosed as a deduction from the gross value. (Refer Note 19)

Point award schemes

The fair value of the consideration received or receivable on sale of goods that result in award credits for customers, under the Group’s point award schemes, is allocated between the goods supplied and the award credits granted. The consideration allocated to the award credits is measured by reference to their fair value from the standpoint of the holder and is recognised as revenue on redemption and/or expected redemption after breakage.

Property option revenue

The Group has acquired the rights to sell flats in a property being constructed by a third party (termed Property Options), which are initially recognized at cost and at each reporting date valued at lower of cost and net realisable value. Sale of option inventory is recognised when there is a transfer of significant risks and rewards in accordance with the terms of the sale contracts. To the extent the transactions contain a significant financing component, it is adjusted from the total consideration using the appropriate discount rate and recognized in profit or loss over the credit period.

Gift vouchers

The amount collected on sale of a gift voucher is recognized as a liability and transferred to revenue (sales) when redeemed or to revenue (other retail operating revenue) on expiry.

Other retail operating revenue

Revenue from store displays and sponsorships are recognised based on the period for which the products or the sponsors’ advertisements are promoted / displayed. Facility management fees are recognized pro-rata over the period of the contract.

Interest income

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.

THE INDIAN HOTELS COMPANY LIMITED

Income from operation

Revenue is measured at the fair value of the consideration received or receivable. Revenue comprises sale of rooms, food and beverages and allied services relating to hotel operations, including management fees for the management of the hotels. Revenue is recognised upon rendering of the service, provided pervasive evidence of an arrangement exists, tariff / rates are fixed or are determinable and collectability is reasonably certain. Revenue from sale of goods or rendering of services is net of Indirect taxes, returns and discounts.

The Group operates loyalty programme, which allows its eligible customers to earn points based on their spending at the hotels. The points so earned by such customers are accumulated. The revenue related to award points is deferred and on redemption of the award points, the revenue is recognised. Membership fees received from the loyalty program is recognised as revenue on time-proportion basis.

Management fees earned from hotels managed by the Group are usually under long-term contracts with the hotel owner and is recognised when earned in accordance with the terms of the contract.

Interest

Interest income is accrued on a time proportion basis using the effective interest rate method.

Dividend

Dividend income is recognised when the Group’s right to receive the amount is established.

Critical accounting estimates and judgements

Loyalty programme

The Group estimates the fair value of points awarded under the Loyalty programme by applying statistical techniques. Inputs include making assumptions about expected breakages, the mix of products that will be available for redemption in the future and customer preferences, redemption at own hotels and other participating hotels.

VEDANTA LIMITED

Revenues are measured at the fair value of the consideration received or receivable, net of discounts, volume rebates, outgoing sales taxes and other indirect taxes excluding excise duty.

Excise duty is a liability of the manufacturer which forms part of the cost of production, irrespective of whether the goods are sold or not. Since the recovery of excise duty flows to the Group on its own account, revenue includes excise duty.

Sale of goods

Revenues from sales of goods are recognised when all significant risks and rewards of ownership of the goods sold are transferred to the customer which usually is on delivery of the goods to the shipping agent. Revenues from sale of by-products are included in revenue.

Certain of the Group’s sales contracts provide for provisional pricing based on the price on The London Metal Exchange (“LME”), as specified in the contract, when shipped. Final settlement of the price is based on the applicable price for a specified future period. The Group’s provisionally priced sales are marked to market using the relevant forward prices for the future period specified in the contract and is adjusted in revenue.

Revenue from oil, gas and condensate sales represents the Group’s share (net of Government’s share of profit petroleum) of oil, gas and condensate production, recognized on a direct entitlement basis, when significant risks and rewards of ownership are transferred to the buyers. Government’s share of profit petroleum is accounted for when the obligation (legal or constructive), in respect of the same arises.

Revenue from sale of power is recognised when delivered and measured based on rates as per bilateral contractual agreements with buyers and at rate arrived at based on the principles laid down under the relevant Tariff Regulations as notified by the regulatory bodies, as applicable.

Where the Group acts as a port operator, revenues and costs relating to each construction contract of service concession arrangements are recognised over the period of each arrangement only to the extent of costs incurred that are probable of recovery. Revenues and costs relating to operating phase of the port contract are measured at the fair value of the consideration received or receivable for the services provided.

Revenue from rendering of services is recognised on the basis of work performed.

Interest income

Interest income from debt instruments is recognised using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Group estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses.

Dividends

Dividend income is recognised in the consolidated statement of profit and loss only when the right to receive payment is established, provided it is probable that the economic benefits associated with the dividend will flow to the Group, and the amount of the dividend can be measured reliably.

INTERGLOBE AVIATION LIMITED

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, net of discounts. Revenue is recorded, provided the recovery of consideration is probable and determinable.

Passenger and cargo revenue

Passenger revenue is recognised on flown basis i.e. when the service is rendered, net of discounts given to the passengers, applicable taxes and airport levies such as passenger service fee, user development fee, etc., if any. Cargo revenue is recognised when service is rendered i.e. goods are transported, net of airport levies and applicable taxes.

The sale of tickets not yet flown is credited to unearned revenue i.e. ‘Forward Sales’ disclosed under other current liabilities. Fees charged for modification and cancelation of flight tickets and towards special service request are recognised as revenue on rendering of the service.

The unutilised balance in Forward Sales for more than a year is recognised as revenue based on historical statistics, data and management estimates and considering the Group’s cancellation policy.

In flight sales

Revenue from sale of merchandise is recognised on transfer of all significant risks and rewards to the passenger. Revenue from sale of food and beverages is recognised on sale of goods to the passenger, net of applicable taxes.

Tour and packages

Income and related expense from sale of tours and packages are recognised upon services being rendered and where applicable, are stated net of discounts and applicable taxes. The income and expense are stated on gross basis.

The sale of tours and packages not yet serviced is credited to unearned revenue, i.e. ‘Forward Sales’ disclosed under other current liabilities.

Interest income

Interest income on financial assets (including deposits with banks) is recognised using the effective interest rate method on a time proportionate basis.

Claims and other credits – non-refundable
Claims relate to reimbursement towards operational expenses such as operating lease rentals, aircraft repair and maintenance, etc., are adjusted against such expenses over the estimated period for which these reimbursements pertain. When credits are used against purchase of goods and services such as operating lease rentals, aircraft repair and maintenance, etc., these are adjusted against such expenses on utilization basis. The claims and credits are netted of against related expense arising on the same transaction as it reflects the substance of transaction. Moreover, any claim or credit not related to reimbursement towards operational expenses or used for purchase of goods and services are recognised as income in the Consolidated Statement of Profit and Loss when a contractual entitlement exists, the amount can be reliably measured and receipt is virtually certain.

BCAJ Admin

From Published Accounts

Section B:

Revision of Financial Statements pursuant to Composite Scheme of Arrangement

Jindal Stainless Ltd . (year ended 31st March 2015)

From Notes to Financial Statements

27. Composite Scheme of Arrangement

1. A Composite Scheme of Arrangement (here in after referred to as ‘Scheme’) amongst Jindal Stainless Limited (the Company/Transferor Company) and its three wholly owned subsidiaries namely Jindal Stainless (Hisar) Limited (JSHL), Jindal United Steel Limited (JUSL) and Jindal Coke Limited (JCL) under the provision of section 391-394 read with section 100- 103 of the Companies Act, 1956 and other relevant provision of Companies Act, 1956 and/or Companies Act, 2013 has been sanctioned by the Hon’ble High Court of Punjab & Haryana, Chandigarh vide its Order dated 21st September 2015, modified by Order dated 12th October, 2015. The Schemes inter-alia includes:-

a) Demerger of the Demerged Undertakings (as defined in the scheme) of the Company comprising of the Ferro Alloys Division located at Jindal Nagar, Kothavalasa (AP) and the Mining Division of the Company and vesting of the same in Jindal Stainless (Hisar) Limited (JSHL) w.e.f. appointed date i.e. close of business hours before midnight of March 31, 2014. (Section I of the Scheme)

b) Transfer of the Business undertaking 1 (as defined in the scheme) of the Company comprising of the Stainless Steel Manufacturing Facilities of the Company located at Hisar, Haryana and vesting of the same with Resultant Company (JSHL) on Going Concern basis by way of Slump Sale along with investments in the domestic subsidiaries (listed in Part B of schedule 2 of the Scheme) of the company w.e.f. appointed date i.e. close of business hours before midnight of 31st March, 2014. (Section II of the Scheme)

c) Transfer of the Business undertaking 2 (as defined in the scheme) of the Company comprising, interalia, of the Hot Strip Plant of the Company located at Odisha and vesting of the same in Jindal United Steel Limited on Going Concern basis by way of Slump Sale w.e.f. appointed date i.e. close of business hours before midnight of March 31, 2015. (Section III of the Scheme)

d) Transfer of the Business Undertaking 3 (as defined in the Scheme) of the Company comprising, interalia ,of the Coke Oven Plant of the Company Located at Odisha and vesting of the same with Jindal Coke Limited on Going Concern basis by way of Slump Sale w.e.f. appointed date i.e. close of business hours before midnight of March 31, 2015. (Section IV of the Scheme)

Section I and Section II of the Scheme became effective on 1st November, 2015, operative from the said appointed date as stated in sub-para (a) and (b) above and Section III and Section IV (for section III and IV appointed date as stated in sub-para (c) & (d) above) of the Scheme will become effective on receipt of necessary approvals from the OIIDCO or any other concerned authorities for transfer/ grant of the right to use in the land on which Hot Strip & Coke Oven Plants are located as specified in the Scheme.

2. Pursuant to the Section I and Section II of the Scheme becoming effective:

a) Demerged Undertakings and Business undertaking 1 has been transferred to and vested in JSHL with effect from the said Appointed Date and the same has been given effect to in these accounts.

b) The difference of Rs. 58,512.65 lakh between the book values of assets and liabilities pertaining to the Demerged Undertakings transferred has been adjusted against Security Premium Account.

c) Share capital of JSHL comprising of 2,50,000 equity shares having face value of Rs. 2 each, 100% held by the Company deemed to has been cancelled. Accordingly the said investment amounting to Rs. 5.00 lakh has been charged off in the Statement of Profit & Loss and has been included under Exceptional Item.

d) Business Undertaking 1 (as defined in sub-para (b) of 1 above) has been transferred at a lump sum consideration of Rs. 280,979.52 lakh; out of this, Rs. 260,000.00 lakh shall be paid by JSHL and Rs. 20,979.52 lakh has been adjusted against sum of Rs. 57,598.19 lakh lying payable to JSHL in the books of the Company.

Against the balance amount of Rs. 36,618.67 lakh, the company is to issue equity shares to JSHL at a price to be determined with the record date to be fixed as specified in the Scheme. Pending allotment, the same has been shown as “Share Capital Suspense Account”.

e) On transfer of Business Undertaking 1, the differential between the book values of assets & liabilities transferred and the lump sum consideration received as stated above amounting to Rs. 116,021.85 lakh has been credited in the Statement of profit & loss and included under Exceptional Item. (Note no. 30)
f) In terms of the Scheme, all the business and activities of Demerged Undertakings and Business Undertaking 1 carried on by the company on and after the appointed date, as stated above, are deemed to have been carried on behalf of JSHL. Accordingly, necessary effects have been given in these accounts on the Scheme becoming effective.
g) The necessary steps and formalities in respect of transfer of properties, licenses, approvals and investments in favour of JSHL and modification of charges etc. are under implementation. Further transfer of Mining Rights to Demerged Undertakings (as referred in para 1 (a) above) is subject to necessary approvals of the concerned authorities.

3. Pursuant to the Scheme the effects on the financial statements of operations carried out by the company for on behalf of JSHL post the said appointed date have been given in these accounts from the effective date (for the close of business hours before midnight of 31st March, 2014) are as summarised below :

As stated in note no. 1 above, section I and section II of the Scheme became effective from the appointed date i.e. from close of business hours before midnight of 31st March, 2014.

4. The financial statements of the Company for the year ended 31st March, 2015 were earlier approved by the Board of Directors at their meeting held on 30th May, 2015 on which the Statutory Auditors of the Company had issued their report dated 30th May, 2015. These financial statements have been reopened and revised to give effect to the Scheme as stated in note 1 & 2 herein above.

From Auditors’ Report

Report on the Standalone Financial Statements (REVISED)
We have audited the accompanying REVISED standalone financial statements of Jindal Stainless Limited (“the Company”), which comprise the REVISED Balance Sheet as at 31st March, 2015, the REVISED Statement of Profit and Loss, the REVISED Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information in which are incorporated the REVISED Return for the year ended on that date audited by the branch auditors of the Company’s branch at Jindal Nagar, Kothavalsa, Dist. Vizianagaram (A.P.) in which impact of the Scheme (as stated in Note no. 27) have been incorporated.

Other Matters
The financial statements of the Company for the year ended 31st March, 2015 were earlier approved by the Board of Directors at their meeting held on 30th May, 2015, on which the Statutory Auditors of the Company had issued their report dated 30th May, 2015. These financial statements have been reopened and revised to give effect to the Scheme as explained in Note No. 27(4).

Our opinion is not modified in respect of these matters.

BCAJ Admin

From Published Accounts

Section A:

Disclosures
regarding Consolidated Financial Statements (CFS) prepared (as per AS 23) for
first time to include results of an Associate

Bajaj
Electricals Ltd (31-3-2016)

From
Notes to CFS

Summary of significant
accounting policies followed by the Company

The consolidated financial statements include
results of the associate of Bajaj Electricals Limited (BEL), consolidated in
accordance with Accounting Standard 23 ‘Accounting for Investment in Associates
in Consolidated Financial Statements’.
This being the first year Consolidated Financial Statements are drawn
up, the previous year comparative numbers have not been presented and
accordingly no consolidated cash flow statement has been prepared.

Name of
the Company

Country
of incorporation

%
shareholding of

Bajaj
Electricals Limited

Consolidated
as

Starlite Lighting Limited

India

19%

Associate

For the purpose of Section 2(6) of the Companies
Act, 2013, “associate company”, in relation to another company, means a company
in which that other company has a significant influence, but which is not a
subsidiary company of the company having such influence and includes a joint
venture company. Explanation – for the purposes of this clause, “significant
influence” means control of at least twenty per cent of total share capital
and/or the ability to significantly influence the operational and financial
policies of the company but not control them.
The holding of Bajaj Electricals Limited in Starlite Lighting Limited
(Starlite) is less than 20%. The Starlite Lighting Limited is consolidated as
an Associate by virtue of the formers ability to influence the operational and
financial policies whereby the share of the parent in the associate’s net worth
and profit has been picked up and accounted for under an independent line item
in the “General Reserve”, “Investment” and “Statement of Profit and Loss”. The excess of cost of Investment in the
associate and the share of net worth of the associate on the day of investing
is reflected as “Goodwill”.

In all other aspects these financial statements
have been prepared in accordance with the other generally accepted accounting
principles in India under the historical cost convention on accrual basis,
except for certain tangible assets which are being carried at revalued amounts.
Pursuant to Section 133 of the Companies Act, 2013 read with Rules 7 of
Companies (Accounts) Rules, 2014, till the standards of accounting or any
addendum thereto are prescribed by Central Government in consultation and
recommendation of the National Financial Reporting Authority, the existing
Accounting Standards notified under the Companies Act, 1956 shall continue to
apply. Consequently, these financial statements
have been prepared to comply in all material aspects with the accounting
standards notified under Section 211(3C) of the Companies Act, 1956 [Companies
(Accounting Standards) Rules, 2006, as amended] and other relevant provisions
of the Companies Act, 2013.

All assets and liabilities have been classified as
current or non-current as per the “Company’s normal operating cycle and other
criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of products and the time
between the acquisition of assets for processing and their realisation in cash
and cash equivalents, the Company has ascertained its operating cycle as 12
months for the purpose of current or non-current classification of assets and
liabilities.

Notes to these consolidated financial statements
are intended to serve as a means of informative disclosure and a guide to
better understanding of the consolidated position of the companies. Recognising this purpose, the Ministry of
Corporate Affairs vide its General Circular No. 39/2014 dated 14 October 2014
has clarified that only those note which are relevant to understanding the Consolidated
Financial Statements should be disclosed and not merely repeating the Notes
disclosed in the standalone financial statements to which these consolidated
financial statements are attached to.

Accordingly:

1] The Company has disclosed only such notes from the
individual financial statements, which fairly present the needed disclosures.

2] The accounting policies of the parent also broadly
represent the accounting policies of the consolidated entity and hence are best
viewed in its independent financial statements, Note 2. However the accounting of derivative
instruments on the basis of the principles of hedge accounting specified in
AS-30 followed by the Associate is in contrast to accounting for the same by
parent (BEL) as a fair value to Profit and Loss account, which has been
adjusted to be consistent with the accounting policies followed by the Company
(BEL). Other accounting policies
followed by the associate consolidated herein have been reviewed and no further
adjustments are considered necessary.

3]
Note Nos.2, 4, 5, 6, 7, 8, 9, 10, 11, 13, 14. 16,
17, 18, 19, 20, 21, 22, 23, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 represent
the numbers and required disclosures of the Parent and accordingly are best
viewed in BEL’s independent financial statements.

GENESYS INTERNATIONAL
CORPORATION LTD
(31-3-2016)

From
Notes to CFS

Summary of significant
accounting policies followed by the Company

The
consolidated financial statements include results of the associates of Genesys
International Corporation Limited, consolidated in accordance with Accounting
Standard 23 ‘Accounting for Investment in Associates in Consolidated Financial
Statements’, as below:

Name
of the Entity

Country
of Incorporation

%
of voting right held on March 31, 2016

Consolidated
as

A.N.Virtual
World Tech Limited

Cyprus

45.01%

Associate

Virtual
World Spatial Technology Private Limited

India

–

Wholly
owned subsidiary of Associate

For
the purpose of Section 2(6) of the Companies Act, 2013, “associate company”, in
relation to another company, means a company in which that other company has a
significant influence, but which is not a subsidiary company of the company
having such influence and includes a joint venture company. Explanation – For
the purposes of this clause, “significant influence” means control of at least
twenty per cent of total share capital and/or the ability to significantly
influence the operational and financial policies of the company but not control
them. The equity holding of Genesys International Corporation Limited in A.N.
Virtual World Tech Limited is 45.01%. The A.N. Virtual World Tech Limited is
consolidated as an Associate by virtue of the formers ability to influence the
operational and financial policies whereby the share of the parent in the
associate’s net worth and profit / loss has been picked up and accounted for
under an independent line item in the “General Reserve”,
“Investment” and “Statement of Profit and Loss”. The excess
of cost of Investment in the associate and the share of net worth of the
associate on the day of investing is reflected as “Goodwill”.

In
all other aspects these financial statements have been prepared in accordance
with the other generally accepted accounting principles in India under the
historical cost convention on accrual basis. Pursuant to Section 133 of the
Companies Act, 2013 read with Rule 7 of Companies (Accounts) Rules, 2014, till
the standards of accounting or any addendum thereto are prescribed by Central
Government in consultation and recommendation of the National Financial
Reporting Authority, the existing Accounting Standards notified under the
Companies Act, 1956 shall continue to apply. Consequently, these financial
statements have been prepared to comply in all material aspects with the
accounting standards notified under Section 211(3C) of the Companies Act, 1956
[Companies (Accounting Standards) Rules, 2006, as amended] and other relevant
provisions of the Companies Act, 2013.

All
assets and liabilities have been classified as current or non-current as per
the Company’s normal operating cycle and other criteria set out in the Schedule
III to the Companies Act, 2013. Based on the nature of products and the time
between the acquisition of assets for processing and their realisation in cash
and cash equivalents, the Company has ascertained its operating cycle as 12
months for the purpose of current or non-current classification of assets and
liabilities.

Notes
to these consolidated financial statements are intended to serve as a means of
informative disclosure and a guide to better understanding of the consolidated
position of the companies. Recognising this purpose, the Ministry of Corporate
Affairs vide its General Circular No. 39/2014 dated 14 October 2014 has
clarified that only those note which are relevant to understanding the
Consolidated Financial Statements should be disclosed and not merely repeating
the Notes disclosed in the standalone financial statements to which these
consolidated financial statements are attached to.

Accordingly:

1]
The Company has disclosed only such notes which fairly present the
needed disclosures.

2] The accounting policies of the
parent also broadly represent the accounting policies of the consolidated
entity and hence are best viewed in its independent financial statements, Note
2. However, the useful life of intangible assets for the purpose of its
depreciation is considered as 20 years by the associate, which is in contrast
to the accounting policy of the parent.

3] Note Nos.
2,3, 5, 6, 7, 8, 9, 10, 11, 12, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25,
26, 27, 28, 29, 30, 31, 32, 34, 35, 36, 37, 38, 39, 40, 41 represent the
numbers and required disclosures of the Parent and accordingly are best viewed
in Genesys International Corporation Limited independent financial statements.

BCAJ Admin

From Published Accounts

Section B:

Disclaimer of Opinion on
account of impact on financial statements due to errors, incorrect accounting
or falsification, fictitious sales, etc.

Ricoh India Ltd. (31-3-2016)
(report dated 18^th November 2016)

From Notes to Financial
Statements

Note 45

Background of Significant
events

(a) The
Company in compliance with the provisions of the Companies Act, 2013 appointed
BSR & Co., LLP, Chartered Accountants as the statutory auditors of the
Company on 24^th September, 2015. In compliance with the provisions
of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 (“Listing Regulations”), the Company prepared its financial
results for quarter and half year ended 30^th September 2015. The
statutory auditors as a part of limited review process for the above quarter
raised various suspicions with respect to certain transactions between the
company and its customers and vendors.

On 14^th
November 2015, the statutory auditors met the Audit Committee of the Company
(“Audit Committee”) and communicated their observations to the Audit Committee.
To seek to expedite the filing of the financial result with the Bombay Stock
Exchange Limited (“BSE”) in accordance with the Listing Regulations, the Audit
Committee decided to engage the services of S. S. Kothari & Mehta,
Chartered Accountants (“SSKM”) to conduct another review of the financial
statements on an agreed upon procedure basis. SSKM submitted its report to the
Audit Committee on 2^nd February 2016 (“SSKM Report”). However, the
statutory auditors did not agree to the scope of the agreed upon procedures and
hence no progress was made.

Following
the concerns raised by the statutory auditors, the Audit Committee in order to
better understand certain areas where the statutory auditors has raised
concerns decided to appoint Shardul Amarchand Mangaldas & Co., Advocates
& Solicitors (“SAM”) who in turn appointed PricewaterhouseCoopers Private Limited,
India (“PwC”) to conduct an independent investigation into the concerns raised.

Pending
the investigation by SAM and PwC, the following key managerial personnel of the
Company were sent on paid leave by the Board on 29^thMarch 2016: Mr.
Manoj Kumar, the Managing Director and Chief Executive Officer; Mr. Arvind
Singhal, the Chief Financial Officer; and Mr. Anil Saini, the Senior Vice
President and Chief Operating Officer. Following the above, on 2 April 2016,
Mr. Manoj Kumar, the Managing Director and Chief Executive Officer resigned
from the board of the directors.

PwC
issued a “Report on Preliminary Findings’ (“Preliminary Report”) dated 20^th
April 2016. From this Preliminary Report, it was apparent that the concerns
identified and the consequent falsification of the account comprised the
following areas” Out of book adjustments; Revenue recognition issues; Suspect
transactions and Personal type expenditure.

Upon
receipt of the Preliminary Report, the Company made disclosures and filings
with various regulatory authorities including the BSE, The Securities &
Exchange Board of India (“SEBI”), Ministry of Corporate Affairs (“MCA”) and
also filed a criminal complaint with the Delhi Police to investigate into the
suspected wrongdoings.

On 18^thMay 2016, the Company published its financial results for the quarter and
half year ended 30^thSeptember 2015. In the disclosures accompanying
the financial results, the Board of Directors stated that the financial results
did not represent a true and fair view of the state of affairs of the Company
and the reasons therefor. The statutory auditors did not provide an opinion in
their limited review report.

The
Company, with the support of the Audit Committee and the Board of Directors,
continued to address the concerns raised in the financial statements for the
quarter and half year ended 30^th September 2015. It was recognised
that the Company was falling further behind the filings. With the quarter ended
30^thSeptember 2015 accounts only being finalised for filing in May
2016, and with the inability of the Board of Directors to approve these
accounts without significant caveats and concerns, they realised the need for a
change in process. Moreover, given the passage of time and the potential losses
in the accounts it was concluded that there was an urgent need to obtain up to
date reliable financial statements which would be of value to all stakeholders.

It
was recognised that many of the matters identified in the Preliminary Report
could best be addressed by a team with Ricoh specific knowledge, engaging PwC
where appropriate, so that efficiency and effectiveness was achieved. It was
therefore concluded that an internal investigation (staffed and led
independently of Ricoh India Limited) could be used to complete certain of the
activities.

The
Company also realised that having already filed a complaint with the Delhi
Police against the suspected wrongdoers (whether known or unknown) who were
already investigating the matter, the investigation with regard to the
individual culpability of the alleged wrongdoers should be best left to
regulatory authorities and the Company should focus on restoration of the
economic value of the shareholders and producing reliable financial results.

Accordingly,
in early June 2016 a team comprising various Ricoh group representatives, all
of whom were independent of Ricoh India Limited, was established to continue the investigations alongside PwC.

On 19^thJuly 2016 the internal investigation team and the Company presented the
estimated unaudited loss for the year ended 31^stMarch 2016 of
Rs.112,300 lakh to the Audit Committee. This estimated result was approved and
filed with BSE.

On 19^th
July 2016, the Promoter Ricoh Company, Limited filed a petition with the
Hon’ble National Company Law Tribunal (“NCLT”) seeking various reliefs but in
particular the re-capitalisation of the Company.

On 24^thAugust 2016 the NCLT issued an Order granting the cancellation of the
shares of either Ricoh Company Limited, or the Co-Promoter NRG Group Limited,
and the preferential issue of the same number of shares for an amount
equivalent to the estimated unaudited loss announced on 19^th July
2016 i.e. Rs.112,300 lakh.

On 14^th
October 2016, an Extraordinary General Meeting was held that approved the
re-capitalisation by way of cancellation of the shares of NRG Group Limited,
and preferential issue of the same number of shares to NRG Group Limited. On 15^th
October 2016 the board approved the cancellation, issue and allotment for the
consideration of Rs.112,300 lakh.

On 17^th
November 2016 PwC presented their final report (“the PwC Report”) and the
independent team presented their findings to the Audit Committee. The PwC
Report will be shared with the relevant regulatory authorities including the
NCLT, BSE, SEBI, MCA and the Delhi Police Economic Offences Wing.

On 18^th
November 2016, the result along with the auditor’s report for the quarter ended
31^st December 2015 and the quarter and year ended 31^st
March 2016 were presented to the Audit Committee. These were subsequently
approved by the board and filed with BSE.

(b) As a
result of the investigations and the matters identified the Company concluded
that it was impractical, because of limitations in the available documentation,
because of the inability to conclude on the nature of certain transactions and
because of time and cost, to seek approval to restate all financial periods
during which the falsification of accounts had taken place.

Hence,
the Company has reported the final loss for the quarter and year ended 31^stMarch 2016 and separately identified, where possible, the loss relating
to previous periods. Given the nature of the falsification of accounts it is
not possible to fully allocate the falsifications or errors since to do so would
require significant assumptions that would be subjective.

As a
result of the PwC Report and the internal investigation team analysis, it is
clear that some of the loss for the year ended 31^st March 2016
relates to previous years. Accordingly, in the results for the quarter and year
ended 31^st March 2016 and as detailed in the analysis at note (f)
below reference is made to items where it is clear that the previous year was
impacted. Given that it is not possible to fully allocate the falsifications or
errors due to subjectivity it is possible that further losses may be
attributable to the previous year.

(c) The
auditors have disclaimed from an opinion on the profit and loss account for the
year ended 31^stMarch 2016. Therefore, within these financial
statements the directors have sought to explain the falsifications identified
and the periods to which they relate. Such analysis is unaudited but in the
opinion of the Directors is critical to an understanding of the matters
included in these financial statements.

(d) The
auditors have disclaimed from an opinion on the balance sheet at 31^stMarch
2016. The Company has sought to satisfy the auditors that the balance sheet
represents a true and fair view but has been unable to do so. The Directors
will file the appropriate statement with BSE stating there is no difference
between the results reported and the results with the impact of the disclaimer
of opinion.

(e) On the
basis of the matters detailed in point (d) above, and based on the
investigations carried out by PwC and the independent investigation team, and
based on the information available to the directors, the directors believe that
the balance sheet statement as at 31^stMarch 2016 materially
represents a true and fair view and will form the basis for future reporting.

The
loss for the year ended 31^stMarch 2016 and the impact of
falsification of accounts

(f) The
loss for the year ended 31^stMarch 2016 can be analysed as follows:

NotNote

(Amount in Rs. lakhs)

One off adjustments that related to the year ended 31^st March 2015 and prior

(17,400)

Cumulative value of one off adjustments that relate to the year
ended 31^st March 2016 and
have been included in the results for the year ended 31 March 2016

(31,300)

Cumulative value of one off adjustments that cannot be allocated
by year and hence are included in the year ended 31^st March 2016

(19,600)

Loss for the year ended 31^st March 2016 before one off adjustments

(43,500)

Total loss for the year

(111,800)

Notes:

(A) One off
adjustments that relate to the year ended 31^stMarch 2015 and prior
are accounting errors/falsifications that can be attributed to those periods.
These included two main categories: (i) incorrect revenue recognition and
profit recognition on contracts; and (ii) unsupported adjustments that have
been made to inflate profits.

(B) One off
adjustments that specifically relate to the year ended 31^st March
2016 are errors and accounting falsifications that relate to that financial
year. These include unsupported adjustments that have been made to inflate
profits and also provisioning for doubtful debt which can be attributable to
the financial year.

(C) One off
adjustments that cannot be allocated by period are accounting
errors/falsifications that due to their nature cannot be retrospectively
analysed by period. Whilst it is possible that some element of these relate to
previous periods any allocation would be subjective. These include categories
such as: (i) inventory where the Company has had to make significant
corrections and provisions. Whilst it is possible that similar issues existed
at 31^stMarch 2015, and the ensuing quarter ends, without having
access to detailed inventory verification and records at each of those dates it
is not possible to determine what errors, if any, existed at those date and
hence in which period the inventory errors arose; and (ii) reconciliation and
accounting adjustments where again without being able to recreate all of the
reconciliations and reliable accounting data at each balance sheet date it is
not possible to determine in which period such errors arose.

(g) Items
included as one off adjustments in the year ended 31^stMarch 2016
comprise:

(Amount in Rs. lakhs)

Year ended 31^stMarch 2016

Revenue

Loss

Apparently fictitious sales that inflate revenues

– Reported within other income net of costs

(68,300)

–

Bad debts that relate to fictitious sales where the Company is
pursuing legal recovery

–

(17,600)

Other doubtful debts

––

(6,100)

Unsupported adjustments that have inflated
profits

–

(26,800)

Inappropriate revenue recognition and
profit recognition

(14,500)

3,100

Balance sheet items for which inadequate
accounting or controls or falsifications has resulted in irrecoverable
balances

–

(11,800)

Inventory provisions and adjustments

–

(7,300)

Other

–

(1,800)

One off adjustments included in the year
ended 31^stMarch 2016

(Note (f)A (f)B and (f)C above)

(82,800)

(68,300)

(h) As indicated, these one off adjustments
and/or accounting falsifications have had a significant impact on the Company.
Given the significance of these matters the Company will work with the relevant
authorities to take action against those responsible. At this time, all such
matters are subject to legal process and consequently it is inappropriate for
the Company to comment and potentially prejudice such action.

From Auditors’ Report

4. Basis
for Disclaimer of Opinion

A. Scope of
investigation and impact on opening balances

Attention
is invited to Note 45 of the standalone financial statements which describes in
a general and overall manner the irregularities and suspected fraudulent transactions
noted during the year. In view thereof, the Company appointed an external firm
along with an internal team (comprising representatives of other Ricoh
companies) to carry out the investigation. Reports of the aforesaid
investigations have been made available for our sighting (on a non-copy basis).

As a
result of the external and the internal investigation, the Company has recorded
significant adjustments in the current year financial statements as referred to
in Note 45. These relate to recognition of adjustments/transactions which had
remained out of books in earlier periods, disclosure of bank borrowings/bills
discounted, reversal of circular sale and purchase transactions with certain
parties with minimal value addition considered fictitious by the management,
correction of inventory values and provisions of receivable balances considered
doubtful of recovery.

Investigations
mentioned above have concluded that revenue and cost have been overstated by
Rs.130,476 lakh (including Rs.65,495 lakh pertaining to the current year) and
by Rs.110,544 lakh (including Rs.58,983 lakh pertaining to the current year)
respectively from the inception of business with identified suspected parties.
The difference between revenues and costs of the current year has been
presented on a net basis as a part of other income of current year. Further,
uncollected account receivable balances amounting to Rs.17,542 lakh pertaining
to these parties have been considered doubtful of recovery and provided for as
on 31^stMarch 2016. Attention is also invited to Note 45 which
summarise the overall impact of findings/adjustments as a result of
investigations.

Based
on our initial findings, our reading of the Report on preliminary findings
dated 20^thApril 2016 of the external investigation team and
communications sent by the Company to various regulatory authorities, we have a
reason to believe that suspected offence involving a violation of applicable
law, which may tantamount to fraud, may have been committed. Accordingly, we
made the necessary reporting to Central Government of suspected offence
involving fraud being committed or having been committed as required by Rule
13(1)(ii) of the Companies (Audit and Auditors) Rules, 2014 [as amended by the
Companies (Audit and Auditors) Amendment Rules, 2015] on 30^th June
2016.

The
Company has also requested Securities Exchange Board of India (SEBI) to
consider conducting an investigation to ascertain if the incorrect standalone
financial statements had any impact on the securities market and the investors,
particularly under the Securities and Exchange Board of India (Prohibition of
Insider Trading) Regulations, 2015 and the Securities and Exchange Board of
India (Prohibition of Fraudulent and Unfair Trade Practices relating to the Securities
Market) Regulations, 2003.

In view of the limitations
pertaining to investigations elaborated in Note 45 of the financial statements
read with our comments mentioned below in para 4.B to 7, we are unable to
comment on the appropriateness of amounts pertaining to each period,
consequential impact thereof on the opening balances as at 1^stApril
2015, the persons involved and the amount of fraud/misappropriation, and
consequential impact on these standalone financial statements and
appropriateness of related disclosures.

B. Non-availability
of information/ documentation/ satisfactory explanations/ justification

B.1 For most
of the documents, originals were not available and hence we had to carry out
our audit procedures on photo copies of those documents, to the extent made
available to us.

B.2 In
relation to Statement of Profit and Loss, we were not able to complete our
audit procedures due to non-availability of required information/documentation/
satisfactory explanations. This includes non-availability of audit evidence to
support certain sale and purchase transactions such as carriers’ receipts,
goods received notes, proof of delivery, customer acknowledgment, effective
cut-off and sales return procedures; and non-availability of significant
information pertaining to other income, employee benefit expenses, other
expenses, related disclosers in notes to accounts etc.

Further,
in respect of revenue contracts due to non-availability of complete
documentations / sufficient information, the management has accounted for such
contracts on the basis of significant assumptions Accordingly, in view of
aforementioned limitations, we are unable to comment on appropriate accounting
of revenue recognised for these contracts, completeness of provision towards
onerous contracts, evaluation of potential impact of the irregularities and
suspected fraudulent transactions of such contracts.

B.3 In
respect of inventories:

i) the
Company has not maintained proper records including reconciliation of goods
purchased/sold in terms of quantity and value. Further, the reasons for
material discrepancies noted during the physical verification have not been
investigated.

ii) confirmation
for inventories lying with third parties and documentation for movement of
goods from one location to another currently valued at Rs.4,761 lakh was not
available;

iii) Net
Realizable value (NRV) analysis in respect of goods valued at Rs.8,608 lakh has
not been provided.

Therefore,
we are unable to comment on possible adjustment of these, if any, to the
carrying value of inventories.

B.4 In
respect of receivables for machines given on lease, we were not able to
complete our procedures due to non-availability of complete
documentation/details e.g. absence of lease contracts/details and reconciliation
of amount collected till 31^stMarch 2016 / amount due as at year-end
and analysis of nature of lease such as operating lease vs finance lease etc.
Further, basis checking of limited number of samples made available to us, we
have observed inaccuracies/ inconsistencies in details used for computation of
lease receivable as at year end such as fair value of lease, lease terms,
computation of interest rate implicit in the lease etc.

In
view of abovementioned observations, we are unable to comment on the carrying
value of lease receivables balances sand appropriateness of lease income
recognised for the year.

B.5 During
the current year, the Company has performed physical verification of certain
fixed assets. As per the physical verification report provided to us, fixed
assets of gross value of Rs.2,661 lakh against total gross value of Rs.13,914
lakh have been physically verified. Further, basis this physical verification
report, the Company has written off assets having carrying value of Rs.700 lakh
(Gross value Rs.2,988 lakh) to the Statement of profit and loss. Similarly,
assets physically found and not appearing in FAR, have been recorded at zero
value in the fixed assets register. In the absence of complete reconciliation
of assets physically verified with fixed assets register, we are unable to
comment on appropriateness of amounts written off and carrying value of assets
recorded at zero value. Further, as the management has not performed a complete
physical verification of all fixed assets, we are unable to comment on the
existence of such assets and consequential adjustments, if any, and the impact
thereof on the carrying value of such fixed assets.

B.6 We were
not able to complete our balance confirmation procedures in relation to
customers and vendors due to incomplete / incorrect addresses resulting in
non-delivery for balance confirmation letters for certain selected parties,
non-receipt of responses from most of the parties and unreconciled/unexplained
differences for confirmations received. In view of these read along with our
comments mentioned in para B.2 above and considering that the Company does not
have process in place to perform periodical reconciliation of balance with
customers and vendors, we are unable to comment on recoverability of account
receivable balances and advance given to suppliers and completeness of account
payable balances.

B.7 In
respect of following account balances, we were not able to complete our audit
procedures due to non-availability of information/ documentation/ satisfactory
explanations:

Account balance

NoIncluded under

Amount in

Rs. lakhs

Dealer Deposits

Other long-term liabilities

339

Provision for sales commission

Short term
provisions

546

Provision for dealer
commission

Short term
provisions

730

Security Deposits

Long term loans and advances

6,897

Accrued revenue

Other current assets

1,385

Deposit/balance with Excise and Sales tax authorities

Short-term loans and advances

2,510

Advance tax (Net of Provision for income tax)

Long term Loans and Advances

776

In
view of above, we are unable to comment on appropriateness of these balances.

B.8 The
Company has not made the following disclosures required by the Schedule III of
the Companies Act, 2013 and those required by the applicable accounting
standards:

i) Warranty
expense, provision for warranty and related disclosure

ii) Components
of Deferred tax

iii) Consumption
of stores and spares

iv) Specific
disclosures required by AS-7 Construction contracts

v) Complete
disclosure for Operating leases

In
view of our observations in paras A to B.8 above, we are unable to determine
the adjustments, if any, that are necessary in respect of the Company’s assets,
liabilities as on balance sheet date, income and expenses for the year, the
elements making up the Cash Flow Statement and disclosures in the notes to
accounts.

5. Disclaimer
of Opinion

Because
of the significance of the matter described in the Basis of Disclaimer of
Opinion paragraph, 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 standalone financial statements.

7. Report
on Other Legal and Regulatory Requirements

(ii) As
required by section 143(3) of the Act, 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. due to
the possible effects of the matters described in the Basis for Disclaimer of
Opinion paragraph, we are unable to state whether proper books of account as
required by law have been kept by the Company so far as appears from our
examination of those books;

c. 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 as
maintained;

d. due to
the possible effects of the related matters 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 specified u/s. 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014;

e. on the
basis of written representations received from the directors as on 31^st
March 2016, and taken on record by the Board of Directors, none of the
directors is disqualified as on 31^stMarch 2016 from being appointed
as a director in terms of section 164(2) of the Act. However, as informed to
us, the aforementioned representation has not been received from the
ex-Managing Director of the Company.
Accordingly, we are unable to comment as to whether such director is
disqualified as on 31^st March 2016 from being appointed as a director
in terms of section 164(2) of the Act; and

f. 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

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) In view
of the related matters described in para 4 Basis for Disclaimer of Opinion, we
are unable to state whether Note 28 to the standalone financial statements
discloses the complete impact of pending litigations on the financial position
in the standalone financial statements of the Company;

ii) In view
of the related matters described in para 4 Basis for Disclaimer of Opinion, we
are unable to state whether the Company has made provision, as required under
the applicable law or accounting standards, for material foreseeable losses, if
any, on long-term contracts including derivative contracts;

iii) There
has been no delay in transferring amounts, required to be transferred, to the
investor education and protection fund by the Company.

From Directors’ Report

Disclosures

(iv) DETAILS
IN RESPECT OF FRAUD REPORTED BY THE AUDITORS U/S. 143(12) OF THE COMPANIES ACT
2013 OTHER THAN THOSE REPORTABLE TO CENTRAL GOVERNMENT

On 5^th
May 2016, BSR & Co. LLP, Chartered Accountants, the statutory auditors of
the Company reported to the Audit Committee u/s. 143(12) of the Companies Act,
2013. This report of the statutory auditors was made on the basis of the review
of BSR & Co. LLP of the report of preliminary findings by
PricewaterhouseCoopers Private Limited, India (PwC) dated 20^th April
2016. The Audit Committee responded to BSR & Co. LLP on 15^th
June 2016 confirming their understanding that the concerns raised were in
accordance with the issues identified in the PwC report of preliminary
findings.

Following
the conclusion of the Company investigations (as fully detailed in Note 45) of
the financial statements, the Company has filed its financial statements for
the year ended 31^st March 2016. Set out in Note 45(f) and 45(g) of
the financial statements are details of the one-off adjustments that the
Company has identified as being attributable to accounting errors and or
falsifications.

Given
the significance of the one-off adjustments and/or accounting falsifications
the Company will work with the relevant authorities to take action against
those responsible. At the date of this Report all the matters are subject to
legal process and consequently it is inappropriate for the Company to comment
and potentially prejudice such action.

(vii) EXPLANATIONS
OR COMMENTS BY THE BOARD ON EVERY QUALIFICATION, RESERVATION OR ADVERSE REMARK
OR DISCLAIMER MADE BY THE STATUTORY AUDITOR IN HIS REPORT AND BY THE COMPANY
SECRETARY IN PRACTICE IN HIS SECRETARIAL AUDIT REPORT

As
included in pages 74 to 82 the statutory auditors have issued a disclaimer of
opinion on the financial statements for the year ended 31^stMarch
2016 on the basis that they have not been able to obtain sufficient appropriate
audit evidence.

The
Directors have filed on 18^th November 2016 with BSE Limited a statement
of impact of audit qualification. In this statement management, have confirmed
that they believe that there is no impact and that, based on their analysis and
assumptions, the balance sheet at 31^st March 2016 is materially
correct.

The
Directors acknowledge that the circumstances for the statutory auditors are
challenging, in particular as a result of the falsification of accounts during
the year ended 31^stMarch 2016. The Directors would draw the
followings points to your attention:

a) Whilst
the auditors have had to rely in part on photocopies the directors have no
reason to believe that such copies are not a true reflection of originals. The
Company has instituted improved document retention strategies, and in line with
the core business offering of the Company, will increasingly move to scan and
or copy documents to minimise the cost and impact of document management.

b) Whilst
the auditors have raised documentation concerns on the profit and loss
statement, the approach taken by the Company has been to ensure that the
balance sheet at 31^stMarch 2016 is materially correct. As a result
the profit and loss account is the cumulative difference between the audited
balance sheet at 31^st March 2015 and the balance sheet at 31^stMarch
2016. The Directors concluded that this was the most reliable way of moving
their investigations forward and would allow the Company to produce reliable
profit and loss statements going forward. It would also enable to scale of
losses and actions required to be identified as quickly as possible.

c) The
Directors acknowledge that their accounting for major contracts is based on
their discussions with the contracted parties and assumptions regarding the
outcome of such contracts. This is normal business practice. The Directors are
aware of the need to improve the contractual documentation and are working to
ensure that this is addressed.

d) The
Directors have valued inventories in accordance with physical stocktakes rolled
back to 31^st March 2016. It is the Directors view that the overall
level of inventory provisioning is adequate.

e) For
finance lease contracts the Directors acknowledge the need to improve document
retention (see above) and are working on this. Based on the calculations
performed the Directors are of the view that the material balances contain
within finance lease contracts are adequately confirmed and accounted for.

f) The
Directors have corrected the fixed assets register. In the period, we have not
carried out a 100% verification but have confirmed the existence of material
assets.

g) In
respect of Debtors, Creditors and various account balances, the Directors
recognise that the auditors have not received all of their confirmations.
However, based on the management analysis and documentation, the Directors are
of the view that such balances are materially correctly stated.

h) The
Company have invested significant time in confirming the balance sheet at 31^stMarch 2016. In the period from 19^th July 2016 when the
estimated unaudited loss for the year ended 31^st March 2016 was
announced as Rs.1,123 crore to the date of the financial statements on 18^th
November 2016, significant reconciliation and verification was undertaken. The
impact was a reduction in the reported loss of Rs.5 crore i.e. the reported
loss for the year ended 31^st March 2016 was Rs.1,118 crore.

The
Directors are of the view that the Balance Sheet as at 31^st March
2016, is materially true and fair and forms the basis for future reporting.

The
Directors will ensure that the accounting policies are followed consistently
such that the results reported, regardless of the audit disclaimer, will going
forward be a reflection of the Company’s operating performance.

The statutory auditors have also raised
matters in their report on Internal Financial Controls. These are summarised
with our comments as follows:

a) Deficiencies
in maintenance of books of accounts and documentation including
non-availability of original documents, recording of unsupported and back dated
transactions, out of books adjustments entries etc.

These
issued primarily related to the falsification of accounts. Specific controls
have been put in place to ensure backdating is no longer possible and that out
of book entries (journals) are minimised and, if necessary, are fully
validated, properly documented and approved. The Company is also improving its
documentation management and retention processes. Significant progress has been
made in this regard though inevitably gaps for prior periods will take time to
close.

b) Recording
of circular sales and purchase transactions considered fictitious by the
Management, non-maintenance of appropriate inventory records including
quantitative reconciliation of goods purchased and sold and physical
verification of inventory at regular interval.

This
issue primarily relates to the falsification. Controls are now in place to
ensure the independence of sales, finance and account administration. Inventory controls have also been enhanced
and regular verification processes implemented.

c) Non-maintenance
of complete records and documentation for machines given on lease at
transaction level and fixed asset records.

The majority of the Company’s sales are on lease
transactions. All major leases have been validated. The Company is continuing
to gather the records for all historic transactions. This is linked closely to the document
retention and management improvements referred to above.

BCAJ Admin

From Published Accounts

Accounting for composite scheme of
amalgamation and arrangement as per accounting standards applicable as on the
appointed date and not as per IndAS as applicable for the financial year

Suzlon Energy Ltd. (Year ended 31st March
2017)

From Notes
to Financial Statements

Composite scheme of amalgamation and
arrangement

On April 27,
2016, the Board of Directors of the Company had approved a composite scheme
which comprised of merger of its three wholly owned subsidiaries, namely, SE
Blades Limited (‘SEBL’), SE Electricals Limited (‘SEEL’) and Suzlon Wind
International Limited (‘SWIL’) in the Company, with effect from January 1, 2016
(being the appointed date for merger) and demerger of tower business from
wholly owned subsidiary, Suzlon Structures Limited (‘SSL’) (now known as Suzlon
Global Services Limited) (‘Scheme’) from the Company, with effect from April 1,
2016 (being the appointed date for demerger).

This Scheme has been approved by the
Honourable National Company Law Tribunal, Ahmedabad Bench on May 31, 2017 and
the Company has incorporated the accounting effects in its books of accounts as
per the accounting treatment prescribed in the Scheme which is in compliance
and accordance with the accounting standards applicable to the Company as of
the appointed date of the Scheme. Accounting standards currently applicable to
the Company are Ind AS. Had the Company applied the accounting treatment in accordance
with Ind AS 103, Business Combination, the following would have been the
accounting treatment:

a) The assets and liabilities
of transferor companies would have been taken over at carrying amount in the
books of transferor company and not at fair value;

b) Retained earnings appearing
in the books of transferor companies would have been aggregated with the books
of the Company. The total amount of retained earnings would have been Rs.
11,236.30 Crore.

c) No new assets / liabilities
would have been recognised and no adjustments would have been made to reflect
fair values of assets or liabilities of the transferor companies. As a result
of acquisition of transferor companies, the Company has recognised Goodwill of
Rs 1,059.80 Crore which shall be amortised over five years in accordance with
the Scheme.

d) Financial statements in
respect of prior period would have been restated as if business combination had
occurred from the transition date. The Company has accounted for the business
combination of transferor companies as well as demerged business from the
appointed dates defined in the Scheme.

e) Business combinations which
are effected after the balance sheet date but before approval of financial
statements, are not incorporated in the financial statements but only
disclosures required by Ind AS 10 Events after the reporting period are made.
In the current case, the Company has recorded the business combination on the
appointed date defined in the Scheme.

f) The Company has not
recognised deferred tax asset or liabilities arising out of assets acquired or
liabilities assumed.

Accounting for
composite scheme of amalgamation and arrangement

On April 27, 2016, the Board of Directors of
the Company had approved a Composite Scheme (‘Scheme’) which comprised of:

a) Merger of its three wholly
owned subsidiary companies, namely, SE Blades Limited (‘SEBL’), SE Electricals
Limited (‘SEEL’) and Suzlon Wind International Limited (‘SWIL’) in the Company,
with effect from January 1, 2016 (being the appointed date for merger);

b) Demerger of tower business
from wholly owned subsidiary, Suzlon Structures Limited (‘SSL’) (renamed as
Suzlon Global Services Limited (‘SGSL”)) from the Company, with effect from
April 1, 2016 (being the appointed date for demerger).

SEBL, SEEL, SWIL are hereinafter referred to
as the ‘transferor companies’ and tower business of SSL is referred to as
‘demerged business’.

Prior to merger, the transferor companies
and tower business of SSL, were engaged in manufacturing components of wind
turbine generators (WTGs). The Scheme defined following accounting treatment
for recording this transaction with transferor companies in the books of the
Company:

a) Transfer of all assets and
liabilities appearing in the books of transferor companies to the Company at
their fair values as on the appointed date;

b) The cost of equity and
preference shares issued by transferor companies and held by the Company, shall
be treated as consideration paid for acquisition of business of transferor
companies;

c) The Reserves (whether
capital or revenue or on revaluation) of transferor companies should not be
recorded in the financial statements of the Company;

d) Loans and advances inter-se
between the transferor companies and the Company, if any shall stand cancelled;

e) Differences in accounting
policy between the transferor companies and the Company will be quantified and
adjusted in the balance in the statement of the profit and loss of the Company;
and

f) Difference between net
assets value taken over from transferor companies and the cost of investments
defined in (b) above, shall be debited to Goodwill account / credited to
capital reserve account. Goodwill, if any, shall be amortised on a
straight-line basis over period of full five years (i.e. 60 months) and shall
accordingly be amortised proportionately for a part of any financial year, if
so required.

The Scheme defined the following accounting
treatment for recording this transaction with demerged business in the books of
the Company:

a) Transfer of all assets and
liabilities in the books of demerged business to the Company at their
respective book values, as appearing in the books of SSL immediately preceding
the appointed date

b) Intercompany balances, if
any between the demerged business and the Company shall stand cancelled

c) Amount of net assets /
(liabilities) of demerged business transferred to the Company, shall be
recorded as Capital Reserve / Goodwill respectively. This Goodwill / Capital
Reserve shall be independent of Goodwill / Capital Reserve arising on merger of
transferor companies defined above.

The details of Fair values of assets and
liabilities taken over from transferor companies and book value of assets and
liabilities taken over from demerged business in accordance with the Scheme are
as follows:

Rs. In crores

Sebl

Swil

Seel

Tower
business Of ssl

Assets

91.60

67.76

134.51

20.38

Property,
plant and equipment

0.67

0.43

0.65

2.71

Trade
receivables

134.93

20.61

188.45

63.89

Inventories

81.68

23.83

102.79

69.57

Other
financial assets

51.31

245.85

7.06

5.04

Other
non-financial assets

1.46

6.02

7.01

2.16

Total
Assets (A)

361.65

364.50

440.47

163.75

Liabilities

Trade payables

209.88

332.28

106.24

51.34

Provisions

7.42

32.61

2.38

2.91

Borrowings

109.01

224.45

215.09

85.22

Deferred tax

–

12.61

–

Inter Division Balance

–

22.14

Other Financial Liabilities

21.85

55.87

24.56

1.84

Other Non-Financial Liabilities

10.02

19.71

4.26

0.30

Total Liabilities (B)

358.18

664.92

365.14

163.75

Net Assets Taken Over C=(A-B)

3.47

(300.42)

75.33

–

Gross Value Of Investment

538.98

203.30

95.90

–

Goodwill Arising on Acquisition

535.51

503.72

20.57

–

Purchase Consideration *refer Note (b) below

Equity Share Capital

15.00

10.00

–

Preference Share Capital

523.98

193.30

85.90

–

Contribution
to amounts reported in year ended March 31, 2017 (before elimination)

Revenue

295.04

2.78

534.70

278.33

Profit
before tax

(66.14)

(128.34)

27.87

1.30

None of the trade receivables is credit
impaired and it is expected that the full contractual amounts can be collected.

The above mentioned fair valuation is based
on valuations performed by an accredited independent valuer and the valuation
model is in accordance with that recommended by the International Valuation
Standards Committee.

Notes:

a) Other financial liabilities
of SSL include an amount of Rs. 22.14 Crore, relating to amount payable by the
tower business to other businesses included in SSL. As this in the nature of
other financial liability, the same has been included in the computation of net
assets of tower business.

b) The Scheme states that
since the entire share capital of transferor companies being SEBL, SEEL and
SWIL is held by SEL, being wholly owned subsidiaries of SEL, no shares of SEL
shall be allotted in respect of its holding in the transferor companies
pursuant to amalgamation due to operation of law. The value of investment in
the shares of transferor companies held by SEL shall stand cancelled in the
books of SEL, without further act or deed. The cost of acquisition of such
equity and preference shares in the hands of SEL shall be treated as the
consideration for the acquisition of business of transferor companies. As
regards the de-merger of tower manufacturing division of SSL, the Scheme states
that since the entire share capital of demerged company is held by SEL and its
nominees, no shares of SEL shall be allotted in respect of its holding in the
demerged company pursuant to demerger, due to operation of law.

** As a result of the merger, the Company
has recognised adjustment of Rs. 69.15 Crore on account of cancellation of
RCPs, Rs. 111.90 Crore on account of accounting policy alignment including Ind
AS adjustments.

From
Auditors’ Report

Emphasis of Matter

We draw attention to Note 7 of the accompanying
standalone Ind AS financial statements, whereby the Company has recognised
goodwill on amalgamation aggregating to Rs. 1,059.80 Crore and amortised the
same in accordance with the composite scheme of amalgamation and arrangement
approved by the National Company Law Tribunal. This accounting treatment is
different from that prescribed under Indian Accounting Standard (Ind AS) 103 –
Business Combinations in case of common control business combinations as is
more fully described in the aforesaid note. Our opinion is not qualified in respect
of this matter.

BCAJ Admin

From Published Accounts

Illustrative Limited
Review Report for a company where Interim Resolution Professional (IRP)
has been appointed under the Corporate Insolvency Resolution Process (CIRP)

Lanco Infratech
Ltd (From Notes to Unaudited Standalone Financial
Results for the quarter ended December 31, 2017)

STATEMENT
OF STANDALONE RESULTS FOR THE QUARTER AND NINE MONTHS ENDED DECEMBER 31, 2017

Rs. Cr

PARTICULARS

Quarter Ended

Nine Months Ended

Year Ended

31.12.2017

30.09.2017

31.12.2016

31.12.2017

31.12.2016

31.03.2017

(Unaudited)

(Audited)

Revenue from operations

10.96

12.64

226.64

266.65

1049.07

1634.90

Other income

6.86

8.57

11.98

27.12

39.50

122.63

Total Income (1 + 2)

17.82

21.21

238.62

293.77

1088.57

1757.53

Expenses

Cost of Materials Consumed

14.34

8.87

167.19

80.33

589.09

750.10

Purchase of stock-in-trade

–

49.37

Subcontract Cost

10.05

14.57

63.33

107.87

229.13

388.20

Construction and Site
Expenses

2.86

3.79

41.01

34.95

82.81

122.21

Change in inventories of
construction work in progress

73.91

57.18

(5.40)

403.16

(180.84)

(82.81)

Employee benefits expenses

21.00

34.30

46.06

99.13

150.07

186.49

Finance cost

292.75

287.78

267.68

846.53

755.25

1032.13

Depreciation and
Amortization expense

13.01

13.86

23.53

41.93

70.31

87.78

Other expenses

16.12

45.73

23.54

110.76

59.67

133.58

Total Expenses (4)

444.04

466.08

627.14

1724.66

1755.49

2647.05

Profit / (Loss) before
exceptional items and
Tax (3-4)

(426.22)

(444.87)

(388.52)

(1430.89)

(666.92)

(889.52)

Exceptional items

–

(130.56)

–

(1262.39)

–

Profit / (Loss) before Tax

(5 + 6)

(426.22)

(575.43)

(388.52)

(2693.28)

(666.92)

(889.52)

Tax Expense

–

Profit/ (Loss) for the
Period (7- 8)

(426.22)

(575.43)

(388.52)

(2693.28)

(666.92)

(889.52)

Other comprehensive income

Items that will not be
reclassified to profit
and loss

0.14

(0.10)

0.41

(0.31)

0.55

Total comprehensive income
for the period (9+10)

(426.08)

(575.29)

(388.62)

(2692.87)

(667.23)

(888.97)

Paid-up equity share capital
(face value of Re.1/- per share)

330.26

273.78

330.26

273.78

330.26

Earning per share (EPS) not
annualised

– Basic

(1.30)

(1.76)

(1.44)

(8.24)

(2.47)

(3.25)

– Diluted

(1.30)

(1.76)

(1.44)

(8.24)

(2.47)

(3.25)

STATEMENT
WISE REVENUE, RESULTS, ASSETS AND LIABILITIES FOR THE QUARTER AND NINE MONTHS
ENDED DECEMBER 31, 2017 – STANDALONE

Rs. Cr

PARTICULARS

Quarter Ended

Nine Months Ended

Year Ended

31.12.2017

30.09.2017

31.12.2016

31.12.2017

31.12.2016

31.03.2017

(Unaudited)

(Audited)

Segment
Revenue

EPC & Construction

2.30

4.77

199.63

240.80

964.33

1533.39

Power

1.55

1.36

19.57

5.72

55.17

63.63

Infrastructure

7.11

6.51

7.44

20.13

29.57

37.88

Net Sales/Income from Operations

10.96

12.64

226.64

266.65

1049.07

1634.90

Segment
Results (Profit(+) /Loss(-) before tax and interest from each segment)

EPC& Construction

(141.21)

(166.20)

(145.13)

(613.28)

5.22

(24.58)

Power

(0.19)

(0.43)

9.39

0.32

24.12

27.93

Infrastructure

1.07

0.97

1.12

3.02

4.44

5.68

Unallocated

–

2.00

(1.54)

15.05

10.95

Total

(140.33)

(165.66)

(132.62)

(611.48)

48.83

19.98

Less:

Interest

292.75

287.78

267.88

846.53

755.25

1032.13

ii)

Other
Un-allocable Expenses (Net of
Un-allocable income)

(6.86)

121.99

(11.98)

1235.27

(39.50)

(122.63)

Total
Profit/(Loss) Before Tax

(426.22)

(575.43)

(388.52)

(2693.28)

(666.92)

(889.52)

Segment
Assets

EPC& Construction

5136.63

5118.20

5615.99

5136.63

5615.99

5247.78

Power

63.80

64.76

456.49

63.80

456.49

69.94

Infrastructure

10697.80

10693.96

11486.63

10697.80

11486.63

11336.42

Unallocated

838.96

836.54

1313.36

838.96

1313.36

1413.82

16737.19

16713.46

18872.47

16737.19

18872.47

18067.96

Segment
Liabilities

EPC& Construction

8521.27

8741.06

9144.93

8521.27

9144.93

8876.80

Power

6.29

5.96

5.25

6.29

5.25

6.45

Infrastructure

3.08

182.14

3.08

182.14

3.08

Unallocated

9844.77

9183.28

8321.89

9844.77

8321.89

8143.97

18375.41

17933.38

17654.21

18375.41

17654.21

17030.30

1. Hon’ble National Company Law Tribunal
(NCLT), Hyderabad Bench vide order dated August 07, 2017, has initiated
Corporate Insolvency Resolution Process (CIRP) in the Company under Section 7
of the Insolvency and Bankruptcy Code, 2016 (IBC), based on the application
filed by IDBI Bank Limited, Financial Creditor of the Company. Mr. Savan
Godiawala (IP Registration No.IBBI.IPA-001/IP-P00239/2017-18/10468) was
appointed as Interim Resolution Professional (IRP) with effect from August 07,
2017 under the provisions of IBC. In the first Committee of Creditors meeting
dated September 12, 2017, Mr. Savan Godiawala has been confirmed as Resolution
Professional. The Resolution Professional has relied upon assistance provided
by members of the Audit Committee in review of the aforesaid unaudited
financial results and representations, clarifications and explanations provided
by the Managing Director & Chief Executive Officer, Chief Financial
Officer, other directors and Key Managerial Personnel of the Company in
relation to such financial results in the meetings called by the Resolution
Professional. The reviewed financial results have been examined by the
directors of the Company constituting the Board of Directors of the company
(powers of whom stand suspended in accordance with IBC) and accordingly, the
Resolution Professional, in reliance of such examination by the directors of
the Company and the aforesaid representations, clarifications and explanations,
has approved the same. It is clarified however, that the Resolution Professional
has not conducted an independent verification of these unaudited financial
results and has not certified on the truthfulness, fairness, accuracy or
completeness of these results, in so far as it pertains to the period prior to
commencement of the CIRP and his appointment. The Resolution Professional has
approved the financial results only to the limited extent of discharging the
power of the board of directors of the company which has been conferred upon
him inter alia in terms of provisions of section 17 of Insolvency and
Bankruptcy Code, 2016.

2. Exceptional item includes:

a)
The company acquired Griffin Coal Mining Company Pty Limited and
Carpenter Mine Management Pty Limited referred as Griffin Coal Mine Operations
through its erstwhile wholly owned subsidiary Lanco Resources International Pte
Limited (LRIPL) to further invest in expansion to enhance the capacity.
Post-acquisition, many approvals were obtained for mine expansion and other
infrastructure related facilities. LRIPL along with its subsidiary companies
(Griffin Coal Mine Operations) has been incurring losses from acquisition
onwards. Due to circumstances beyond the control of company, the mine expansion
got delayed, resultantly anticipated incremental EBIDTA could not be earned,
thus increasing the loans from the lenders to meet the interest obligations.
Due to default in debt servicing, as per the Security Agreement entered by
LRIPL with lenders, lenders appointed the Receivers and Managers on April 27,
2017 and transferred the pledged shares to the nominee of the Security Agent of
the lenders. Consequent to this, during the quarter ended June 30, 2017,
impairment provision has been created against the receivables in respect of
said share transfer at carrying value of Rs.534.16 cr, Loans receivable along
with interest Rs.567.27 cr, and charged off the balance existing in the Foreign
Currency Monetary item Translation Difference account of Rs.9.83 cr pertaining to the said loans
receivable.

b) A
provision of Rs.20.57 cr is created in the quarter ended June 30, 2017 for
diminution in the value of investment of Lanco Wind Power Private Limited, a
subsidiary of the company.

c) A
provision of Rs.130.56 cr is created in the previous quarter ended September
30, 2017, for possible diminution in the
value of investment of Lanco Power Limited (LPL), a subsidiary of the company
which is holding the shares of Lanco Mandakini Hydro Energy Private Limited
(LMHEPL) directly and indirectly, on account of lenders proposal to invoke
change in management (outside SDR) by exercising the pledged shares of the
LMHEPL.

3. Mahatamil Mining and Thermal Energy
Limited (MMTEL), a subsidiary of the company had entered into Coal Mining
Services Agreement (CMSA) with Mahatamil Collieries Limited (MCl) for
developing and mining of Gare Pelma Sector II Coal block located in Raigarh
district in the state of Chhattisgarh. The allocation of said coal block was
cancelled by the Hon’ble Supreme Court’s order dated September 24, 2014. As per
CMSA, MMTEL has incurred an amount of Rs.204.66 cr till March 31, 2015 towards
exploration, infrastructure and performance security deposit. The amount
incurred has been claimed by MMTEL as per terms of the Coal Mines (Special
Provisions) Ordinance, 2014. The company’s investment of Rs.90.42 cr and other
advances amounting to Rs.80.84 cr made in MMTEL as on December 31, 2017, is
considered recoverable from MCL by the management based on the said claim. This
is an emphasis of matter in the auditor’s limited review report.

4. Lanco Hoskote Highways Limited (LHHL) and
Lanco Devihalli Highways Limited (LDHL), subsidiaries of the company, have been incurring losses since commencement
of operations and also due to de-recognition of Capital Grant from Reserves as
per the requirement of Ind AS 11 Appendix – A on Service Concession
Arrangement, the Net Worth has eroded significantly as at December 31, 2017.
The Management is taking necessary steps to improve the profitability in future
and is of the view that the carrying value of Investment of the company along
with its subsidiaries aggregating to Rs.805.66 cr in LHHL & LDHL is
realisable at the value stated therein. Accordingly, no adjustments have been
made in these financials results. This is an emphasis of matter in the
auditor’s limited review report.

5. Lanco Hills Technology Park Private
Limited (LHTPPL), a subsidiary of the company has been incurring losses and the
Net Worth has eroded significantly as at December 31, 2017. The Management is
taking various initiatives to improve the profitability, and completion of
certain project components through development partners and is of the view that
the carrying value of the Investment Rs.1,332.08 cr in LHTPPL is realisable at
the value stated therein. Accordingly, no adjustments have been made in these
financials results. This is an emphasis of matter in the auditor’s limited
review report.

6. Lanco Kanpur Highways Limited (LKHL), a
subsidiary of the company, had entered into concession agreement with NHAI for
developing a road project in Uttar Pradesh state under BOOT mechanism. The
construction work is delayed due to right of way to be arranged by NHAI. During
the FY 2015-16, LKHL had received notice of termination of concession agreement
from NHAI, and LKHL issued a notice of termination of concession agreement to
NHAI. Arbitration proceedings have been initiated to settle the claims and the
counter claims associated with the termination as per the Concession Agreement.
Based on the expert legal opinion, the management is confident on the
recoverability of its claims submitted and is not expecting any liability on
counter claims filed by NHAI. The company invested in LKHL Rs.196.50 cr, other
advances receivable Rs.0.23 cr and received EPC contract mobilisation advance
of Rs.143.54 cr as on December 31, 2017. This is an emphasis of matter in the
auditor’s limited review report.

7. Diwakar Solar Projects Limited (DSPL), a
subsidiary of the Company engaged in setting up solar thermal power plant (100
MW); is affected on account of various factors beyond the control of the
management. DSPL has filed petition with Central Electricity Regulatory Commission
(CERC) for extension of Commercial Operation Date (COD) and to revise the Power
Purchase Agreement (PPA) Tariff for viability of the project on the ground that
the bid Direct Normal Irradiation (DNI) was different from the actual DNI. The
Management is confident upon tariff revision and extension of COD for executing
the project. In view of this, the company does not foresee any requirement for
adjustment in carrying value of investment of Rs.219.59 cr as at December 31,
2017. This is an emphasis of matter in the auditor’s limited review
report.

8. During/the previous quarter ended
September 30, 2017, one of the lenders has recalled its loans given to the
Lanco Teesta Hydro Power Limited (LTHPL), an associate of the company and
invoked the pledged shares issued by LTHPL as security towards the loan
facility amounting to Rs.296.63 cr. Vide share purchase agreement dated March
30, 2012, shares held by the company in LTHPL were transferred to Lanco Hydro
Power Limited, a subsidiary of the company. The eventual financial obligation
on the company is yet to be determined and hence, no adjustments have been made
in these financial results. This is an emphasis of matter in the auditor’s
limited review report.

9. During the previous quarter ended
September 30, 2017, one of the lenders has recalled its loans given to the
group companies and invoked the Corporate Guarantees issued by the company in
favour of those group companies amounting to Rs.7,266.17 cr. The eventual
financial obligation on the company is yet to be determined, hence, no
adjustments have been made in these financial results including changes that
may be warranted due to exchange fluctuations.
This is a matter of qualification in the auditor’s limited review report.

10. During the nine months period ended
December 31, 2017, certain customers of the Company encashed Bank Guarantees
(BG) provided by the Company towards
advances received and performance security. In the opinion of the
management against the encashed BGs, value amounting to Rs.519.69 cr is
recoverable from the customers and necessary steps are being initiated.
Consequently, no adjustments have been made in these financial results. This is
a matter of qualification in the auditor’s limited review report.

11. The Company had been referred to NCLT by
one of its lenders and consequently CIRP has been initiated, as detailed in
Note 1. During the quarter ended June 30, 2017, the Company’s Net worth has
been fully eroded. The Company’s ability to meet its contractual obligations
involving EPC Contracts, financial obligations to its lenders and investment
commitments to group companies is dependent on resolution of the matters as
part of CIRP. Currently, the Company is in the process of identifying the
resolution alternatives, and accordingly, the financial results are prepared on
a going concern basis. This is a matter of qualification in the auditor’s
limited review report.

12.
As reported in the previous periods, during the quarter the lenders of
Lanco Kondapalli Power Limited (LKPL) converted portion of their debt into
equity shares of LKPL under Strategic Debt Restructuring Scheme (SDR), RBI
guidelines. On account of SDR, the effective shareholding of the company in
LKPL reduced to 28.15% from 58.91% and ceased to be subsidiary with effect from
November 22, 2017.

From
Independent Auditors’ Review Report on Standalone Unaudited Financial Results

1. The Hon’ble National Company Law Tribunal
(“NCLT”), Hyderabad Bench, admitted the Corporate Insolvency
Resolution Process (“CIRP”) application filed by a Financial Creditor
of Lanco Infratech Limited (“the Company”), and appointed an
Interim Resolution Professional (“IRP”), in terms of the Insolvency
and Bankruptcy Code, 2016 (“the Code”) to manage the affairs of the
Company as per the provisions of the Code. The Committee of Creditors of the
Company, in its meeting dated September 12, 2017, confirmed the IRP as the
Resolution Professional (“RP”) for the Company. In view of pendency
of the CIRP, and in view of suspension of powers of Board of Directors and as
explained to us, the powers of adoption of this standalone financial results
vests with the RP.

2. Not reproduced

3. Not reproduced

4. Without qualifying our review conclusion,
attention is invited to

a)
Note 3 to the financial results, dealing with cancellation of coal
blocks by the Hon’ble Supreme Court, which included coal mine jointly allotted
to Tamil Nadu Electricity Board and Maharashtra State Mining Corporation
Limited (“the Allottees”). Mahatamil Mining and Thermal Energy
Limited (MMTEL), a subsidiary of the Company, entered into Coal Mining Services
Agreement with the Allottees of the mine, pursuant to which, the amount
invested and advances provided aggregating to Rs.171.26 crore, the
realisability of which is dependent on the compensation to be awarded under the
Ordinance issued by the Government of India. The Company obtained a legal
opinion in this regard, based on which, the investment is considered to be
recoverable, notwithstanding the denial of obligation by the Allottees in
regard to certain cost components, and no adjustments have been made in these
financial results, pending the final outcome of claims by MMTEL.

b) Note 4 to the financial results, in
relation to the carrying value of investments in Lanco Hoskote Highway Limited
(LHHL) and Lanco Devihalli Highways Limited (LDHL), subsidiaries of the
Company, which have been incurring losses ever since the commencement of
commercial operation and accumulated losses incurred so far eroded the net
worth significantly. Taking into consideration the management’s assessment of
the situation including its efforts towards seeking further concessions from
grantors, the management of the Company is of the view that the carrying value
of the investment is realizable at the value stated therein. Accordingly, no
adjustments have been made in these financial results.

c) Note 5 to the financial results, in
relation to the carrying value of investment in Lanco Hills Technology Park
Private Limited (LHTPPL), a subsidiary of the Company, where the accumulated
losses incurred so far eroded the net worth significantly. Taking into
consideration the management’s assessment of the situation including its
efforts to complete certain project components through development partners,
the management of the Company is of the view that the carrying value of the
investment is realisable at the value stated therein. Accordingly, no
adjustments have been made in these financial results.

d) Note 6 to the financial results, in
relation to Lanco Kanpur Highways Limited (LKHL), a subsidiary of the Company,
which has received a notice of termination to the Concession Agreement from
National Highways Authority of India (NHAl) and simultaneously, LKHL has also
issued a notice of termination to NHAI. Arbitration proceedings have been
initiated to settle the claims and the counter claims associated with the
termination as per the Concession Agreement. LKHL has incurred certain costs
towards the project during the period when the concession was in force and
subsequently, aggregating to Rs.53.19 crore, the reliability of these amounts
is dependent on the outcome of the arbitration proceedings. Accordingly, no adjustments
have been made in these financial results.

e) Note 7 to the financial results, in
relation to the carrying value of investment
amounting to Rs.219.59 crore in Diwakar Solar Projects Ltd (DSPL), a
subsidiary of the Company, which explains the management’s efforts in obtaining
the extension of revised COD and revision in tariff. In the opinion of the
management, the execution of the project with the extended timelines for
bringing the assets to its intended use with revised tariff being considered
favourably, is still viable even after considering low implementation
activities and significant time and cost overruns. Accordingly, in the opinion
of the management, no provision is required for any diminution in the carrying
value of the investment. Pending the final outcome in the matters relating to
extension of revised COD and revision of tariff, no adjustments have been
carried out to the carrying value of the investment.

f) Note 8 to the financial results, In
regard to invocation of pledged shares of Lanco Teesta Hydro Power Limited
(LTHPL), an associate of the Company, issued by the Company in favour of the
lender of LTHPL, amounting to Rs.296.63 crore. One of the lenders of LTHPL, has
filed a petition in NCLT in terms of Section 7 of the Code, which is pending
admittance by the NCLT. In view of the factors
detailed in the said note and pending determination of the eventual
financial obligation on the Company, no adjustments have been made to these
financial results.

Our conclusion is not qualified in respect
of the matters reported in paragraph

5.
Attention is invited to

a) Note 9 to the financial results, in
regard to the various Corporate Guarantees extended by the Company in favour of
one of the lenders of Group Companies. The lender has invoked these guarantees
amounting to Rs.7,266.17 crore and is pursuing recovery actions against the
Company. In view of the factors detailed in the said note and pending
determination of the eventual financial obligation on the Company, the impact
on the financial results is also not quantifiable, accordingly no adjustments
have been made to these financial results.

b)
Note 10 to the financial results, regarding encashment of Bank Guarantee
by customers of the Company amounting to Rs.949.35 crore. The management is of
the opinion that the encashment is not in accordance with the conditions
specified in the Engineering, Procurement and Construction (EPC) contract and
is of the opinion that the encashed value of Bank Guarantee, net of advances,
is fully recoverable and no adjustments have been made in these financial
results. Pending initiatives by the management against the invocation of Bank
Guarantee, had the impact been factored in these financial results, the Loss
for the Quarter would have been higher by Rs.519.69 crore with a consequential
impact on reserves, to the same extent.

c)
Note 11 to the financial results, regarding application by the Financial
Creditor, initiating the insolvency provisions under the Insolvency and
Bankruptcy Code, 2016 (the Code) and the consequential appointment of RP under
the Code, and adequacy of disclosure concerning the Company’s ability to meet
its contractual obligation in respect of EPC Contracts including management’s
technical estimates in regard to estimated cost to completion, realisation of
value of inventories and other financial assets, financial obligations
including repayment of various loans including invoked guarantees both by
lenders and customers, unpaid interest and the ability to fund various obligations
pertaining to operations including unpaid/overdue creditors, for
ensuring/commencing normal operations and further investments required towards
ongoing projects under construction. These matters essentially require the
Company to resolve the situations specified therein within the framework
specified through the CIRP. Under these circumstances, the possible erosion in
the carrying value of Investments is also not ascertainable at this point in
time. In the absence of any specific guidance or direction that can be assessed
out of CIRP, material uncertainties exist that may cause significant doubt on
the Company’s ability to continue as a going concern. However, the
appropriateness of preparation of financial results on a going concern basis is
subject to the Company’s ability to resolve the matters through the CIRP or
such other forum or manner as specified in the said Note.

6. Based on our review conducted as stated
above, except for possible effects of the matters specified in Paragraph 5
above, nothing has come to our attention that causes us to believe that the
accompanying statement of unaudited financial results prepared in accordance
with aforesaid Indian Accounting Standards and other accounting principles
generally accepted in India, has not disclosed the information required to be
disclosed in terms of Regulation 33 of the SEBI (Listing Obligations &
Disclosure Requirements) Regulations, 2015 as modified by Circular No.
CIR/CFD/FAC/62/2016 dated July 5, 2016, including the manner in which it is to
be disclosed, or that it contains any material misstatement.

BCAJ Admin

From Published Accounts

Section A:

Disclosures and reporting in financial statements for the year
ended 31^st March 2017 for ‘Specified Bank Notes’ (SBN)

Compilers’ Note

The Ministry of Corporate Affairs vide notifications dated
March 30, 2017 notified the Companies (Audit and Auditors) Amendment Rules,
2017 and Amendment to Schedule III to the Companies Act, 2013. Pursuant to
these notifications, a new clause (d) has been inserted in Rule 11 of the
Companies (Audit and Auditors) Rules, 2014 requiring auditors to report on
whether the company had provided requisite disclosures in its financial
statements as to holdings as well as dealings in Specified Bank Notes during the
period from 8^th November, 2016 to 30^th December, 2016 and
if so, whether these are in accordance with the books of accounts maintained by
the company. Amendment has also been made to Schedule III to the Companies Act,
2013 to require that every company shall disclose the details of Specified Bank
Notes held and transacted during the period from 8^th November, 2016
to 30^th December, 2016 in the specified format.

The ICAI, looking to the urgency to provide guidance to
members for the disclosure and reporting as per the above MCA notifications,
has on 15^th April 2017 issued an implementation guide for the
same.

Given below is an illustration of disclosure and reporting
for the above in the financial statements for 2016-17.

Infosys Ltd. (financial statements dated 13^th April
2017)

From Notes to Accounts

Disclosure on Specified Bank Notes (SBNs)

During the year, the company had specified bank notes or
other denomination note as defined in the MCA notification

GSR 308(E) dated March 31, 2017 on the details of Specified
Bank Notes (SBNs) held and transacted during the period from 8^thNovember,
2016 to 30^th December, 2016, the denomination wise SBNs and other
notes as per the said notification is given below:

In Rs.

Particulars

SBNs*

Other denomination notes

Total

Closing cash in hand on
November 8, 2016

232,000

352,117

581,117

(+) permitted receipts

–

561,236

(-) permitted
payments

(98,000)

(765,438)

(863,438)

(-) Amount deposited
in banks

(134,000)

–

(134,000)

Closing cash in hand as on
December 30, 2016

–

147,915

*For the purpose of this
clause, the term ‘Specified Bank Notes’ shall have the same meaning provided in
the notification of the Government of India, in the Ministry of Finance,
Department of Economic Affairs number SO 340E, dated the 8^th
November, 2016.

From Auditors’ Report

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. …

ii. …

iii. …

iv. the
Company has provided requisite disclosures in its standalone Ind AS financial
statements as to holdings as well as dealings in Specified Bank Notes during
the period from 8^th November, 2016 to 30^th December, 2016
and these are in accordance with the books of accounts maintained by the
Company. Refer Note 2.27 to the standalone Ind AS financial statements.

BCAJ Admin

From Published Accounts

Section B:

– Report under CARO, 2016

– Adverse Report on Internal
Financial Controls (IFC)

in a case where main
report u/s. 143 of the Companies Act, 2013 is a ‘disclaimer’ report

Ricoh India Ltd (31-3-2016) (report dated 18 November 2016)

Compilers’ Note: The main
report u/s. 143 has been reproduced in January 2017 issue of BCAJ.

From Report on CARO

(Only clauses with adverse
reporting are reproduced)

The Annexure A referred to in Independent Auditor’s Report to
the members of Ricoh India Limited on the financial statements for the year
ended 31^st March 2016, we report that:

(i) (a) As
described in the basis of disclaimer of opinion para 4.B.5 of main report, the
fixed assets records of the Company have been updated as at 31^st
March 2016 based on partial physical verification. Therefore, the Company has
maintained proper records showing full particulars, including quantitative
details and situation of fixed assets in respect of assets physically verified.
However, fixed asset records are not updated for adjustments, if any, in
respect of assets not physically verified.

(b) During
the current year, the Company has performed physical verification of certain
fixed assets. In our opinion, the Company needs to strengthen its process for
conducting physical verification of fixed assets at reasonable intervals. As
explained and represented to us, the Company is considering ongoing fixed asset
verification processes on a sample basis. As described in the basis of
disclaimer of opinion para 4.B.5 of main report, the shortages have been
written-off and the excesses have been recorded as zero value. Since all the
fixed assets were not covered by the exercise and the shortages and excesses
were not mutually reconciled, we are unable to comment as to whether the
material discrepancies noted on such verification have been properly dealt with
and on the reasonableness of such verification.

(c) Photocopies
of title deeds of immovable properties have been examined by us (other than
five properties – having a net book value of Rs.14 lakh as at 31^st
March 2016 for which even the photocopies have not been made available).
Accordingly, we are unable to comment as to whether the immovable properties
are held in the name of the Company or not.

(ii) Not reproduced

(iii) Except for the effects of the matters
described in the basis of disclaimer of opinion para 4A main report, 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 u/s. 189 of
the Act.

(iv) Except for the effects of the matters
described in the basis of disclaimer of opinion para 4A main report, according
to the information and explanation given to us, the Company has not given any
loans, or made any investments, or provided any guarantee, or security as
specified u/s. 185 and 186 of the Companies Act, 2013.

(v) Except for the effects of the matters
described in the basis of disclaimer of opinion para 4A of main report, as per
the information and explanation given to us, the Company has not accepted any
deposits as mentioned in the directives issued by the Reserve Bank of India and
the provisions of section 73 to 76 or any other relevant provisions of the
Companies Act, 2013 and the rules framed there under.

(vi) Not reproduced.

(vii) (a) According
to the information and explanations given to us; on the basis of our
examination of the records of the Company; and appearing in the books of the
accounts as statutory dues paid/payable, except for the effects of the matters
described in the basis of disclaimer of opinion paragraph of main report,
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, value added tax, cess and
other material statutory dues have not generally been regularly deposited with
the appropriate authorities though the delays in deposit have not been serious.
As explained to us, the Company did not have any dues on account of duty of
excise.

According to the information and
explanations given to us; on the basis of our examination of the records of the
Company; and appearing in the books of the accounts as statutory dues
paid/payable, except for the effects of the matters described in the basis of
disclaimer of opinion paragraph of main report, no amounts payable in respect
of undisputed statutory dues including provident fund, employees’ state
insurance, income-tax, sales tax, service tax, duty of customs, value added
tax, cess and other material statutory dues were in arrears as at 31^stMarch
2016 for a period of more than six months from the date they became payable.

(b) Except
for the effects of the matters described in the basis of disclaimer of opinion
paragraph of main report, in particular para 7(g)(i) and according to the
information and explanations given to us, there are no dues of income tax,
sales tax, service tax and value added tax which have not been deposited with
the appropriate authorities on account of any dispute except as mentioned
below. As explained to us, the Company did not have any dues on account of duty
of excise.

(viii) Not reproduced

(ix) Not reproduced

(x) Attention is invited to note 4A in main
audit report wherein it is stated that we have a reason to believe that
suspected offence involving a violation of applicable law, which may tantamount
to fraud, may have been committed. However, due to the limitations pertaining
to investigations elaborated in note 45 of the financial statements read with
our comments mentioned in para 4.B to 7 of main report, we are unable to
comment on the appropriateness of amounts pertaining to each period over which
such transactions continued, the persons involved and the amount of
fraud/misappropriation. According to the information and explanations given to
us, no other material fraud by the Company 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
give to us and based on our examination of the records of the Company, the
Company has paid/provided for managerial remuneration in accordance with the
requisite approvals mandated by the provisions of section 197 read with
Schedule V to the Act. However, this is subject to the potential financial
impact of findings of investigations which has not been considered for
computing the overall limits for payment of managerial remuneration.

(xii) Not reproduced

(xiii) Except for the effects of the matters
described in the basis of the disclaimer of opinion paragraph of the main
report, particularly the impact, if any, of the irregularities and suspected
fraudulent transactions which at present is not fully ascertainable, in our
opinion and according to the information available as at present and
explanations given to us and on the basis of our examination of the records of
the Company, the transactions with the related parties are in compliance with
sections 177 and 188 of the Companies Act, 2013 where applicable and the
details have been disclosed in the financial statements as required by the
accounting standards.

(xiv) Not reproduced

(xv) Except for the effects of the matters described
in the basis of the disclaimer of opinion paragraph of the main report,
particularly the impact, if any, of the irregularities and suspected fraudulent
transactions which at present is not fully ascertainable, according to the
information available as at present and explanations given to us and based on
our examination of the records of the Company, the Company has not entered into
non-cash transactions with directors or persons connected with him.

(xvi) Not reproduced

From Report on IFC

Report on the Internal
Financial Controls under Clause (i) of sub-section 3 of section 143 of the Act

We were engaged to audit the internal financial controls over
financial reporting of the Company as of 31^stMarch 2016 in
conjunction with our audit of the financial statements of the Company for the
year ended on that date.

Management’s
Responsibility for Internal Financial Controls

Not reproduced

Auditor’s Responsibility

Not reproduced

Meaning of Internal
Financial Controls Over Financial Reporting

Not reproduced

Inherent Limitations of
Internal Financial Controls Over Financial Reporting

Not reproduced

Adverse Opinion

As described in para 4 of our main report, a large number of
irregularities and suspected fraudulent transactions were noted during the
year. As described in detail in the aforesaid para these irregularities and
suspected fraudulent transactions clearly illustrate that the Company has not
established adequate internal financial controls and that whatever financial
controls have been established were not operating effectively. While reference
may be made to the aforesaid paragraph, the following significant aspects of
material weaknesses in internal control system are particularly noteworthy as
identified in the investigation reports and by our audit procedures:

a) Deficiencies in maintenance of books of
accounts and documentation including non-availability of original documents,
recording of unsupported and back dated transactions, out of book adjustment
entries etc.

b) Recording of circular sale and purchase
transactions considered fictitious by the management, non-maintenance of
appropriate inventory records including quantitative reconciliation of goods
purchased and sold and physical verification of inventory at regular interval.

c) Non-maintenance of complete records and
documentation for machines given to lease at transaction level and fixed asset
records.

d) Absence of an appropriate internal control
system to perform periodical reconciliations of advances/balances of customer
and vendors.

A ‘material weakness’ is a deficiency, or a combination of
deficiencies, in internal financial control over financial reporting, such that
there is a reasonable possibility that a material misstatement of the company’s
annual or interim financial statements will not be prevented or detected on a
timely basis.

In our opinion, because of the matters described in the basis
of disclaimer of opinion paragraph of main report and in view of the material
weaknesses described above, the Company has not maintained adequate and
effective internal financial controls over financial reporting as of 31^st
March 2016.

We have considered the material weaknesses
identified and reported above in determining the nature, timing, and extent of
audit tests applied in our audit of the 31^st March 2016 standalone
financial statements of the Company and theses material weaknesses have inter-alia
affected our opinion on the financial statements of the Standalone company and
we have issued a disclaimer of opinion on the financial statements.

BCAJ Admin

From Published Accounts

Section A: Disclosures regarding adoption of Ind AS and pursuant adjustments carried out

Compilers’ Note
As per the roadmap issued by the Ministry of Company Affairs (MCA), listed and other companies with a net worth of over Rs. 500 crore (as on 31st March 2014) have to adopt ‘Ind AS’ set of standards as notified by the Companies (Indian Accounting Standards) Rules, 2015 as amended by Companies (Indian Accounting Standards) Amendment Rules, 2016.

To overcome the initial problems likely to faced by companies on Ind AS implementation, SEBI has also vide Circular dated 5th July 2016 given certain exemptions from disclosures for Q1 and Q2 results for companies who have to adopt Ind AS.

Given below are disclosures by 2 large listed companies for the quarter ended 30th June 2016 who have adopted Ind AS.

Reliance Industries Ltd
Transition to Ind-AS:
The Company has adopted Ind AS with effect from 1st April 2016 with comparatives being restated. Accordingly the impact of transition has been provided in the Opening Reserves as at 1st April 2015 and all the periods presented have been restated accordingly.

RECONCILATION OF PROFIT AND RESERVE BETWEEN IND AS AND PREVIOUS INDIAN GAAP FOR EARLIER PERIOD AND AS AT MARCH 31, 2016

Notes:
I. Change in accounting policy for Oil & Gas Activity – From Full cost method (FCM) to Successful Efforts Method (SEM): The impact on account of change in accounting policy from FCM to SEM is recognised in the Opening Reserves on the date of transition and consequential impact of depletion and write offs is recognised in the Profit and Loss Account. Major differences impacting such change of accounting policy are in the areas of;

– Expenditure on surrendered blocks, unproved wells, abandoned wells, seismic and expired leases and licenses which has been expensed under SEM.

– Depletion on producing property in SEM is calculated using Proved Developed Reserve, as against Proved Reserve in FCM.

II. Fair valuation as deemed cost for Property, Plant and Equipment: The Company and its subsidiaries have considered fair value for property, viz land admeasuring over 33000 acres, situated in India, with impact of Rs. 51,101 crore and gas producing wells in USA Shale region with impact of Rs.(-) 5,829 crore in accordance with stipulations of Ind AS 101 with the resultant impact being accounted for in the reserves. The consequential impact on depletion and reversal of impairment is reflected in the Profit and Loss Account.

III. Fair valuation for financial Assets: The Company has valued financial assets (other than investment in subsidiaries, associate and joint ventures which are accounted at cost), at fair value. Impact of fair value changes as on the date of transition, is recognised in opening reserves and changes thereafter are recognised in Profit and Loss Account or Other Comprehensive Income, as the case may be.

IV. Deferred Tax:
The impact of transition adjustments together with Ind AS mandate of using balance sheet approach (against profit and loss approach in the previous GAAP) for computation of deferred taxes has resulted in charge to the Reserves, on the date of transition, with consequential impact to the Profit and Loss account for the subsequent periods.

V. Others: Other adjustments primarily comprises of:
a. Attributing time value of money to Assets Retirement Obligation: Under Ind AS, such obligation is recognised and measured at present value. Under previous Indian GAAP it was recorded at cost. The impact for the period subsequent to the date of transition is reflected in the Profit and Loss account.

b. Loan processing fees / transaction cost: Under Ind AS such expenditure are considered for calculating effective interest rate. The impact for the periods subsequent to the date of transition is reflected in the Profit and Loss account.

Tech Mahindra Ltd
The Company has prepared its first Ind AS compliant Financial Statements for the periods commencing April 1, 2016 with restated comparative figures for the year ended March 31, 2016 in compliance with Ind AS. Accordingly, the Opening Balance Sheet, in line with Ind As transitional provisions, has been prepared as at April 1, 2015, the date of company’s transition to Ind AS. In accordance with Ind AS 101 First-time Adoption of Ind AS, the Company has presented a reconciliation from the presentation of financial statements under Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (“Previous GAAP”) to equity under Ind AS as at March 31, 2016, June 30, 2015 and April 1, 2015 and of the total comprehensive income for the quarter ended June 30, 2015.

The principal adjustments made by the Company in restating its “Previous GAAP” statement of profit and Loss for the quarter and year ended March 31, 2016 and quarter ended June 30, 2015 are as mentioned below:

Footnotes to the reconciliation between “Previous GAAP” and Ind AS.

i) Fair Value Through Other Comprehensive Income (FVTOCI) Financial assets:
Under “Previous GAAP”, the Group accounted for long term investments in unquoted and quoted equity shares as investment measured at cost less provision for other than temporary diminution in the value of investments. Under Ind AS, the Group has designated such investments (other than subsidiary and associate) as FVTO CI investments. Ind AS requires FVTO CI investments to be measured at fair value. Due to difference between the investments fair value and “Previous GAAP” carrying amount, total comprehensive income has been increased by an amount of Rs.1160 Lakh for quarter ended June 30, 2015 and decreased by an amount of Rs.2785 Lakh and Rs.546 Lakh for quarter and year ended March 31, 2016 respectively.

The Group, under the “Previous GAAP” had made provision for diminution in value of quoted investments in earlier years, now since investments are accounted at fair value, provision for diminution, no longer required has been reversed by the company and corresponding effect has been given by crediting retained earnings Rs. 2515 Lakh as at transition date. During the quarter ended June 2015, company had already reversed the amount of provision for diminution in value of quoted investment of Rs.2435 Lakh in “Previous GAAP” financials and on reversal on transition date, the profit under Ind As has been decreased by an amount of Rs.2435 Lakh for quarter ended June 30, 2015 and year ended March 31, 2016.

ii) Share based payments:
Under “Previous GAAP”, the Group recognised stock compensation cost based on intrinsic value method. Ind AS 102, Share-based Payment, requires compensation cost to be recognised on fair value as at grant date to be determined using an appropriate pricing model over the vesting period. Accordingly, profit has been decreased (excess of cost determined on fair value basis over intrinsic value basis) by an amount of Rs.1051 Lakh, Rs.860 Lakh and Rs.3269 Lakh for quarter ended June 30, 2015, quarter and year ended March 31, 2016 respectively.

iii) Foreign currency translations:
In “Previous GAAP”, fixed assets of integral foreign operations were carried at historical exchange rate and now in accordance with Ind AS 21, Property, Plant and Equipment of integral foreign operations has been restated at closing rate and other comprehensive income has been increased by an amount of Rs.149 Lakhs, Rs.600 Lakh and Rs.600 Lakh for quarter ended June 30, 2015, quarter and year ended March 31, 2016 respectively.

iv) Fair Value Through profit or loss in respect of Financial assets:
Under “Previous GAAP”, the company accounted for current investment in mutual funds on the basis of cost or Net realizable value whichever is lower. Ind AS requires the same to be measured at fair value. Accordingly, current investment in mutual funds have been measured at fair value and profit has been decreased by an amount of Rs, 91 Lakh for quarter ended June 30, 2015 and increased by an amount of Rs.167 Lakh and Rs.230 Lakh for quarter and year ended March 31, 2016.

v) Deferred tax:
Certain translation adjustments lead to temporary differences and accordingly, the group accounted for deferred tax, as applicable on such differences. Deferred tax adjustments are recognised in correlation to the underlying transaction either in retained earnings or a separate component of equity.

These adjustments have resulted in decrease in profit by an amount of Rs. 435 lakh and Rs.2349 Lakh for quarter ended June 30, 2015 and March 31, 2016 respectively and increased by an amount of Rs. 4183 Lakh for year ended March 31, 2016.

Tax adjustments are primarily on account of deferred taxes recognised for undistributed earnings of subsidiaries.

vi) Other Comprehensive Income:
Under the “Previous GAAP”, the Group has not presented other comprehensive income (OCI) separately. Now, under Ind AS, actuarial gain/loss on defined benefit liability, effective portion of cash flow hedges (amounting to loss of Rs.14984 Lakh for quarter ended June 30, 2015 and gain of Rs.10890 Lakh and Rs.11741 Lakh for quarter and year ended March 31, 2016 respectively) and currency translation reserve has been shown separately and routed through OCI.

BCAJ Admin

From Published Accounts

Accounting
for Demerger in the books of demerged company and resulting company (both
companies following Ind AS)

Sterlite Technologies Ltd. (31-3-2017) (demerged company)

From
Notes to Accounts

54G Demerger
of Power Business

The
Board of directors of the Company on 18^th May 2015 approved the
Scheme of Arrangement under sections 391 – 394 of the Companies Act, 1956 (“the
Scheme’) between Sterlite Technologies Limited (‘STL’ of Demerged company),
Sterlite Power Transmission Limited (‘SPTL’ or Resulting company’) and their respective
shareholders and creditors for the demerger of power products and solutions
business (including the investments of STL in power transmission infrastructure
subsidiaries i.e. Sterlite Power Grid Ventures Limited and East North
interconnection Company Limited into SPTL with the appointed date of 1^st
April 2015. The Scheme was approved by the Hon’ble Bombay High Court vide
Order dated 22^nd April 2016 and it became effective from 23^rd
May 2016 (being the date of filing with Registrar of Companies).

As
a result of the demerger, the opening balance sheet as at 1^st April 2015 and the financial statements of the Company as at and for the
year ended 31^st March 2016, do not include the operations of the
demerged undertaking.

As per the Scheme, STL shall reduce the book
values of assets and liabilities pertaining to the demerged undertaking (i.e.
Power Business) as on the appointed date from its books of account.
Accordingly, the following assets and liabilities pertaining to Power Business
have been reduced from the books of account of STL as on April 1^st
2015.

Particulars

( Rs in crores)

Assets

Non-current
assets

Property,
plant & equipment

238.94

Capital
work-in-progress

2.98

Other
intangible assets

0.07

Investment
in subsidiaries

1,198.11

Financial
assets

Loans

9.20

Other non-current financial assets

1.47

Other
non-current assets

1.10

1,451.87

Current
assets

Inventories

236.65

Financial
assets

Trade receivables

413.06

Cash and cash equivalents

0.51

Other current financial assets

76.50

Other
current assets

23.01

749.73

Total
(A)

2,201.60

Liabilities

Non-current
liabilities

Financial
Liabilities

Borrowings

562.84

Employee
benefit obligations

2.28

Deferred
tax liabilities (net)

5.75

570.86

Current
liabilities

Financial
liabilities

Borrowings

228.25

Trade payables

586.09

Other financial liabilities

160.39

Net
employee defined benefit liabilities

1.41

1,064.95

Total
(B)

1,635.82

Excess
of book value of assets over the book value of liabilities (A-B)

565.78

Further, as per the Scheme,
the excess of book value of assets over the book value of liabilities of the
demerged undertaking shall be adjusted against the securities premium account
and balance, if any, shall be first adjusted against the general reserve account
and thereafter against profit and loss account of the demerged company. Also,
the investment of STL in SPTL of Rs. 0.05 crore has been cancelled and adjusted
against surplus in the statement of profit and loss as per the Scheme,
Accordingly, the following adjustments have been made in the opening reserves
as at 1^st April 2015:

Particulars

Rs. in
crores

Excess
of book value of assets over the book value of liabilities

565.78

Adjusted
against:

Securities
premium

197.26

General
reserve

99.97

Surplus
in the statement of profit and loss

268.55

Total

565.78

The resulting company shall
reimburse the demerged company for all liabilities incurred by the demerged
company in so far as such liabilities relate to period prior to the appointed
date i.e. 1^st April 2015 in respect of the demerged undertaking as
per the Scheme.

Sterlite Power Transmission Ltd. (31-3-2017) (resulting company)

From
Notes to Accounts

NOTE 45:
DEMERGER OF POWER BUSINESS FROM STERLITE TECHNOLOGIES LIMITED

A. The
Board of directors of the Sterlite Technologies Limited on 18^th May,
2015 approved the Scheme of Arrangement under sections 391 – 394 of the
Companies Act, 1956 (‘the Scheme’) between Sterlite Technologies Limited (‘STL’
or ‘Demerged company’), Sterlite Power Transmission Limited (‘SPTL’ or
‘Resulting company’ or ‘Company’) and their respective shareholders &
creditors for the demerger of power products and solutions business (including
the investments of STL in power transmission infrastructure subsidiaries i.e.
Sterlite Power Grid Ventures Limited and East North Interconnection Company
Limited) into the Company with the appointed date of 1^st April,
2015. The Scheme was approved by the Hon’ble Bombay High Court vide
Order dated 22^nd April, 2016 and it became effective from 23^rd
May, 2016 (being the date of filing with Registrar of Companies).

The
Company was incorporated on 5^th May, 2015 with the object of
carrying out business of power products and solutions under the name Sterlite
Power Transmission Limited. As per the Scheme, power products and solutions
business (including the investments of STL in power transmission infrastructure
subsidiaries i.e. Sterlite Power Grid Ventures Limited and East North
Interconnection Company Limited) has been transferred into the Company with the
appointed date of 1^st April, 2015.

B. The
Scheme inter alia provides for issue by SPTL, at the option of the
shareholder of STL, of either one equity share of face value of INR 2 or one
redeemable preference share of face value of INR 2 issued at a premium of INR
110.30 per share for every 5 fully paid up equity shares of INR 2 each of the
Demerged company and redeemable on expiry of eighteen months from the date of
allotment at a premium of INR 123.55 per share for eligible members other than
non-residents. In case of non-residents, one equity share of face value of INR
2 for every 5 fully paid up equity shares of INR 2 each of the Demerged company
and all such equity shares shall be purchased by the promoters of the Demerged
Company and/or their affiliates or any other person and/or entity identified by
them, in accordance with the scheme.

C. As
per the option exercised by the shareholders of STL 61.18 million equity shares
and 17.09 million redeemable preference shares were issued on 22^nd
August, 2016.

D. Further,
as per the Scheme, the investment of STL in SPTL of INR 0.05 crore has been
cancelled w.e.f. 1^st April, 2015.

E. As
per the Scheme, the following assets and liabilities pertaining to Power Business
were transferred from STL to SPTL w.e.f. 1^st April, 2015:

Particulars

INR in millions*

ASSETS

Non-current
assets

Fixed
assets

Tangible assets

2,389.36

Intangible Assets

0.73

Capital work-in-progress

29.81

2,419.90

Non-current
investments

11,981.08

Long-term
loans and advances

117.75

Other
non-current assets

4.20

14,522.93

Current
assets

Inventories

2,366.52

Trade
receivables

4,130.64

Cash
and bank balances

5.10

Short-term
loans and advances

981.05

Other
current assets

17.98

7,501.30

TOTAL
(A)

22,024.23

LIABILITIES

Non-current
liabilities

Long-term
borrowings

5,632.50

Deferred
tax liabilities (net)

57.50

Long-term
provisions

22.75

5,712.75

Current
liabilities

Short-term
borrowings

2,286.54

Trade
payables

5,860.98

Other
current liabilities

2,492.04

Short-term
provisions

14.12

10,653.68

TOTAL
(B)

16,366.43

Excess
of book value of assets over the book value of liabilities (A – B)

5,657.79

Total
consideration payable by the Company to equity share holders of STL

8,880.92

Goodwill

3,223.09

*These figures are as per Indian GAAP.

As
per the Scheme, difference between total consideration payable by the Company
to equity share holders of Sterlite Technologies Limited and excess of book
value of assets over the book value of liabilities transferred from Sterlite
Technologies Limited is recognised as Goodwill and amortised over a period of
five years as required under the Scheme.

F. As
per the Scheme, the resulting company shall reimburse the demerged company for
all liabilities incurred by the demerged company in so far as such liabilities
relate to period prior to the appointed date i.e. 1^st April, 2015 in
respect of the demerged undertaking. The management does not expect any cash
outflow in respect of the above.

From
Auditors’ Report

Emphasis
of Matter

We
draw attention to Note 45 to the standalone Ind AS financial statements which
describes the accounting for merger which has been done as per the Scheme of
arrangement approved by the High Court. Our opinion is not qualified in respect
of this matter. _

BCAJ Admin

From Published Accounts

Section B:
Illustration of qualified Limited Review Report on Consolidated Financial Results

Ed ucomp Solutions Ltd . (quarter ended 31st December 2015)

From Notes to Consolidated Unaudited Financial Results (extracts)

2. The auditors have qualified their limited review report on the consolidated unaudited financial results of the Company for the quarter ended December 31, 2015, quarter ended September 30, 2015, quarter ended June 30, 2015 and audit report for the year ended March 31, 2015 and limited review report for the quarter ended December 31, 2014 was also qualified in respect of the following matter:

As per the terms of Master Restructuring Agreement and approved Corporate Debt Restructuring Scheme (CDR) of Educomp Infrastructure and School Management Limited (EISML), a subsidiary company, there are certain assets amounting Rs. 32,075.33 lakh (at cost) which have been identified for sale in a time bound manner. The lead bank carried out a valuation of these assets which are indicative in nature. Market valuations have not been carried out by EISML and its step down subsidiaries, as some of these assets are not ready for sale due to pending regulatory approvals/ permissions.

Based on recent firm offers and valuation reports, the Management believes that the market value of these investments is higher than as considered under the indicative valuation reports and differences, if any, are temporary only. Therefore, no adjustment is required to the carrying value of these assets.

3. The auditors have drawn attention in their limited review report on the consolidated unaudited financial results of the Company for the quarter ended December 31, 2015 in respect of the following matters:

a) Due to inadequacy of the profits, managerial remuneration paid/provided, by the Company to one of its whole time director during the quarter ended June 30, 2015 and year ended March 31, 2015 and by one of its subsidiary, Educomp Infrastructure and School Management Limited (EISML) to its wholetime director during the year ended March 31, 2015, is in excess of limits prescribed u/s 197 and section 198 read with Schedule V to the Companies Act, 2013.

Further, due to inadequacy of the profits in the previous financial year, managerial remuneration paid/provided, by the Company to one of its whole time director and by one of its subsidiary EISML to its whole-time director/Managing Directors during financial year ended March 31, 2014, was in excess of limits prescribed under Section 198, Section 269, Section 309 read with Schedule XIII of the Companies Act, 1956.

EISML has submitted an application to the Central Government for waiver/approval of managerial remuneration pertaining to year ended March 31, 2014 and March 31, 2015.

The management of the Company is in the process of making necessary applications to the Central Government to obtain its approval for the waiver/ approval of the remuneration so paid/recorded in year ended March 31, 2014, March 31, 2015 and quarter ended June 30, 2015 in due course.

b) Due to longer than expected gestation period of schools, recoverability of trade receivables amounting Rs.21,255 lakh from Trusts to the subsidiary Company EISML has been slow. The Management of EISML, is regularly monitoring the growth in schools and their future projections, based on which, the Management believes that the trade receivables from the Trusts are fully recoverable.

c) The Group has assessed the business projections of six companies in the Group, namely, Educomp Infrastructure and School Management Limited, Educomp Online Supplemental Service Limited, Educomp Child Care Private Limited, Educomp Professional Education Limited, Vidya Mandir Classes Limited, Educomp Intelliprop Ventures Pte Ltd. (Formerly known as Educomp Intelprop Ventures Pte Ltd.) and its associate Greycells18 Media Limited., for evaluating the recoverability of Group’s share of net assets and has concluded that their businesses are sustainable on a going concern basis. The Company has evaluated the recoverability of its share of net assets held through these Companies, using business valuations performed by independent experts, according to which the decline in the carrying value of net assets is considered to be temporary. The said evaluation is based on the long term business plans of its subsidiaries/associate as on March 31, 2015 and concluded that no adjustments to the carrying value of its share in net assets is required to be recorded in the consolidated unaudited financial results of the Company for the quarter ended December 31, 2015.

d) During earlier years, EISML, a subsidiary of the Company had given capital advances amounting to Rs. 25,329 lakh to various parties for acquisition of fixed assets. The Management of EISML as part of its regular recoverability evaluation process had identified certain portions of capital advances which were doubtful of recovery or did not have recoverable value equivalent to the book value. Accordingly, on a prudent basis, till March 31, 2015 the Management had recorded a total provision of Rs. 20,175.48 lakh in the books of accounts towards such capital advances or portions thereof, which were doubtful of recovery.

The Management is continuously monitoring the settlement of these balances and is regularly following up with respective parties for recovery of the said capital advances. The Management believes that other capital advances, which have not been provided for, although have been long outstanding but are fully recoverable and hence, existing provision recorded in books is sufficient to cover any possible future losses on account of non recovery of such capital advances.

e) The Group’s management has reviewed business plan of its joint venture, Educomp Raffles Higher Education Limited which had advanced loans amounting to Rs. 5,147 lakh to Jai Radha Raman Education Society (Society) and its subsidiary Millennium Infra Developers Limited which had trade receivables of Rs. 6,021 lakh from the same Society under contractual obligations. The Group’s management has also considered the business plan of the Society and estimated market value of its net assets, based on which no adjustment is required in carrying value of its share of net assets in such joint venture. The Group’s holding in the joint venture is 41.82%. The consolidated financial results of Educomp Raffles Higher Education Limited are not available with the Company, hence there is no update available on the above status.

f) The Group had evaluated the recoverability of intangible assets in form of Brand ‘Universal’ in one of its step down subsidiary, by using valuations performed by an independent valuation expert. The said evaluation was based on long term business plans and underlying assumptions used for the purpose of valuation, which in view of the Management were realistic and achievable by the subsidiary. Based on revised business plans which entailed scaling down the operation of ‘Universal’ brand of schools, the management had recorded an impairment of Rs. 4,527 lakh to this asset in the year ended March 31, 2015.

g) Pursuant to implementation of approved CDR scheme, certain lenders have disbursed fresh corporate loans to the Company and corresponding trade receivables were bought from Edu Smart Services Private Limited (ESSPL) together with future business relating to these customers. Due to this restructuring, the remaining receivables in ESSPL may not yield adequate surplus to discharge its liability towards the Company for trade receivables and redemption of Redeemable non-convertible preference shares. However, the approved CDR scheme has mandated merger of ESSPL with the Company and accordingly, the Company has initiated the process and has taken the approval of the Board of Directors in the board meeting held on 13th January 2015. The impact for the amalgamation shall be given/recorded in the books of accounts upon obtaining approvals and implementation of the Scheme.

h) The Company has incurred substantial losses and its net worth has been significantly eroded. Based on Company’s projected cash flows, it shall have sufficient funds to run its operations in foreseeable future. As regards availability of requisite funds to meet its debt related obligations including those falling due in the year 2015-16 as per its CDR package executed with Company’s lenders, the Company intends to monetize its identified investments, receivables and assets to meet the necessary obligations. The Company is also taking several measures to improve operational efficiencies and other avenues of raising funds.

The management is confident that with the above measures and continuous efforts to improve the business, it would be able to generate sustainable cash flow, discharge its short-term and long term liabilities and recover & recoup the erosion in its net worth through profitable operations and continue as a going concern. Accordingly, these consolidated unaudited financial results have been prepared on a going concern basis and do not include any adjustments relating to the recoverability and classification of recorded assets, or to amounts and classification of liabilities that may be necessary if the entity is unable to continue as a going concern.

i) The Company’s subsidiary, Educomp Infrastructure & School Management Limited has incurred losses and the subsidiary debt related obligation in the form of Funded Interest Term Loan has been converted into 0.1% Cumulative Compulsory Convertible Preference Shares during the earlier quarters. Based on subsidiary company’s projected cash flows, it shall have sufficient funds to run its operations in foreseeable future. As regards availability of requisite funds to meet its debt related obligations including those falling due in the year 2015-16 as per the CDR package executed with subsidiary’s lenders, the subsidiary intends to monetise its assets identified for sale to meet the necessary obligations. The subsidiary is also taking several measures to improve operational efficiencies and other avenues of raising funds.

The management is confident that with the above measures and continuous efforts to improve the business, it would be able to generate sustainable cash flow to discharge its short-term and long term liabilities and recover and recoup the erosion in its net worth through profitable operations and continue as a going concern. Accordingly, these consolidated unaudited financial results have been prepared on a going concern basis and do not include any adjustments relating to the recoverability and classification of recorded assets, or to amounts and classification of liabilities that may be necessary if the entity is unable to continue as a going concern.

j) The Company’s step down subsidiary, Knowledge Vistas Limited has taken land from Lavasa Corporation Limited on lease vide lease agreement dated June 30, 2009 for a period of 999 years to construct an international residential school. Further, this subsidiary has entered into a sublease agreement with Gyan Kunj Educational Trust (GKET) to sub lease the school building. As per the sub lease agreement, GKET shall be liable to pay lease rental to the subsidiary from the year in which it has cash surplus. GKET has started its operations in the Academic Session 2011-12 but due to certain environmental matters, GKET decided to suspend its operations and is waiting for favourable business opportunities.

On the basis of the valuation reports from an independent valuer, the carrying cost of the said subsidiary’s assets is not less than its net realisable value. Hence, the management doesn’t anticipate any asset impairment. These consolidated unaudited financial results have been prepared on a going concern basis and do not include any adjustments relating to the recoverability and classification of recorded assets, or to amounts and classification of liabilities that may be necessary if the entity is unable to continue as a going concern.

6. The Group is in the process of determining and identifying significant components of fixed assets as prescribed under Schedule II to the Companies Act 2013 and the resultant impact, if any, will be considered in due course during the financial year 2015-16.

From Auditors’ Limited Review Report (extracts)
4. As per the terms of Master Restructuring Agreement (MRA) dated December 28, 2013 entered into pursuant to approved Corporate Debt Restructuring Scheme to restructure debt of Educomp Infrastructure and School Management Limited (EISML), a subsidiary of the Company, certain tangible fixed assets of EISML and EISML’s subsidiaries have been Identified for sale in a time bound manner. As per the valuation of such tangible fixed assets as evaluated and disclosed in the approved Corporate Debt Restructuring Package, some of these assets are expected to have lower realizable value than their carrying values. Such tangible fixed assets having total carrying value of Rs. 32,075.33 lakh as at December 31, 2015 (as at December 31, 2014 Rs. 32,196.76 lakh) are included in the tangible fixed assets.

The Management has not carried out any evaluation of impairment of these assets at the close of the quarter and no provision for impairment has been recorded, as required by Accounting Standard 28 ‘Impairment of Assets’.

As we are unable to obtain sufficient appropriate audit evidence about the extent of recoverability of carrying value of these assets, we are unable to determine whether any adjustments to these amounts are necessary.

Our audit opinion on the consolidated financial statements for the year ended March 31, 2015 and our limited review reports for the quarters ended September 30, 2015 and December 31, 2014 were also qualified in respect of the aforesaid matter.

5. Based on our review conducted as above, and on consideration of the reports of the other auditors and subject to the possible effects of the matter described in paragraph 4 above, nothing has come to our attention that causes us to believe that the accompanying Statement, prepared in accordance with applicable accounting standards as specified u/s. 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Account) Rules, 2014 and other recognised accounting practices and policies has not disclosed the information required to be disclosed in terms of Regulation 63 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 including the manner in which it is to be disclosed, or that it contains any material misstatement.

6. We draw attention to the following matters in the notes to the Statement:

a) Note 3(a) regarding managerial remuneration paid/ payable to one of the whole time director of the Holding Company for the quarter ended June 30, 2015, year ended March 31, 2015 and year ended March 31, 2014 and whole time director of one of its subsidiary Company, Educomp Infrastructure and School Management Limited during the year ended March 31, 2015 and the year ended March 31, 2014, in non-compliance with the requirements of section 197 and section 198 read with schedule V to the Companies Act, 2013 and section 198, section 269 and section 309 read with Schedule XIII to the Companies Act, 1956 respectively, for which the Central Government’s approval has not been obtained.

b) Note 3(b) wherein a subsidiary company, Educomp Infrastructure and School Management Limited has considered its long outstanding Trade Receivables due from certain Trusts which are due for more than one year, as good and fully recoverable.

c) Note 3(c) with respect to Management’s assessment of recoverability of Group’s share of net assets as regards investment in six companies of the Group, namely, Educomp Infrastructure and School Management Limited, Educomp Online Supplemental Service Limited, Educomp Child Care Private Limited, Educomp Professional Education Limited, Vidya Mandir Classes Limited, Educomp Intelliprop Ventures Pte. Ltd.(formerly known as Educomp Intelprop Ventures Pte. Ltd.) and its associate, Greycells18 Media Limited.

d) Note 3(d) which explains Management’s view on recoverability of certain significant amount of capital advances given by the Group and which have been outstanding for a long period of time.

e) Note 3(e) which explains Management’s view on recoverability of certain loans advanced to Jai Radha Raman Education Society (the society) by Educomp Raffles Higher Education Limited, a joint venture (JV), and trade receivables due to JV’s subsidiary Millennium Infra Developers Limited from the society under contractual obligations.

f) Note 3(f) with respect to Management’s assessment, based on valuation performed by an independent expert, of recoverability of intangible assets in the form of brand ‘Universal’ in one of its step down subsidiary named, Educomp APAC Services Limited. The recoverability of the intangible assets is significantly dependent on the step down subsidiary’s ability to achieve long term futuristic growth plan envisaged in the related assumptions used for the purpose of valuation.

g) Note 3(g) wherein the Holding Company has not considered impairment/diminution of trade receivables from/investment in Edu Smart Services Private Limited (ESSPL) in the intervening period, in view of proposed merger of ESSPL with the Holding Company.

h) Note 3(h) in respect of the Holding Company, in the opinion of the management, despite incurring net losses, including during the quarter ended December 31, 2015 and erosion of net worth as at December 31, 2015, the unaudited consolidated financial results have been prepared on a going concern basis in view of matters more fully explained in the said note.

i) Note 3(i) in respect of one of the Holding Company’s subsidiary, Educomp Infrastructure & School Management Limited, in the opinion of the management, despite incurring losses, including during the quarter ended December 31, 2015 and erosion of net worth as at December 31, 2015, the unaudited consolidated financial results have been prepared on a going concern basis in view of matters more fully explained in the said note.

j) Note 3(j) in respect of one of Holding Company’s step down subsidiary, Knowledge Vistas Limited, which indicates that the company has suspended its operation and is waiting for favourable business opportunities. Despite existence of these conditions, along with other matters more fully explained in the said note, the unaudited consolidated financial results have been prepared on going concern basis.

Our report is not modified in respect of these matters

BCAJ Admin

From Published Accounts

Section A :
Reporting on Internal Financial Controls as per section 143(3)(i) of the Companies Act, 2013

Compilers’ Note
Reporting u/s. 143(3)(i) by an auditor is mandatory from FY 2015-16 onwards. The said clause requires the auditors to comment, “whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls”. ICAI has, in September 2015, issued a Guidance Note on Audit of Internal Financial Controls over Financial Reporting wherein the role of the auditor, procedures to be followed and manner of reporting are discussed in detail. Given below are some illustrations of such reporting for the year ended 31st March 2016.

G.M.Breweries Ltd .
In our opinion, the company has, in all material respects, an adequate internal financial controls, system over financial reporting and such internal financial control over financial reporting were operating effectively as at March 31, 2016, based on the internal control over financial reporting criteria established by the company.

Kitex Garments Ltd .
On the basis of the information and explanation of the Company provided to us, the internal financial control framework, the report of the internal auditors and in our opinion, the Company has adequate internal financial controls systems in place and the operating effectiveness of such controls.

Bajaj Corp Ltd .
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.

Annexure B
Annexure to the independent auditor’s report of even date on the Standalone financial statements of Bajaj Corp Limited Report on the Internal Financial Controls under Clause (i) of sub-section 3 of section 143 of the Companies Act, 2013 (“the Act”) We have audited the internal financial controls over financial reporting of Bajaj Corp Limited (“the Company”) as of March 31, 2016 in conjunction with our audit of the standalone 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. 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 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.

Auditor’s 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 u/s. 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 auditor’s 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 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 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 financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s 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 March 31, 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.

Stewards & Lloyds of India Ltd
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 I.

Annexure I
We have audited the internal financial controls over financial reporting of Bajaj Corp Limited (“the Company”) as of March 31, 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls
Not reproduced since same as above

Auditor’s Responsibility
Not reproduced since same as above

Meaning of Internal Financial Controls over Financial Reporting
Not reproduced since same as above

Inherent Limitations of Internal Financial Controls over Financial Reporting
Not reproduced since same as above

Qualified Opinion
According to the information and explanations given to us and on our audit, the following material weaknesses have been identified as at 31st March 2016.

a) The company did not have an appropriate internal control system for review of its performance pertaining to execution of contracts resulting in customer dissatisfaction and dispute leading to recognition of revenue without establishing reasonable certainty of ultimate collection in earlier years from sundry debtors affecting cash flows adversely.

b) The internal auditor of the company has also pointed out in their report material weakness in internal financial controls stating that the company is not having any ERP system to manage the different operational activities. Due to its present condition, it is also functioning with some minimum staff strength. Accordingly, many of the operations which would have been taken care by a computer system and controls are being managed manually. Hence there is some limitation in control system and processes which have been mentioned in a separate annexure.

A material weakness is a deficiency or a combination of deficiencies in internal financial control over financial reporting such that there is reasonable possibility that a material misstatement of the Companies’ annual or interim financial statements will not be prevented or detected on timely basis.

In our opinion, except for the possible effects of the material weaknesses described above on the achievement of the objectives of the control criteria, the company has maintained in all material respects adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as of 31st March 2016 based on the internal financial controls over financial reporting criteria established by the company considering the essential components of internal financial controls stated in the Guidance Note on audit of internal financial controls over financial reporting issued by the Institute of Chartered Accountants of India.

We have considered material weaknesses as identified and reported above in determining the nature, timing and extent of audit test applied in our audit of March 31, 2016 financial statements of the company and these material weaknesses do not affect our opinion on the financial statements of the company.

Section B:
Reporting on Companies (Auditors’ Report) Order, 2016

Compilers’ Note
The Ministry of Company Affairs has vide notification dated 29th March 2016 notified u/s. 143(11) of the Companies Act, 2013 issued the Companies (Auditors’ Report) Order (CARO, 2016). As per the said order, every report made by the auditor u/s. 143 of the Companies Act, 2013 on the accounts of every company audited by him, to which this Order applies, for the financial years commencing on or after 1st April, 2015, shall in addition, report on matters specified in paragraphs 3 and 4 of the order. Given below is an illustration of reporting as per CARO, 2016 for the year ended 31st March 2016. ICAI has also issued in April 2016 Guidance Note on CARO, 2016 which needs to be adhered to while reporting on the clauses.

Infosys Ltd (report issued before release of ICAI GN)
As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure A, a statement on the matters specified in the paragraph 3 and 4 of the order.

Annexure – A to the Auditors’ Report
The Annexure referred to in Independent Auditors’ Report to the members of the Company on the standalone financial statements for the year ended 31st March 2016, we report that:

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 fixed assets are verified in a phased manner over a period of three years. In accordance with this programme, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification 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 title deeds of immovable properties are held in the name of the Company.

ii) The Company is a service company, primarily rendering software services. Accordingly, it does not hold any physical inventories. Thus, paragraph 3(ii) of the Order is not applicable to the Company.

iii) The Company has granted loans to five bodies corporate covered in the register maintained u/s. 189 of the Companies Act, 2013 (‘the Act’).

(a) In our opinion, the rate of interest and other terms and conditions on which the loans had been granted to the bodies corporate listed in the register maintained u/s. 189 of the Act were not, prima facie, prejudicial to the interest of the Company

(b) In the case of the loans granted to the bodies corporate listed in the register maintained u/s. 189 of the Act, the borrowers have been regular in the payment of the principal and interest as stipulated.

(c) There are no overdue amounts in respect of the loan granted to a body corporate listed in the register maintained u/s. 189 of the Act.

iv) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of section 185 and 186 of the Act, with respect to the loans and investments made.

v) The Company has not accepted any deposits from the public.

vi) The Central Government has not prescribed the maintenance of cost records u/s. 148(1) of the Act, for any of the services rendered by the Company.

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, income-tax, sales tax, value added tax, duty of customs, service tax, cess and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities. As explained to us, the Company did not have any dues on account of employees’ state insurance and duty of excise. According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, income tax, sales tax, value added tax, duty of customs, service tax, cess and other material statutory dues were in arrears as at 31st 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, there are no material dues of duty of customs which have not been deposited with the appropriate authorities on account of any dispute. However, according to information and explanations given to us, the following dues of income tax, sales tax, duty of excise, service tax and value added tax have not been deposited by the Company on account of disputes: (table not reproduced)

viii) The Company does not have any loans or borrowings from any financial institution, banks, government or debenture holders during the year. Accordingly, paragraph 3(viii) of the Order is not applicable.

ix) The Company did not raise any money by way of initial public offer or further public offer (including debt instruments) and term loans during the year. Accordingly, paragraph 3 (ix) of the Order is not applicable.

x) According to the information and explanations given to us, no material fraud by the Company 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 give to us and based on our examination of the records of the Company, the Company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.

xii) In our opinion and 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, transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.

xiv) According to the information and explanations given to us and based on 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 the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.

xvi) The Company is not required to be registered u/s. 45- IA of the Reserve Bank of India Act 1934.

BCAJ Admin

From Published Accounts

Section A: Disclosure regarding title deeds of imm ovable properties as per CARO 2016

Compilers’ Note
CARO 2016 has introduced a new clause 1(c) wherein auditors have to comment on ‘whether the title deeds of immovable properties are held in the name of the company; lf not, provide the details thereof’;

Given below are some disclosures by companies for the year ended 31st March 2016 for the same.

Tata Consultancy Services Ltd .
According to the information and explanations given to us and the records examined by us and based on the examination of the conveyance deed provided to us, we report that, the title deeds, comprising all the immovable properties of land and buildings which are freehold, are held in the name of the Company as at the balance sheet date, except a building with carrying value of Rs. 0.27 lakhs which is under dispute.

Tata Communications Ltd
According to the information and explanations given to us and the records examined by us and based on the examination of the registered sale deed, conveyance deed and transfer deed of the Government of India vide its letter no. G-25015/6/860C dated 23 October, 2001 provided to us, we report that, the title deeds, comprising all the immovable properties of land and buildings which are freehold, are held in the name of the Company, except the following:

In respect of immovable properties of land and buildings that have been taken on lease and disclosed as fixed asset in the financial statements, the lease agreements are in the name of the Company, where the Company is the lessee in the agreement.

Tata Motors Ltd
According to the information and explanations given to us, the records examined by us and based on the examination of the registered sale deed / transfer deed / conveyance deed / confirmation from custodians / court orders approving schemes of arrangements / amalgamations provided to us, we report that, the title deeds, comprising all the immovable properties of land and buildings which are freehold, are held in the name of the Company as at the balance sheet date. In respect of immovable properties of land and buildings that have been taken on lease and disclosed as fixed asset in the financial statements, the lease agreements are in the name of the Company, where the Company is the lessee in the agreement.

Dr Reddy’s Laboratories Ltd
According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties as disclosed in Note 2.7 to these standalone financial statements, are held in the name of the Company.

Vedanta Ltd
According to the information and explanations give to us and the records examined by us and based on the examination of the registered sale deed / transfer deed / conveyance deed and other relevant records evidencing title provided to us, we report that, the title deeds, comprising all the immovable properties of land and buildings which are freehold, are held in the name of the Company as at the balance sheet date, except as stated in the table below:

Immovable properties of land and buildings whose title deeds have been pledged as security for loans, guarantees, etc., are held in the name of the Company based on the confirmations directly received by us from lenders / parties.

United Spirits Ltd
According to the information and explanations given to us and based on our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company except for 22 cases of freehold and having aggregate gross block of Rs.1,175 million, 3 cases of leasehold land having aggregate gross block of Rs.41 million; and various buildings having aggregate gross block of Rs.1,869 million, where the Company is in process of collating and identifying title deeds.

Britannia Industries Ltd
In our opinion and according to the information and explanations given to us and on the basis of our examination of the records of the company, the title deeds of immovable properties are held in the name of the company.

BCAJ Admin

From Published Accounts

Miscellaneous

I) Financial statements prepared on ‘Going Concern’ basis on net worth becoming positive post use of fair value option on adoption of Ind AS

Jindal Stainless Ltd. (31-3-2017)

From Notes to Financial Statements

34. Post adoption of Ind AS and due to adoption of fair valuation of assets (including property, plant and equipment as allowed in Ind AS and liabilities) the net worth of the company became positive (refer note no.56). Further, to strengthen its net worth, the Company is taking necessary steps towards full implementation of AMP including conversion of Funded Interest Term Loan (FITL) by the Lenders of the Company into Equity Shares / Optionally Convertible Redeemable Preference Shares (refer note no.32 (A)(ii). Thus, these accounts have been prepared on a going concern basis.

56. Transition to Ind AS

Exemptions availed

As permitted by Ind AS 101, the company has availed following exemptions from the retrospective application of certain requirements under Ind AS. These exemptions are:

– The company has chosen to measure all items of PPE on transition date i.e. 1st April 2015 at fair value as their deemed cost.

– The company has elected to adopt the fair value as a deemed cost of investments (Other than its subsidiaries, associates and joint ventures).

– The company has chosen to continue recognising Exchange difference of other long term outstanding loan/liability (against which there is no depreciable fixed assets that exists) as Foreign Currency Monetary Item Transition Difference Account and amortised over period/remaining period of loan/liability.

– The company has chosen to consider the cumulative transition difference for all foreign operations that existed at the date of transition at zero.

– The company has opted to apply business combination Ind AS 103 post transition date and not retrospectively.

From Auditors’ Report

Emphasis of Matter

(a) to (d) … not reproduced

(e) Net Worth post considering the fair value became positive as stated in Note No. 34 of the financial statements.

II) Life of Goodwill reconsidered from definite to indefinite on adoption of IndAS

Jindal Stainless (Hisar) Ltd.(31-3-2017)

From Note below schedule on Property, Plant and Equipment

Goodwill and Intangible assets

Goodwill was initially recognised and decided by the management to amortise over a period of two years, accordingly Rs. 10.34 Crore was amortised during the earlier year (2014-15). During the year 2016-17, life of goodwill was reconsidered from definite to indefinite as per Ind AS, and accordingly the Goodwill was restated at Rs. 10.34 Crore as at 1st April 2015. (Refer Note No.54)

From Notes to Financial Statements

54 Assets are tested for impairment whenever there are any internal or external indications of impairment. Impairment test is performed at the level of each Cash Generating Unit (‘CGU’) within the Company at which the goodwill or other assets are monitored for internal management purposes, within an operating segment. The impairment assessment is based on higher of value in use and fair value less costs of disposal. During the year, the testing did not result in any impairment in the carrying amount of goodwill and other assets. The measurement of the cash generating units’ value in use is determined based on financial plans that have been used by management for internal purposes. The planning horizon reflects the assumptions for short to mid-term market conditions.

Assumption

Approach
used to determine values

Sales
volume

Average
annual growth rate over the five-year forecast period; based on past
performance and management’s expectations of market development.

Sales
price

Average
annual growth rate over the five-year forecast period; based on current
industry trends and including long term inflation forecasts for each
territory.

Budgeted
gross margin

Based
on past performance and management’s expectations for the future.

Other
operating costs

Fixed
costs of the CGUs, which do not vary significantly with sales volumes or
prices. Management forecasts these
costs based on the current structure of the business, adjusting for
inflationary increases but not reflecting any future restructurings or cost
saving measures. The amounts disclosed
above are the average operating costs for the five-year forecast period.

Annual
capital

Expected
cash costs in the CGUs. This is based on the historical experience of
management, and the planned refurbishment expenditure. No incremental revenue
or cost savings are assumed in the value-in-use model as a result of this
expenditure.

Long-term
growth rate

This
is the weighted average growth rate used to extrapolate cash flows beyond the
budget period. The rates are consistent with forecasts included in industry
reports.

Pre-tax
discount rates

Reflect
specific risks relating to the relevant segments and the countries in which
they operate.

III) Factors considered to assess carrying values and impairment loss for investments in and loans and advances to subsidiaries / JVs (as per Ind AS)

JSW Steel Ltd. (31-3-2017)

From Significant Accounting Policies

First time adoption – mandatory exceptions and optional exemptions (extract)

The Company has elected to continue with the carrying value of all of its investments in subsidiaries, joint ventures and associates recognised as of 1st April, 2015 (transition date) measured as per the previous GAAP as its deemed cost as at the date of transition.

From Notes to Financial Statements

48. In assessing the carrying amounts of Investments in and loans / advances (net of impairment loss / loss allowance) to certain subsidiaries and a JV and financial guarantees to certain subsidiaries (listed below), the Company considered various factors as detailed there against and concluded they are recoverable.

(a) Investments aggregating to Rs. 294.63 crore (Rs. 814.30 crore as at March 31, 2016, Rs. 727.53 crore as at April 1, 2015) in equity and preference shares of NBV, loans of Rs. 105.20 crore (Rs. 70.73 crore as at March 31, 2016, Rs. Nil as at April 1, 2015), Rs. 1,921.70 crore (Rs. 683.39 crore as at March 31, 2016, Rs. 3,063.65 crore as at April 1, 2015) and Rs. 839.92 crore (Rs. 252.41 crore as at March 31, 2016, Rs. 646.18 crores as at April 1, 2015) to NBY, PHL and JPHC respectively and the financial guarantees of Rs. 3,177.08 crore (Rs. 3,900.37 crore as at March 31, 2016, Rs. 3,429.98 crore as at April 1, 2015) and Rs. 198.57 crore (Rs. 319.23 crore as at March 31, 2016, Rs. Nil crore as at April 1, 2015) on behalf of PHL and JSU respectively – Estimate of values of the businesses and assets by independent external valuers based on cash flow projections/implied multiple approach. In making the said projections, reliance has been placed on estimates of future prices of iron ore and coal. mineable resources, and assumptions relating to operational performance including significant improvement in capacity utilisation and margins based on forecasts of demand in local markets, and availability of infrastructure facilities for mines.

(b) Equity shares of JSW Steel Bengal Limited, a subsidiary (carrying amount Rs. 438.34 crore (Rs. 436.04 crore as at March 31, 2016, Rs. 427.98 crore as at April 1, 2015) – Evaluation of the status of its integrated Steel Complex (including power plant) to be implemented in phases at Salboni of district Paschim Medinipur in West Bengal by the said subsidiary, and the projections relating to the said complex considering estimates in respect of future raw material prices, foreign exchange rates, operating margins, etc. and the plans for commencing construction of the said complex.

(c) Equity shares of JSW Jharkhand Steel Limited, a subsidiary (carrying amount of Rs. 80.27 crore as at March 31, 2017; Rs. 76.71 crore as at March 31, 2016, Rs. 76.71 crore as at April 1, 2015) – Evaluation of the status of its integrated Steel Complex to be implemented in phases at Ranchi, Jharkhand by the said subsidiary, and the projections relating to the said complex considering estimates in respect of future raw material prices, foreign exchange rates, operating margins, etc. and the plans for commencing construction of the said complex.

(d) Equity shares of Peddar Realty Private Limited (PRPL) (carrying amount of investments: Rs. 24.04 crore as at March 31, 2017; Rs. 56.72 crore as at March 31, 2016. Rs. 56.72 crore as at April 1, 2015, and loans of Rs. 156.79 crore as at March 31, 2017 Rs. 158.18 crore as at March 31, 2016, Rs. 185.83 crore as at April 1, 2015) -Valuation by an independent valuer of the residential complex in which PRPL holds interest.

(e) Investment on Rs. 3.93 crore (Rs. 3.93 crore as at March 31, 2016, Rs. 3.93 crore as at Aprii 1, 2015) and loan on Rs. 116.70 crore (Rs. 112.42 crore as at March 31, 2016, Rs. 95.25 crore as at April 1, 2015) relating to JSW Natural Resources Mozambique Limitada and JSW ADMS Carvo Limitada (step down subsidiaries) – Assessment of minable reserves by independent experts and cash flow projections based on the plans to commence operations after mining lease arrangements are in place for which application has been submitted to regulatory authorities, and infrastructure is developed.

(f) Equity shares of JSW Severfield Structures Limited, a joint venture (carrying amount Rs. 115.44 crore as at March 31, 2017; Rs. 115.44 crore as at March 31, 2016, Rs. 115.44 crore as at April 1, 2015) – Cash flow projections approved by the said JV which are based on estimates and assumptions relating to order book, capacity utilisation, operational performance, market prices of materials, inflation, terminal value, etc.

From Auditors’ Report

Emphasis of Matter

Attention is invited to note 48 to the standalone Ind AS financial statements regarding the factors considered in the Company’s assessment that the carrying amounts of the investments aggregating to Rs. 956.66 crore in and the loans and advances aggregating to Rs. 3,140.31 crore to certain subsidiaries and a joint venture are recoverable and that no loss allowance is required against the financial guarantees of Rs. 3,375.65 crore.

Our opinion is not modified in respect of this matter.

BCAJ Admin

From Published Accounts

Accounting
and Disclosure under Ind AS for financial guarantees given by Holding company
for its subsidiaries, etc. (in standalone financial statements for year ended
31^st March 2017)

Suzlon Energy Limited

From Notes to Accounts

SBLC
facility and security given to AE Rotor Holding B.V. (’AERH’)

Suzlon Energy Limited and
its identified domestic subsidiaries (collectively ‘the Group’) and Suzlon
Generators Limited, a jointly controlled entity (‘SGL’) are obligors under the
Onshore Stand by letter of credit (‘SBLC’) Facility Agreement and have provided
security under the ‘Offshore SBLC Facility Agreement in connection with a SBLC
issued by State Bank of India of USD 655 Million for securing the credit
facility and covered bonds availed by AE Rotor Holding B.V. (AERH), a step-down
wholly owned subsidiary of the Company. The Group has classified the Onshore
facility availed amounting to USD 538 million as a financial guarantee
contract. AERH has a borrowing of USD 626 million as at March 31, 2017, which
is due for repayment in March 2018, as per original schedule. The Group has
obtained a No Objection Certificate from the SBLC lenders as well as approval
from Reserve Bank of India for extension of SBLC from April 2018 to April 2023.
The Group believes that based on the strength of extended SBLC, the outstanding
borrowing of AERH can be extended/refinanced by the existing lenders or by new
lenders. AERH and its subsidiaries are engaged in dealing of WTGs in
international markets and the cash-flows generated from these business
activities will be used for serving the finance cost as well as towards part
repayment of outstanding debt of AERH. The ability of AERH to repay the
outstanding debt is primarily dependent on generation of cash-flows from
business operations in overseas market. The Company management believes that
AERH has reasonable business forecast over the next few years and estimates
that AERH will be able to refinance the outstanding debt, if required and meet
the debt obligations as and when they fall due and hence they believe that the
financial guarantee obligation of USD 538 million is not required to be
recognised in financial statements and it has been disclosed as contingent
liability.

From Auditors’ Report

Emphasis
of Matter

We draw attention to Note 6
of accompanying standalone Ind AS financial statements, in relation to
accounting of financial guarantee provided by the Company (along with its three
Indian subsidiaries and a jointly controlled entity) in respect of borrowing
availed by one of its subsidiary based in The Netherlands and disclosure of the
same as contingent liability as more fully described therein. Our opinion is not
qualified in respect of this matter.

Oil and Natural Gas Corporation Limited
(ONGC)

From Notes to Accounts

Investments
in subsidiaries, associates and joint ventures

When the Company issues
financial guarantees on behalf of subsidiaries, initially it measures the
financial guarantees at their fair values and subsequently measures at the
higher of:

i. the
amount of loss allowance determined in accordance with impairment requirements
of Ind AS 109 ‘Financial Instruments’; and

ii. the
amount initially recognized less, when appropriate, the cumulative amount of
income recognised in accordance with the principles of Ind AS 18 ‘Revenue

The Company records the
initial fair value of financial guarantee as deemed investment with a
corresponding liability recorded as deferred revenue under financial guarantee
obligation. Such deemed investment is added to the carrying amount of
investment in subsidiaries. Deferred revenue is recognized in the Statement of
Profit and Loss over the remaining period of financial guarantee issued as
other income.

Investments (Rs. in million)

Particulars

As at 31^st March, 2017

As at 31^st March, 2016

As at 1^st April, 2015

Other
Investments (Note 10.3)

24,029.50

73,572.84

66,702.89

Other
Investments (Rs. in million)

Particulars

As at 31^st March, 2017

As at 31^stMarch, 2016

As at 1^st April, 2015

(i)
Investments Deemed Equity –

Subsidiaries

Mangalore Refinery and Petrochemicals Limited

30.53

26.05

The amount of Rs.30.53 million
(Previous year Rs.26.05 million) shown as deemed equity investments denotes the
fair value of fees towards financial guarantee given for Mangalore Refinery and
Petrochemicals Limited without any consideration.

Vedanta Limited

From Notes to Accounts

Financial
Guarantees

Financial guarantees issued
by the Company on behalf of group companies are designated as ‘Insurance
Contracts’. The Company assess at the end of each reporting period whether its
recognized insurance liabilities (if any) are adequate, using current estimates
of future cash flows under its insurance contracts. If that assessment shows
that the carrying amount of its insurance liabilities is inadequate in the
light of the estimated future cash flows, the entire deficiency is recognised
in profit or loss.

The Company has issued
financial guarantees to banks on behalf of and in respect of loan facilities
availed by its group companies. In accordance with the policy of the Company
(refer note 3(j) the Company has designated such guarantees as ‘Insurance Contracts’.
The Company has classified financial guarantees as contingent liabilities.

Refer below for details of
the financial guarantees issued:

(Rs.in
Crore)

(list not
reproduced)

Wabag Limited

From Notes to Accounts

Financial guarantee
contracts issued by the Company are those contracts that require a payment to
be made to reimburse the holder for a loss it incurs because the specified
debtor fails to make a payment when due in accordance with the terms of a debt
instrument. Financial guarantee contracts are recognized initially as a
liability at fair value, adjusted for transaction costs that are directly
attributable to the issuance of the guarantee. Subsequently, the liability is
measured at the higher of the amount of loss allowance determined as per impairment
requirements of Ind-AS 109 and the amount recognized less cumulative
amortisation.

Other
Financial Liabilities (Rs. in lakhs)

Particulars

As at 31^st March, 2017

As at 31^stMarch, 2016

As at 1^st April, 2015

Current

Financial
guarantee obligation

1,446

1,398

Financial guarantee
obligation represents the loss allowance for expected credit losses on
financial guarantee provided by the Company to financial institutions for
banking facilities of its subsidiaries and joint venture.

Godrej Consumer Products Ltd.

From Notes to Accounts

Financial
Liabilities

Financial
guarantee contracts

Financial guarantee
contracts issued by the Company are those contracts that require specified
payments to be made to reimburse the holder for a loss it incurs because the
specified debtor fails to make a payment when due in accordance with the terms
of a debt instrument. Financial guarantee contracts are recognised initially as
a liability at fair value, adjusted for transaction costs that are directly
attributable to the issuance of the guarantee. Subsequently, the liability is
measured at the higher of the amount of loss allowance determined as per
impairment requirements of Ind-AS 109 and the amount recognised less cumulative
amortization. Where guarantees in relation to loans or other payables of
subsidiaries are provided for no compensation, the fair values are accounted
for as contributions and recognised as fees receivable under “other financial assets” or as a part of the cost of the
investment, depending on the contractual terms.

Contingent
Liabilities (Rs. in Crores)

Particulars

As at 31^st March, 2017

As at 31^stMarch, 2016

As at 1^st April, 2015

Guarantees
given on behalf of Subsidiaries

(list
not reproduced)

DLF Ltd.

From Notes to Accounts

Financial
guarantee contracts

Financial guarantee
contracts are those contracts that require a payment to be made to reimburse
the holder for a loss it incurs because the specified party fails to make a
payment when due in accordance with the terms of a debt instrument. Financial
guarantee contracts are recognised as a financial liability at the time the
guarantee is issued at fair value, adjusted for transaction costs that are
directly attributable to the issuance of the guarantee. Subsequently, the
liability is measured at the higher of the amount of expected loss allowance
determined as per impairment requirements of Ind AS 109 and the amount
recognised less cumulative amortisation.

Contingent
Liabilities and commitments (Rs. in lakhs)

Particulars

As at 31^st March, 2017

As at 31^stMarch, 2016

As at 1^st April, 2015

Guarantees
issued by the Company on behalf of:

Subsidiary
companies

9,86,232

1,121,001

8,98,735

BCAJ Admin

From Published Accounts

Section A: Qualified report on Unaudited financial results for interim period

Ricoh India Ltd (period 1st April 2015 to 30th September 2015) (as submitted to Stock exchanges on 19th May 2016)

Compilers’ Note

The disclosures given by the above company (as reproduced below) have created ripples in the accounting and auditing profession. The press and some corporate commentators have compared the developments as akin to the ‘Satyam’ fraud. The disclosures also leave a lot of questions unanswered about the role of the Board and the independent directors, the company management and the auditors.

From Notes to Unaudited Financial results

1. Subject to the observations below, the financial results have been prepared in accordance with the Generally Accepted Accounting Principles in India, the Accounting Standards specified u/s. 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rule, 2014 and the relevant provisions of the Act.

2. In November 2015 at a meeting with the Audit Committee, prior to the completion of their limited review of financial results relating to quarter and 6 months ended 30 September 2015, B S R & Co. LLP (“BSR”), the statutory auditors made certain observations which indicated that further procedures and investigations were required in respect of many transactions before it could be opined that the draft unaudited financial results are free of material misstatements and that they had been prepared and presented in accordance with applicable accounting standards and in accordance with the requirements of clause 41 of the listing agreement. In view of the above, the Company did not adopt the aforesaid financial results and it, through its Audit Committee appointed M/s S. S. Kothari & Mehta another audit firm to conduct a review of the observations of BSR as per Agreed upon Procedures. The report of M/s S. S. Kothari & Mehta was inconclusive and needed further investigation. Hence, unaudited financial results could not be finalized.

3. The Audit Committee, thereafter, appointed Shardul Amarchand Mangaldas & Co. (“SAM & Co.”) as independent legal counsel, and the said law firm appointed M/s PricewaterhouseCoopers Private Limited (“PwC”) for conducting a forensic review of the Company’s accounts:

(i) To identify whether the financial statements, and thereby the underlying books of account, of the Company have been misstated or misrepresented

(ii) To quantify the extent of misstatement and/ or misrepresentation including the personnel and entities involved

(iii) To identify the modus operandi of the alleged wrong doings and economic rationale for transactions leading to wrong doings, to the extent possible

(iv) To assess whether there was personal profiteering by the Company personnel. The period of PWC review was limited to 1 April 2015 to 30 September 2015.

4. Not reproduced

5. Not reproduced

6. PwC’s report contains only their preliminary findings and specifically states that further procedures were required covering more comprehensive information and further analysis of electronic documents and data extracted from various devices and certain unprocessed information. The preliminary findings in PwC Report inter alia indicate that unsupported out of books’ adjustments were made to the net sales, expenses, assets and liabilities, in order to report higher profits or to cover previously unreported losses; revenue was recorded based on orders in hand or on invoicing without dispatch/delivery of goods which may not be in conformity with company’s accounting policies on revenue recognition; very substantive back to back purchase/sales transactions with no / minimal value addition; unsupported and backdated transactions recorded in the books of accounts; nexus between the key managerial personnel, vendors and customers of the company; and cases of some customers having bogus addresses and in case of some vendors and customers’ undue favor of payment and other arrangements having been given and sale of non-existing products. Their report was submitted to SAM & Co, and the Audit Committee at a meeting of the Audit Committee held on 20th April 2016.

7. The audit Committee members were briefed on the outcome of the forensic investigation on April 20, 2016 and immediate disclosure of findings of PwC Indicating wrongdoing, were submitted by the Audit Committee to the Bombay Stock Exchange (“BSE”), the Securities and Exchange Board of India (SEBI) and the Ministry of Corporate Affairs or April 20, 2016. The BSE disclosure constitutes a qualifying statement for the financial results. In its letter to SEBI, the Company has requested SEBI to conduct an investigation to ascertain if the incorrect financial statements had any impact on the securities market and the investors, particularly under the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 and the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to the Securities Market) Regulations, 2003.

8. The disclosure made by the Audit Committee to the BSE on 20th April, 2016, amongst others, state that based on the review of the preliminary findings of PwC for the two quarters i.e. 1st April, 2015 to 30th September, 2015, the Audit Committee and the Board were of opinion that the books of account and other relevant books, papers and financial statement for the quarter ended 30th June, 2015 and 30th September, 2015 do not reflect true and fair view of the state of affairs of the Company.

9. The Company is investigating the extent of deviations from true and fair view and also the reasons for the same, including but not limited to, internal control issues, complacency of certain employees and suspicions of fraud. Investigations are ongoing and the financial results are based on current available information. Revisions in the financial results may be required based on the outcome of the investigations.

10. The PWC report as well as communications of the Company with the regulators were provided to B S R on 3 May 2016. Thereafter, the Company has received Form ADT – 4 regarding reporting of suspected offence involving fraud to the Central Government from B S R on 5 May 2016 as required by Rule 13(12)(a) of the Companies (Audit and Auditors) Rules, 2014. The management is in the process of providing its response thereto.

11. Not reproduced

12. Not reproduced

13. Not reproduced

14. The management has proceeded on the basis that the opening balances as at 1 April 2015 and those as at 1 July 2015 are correctly stated but this assumption may be proved incorrect in which case the accounts as presented above may undergo consequential changes.

15. The Auditors of the Company have carried out the Limited review of the above unaudited financial results for the half year ended on 30th September, 2015 in terms of the Clause 41 of the Listing Agreement.

16. Not reproduced

17. Not reproduced

From Independent Auditor’s Review Report

1. Not reproduced

2. The financial results for the three months ended 30 June 2016 which are included in the results for the six months period ended 30 September 2015 and periods earlier to 30 June 2015, set out in the accompanying Statement were reviewed/audited earlier by the then statutory auditors of the Company whose reports have been furnished to us. Attention is invited to notes forming part of the financial results wherein a large number of irregularities and suspected fraudulent transactions / observations have been summarised. Further, attention is invited to note 14 which states as below:

“The management has proceeded on the basis that the opening balances as at 1 April 2015 and those as at 1 July 2015 are correctly stated but this assumption may be proved incorrect in which case the accounts as presented above may undergo consequential changes.”

Consequently, the opening balances as of 1 April 2015 and 1 July 2015 may need substantive adjustments.

3. We conducted our review in accordance with the Standard Review Engagement (SRE) 2410, “Review of Interim Financial Information performed by the Independent Auditor of the Entity”, issued by the Institute of Chartered Accountants of India. This standard requires that we plan and perform the review to obtain moderate assurance as to whether the financial results are free of material misstatement. A review is limited primarily to inquiries of Company personnel and analytical procedures applied to financial data and thus provides less assurance than an audit. We have not performed an audit and accordingly, we do not express an audit opinion.

4. Attention is invited to Note 1 to 14 of the financial results which list a large number of irregularities and suspected fraudulent transactions / observations arising from our review procedures followed by investigation by independent experts and management assessment. In this regard, we state as below:

– The assumption regarding correctness of opening balances as at 1April 2015 and as at 1 July 2015 may be proved to be incorrect in which case the financial results as presented above may undergo substantive changes (refer to note 14);

– As per the management, the books of account and other relevant books, papers and financial statement for the quarter ended 30 June 2015 and 30 September 2015 do not reflect true and fair view of the state of affairs of the Company. (refer to note 8);

– The findings of our review procedures, those of the independent investigations and of the management (refer note 1 to 14) indicate a large number of irregularities and suspected fraudulent transactions in many areas.

In particular:
• unsupported out of books adjustments made to the net sales, expenses, assets and liabilities, in order to report higher profits or to cover previously unreported losses;
• revenue was recorded based on orders in hand or on invoicing without dispatch/delivery of goods. Revenue recognition in respect of composite contracts was on the basis of invoicing without an evaluation of linkage with performance as per terms of the contract. These may not be in conformity with generally accepted accounting principles in India;
• very substantive back to back purchases and sales transactions / rendering or receipt of services to customers / vendors having no / minimal value addition including with those having close connections / possible conflict of interest;
• inconsistencies in product pricing with market rates;
• unsupported and backdated transactions recorded in the books of accounts;
• nexus between then key managerial personnel, employees, vendors and customers of the company;
• cases of some customers having non-traceable addresses / having unrelated background;
• in case of some vendors and customers’ undue favour of payment and other arrangements having been given and sale of non-existing products; and
• certain entries recorded in the books of account without appropriate justification / proper supporting documents.

5. In relation to our review procedures pertaining to sales and purchases, we have not been provided with satisfactory explanation / information/ documentation such as:

– documentation and validation of information contained in customer evaluation form including basis of selection, acceptance of customers, assigning credit limit to the customers etc.;

– terms and conditions of the vendor/ customer contracts for sale and purchase of goods and services;

– carriers’ receipts for movement of goods, proof of delivery (POD) and customer acknowledgements etc.;

– identification of goods purchased/ sold;

– inventory records showing details of quantity purchased, sold and valuation thereof;

– periodic quantitative reconciliation of goods purchased/sold; non-recording of certain purchase invoices and corresponding credit notes;

– reconciliation of customer’s sub-ledgers with General ledger; and

– reconciliation of sales and purchase with the statutory records.

6. Certain large advances / balances of customers and vendors have not been reconciled. In the absence of appropriate supporting documentation / reconciliation / confirmation by the concerned party, we are unable to state whether adequate provision / adjustment therefor bas been made.

7. In our view, the internal controls both operating and financial including information technology controls require considerable strengthening. In particular, controls over maintenance of books of account, proper supporting documentation need a thorough review.

8. Attention is invited to segment disclosure made in the financial results based on the segments identified during the year ended 31 March 2015. We have not been provided with justification/ detailed analysis for identification and disclosure of such segments. Consequently, we are unable to comment as to whether the segments disclosed are in compliance with the requirements of Accounting Standard-17 ‘Segment reporting’ specified u/s. 133 of the Companies Act, 2013.

9. Attention is invited to note 7 that the Company has requested Securities Exchange Board of India to conduct an investigation to ascertain if the incorrect financial statements had any impact ‘on the securities market and the investors, particularly under the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, and the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to the Securities Market) Regulations, 2003. Pending the conduct of such investigation, if any, we are unable to comment on its impact on the financial results for the quarter and half year ended 30 September, 2015.

10. Basis the initial observations noted during the review of the financial results and issues highlighted in the preliminary findings, we have made the necessary reporting on 5 May 2016 to the Audit Committee as required by Rule 13(12)(a) of the Companies (Audit and Auditors) Rules, 20l4 [as amended by the Companies (Audit and Auditors) Amendment Rules, 2015]. Pending response from the Company, we are unable to comment on the magnitude, the period, the modus operandi, the persons involved and the consequential impact on tile financial results for the quarter and six months ended 30 September 2015.

11. Attention is invited to note 9 according to which the Company is investigating the extent of deviations from true and fair view and also the reasons for the same, including but not limited to, internal control issues, complacency of certain employees and suspicions of fraud. Investigations are ongoing and the financial results are based on current available information.

12. In view of the fact that the investigation are ongoing and because of substantive nature of the matters described in paragraphs 4 to 11 above, we are unable to quantify the impact of these possible adjustments to these financial results and conclude whether the going concern assumption is appropriate or not.

Because of the very substantive nature and significance of the matters described in paragraphs 2 to 12 above and because of the limitation on work performed by us, we have not been able to obtain moderate assurance as to whether the accompanying statement of unaudited financial results has been prepared in accordance with the applicable accounting standards and other recognized accounting practices and policies or that the unaudited financial results are free of material misstatement or state whether the unaudited financial results are presented in accordance with the requirements of Clause 41 of the Listing Agreement.

BCAJ Admin

From Published Accounts

Accounting Policy and disclosures for Leases of
land and other assets as per Ind AS (year ended 31st
March 2017)

ATUL LTD.

Consolidated financial statements

Significant Accounting Policies

As a lessee

Leases in which a significant portion of the risks and
rewards of ownership are not transferred to the Company
as lessee are classified as operating leases. Payments
made under operating leases (net of any incentives
received from the lessor) are charged to profit or loss
on a straight-line basis over the period of the lease
unless the payments are structured to increase in line
with expected general inflation to compensate expected
inflationary cost increases for the lessor.

As a lessor

Lease income from operating leases where the Company
is a lessor is recognised as income on a straightline
basis over the lease term, unless the receipts are
structured to increase in line with expected general
inflation to compensate for the expected inflationary
cost increases. The respective leased assets
are included in the Balance Sheet based on
their nature. Leases of property, plant and
equipment where the Company as a lessor
has substantially transferred all the risks
and rewards are classified as finance lease.
Finance leases are capitalised at the inception
of the lease at the fair value of the leased
property or, if lower, the present value of the
minimum lease payments. The corresponding
rent receivables, net of interest income,
are included in other financial assets. Each
lease receipt is allocated between the asset
and interest income. The interest income
is recognised in the Statement of Profit and
Loss over the lease period so as to produce
a constant periodic rate of interest on the remaining balance of the asset for each period.

Under combined lease agreements, land and building
are assessed individually. Lease rental attributable to the
operating lease are charged to Statement of Profit and
Loss as lease income, whereas lease income attributable
to finance lease is recognised as finance lease receivable
and recognised on the basis of effective interest rate.

Disclosures

Operating lease

The Company has taken various residential and office
premises under operating lease or leave and licence
Agreements. These are generally cancellable, having
a term between 11 months and 3 years and have no
specific obligation for renewal. Payments are recognised
in the Statement of Profit and Loss under ‘Rent’.

Finance lease

The Company has given a building on finance lease for a
term of 30 years.
Future minimum lease payments receivable under finance
leases together with the present value of the net minimum
lease payments (MLP) are as under:

Particulars	As at March 31, 2017		As at March 31, 2016		As at April 1, 2015
	Minimum lease payments	Present value of MLP	Minimum lease payments	Present value of MLP	Minimum lease payments	Present value of MLP
Not later than one year	0.20	0.20	–	–	0.20	0.20
Later than one year and not later than five years	0.40	0.34	0.40	0.35	0.40	0.33
Later than five years	2.00	0.84	2.20	0.94	2.20	0.88
Total minimum lease payments receivable	2.60	1.38	2.60	1.29	2.80	–
Less: Unearned finance Income	1.22	–	1.31	–	1.38	–

Particulars	As at March 31, 2017		As at March 31, 2016		As at April 1, 2015
	Minimum lease payments	Present value of MLP	Minimum lease payments	Present value of MLP	Minimum lease payments	Present value of MLP
Present value of minimum lease payments receivable	1.38	1.38	1.29	1.29	1.42	–
Less: Allowance for uncollectible lease payments	–	–	–	–	–	–
	1.38	1.38	1.29	1.29	1.42	–

The Company has taken on lease a parcel of land from
Gujarat Industrial Development Corporation for a period
of 99 years with an option to extend the lease by another
99 years on expiry of lease at a rental that is 100% higher
than the current rental. However, the Company has no
specific obligation for renewal. The Company believes
and has considered that such a lease of land transfers
substantially all of the risks and rewards incidental to
ownership of land, and has thus accounted for the same
as finance lease.

IDEA CELLULAR LTD.

Consolidated Financial Statements

Significant Accounting Policies

Leases

The Company evaluates whether an arrangement is
(or contains) a lease based on the substance of the
arrangement at the inception of the lease. An arrangement
which is dependent on the use of a specific asset or
assets and conveys a right to use the asset or assets,
even if it is not explicitly specified in an arrangement is (or
contains) a lease.

Leases are classified as finance lease whenever the
terms of the lease transfer substantially all the risks and
rewards of ownership to the lessee. All other leases are
classified as operating leases.

Company as a lessee Finance lease

Assets held under finance leases are initially recognised
as assets at the commencement of the lease at their fair
value or, if lower, at the present value of the minimum lease
payments. Lease payments are apportioned between
finance charges and reduction of the lease liability so as to achieve a constant rate of interest on
the remaining balance of the liability. Finance
charges are recognised in the Statement
of Profit and Loss, unless they are directly
attributable to qualifying assets, in which case
they are capitalised in accordance with the
Company’s general policy on borrowing costs.
Such assets are depreciated/amortised over
the period of lease or estimated useful life
of the assets whichever is less. Contingent
rentals are recognised as expenses in the
periods in which they are incurred.

Operating lease

Operating lease payments are recognised as an expense
in the statement of profit and loss on a straight-line basis
unless payments to the lessor are structured to increase
in line with expected general inflation to compensate for
the lessor’s expected inflationary cost increase; such
increases are recognised in the year in which such
benefits accrue. Contingent rentals arising, if any, under
operating leases are recognised as an expense in the
period in which they are incurred.

In the event that lease incentives are received to enter
into operating leases, such incentives are recognised
as a liability. The aggregate benefit of incentives is
recognised as a reduction of rental expense on a straightline
basis, except where another systematic basis is more
representative of the time pattern in which economic
benefits from the leased asset are consumed.

Company as a lessor Finance lease

Amounts due from lessees under finance leases are
recognised as receivables at the amount of the Company’s
net investment in the leases. Finance lease income is
allocated to accounting period so as to reflect a constant
periodic rate of return on the net investment outstanding
in respect of the lease.

Operating lease

Rental income from operating lease is recognised on a
straight-line basis over the lease term unless payments
to the Company are structured to increase in line
with expected general inflation to compensate for the
Company’s expected inflationary cost increase; such
increases are recognised in the year in which such
benefits accrue. Initial direct costs incurred in negotiating
and arranging an operating lease are added to the
carrying amount of the leased asset and recognised on
a straight-line basis over the lease term. Contingent rents are recognised as revenue in the period in which they are
earned.

Estimates and Judgments

Operating lease commitments – Company as lessee

The Company has entered into lease agreements for
properties and cell sites, where it has, on the basis of
evaluation of the terms and conditions of the arrangement
determined that the significant risks and rewards related
to the assets and properties are retained with the lessors.
Accordingly, such lease agreements are accounted for as
operating leases. Further details about operating lease
are given in Note 45.

Disclosures

Operating Lease

Company as lessee

The Company has entered into non-cancellable operating
leases for offices, switches and cell sites for periods
ranging from 36 months to 240 months.
Lease payments amounting to ₹52,522.45 million
(Previous year: ₹44,973.69 million) are included in rental
and passive infrastructure expenses in the statement of
profit and loss during the current year.

Future minimum lease rentals payable under noncancellable
operating leases are as follows:

Particulars	As at March 31, 2017	As at March 31, 2016	As at April 1, 2015
Within one year	48,254.95	42,264.91	36,965.54
After one year but not more than five years	140,612.85	122,015.51	120,216.08
More than five years	75,755.79	48,364.15	47,163.75

Company as lessor

The Company has leased certain Optical Fibre Cables
pairs (OFC) on Indefeasible Rights of Use (“IRU”) basis
and certain cell sites under operating lease arrangements.
The gross block, accumulated depreciation and
depreciation expense of the assets given on lease are
not separately identifiable and hence not disclosed.
Future minimum lease rentals receivable under
non-cancellable operating leases are as follows:

₹million
Particulars	As at March 31, 2017	As at March 31, 2016	As at April 1, 2015
Within one year	402.76	1,404.54	757.18
After one year but not more than five years	–	5,257.19	2,108.17
More than five years	–	5,140.92	2,136.62

The Company has composite IT outsourcing agreements
where in property, plant and equipment, computer
software and services related to IT has been supplied
by the vendor. Such property, plant and equipment
received have been accounted for as finance lease.
Correspondingly, such assets are recorded at fair value
at the time of receipt and depreciated on the stated useful
life applicable to similar IT assets of the company.

PVR LTD.

Consolidated financial statements

Significant accounting policies

The determination of whether an arrangement is
(or contains) a lease is based on the substance of
the arrangement at the inception of the lease. The
arrangement is, or contains, a lease if fulfilment of the
arrangement is dependent on the use of a specific asset
or assets and the arrangement conveys a right to use the
asset or assets, even if that right is not explicitly specified
in an arrangement.

Where the Company is the lessee Finance leases, which
effectively transfer to the Company substantially all the
risks and benefits incidental to ownership of the leased
item, are capitalised at the inception of the lease term at the
lower of the fair value of the leased property and present
value of minimum lease payments. Lease payments are
apportioned between the finance charges and reduction
of the lease liability so as to achieve a constant rate of
interest on the remaining balance of the liability. Finance
charges are recognised as finance costs in the Statement
of Profit and Loss. A leased asset is depreciated on a
straight-line basis over the useful life of the asset.

Leases where the lessor effectively retains substantially
all the risks and benefits of ownership of the leased
items are classified as operating leases. Operating lease
payments are recognised as an expense in the statement
of profit and loss on an ongoing basis.

Where the Company is the lessor

Leases in which the Company does not transfer
substantially all risks and benefits of ownership of the
assets are classified as operating lease.

Assets subject to operating leases are included in fixed
assets. Lease income is recognised in the Statement
of Profit and Loss on ongoing basis. Costs, including
depreciation are recognised as an expense in the
Statement of Profit and Loss. Initial direct costs such
as legal costs, brokerage costs, etc. are recognised
immediately in the Statement of Profit and Loss.

Disclosures

i. Rental expenses in respect of operating leases are
recognised as an expense in the Statement of Profit
and Loss and pre-operative expenditure (pending
allocation), as the case may be.

Operating Lease (for assets taken on lease)

Disclosure for assets taken under non-cancellable leases,
where the Company is presently carrying commercial
operations is as under, which reflects the outstanding
amount for non-cancellable period:

(₹ in crore)
Particulars	2016-17	2015-16
Lease payments for the year recognised in Statement of Profit and Loss (including deferred rent portion)	38,312	32,626
Lease payments for the year included in Capital work-in-progress	71	227
Minimum lease payments:
Within one year	23,106	19,162
After one year but not more than five years	67,950	54,163
More than five years	40,560	24,690

ii. Rental income/Sub-Lease income in respect of
operating leases are recognised as an income in the
Statement of Profit and Loss or netted off from rent
expense, as the case may be.

Operating Lease (for assets given on lease)

The Company has given various spaces under operating
lease agreements. These are generally cancellable on
mutual consent and the lessee can vacate the rented
property at any time. There is no escalation clause in the
lease agreement. There are no restrictions imposed by
lease arrangements.

(₹ in crore)
Particulars	2016-17	2015-16
Sub-lease rent receipts	1,015	1,061

The Company has given spaces of cinemas/food courts
under operating lease arrangements taken on lease or
being operated under revenue sharing arrangements.
The Company has common fixed assets for operating
multiplex/giving on rent. Hence, separate figures for the
fixed assets given on rent are not ascertainable.

iii. Finance lease: Company as lessee

The Company has finance leases contracts for plant and
machinery (Projectors). These leases involve significant
upfront lease payment, have terms of renewal and bargain
purchase option. However, there is no escalation clause.
Each renewal is at the option of lessee. Future minimum
lease payments (MLP) under finance leases together with
the present value of the net MLP are as follows:

₹ In lakhs
Particulars	March 31, 2017		March 31, 2016
	Minimum payments	Present value of MLP	Minimum payments	Present value of MLP
Within one year	899	524	813	433
After one year but not more than five years	3,259	2,537	3,145	2,282
More than five years	352	332	642	599
Total minimum lease payments	4,510	3,393	4,600	3,314
Less: amounts representing finance charges	(1,117)	–	(1,286)	–
Present value of minimum lease payments	3,393	3,393	3,314	3,314

There was no finance lease arrangement for the year
ended March 31, 2015.

THE INDIAN HOTELS COMPANY LTD.

Consolidated Financial statements

Significant accounting policies

Operating Lease

A Lease in which a significant portion of the risks and rewards of ownership are not transferred to the Company
is classified as operating lease. Payments made under
operating lease are charged to the Statement of Profit
and Loss on a straight line basis over the period of the
lease, unless the payments are structured to increase in
line with the expected general inflation to compensate for
the lessor’s expected inflationary cost increases.

For leases which include both land and building elements,
basis of classification of each element is assessed on the
date of transition, April 1, 2015, in accordance with Ind AS
101 First-time Adoption of Indian Accounting Standard.

Disclosures

In respect of a plot of land provided to the Company
under a licence agreement, on which the Company has
constructed a hotel, the licensor has made a claim of
₹ 344.50 crore to date, (13 times the previous annual
rental) for increase in the rentals with effect from 2006-
07. The Company believes these claims to be untenable.
The Company has contested the claim based upon
legal advice, by filing a suit in the Hon’ble High Court
of Judicature at Bombay on grounds of the licensor’s
inconsistent stand on automatic renewal of lease, levy
of lease rentals and method of computing such lease
rent, within the terms of the existing license agreement
as also a Supreme Court judgement on related matters.
Even taking recent enactments into consideration, in the
opinion of the Company, the computation cannot stretch
more than ₹ 86.36 crore (excluding interest/penalty), and
this too is being contested by the Company on merit.
Further, a “Notice of Motion” has been issued by the
Hon’ble High Court of Judicature at Bombay, inter alia,
for a stay against any further proceedings by the licensor,
pending a resolution of this dispute by the Hon’ble Bombay
High Court. In view of this, and based on legal advice,
the Company regards the likelihood of sustainability of
the lessor’s claim to be remote and the amount of any
potential liability, if at all, is indeterminate.

Note 32: Operating lease

The Company has taken certain vehicles, land and
immovable properties on operating lease. The leases of
hotel properties are generally long-term in nature with
varying terms and renewal rights expiring within five
years to one hundred & ninety eight years. On renewal,
the terms of the leases are renegotiated. The total lease
rent paid on the same is included under Rent and Licence
Fees forming part of Other Expenses (Refer Note No. 26,
Footnote (iv), Page 144).

The minimum future lease rentals payable in respect of
non-cancellable leases entered into by the Company to
the extent of minimum guarantee amount are as follows:—

Particulars	March 31, 2017	March 31, 2016	April 1, 2015
	₹ crore	₹ crore	₹ crore
Not later than one year	54.69	54.84	48.22
Later than one year but not later than five years	201.18	213.30	204.10
Later than five years	1,178.37	1,215.02	1,221.50
	1,434.24	1,483.16	1,473.82

In addition, in certain circumstances, the Company is
committed to making additional lease payments that
are contingent on the performance viz. gross operating
profits, revenues etc. of the hotels that are being leased.

Expenses Recognised in the statement of profit and loss:

Particulars	March 31, 2017	March 31, 2016
	₹ crore	₹ crore
Minimum Lease Payments/ Fixed Rentals	39.19	37.14
Contingent rents *	88.69	89.50
	127.88	126.64
* contingent on the performance viz. gross operating profits, revenues etc. of the hotels that are being leased.

WIPRO LTD.

Consolidated financial statements

Significant accounting policies

The determination of whether an arrangement is, or
contains, a lease is based on the substance of the
arrangement at the inception date. The arrangement
is, or contains a lease if, fulfilment of the arrangement
is dependent on the use of a specific asset or assets
or the arrangement conveys a right to use the asset or
assets, even if that right is not explicitly specified in an
arrangement.

Arrangements where the Company is the
lessee

Leases of property, plant and equipment, where the
Company assumes substantially all the risks and rewards
of ownership are classified as finance leases. Finance
leases are capitalised at lower of the fair value of the
leased property and the present value of the minimum lease payments. Lease payments are apportioned
between the finance charge and the outstanding liability.
The finance charge is allocated to periods during the
lease term at a constant periodic rate of interest on the
remaining balance of the liability.

Leases where the lessor retains substantially all the risks
and rewards of ownership are classified as operating
leases. Payments made under operating leases are
recognised in the Statement of Profit and Loss on a
straight-line basis over the lease term.

Arrangements where the Company is the lessor
In certain arrangements, the Company recognises
revenue from the sale of products given under finance
leases. The Company records gross finance receivables,
unearned income and the estimated residual value of
the leased equipment on consummation of such leases.
Unearned income represents the excess of the gross
finance lease receivable plus the estimated residual value
over the sales price of the equipment. The Company
recognises unearned income as finance income over the
lease term using the effective interest method.

Disclosures

Finance lease receivables

Finance lease receivables consist of assets that are
leased to customers for a contract term ranging from 1 to
7 years, with lease payments due in monthly or quarterly
installments. Details of finance lease receivables are
given below:

	March 31, 2017	March 31, 2016	April 1, 2015
Gross investment in lease
Not later than one year	₹2,060	₹2,222	₹3,685
Later than one year and not later than five years	2,725	3,127	3,108
Later than five years	–	–	73
Unguaranteed residual values	62	62	63
Unearned finance income	4,847 (319)	5,411 (413)	6,929 (569)
Net investment in finance receivable	₹4,528	₹4,998	₹6,360

Present value of minimum lease receivables are as
follows:

	*March 31,* *2017*	*March 31,* *2016*	*April 1,* *2015*
Present value of investment in lease
Payments receivables	₹ 4,528	₹ 4,998	₹ 6,360
Not later than one year	1,854	2,034	3,419
Later than one year and not later than five years	2,616	2,906	2,826
Later than five years	–	–	57
Unguaranteed residual values	58	58	58

Included in the consolidated balance sheet as follows:

March 31,

2017

March 31,

2016

April 1,

2015

Non-current

₹ 1,854

₹ 2,034

₹ 3,461

Current

₹ 2,674

₹ 2,964

₹ 2,899

Assets taken on lease

Finance leases:

The following is a schedule of present
value of minimum lease payments under finance leases,
together with the value of the future minimum lease
payments as of March 31, 2017, March 31, 2016 and April
1, 2015.

	*March 31,* *2017*	*March 31,* *2016*	*April 1,* *2015*
Present value of minimum lease payments
Not later than one year	₹ 3,623	₹ 3,133	₹ 1,660
Later than one year and not later than five years	4,657	5,830	3,218
Total present value of minimum lease payments	8,280	8,963	4,878
Add: Amount representing interest	437	578	345
Total value of minimum lease payments	₹ 8,717	₹ 9,541	₹ 5,223

Operating leases

The Company has taken office, vehicle and IT equipment
under cancellable and non-cancellable operating lease
agreements that are renewable on a periodic basis at the
option of both the lessor and the lessee. The operating
lease agreements extend up a maximum of fifteen years
from their respective dates of inception and some of these
lease agreements have price escalation clause. Rental
payments under such leases were ₹5,953, ₹5,184 and
₹4,727 during the years ended March 31, 2017, March
31, 2016 and April 1, 2015.

Details of contractual payments under non-cancellable
leases are given below:

	*March 31,* *2017*	*March 31,* *2016*	*April 1,* *2015*
Not later than one year	₹ 5,040	₹ 4,246	₹ 3,351
Later than one year and not later than five years	12,976	9,900	6,385
Later than five years	2,760	2,713	2,206
Total	₹ 20,776	₹ 16,859	₹11,942

Finance lease receivables

Leasing arrangements

Finance lease receivables consist of assets that are
leased to customers for contract terms ranging from 1 to
7 years, with lease payments due in monthly or quarterly
installments.

Finance leases

Obligation under finance lease is secured by underlying
assets leased. The legal title of these assets vests with
the lessors. These obligations are repayable in monthly,
quarterly and yearly installments up to year ending March
31, 2021. The interest rate for these obligations ranges
from 1.82% to 17.19%.

Operating leases

The Company leases office and residential facilities
under cancellable and non-cancellable operating lease
agreements that are renewable on a periodic basis at the
option of both the lessor and the lessee. Rental payments
under such leases are ₹2,878, ₹2,905 and ₹2,682 during
the years ended March 31, 2017, March 31, 2016 and
April 1, 2015.

BCAJ Admin

From Published Accounts

Section B:

Jindal Stainless Steel Ltd.

(31-3-2016)

– Composite scheme of Arrangement: Revision of
Financial Statements pursuant to section III and IV of the scheme becoming
effective (section I and II given effect earlier in same FY)

From Notes to Financial
Statements

27. Composite Scheme of Arrangement

1. A Composite
Scheme of Arrangement
(hereinafter referred to as “Scheme”) amongst Jindal Stainless Limited (the
Company/Transferor Company) and its three wholly owned subsidiaries namely
Jindal Stainless (Hisar) Limited (JSHL), Jindal United Steel Limited (JUSL) and
Jindal Coke Limited (JCL) under the provision of section 391-394 read with
section 100-103 of the Companies Act, 1956 and other relevant provision of
Companies Act, 1956 and/or Companies Act, 2013 has been sanctioned by the
Hon’ble High Court of Punjab & Haryana, Chandigarh vide its Order
dated 21^stSeptember, 2015, as amended vide order dated 12^thOctober, 2015.

Section
I and Section II of the Scheme became effective on 1^st November,
2015, operative from the appointed date i.e. close of business hours before
midnight of 31^stMarch, 2014.

Section
III of the scheme comprising Transfer of the Business undertaking 2 (as defined
in the scheme) of the Company comprising, inter-alia, of the Hot Strip
Plant of the Company located at Odisha and vesting of the same in Jindal United
Steel Limited (JUSL) on Going Concern basis by way of Slump Sale w.e.f.
appointed date i.e. close of business hours before midnight of 31^stMarch,
2015 and section IV of the Scheme comprising Transfer of the Business Undertaking
3 (as defined in the Scheme) of the Company comprising, inter-alia, of
the Coke Oven Plant of the Company Located at Odisha and vesting of the same
with Jindal Coke Limited (JCL) on Going Concern basis by way of Slump Sale
w.e.f. appointed date i.e close of business hours before midnight of 31^st
March, 2015. Section III and section IV of the Scheme has become effective on
24^th September, 2016 [i.e. on receipt of approvals from the Orissa
Industrial Infrastructure Development Corporation (OIIDCO) for the
transfer/grant of the right to use in the land on which Hot Strip (HSM Plant)
& Coke Oven Plants are located to JUSL & JCL respectively as specified
in the Scheme].

2. Pursuant
to the section I and section II of the Scheme becoming effective:

a) Against
amount of Rs. 36,618.67 lakh, the company is required to issue and allot
equity shares to JSHL at a price to be determined in accordance with chapter
VII of SEBI (ICDR) regulations 2009, with the record date jointly to be decided
by the board of directors of the Company and JSHL being considered as relevant
date as specified in the Scheme. The board of the Company and JSHL have, in
their respective meetings held on 6^th November, 2015, fixed 21^st
November, 2015 as the record date. However, since the price worked out for
issue of equity shares by the Company to JSHL, in terms of the provisions of
chapter VII SEBI (ICDR) was not reflective of the actual price of the equity
shares of the Company on EX-JSHL basis, therefore the allotment of equity shares
based on the aforesaid record date has not been pursued. Hence, pending
allotment by the Company of the aforesaid equity shares to JSHL as on 31^st
March, 2016, the same has been shown as “Share Capital Suspense Account”.
Subsequent to the Balance Sheet date, the company has allotted 16,82,84,309
nos. fully paid up equity shares of Rs. 2/- each @ 21.76 per share (including
premium of Rs.19.76 per share) on 3^rd July, 2016.

b) Out of Rs.
2,60,000.00 lakh payable by JSHL, Rs. 1,18,493.00 lakh
has been received upto 31^st March, 2016 and also balance amount of Rs.1,41,507.00
lakh has been received subsequent to balance sheet date.

c) In terms
of the Scheme, all the business and activities of Demerged Undertakings and
Business Undertaking 1 carried on by the Company on and after the appointed
date, as stated above, are deemed to have been carried on behalf of JSHL.
Accordingly, necessary effects had been given in the previous year accounts and
in these accounts on the Scheme becoming effective (read with note no.5 below).

3. Pursuant
to the section III and section IV of the Scheme becoming effective:

a) Business
undertaking 2 & Business undertaking 3 have been transferred to and vested
in JUSL & JCL respectively with effect from the Appointed Date i.e. close
of business hours before midnight of March 31, 2015 and the same has been given
effect to in these accounts.

b) (i) Business Undertaking 2 has been transferred at
a lump sum consideration of Rs. 2,41,267.33 lakh; out of this Rs.
2,15,000.00 lakh shall be paid by JUSL and against the balance amount of Rs.
26,267.33 lakh, the JUSL is to issue & allot to the Company
17,50,00,000 nos. 0.01% non-cumulative compulsorily convertible preference
shares having face value of Rs.10 each and 8,76,73,311 nos. 10%
non-cumulative non-convertible redeemable preference shares having face value
of Rs.10 each as specified in the Scheme, AND

(ii) Business undertaking 3 has been transferred at
a lump sum consideration of Rs. 49,264.71 lakh; out of this Rs. 37,500.00
lakh shall be paid by JCL and against the balance amount of Rs.
11,764.71 lakh, the JCL is to issue & allot to the Company 2,60,00,000
nos. 0.01% non-cumulative compulsorily convertible preference shares having
face value of Rs. 10 each and 9,16,47,073 nos. 10% non-cumulative non-convertible
redeemable preference shares having face value of Rs. 10 each as
specified in the Scheme. Pending allotment as stated above the same have been
shown as “Investment-pending Allotment”

c) On transfer of Business Undertaking 2 &
Business Undertaking 3, the differential between the book values of assets
& liabilities transferred and the lump sum consideration received as stated
above amounting to Rs. 36,259.75 lakh has been credited in the Statement
of Profit & Loss and included under Exceptional Item (Note no.30).

d) In terms of the Scheme, all the business and
activities of Business Undertaking 2 & Business Undertaking 3 carried on by
the company on and after the appointed date, as stated above, are deemed to have
been carried for and on behalf of JUSL & JCL respectively. Accordingly,
necessary effects have been given in these accounts on the Scheme becoming
effective.

4. The
necessary steps and formalities in respect of transfer of the properties,
licenses, approvals and investments in favour of JSHL, JUSL & JCL and
modification of charges etc. are under implementation.

5. While
according its approval for transfer/right to use of the land in the name of
JUSL & JCL Government of Odisha, Department of Steel & Mines vide
letter dated 16^th August, 2016, had put a condition that sections I
& II of the Scheme will not be carried out in so far as the mining lease of
the Company is concerned; accordingly transfer of the Mining Rights to Demerged
Undertakings (as referred in the Scheme) (Demerged undertaking transferred to
JSHL) is not been given effect, consequently:- (i) all mining activities in
relation to the Mining Rights continue to be carried out by the company (JSL);
and (ii) all assets (excluding fixed assets) and liabilities (including
contingent liabilities) in relation to the Mining Rights continue to be
recorded in the books of JSL; and (iii) all revenue and net profit: post 1^st
November 2015 on sections I & II of the scheme becoming effective are
recorded in the books of the company.

6. Post
Section III of the Scheme becoming effective, the Company has entered into an
agreement for Trolling of slabs got done from JUSL (Business Undertaking 2)
effective from 1^st April 2015, accordingly impact of the same amounting
to Rs. 35,262.50 lakh has been given under manufacturing expenses in
these accounts.

7. (A) Pursuant to the Scheme the effects on the
financial statements of operations carried out by the company for on behalf of
JUSL & JCL post the said appointed date have been given in these accounts
from the effective date (for the close of business hours before midnight of 31^st
March, 2015) are as summarised below:

Revenue items

Particulars (Post Appointed Period)

(Rs. in lakh)

2014-2015

Revenue

Nil

Expenses

Nil

Profit (Loss) before exceptional and
extraordinary items and tax

Nil

Exceptional Items – Gain/(Loss)

36,259.75

Profit before Tax

36,259.75

Tax Expenses (including deferred tax)

Nil

Profit after Tax

36,259.75

(B) As stated
in note no.1 above, the section III and section IV of the Scheme became
effective on 24^th September 2016, accordingly interest on amount
receivable will be accounted for.

8. The
financial statement of the Company for the year ended 31^st March,
2016 were earlier approved by the Board of Directors at their meeting held on
28^th May, 2016 on which the Statutory Auditors of the Company had
issued their report dated 28^th May, 2016. These financial statements
have been reopened and revised to give effect to the Scheme as stated in note
no.1 & 3 herein above.

From Auditors’ Report

Report
on the Standalone Financial Statements

We
have audited the accompanying REVISED standalone financial statements of JINDAL
STAINLESS LIMITED (“the Company”), which comprise the REVISED Balance Sheet as
at 31^stMarch, 2016, the REVISED Statement of Profit and Loss, the
REVISED Cash Flow Statement for the year then ended, and a summary of the
significant accounting policies and other explanatory information in which
impact of the Scheme (as stated in Note No.27) have been incorporated.

From Directors’ Report

Asset
Monetisation and Business Reorganisation Plan (AMP) and Composite Scheme of
Arrangement

The
Company, after having various rounds of discussions with the CDR Lenders, had
finalised a comprehensive plan of Asset Monetisation cum Business
Reorganisation Plan (“AMP”), which entailed monetisation of identified
business undertaking(s) of the Company through demerger/slump sale(s) and
utilisation of the proceeds of the slump sale(s) in reduction of debt of the
Company.

As
a part of the above said AMP, a Composite Scheme of Arrangement among the
Company and its three wholly owned subsidiary companies viz. Jindal Stainless
(Hisar) Limited (“JSHL”), Jindal United Steel Limited (“JUSL”)
and Jindal Coke Limited (“JCL”) and their respective creditors and
shareholders was undertaken which was approved by the Hon’ble High Court of
Punjab and Haryana at Chandigarh, vide its order dated 21^stSeptember,
2015 (as modified on 12^thOctober, 2015), Certified true copy of the
said Order was filed on 1^st November, 2015, with the office of
Registrar of Companies, NCT of Delhi and Haryana. Consequently, Section I
(pertaining to demerger of Mining Division and Ferro Alloys Division and
vesting the same in JSHL) and section II (pertaining to slump sale of
manufacturing facility at Hisar from the Company to JSHL) of the Scheme became
operative from the Appointed Date 1 i.e. close of business hours before
midnight of 31^st March, 2014. The Scheme envisaged demerger of
Mining Division including the Chromite Mines located at Sukinda and vesting the
same in JSHL, however, the Company did not receive approval from the Ministry
of Mines, Government of Odisha for transfer of the said Mines to JSHL,
therefore, the Board of Directors of the Company in its meeting held on 23^rd
November, 2016, in terms of clause 1.10 of section V of the Scheme, decided not to transfer the Mines of JSHL.

Section
III and IV of the Scheme with respect to JUSL and JCL respectively became
operative from Appointed Date 2 i.e. close of business hours before midnight of
31^st March, 2015, upon receipt of approval from Orissa Industrial
and Infrastructure Development Corporation Limited (OIIDCO), on 24^th
September, 2016, with respect to the transfer/right to use the land on which
Hot Strip Mill and Coke Oven Plant is located, from the Company to JUSL and JCL
respectively.

Post implementation of the
Scheme, the Company has already received an amount of Rs. 2,600 crore as
consideration for slump sale from JSHL, which has been utilised to prepay the
debts of the Company and accordingly the debt of the Company as on date has
been reduced to that extent. The Company will further receive an amount of Rs.
2,400 crore from JUSL and `Rs. 500 crore from JCL towards consideration of
slump sale and interest free security deposit for sharing infrastructure
facilities in due course and that amount shall also be utilised to prepay the
debts of the Company.

BCAJ Admin

From Published Accounts

Section B: Restatement of f inancial statements as per SEBI
directives pursuant to ‘Basis of Qualified Opinion’ – disclosures in
Consolidated Financial Statements GMR Infrastr uct ure Ltd . (31-3-2015)
From Notes to Consolidated Financial Statements

NOTE 30
During
the year ended 31st March, 2015, the Company (‘GIL’) received a letter
from National Stock Exchange of India Limited (‘NSE’) whereby Securities
and Exchange Board of India (‘SEBI’) directed NSE to advise the Company
to restate the consolidated financial statements of the Group for the
year ended 31st March, 2013 for the qualifications in the Auditor’s
Report for the year then ended in respect of the matters stated in the
Paragraph 1 and 2 of ‘Basis for Qualified Opinion’ in the said Auditor’s
Report, pursuant to the Paragraph 5(d)(ii) of the SEBI Circular
CIR/CFD/DIL/7/2012 dated August 13, 2012. Further, SEBI vide Circular
CIR/ CFD/DIL/9/2013 dated 5th June, 2013 had clarified that restatement
of books of account indicated in Paragraph 5 of the aforesaid circular
shall mean that the Company is required to disclose the effect of
revised financial accounts by way of revised proforma financial results
immediately to the shareholders through Stock Exchanges. However, the
financial effects of the revision may be carried out in the annual
accounts of the subsequent financial year as a prior period item.

In
response to its representations made, the Company received a letter
from SEBI dated 27th April, 2015, whereby SEBI has reiterated its
earlier advice for restatement of financial results, in terms of the
aforementioned circulars. Further, SEBI has advised the Company to
restate financial results for financial year 2012-13 and 2013-14 and the
effect of these restatement adjustments may be carried out in the
annual accounts of the financial year 2014-15, as a prior period item in
terms of the aforementioned circulars. With regard to matter described
in note 43(iii), the Group made adjustments in these consolidated
financial statements for the year ended 31st March, 2015. With regard to
the matter described in note 44(ii)(b), the Hon’ble High Court of
Delhi, while hearing the writ petition filed by the Group in this
regard, directed SEBI not to insist on restatement of accounts till the
next hearing date, which is scheduled on 4th September, 2015. Further,
the High Court of Delhi directed the Company that if the accounts for
2014-15 are prepared, the aforementioned issue will be reflected in the
accounts and the effect of both capitalisation and non-capitalisation on
the net worth will also be disclosed in due prominence, in the
financial accounts prepared by the Company. Refer note 44(ii)(b) for the
disclosure of such effects.

NOTE 44 – MATTERS RELATED TO CERTAIN POWER SECTOR ENTITIES

i) …

ii) a) …

b)
In respect of plant under construction at Rajahmundry, pending securing
supply of requisite natural gas, the Group has put on hold active
construction work of the plant. The management of the Group believes
that the indirect expenditure attributable to the construction of the
project and borrowing costs incurred during the period of uncertainty
around securing gas supplies qualifies for capitalisation under
paragraphs 9.3 and 9.4 of AS -10 and paragraphs 18 and 19 of AS -16. The
subsidiary setting up the plant had approached the Ministry of
Corporate Affairs (‘MCA’) seeking clarification/relaxation on
applicability of the aforementioned paragraphs to the gas availability
situation referred in note 44(ii)(a) above. MCA vide its General
Circular No. 35/2014 dated 27th August, 2014 on capitalisation under
AS-10 and capitalisation of borrowing cost during extended delay in
commercial production has clarified that only such expenditure which
increases the worth of the assets can be capitalised to the cost of the
fixed assets as prescribed by AS 10 and AS 16. Further, the circular
states that cost incurred during the extended delay in commencement of
commercial production after the plant is otherwise ready does not
increase the worth of fixed assets and therefore such costs cannot be
capitalised. The Group approached MCA seeking further clarification on
the applicability of the said Circular to its Rajahmundry plant and
pending receipt of requisite clarification, the Group has continued the
capitalisation of the aforesaid expenses of Rs.1,104.92 crore (including
Rs. 424.97 crore for the current year) cumulatively upto 31st March,
2015. Further as detailed in note 30 above, during the year ended 31st
March, 2015, the Company received a letter from NSE whereby SEBI has
directed NSE to advise the Company to restate the consolidated financial
statements of the Group for the year ended 31st March, 2013 as regards
the qualification on continuance of capitalization as stated aforesaid,
post cessation of active construction work. SEBI advised the Company
that the effect of these restatement adjustments may be carried out in
the annual accounts of the financial year 2014-15, as a prior period
item. The Company filed a writ petition with the Hon’ble High Court of
Delhi in this regard. In response to the writ petition filed by the
Company, the Hon’ble High Court of Delhi directed the Company that if
the accounts for 2014-2015 are prepared, the aforementioned issue will
be reflected in the accounts and the effect of both capitalisation and
non-capitalisation on the networth will also be disclosed in due
prominence, in the financial accounts prepared by the Company.
Accordingly the effect of charging off the above expenses to the
consolidated statement of profit and loss on the net worth of the Group
is disclosed below:

*
Net worth has been calculated as per the definition of net worth in
Guidance Note on “Terms used in Financial Statements” issued by the
Institute of Chartered Accountants of India.

From Auditors’ Report

Basis for Qualified Opinion

1.
As detailed in Note 44(ii)(b) to the accompanying consolidated
financial statements for the year ended 31st March, 2015, GMR
Rajahmundry Energy Limited (‘GREL’), a subsidiary of GIL, not audited by
us, has capitalised Rs. 424.97 crore and Rs. 1,104.92 crore for the
year ended and cumulatively upto 31st March, 2015 respectively towards
indirect expenditure and borrowing costs (net of income earned during
aforementioned period) incurred on a plant under construction where
active construction work has been put on hold pending securing supply of
requisite natural gas and has approached the Ministry of Corporate
Affairs (‘MCA’) seeking clarification on the applicability of the
General Circular 35/2014 dated 27th August, 2014 issued by MCA. However,
in our opinion, the aforesaid capitalisation of such expenses is not in
accordance with the relevant Accounting Standards. Had the aforesaid
expenditure not been capitalised, loss after tax and minority interest
of the Group for the year ended and cumulatively upto 31st March, 2015
would have been higher by Rs. 393.88 crore and Rs. 1,059.62 crore
respectively. In respect of the above matter, our audit report for the
year ended 31st March, 2014 was similarly qualified. In this regard,
also refer sub-paragraph 2 and 4 in Emphasis of Matter paragraph.

2.
As detailed in Note 43(iii) to the accompanying consolidated financial
statements for the year ended March 31, 2015, GMR Kishangarh Udaipur
Ahmedabad Expressways Limited (‘GKUAEL’), a subsidiary of GIL, not
audited by us, issued a notice of intention to terminate the Concession
Agreement with National Highways Authority of India (‘NHAI’) during the
earlier year and a notice of dispute to NHAI invoking arbitration
provisions of the Concession Agreement during the current year. Both the
parties have appointed their arbitrators and the arbitration process is
pending commencement.

As at 31st March, 2015, GKUAEL has
incurred and capitalised indirect expenditure and borrowing costs of
Rs.130.99 crore (including Rs. 6.56 crore incurred during the year ended
31st March, 2015) and has given capital advances of Rs. 590.00 crore to
its EPC Contractor. The Group also provided a bank guarantee of Rs.
269.36 crore to NHAI. Pursuant to the notice of dispute, GKUAEL
terminated the EPC contract on 15th May, 2015, transferred the aforesaid
project costs of Rs. 130.99 crore to claims recoverable and consequent
to the letter received from National Stock Exchange of India Limited
(‘NSE’), as referred in note 30 to the accompanying consolidated
financial statements, the Group has made a provision of Rs. 130.99 crore
towards such claims recoverable including Rs. 124.43 crore pertaining
to earlier years.

The notice of dispute and initiation of
arbitration proceedings, indicate the existence of a material
uncertainty that may cast a significant doubt about the going concern of
the GKUAEL and its impact on the net assets/bank guarantee provided by
the Group. Having regard to the uncertainty, we are unable to comment on
the final outcome of the matter and its consequential impact on the
consolidated financial statements for the year ended 31st March, 2015.
In respect of the above matter, our audit report for the year ended 31st
March, 2014 was similarly qualified. In this regard, also refer
sub-paragraph 2 in Emphasis of Matter paragraph.

3 and 4 – not reproduced

Qualified
Opinion In our opinion and to the best of our information and according
to the explanations given to us, except for the effect of the matters
described in sub-paragraphs 1 and 4 and the possible effect of the
matters described in sub-paragraphs 2 and 3 in the Basis for Qualified
Opinion paragraph, the aforesaid consolidated 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 consolidated state of affairs of the
Group as at 31st March, 2015, its consolidated losses and its
consolidated cash flows for the year ended on that date.

Emphasis of Matter
We
draw attention to the following matters in the notes to the
accompanying consolidated financial statements for the year ended 31st
March, 2015:

1. …

2. N ote 30 regarding the receipt of a
letter by GIL from NSE whereby Securities and Exchange Board of India
(‘SEBI’) has directed NSE to advise GIL to restate the consolidated
financial statements of the Group for the year ended 31st March, 2013
for qualifications in the Auditor’s Report referred in the
aforementioned note, within the period specified and in terms of clause
5(d)(ii) of the SEBI Circulars dated 13st August, 2012 and 5th June,
2013. The Group has made adjustments in these consolidated financial
statements with regard to the matter described in note 43(iii) to the
accompanying consolidated financial statements. With regard to the
matter described in note 44(ii) (b) to the accompanying consolidated
financial statements, the Hon’ble High Court of Delhi, while hearing the
writ petition filed by the Group, directed SEBI not to insist on
restatement of accounts till the next hearing date. Also refer
sub-paragraphs 1 and 2 in Basis for Qualified Opinion paragraph.

3. …

4.
N ote 44(ii)(a) regarding (i) cessation of operations and the losses
including cash losses incurred by GMR Energy Limited (‘GEL’) and GMR
Vemagiri Power Generation Limited (‘GVPGL’), subsidiaries of GIL, and
the consequent erosion of net worth resulting from the unavailability of
adequate supply of natural gas; and (ii) rescheduling of the commercial
operation date and the repayment of certain project loans by GREL,
pending linkage of natural gas supply. Continued uncertainty exists as
to the availability of adequate supply of natural gas which is necessary
to conduct operations at varying levels of capacity in the future and
the appropriateness of the going concern assumption is dependent on the
ability of the aforesaid entities to establish consistent profitable
operations as well as raising adequate finance to meet their short term
and long term obligations. The accompanying consolidated financial
statements for the year ended 31st March, 2015 do not include any
adjustments that might result from the outcome of this significant
uncertainty.

5 to 11 – not reproduced

Our opinion is not qualified in respect of the aforesaid matters.

BCAJ Admin

From Published Accounts

Section A:

Disclosures in financial statements regarding Transition
to IndAS

Tata Consultancy Services Ltd. (31-3-2017)

From Notes
forming part of
financial statements (unconsolidated)

3. Explanation of Transition to Ind AS

The transition as at April 1, 2015 to Ind AS was carried out
from Previous GAAP. The exemptions and exceptions applied by the Company in
accordance with Ind AS 101- First-time Adoption of Indian Accounting Standards,
the reconciliations of equity and total comprehensive income in accordance with
Previous GAAP to Ind AS are explained below.

Exemptions from retrospective application:

The Company has applied the following exemptions:

(a) Investments in subsidiaries, joint ventures
and associates

The Company has elected to adopt the
carrying value under Previous GAAP as on the date of transition i.e. April 1,
2015 in its separate financial statements.

(b) Business combinations

The Company has elected to apply Ind AS
103 – Business Combinations retrospectively to past business combinations from
April 1, 2013.

Reconciliations between Previous GAAP and Ind AS

(Rs. Crore)

(i) Equity reconciliation

Note

As at
March 31, 2016

As at
April 1, 2015

As reported under Previous
GAAP

Adjusted effect of CMC
Merger

58,867

–

45,416

810

Adjusted equity under Previous GAAP

Dividend (including dividend tax) Depreciation

Change in fair valuation of investments

Tax adjustments

Others

Equity under Ind AS

58,867

6,403

(440)

101

(1)

65,013

46,226

5,724

(537)

133

(6)

51,549

(ii) Total Comprehensive income
reconciliation

2016

Net Profit under Previous GAAP

Employee benefits

Depreciation

Change in fair valuation of investments

Tax adjustments

Others

Net profit under Ind AS

Other comprehensive income
Total comprehensive income
under Ind AS

22,883

122

(3)

(28)

23,075

(132)

22,943

(iii) Reconciliation of Statement Cash Flow

There are no material adjustments to the
Statements of Cash Flow as reported under the Previous GAAP.

Notes to reconciliations between Previous GAAP and Ind AS

(a) Dividend
(including dividend tax)

Under Ind AS, dividend to holders of
equity instruments is recognised as a liability in the year in which the
obligation to pay is established. Under Previous GAAP, dividend payable is
recorded as a liability in the year to which it relates. This has resulted in an
increase in equity by Rs. 6,403 crore and Rs. 5,724 crore (including dividend
declared by CMC Limited) as at March 31, 2016 and April 1, 2015 respectively.

(b) Depreciation

In April 2014, the Company revised its
method of depreciation from written down value to straight-line basis. This
change in method was retrospectively adjusted in accordance with the Previous
GAAP. Under Ind AS, the Company has elected to apply Ind AS 16-Property, plant
and equipment from the date of acquisition of property, plant and equipment and
accordingly the change in method has been prospectively applied as a change in
estimate. This has resulted in a decline in equity under Ind AS by Rs. 440 crore,
and Rs. 537 crore as at March 31, 2016, and as at April, 2015 respectively, and
increase in net profit by Rs. 97 crore for the year ended March 31, 2016.

Under Previous GAAP, current investments
were measured at lower of cost or fair value
and long term investments were measured at cost less diminution in value
which is other than temporary, under Ind AS Financial assets other than
amortised cost are subsequently measured at fair value.

The Company holds investment in
government securities with the objective of both collecting contractual cash
flows which give rise on specified dates to cash flows that are solely payments
of principal and interest on the principal amount outstanding and selling
financial assets. The Company has also made an irrevocable election to present
in other comprehensive income subsequent changes in the fair value of equity
investments not held for trading. This has resulted in increase in investment
revaluation reserve by Rs. 82 crore, and increase in investment revaluation
reserve by Rs. 4 crore as at March 31, 2016 and April 1, 2015 respectively.

Investment in mutual funds have been
classified as fair value through statement of profit and loss and changes in
fair value are recognised in statement of profit and loss. This has resulted in
increase in retained earnings of Rs.1 crore, and Rs. 5 crore as at March 31,
2016 and April 1, 2015 respectively, increase in net profit by Rs. 3 crore for
the year ended March 31,2016.

(d) Tax
adjustments

Tax adjustments include deferred tax
impact on account of difference between Previous GAAP and Ind AS. These
adjustments have resulted in an increase in equity under Ind AS by Rs. 101
crore and Rs. 133 crore as at March 31, 2016, and April 1, 2015 respectively
and decrease in net profit by Rs. 28 crore for the year ended March 31,2016.

(e) Employee benefits

Under
Previous GAAP, actuarial gains and losses were recognised in the statement of
profit and loss. Under Ind AS, the actuarial gains and losses form part of
re-measurement of net defined benefit liability/asset which is recognised in
other comprehensive income in the respective years. This difference has
resulted in increase in net profit
of Rs.122 crore for the year ended March 31, 2016. However, the same does not
result in difference in equity or total comprehensive income.

BCAJ Admin

From Published Accounts

Section A:
Disclosure in Directors’ Report on Internal Financial Controls for the financial year 2015-16

Compilers’ Note
In all the following cases, the report of the statutory auditors u/s. 143(3)(i) of the Companies Act, 2013 on Internal Financial Controls over Financial Reporting is unmodified.

Tata Consultancy Services Ltd.
The details in respect of internal financial control and their adequacy are included in the Management Discussion & Analysis, which forms part of this report.

Internal Financial Control Systems and their Adequacy

TCS has aligned its current systems of internal financial control with the requirement of Companies Act 2013, on lines of globally accepted risk based framework as issued by the committee of sponsoring organisations (COSO) of the treadway commission. The Internal Control – Integrated Framework (the 2013 framework) is intended to increase transparency and accountability in an organisation’s process of designing and implementing a system of internal control. The framework requires a company to identify and analyse risks and manage appropriate responses. The Company has successfully laid down the framework and ensured its effectiveness.

TCS’s internal controls are commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorised use, executing transactions with proper authorisation and ensuring compliance of corporate policies. TCS has a well-defined delegation of power with authority limits for approving revenue as well as expenditure. Processes for formulating and reviewing annual and long term business plans have been laid down. TCS uses a state-of-the-art enterprise resource planning (ERP) system to record data for accounting, consolidation and management information purposes and connects to different locations for efficient exchange of information. It has continued its efforts to align all its processes and controls with global best practices.

Our management assessed the effectiveness of the Company’s internal control over financial reporting (as defined in Clause 17 of SEBI Regulations 2015) as of March 31, 2016. The assessment involved self-review, peer review and external audit.

Deloitte Haskins & Sells LLP, the statutory auditors of TCS has audited the financial statements included in this annual report and has issued an attestation report on our internal control over financial reporting (as defined in section 143 of Companies Act 2013).

TCS has appointed … to oversee and carry out internal audit of its activities. The audit is based on an internal audit plan, which is reviewed each year in consultation with the statutory auditors … and the audit committee. In line with international practice, the conduct of internal audit is oriented towards the review of internal controls and risks in its operations such as software delivery, accounting and finance, procurement, employee engagement, travel, insurance, IT processes, including most of the subsidiaries and foreign branches.

TCS also undergoes periodic audit by specialised third party consultant and professional for business specific compliance such as quality management, service management, information security, etc.

The audit committee reviews reports submitted by the management and audit reports submitted by internal auditors and statutory auditors. Suggestions for improvement are considered and the audit committee follows up on corrective action. The audit committee also meets TCS’ statutory auditors to ascertain, inter alia, their views on the adequacy of internal control systems and keeps the board of directors informed of its major observations, periodically.

Based on its evaluation (as defined in section 177 of Companies Act 2013 and Clause 18 of SEBI Regulations 2015), our audit committee has concluded that, as of March 31, 2016, our internal financial controls were adequate and operating effectively.

Vedanta Ltd.

Internal financial Controls

The Board of Directors (Board) has devised systems, policies and procedures / frameworks, which are currently operational within the Company for ensuring the orderly and efficient conduct of its business, which includes adherence to Company’s policies, safeguarding assets of the Company, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial information. In line with best practices, the Audit Committee and the Board reviews these internal control systems to ensure they remain effective and are achieving their intended purpose. Where weaknesses, if any, are identified as a result of the reviews, new procedures are put in place to strengthen controls. These controls are in turn reviewed at regular intervals.

The systems / frameworks include proper delegation of authority, operating philosophies, policies and procedures, effective IT systems aligned to business requirements, an internal audit framework, an ethics framework, a risk management framework and adequate segregation of duties to ensure an acceptable level of risk. Documented controls are in place for business processes and IT general controls. Key controls are tested by entities to assure that these are operating effectively. Besides, the Company has also adopted an SAP GRC (Governance, Risk and Compliance) framework to strengthen the internal control and segregation of duties/access. It also follows a half-yearly process of management certification through the Control Self-Assessment framework, which includes financial controls/exposures.

The Company has documented Standard Operating Procedures (SOP) for procurement, project / expansion management capital expenditure, human resources, sales and marketing, finance, treasury, compliance, safety, health, and environment (SHE), and manufacturing.

The Group’s internal audit activity is managed through the Management Assurance Services (‘MAS’) function. It is an important element of the overall process by which the Audit Committee and the Board obtains the assurance on the effectiveness of relevant internal controls.

The scope of work, authority, and resources of MAS are regularly reviewed by the Audit Committee. Besides, its work is supported by the services of leading international accountancy firms.

The Company’s system of internal audit includes: covering monthly physical verification of inventory, a monthly review of accounts and a quarterly review of critical business processes. To enhance internal controls, the internal audit follows a stringent grading mechanism, focusing on the implementation of recommendations of internal auditors. The internal auditors make periodic presentations on audit observations, including the status of follow-up to the Audit Committee.

The Company is required to comply with the provisions of the Companies Act, 2013, as regards maintaining adequate internal financial controls over financial reporting (ICOFR). The Company is also required to comply with the Sarbanes Oxley Act section 404, which pertains to ICOFR. Through the SOX 404 compliance programme, which is aligned to the COSO framework, the Audit Committee and the Board also gains assurance from the management on the adequacy and effectiveness of ICOFR.

In addition, as part of their role, the Board and its Committees routinely monitor the Group’s material business risks. Due to the limitations inherent in any risk management system, the process for identifying, evaluating, and managing the material business risks is designed to manage, rather than eliminate risk. Besides it is created to provide reasonable, but not absolute assurance against material misstatement or loss.

Since the Company has strong internal control systems which get further accentuated by review of SEBI Regulations, Companies Act, 2013 & SOX compliance by the Statutory Auditors, the CEO and CFO give their recommendation for strong internal financial control to the Board.

Based on the information provided, nothing has come to the attention of the Directors to indicate that any material breakdown in the function of these controls, procedures or systems occurred during the year under review. There have been no significant changes in the Company’s internal financial controls during the year that have materially affected, or are reasonably likely to materially affect its internal financial controls.

There are inherent limitations to the effectiveness of any system of disclosure, controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their objectives. Moreover, in the design and evaluation of the Company’s disclosure controls and procedures, the management was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Asian Paints Ltd .

Details on Internal Financial Controls Related to Financial Statements

Your Company has put in place adequate internal financial controls with reference to the financial statements, some of which are outlined below.

Your Company has adopted accounting policies which are in line with the Accounting Standards prescribed in the Companies (Accounting Standards) Rules, 2006 that continue to apply u/s. 133 and other applicable provisions, if any, of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 and relevant provisions of the Companies Act, 1956, to the extent applicable. These are in accordance with generally accepted accounting principles in India. Changes in policies, if any, are approved by the Audit Committee in consultation with the Statutory Auditors.

The policies to ensure uniform accounting treatment are prescribed to the subsidiaries of your Company. The accounts of the subsidiary companies are audited and certified by their respective Statutory Auditors for consolidation.

Your Company operates in SAP, an ERP system, and has many of its accounting records stored in an electronic form and backed up periodically. The ERP system is configured to ensure that all transactions are integrated seamlessly with the underlying books of account. Your Company has automated processes to ensure accurate and timely updation of various master data in the underlying ERP system. Your Company has a robust financial closure selfcertification mechanism wherein the line managers certify adherence to various accounting policies, accounting hygiene and accuracy of provisions and other estimates.

Your Company operates a shared service center which handles all payments made by your Company. This center ensures adherence to all policies laid down by the management.

Your Company in preparing its financial statements makes judgments and estimates based on sound policies and uses external agencies to verify/ validate them as and when appropriate. The basis of such judgments and estimates are also approved by the Statutory Auditors and Audit Committee.

The Management periodically reviews the financial performance of your Company against the approved plans across various parameters and takes necessary action, wherever necessary.

Your Company has a code of conduct applicable to all its employees along with a Whistle Blower Policy which requires employees to update accounting information accurately and in a timely manner. Any non-compliance noticed is to be reported and actioned upon in line with the Whistle Blower Policy.

Your Company gets its Standalone accounts audited every quarter by its Statutory Auditors.

BCAJ Admin

From Published Accounts

SECTION A:

REPORTING AS PER REVISED INTERNATIONAL AUDITING STANDARDS (ISAS) ON AUDIT REPORTING

Compilers’ Note
The International Auditing and Assurance Standards Board (IAASB) has issued revised and new International Standards on Auditing (ISAs) for audit reporting. These audit reporting ISAs are applicable for all reports issued after 15th December 2016 onwards.

With a view to align the Standards on Auditing (SAs) in India, ICAI has also issued revised reporting standards which are effective for audits of financial statements for periods beginning on or after April 1, 2018.

One of the key features of the revised audit reports is the inclusion of a paragraph called “Key Audit Matters” (KAM). KAM are defined as those matters that, in the auditor’s professional judgment, were of most significance in the audit of the financial statements of the current period. KAM are selected from matters communicated with TCWG.

Given below are some illustrations of the KAM paragraph included in the audit reports of some listed entities in the UAE for audit reports issued after 15th December 2016 for the year 2016.

EMIRATES ISLAMIC BANK PJSC
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditors’ responsibilities for the audit of the consolidated financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial statements. The result of our audit procedures, including the procedures performed to address the matters below, provide the basis of our audit opinion on the accompanying consolidated financial statements.

(a) Impairment of financing and investing receivables
Due to the inherently judgmental nature of the computation of impairment provisions for financing and investing receivables, there is a risk that the amount of impairment may be misstated. The impairment of financing and investing receivables is estimated by management through the application of judgment and the use of subjective assumptions. Due to the significance of financing and investing receivables and related estimation uncertainty, this is considered a key audit risk. The corporate financing and investing receivables portfolio generally comprise larger receivables that are monitored individually by management. The assessment of financing and investing receivables loss impairment is therefore based on management’s knowledge of each individual borrower. However, retail financing and investing receivables generally comprise much smaller value receivables to a much greater number of customers. Provisions are not calculated on an individual basis, but are determined by grouping product into homogeneous portfolios. The portfolios are then monitored through delinquency statistics, which drive the assessment of financing and investing receivables loss provision. The portfolios which give rise to the greatest uncertainty are typically those where impairments are derived from collective models, are unsecured or are subject to potential collateral shortfalls.

The risks outlined above were addressed by us as follows:
– For corporate customers, we tested the key controls over the credit grading process, to assess if the risk grades allocated to the counterparties were appropriate. We then performed detailed credit assessment of all financing and investing receivables in excess of a defined threshold and financing and investing receivables in excess of a lower threshold in the watch list category and impaired category together with a selection of other financing and investing receivables.

– For retail customers, the impairment process is based on projecting losses based on prior historical payment performance of each portfolio, adjusted for current market conditions. We have tested the accuracy of key data from the portfolio used in the models and reperformed key provision calculations.

– We compared the Group’s assumptions for collective impairment allowances to externally available industry, financial and economic data. As part of this, we critically assessed the Group’s estimates assumptions, specifically in respect to the inputs to the impairment models and the consistency of judgement applied in the use of economic factors, loss emergence periods and the observation period for historical default rates. We have made use of specialists to assess the appropriateness of the collective impairment calculation methodology.

Other information
Management is responsible for the other information. Other information consists of the information included in the Group’s 2016 Annual Report, other than the consolidated financial statements and our auditors’ report thereon. We obtained the report of the Bank’s Board of Directors, prior to the date of our auditors’ report, and we expect to obtain the remaining sections of the Group’s 2016 Annual Report after the date of our auditors’ report.

NATIONAL GENERAL INSURANCE CO (PSC)
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

1. Insurance contract liabilities

Refer to note 5 and 13 of the financial statements.

Valuation of these liabilities involves significant judgement, and requires a number of assumptions to be made that have high estimation uncertainty. This is particularly the case for those liabilities that are recognised in respect of claims that have occurred, but have not yet been reported (“IBNR”) to the Company. IBNR and life assurance fund is calculated by an independent qualified external actuary for the Company.

Small changes in the assumptions used to value the liabilities, particularly those relating to the amount and timing of future claims, can lead to a material impact on the valuation of these liabilities and a corresponding effect on profit or loss. The key assumptions that drive the reserve calculations include loss ratios, estimates of the frequency and severity of claims and, where appropriate, the discount rates for longer tail classes of business.

The valuation of these liabilities depends on accurate data about the volume, amount and pattern of current and historical claims since they are often used to form expectations about future claims. If the data used in calculating insurance liabilities, or for forming judgements over key assumptions, is not complete and accurate then material impacts on the valuation of these liabilities may arise.

Our response: Our audit procedures supported by our actuarial specialists included:

– evaluating and testing of key controls around the claims handling and case reserve setting processes of the Company. Examining evidence of the operation of controls over the valuation of individual reserve for outstanding claims and consider if the amount recorded in the financial statements is valued appropriately;

– obtaining an understanding of and assessing the methodology and key assumptions applied by the management. Independently re-projecting the reserve balances for certain classes of business;

– assessing the experience and competence of the Company’s actuary and degree of challenge applied through the reserving process;

– checking sample of reserves for outstanding claims through comparing the estimated amount of the reserves for outstanding claims to appropriate documentation, such as reports from loss adjusters; and

– assessing the Company’s disclosure in relation to these liabilities including claims development table is appropriate.

2. Insurance and other receivables

Refer to note 4, 5 and 11 of the financial statements.

The Company has significant premium and insurance receivables against written premium policies. There is a risk over the recoverability of these receivables. The determination of the related impairment allowance is subjective and is influenced by judgements relating to the probability of default and probable losses in the event of default.

Our response:
– our procedure on the recoverability of insurance and other receivables included evaluating and testing key controls over the processes designed to record and monitor insurance receivables;

– testing the ageing of trade receivables to assess if these have been accurately determined. Testing samples of long outstanding trade receivables where no impairment allowance is made with the management’s evidences to support the recoverability of these balances;

– obtaining balance confirmations from the respective counterparties such as policyholders, agents and brokers;

– verifying payments received from such counterparties post year end;

– considering the adequacy of provisions for bad debts for significant customers, taking into account specific credit risk assessments for each customer based on period overdue, existence of any disputes over the balance outstanding, history of settlement of receivables liabilities with the same counterparties; and

– discussing with management and reviewing correspondence, where relevant, to identify any disputes and assessing whether these were appropriately considered in determining the impairment allowance.

3. Valuation of investment properties

Refer to note 5 and 9 of the financial statements.

The valuation of investment properties is determined through the application of valuation techniques which often involve the exercise of judgement and the use of assumptions and estimates.

Due to the significance of investment properties and the related estimation uncertainty, this is considered a key audit matter.

Investment properties are held at fair value through profit or loss in the Company’s statement of financial position and qualify under Level 3 of the fair value hierarchy as at 31st December 2016.

Our response:
– We assessed the competence, independence and integrity of the external valuers and read their terms of engagement with the Company to determine whether there were any matters that might have affected their objectivity or may have imposed scope limitations on their work:

– We obtained the external valuation reports for all properties and confirmed that the valuation approach is in accordance with RICS’ standards and is suitable for use in determining the fair value in the statement of financial position;

– We carried out procedures to test whether property specific standing data supplied to the external valuers by management is appropriate and reliable; and

– Based on the outcome of our evaluation, we determined the adequacy of the disclosure in the financial statements.
MASHREQBANK PSC
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key Audit
Matter

How our
Audit Addressed the Key Audit Matters

Impairment
of loans and advances and islamic financing

The management
exercises significant judgment when determining both when and how much to
record as loan impairment provisions.
Because of the significance of these judgements and the size of loans
and advances and Islamic financing, the audit of allowance for related
impairment provisions is a key area of focus. At 31^st December
2016, the total of gross loans and advances and Islamic finance was AED 64
billion (2015: AED 63 billion) against which allowance for impairment
provisions of AED 3.3 billion were recorded (2015: AED 2.8 billion).
Judgement is applied to determine appropriate parameters and assumptions used
to calculate impairment.

The accounting
policies and critical judgments relative to the calculations of the
impairment provisions on loans and advances and Islamic financing are
summarised in Note 3.14 and Note 4.1 to the consolidated financial statements
respectively.

The Group uses two
methods in its calculations of impairment provisions on loans and advances
and Islamic financing:

Individually assessed facilities

These represent
mainly corporate facilities which are assessed individually by the Group’s
Credit Risk Unit in order to determine whether there exists any objective
evidence that a loan is impaired.

Impaired
facilities are measured based on the present value of expected future cash
flows discounted at the original effective interest rate or at the observable
market price, if available, or at the fair value of the collateral if the
recovery is entirely collateral dependent.

Impairment loss is
calculated as the difference in between the facilities carrying value and its present value or recoverable
amount calculated as above.

Collectively assessed facilities

The management of
the Group assesses, based on historical experience and the prevailing
economical and credit conditions, the magnitude of performing retail and wholesale facilities which may be impaired
but not identified as of the reporting date.

Allowances against
performing loans and advances are reassessed on a periodical basis using
modelled basis for different portfolios with common features and allowances are adjusted accordingly based
on the judgment of management and
guidance received from the Central Bank of the UAE.

Our audit
procedures included the assessment of controls over the approval, recording
and monitoring of loans and advances, and evaluating the methodologies,
inputs and assumptions used by the Group in calculating collectively assessed
impairments, and assessing the adequacy of impairment allowances for individually assessed loans
and advances.

We tested the
design, implementation and operating effectiveness of the key controls to
determine which loans and advances are impaired and provisions against those
assets. These included testing:

u System-based and manual
controls over the timely recognition of impaired loans and advances;

u Controls over the impairment
calculation models including data inputs;

u Controls over
collateral valuation estimates

u Controls over governance and
approval process related to impairment provisions, including continuous
reassessment by the management.

We also assessed
whether the financial statement disclosures appropriately reflect the Group’s
exposure to credit risk.

Individually assessed facilities

We tested a sample
of individual facilities (including loans that had not been identified by
management as potentially impaired) to form our own assessment as to whether
impairment events had occurred and to assess whether adequate impairments
provisions had been recorded in a timely manner.

Where impairment
had been identified, we tested the estimation of the future expected cash
flows prepared by management to support the calculation of impairment,
challenging the assumptions, including realisation of collateral held. This
work involved assessing the work performed by external experts used by the
Group to value the collateral.

We examined a
sample of facilities which had not been identified by management as potentially impaired and formed our own
judgment as to whether that was appropriate to support management’s
conclusion.

Collectively assessed facilities

For the collective
impairment models used by the Group, we tested a sample of the data used in
the models as well as evaluating the model methodology and re-performing the
calculations. For the key assumptions used in the model, we challenged
management to provide objective evidence that they were appropriate and
included all relevant risks. Further, we considered our industry experience
and knowledge to consider the appropriateness of the provision.

We recalculated
the collective impairment provision as per the Bank’s policies and IFRS and
compared it with the calculations as per UAE Central Bank to ensure adequacy
of the provision.

We performed
certain test procedures to ensure past due payments are reflected in the
right bucket. We have also involved our IT auditors to provide us assurance
on the accuracy of the ageing reports generated by the system and its related
configuration.

Valuation
of financial instruments including derivatives

The fair value of
financial instruments is determined through the application of valuation
techniques which often involve the exercise of judgement by management and
the use of assumptions and estimates. Due to the significance of financial
instruments (financial instruments measured at fair value represent 3% of
total assets) and the related estimation uncertainty, this is considered a
key audit risk. Fair values are generally obtained by reference to quoted
market prices, third party quotes, discounted cash flow models and recognised pricing models as appropriate.

Our audit
procedures included the assessment of controls over the identification,
measurement and management of valuation risk, and evaluating the
methodologies, inputs and assumptions used by the Group in determining fair
values. For the Group’s fair value models, we assessed the appropriateness of
the models and inputs. We compared observable inputs against independent
sources and externally available market data.

For a sample of
instruments with the assistance of our own valuation specialists, we
critically assessed the assumptions and models used, by reference to what we
considered to be available alternative methods and sensitivities to key
factors.

We have also
assessed the adequacy of the Bank’s disclosures including the accuracy of the
categorisation into the fair value measurement hierarchy and adequacy of the
disclosure of the valuation techniques, significant unobservable inputs,
changes in estimate occurring during the period and the sensitivity to the
key assumptions.

Valuation of Insurance contract liabilities

As at 31^st December 2016,
net insurance contract liabilities amounted to AED 1.5 billion, as detailed
in note 18 to these consolidated
financial statements.

As set out in note 3.l8 and note 4.6,
valuation of these liabilities requires professional judgment and also
involve number of assumptions made by management.

This is particularly the case for
those liabilities that are based on the best-estimate of technical reserves
that includes ultimate cost of all claims incurred but not settled at a given
date, whether reported or not, together with the related claims handling
costs and related technical reserves. A range of methods are used by
management and the internal actuary /
independent external actuary to determine these provisions. Underlying these
methods are a number of explicit or implicit assumptions relating to the
expected settlement amount and settlement patterns of claims.

Furthermore, valuation of life
insurance contract liabilities involves complex and subjective judgement made
by management and the internal actuary
/ independent external actuary about variety
of uncertain future outcomes, including the estimation of economic
assumptions, such as investment
return, discount rates, and operating
assumptions, such as expense, mortality and persistency. Changes in
these assumptions can result in
material impacts to the valuation of these liabilities.

The valuation of these liabilities
also depends on accurate data about
the volume, amount and pattern of current and historical claims since they
are often used to form expectations about future claims. As a result of all
of the above factors, insurance contract liabilities represent a significant risk
for the Group.

Our audit procedures included:

u Testing the underlying Group
data to source documentation.

u Evaluating and testing of
key controls around the claims handling and case reserve setting processes of
the Group.

u Evaluating and testing of
key controls designed to ensure the integrity of the data used in the
actuarial reserving process.

u Checking samples of claims
case reserves through comparing the estimated amount of the case reserve to
appropriate documentation, such as reports from loss adjusters.

u Re-performing
reconciliations between the claims data recorded in the Group’s systems and
the data used in the actuarial reserving calculations.

In addition, with
the assistance of our actuarial specialists, we:

u performed necessary reviews
to ascertain whether the results are appropriate for financial disclosure.

u reviewed the actuarial
report compiled by the independent external actuaries of the Group and
calculations underlying these provisions, particularly the following areas;

• appropriateness
of the calculation methods and approach (actuarial best practice)

• review
of assumptions

• sensitivities
to key assumptions

• risk
profiles

• consistency
between valuation periods

• general
application of financial and mathematical
rules

IT systems and controls over financial reporting

We identified IT systems and controls
over financial reporting as an area of focus because the Bank’s financial
accounting and reporting systems are vitally dependent on complex technology
due to the extensive volume and variety of transactions which are processed
daily and there is a risk that automated accounting procedures and related
internal controls are not accurately designed and operating effectively. A
particular area of focus related to logical access management and segregation
of duties. The incorporated key controls are essential to limit the potential
for fraud and error as a result of change to an application or underlying
data. Our audit approach relies on automated controls and therefore
procedures are designed to test access and control over IT systems.

We assessed and
tested the design and operating effectiveness of the controls over the continued integrity of the IT
systems that are relevant to financial reporting. We examined the framework
of governance over the Group’s IT organisation and the controls over program
development and changes, access to programs and data and IT operations,
including compensating controls where required. We also tested the accuracy and
completeness of key computer generated reports heavily used in our testing
such as aging report of overdue loans and advances.

In events
deficiencies are noted during our testing affecting applications and
databases, we performed a combination of controls testing and substantive
testing in order to determine whether we could place reliance on the
completeness and accuracy of system generated information. In addition and
where appropriate, we extended the scope of our substantive audit procedures.

BCAJ Admin

From Published Accounts

Option at transition date available in Ind AS 101 “First
time Adoption of Indian Accounting Standards”, used to substitute fair value as
deemed cost for Property, Plant and Equipment and Investments with
corresponding impact of retained earnings on transition date

Reliance Industries Ltd. (Year ended 31^st March
2017)

Transition to Ind AS:

The Company has adopted
Ind AS with effect from 1^stApril 2016 with comparatives being
restated. Accordingly, the impact of transition has been provided in the
Reserves as at 1^stApril 2015 and all the periods presented have
been restated. The reconciliation between Ind AS and the previous Indian GAAP
for profits and reserves was first presented in Q1 FY 2016-17, under limited
review by the auditors. The audited reconciliation of convergence to Ind AS is
presented below along with the additional details.

RECONCILIATION OF PROFIT AND OTHER EQUITY BETWEEN Ind AS AND PREVIOUS INDIAN GAAP FOR
EARLIER PERIODS AND AS AT MARCH 31, 2016

(Rs. Crore)

Sr. No.

Nature of adjustments

Note ref.

Profit
reconciliation

Year ended

31-Mar-16

Other Equity

As at

31-Mar-16

Net profit/Other Equity as per Previous Indian GAAP

27,417

236,944*

Change in accounting policy for Oil
& Gas Activity – From full Cost Method (FCM) to Successful Efforts Method
(SEM)

279

(20,217)

Fair valuation as deemed cost for
Property, Plant and Equipment

–

41,292

Fair Valuation for Financial Assets

III

167

4,110

Deferred Tax

(349)

(10,588)

Others

(130)

(783)

Total

(33)

13,814

Net profit before OCI/Other Equity as per Ind AS

27,384

250,758

*Including share application
money pending allotment.

Notes:

I. Change in accounting policy for Oil & Gas
Activity – From Full Cost Method (FCM) to Successful Efforts Method (SEM):
The impact on account of change in accounting policy from FCM to SEM is
recognised in the Opening Reserves on the date of transition and consequential
impact of depletion and write-offs is recognised in the Profit and Loss
Account. Major differences impacting such change of accounting policy are in
the areas of;

– Expenditure on surrendered blocks, unproved
wells and abandoned wells, which has been expensed under SEM.

– Depletion on producing property in SEM is
calculated using Proved Developed Reserve, as against Proved Reserve in FCM.

II. Fair valuation as deemed cost for Property,
Plant and Equipment: The Company have considered fair value for properties,
viz, land admeasuring over 30,000 acres, situated in India, with impact of Rs.
41,292 crore in accordance with stipulations of Ind AS 101 with the resultant
impact being accounted for in the reserves.

III. Fair valuation for Financial Assets: The
Company has valued financial assets (other than investment in subsidiaries,
associate and joint ventures which are accounted at cost), at fair value.
Impact of fair value changes as on the date of transition, is recognised in
opening reserves and changes thereafter are recognised in Profit and Loss
Account or Other Comprehensive Income, as the case may be.

IV. Deferred Tax: The impact of transition
adjustments together with Ind AS mandate of using balance sheet approach
(against profit and loss approach in the previous GAAP) for computation of
deferred taxes has resulted in charge to the Reserves, on the date of
transition, with consequential impact to the Profit and Loss Account for the
subsequent periods.

V. Others: Other adjustments primarily
comprise of:

a. Attributing time value of money to Assets
Retirement Obligation: Under Ind AS, such obligation is recognised and measured
at present value. Under previous Indian GAAP, it was recorded at cost. The
impact for the periods subsequent to the date of transition is reflected in the
Profit and Loss Account.

b. Loan processing fees / transaction cost: Under
Ind AS, such expenditures are considered for calculating effective interest
rate. The impact for the periods subsequent to the date of transition is
reflected in the Profit and Loss Account.

Tata Steel Ltd. (Year ended 31^st March 2017)

Reconciliation between
Standalone/Consolidated financial results as reported under erstwhile Indian
GAAP (referred to as ‘I GAAP’) and Ind AS are summarised as below:

(a) Profit reconciliation

Rs. Crores

Particulars

Standalone Financial Year ended on 31.03.2016

Consolidated Financial year ended on 31.03.2016

Net profit as per I GAAP

4,900.95

(3,049.32)

Reversal
of gain on sale of equity instruments classified as fair value through OCI

(3,570.51)

(3,570.39)

Additional
depreciation and amortisation on fair value as deemed cost of property, plant
and equipment

(967.46)

7,207.40

Increase/(decrease)
in defined benefit cost

5.01

(1,707.18)

Others

(50.22)

(110.02)

Tax
effect on above adjustments

637.88

732.42

Net Profit as per Ind AS

955.65

(497.09)

Other
Comprehensive Income as per Ind AS

(3,407.13)

(1,898.17)

Total Comprehensive Income as per Ind AS

(2,451.48)

(2,395.26)

Other Comprehensive Income primarily includes impact of fair
valuation of quoted non-current investments and re-measurement gains/losses on
actuarial valuation of post-employment defined benefits. The consolidated other
comprehensive income also includes effect of foreign currency translation on
consolidation.

(b) Equity Reconciliation

Rs. Crore

Standalone

Consolidated

Particulars

As on 31.03.2016

As on 01.04.2015

As on 31.03.2016

Equity as per I GAAP

70,476.72

31,349.41

28,478.86

Fair
valuation / Amortised cost of Financial Assets / Liabilities

3,929.62

10,458.08

3,904.78

Deemed
cost of Property, plant and equipment and Investments [Note (i)]

(24,582.16)

13,956.40

21,012.11

Re-classification
of perpetual securities

2,275.00

Reversal
of proposed dividend and tax thereon

935.15

943.15

946.37

Fair
valuation of business combinations

–

(7,229.09)

(7,677.03)

Others

(421.70)

2,614.85

1,836.36

Tax impact on above adjustments

(3,700.25)

(6,399.99)

(6,262.96)

Equity as per Ind AS

48,912.38

47,967.81

44,513.49

Note (i): In accordance with Ind AS 101 “First time
Adoption of Indian Accounting Standards”, the Company has elected to treat fair
value as deemed cost for certain items of its property, plant and equipment and
investments held in certain subsidiaries as at
April 01, 2015.

The net changes on account of the election in
the stand-alone consolidated financial statement resulted in an increase in
deemed cost of property, plant and equipment and a decrease in the deemed cost
of investments.

BCAJ Admin

FROM PUBLISHED ACCOUNTS

Disclosure
related to new and amendments to Ind AS which are not applied as they are effective for periods
beginning on or after 1^st April
2018

Compilers’ Note

Paragraph 30 of Ind AS 8
‘Accounting Policies, Changes in Accounting Estimates and Errors’, states as
follows: “When an entity has not applied a new Ind AS that has been issued but
is not yet effective, the entity shall disclose:

(a) this fact; and

(b) known or reasonably estimable
information relevant to assessing the possible impact that application of the
new Ind AS will have on the entity’s financial statements in the period of
initial application.”

Given below are disclosures by 2
companies as per the above requirement.

Tata
Consultancy Services Ltd (31^st March 2018)

From Notes to Standalone
Financial Statements

Recent
Indian Accounting Standards (Ind AS)

Ministry of Corporate Affairs
(“MCA”) through Companies (Indian Accounting Standards) Amendment
Rules, 2018 has notified the following new and amendments to Ind ASs which the
Company has not applied as they are effective for annual periods beginning on
or after April 1, 2018:

u Ind AS 115 Revenue from
Contracts with Customers.

u Ind AS 21 The effect of changes in Foreign Exchange
rates.

Ind AS 115 – Revenue from
Contracts with Customers

Ind AS 115 establishes a single
comprehensive model for entities to use in accounting for revenue arising from
contracts with customers. Ind AS 115 will supersede the current revenue
recognition standard Ind AS 18 Revenue, Ind AS 11 Construction Contracts when
it becomes effective.

The core principle of Ind AS 115 is
that an entity should recognise revenue to depict the transfer of promised
goods or services to customers in an amount that reflects the consideration to
which the entity expects to be entitled in exchange for those goods or
services. Specifically, the standard introduces a 5-step approach to revenue
recognition:

u Step 1: Identify the
contract(s) with a customer

u Step 2: Identify the
performance obligation in contract

u Step 3: Determine the
transaction price

u Step 4: Allocate the
transaction price to the performance obligations in the contract

u Step 5: Recognise revenue
when (or as) the entity satisfies a performance obligation

Under Ind AS 115, an entity
recognises revenue when (or as) a performance obligation is satisfied, i.e.
when ‘control’ of the goods or services underlying the particular performance
obligation is transferred to the customer.

The Company has completed its
evaluation of the possible impact of Ind AS 115 and will adopt the standard
with all related amendments to all contracts with customers retrospectively
with the cumulative effect of initially applying the standard recognised at the
date of initial application. Under this transition method, cumulative effect of
initially applying IND AS 115 is recognised as an adjustment to the opening
balance of retained earnings of the annual reporting period. The standard is
applied retrospectively only to contracts that are not completed contracts at
the date of initial application. The Company does not expect the impact of the
adoption of the new standard to be material on its retained earnings and to its
net income on an ongoing basis.

Ind AS 21 – The effect of
changes in Foreign Exchange rates

The amendment clarifies on the
accounting of transactions that include the receipt or payment of advance
consideration in a foreign currency. The appendix explains that the date of the
transaction, for the purpose of determining the exchange rate, is the date of initial
recognition of the non-monetary prepayment asset or deferred income liability.
If there are multiple payments or receipts in advance, a date of transaction is
established for each payment or receipt. TCS Limited is evaluating the impact
of this amendment on its financial statements.

Infosys
Ltd. (31^st March 2018)

From Notes to Standalone
Financial Statements

Recent
accounting pronouncements

Appendix B to Ind AS 21, Foreign
currency transactions and advance consideration:

On March 28, 2018, Ministry of
Corporate Affairs (“MCA”) has notified the Companies (Indian
Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21,
Foreign currency transactions and advance consideration which clarifies the
date of the transaction for the purpose of determining the exchange rate to use
on initial recognition of the related asset, expense or income, when an entity
has received or paid advance consideration in a foreign currency. The amendment
will come into force from April 1, 2018. The Company has evaluated the effect
of this on the financial statements and the impact is not material.

Ind AS 115- Revenue from
Contract with Customers:

On March 28, 2018, Ministry of
Corporate Affairs (“MCA”) has notified the Ind AS 115, Revenue from
Contract with Customers. The core principle of the new standard is that an
entity should recognise revenue to depict the transfer of promised goods or
services to customers in an amount that reflects the consideration to which the
entity expects to be entitled in exchange for those goods or services. Further,
the new standard requires enhanced disclosures about the nature, amount, timing
and uncertainty of revenue and cash flows arising from the entity’s contracts
with customers.

The standard permits two possible
methods of transition:

Retrospective approach – Under this
approach the standard will be applied retrospectively to each prior reporting
period presented in accordance with Ind AS 8- Accounting Policies, Changes in
Accounting Estimates and Errors

Retrospectively
with cumulative effect of initially applying the standard recognised at the
date of initial application (Cumulative catch – up approach) –

The effective date for adoption of
Ind AS 115 is financial periods beginning on or after April 1, 2018.

The Company will adopt the standard
on April 1, 2018 by using the cumulative catch-up transition method and
accordingly comparatives for the year ending or ended March 31, 2018 will not
be retrospectively adjusted. The effect on adoption of Ind AS 115 is expected
to be insignificant.

BCAJ Admin

FROM PUBLISHED ACCOUNTS

Illustration of Disclosures and Audit
Opinion in case of company under Corporate Insolvency Resolution Process (“CIRP
Process”)

Bhushan Steel Limited
(Year ended 31st March 2018)

From Notes to
Financial Statements

28.

Exceptional items (Rs. in Lakh)

Year
ended Year ended

31^st
March, 2018 31^stMarch, 2017

(i) …

(ii) ….

(iii) Other exceptional items 234,732.49 –

Note:

(iii) Other exceptional
items for the year ended 31^stMarch,
2018 include prior period items of Rs. 201,909.65 Lakh comprising of the
following:

a) Amortisation of leasehold land accounted as
operating lease – The Company has taken land properties on operating lease in
earlier years, which earlier were accounted as finance lease. Upon change in
their classification as operating lease, the cumulative effect of amortisation
from inception until previous year ended 31^stMarch, 2017 has
been recognised in current year’s profit or loss in ‘exceptional items’.
Further, these leasehold land properties were recognised at fair value on
transition to Ind AS as on 1^st April 2015 and such fair valuation
adjustment has also been reversed in current year’s profit or loss in
‘exceptional items’.

b) Accounting effect of oxygen plant accounted as
finance lease – The Company entered into sale and leaseback arrangement for
oxygen plant in earlier years which was accounted as operating lease. However,
the terms of the lease require such arrangement to be classified as finance
lease. Consequently, the asset has been recognised with corresponding finance
lease obligation. Cumulative effect of reversal of operating lease rentals and
booking of depreciation and finance cost from inception until previous year ended
31^st March, 2017 has been recognised in current year’s profit or
loss in ‘exceptional items’.

42. A corporate insolvency
resolution process (“CIRP”) under the Insolvency and Bankruptcy Code, 2016 was
initiated against the Company vide an order of the Principal Bench of the
National Company Law Tribunal (“NCLT”) dated 26^th July, 2017.
Subsequent to the year-end, on 15^thMay, 2018, the NCLT has approved
the terms of the Resolution Plan submitted by Tata Steel Limited (“TSL”), which
provides, inter alia, the acquisition of the Company by TSL, through its
wholly owned subsidiary Bamnipal Steel Limited. The approval of the Resolution
Plan subsequent to 31^st March, 2018 has been considered as a
non-adjusting event for the purpose of financial statements for the year ended
31^stMarch, 2018. Pursuant to such approval of the Resolution Plan,
the financial statements for the year ended 31^stMarch, 2018 have
been prepared on a going concern basis.

44. The Company has
defaulted in repayment of debts, redemption of debentures and pay interest
thereon, the Directors of the Company were disqualified from being appointed as
Directors in terms of section 164(2) of the Companies Act. Subsequent to the
year end, pursuant to the NCLT order dated 15^th May, 2018, the
erstwhile Directors of the Company are deemed to have resigned/vacated the
office. Hence, none of the erstwhile Directors continue as Members of the
Board.

From Auditors’ Report

Basis for Qualified
Opinion

8. As explained in Note
28(iii) to the standalone financial statements, the Company has accounted for
certain prior period errors in the financial statements for the year ended 31^st
March 2018. Under Ind AS 8, “Accounting policies, changes in accounting
estimates and errors”, errors that occurred prior to 1^st April 2016
should have been retrospectively corrected by restating the balances of
respective assets and liabilities and equity as at 1^st April 2016
and errors that occurred in year ended 31^st March 2017 should have
been retrospectively corrected by restating the comparative amounts as at 31^st
March 2017 and for the year then ended.

Had the prior period
errors been appropriately accounted for in accordance with Ind AS 8:

Other non-current assets, non-current
borrowings and other financial liabilities as at 1^st April 2016
would have increased by Rs. 18,814.00 lakh, Rs. 89,645.86 lakh and Rs. 2,962.18
lakh, respectively and property, plant and equipment, deferred tax liabilities
and equity as at that date would have decreased by Rs. 121,349.09 lakh,

Rs. 2,775.54 lakh and Rs. 192,367.59 lakh respectively;

Depreciation, finance costs and deferred tax
credit for the year ended 31^st March 2017 would have increased by
Rs. 9,486.52 lakh, Rs. 12,277.82 lakh and Rs. 2,257.94 lakh respectively and
other expenses for the year then ended would have decreased by Rs. 14,997.82
lakh respectively. Accordingly, the loss after tax for the year ended 31^st
March 2017 would have increased by Rs. 4,508.58 lakh;

Other non-current assets, non-current
borrowings and other financial liabilities as at 31^st March 2017
would have increased by Rs. 18,571.82 lakh, Rs. 86,074.90 lakh and Rs. 3,570.96
lakh, respectively and property, plant and equipment, deferred tax liabilities
and equity as at that date would have decreased by Rs. 130,835.61 lakh, Rs.
5,033.48 lakh and Rs. 196,876.17 lakh respectively; and

Exceptional items in the statement of profit
and loss for the year ended 31^st March 2018 would have decreased by
Rs. 201,909.65 lakh and accordingly, loss after tax would have decreased by Rs.
196,876.17 lakh.

Further, as at 31^st
March 2017, the Company had classified certain financial liabilities as
non-current liabilities even though the Company was in breach of material
provisions of certain long-term loan arrangements and the lenders had not
agreed, before the date of approval of the financial statements for the year
then ended, to not demand payment as a consequence of the breach. Accordingly,
the liabilities towards such lenders had become payable on demand, and in
accordance with the requirements of Ind AS 1, ‘Presentation of financial
statements’, should have been classified as current liabilities. In the absence
of the requisite information, the impact of such misstatement on the balance
sheet as at 31^st March 2017 cannot be ascertained.

Qualified Opinion

9. In our opinion and to
the best of our information and according to the explanations given to us,
except for the effects (to the extent ascertained) of the matter described in
the Basis for Qualified Opinion paragraph above, the aforesaid standalone
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 including Ind AS specified u/s. 133 of
the Act, of the state of affairs (financial position) of the Company as at 31^st
March 2018, and its loss (financial performance including other comprehensive
income), its cash flows and the changes in equity for the year ended on that
date.

Emphasis of Matter

10. We draw attention to
Note 42 to the standalone financial statements which describes the status of
Corporate Insolvency Resolution Process that the Company underwent, which was
subsequently concluded on 15^th May 2018. We also draw attention to
Note 28 to the standalone financial statements which describes certain related
exceptional items (other than the prior period errors dealt with above)
recognised during the year ended 31^st March 2018.

Our opinion is not
modified in respect of these matters.

From Directors Report

Auditors

…. has audited the book of
accounts of the Company for the financial year ended 31^stMarch,
2018 and has issued a qualified auditors’ report thereon. The qualifications in
the auditor’s report are as given hereunder:

a) The statutory auditors of the Company have
expressed a qualified opinion on the standalone and consolidated financial
results of the Company for the year ended 31^st March, 2018. The
cumulative impact of the same on turnover, total expenditure, profit or loss
and earning per share of the Company for the year ended is Rs. Nil, Rs.
2,019.11 crore, Rs. 1,968.76 crore and decrease of Rs. 86.92 per share
respectively. As the qualification pertains to the prior period adjustments in
the financial results for the year ended 31^stMarch, 2018, there is
no cumulative impact thereof on the balance sheet of the Company as of that
date.

b) ….

c) …..

BCAJ Admin

FROM PUBLISHED ACCOUNTS

Audit
Reporting as per revised Standard on Auditing (SA 701)

Compilers’
Note

With a
view to align the Standards on Auditing (SAs) in India, ICAI has also issued
revised reporting standards which are effective for audits of financial
statements for periods beginning on or after 1^stApril, 2017. The
said date was subsequently deferred by 1 year to now become effective for
audits of financial statements for periods beginning on or after 1^stApril,
2018. ICAI has also issued an implementation guide to SA 701.

One of the
key features of the revised audit reports is the inclusion of a paragraph
called “Key Audit Matters” (KAM). KAM are defined as those matters that, in the
auditor’s professional judgment, were of most significance in the audit of the
financial statements of the current period. KAM are selected from matters
communicated with TCWG.

Given
below is an illustration of the KAM paragraph included in the audit of interim
consolidated financial statements.

Infosys
Ltd: (9 months ended 31^st December, 2018)

Key
Audit Matters

Key audit matters are those
matters that, in our professional judgment, were of most significance in our
audit of the financial statements of the current period. These matters were
addressed in the context of our audit of the interim consolidated financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.

KEY AUDIT MATTER

RESPONSE TO KEY AUDIT MATTER

Accuracy of revenues and onerous obligations in
respect of fixed price contract involves critical estimates

Estimated effort is a critical estimate to determine revenues
and liability for onerous obligations.
This estimate has a high inherent uncertainty as it requires
consideration of progress of the contract, efforts incurred till date and
efforts required to complete the remaining contract performance obligations.

Refer Notes 1.5a and 2.16 to the Interim Consolidated Financial
Statements.

Principal Audit Procedures

Our
audit approach was a combination of test of internal controls and substantive
procedures which included the following:

? Evaluated the design of internal controls
relating to recording of efforts incurred and estimation of efforts required
to complete the performance obligations.

?Tested the access and
application controls pertaining to time recording, allocation and budgeting
systems which prevents unauthorised changes to recording of efforts incurred.

? Selected a sample of
contracts and through inspection of evidence of performance of these
controls, tested the operating effectiveness of the internal controls
relating to efforts incurred and estimated.

? Selected a sample of
contracts and performed a retrospective review of efforts incurred with
estimated efforts to identify significant variations and verify whether those
variations have been considered in estimating the remaining efforts to
complete the contract.

? Reviewed a sample of
contracts with unbilled revenues to identify possible delays in achieving
milestones, which require change in estimated efforts to complete the
remaining performance obligations.

? Performed analytical
procedures and test of details for reasonableness of incurred and estimated
efforts.

Conclusion

Our procedures did not identify any material exceptions.

Reasonableness of carrying amount of assets
reclassified from “held for sale”

Carrying amounts of assets reclassified from “held for sale” is
at the lower of cost and recoverable amounts.

Recoverable amounts of assets reclassified from “held for sale”
have been estimated using management’s assumptions relating to business
projections which consist of significant unobservable inputs.

Refer Note 1.5f and 2.1.2 to the Interim Consolidated Financial
Statements.

Principal Audit Procedures

Our audit procedures consisted of challenging management’s key
assumptions relating to business projections and other inputs used by the
external valuer in computing the value in use to determine the recoverable
amounts. We have also considered the sensitivity to reasonable possibility of
changes in key assumptions and inputs to ascertain whether these possible
changes have a material effect on the recoverable amounts.

Conclusion

The assumptions and inputs have been appropriately considered in
estimating the recoverable amounts.

BCAJ Admin

FROM PUBLISHED ACCOUNTS

REPORTING AND DISCLOSURES IN QUARTERLY CONSOLIDATED
RESULTS FOR A MATERIAL EVENT OCCURRING AFTER THE END OF THE QUARTER (PERIOD AND
QUARTER ENDED 30^th SEPTEMBER, 2019)

BHARTI AIRTEL LTD.

From: Notes below statement of audited consolidated
results

(A) Details of the specific
event and implications of these on these financial results

On October 24, 2019, the Honourable Supreme Court of India delivered a
judgment in relation to a long outstanding industry-wide case upholding the
view considered by Department of Telecommunications (‘DoT’) in respect of the
definition of Adjusted Gross Revenue (‘AGR’) (‘Court Judgment’). The Hon’ble
Supreme Court has allowed a period of three months to the affected parties to
pay the amounts due to DoT. This Court Judgment has significant financial
implications on the group.

The management is reviewing its options and remedies available,
including but not limited to filing petitions before the Supreme Court and
seeking other reliefs, with others affected in the industry, from the
government. As on the date, the management understands that the government has
formed a high-level Committee of Secretaries across Ministries to assess the
stress in the industry and recommend suitable measures.

In the absence of available reliefs, the group has, in these financial
results, provided for an additional amount of Rs. 168,150 million (comprising
of principal of Rs. 32,070 million, interest of Rs. 70,000 million, penalty of
Rs. 24,920 million, and interest on penalty of Rs. 41,160 million) as a charge
to the statement of profit and loss, with respect to the license fee payable as
estimated based on the Court Judgment. In addition, an amount of Rs. 116,350
million (comprising of principal of Rs. 29,570 million, interest of Rs. 52,190
million, penalty of Rs. 12,680 million, and interest on penalty of Rs. 21,910
million) with respect to spectrum usage charges (‘SUC’), based on the
definition of AGR, has further been provided as a charge to the statement of
profit and loss as estimated, albeit the group believes SUC is a charge
related to use of spectrum and should be levied only on the AGR earned from
wireless access subscribers / services. These provisions have been made without
prejudice to the group’s right to
contest DoT’s demands on facts as well as on rights available in law.

Accordingly, in the absence of available reliefs, with respect to the
operations of the group, the liabilities / provisions as at September 30, 2019
aggregate Rs. 342,600 million (comprising of principal of Rs. 87,470 million,
interest of Rs. 154,460 million, penalty of Rs. 37,600 million, and interest on
penalty of Rs. 63,070 million).

Management plan
to deal with this event and the material uncertainty related to the event

The group will require significant additional financing to discharge its
obligations under the Court Judgment… the management’s actions include, inter
alia, accessing diversified sources of finance. The group has an
established track record of accessing diversified sources of finance across
markets and currencies. However, there can be no assurance of the success of
management’s plans to access additional sources of finance to the extent
required, on terms acceptable to the group, and to raise these amounts in a
timely manner. This represents a material uncertainty whereby it may be unable
to realise its assets and discharge its liabilities in the normal course of
business, and accordingly may cast significant doubt on the group’s ability to
continue as a going concern.

From: Independent auditors’ report on audit of
interim consolidated financial results

Material
uncertainty related to going concern

The accompanying Consolidated Financial Results have been prepared
assuming that the group will continue as a going concern. As discussed in Note
3 to the Consolidated Financial Results, the company has referred to a judgment
delivered by the Honourable Supreme Court of India on October 24, 2019 in
relation to a long outstanding industry-wide case upholding the view considered
by the Department of Telecommunications in respect of definition of Adjusted
Gross Revenue which, along with other matters as stated in the said Note,
indicates that a material uncertainty exists that may cast significant doubt
about its ability to continue as a going concern. Management evaluation of the
events and conditions and management’s plans regarding these matters are also
described in Note 3.

Our opinion on the Statement is not modified in respect of this matter.

Emphasis of matter

(i) …………..

(ii) …………..

Our opinion on the Statement is not modified in respect of these
matters.

VODAFONE IDEA LTD.

From: Notes below statement of unaudited
consolidated results

(A) Subsequent to the quarter end, the Hon’ble Supreme
Court on 24^th October, 2019 passed the judgment (SC AGR Judgment) on
cross appeals against the Hon’ble TDSAT judgment dated 23^rd April, 2015
wherein it has held that the definition of Gross Revenue under Clause 19 of the
UASL is all-encompassing and comprehensive. The Hon’ble Supreme Court has
further held that the gross revenue definition shall prevail over the
accounting standards and is binding on the parties to the contract / license
agreement. The Hon’ble Supreme Court has then dealt with different heads of
revenue / inflow and has held that these will fall within the definition of
adjusted gross revenue. Further, the Hon’ble Supreme Court has upheld the levy
of interest, penalty and interest on penalty stating that the levy is as per
the terms and conditions of the license agreement.

Consequent to the above, the company has estimated license fee of Rs.
276,100 million and Spectrum Usage Charges (SUC) of Rs. 165,400 million
(including interest, penalty and interest thereon of Rs. 330,050 million) (‘AGR
liability’) based on the DoT demands received till date and estimation for
periods for which demands have not been raised by DoT, together with interest
and penalty, all taken for periods up to 30^thSeptember, 2019 and
adjusted for certain computational errors. Whilst the company has provided for
SUC, considering that no spectrum is used for generating non-telecom income,
the company is evaluating the levy of SUC on such income. Accordingly, during
the quarter, the company has recognised a charge of Rs. 256,779 million as an
exceptional item after adjusting the available provisions and adjustments for
potential payments under a mechanism on satisfaction of contractual conditions
as per the implementation agreement dated 20^th March, 2017 entered
on merger of erstwhile VInL and ICL in relation to the crystallisation of
certain contingent liabilities which existed at the time of merger. Also, the
company has informed the lenders and bond holders about the SC AGR judgment, as
required under the financing agreements entered with them and also notified the
stock exchanges.

The Hon’ble Supreme Court has directed the telecom operators to pay the
dues within 90 days from the date of the SC AGR Judgment. By its letter of 13^thNovember, 2019, the DoT has directed the company to make payment in
accordance with SC AGR judgment based on its own assessment with requisite
documents. The company would complete its assessment, reconcile / validate the
DoT demands and true up the estimates considered in accordance with SC AGR
judgment.

The company is in the process of filing a review petition with the
Hon’ble Supreme Court. Further, the company through Cellular Operators
Association of India (‘COAI’) has made representations to the government to
provide relief to the telecom sector, including but not limited to requesting
to not press for the AGR liability payment and grant waivers, not levy spectrum
usage charges on non-licensed revenue / income, reduction of licence fee and
SUC rates, use of GST credit for payment of government levies and allow payment
to be made in instalments after some moratorium and grant a moratorium of two
years for the payment of spectrum dues beyond 1^stApril, 2020 up to
31^st March, 2022. The Government has taken cognisance of these
representations and has recently set up a Committee of Secretaries (‘COS’) to
evaluate the telecom operator’s plea and suggest measures to mitigate the financial
stress.

(B) During the year ended 31^st
March, 2019, the company had classified Rs. 102,062 million from non-current
borrowings to current maturities of long-term debt for not meeting certain
covenant clauses under the financial agreements for specified financial ratios
as at 31^st March, 2019. The company had exchanged correspondence /
been in discussions with these lenders for the next steps / waivers.

Based on the above waiver and / or grant of deferred payment terms for
the AGR liability by the government, reduction of license fee and / or SUC
rates and a moratorium on payment of DoT spectrum instalments are essential to
meet the funding requirement for the aforesaid payments. The above factors
indicate that material uncertainty exists that casts significant doubt on the
company’s ability to continue as a going concern and its ability to generate
the cash flow that it needs to settle, or refinance its liabilities and
guarantees as they fall due, including those relating to the SC AGR judgment. The
company’s ability to continue as going concern is dependent on obtaining the
reliefs from the government, as discussed in Note 5(A) above and positive
outcome of the proposed legal remedy. Pending the outcome of the above matters,
these financial results have been prepared on a going concern basis.

From: Independent auditors’ review report on
unaudited consolidated financial results

We draw attention to Note 5 to the financial results regarding the
Hon’ble Supreme Court judgment dated 24^thOctober, 2019 on the
definition of gross revenue as per the UASL agreement and the liability on
licence fee and spectrum usage charges of Rs. 441,500 million payable within 90
days from the Supreme Court judgment and breach of debt covenants, its ability
to generate the cash flow that it needs to settle, or refinance its liabilities
and guarantees as they fall due resulting in a material uncertainty that casts
significant doubt on the holding company’s ability to make the payments
mentioned therein and continue as a going concern.

The said assumption of going concern is dependent upon the holding
company obtaining the reliefs from the government as discussed in Note 5,
positive outcome of the proposed legal remedy. Our conclusion is not modified
in respect of this matter.

BCAJ Admin

FROM PUBLISHED ACCOUNTS

DISCLAIMER OF OPINION FOR REPORT
ISSUED ON FINANCIAL RESULTS IN TERMS OF SEBI LODR

RELIANCE INFRASTRUCTURE LTD. (31^ST MARCH, 2019)

From Auditor’s Report on standalone annual financial
results

1. We
were engaged to audit the standalone annual financial results of Reliance
Infrastructure Limited (the Company) for the year ended 31^st March,
2019, attached herewith, being submitted by the company pursuant to the
requirement of regulation 33 and regulation 52 of the Securities and Exchange
Board of India (Listing Obligations and Disclosure Requirements) Regulations,
2015 (Listing Regulations). Attention is drawn to the fact that the figures for
the last quarter ended 31^st March, 2019 and the corresponding
quarter ended in the previous year as reported in these standalone annual
financial results are the balancing figures between figures in respect of the
full financial year and the published year to date figures up to the end of the
third quarter of the relevant financial year. Also, the figures up to the end
of the third quarter had only been reviewed and not subjected to audit.

2. These
standalone annual financial results have been prepared on the basis of the
standalone annual financial statements and reviewed quarterly financial results
which are the responsibility of the company’s management. Our responsibility is
to conduct an audit of these standalone annual financial results based on our
audit of the standalone annual financial statements which have been prepared in
accordance with the recognition and measurement principles laid down in the
Companies (Indian Accounting Standards) Rules, 2015 as per section 133 of the
Companies Act, 2013 and other accounting principles generally accepted in India
and in compliance with regulation 33 and regulation 52 of the listing
regulations.

3. Our
responsibility is to conduct an audit of the standalone annual financial
results in accordance with the standards on auditing and to issue an auditor’s
report. However, because of the matter described in the paragraph below, we
were not able to obtain sufficient appropriate audit evidence to provide a
basis for an audit opinion on these standalone annual financial results.

4. We
refer to Note 10 to the standalone annual financial results which describes
that the company has investments in and has various amounts recoverable from a
party aggregating Rs. 7,082.96 crores (net of provision of Rs. 3,972.17 crores)
[Rs. 10,936.62 crores as at 31^stMarch, 2018 net of provision of Rs.
2,697.17 crores] comprising inter-corporate deposits including accrued interest
/ investments / receivables and advances. In addition, the company has provided
corporate guarantees during the year aggregating to Rs. 1,775 crores (net of
corporate guarantees aggregating to Rs. 5,010.31 crores cancelled subsequent to
the balance sheet date) in favour of the aforesaid party towards borrowings of
the aforesaid party from various companies, including certain related parties
of the company.

According to the management of the
company, these amounts have been mainly given for general corporate purposes
and towards funding of working capital requirements of the party which has been
engaged in providing engineering, procurement and construction (EPC) services
primarily to the company and its subsidiaries and its associates. We were
unable to obtain sufficient appropriate audit evidence about the relationship
of the aforementioned party with the company, the underlying commercial
rationale / purpose for such transactions relative to the size and scale of the
business activities with such party and the recoverability of these amounts.
Accordingly, we are unable to determine the consequential implications arising
therefrom and whether any adjustments, restatement, disclosures or compliances
are necessary in respect of these transactions, investments and recoverable
amounts in the standalone annual financial results of the company.

5. On
account of the substantive nature and significance of the matter described
above, we have not been able to obtain sufficient appropriate audit evidence to
provide a basis for an audit opinion as to whether these standalone annual
financial results:

(i) are
presented in accordance with the requirements of regulation 33 and regulation
52 of the listing
regulations; and

(ii) give
a true and fair view of the net loss and other comprehensive income and other
financial information for the year ended 31^st March, 2019.

6. (a)
We draw attention to Note 3 to the
standalone annual financial results regarding the scheme of amalgamation (the
scheme) between Reliance Infraprojects Limited (a wholly-owned subsidiary of
the company) and the company sanctioned by the Honourable High Court of
Judicature at Bombay vide its order dated 30^th March, 2011 wherein
the company, as determined by the Board of Directors, is permitted to adjust
foreign exchange gain credited to the standalone statement of profit and loss
by a corresponding credit to general reserve which overrides the relevant
provisions of Indian Accounting Standard 1 Presentation of financial
statements. Pursuant to the scheme, foreign exchange gain of Rs. 192.24
crores for the year ended 31^st March, 2019 has been credited to
standalone statement of profit and loss and an equivalent amount has been
transferred to general reserve.

(b) We
draw attention to Note 4 to the standalone annual financial results wherein,
pursuant to the scheme of amalgamation of Reliance Cement Works Private Limited
with Western Region Transmission (Maharashtra) Private Limited (WRTM),
wholly-owned subsidiary of the company, which was subsequently amalgamated with
the company with effect from 1^st April, 2013, WRTM or its
successor(s) is permitted to offset any extraordinary / exceptional items, as
determined by the Board of Directors, debited to the statement of profit and
loss by a corresponding withdrawal from general reserve, which override the
relevant provision of Indian Accounting Standard 1 Presentation of financial
statements. The Board of Directors of the company in terms of the aforesaid
scheme, determined an amount of Rs. 6,616.02 crores for the year ended 31^st
March, 2019 as exceptional item comprising various financial assets amounting
to Rs. 5,354.88 crores and loss on sale of shares of Reliance Power Limited
(RPower), an associate company pursuant to invocation of pledge of Rs. 1,261.14
crores. The aforesaid amount of Rs. 6,616.02 crores for the year ended 31^st
March, 2019 has to be debited to the standalone statement of profit and loss
and an equivalent amount has been withdrawn from general reserve.

Had the accounting treatment
specified in paragraphs 6(a) and 6(b) above not been followed, loss before tax
for the year ended 31^stMarch, 2019 would have been higher by Rs.
6,423.78 crores and general reserve would have been higher by an equivalent
amount.

7. We draw attention to Note 8 of the
standalone annual financial results. The factors, more fully described in the
aforesaid Note, relating to losses incurred during the year and certain loans
for which the company is guarantor, indicate that a material uncertainty exists
that may cast significant doubt on the company’s ability to continue as a going
concern.

8. We
draw attention to Note 9 to the standalone annual financial results which
describes the impairment assessment performed by the company in respect of its
investment of Rs. 5,231.18 crores and amounts recoverable aggregating to Rs.
1,219.63 crores in RPower as at 31^stMarch, 2019 in accordance with
Indian Accounting Standard 36 Impairment of assets / Indian Accounting
Standard 109 Financial Instruments. This assessment involves significant
management judgement and estimates on the valuation methodology and various
assumptions used in determination of value in use / fair value by independent
valuation experts / management as more fully described in the aforesaid note.
Based on management’s assessment and the independent valuation reports, no
impairment is considered necessary on the investment and the recoverable
amounts.

…..

Notes below financial results of
Reliance Infrastructure Ltd. (extracts of relevant notes)

3.
Pursuant to the scheme of
amalgamation of Reliance Infraprojects Limited with the company, sanctioned by
the Hon’ble High Court of Judicature at Bombay on 30^thMarch, 2011,
net foreign exchange gain of Rs. 98.98 crores and Rs. 192.24 crores for the
quarter and year ended 31^st March, 2019, respectively, has been
credited to the statement of Profit and Loss and an equivalent amount has been
transferred to General Reserve. Had such transfer not been done, the loss
before tax for the quarter and year ended 31^st March, 2019 would
have been lower by Rs. 98.98 crores and Rs. 192.24 crores, respectively, and
General Reserve would have been lower by Rs. 192.24 crores. The treatment
prescribed under the scheme overrides the relevant provisions of Ind AS 1 Presentation
of Financial Statements. This matter has been referred to by the auditors
in their report as an emphasis of matter.

4. Pursuant
to the scheme of amalgamation of Reliance Cement Works Private Limited with
Western Region Transmission (Maharashtra) Private Limited (WRTM), wholly-owned
subsidiary of the company, which was subsequently amalgamated with the company
w.e.f. 1^st April, 2013, during the quarter and year ended 31^st
March, 2019 an amount of Rs. 6,616.02 crores has been withdrawn from General
Reserve and credited to the statement of Profit and Loss against the
exceptional items of Rs. 8,597.36 crores and Rs. 12,797.36 crores for the
quarter and year ended 31^stMarch, 2019 representing a loss on sale
/ w/off of / provision for diminution in the value of certain financial assets
including Rs. 1,261.14 crores being loss on sale of investments pursuant to
invocation of pledge. Had such withdrawal not been done, the loss before tax
for the quarter and year ended 31^st March, 2019 would have been
higher by Rs. 6,616.02 crores and General Reserve would have been higher by an
equivalent amount. The treatment prescribed under the scheme overrides the
relevant provisions of Ind AS 1 Presentation of Financial Statements.
This matter has been referred to by the auditors in their report as an emphasis
of matter.

…..

8.
The company has incurred net
losses (after impairment of assets) of Rs. 913.39 crores during the year ended
31^st March, 2019. Further, in respect of certain loan arrangements
of certain subsidiaries / associates, certain amounts have fallen due and / or
have been reclassified as current liabilities by the respective subsidiary /
associate companies. The company is guarantor in respect of some of the loans /
corporate guarantee arrangements and consequently, the company’s ability to
meet its obligations is significantly dependent on material uncertain events
including restructuring of loans, achievement of debt resolution and
restructuring plans, time-bound monetisation of assets as well as favourable
and timely outcome of various claims. The company is confident that such cash
flows would enable it to service its debt, realise its assets and discharge its
liabilities, including devolvement of any guarantees / support to the
subsidiaries and associates in the normal course of its business. Accordingly,
the standalone annual financial results of the company have been prepared on a
going concern basis.

9.
The company has an investment of
Rs. 5,231.18 crores as at 31^st March, 2019 which represents 33.10%
shareholding in Reliance Power Limited (RPower), an associate company. Further,
the company also has net recoverable amounts aggregating to Rs. 1,219.63 crores
from RPower as at 31^st March, 2019. RPower has incurred a net loss
(after impairment of certain assets) of Rs. 2,951.82 crores for the year ended
31st March, 2019 and its current liabilities exceeded its current assets by Rs.
12,249.17 crores as at that date. Management has performed an impairment
assessment of its investment in RPower as required by Indian Accounting
Standard 36 Impairment of assets, Indian Accounting Standard 109 Financial
Instruments, by considering inter alia the valuations of the
underlying subsidiaries of RPower which are based on their value in use
(considering discounted cash flows) and valuations of other assets of RPower /
its subsidiaries based on their fair values, which have been determined by
external valuation experts and / or management’s internal evaluation. The
determination of the value in use / fair value involves significant management
judgement and estimates on the various assumptions including relating to growth
rates, discount rates, terminal value, time that may be required to identify
buyers, negotiation discounts, etc. Further, management believes that the above
assessment based on value in use / fair value appropriately reflects the
recoverable amount of the investment as the current market price / valuation of
RPower does not reflect the fundamentals of the business and is an aberration.
Based on management’s assessment and the independent valuation reports, no
impairment is considered necessary on this investment and recoverable amounts.

10.
The Reliance Group of companies, of which
the company is a part, supported an independent company in which the company
holds less than 2% of equity shares (EPC Company) to inter alia
undertake contracts and assignments for the large number of varied projects in
the fields of power (thermal, hydro and nuclear), roads, cement, telecom, metro
rail, etc. which were proposed and / or under development by the Group. To this
end, along with other companies of the Group, the company funded EPC Company by
way of EPC advances, subscription to Debentures and Preference Shares and
inter-corporate deposits. The aggregate funding provided by the company as on
31^st March, 2019 was Rs. 7,082.96 crores (previous year Rs.
10,936.62 crores) net of provision on Rs. 3,972.17 crores, Rs. 2,697.17
crores). In addition, the company has provided corporate guarantees during the
year aggregating (net of subsequent cancellation) to Rs. 1,775 crores.

The activities of EPC Company have
been impacted by the reduced project activities of the companies of the Group.
In the absence of the financial statements of the EPC Company for the year
ending 31^st March, 2019 which are under compilation, it has not been
possible to complete the evaluation of the nature of relationship, if any,
between the independent EPC Company and the company. At present, based on the
analysis carried out in earlier years, the EPC Company has not been treated as
related party.

Similarly, in the absence of full visibility on
the assets and liabilities of the EPC Company, and after considering the
reduced ability of the holding company of the Reliance Group of Companies to
support the EPC Company, the company has provided / written-off further Rs.
2,042.16 crores during the year in respect of the outstanding amount advanced
to the EPC Company. Given the huge opportunity in the EPC field, particularly
considering the Government of India’s thrust on infrastructure sector coupled
with increasing project and EPC activities of the Reliance Group, the EPC
Company with its experience will be able to achieve substantial project
activity in excess of its current levels, thus enabling the EPC Company to meet
its obligations. The company is reasonably confident that the provision will be
adequate to deal with any contingency relating to recovery from the EPC
Company.

BCAJ Admin

FROM PUBLISHED ACCOUNTS

MULTIPLE KEY AUDIT MATTERS IN INDEPENDENT
AUDITORS’ REPORTS

RELIANCE INDUSTRIES LTD. (31^stMARCH,
2019)

From Auditor’s Report on Consolidated
Financial Statements

KEY AUDIT MATTERS

Key Audit Matters are those matters that, in our professional judgement,
were of most significance in our audit of the Consolidated Financial Statements
for the financial year ended 31^st March, 2019. These matters were
addressed in the context of our audit of the Consolidated Financial Statements
as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters. For each matter below, our description of
how our audit addressed the matter is provided in that context. We have
determined the matters described below to be the Key Audit Matters (KAMs) to be
communicated in our report.

We have fulfilled the responsibilities described in the auditor’s
responsibilities for the audit of the Consolidated Financial Statements section
of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of
the risks of material misstatement of the Consolidated Financial Statements.
The results of audit procedures performed by us and by other auditors of
components not audited by us, as reported by them in their audit reports
furnished to us by the management, including those procedures performed to
address the matters below, provide the basis for our audit opinion on the
accompanying Consolidated Financial Statements.

KAM: Capitalisation of property, plant and
equipment, intangible assets and related depreciation and amortisation

The holding company has identified capitalisation of property, plant and
equipment as a KAM. As a part of the gasification project, the holding company
has incurred additional capital expenditure for modification of power plant
equipments, i.e., gas turbines, auxiliary boilers, HRSGs, process furnaces,
etc., to make them compatible with multiple feedstock, including those received
from petcoke gasifier. Currently, all units of the gasification complex, its
associated utilities and offsites have been started and the complex is under
stabilisation. The testing phase of the project is under progress as at 31^st
March, 2019 as it has not achieved the quality and efficiency parameters.
Accordingly, significant level of judgement is involved to ensure that
capitalisation of property, plant and equipment meet the recognition criteria
of Ind AS 16 Property, Plant and Equipment, specifically in relation to
determination of the trial run period and costs associated with trial runs for
it to be ready for intended use. As a result, the aforesaid matter was
determined to be a KAM.

The auditors of Reliance JioInfocomm Limited (‘RJIL’), a subsidiary of
the holding company, have reported a KAM on capitalisation of property, plant
and equipment / intangible assets and amortisation / depreciation of spectrum
costs and related tangible assets as it is a material item on the balance sheet
of the subsidiary in value terms. The property, plant and equipment and
intangible assets of the subsidiary as at 31^st March 2019 is Rs.
134,000 crores. While the subsidiary has capitalised the wireless
telecommunication project, it continues to augment capacity therein and
continues to invest in setting up the wireline telecommunication project. Items
of property, plant and equipment and intangibles are capitalised when they are
ready for use as intended by the management.

Further, spectrum costs and the related tangible assets are amortised /
depreciated to appropriately reflect the expected pattern of consumption of
expected future economic benefits from continued use of the said assets (Refer
Note B.3 [e] of the Consolidated Financial Statements). Determination of timing
of capitalisation as well as rate of amortisation / depreciation in order to
ensure compliance with the stipulation of the applicable Accounting Standards
involve estimates, significant use of technology and significant judgement. Accordingly,
valuation and completeness are key assertions related to capitalisation of
property, plant and equipment and intangible assets, while accuracy is the key
assertion in respect of depreciation / amortisation charge.

How our audit addressed the KAM

Our audit procedures included and were not limited to the following:

Assessing the nature of the costs incurred to substantially modify the
existing power plants to test whether such costs are incurred specifically for
trial runs and meet the recognition criteria as set out in paras 16 to 22 of
Ind AS 16.

Evaluating the assessment provided by
third-party vendors involved in the construction and testing process to
determine whether capitalisation ceased when the asset is in the location and
condition necessary for it to be capable of operating in the manner intended by
the management.

In respect of the KAM reported by the auditors of RJIL, we performed
inquiry of the audit procedures performed by them to address the same. As
reported by the subsidiary auditor, the following procedures have been
performed by them:

(i) Testing the design, implementation and operating effectiveness of
controls in respect of review of capital work in progress, particularly in
respect of timing of the capitalisation with source documentation;

(ii) Testing controls over determination of
expected economic benefits from the use of relevant assets and monitoring
actual consumption thereof to true-up (sic) the expected pattern of
consumption during an accounting period;

(iii) Testing, including substantial involvement of internal telecom and
information technology specialists, to validate the expected pattern of
consumption of the economic benefits emanating from the use of the relevant
assets, as well as testing the relevant application systems used in monitoring
of actual consumption of the expected economic benefits;

(iv) Substantive testing procedures, including testing necessary
authorisations for capitalisation of items of PPE and intangible assets,
testing supporting documentation for consumption of capital goods inventory,
comparison of actual pattern of consumption of benefits for the current year
with the budget and testing the mathematical accuracy of computation of amortisation
/ depreciation charge for the year.

Obtained and read the financial statements of RJIL to identify whether
disclosure for capitalisation of property, plant and equipment and intangible
assets including spectrum and related amortisation / depreciation has been
appropriately disclosed in the consolidated financial statements of the group.

KAM: Changes in useful life and residual
value of plant and machinery

As at 31^st March, 2019 the holding company had a gross block
of Rs. 228,340 crores in plant and machinery which constitutes 52.1% of the
property, plant and equipment. In the current year, the holding company has
revised the useful life and residual value of the plant and machinery used in
the refining segment. Assessment of useful lives and residual values of plant
machinery in an integrated and complex plant involves management judgement,
consideration of historical experiences, anticipated technological changes,
etc. (Refer Note 1.7 of the Consolidated Financial Statements). Accordingly, it
has been determined as a KAM.

How our audit addressed the KAM

Our audit procedures included and were not limited to the following:

(a) Evaluating the reasonableness of the assumptions considered by the
management in estimation of useful life and residual values;

(b) Examining the useful economic lives and residual value assigned with
reference to the holding company’s historical experience, technical evaluation
by third party and our understanding of the future utilisation of assets by the
holding company;

(d) Review of the disclosures made in the financial statements in this
regard.

KAM: Estimation of oil reserves and decommissio-ning
liabilities

Refer to Note 30.2 on proved reserves and production, both on product
and geographical basis, and Note C(A) on estimation of oil and gas reserves,
Note C(C) on depreciation, amortisation and impairment charges and Note B.3(k)
on provisions. The determination of the holding company’s oil and natural gas
reserves requires significant judgements and estimates to be applied. Factors
such as the availability of geological and engineering data, reservoir
performance data, acquisition and divestment activity, drilling of new wells
and commodity prices, all impact the determination of the holding company’s
estimates of oil and natural gas reserves. The holding company bases its proved
reserves estimates considering reasonable certainty with rigorous technical and
commercial assessments based on conventional industry practice and regulatory
requirements. Estimates of oil and gas reserves are used to calculate depletion
charges for the holding company’s oil and gas assets.

The impact of changes in estimated proved reserves is dealt with
prospectively by amortising the remaining carrying value of the asset over the
expected future production. Oil and natural gas reserves also have a direct
impact on the assessment of the recoverability of asset’s carrying values
reported in the financial statements. Further, the recognition and measurement
of decommissioning provisions involves use of estimates and assumptions
relating to timing of abandonment of well and related facilities which would
depend upon the ultimate life of the field, expected utilisation of assets by
other fields, the scope of abandonment activity and pre-tax rate applied for
discounting. Accordingly, the same is considered as a KAM. The auditors of
Reliance Holding USA Inc. (‘RHUSA’), a subsidiary of the holding company, have
also reported a KAM on the aforesaid topic.

How our audit addressed the KAM

Our procedures have focused on the management’s estimation process in
the determination of oil and gas reserves and decommissioning liabilities. Our
work included, and was not limited to, the following procedures:

(I) Understand the holding company’s process and controls associated
with the oil and gas reserves estimation process;

(II) Evaluate the objectivity, independence and competence of the
internal specialists involved in the oil and gas reserves estimation process;

(III) Test that the updated oil and gas reserve estimates were included
appropriately in the holding company’s consideration of impairment, accounting
for amortisation / depletion and disclosures of proved reserves and proved
developed reserves in the financial statements;

(IV) Test the assumptions used in determining the decommissioning
provisions. And compare these assumptions with the past year and inquire for
reasons for any variations;

(V) In respect of the KAM reported to us by the auditors of RHUSA, we
performed an inquiry of the audit procedures performed by them to address the
same. As reported to us by the subsidiary auditor, they have performed
procedures in relation to the approach used; test of controls performed with
regard to data input into the system for calculation of oil and gas reserves;
audit report issued by external experts appointed by the subsidiary relating to
the audit of the key data and assumptions used by the management for estimating
the oil and gas reserve and the future net income as at the year-end;
competence and objectivity of the external experts; calculation of the
depletion charge and future net income and reasonableness of the discount rate
used by the subsidiary for calculating the future net income for impairment
calculation;

(VI) With respect to RHUSA, obtain and read its financial statements to
identify whether the disclosures on estimation of oil reserves have been
included in the Consolidated Financial Statements of the group.

KAM: Litigation matters (oil and gas)

The holding company has certain significant open legal proceedings under
arbitration for various complex matters with the Government of India and other
parties, continuing from earlier years, which are as under:

(i) Disallowance of certain costs under the production-sharing contract
relating to Block KG-DWN-98/3 and consequent deposit of differential revenue on
gas sales from D1D3 field to the gas pool account maintained by Gail (India)
Limited (Note 30.3 and 30.4 [b]);

(ii) Claim against the holding company in respect of gas said to have
migrated from neighbouring blocks (KGD6) (Note 30.4 [a]);

(iii) Claims relating to limits of cost-recovery, profit-sharing and
audit and accounting provisions of the public sector corporations, etc.,
arising under two production-sharing contracts entered into in 1994 (Note 30.4
[c]);

(iv) Suit for specific performance of a contract for supply of natural
gas before the Hon’ble Bombay High Court (Note 30.4 [d]). Due to the complexity
involved in these litigation matters, management’s judgement regarding
recognition and measurement of provisions for these legal proceedings is
inherently uncertain and might change over time as the outcomes of the legal
cases are determined. Accordingly, it has been considered as a KAM.

How our audit addressed the KAM

Our audit procedures included, and were not limited to, the following:

(a) Assessing management’s position through discussions with the
in-house legal expert and external legal opinions obtained by the holding
company (where considered necessary) on both the probability of success in the
aforesaid cases and the magnitude of any potential loss;

(b) Discussion with the management on the
developments in these litigations during the year ended 31^st March,
2019;

(c) Roll out of inquiry letters to the holding company’s legal counsel
(internal / external) and studying the responses received from them. Assessing
that the accounting / disclosures made by the holding company are in accordance
with the assessment of the legal counsel;

(d) Review of the disclosures made in the financial statements in this
regard;

(e) Obtaining a representation letter from the management on the
assessment of these matters.

KAM: IT systems and controls over financial
reporting

We identified IT systems and controls over financial reporting as a KAM
for the holding company because its financial accounting and reporting systems
are fundamentally reliant on IT systems and IT controls to process significant
transaction volumes, specifically with respect to revenue and raw material
consumption. Automated accounting procedures and IT environment controls, which
include IT governance, IT general controls over programme development and
changes, access to programmes and data and IT operations, IT application
controls and interfaces between IT applications, are required to be designed
and to operate effectively to ensure accurate financial reporting.

How our audit addressed the KAM

Our procedures included and were not limited to the following:

(I) Assessing the complexity of the IT environment by engaging IT
specialists and through discussions with the head of IT;

(II) Assessing the design and evaluation of the operating effectiveness
of IT general controls over programme development and changes, access to
programmes and data and IT operations by engaging IT specialists;

(III) Assessing the design and evaluation of the operating effectiveness
of IT application controls in the key processes impacting financial reporting
of the holding company by engaging IT specialists;

(IV) Assessing the operating effectiveness of controls relating to data
transmission through the different IT systems to the financial reporting
systems by engaging IT specialists.

KAM: Impairment of goodwill

The group’s balance sheet includes Rs. 11,997 crores of goodwill,
representing 1% of its total assets. In accordance with Ind AS, goodwill is
allocated to cash generating units (CGUs) which are tested annually for
impairment using the discounted cash-flow approach of each CGU’s recoverable
value compared to the carrying value of the assets. A deficit between the
recoverable value and the CGU’s net assets would result in impairment. The
impairment test includes sensitivity testing of key assumptions, including
revenue growth, operating margin and discount rate. The annual impairment
testing is considered a significant accounting judgement and estimate and a KAM
because the assumptions on which the tests are based are highly judgemental and
are affected by future market and economic conditions which are inherently
uncertain.

How our audit addressed the KAM

With respect to goodwill relating to material subsidiaries, our audit
procedures included and were not limited to

the following:

(i) Obtaining and reading the financial statements of the material
subsidiaries. Assessing the appropriateness of the methodology applied in
determining the CGUs to which goodwill is allocated;

(ii) Assessing the assumptions around the key drivers of the cash flow
forecasts including discount rates, expected growth rates and terminal growth
rates used, including engaging valuation specialists in certain cases;

(iii) Assessing the recoverable value headroom by performing sensitivity
testing of key assumptions used;

(iv) Discussing potential changes in key drivers as compared to previous
year / actual performance with management in order to evaluate whether the
inputs and assumptions used in the cash flow forecasts were reasonable.

KAM: Revenue recognition

The accounting policies of the group for revenue recognition are set out
in Note B3(p) to the Consolidated Financial Statements. The auditors of
Reliance JioInfocomm Limited (‘RJIL’), a subsidiary of the holding company,
have reported revenue recognition as a KAM due to the high volume of the
transactions, the high degree of IT systems involvement and considering that
accounting for certain tariff schemes involves exercise of judgements and
estimates, thereby affecting occurrence, cut-off and accuracy assertions in
respect of revenue recognition. Reliance Retail Ventures Limited (‘RRVL’), a
subsidiary of the holding company, trades in various consumption baskets on a
principal basis and recognises full value of consideration on transfer of
control of traded goods to the customers which most of the time coincides with
collection of cash or cash equivalent. The auditors of the subsidiary have reported
revenue recognition as a KAM due to the high volume of the transactions and
reconciliation of mode of payments with revenue recognised.

How our audit addressed the KAM

Our audit procedures included and were not limited to the following:

(a) Obtaining and reading the financial statements of RJIL and RRVL to
identify whether the revenue recognition policies are included in the
consolidated financial statement of the group;

(b) In respect of the KAM reported by the auditors of RJIL, we performed
an inquiry of the audit procedures performed by them to address the same. As reported by the subsidiary auditor, the
following procedures have been performed by them:

(i) involvement of IT specialists and testing of the IT environment inter
alia for access controls and change management controls over the subsidiary
company’s billing and other relevant support systems;

(ii) evaluation and testing of the design and operating effectiveness of
the relevant business process controls, inter alia controls over the
capture, measurement and authorisation of revenue transactions and involvement
of IT specialists for testing the automated controls therein;

(iii) evaluation of substantive testing involved, testing collections,
customer ratings for new products and tariffs introduced in the year, testing
the reconciliation between revenue as per the billing system and the financial
records and testing supporting documentation for manual journal entries posted
in revenue to ensure veracity thereof;

(iv) validation of the judgements and estimates exercised by the
management regarding the application of revenue recognition accounting standard
with respect to certain tariff schemes, particularly in view of adoption of
Ind AS 115;

(c) In respect of the KAM reported to us by the auditors of RRVL, we
performed an inquiry of the audit procedure performed by them to address it. As
reported to us by the subsidiary auditor, the following procedure had been
performed by them:

(v) Evaluation of the design, testing of the implementation of internal
controls and review of the operating effectiveness of the controls relating to
reconciliation of consideration with store sales by selection of samples from
different stores and dates throughout the period of audit and re-performance of
the reconciliation between store sales and the mode of payment collection
report.

KAM: Inventory

The auditors of Reliance Retail Ventures Limited (‘RRVL’), a subsidiary
of the holding company, have reported existence of inventory as a KAM due to
involvement of high risk on the basis of and the nature of the retail industry
wherein value per unit is relatively insignificant but high volumes are
involved which are dispersed across different points of sale and warehouses.
Refer Note B.3(i) to the Consolidated Financial Statements of the group.

How our audit addressed the KAM

Our audit procedures included and were not limited to the following:

In respect of the KAM reported to us by the auditors of RRVL, we
performed an inquiry of the audit procedures performed by them to address the
same. As reported to us by the subsidiary auditor, the following procedures
have been performed by them:

(I) Evaluation of the design and testing of the implementation of
internal controls relating to physical inventory counts on a test basis;

(II) Performance of test of controls over verification of documentary
evidence of controls including the calculation of shrinkages;

(III) Performance of test of details through sample selection of stores
as part of the inventory verification programme, including verification of
inventory from floor to documentary evidence and vice versa and
verification of shrinkage.

KAM: Transfer of the fibre undertakings

Pursuant to a Composite Scheme of Arrangement between Reliance
JioInfocomm Ltd. (RJIL), Jio Digital Fibre Private Limited (JDFPL) and Reliance
JioInfratel Private Limited (RJIPL) (the Scheme), RJIL has demerged its optic
fibre cable undertaking to JDFPL upon the scheme becoming effective on 31^st
March, 2019. As per the scheme, RJIL transferred the undertaking to JDFPL at
book value and adjusted the carrying amount of net assets in reserves. Further,
JDFPL applied the purchase method of accounting in accordance with Ind AS 103
as mentioned in the scheme and recorded assets and liabilities of the
undertaking at their respective fair values and issued equity shares of Rs. 3
crores (fair value Rs. 497 crores) and optionally convertible preference shares
with surplus rights (OCPS) of Rs. 544 crores (fair value Rs. 77,701 crores) to
the company, being the shareholders of RJIL. Pursuant to the receipt of these
equity shares and OCPS, the holding company in its standalone financial
statements (SFS) has allocated its cost of investments in RJIL to RJIL and JDFPL
and elected to value its investment in OCPS at fair value through other
comprehensive income (FVTOCI).

Subsequently, the holding company sold its controlling equity stake in
JDFPL to Digital Fibre Infrastructure Trust resulting in a gain of Rs. 246
crores recognised in the consolidated statement of profit and loss. The
management has determined that the holding company has no control or
significant influence over JDFPL post the controlling stake sale. Further, the
remaining equity investment in JDFPL is measured at FVTPL and OCPS is measured
at FVTOCI in the Consolidated Financial Statements (Refer Note 2.2 of the
same). The auditors of RJIL have also reported a KAM in respect of the
accounting treatment applied for the scheme in its financial statements. The
above is considered as a KAM as the same has been reported as a significant
transaction that occurred during the current year which involves exercise of
judgement and interpretation of the relevant Indian Accounting Standards and
applicable tax and other statutes / regulations.

How our audit addressed the KAM

Our audit procedures included and were not limited to the following:

(i) Obtaining and reading the composite scheme of arrangement for
demerger of the optic fibre cable undertaking;

(ii) Obtaining the memo prepared by the holding company in consultation
with external experts (including related assumptions and accounting policy
choice) on the accounting treatment to be applied in the financial statements;

(iii) Evaluating whether the accounting treatment of the said
transaction is in line with the applicable Indian Accounting Standards;

(iv) Performing substantive testing procedures, including involvement of
valuation specialists for testing of the valuation reports provided by the
management for appropriateness of assumptions involved and testing of the
computation;

(v) Assessing whether the accounting entries recorded in the books are
in line with the accounting treatment assessed above, including the
arithmetical accuracy of the same;

(vi) In respect of the KAM reported by the auditors of RJIL, we
performed inquiry of the audit procedures performed by them to address the
same.

As reported by the subsidiary auditor, the following procedures have
been performed by them:

(I) Evaluation and testing of the internal controls over the
management’s assessment of the accounting treatment of the said transaction in
terms of the applicable Indian Accounting Standards and applicable tax and
other statutes / regulations, identification of assets and liabilities related
to each of the two undertakings;

(II) Substantive testing procedures including involvement of tax
specialists to validate the management position on tax implications of the
transaction and testing of tax computation for appropriate application of tax
laws, involvement of valuation specialists for testing of the valuation reports
provided by the management for appropriateness of assumptions involved and
testing of the computation, accounting of the transactions and the disclosures
for compliance with the requirements of the applicable accounting standards.

KAM: Impairment of assets of subsidiaries of
Reliance Industrial Investments and Holding Limited

The auditors of Reliance Industrial Investments and Holdings Limited (‘RIIHL’),
a subsidiary of the holding company, have reported a KAM on the impairment of
investment and loans given to subsidiaries as the recoverability assessment
involves significant management judgement and estimates (Refer Note B.3 [j] of
the Consolidated Financial Statements). Though these investments and loans are
eliminated at the consolidated level, the assets of the RIIHL subsidiaries are
included on a line-by-line basis in the Consolidated Financial Statements.
Accordingly, the impairment of these assets is considered to be a KAM.

How our audit addressed the KAM

Our audit procedures included and were not limited to the following:

(a) Obtaining and reading the financial statements of RIIHL and its
subsidiaries to identify whether any impairment has been recorded in the
current year;

(b) In respect of the KAM reported to us by the
auditors of RIIHL, we performed an inquiry of the audit procedures performed by
them to address the KAM. As reported to us by the subsidiary auditor, the
following procedures have been performed by them for material subsidiaries:

(i) Assessment of
the net worth of RIIHL subsidiaries / associates on the basis of latest
available financial statements;

(ii) Assessment of the methodologies applied to
ascertain the fair value or, as the case may be, value in use of the assets of
the subsidiaries / associates, where the net worth was negative;

(iii) Assessment of the accuracy and reasonableness
of the input data and assumptions used to determine the fair value of
subsidiaries’ assets, cash flow estimates, including sensitivity analysis of
key assumptions used.

BCAJ Admin

FROM PUBLISHED ACCOUNTS

ILLUSTRATION
OF AUDIT REPORT WITH QUALIFIED OPINION AND KEY AUDIT MATTERS (WHERE THE
PREDECESSOR AUDITOR HAD ALSO ISSUED AUDIT OPINION WITH QUALIFICATIONS ON
CERTAIN MATTERS)

FORTIS HEALTHCARE LTD.
(31^stMarch, 2019)

From
Auditors’ Report

BASIS
FOR QUALIFIED OPINION

(a) The matters stated below were also subject
matter of qualification in predecessor auditor’s audit opinion on the
consolidated financial statements as at 31^st March, 2018:

(i) As explained in Note 31 of the consolidated
financial statements, pursuant to certain events / transactions, the erstwhile
Audit and Risk Management Committee (ARMC) of the company had initiated an
independent investigation by an external legal firm and special audits by
professional firms on matters relating to systematic lapses / override of
internal controls as described in Note 31 of the consolidated financial
statements. The report has since been submitted and is subject to the limitations
on the information available to the external legal firm and their
qualifications and disclaimers as described in their investigation report.

Additionally, different
regulatory authorities are currently undertaking their own investigations,
details of which are described in Note 31 and Note 32 of the consolidated
financial statements and are stated below:

SEBI has initiated an
investigation in respect of the various issues. On 17^th October,
2018, 21^st December, 2018, and 19^th March, 2019, SEBI
passed orders (orders) and further investigation by regulatory authorities is
continuing. In its orders, SEBI observed that certain inter-corporate deposits
(ICDs) made by Fortis Hospitals Limited (FHsL), a wholly-owned subsidiary of
the company, with certain identified entities were so structured that they seem
to be prima facie fictitious and fraudulent in nature resulting inter
alia in diversion of funds from the group for the ultimate benefit of the
erstwhile promoters (and certain entities controlled by them) resulting in a
misrepresentation in the financial statements of the group in earlier period.
Further, SEBI issued certain directions inter alia directing the company
and FHsL to take all necessary steps to recover Rs. 40,300 lakhs along with the
due interest from the erstwhile promoters and various other entities as
mentioned in the orders. It has also directed the erstwhile promoters and the
said entities to repay the sums due. The aforesaid ICDs were fully provided for
in the books as at 31^st March, 2018. SEBI, in its orders, also
directed the erstwhile promoters and the said entities that pending completion
of investigation and till further order, they shall not dispose of or alienate
any of their assets or divert any funds, except for the purpose of meeting
expenses of day-to-day business operations, without the prior permission of
SEBI. Erstwhile promoters have also been directed not to associate themselves
with the affairs of the company in any manner whatsoever till further
directions. The initial directions issued by SEBI have been confirmed by SEBI
in their order dated 19^th March, 2019.

The Serious Fraud Investigation
Office (SFIO), Ministry of Corporate Affairs, u/s 217(1)(a) of the Companies
Act, 2013, inter alia, has initiated an investigation and has been
seeking information in relation to the company, its material subsidiaries,
joint ventures and associates to which, as informed to us, the company has
responded.

Since the investigation and
inquiries carried out by regulators as aforesaid are currently ongoing, the
need for additional procedures / inquiries, if any, and an overall assessment
of the impact of the investigations on the financial statements is yet to be
concluded.

Based on investigations carried
out by an external legal firm, orders by SEBI and other information available
currently, as per the management all identified / required adjustments /
disclosures arising from the findings in the investigation report and the
orders by SEBI, were made in the consolidated financial statements for the year
ended 31^st March, 2018.

Matters included in the
investigation report (but not limited to) and highlighted by the predecessor
auditor in their audit report for the year ended 31^st March, 2018,
are as below:

Provisions against the
outstanding ICDs amounting to Rs. 44,503 lakhs (including interest accrued
thereon of Rs. 4,260 lakhs), provision of Rs. 5,519 lakhs towards amounts paid
as security deposit, advances towards lease of office space and expenditure
incurred towards capital work in progress and Rs. 2,549 lakhs towards property
advance (including interest accrued thereon of Rs. 174 lakhs) due to
uncertainty of recovery of these balances (refer to Note 29 and Note 30 of the
consolidated financial statements).

The company through its overseas
subsidiaries sold its investment held in a fund at a discount (money was
received on 23^rdApril 2018) which was recorded as a loss in the
consolidated financial statements for the year ended 31^st March,
2018. In the absence of sufficient information available, the rationale to
demonstrate the reasonability of the discount was not established [refer to
Note 30(c) and 31(b) of the consolidated financial statements].

Certain past transactions as
mentioned in Note 31 of the consolidated financial statements may have been
prejudicial to the group.

No additional adjustments /
disclosures were required to be made in the consolidated financial statements
for the year 31^st March, 2019 in respect of the above.

As explained
in Note 9(5) and Note 31(e) of the consolidated financial statements, related
party relationships prior to loss of control of erstwhile promoters / directors
in the year ended 31^st March, 2018 were identified by the management
taking into account the information available with the management and including
the findings and limitations in the investigation reports. In this regard,
specific declarations from the erstwhile directors / promoters, especially
considering the substance of the relationship rather than the legal form, were
not available. Therefore, the possibility cannot be ruled out that there may be
additional related parties of erstwhile promoters / directors whose
relationships may not have been disclosed to the group and, hence, not known to
the management.

Further, as
explained in Note 14 of the consolidated financial statements, a civil suit was
filed by a third party against various entities including the company relating
to ‘Fortis, SRL and La-Femme’ brands. The company has received four demand
notices aggregating to Rs. 25,344 lakhs in respect of this civil suit. The
allegations made by the third party have been duly responded to by the company,
denying (i) execution of any binding agreement with the third party; and (ii)
liability of any kind whatsoever. Based on legal advice of the external legal
counsel, the management believes that the claims are without legal basis and
not tenable. The matter is currently subjudice.

Due to the
ongoing nature of the various regulatory inquiries / investigations, we are
unable to comment on the adjustments / disclosures which may become necessary
as a result of further findings of the ongoing regulatory investigations on the
consolidated financial statements, including completeness / accuracy of the
related party transactions which relate to or which originated before 31^st
March, 2018, the regulatory non-compliances, if any, and the consequential
impact, if any, on the consolidated financial statements.

(ii) As explained in Note 29 and Note 30, during
the year ended 31^st March, 2018 interest income of Rs. 4,434 lakhs
comprising Rs. 4,260 lakhs (on the outstanding ICDs given) and Rs. 174 lakhs
(relating to property advance) had been recognised. A provision was, however,
created against the entire amount in the year ended 31^st March, 2018
and the provision was disclosed as an exceptional item. The recognition of the
aforesaid interest income as at 31^st March, 2018 on doubtful ICDs
and property advance is not in compliance with Ind AS 18 ‘Revenue’ (as it does
not meet the recognition criteria) and consequently interest income and the
provision for doubtful interest disclosed as exceptional items (net) are
overstated to that extent. It had no impact on loss for the year ended 31^st
March, 2018.

(iii) As explained in Note 34 of the consolidated
financial statements, during the year ended 31^st March, 2018, the
company having considered all necessary facts and taking into account external
legal advice, concluded that it had paid amount aggregating to Rs. 2,002 lakhs
to the erstwhile Executive Chairman during his tenure (ended during the year
ended 31^st March, 2018) in excess of the amounts approved by the
Central Government u/s 197 of the Companies Act, 2013 for his remuneration and
other reimbursements. This is accordingly a non-compliance with
the provisions of section 197 of the Companies Act, 2013. In the current year,
the company has taken requisite actions to
recover this amount. Due to the uncertainty involved in recoverability of the
said amounts, a provision for this amount has also been recorded.

(b) The
group has recorded a cumulative financial liability as at 31^st
March, 2019 of Rs. 118,000 lakhs (included under ‘other current financial
liabilities’) by debiting ‘other equity’ in respect of put option available
with certain non-controlling shareholders of SRL Limited [refer to Note 12(b)
of the consolidated financial statements]. The group has not quantified the
liability relating to previous periods and, therefore, we are unable to comment
on the impact of such liability for previous periods.

We conducted
our audit in accordance with the Standards on Auditing (SAs) specified u/s
143(10) of the Act. Our responsibilities under those SAs are further described
in the Auditor’s Responsibilities for the Audit of the Consolidated
Financial Statements section of our report. We are independent of the group
in accordance with the Code of Ethics issued by the Institute of Chartered
Accountants of India and we have fulfilled our other ethical responsibilities
in accordance with the provisions of the Act. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for
our qualified opinion.

EMPHASIS OF MATTER

We draw
attention to the following matters in the Notes forming part of the
consolidated financial statements:

(a) Note
14(II) relating to outcome of income tax assessments in respect of Escorts
Heart Institute and Research Centre Limited (EHIRCL), one of the subsidiaries
in the group, regarding amalgamation of two societies and its subsequent
conversion to EHIRCL;

(b) Note
14(II) relating to the outcome of the civil suit / arbitrations with regard to
termination of certain land leases allotted by Delhi Development Authority
(DDA) and the matter related to non-compliance with the order of the Honourable
High Court of Delhi in relation to provision of free treatment / beds to the
poor by EHIRCL;

(c) Note
14(III) regarding matter relating to termination of hospital lease agreement of
Hiranandani Healthcare Private Limited, one of the subsidiaries in the group,
by Navi Mumbai Municipal Corporation (NMMC) vide order dated 18^th
January, 2018.

Based on the
advice given by external legal counsel, the likelihood of outflow in the above
litigations is remote and accordingly no provision / adjustment has been
considered necessary by the management with respect to the above matters in the
consolidated financial statements.

Our opinion
is not modified in respect of these matters.

KEY AUDIT MATTERS

Key audit
matters are those matters that, in our professional judgement, were of most
significance in our audit of the consolidated financial statements of the
current period. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.

In addition
to the matters described in the ‘Basis for Qualified Opinion’ paragraphs, we
have determined that the following are the key audit matters:

The
key audit matter

How
the matter was addressed in our audit

Accounting for
acquisitions

As explained in Note 26
of the consolidated financial statements, the group acquired business of RHT
Health Trust (formerly known as Religare Health Trust) for a consideration of
Rs. 466,630 lakhs and on the basis of the preliminary purchase price
allocation recorded
goodwill of Rs. 180,070 lakhs

The contractual
arrangements for such transactions can be complex and require management to
apply judgement in determining whether a transaction represents an
acquisition of an asset or a business combination and there are estimates and
judgements made in any such purchase price allocation

In view of the
significance of the matter we evaluated the accounting for the acquisition,
including:

Assessed
the judgements applied in determining whether this acquisition represented an
acquisition of an asset or a business combination. This involved assessing
whether or not the entities and the assets acquired constitute the carrying
on of a business, i.e., whether there are inputs and processes applied to
those inputs that have the ability to create outputs;

Inspected the
agreements to determine whether the appropriate intangible assets (including
termination of pre-existing relationship) have been identified and that no
unusual terms exist that have not been accounted for;

The audit procedures in
relation to consideration payable, accounting of fair valuation of the
separately identifiable acquired assets and assumed liabilities; and

Tested the valuation
assumptions such as projected cash flows growth, discount and tax rates by
reviewing assumptions used in such calculations and recalculating on sample
basis

In doing so we have
involved independent valuation specialists to assist us in carrying out the
aforesaid procedures as considered appropriate

We have also evaluated
the accounting and respective disclosures made in the consolidated financial
statements

Goodwill and
investment

As set out in Note
6(ii) and 6(iv), the group carries goodwill of Rs. 372,076 lakhs and
investments in associates and joint ventures of Rs. 19,031 lakhs. Management
performs an annual impairment review of goodwill as at 31^st March.
Investments are tested for impairment in case an indicator of potential
impairment is identified

There are judgements
used in this, such as forecast cash flows, discount rates and growth rates

We have assessed the
group’s current and forecast performance and considered whether any other
factors exist that would suggest that the goodwill / investment is impaired.
We have performed the
following procedures:

Challenged management’s
identification of Cash Generating Units (CGUs) against our understanding of
the business and the definition as set out in the accounting standards;

Assessed the
appropriateness of the calculation of the value in use of each CGU and the
associated headroom, performing recalculations to test the mechanical
accuracy of those amounts;

Forecast inputs and
growth assumptions were compared against historical trends to assess the
reliability of management’s forecast, in addition to comparing forecast
assumptions to external market analysis;

With the assistance of
specialists, we compared the discount rate applied to the future cash flows
and benchmarked it against other companies in the industry; and

Performed sensitivity
analysis

In doing so we have
involved our valuation specialists to assist us in carrying out aforesaid
procedures as considered appropriate

We have also evaluated
the accounting and respective disclosures made in the consolidated financial
statements

Legal matters

There are a number of
threatened and actual legal, regulatory and tax cases against the group.
These include those relating to land and related commitments, tax matters,
claims made by or against the group on account of medical matters and other
civil suits, etc. There is a high level of judgement required in assessing
consequential impact and disclosures thereof on the consolidated financial
statements

Refer to Note 3 –
Critical estimates and judgements; Note 6(xx) – Provisions; and Note 13 –
Contingent liabilities and legal proceedings

Our procedures included
the following:

Testing key controls
surrounding litigation, regulatory and tax cases;

External legal opinions
obtained by management and independent confirmations obtained by us;

Reading correspondences
including those of subsequent period;

Discussing open matters
with the management including, but not limited to, company legal counsel, tax
teams, regional and financial teams; and

Assessing and
challenging management’s conclusions through understanding precedents set in
similar cases

Based on the evidence
obtained, management’s assessment of such legal, regulatory and tax matters,
the provision carried in the books of accounts in respect of such matters as
on 31^st March, 2019 (while noting the inherent uncertainty of such
matters) and related disclosures seem to be reasonable

Report on Other
Legal and Regulatory Requirements

1. As regards the matters to be
inquired by the auditors in terms of section 143(1) of the Act, we report, to
the extent applicable, as follows:

(a) As explained in Note 29 and
Note 31(d)(i) of the consolidated financial statements, FHsL, a wholly-owned
subsidiary of the company, has granted loans in the form of ICDs to three
borrower companies which were stated to have been secured at the time of grant
on 1^st July, 2017. However, it has been noted in the investigation
report that:

(i) there were certain systemic
lapses and override of internal controls including shortcomings in executing
documents and creating a security charge. The charge was later on created in
February, 2018 for the ICDs granted on 1^st July, 2017 while the
company / FHsL was under financial stress; and

(ii) there were certain systemic
lapses in respect of the assignment of the ICDs and subsequent termination of
the arrangement, viz., no diligence was undertaken in relation to assignment,
it was not approved by the Treasury Committee, and was antedated. The Board of
the subsidiary took note of the same only in February, 2018.

Further, we note from the
investigation report that the external legal firm was unable to assess as to
whether the security (charge) is realisable considering the nature of assets
held by the borrower companies.

In view of the above, we are
unable to comment whether aforesaid loans and advances made by the wholly-owned
subsidiary on the basis of security have been properly secured or whether they
are prejudicial to the interests of the group.

(b) In respect of the ICDs placed,
the investigation report has stated that a roll-over mechanism was devised
whereby the ICDs were repaid by cheque by the borrower companies at the end of
each quarter and fresh ICDs were released at the start of succeeding quarter
under separately executed ICD agreements. Further, in respect of the roll-overs
of ICDs placed on 1^st July 2017 with the borrower companies, FHsL
utilised the funds received from the company for the purposes of effecting
roll-over. We are unable to determine whether these transactions in substance
represent book entries or whether they are prejudicial to the interests of the
group as these were simultaneously debited and credited to the bank statement.

However, as explained in Note 29
to the consolidated financial statements, the company’s management has fully
provided for the outstanding balance of the ICDs and the interest accrued
thereon as at 31^st March, 2018.

(c) As explained in Note
31(d)(iv), during the year, the company through its subsidiary (i.e., Escorts
Heart Institute and Research Centre Limited or EHIRCL), acquired 71% equity
interest in Fortis Healthstaff Limited at an aggregate consideration of Rs.
3.46 lakhs. Subsequently, EHIRCL advanced a loan to Fortis Healthstaff Limited,
which was used to repay the outstanding unsecured loan amount of Rs. 794.50
lakhs to a promoter group company. Certain documents suggest that the loan
repayment by Fortis Healthstaff Limited and some other payments to the promoter
group company were ultimately routed through various intermediary companies and
used for repayment of the ICDs / vendor advance to FHsL / company.

Further as explained in Note
31(i), the company through its subsidiary (FHsL) acquired equity interest in
Fortis Emergency Services Limited from a promoter group company. On the day of
the share purchase transaction, FHsL advanced a loan to Fortis Emergency
Services Limited which was used to repay an outstanding unsecured loan amount
to the said promoter group company. It may be possible that the loan repayment
by Fortis Emergency Services Limited to the said promoter group company was
ultimately routed through various intermediary companies and was used for
repayment of the ICDs / vendor advance to FHsL.

With regard to the above
acquisitions, we are informed that pre-approval from the Audit Committee was
obtained for acquiring the equity interest, but not for advancing the loans to
these subsidiaries. Further, we understand that the aggregate of the amounts
paid towards acquisition of shares and the loans given were substantially
higher than the enterprise value of these companies at the time of acquisition,
as determined by the group.

In view of the above, we are
unable to determine whether these transactions are prejudicial to the interests
of
the group.

……

3. With respect to the other
matters to be included in the Auditor’s Report in accordance with Rule 11 of
the Companies (Audit and Auditor’s) Rules, 2014, in our opinion and to the best
of our information and according to the explanations given to us and based on
the consideration of the reports of the other auditors on separate financial
statements of the subsidiaries, associates and joint ventures, as noted in the
‘other matters’ paragraph:

(a) Except for the effects /
possible effects of matters described in paragraph (a)(i) of the ‘Basis for
Qualified Opinion’ section above, the consolidated financial statements
disclose the impact of pending litigations as at 31st March, 2019 on the
consolidated financial position of the group, its associates and joint ventures.
Refer Note 13 to the consolidated financial statements.

(b) Except for effects / possible
effects of the matters described in paragraph (a) of the ‘Basis for Qualified
Opinion’ section above, provision has been made in the consolidated financial
statements, as required under the applicable law or Ind AS, for material
foreseeable losses, if any, on long-term contracts including derivative
contracts. Refer Note 12(b), 6(xx) and 12(d) to the consolidated financial
statements.

(c) There were no amounts which
were required to be transferred to the investor education and protection fund
by the group. Refer Note 12(e) of the consolidated financial statements.

(d) The
disclosures in the consolidated financial statements regarding holdings as well
as dealings in specified bank notes during the period from 8^th
November, 2016 to 30^th December, 2016 have not been made in the
financial statements since they do not pertain to the financial year ended 31^stMarch, 2019.

From
Notes to Accounts

31. Investigation initiated by
the erstwhile Audit and Risk Management Committee:

(a) During the previous year
there were reports in the media and inquiries from, inter alia, the
stock exchanges received by the company about certain inter-corporate loans
(ICDs) given by a wholly-owned subsidiary of the company. The erstwhile Audit
and Risk Management Committee of the company in its meeting on 13^thFebruary,
2018 decided to carry out an independent investigation through an external
legal firm on this matter;

(b) The
terms of reference of the investigation, comprised: (i) ICDs amounting to a
total of Rs. 49,414 lakhs (principal), placed by the company’s wholly-owned
subsidiary, FHsL, with three borrowing companies as on 1^st July,
2017 (refer Note 29 above); (ii) the assignment of these ICDs to a third party
and the subsequent cancellation thereof as well as evaluation of legal notice
(now a civil suit) received from such third party (refer Notes 14I and 29
above); (iii) review of intra-group transactions for the period commencing FY
2014-15 and ending on 31^stDecember, 2017; (iv) investments made in
certain overseas funds by the overseas subsidiaries of the company [i.e.,
Fortis Asia Healthcare Pte. Ltd, Singapore and Fortis Global Healthcare
(Mauritius) Limited] {refer Note 30(c) above}; (v) certain other transactions
involving acquisition of Fortis Healthstaff Limited (Fortis Healthstaff) from
an erstwhile promoter group company, and subsequent repayment of loan by said
subsidiary to the erstwhile promoter group company;

(d) The re-constituted Board
discussed and considered the investigation report and noted certain significant
findings of the external legal firm, which are subject to the limitations on
the information available to the external legal firm and their qualifications
and disclaimers as described in their investigation report:

(i) While the investigation
report did not conclude on utilisation of funds by the borrower companies,
there are findings in the report to suggest that the ICDs were utilised by the
borrower companies for granting / repayment of loans to certain additional
entities including those whose current and / or past promoters / directors are
known to / connected with the erstwhile promoters of the company;

(ii) In terms of the relationship with the
borrower companies, there was no direct relationship between the borrower
companies and the company and / or its subsidiaries during the period December,
2011 to 14^th December, 2017 (these borrower companies became related
parties from 15^th December, 2017). The investigation report has made
observations where erstwhile promoters were evaluating certain transactions
concerning certain assets owned by them for the settlement of ICDs, thereby
indirectly implying some sort of affiliation with the borrower companies. The
investigation report has observed that the borrower companies could possibly
qualify as related parties of the company and / or FHsL, given the substance of
the relationship. In this regard, reference was made to Indian Accounting
Standards dealing with related party disclosures, which states that for
considering each possible related party relationship, attention is to be
directed to the substance of the relationship and not merely the legal form;

Objections on record indicate
that management personnel and other persons involved were forced into
undertaking the ICD transactions under the repeated assurance of due repayment
and it could not be said that the management was in collusion with the
erstwhile promoters to give ICDs to the borrower companies. Relevant documents
/ information and interviews also indicate that the management’s objections
were overruled. However, the former Executive Chairman of the company, in his
written responses, has denied any wrongdoing, including override of controls in
connection with grant of the ICDs;

(iii) Separately, it was also noted in the Investigation Report that the
aforesaid third party to whom the ICDs were assigned has also initiated legal
action against the company. (Refer Note 29). Whilst the matter was included as
part of the terms of reference of the investigation, the merits of the case
cannot be reported since the matter was subjudice;

(iv) During the previous year ended 31^st March, 2018, the
company through its subsidiary (Escorts Heart Institute and Research Centre
Limited or EHIRCL), acquired 71% equity interest in Fortis Healthstaff Limited
at an aggregate consideration of Rs. 3.46 lakhs. Subsequently, EHIRCL advanced
a loan to Fortis Healthstaff Limited which was used to repay the outstanding
unsecured loan amount of Rs. 794.50 lakhs to an erstwhile promoter group
company. Certain documents suggest that the loan repayment by Fortis
Healthstaff Limited and some other payments to the erstwhile promoter group
company may have been ultimately routed through various intermediary companies
and used for repayment of the ICDs / vendor advance to FHsL / EHIRCL. Further,
the said loan advanced by EHIRCL to Fortis Healthstaff Limited was impaired in
the books of accounts of EHIRCL due to anticipated chances of non-recovery
during the year ended 31^st March, 2019;

(v) The investigation did not cover all related party transactions
during the period under investigation and focused on identifying undisclosed
parties having direct / indirect relationship with the erstwhile promoter
group, if any. In this regard, it was observed in internal correspondence
within the company that transactions with certain other entities have been
referred to as related party transactions. However, no further conclusions have
been made in this regard;

(vi) Additionally, it was observed in the investigation report that
there were significant fluctuations in the NAV of the investments in overseas
funds by the overseas subsidiaries during a short span of time. Further, like
the paragraph above, in the internal correspondence within the company,
investments in the overseas funds have been referred to as related party
transactions. During the year ended 31^st March, 2018 investments
held in the Global Dynamic Opportunity Fund were sold at a discount of 10% with
no loss in the principal value of investments.

OTHER
MATTERS

(e) Related party relationships
as required under Ind AS 24 Related Party Disclosures and the Companies
Act, 2013 were as identified by the management taking into account the findings
and limitations in the investigation report [Refer Notes 31(d)(i), (ii) and
(vi) above] and the information available with the management. In this regard,
in the absence of specific declarations from the erstwhile directors on their
compliance with disclosures of related parties, especially considering the
substance of the relationship rather than the legal form, the related parties
were identified based on the declarations by the erstwhile directors and the
information available through the known shareholding pattern in the entities up
to 31^st March, 2018. Therefore, the possibility cannot be ruled out
that there may have been additional related parties whose relationship may not
have been disclosed to the group and, hence, not known to the management;

(f) With respect to the other
matters identified in the investigation report, the Board initiated specific
improvement projects to strengthen the process and control environment. The
projects included revision of authority levels, both operational and financial
and oversight of the Board, review of financial reporting processes, assessment
of secretarial documentation w.r.t. compliance with regulatory requirements and
systems design and control enhancement. The assessment work has been done and
corrective action plans have been implemented. The Board, however, continues to
evaluate other areas to strengthen processes and build a robust governance
framework. Towards this end, it is also evaluating internal organisational
structure and reporting lines, the roles of authorised representatives and
terms of reference of executive committees and their functional role. The
company’s Board of Directors has also initiated an inquiry of the management of
certain entities in the group that were impacted in respect of the matters
investigated by the external legal firm;

(g) It is in the above backdrop
that it is pertinent to mention that during the previous year the company
received a communication dated 16^th February, 2018 from the
Securities and Exchange Board of India (SEBI), confirming that an investigation
has been instituted by SEBI in the matter of the company. In the aforesaid
letter, SEBI required the company u/s 11C(3) of the SEBI Act, 1992 to furnish
by 26^thFebruary, 2018 certain information and documents relating to
the short-term investments of Rs. 473 crores reported in the media. SEBI had
appointed forensic auditors to conduct a forensic audit, and of collating
information from the company and certain of its subsidiaries. The company / its
subsidiaries furnished all requisite information and documents requested by
SEBI.

In
furtherance of the above, on 17^th October, 2018 SEBI passed an ex-parte
interim order whereby it observed that certain transactions were structured by
some identified entities over a certain duration, and undertaken through the
company, which were prima facie fictitious and fraudulent in nature and
which resulted in inter alia diversion of funds from the company for the
ultimate benefit of erstwhile promoters (and certain entities controlled by
them) and misrepresentation in financial statements of the company. Further, it
issued certain interim directions that inter alia directed the company
to take all necessary steps to recover Rs. 40,300 lakhs along with due interest
from erstwhile promoters and various other entities, as mentioned in the order.
More importantly, the said entities had also been directed to jointly and severally
repay Rs. 40,300 lakhs (approximately) along with due interest to the company
within three months of the order. Incidentally, the order also included FHsL as
one of the entities directed to repay the due sums. Pursuant to this, FHsL’s
beneficial owner account had been suspended for debits by the National
Securities Depository Limited and Central Depository Services (India) Limited.
Further, SEBI had also directed the said entities that pending completion of
investigation and till further order, they shall not dispose of or alienate any
of their assets or divert any funds, except for the purposes of meeting
expenses of day-to-day business operations, without the prior permission of
SEBI. The erstwhile promoters have also been directed not to associate themselves
with the affairs of the company in any manner whatsoever till further
directions. Parties named in the order had been granted opportunity for filing
their respective replies / objections within 21 days.

The company and its wholly-owned
subsidiary, Fortis Hospitals Limited (FHsL), had then filed applications for
modification of the order, for deletion of the name of FHsL from the list of
entities against whom the directions were issued. Pursuant to this, SEBI, vide
order dated 21^st December, 2018, modified its previous order dated
17^th October, 2018 deleting FHsL from the list of entities against
whom the order was directed. Pursuant to this, the suspension order by National
Securities Depository Limited for debits in beneficial owner account of FHsL was
accordingly removed. Vide an order dated 19^th March, 2019 SEBI has
confirmed the directions issued vide ad interim ex-parte order dated 17^th
October, 2018 read with order dated 21^stDecember, 2018 till further
orders. SEBI also directed the company and FHsL to take all necessary steps to
recover Rs. 40,300 lakhs along with due interest from the erstwhile promoters
and various other entities, as mentioned in the order.

The company and FHsL have filed
all necessary applications in this regard including an application with the
Recovery Officer, SEBI, u/s 28A of the Securities and Exchange Board of India
Act, 1992 for the recovery of the amounts owed by the erstwhile promoters and
various other entities to the company and FHsL.

The matter before SEBI is subjudice
and the investigation is ongoing, inasmuch as it has observed that a detailed
investigation would be undertaken to ascertain the role of each entity in the
alleged diversion and routing of funds. The Board of Directors is committed to
fully co-operating with the relevant regulatory authorities to enable them to
make a determination on these matters and to undertake remedial action, as may
be required, and to ensure compliance with applicable laws and regulations. In
the aforesaid context, proper and sufficient care has been taken for the
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 fraud and other irregularities.

(h) As per the assessment of the
Board, based on the investigation carried out through the external legal firm,
the SEBI order and the information available at this stage, all identified /
required adjustments / disclosures arising from the findings in the
investigation report were made in the consolidated financial statements for the
year ended 31^stMarch, 2018.

No further adjustments have been
required to be made in consolidated financial statements for the year ended 31^st
March, 2019. Any further adjustments / disclosures, if required, would be made
in the books of accounts as and when the outcome of the above is known.

(i) In the backdrop of the
investigation, the management has reviewed some of the past information /
documents in connection with transactions undertaken by the company and certain
subsidiaries. It has been noted that the company through its subsidiary Fortis
Hospitals Limited (FHsL) acquired equity interest in Fortis Emergency Services
Limited from a promoter group company. On the day of the share purchase
transaction, FHsL advanced a loan to Fortis Emergency Services Limited, which
was used to repay an outstanding unsecured loan amount to the said promoter
group company. It may be possible that the loan repayment by Fortis Emergency
Services Limited to the said promoter group company was ultimately routed
through various intermediary companies and was used for repayment of the ICDs /
vendor advance to FHsL.

From
Directors’ Report

QUALIFIED
OPINION

We have audited the consolidated
financial statements of Fortis Healthcare Limited (hereinafter referred to as
the ‘company’ or ‘holding company’) and its subsidiaries (holding company and
its subsidiaries together referred to as ‘the group’), its associates and its
joint ventures, which comprise the consolidated balance sheet as at 31^st
March, 2019, the consolidated statement of profit and loss (including other
comprehensive income), consolidated statement of change in equity and
consolidated cash flow statement for the year then ended, and notes to the
consolidated financial statements, including a summary of significant
accounting policies and other explanatory information (hereinafter referred to
as ‘the consolidated financial statements’).

In our opinion and to the best of
our information and according to the explanations given to us, and based on the
consideration of the reports of auditors on separate financial statements of
such subsidiaries, associates and joint ventures as were audited by other
auditors, except for the effects / possible effects, if any, of the matters
described in the ‘Basis for Qualified Opinion’ paragraphs of our report , the
aforesaid consolidated financial statements give the information required by
the Companies Act, 2013 (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 consolidated state of affairs of the group, its associates and
joint ventures as at 31^st March, 2019, of its consolidated profit
and other comprehensive income, consolidated statement of changes in equity and
consolidated cash flows for the year ended on that date.

Basis for
Qualified Opinion

(a) The matters
stated below were also subject matter of qualification in predecessor auditor’s
audit opinion on the consolidated financial statements as at 31^stMarch,
2018:

(i) As
explained in Note 31 of the consolidated financial statements, pursuant to
certain events / transactions, the erstwhile Audit and Risk Management
Committee (ARMC) of the company had initiated an independent investigation by
an external legal firm and special audits by professional firms on matters
relating to systematic lapses / override of internal controls as described in
Note 31 of the consolidated financial statements. The report has since been
submitted and is subject to the limitations on the information available to the
external legal firm and their qualifications and disclaimers as described in
their investigation report. Additionally, different regulatory authorities are
currently undertaking their own investigations, details of which are described
in Note 31 and Note 32 of the consolidated financial statements and are stated
below:

* SEBI has initiated an
investigation in respect of the various issues. On 17^th October,
2018, 21^st December, 2018 and
19^th March, 2019, SEBI passed orders and further investigations by
regulatory authorities is continuing. In its orders, SEBI observed that certain
inter-corporate deposits (ICDs) made by Fortis Hospitals Limited (FHsL), a
wholly-owned subsidiary of the company, with certain identified entities were
so structured that they seem to be prima facie fictitious and fraudulent
in nature resulting inter alia in diversion of funds from the group for
the ultimate benefit of erstwhile promoters (and certain entities controlled by
them) resulting in a misrepresentation in the financial statements of the group
in the earlier period. Further, SEBI issued certain directions inter alia
directing the company and FHsL to take all necessary steps to recover Rs.
40,300 lakhs along with the due interest from the erstwhile promoters and
various other entities, as mentioned in the orders. It has also directed the
erstwhile promoter and the said entities to repay the sums due. The aforesaid
ICDs were fully provided for in the books as at 31^st March, 2018.
SEBI in its orders also directed the erstwhile promoters and the said entities
that pending completion of investigation and till further order, they shall not
dispose of or alienate any of their assets or divert any funds, except for the
purposes of meeting expenses of the day-to-day business operations, without the
prior permission of SEBI. The erstwhile promoters have also been directed not
to associate themselves with the affairs of the company in any manner
whatsoever till further directions. The initial directions issued by SEBI have
been confirmed by SEBI in their order dated 19^thMarch, 2019.

* Serious Fraud Investigation
Office (SFIO), Ministry of Corporate Affairs, u/s 217(1)(a) of the Companies
Act, 2013, inter alia, has initiated an investigation and has been
seeking information in relation to the company, its material subsidiaries,
joint ventures and associates to which, as informed to us, the company has
responded.

Since the investigation and
inquiries carried out by the regulators as aforesaid are currently ongoing, the
need for additional procedures / inquiries, if any, and an overall assessment
of the impact of the investigations on the financial statements is yet to be
concluded.

Matters
included in the investigation report (but not limited to) and highlighted by
the predecessor auditor in their audit report for the year ended 31^st
March, 2018 are as below:

* Provisions
against the outstanding ICDs amounting to Rs. 44,503 lakhs (including interest
accrued thereon of Rs. 4,260 lakhs), provision of Rs. 5,519 lakhs towards
amounts paid as security deposit, advances towards lease of office space and
expenditure incurred towards capital work in progress and Rs. 2,549 lakhs
towards property advance (including interest accrued thereon of Rs. 174 lakhs)
due to uncertainty of recovery of these balances (refer to Note 29 and 30 of
the of the consolidated financial statements).

* The company through its
overseas subsidiaries sold its investment held in a fund at a discount (money
was received on 23^rdApril, 2018) which was recorded as a loss in
the consolidated financial statements for the year ended 31^st March,
2018. In absence of sufficient information available, rationale to demonstrate
the reasonability of the discount was not established [refer to Note 30(c) and
31(b) of the consolidated financial statements].

* Certain past transactions as
mentioned in the Note 31 of the consolidated financial statements which may
have been prejudicial to the group.

No additional adjustments /
disclosures were required to be made in the consolidated financial statements
for the year 31^st March, 2019 in respect of the above.

As explained in Note 9(5) and
Note 31(e) of the consolidated financial statements, related party
relationships prior to loss of control of erstwhile promoters / directors in
the year ended 31^st March, 2018 were identified by the management
taking into account the information available with the management and including
the findings and limitations in the investigation reports. In this regard,
specific declarations from the erstwhile directors / promoters, especially
considering the substance of the relationship rather than the legal form, were
not available. Therefore, the possibility cannot be ruled out that there may be
additional related parties of the erstwhile promoters / directors whose
relationships may not have been disclosed to the group and, hence, not known to
the management.

Further, as explained in Note 14
of the consolidated financial statements, a civil suit was filed by a third
party against various entities including the company relating to ‘Fortis, SRL
and La-Femme’ brands. The company has received four demand notices aggregating
to Rs. 25,344 lakhs in respect to this civil suit. Allegations made by third
party have been duly responded to by the company denying (i) execution of any
binding agreement with the third party; and (ii) liability of any kind
whatsoever. Based on legal advice of the external legal counsel, the management
believes that the claims are without legal basis and not tenable. The matter is
currently subjudice.

Due to the ongoing nature of the
various regulatory inquiries / investigations, we are unable to comment on the
adjustments / disclosures which may become necessary as a result of further
findings of the ongoing regulatory investigations on the consolidated financial
statements including completeness / accuracy of the related party transactions
which relate to or which originated before 31^st March, 2018, the
regulatory non-compliances, if any, and the consequential impact, if any, on
the consolidated financial statements.

(ii) As explained in Note 29 and
Note 30 during the year ended 31^st March, 2018 interest income of
Rs. 4,434 lakhs comprising Rs. 4,260 lakhs (on the outstanding ICDs given) and
Rs. 174 lakhs (relating to property advance) had been recognised. A provision
was, however, created against the entire amount in the year ended 31^st
March, 2018 and the provision was disclosed as an exceptional item. The
recognition of aforesaid interest income as at 31^st March, 2018 on
doubtful ICDs and property advance is not in compliance with Ind AS 18
‘Revenue’ (as it does not meet the recognition criteria) and consequently
interest income and the provision for doubtful interest disclosed as
exceptional items (net) are overstated to that extent. It had no impact on loss
for the year ended 31^stMarch, 2018.

(iii) As explained in Note 34 of
the consolidated financial statements, during the year ended 31^st
March, 2018, the company having considered all necessary facts and taking into
account external legal advice, concluded that it had paid an amount aggregating
to Rs. 2,002 lakhs to the erstwhile Executive Chairman during his tenure (ended
during the year ended 31^stMarch, 2018) in excess of the amounts
approved by the Central Government u/s 197 of the Companies Act, 2013 for his
remuneration and other reimbursements. This is accordingly a non-compliance
with the provisions of section 197 of the Companies Act, 2013. In the current
year, the company has taken requisite actions to recover this amount. Due to
the uncertainty involved in recoverability of the said amounts, a provision for
this amount has also been recorded.

(b) The group has recorded a
cumulative financial liability as at 31^st March, 2019 of Rs. 118,000
lakhs (included under ‘other current financial liabilities’) by debiting ‘other
equity’ in respect of put option available with certain non-controlling
shareholders of SRL Limited [refer to Note 12(b) of the consolidated financial
statements]. The group has not quantified the liability relating to previous
periods and, therefore, we are unable to comment on the impact of such
liability on previous periods.

DIRECTOR’S
RESPONSE TO COMMENTS OF THE STATUTORY AUDITORS IN THE AUDIT REPORT:

(i) With regard to the comments
of the statutory auditors in paragraph a(i) of the ‘Basis for Qualified Opinion
of Audit Report’, pertaining to the investigation report, it is submitted that,
based on the investigation carried out by the external legal firm, SEBI interim
orders dated 17^thOctober, 2018 and 21^st December, 2018
and confirmed vide order dated 19^th March, 2019 and the information
available at this stage, all identified / required adjustments / disclosures
arising from the findings in the investigation report, were made in the
previous year. Further, the Board initiated specific improvement projects
during current year to strengthen the process and control environment. The
Board continues to evaluate other areas to strengthen processes. Further,
investigations by various regulatory authorities are yet to be completed. With
regard to other comments, all identified adjustments / disclosures have been
made. For more details please refer to Notes 14, 29, 30, 31, 21 to financial
statements;

(ii) With regard to the comments of the statutory auditors in
paragraph a(ii) of the ‘Basis for Qualified Opinion of Audit Report’, there was
no impact on the net income for the previous year;

(iii) With regard to the comments of the statutory auditors in paragraph
a(iii) of the ‘Basis for Qualified Opinion of Audit Report’, pertaining to the
LoA issued to the erstwhile Executive Chairman, the company, having considered
all necessary facts, has decided to treat as non-est the LoA issued to
the erstwhile Executive Chairman and is taking suitable legal measures to
recover the payments made to him under the LoA as well as all the company’s
assets in his possession. For more details, please refer to Note 34 to
financial statements.

(iv) With regard to the comments of the statutory auditors in paragraph
b, of the ‘Basis for Qualified Opinion of Audit Report’ in relation to put
options granted to certain non-controlling shareholders of the subsidiary, due
to contractual agreement, facts and circumstances of the case at that time, the
group considered not to recognise this liability in the previous year.

The statement on Impact of Audit
Qualifications as stipulated in regulation 33(3)(d) is placed below:

Qualifications
in the Auditor’s Report

The Board of Fortis Healthcare
Limited has dealt with the matters stated in the qualifications in statutory
auditor’s report on the consolidated financial results of Fortis Healthcare
Limited (the ‘parent’ or ‘the company’) and its subsidiaries (the parent /
company and its subsidiaries together referred to as ‘the group’) and its share
of profit / (Loss) of its joint ventures and associates for the year ended 31^st
March, 2019 (the consolidated annual results) included in the statement of
consolidated financial results (the consolidated statement) to the extent
information was available with them.

(Rs.
in lakhs)

Sl.
No.

Particulars

Audited
figures (as reported before adjusting for qualifications)

Adjusted
figures (audited figures after adjusting for qualifications)^$

Turnover
/ total income

456,176

Not
determinable

Total
expenditure

478,547

—Do—

Net
profit/ (loss)

(22,371)

—Do—

Earnings
per share

(3.70)

—Do—

Total
assets

1,195,127

—Do—

Total
liabilities

483,878

—Do—

Net
worth

711,249

—Do—

Any
other financial item(s) [as felt appropriate by the management]

–

“$” for
Qualifications a to b of the Auditor’s Report

QUALIFICATION 1
OF THE AUDITOR’S REPORT

1. Details of audit
qualification:

As explained in basis of
qualification a(i) above;

2. Type of audit
qualification:

Qualified opinion;

3. Frequency of qualification:

Second time;

4. For Audit qualification(s) where
the impact is quantified by the auditor, management’s views:

Not applicable;

5. For audit qualification(s)
where the impact is not quantified by the auditor:

(i) Management’s estimation on
the impact of audit qualification: Not quantifiable;

(ii) If management is unable
to estimate the impact, reasons for the same:

Please refer point No. (i) above
of Director’s response to comments of the statutory auditors in the Audit
Report;

(iii) Auditors’ comments on
(i) or (ii) above:

Due to the nature of various
regulatory inquiries / investigations, the consequential impact, if any, cannot
be ascertained.

QUALIFICATION 2
OF THE AUDITOR’S REPORT

1. Details of audit
qualification:

As explained in basis of
qualification a(ii);

2. Type of audit
qualification:

Qualified opinion;

3. Frequency of qualification:

Second time;

4. For Audit qualification(s)
where the impact is quantified by the auditor, management’s views:

Please refer point No. (ii) above
of Director’s response to comments of the statutory auditors in the Audit
Report.

5. For audit qualification(s)
where the impact is not quantified by the auditor:

(i) Management’s estimation on
the impact of audit qualification:

No impact in the current year
2018-19;

(ii) If management is unable
to estimate the impact, reasons for the same:

Not applicable;

(iii) Auditors’ comments on
(i) or (ii) above:

Not applicable.

QUALIFICATION 3
OF THE AUDITOR’S REPORT

1. Details of audit
qualification:

As explained in the basis of
qualification a(iii) above;

2. Type of audit
qualification:

Qualified opinion;

3. Frequency of qualification:

Second time;

4. For audit qualification(s)
where the impact is quantified by the auditor, management’s views:

Not applicable;

5. For audit qualification(s)
where the impact is not quantified by the auditor:

(i) Management’s estimation on
the impact of audit qualification:

Not quantifiable;

(ii) If management is unable
to estimate the impact, reasons for the same:

Please refer point No. (iii)
above of Director’s response to comments of the statutory auditors in the Audit
Report;

(iii) Auditors’ comments on
(i) or (ii) above:

A continuing qualification from
previous year as non-compliance with section 197 of the Companies Act, 2013 is
pending to be regularised.

QUALIFICATION 4
OF THE AUDITOR’S REPORT

1. Details of audit
qualification:

As explained in basis of
qualification (b) above;

2. Type of audit
qualification:

Qualified opinion

3. Frequency of qualification:

First time;

4. For audit qualification(s)
where the impact is quantified by the auditor, management’s views:

Not applicable;

5. For audit qualification(s)
where the impact is not quantified by the auditor:

(i) Management’s estimation on
the impact of audit qualification:

Not quantifiable;

(ii) If management is unable
to estimate the impact, reasons for the same:

Please refer point No. (iv) above
of Director’s response to comments of the statutory auditors in the
Audit Report;

(iii) Auditors’ Comments on
(i) or (ii) above:

In our view, based on contractual
agreement and facts available, the group is required to recognise liability of
this put option in earlier years.

BCAJ Admin

From Published Accounts

Assumption
of ‘Going Concern’ basis for preparation of financial statements for the year
ended 31^st March
2018 and reporting thereon in independent auditor’s report for SEBI LODR
regulations

Jet Airways (India)
Ltd.

From Notes to financial results

The
Company has incurred a loss during the year and has negative net worth as at 31^st
March, 2018 that may create uncertainties. However, various initiatives
undertaken by the Company in relation to saving cost, optimise revenue
management opportunities and enhance ancillary revenues is expected to result
in improved operating performance. Further, our continued thrust to improve
operational efficiency and initiatives to raise funds are expected to result in
sustainable cash flows addressing any uncertainties, accordingly, the statement
of financial results continues to be prepared on a going concern basis, which
contemplates realisation of assets and settlement of liabilities in the normal
course of business including financial support to its subsidiaries.

From auditor’s report

Emphasis of Matter

We
draw attention to Note 13 of the annual standalone financial results regarding
preparation of the annual standalone financial results on going concern basis
for the reasons stated therein. The appropriateness of assumption of going
concern is dependent upon realisation of the various initiatives undertaken by
the Company and/or the Company’s ability to raise requisite finance/generate
cash flows in future to meet its obligations, including financial support to
its subsidiary companies. Our opinion is not modified in respect of this
matter.

Reliance
Communications Ltd.

From Notes to financial results

The
Company was engaged with Joint Lenders’ Forum (JLF), constituted on June 2,
2017 and under standstill period till December 2017 pursuant to the Strategic
Debt Restructuring Scheme (SDR Scheme) of Reserve Bank of India (RBI).
Consequent to circular of 1 February, 2018 of RBI, the Company continued to
work closely with the Lenders to finalise an overall debt resolution plan.
Pursuant to strategic transformation programme, as a part of debt resolution
plan of the Company under consideration, inter alia of the Lenders, the
Company and its subsidiaries; Reliance Telecom Limited (RTL) and Reliance
lnfratel Limited (RITL), with the permission of and on the basis of suggestions
of the Lenders, had for monetisation of some specified Assets, entered into
definitive binding agreements with Reliance Jio lnfocomm Limited (RJio) on
December 28, 2017 for sale of Wireless Spectrum, Towers, Fiber and Media
Convergence Nodes (MCNs). Further, the Company has also entered into a
definitive binding agreement with Pantel Technologies Private Limited and
Veecon Media and Television Limited for sale of its subsidiary company having
DTH Business. The Company and its said subsidiaries expected to close these
transactions in a phased manner. In the meanwhile, Hon’ble National Company Law
Tribunal (NCLT), Mumbai has, overruling the objections of the Company as also
its lenders represented by State Bank of India, the lead member, vide its order
dated May 15, 2018 admitted applications filed by an operational creditor for
its claims against the Company and its subsidiaries; RTL and RITL and thereby
admitted the companies to debt resolution process under the Insolvency and
Bankruptcy Code, 2016 (IBC). As a consequence, Interim Resolution Professionals
(IRPs) were appointed vide NCLT’s order dated May 18, 2018. The Company along
with the support of the lenders filed an appeal with Hon’ble National Company
Law Appellate Tribunal (NCLAT) challenging the order of NCLT admitting the Company
to IBC proceedings. The Hon’ble NCLAT, vide its order dated May 30, 2018,
stayed the order passed by NCLT and consequently, the Board stands reinstated.
Further, Minority Shareholders holding 4.26% stake in RITL had accused the
management of RITL of “Oppression of minority shareholders and
mismanagement” and filed a petition in NCLT. Based on an amendment to the
Petition, the NCLT stayed RITL’s proposed asset sale (Tower and Fibre). The
parties have subsequently settled the dispute and the restriction on sale
stands vacated pursuant to order admitting RITL to the IBC proceeding is
vacated. The Company is confident that a suitable debt resolution plan would be
formulated along with its lenders as per the strategic transformation
programme. Considering these developments, the financial results continue to be
prepared on going concern basis. This matter has been referred to by the
Auditors in their Audit Report.

From auditor’s report

We
draw attention to Note 7 of the standalone Ind AS financial results, regarding
the Definitive Binding Agreement for monetisation of assets of the company
& its two subsidiaries and National Company Law Appellate Tribunal (NCLAT)
order dated 30^th May 2018 staying the NCLT order dated 15^th
May 2018 admitting the Company under Insolvency and Bankruptcy Code (IBC),
2016. The Company is confident that a suitable resolution plan would be
formulated by lenders in view of order admitting the Company under IBC
proceedings is vacated/stayed, accordingly financial results of the Company have
been prepared on going concern basis. Our opinion is not modified in respect of
the above matters.

Tata Teleservices
(Maharashtra) Ltd

From Notes to financial results

The
accumulated losses of the company as of March 31, 2018 have exceeded its
paid-up capital and reserves. The company has incurred net loss during the year
ended March 31, 2018 and the company’s current liabilities exceeded its current
assets as on that date. The company is in discussion for monetisation of
certain assets, proceeds of which will be used to meet its financial
obligations as and when they fall due. Further, the company has obtained a
support letter from its promoter indicating that the promoter will take
necessary actions to organise for any shortfall in liquidity in the company
that may arise to meet its financial obligations   and
timely   repayment of
debt   during the 12 months from balance sheet date.

From auditor’s report

No
remarks

Sri Adhikari
Brothers Television Network Ltd.

From Notes to financial results

During
the year ended 31^st March 2018, the company’s loan facilities from
banks has turned Non performing. Management of the company has submitted its
resolution plan, which is under consideration with the banks. The management of
the company is focussing on growth in cash flow and is quite confident to reach
some workable solution to resolve the financial position of the company.

From auditor’s report

We
draw attention to Note 6 regarding preparation of results on going concern
basis notwithstanding the fact that loans have been recalled back by secured
lenders, current liabilities are substantially higher than the current assets
and substantial losses incurred by the company during the financial year ending
31^st March 2018. The appropriateness of assumption of going concern
is mainly dependent on approval of company’s resolution plan with the secured
lenders, company’s ability to generate growth in cash flows in future, to meet
its obligations.

Our
opinion is not modified in respect of the matter stated in the above paragraph.

Spice Jet Ltd.

From Notes to financial results

The
Company has been consistently profitable for the last three financial years, as
a result of which the negative net worth of Rs. 14,852 million as on March 31,
2015 has substantially improved, and is only Rs. 429.7 million as on March 31,
2018. The Company’s net current liabilities have also reduced by similar
amounts. The earlier position of negative net worth and net current liabilities
was the result of historical market factors.

As a
result of various operational, commercial and financial measures implemented
over the last three years, the Company has significantly improved its liquidity
position, and generated operating cash flows during that period.

In
view of the foregoing and having regard to industry outlook in the markets in
which the Company operates, management is of the view that the Company will be
able to maintain profitable operations and raise funds as necessary, in order
to meet its liabilities as they fall due. Accordingly, these financial results
have been prepared on the basis that the Company will continue as a going
concern for the foreseeable future.

From auditor’s report

No remarks

BCAJ Admin

FROM PUBLISHED ACCOUNTS

This
monthly feature was started in August, 1976 and contained the description
“Notes as appeared in printed balance sheet of various companies regarding
maintenance of proper records of Fixed Asset”. It contained only two pages and
notes were taken from seven companies. No author name was stated.

From
1980-81 N H Kishnadwala wrote the feature till 1986-87. Nayan Parikh took over
from him from 1987-88 till 1994-95 along with other co-authors during that
time. In 1995-96 Ashok Dhere and Himanshu Kishnadwala carried it forward.
Himanshu has been contributing for 24 years now. Many others joined him during
that time for few years. Since 2009-10, Himanshu has been the sole contributor
to this 39-year-old feature.

In the early days, physical annual reports
had to be procured and then reviewed. Many people had to be requested to send
annual reports of companies. While earlier version carried abstracts from
Indian companies, the present feature covers reporting done by foreign
companies too. Feature covers new disclosures and notes, conflicting
disclosures by companies for accounting standards, comments in audit report and
other disclosures.

Limited Review
report containing ‘Qualification’ for potential Inventory losses and ‘Emphasis
of Matter’ for managerial remuneration and other pending inquiries on certain
past transactions and litigation

UNITED SPIRITS LTD (quarter ended 31^st
December, 2018)

From Statutory Auditors’ Limited Review
Report

Basis for Qualified Conclusion

4. We draw your attention to Note 11 to the
Statement, which states that the Company has come across differences in the
process losses and potential resultant differences in the inventory of few
categories of work in progress in certain plants, for which the company is
taking appropriate steps as described in the aforesaid Note. At this stage the
Company is not able to determine the related financial impact, if any, and
consequently we are unable to comment on the impact of this matter on the
Company’s results for the quarter ended 31^st December, 2018, as
reported in the Statement.

Qualified Conclusion

5. Based on our review conducted as above,
except for the matter stated in Basis for Qualified Conclusion in paragraph 4
above, nothing has come to our attention that causes us to believe that the
Statement has not been prepared in all material respects in accordance with the
applicable Accounting Standards prescribed u/s. 133 of the Companies Act, 2013
and other recognised accounting practices and policies, and has not disclosed
the information required to be disclosed in terms of Regulation 33 of the
Listing Regulations, 2015, including the manner in which it is to be disclosed,
or that it contains any material misstatement.

Emphasis of Matter

6. We draw attention to the following matters:

a) As explained in Note 6 (a) to the Statement,
the Managerial remuneration for the year ended 31^st March, 2015
included amounts paid to managerial personnel in excess of the limits
prescribed under the provisions of Schedule V to the Companies Act, 2013 by Rs.
134 million to the former Executive Director and Chief Financial Officer (ED
& CFO). The Company has initiated steps, including by way of filing a suit
for recovery before the jurisdictional court, to recover such excess
remuneration from the former ED&CFO.

b) As explained in Note 3 to the Statement, upon
completion of the Initial Inquiry, which identified references to certain
Additional Parties and certain Additional Matters, the MD & CEO, pursuant
to the direction of the Board of Directors, had carried out an Additional
Inquiry that revealed transactions indicating actual and potential diversion of
funds from the Company and its Indian and overseas subsidiaries to, in most
cases, Indian and overseas entities that appear to be affiliated or associated
with the Company’ erstwhile non-executive Chairman and other potentially
improper transactions. The amounts identified in the Additional Inquiry have
been fully provided for or expensed by the Company or its subsidiaries in
earlier periods. Management is currently unable to estimate the financial
impact on the Company, if any, arising from potential non-compliances with
applicable laws in respect of the above.

c) As explained in Note 4 to the Statement,
pursuant to its strategic objective of divesting non-core assets and
rationalisation of its subsidiaries, the Company has commenced the
rationalisation process and has sought approval of regulatory authorities for
divesting its stake in an overseas subsidiary and liquidating three of its
wholly owned overseas subsidiaries (and three of its wholly owned step-down
overseas subsidiaries). The completion of the above divestment as well as
liquidations by the Company are subject to regulatory and other approvals (in
India and overseas). At this stage, it is not possible for the management to
estimate the financial impact on the Company, if any, arising out of potential
historical non-compliances, if any, with applicable laws, with respect to its
overseas subsidiaries.

d) As explained in Note 8 to the Statement, the
Company is in litigation with a bank (“the Bank”) that continues to
retain the pledge of certain assets of the Company and of the Company’s shares
held by USL Benefit Trust (of which the Company is the sole beneficiary)
despite the Company prepaying the term loan to that bank along with the
prepayment penalty and further depositing an additional sum of Rs. 459 million
demanded by the Bank and as directed by the Hon’ble High Court of Karnataka
(the “Court”). The Court has directed the Bank not to deal with the
pledged assets of the Company (including the shares held by USL Benefit Trust)
as mentioned above till the disposal of the original writ petition filed by the
Company in the Court.

e) Note 7 to the Statement:

i) regarding clarifications sought by
Securities and Exchange Board of India on matters covered by the Company’s
Initial Inquiry and Additional Inquiry and certain aspects of the agreement
entered into by the Company with its erstwhile non-executive Chairman to which
the Company has responded;

ii) regarding various issues raised and show
cause notices issued pursuant to an inspection u/s. 206(5) of the Companies
Act, 2013 by Ministry of Corporate Affairs/ Registrar of Companies, Karnataka,
alleging violation of certain provisions of the Companies Act, 1956 and
Companies Act, 2013, to which the Company had responded. Further, the Company
has received a letter dated 13^th October, 2017 from the Registrar of
Companies, Karnataka (the “Registrar”) inviting the Company’s
attention to the compounding provisions of the Companies Act, 1956 and
Companies Act, 2013 following the aforesaid show cause notices. The Company
thereafter had filed applications for compounding of offences with the
Registrar in relation to three show cause notices, applications for
adjudication with the Registrar in relation to two show cause notices and had
requested the Registrar to drop one show cause notice based on expert legal
advice received, for which response is awaited.

iii) regarding the ongoing investigation by the
Directorate of Enforcement in connection with the agreement entered into by the
Company with its erstwhile nonexecutive Chairman and investigations under the
provisions of Foreign Exchange Management Act, 1999 and Prevention of Money
Laundering Act, 2002 to which the Company had responded; and

iv) regarding clarifications sought by Authorised
Dealer banks in relation to certain queries from the Reserve Bank of India with
regard to remittances made in prior years by the Company to its overseas
subsidiaries, past acquisition of the Whyte and Mackay group, clarifications on
Annual Performance Reports submitted for prior years and clarifications on
compliances relating to the Company’s overseas Branch office, to which the
Company had responded.

Our conclusion is
not modified in respect of the matters described under paragraph 6 above.

From Notes to
Statement of Standalone Unaudited Results

3. Additional Inquiry

As disclosed in the
financial statements for the years ended 31^st March, 2017 and 31^st
March, 2018, upon completion of the Initial Inquiry which identified references
to certain additional parties and certain additional matters, the MD & CEO,
pursuant to the direction of the Board of Directors, had carried out an
additional inquiry into past improper transactions (‘Additional Inquiry’) which
was completed in July 2016 and which, prima facie, identified transactions
indicating actual and potential diversion of funds from the Company and its
Indian and overseas subsidiaries to, in most cases, Indian and overseas
entities that appear to be affiliated or associated with the Company’s former
non-executive Chairman, Dr. Vijay Mallya, and other potentially improper
transactions. All amounts identified in the Additional Inquiry have been
provided for or expensed in the financial statements of the Company or its
subsidiaries in prior periods. At this stage, it is not possible for the
management to estimate the financial impact on the Company, if any, arising out
of potential non-compliances with applicable laws in relation to such fund
diversions.

4. Subsidiaries
Rationalisation

a) In relation to its subsidiaries and pursuant
to its strategic objective of divesting non-core assets which began with the
divestment of Bouvet Ladubay SAS, Chapin Landais SAS and United Spirits Nepal
Pvt Ltd, the Company has reviewed its subsidiaries’ operations, obligations and
compliances, and made plans for their rationalisation through sale, liquidation
or merger (“Rationalisation Process”).

b) During the quarter ended 30^th
September, 2018, the Company entered into an agreement for the sale of its
entire 51% equity holding in Liquidity Inc. and has sought approval of
regulatory authorities for divesting its stake in Liquidity Inc., as well as
for liquidating two of its wholly owned overseas subsidiaries, United Spirits
Trading (Shanghai) Company Limited and Montrose International SA. During the
quarter ended 31^st December, 2018, the Company has also sought
regulatory approval in respect of liquidating its wholly owned subsidiary, USL
Holdings Limited including its three wholly owned step-down overseas
subsidiaries. The completion of the above sale as well as liquidations by the
Company are subject to regulatory and other approvals (in India and overseas).
During this Rationalisation Process, if any historical non-compliances are
established, the Company will consult with its legal advisors, and address any
such issues including, if necessary, considering filing appropriate compounding
applications with the relevant authorities. At this stage, it is not possible
for the management to estimate the financial impact on the Company, if any,
arising out of potential non-compliances if any, with applicable laws.

c) On 16^th January, 2019, the Company
completed the sale of its entire equity shares held by the Company in its
wholly owned subsidiary Four Seasons Wines Limited (FSWL) along with wine
brands and FSWL’s interest in its associate Wine Society of India (WSI), to
Quintella Assets Limited and Grover Zampa Vineyards Limited. The shares were
sold for a total sale consideration of INR 319 million. Following the
completion of this sale, the Company does not hold any shares in FSWL or WSI
and FSWL has ceased to be a subsidiary of the Company. Also refer Note 10.

6. Excess
managerial remuneration

a) The managerial remuneration for the
financial year ended 31^st March, 2015 aggregating Rs. 63 million and
Rs. 153 million to the Managing Director & Chief Executive Officer (‘MD
& CEO’) and the former Executive Director and Chief Financial Officer (‘ED
& CFO’), respectively, was approved by the shareholders at the annual
general meeting of the Company held on 30^th September, 2014. The
aforesaid remuneration includes amounts paid in excess of the limits prescribed
under the provisions of Schedule V to the Companies Act, 2013 by Rs. 51 million
to the MD & CEO and by Rs. 134 million to the former ED & CFO.
Accordingly, the Company applied for the requisite approval from the Central
Government for such excess remuneration. The Central Government, by letters
dated 28^th April, 2016 did not approve the Company’s applications.
On 24^th May, 2016 the Company resubmitted the applications, along
with detailed explanations, requesting the Central Government to reconsider approving
the waiver of excess remuneration paid. In light of the findings from the
Additional Inquiry, by its letter dated 12^th July, 2016, the Company
withdrew its application for approval of excess remuneration paid to the former
ED & CFO and has filed a civil suit before the jurisdictional court to
recover the sums from the former ED & CFO. Consequent to the notification
of section 197(17) of the Companies Act, 2013 effective 12^th
September, 2018, the pending application of MD & CEO resubmitted to the Central
Government seeking approval automatically stands abated. The Company has,
during January 2019, secured the requisite approval from shareholders by way of
postal ballot exercise approving the waiver of excess remuneration paid to MD
& CEO.

b) Certain amendments have been carried out, inter
alia, to section 198 and Schedule V of the Companies Act, 2013
(“Act”) by way of the Companies (Amendment) Act, 2017, which are
effective from 12^th September, 2018 (“Amendments”),
relating to the remuneration payable to directors by a company. The Company has
negative free reserves and accumulated losses of approximately Rs. 26,580
million as of 31^st March, 2018. Pursuant to these Amendments, the
accumulated losses of a company are required to be set off against the profits
in a given financial year while calculating the profit of the Company for such
financial year u/s. 198. Consequent to the aforesaid amendments, the profit of
the Company (calculated in terms of section 198) is expected to be negative for
the financial year ending 31^st March, 2019. As a result,
remuneration paid and payable to Executive Directors may exceed the limits as
per Schedule V read with section 197 of the Act for the year ending 31^st
March, 2019 and remuneration payable to Non-executive Directors is likely to
exceed the limits as per section 197 both read with section 198 as amended.

The Company has,
during January 2019 secured the requisite approval of the shareholders by way
of postal ballot exercise for the remuneration paid/ payable to the Executive
Directors and remuneration payable to Non-executive Directors for the financial
year ending 31^st March, 2019, 31^st March, 2020 and 31^st
March, 2021 or till the end of the Directors tenure of appointment/
reappointment, whichever is earlier, notwithstanding that such remuneration may
exceed the limits specified under section 197 and Schedule V of the Companies
Act, 2013 as amended.

7. Regulatory
notices and communications

The Company has
previously received letters and notices from various regulatory and other
government authorities as follows:

a) as disclosed in the financial statements for
the years ended 31^st March, 2016, 31^st March, 2017 and 31^st
March, 2018, from the Securities Exchange Board of India (‘SEBI’), in relation
to the Initial Inquiry, Additional Inquiry, and matters arising out of the
Agreement dated 25^th February, 2016, entered into by the Company
with Dr. Vijay Mallya to which the Company has responded. No further communications
have been received thereafter;

b) as disclosed in the financial
statements for the years ended 31^st March, 2016, 31^st
March, 2017 and 31^st March, 2018, from the Ministry of Corporate
Affairs (‘MCA’) in relation to its inspection conducted u/s. 206(5) of the
Companies Act, 2013 during the year ended 31^st March, 2016 and
subsequent show cause notices alleging violation of certain provisions of the
Companies Act, 1956 and Companies Act, 2013, to which the Company had
responded. The Company had also received a letter dated 13^th
October, 2017 from the Registrar of Companies, Karnataka (the ‘Registrar’)
inviting the Company’s attention to the compounding provisions of the Companies
Act, 1956 and Companies Act, 2013 following the aforesaid show cause notices.
During the year ended 31^st March, 2018, the Company filed
applications for compounding of offences with the Registrar in relation to
three show cause notices, applications for adjudication with the Registrar in
relation to two show cause notices, and requested the Registrar to drop one
show cause notice based on expert legal advice received. The Company is
awaiting a response from the Registrar to the aforesaid applications. The
management is of the view that the financial impact arising out of compounding/adjudication
of these matters will not be material to the Company’s results;

c) as disclosed in the financial statements for
the years ended 31^st March, 2016, 31^st March, 2017 and 31^st
March, 2018, from the Directorate of Enforcement (‘ED’) in connection with
Agreement dated 25^th February, 2016, entered into by the Company
with Dr. Vijay Mallya and investigations under the Foreign Exchange Management
Act, 1999 and Prevention of Money Laundering Act, 2002, to which the Company
had responded. No further communications have been received thereafter; and

d) as disclosed in the financial statements for
the year ended 31^st March, 2017 and 31^st March, 2018,
from the Company’s authorised dealer banks in relation to certain queries from
the Reserve Bank of India (‘RBI’) with regard to: (i) remittances made in prior
years by the Company to its overseas subsidiaries; (ii) past acquisition of the
Whyte and Mackay group; (iii) clarifications on Annual Performance Reports
(‘APR’) submitted for prior years; and (iv) compliances relating to the
Company’s overseas Branch office, to all of which the Company had duly
responded.

8. Dispute
with a bank

As disclosed in the
financial statements for the years ended 31^st March, 2015, 31^st
March, 2016, 31^st March, 2017 and 31^st March, 2018,
during the year ended 31^st March, 2014, the Company decided to
prepay a term loan taken from a bank in earlier years under a consortium
arrangement, secured by assets of the Company and pledge of shares of the
Company held by the USL Benefit Trust (of which the Company is the sole
beneficiary). The Company deposited a sum of Rs. 6,280 million, including
prepayment penalty of Rs. 40 million, with the bank and instructed the bank to
debit the amount from its cash credit account towards settlement of the loan
and release the assets and shares pledged by the Company. The bank, however,
disputed the prepayment. The Company has disputed the stand taken by the bank
and its writ petition filed on 6^th November, 2013 is pending before
the Hon’ble High Court of Karnataka. In August 2015, the bank obtained an ex
parte injunction in proceedings between the bank and Kingfisher Airlines
Limited (KFA), before the Debt Recovery Tribunal, Bangalore (‘DRT’),
restraining the USL Benefit Trust from disposing of the pledged shares until
further orders. The Company and USL Benefit Trust, upon receiving notice of the
said order, filed their objections against such ex parte order passed in
proceedings in which neither the Company nor the USL Benefit Trust were
enjoined as parties. In February 2016, the Company received a notice from the
bank seeking to recall the loan and demanding a sum of Rs. 459 million.
Pursuant to an application filed by the Company before the Hon’ble High Court
of Karnataka, in the writ proceedings, the Hon’ble High Court of Karnataka
directed that if the Company deposited the sum of Rs. 459 million with the
bank, the bank should hold the same in a suspense account and should not deal
with any of the secured assets including shares pledged with the bank till
disposal of the original writ petition filed by the Company before the Hon’ble
High Court of Karnataka. During the quarter ended 30^th June, 2016,
the Company deposited the said sum and replied to the bank’s various notices in
light of the above. The aforesaid amount has been accounted as other
non-current financial asset. On 19^th January, 2017, the DRT
dismissed the application filed by the bank seeking the attachment of USL
Benefit Trust shares. During the quarter ended 30^th September, 2017,
the bank filed an ex-parte appeal before the Debt Recovery Appellate Tribunal
(‘DRAT’), Chennai against the order of the DRT. During the quarter ended 31^st
December, 2017, the Company has been impleaded in the proceedings subsequent to
the DRAT’s order. The appeal is pending for final hearing. With regard to the
writ petition filed before the Hon’ble High Court of Karnataka, an early
hearing application was allowed and the hearing of the main matter has
commenced during the quarter ended 31^st December, 2018.

11. During
the quarter, the Company has come across potential differences in process
losses and potential resultant differences in the inventory of a few categories
of work in progress in certain plants. The Company is in the process of
undertaking a review in affected plants, with the help of an independent expert
as required, in order to ascertain the actual quantum of differences, if any.
Should the findings establish any differences, the Company will take
appropriate steps to understand the causes and address the same. At this stage,
the Company is unable to determine the related financial impact, if any,
arising from such potential differences. Accordingly, the results for the
quarter and the nine months ended 31^st December, 2018 do not include
any adjustment in respect of the above.

BCAJ Admin

FROM PUBLISHED ACCOUNTS

REVENUE RECOGNITION POLICY FOR A
COMPANY ENGAGED IN THE BUSINESS OF ‘RIDE SHARING’

UBER TECHNOLOGIES, INC.
(31^ST DECEMBER, 2018)

(From Summary of Key Accounting Policies)

Revenue Recognition

The Company recognises
revenue when or as it satisfies its obligation. The Company derives its
revenues principally from Partners’ use of its ‘Core Platform’ and related
services in connection with ride sharing and Uber Eats and from customers’ use
of Other Bets offerings, including Freight and New Mobility.

Core Platform

The Company enters into
Master Services Agreements (“MSA”) with Partners to use the Platform.
The MSA defines the service fee that the company charges the Partners for each
transaction. Upon acceptance of a transaction, the Partner agrees to perform
the ride sharing or Eats services as requested by an end-user. The acceptance
of a transaction request combined with the MSA establishes enforceable rights
and obligations for each transaction. A contract exists between the Company and
a Partner after the Partner accepts a transaction request and the Partner’s
ability to cancel the transaction lapses. End-users access the Platform for
free and the Company has no performance obligation to end-users. As a result,
end-users are not the Company’s customers.

The Company’s Platform and
related service includes on-demand lead generation and related activities,
including facilitating payments from end-users, that enable Partners to seek,
receive and fulfil on-demand requests from end-users seeking ride sharing
services and Eats services. These activities are performed to satisfy the
Company’s sole performance obligation in the transaction, which is to connect
its Partners with end-users to facilitate the completion of a successful
transaction.

Judgement is required in
determining whether the Company is the principal or agent in transactions with
Partners and end-users. The Company evaluates the presentation of revenue on a
gross or net basis based on whether it controls the service provided to the
end-user and is the principal (i.e., “gross”), or the Company
arranges for other parties to provide the service to the end-user and is an
agent (i.e. “net”). For ride sharing and Eats transactions, the
Company’s role is to provide the service to Partners to facilitate a successful
trip or Eats service to end-users. The Company concluded that it does not
control the goods or services provided by Partners to end-users as (i) it does
not pre-purchase or otherwise obtain control of the Partners’ goods or services
prior to its transfer to the end-user; (ii) the Company does not direct
Partners to perform the service on the Company’s behalf, and Partners have the
sole ability to decline a transaction request; and (iii) the Company does not
integrate services provided by Partners with its other services and then
provide them to end-users.

As part of the Company’s
evaluation of control, the Company reviews other specific indicators to assist
in the principal versus agent conclusions. The Company is not primarily
responsible for ride sharing and Eats services provided to end-users, nor does
it have inventory risk related to these services. While the Company facilitates
setting the price for ride sharing and Eats services, the Partner and end-users
have the ultimate discretion in accepting the transaction price and this
indicator alone does not result in the Company controlling the services
provided to end-users.

Partners are the Company’s
customers and pay the Company a service fee for each successfully completed
transaction with end-users. The Company’s obligation in the transaction is
satisfied upon completion by the Partner of a transaction. In the vast majority
of transactions with end-users, the Company acts as an agent by connecting
end-users seeking ride sharing and Eats services with Partners looking to
provide these services. Accordingly, the Company recognises revenue on a net
basis, representing the fee that the Company expects to receive in exchange for
providing the service to Partners. The Company records refunds to end-users
that it recovers from Partners as a reduction to revenue. Refunds to end-users
due to end-user dissatisfaction with the Platform are recorded as marketing
expenses and reduce the accounts receivable amount associated with the
corresponding transaction.

Ride sharing

The Company derives its
ride sharing revenue primarily from service fees paid by Partners for use of
the Platform and related service to connect with riders and successfully
complete a trip via the Platform. The Company recognises revenue when a trip is
complete. There were no unsatisfied performance obligations as of 31^st
December, 2018.

Depending on the market
where the trip is completed, the service fee is either a fixed percentage of
the end-user fare or the difference between the amount paid by an end-user and
the amount earned by a Partner. In markets where the Company earns the difference
between the amount paid by an end-user and the amount earned by a Partner,
end-users are quoted a fixed upfront price for ride sharing services while the
Company pays Partners based on actual time and distance for the ride sharing
services provided. Therefore, the Company can earn a variable amount and may
realise a loss on the transaction. The Company typically receives the service
fee within a short period of time following the completion of a trip and, as
such, Partner contracts do not have a significant financing component.

In addition, end-users in
certain markets have the option to pay cash for trips. On such trips, cash is
paid by end-users to Partners. The Company generally collects its service fee
from Partners for these trips by offsetting against any other amounts due to
Partners, including Partner incentives. As the Company currently has limited
means to collect its service fee for cash trips and cannot control whether
Partners will generate future amounts owed to them for offset, it concluded
collectability of such amounts is not probable until collected. As such,
uncollected service fees for cash trips are not recognised in the consolidated
financial statements until collected from Partners.

Uber Eats

The Company derives its
Uber Eats revenue primarily from service fees paid by Partners for use of the
Platform and related service to successfully complete a meal delivery service
via the Platform. The Company recognises revenue when an Uber Eats transaction
is complete. There were no material unsatisfied performance obligations as of
31^st December, 2018.

The service fee paid by
Restaurant Partners is a fixed percentage of the meal price. The service fee
paid by Delivery Partners is the difference between the delivery fee amount
paid by the end-user and the amount earned by the Delivery Partner. End-users
are quoted a fixed price for the meal delivery while the Company pays Partners
based on actual time and distance for the delivery. Therefore, the Company
earns a variable amount on a transaction and may realise a loss on the
transaction. The Company typically receives the service fee within a short
period of time following the completion of a delivery. As such, Restaurant and
Delivery Partner contracts do not have a significant financing component.

OTHER BETS

Uber Freight

The Company derives its
Uber Freight revenue from freight transportation services provided to Shippers.
Revenue for Uber Freight represents the gross amount of fees charged to
Shippers for these services. Costs incurred with carriers for Uber Freight
transportation are recorded in cost of revenue.

Shippers contract with the
Company to utilise the Company’s network of independent freight carriers to
transport freight. The Company enters into contracts with Shippers that define
the price for each shipment and payment terms. The Company’s acceptance of the
shipment request establishes enforceable rights and obligations for each
contract. By accepting the Shipper’s order, the Company has responsibility for
transportation of the shipment from origin to destination. The Company enters
into separate contracts with independent freight carriers and is responsible
for prompt payment of freight charges to the carrier regardless of payment by
the Shipper. The Company’s sole performance obligation is the transport of
Shipper freight using its network of independent freight carriers. The Company
invoices the Shipper upon satisfaction of the performance obligation.

Judgement is required in
determining whether the Company is the principal or agent in transactions with
Shippers. For each contract entered into with a Shipper, the Company is
responsible for identifying and directing independent freight carriers to
transport the Shipper’s goods. The Company therefore controls the service
before it is transferred to the Shipper. The Company is primarily responsible
for fulfilling the contract with the Shipper, including having discretion in
selecting a qualified independent freight carrier that meets the Shipper’s
specifications. The Company also has pricing discretion and negotiates
separately the price(s) charged to Shippers and amounts paid to carriers.
Accordingly, the Company is the principal in these transactions.

In consideration for the
Company’s Freight services, Shippers pay the Company a fixed amount for each
completed shipment. When the Shipper’s freight reaches its intended
destination, the Company’s performance obligation is complete. The Company
recognises revenue associated with the Company’s performance obligation over
the contract term, which represents its performance over the period of time a
shipment is in transit. While the transit period of the Company’s contracts can
vary based on origin and destination, contracts still in transit at period end
are not material. Payment for the Company’s services is generally due within 30
to 45 days upon delivery of the shipment. As such, the Company does not have
significant financing components in contracts with Shippers.

New Mobility

The Company’s New Mobility
products, including dockless e-bikes, represent its new or emerging offerings
beyond its Core Platform. New Mobility revenues were not material in 2018.

Incentives to Partners

Incentives provided to
Partners are recorded as a reduction of revenue if the Company does not receive
a distinct good or service or cannot reasonably estimate fair value of the good
or service received. Incentives to Partners that are not for a distinct good or
service are evaluated as variable consideration, in the most likely amount to
be earned by the Partner, at the time or as they are earned by the Partner,
depending on the type of incentive. Since incentives are earned over a short
period of time, there is limited uncertainty when estimating variable
consideration.

Incentives earned by Partners for referring new Partners are
paid in exchange for a distinct service and are accounted for as customer
acquisition costs. The Company expenses such referral payments as incurred in
sales and marketing expenses in the consolidated statements of operations. The
Company applied the practical expedient under ASC 340-40-25-4 and expenses
costs to acquire new customer contracts as incurred because the amortisation
period would be one year or less. The amount recorded as an expense is the
lesser of the amount of the incentive paid or the established fair value of the
service received. Fair value of the service is established using amounts paid
to vendors for similar services. The amounts paid to Partners presented as
sales and marketing expenses for the years ended 31^st December,
2016, 2017 and 2018 were $167 million, $199 million, and $136 million,
respectively.

The Company evaluates
whether the cumulative amount of payments, including incentives, to Partners
that are not in exchange for a distinct good or service received from Partners
exceeds the cumulative revenue earned since inception of the Partner
relationships. Any cumulative payments in excess of cumulative revenue are
presented as cost of revenue in the consolidated statements of operations. The
amounts presented as cost of revenue for the years ended 31^stDecember,
2016, 2017 and 2018 were $507 million, $530 million and $837 million,
respectively.

End-User Discounts and Promotions

The Company offers
discounts and promotions to end-users to encourage use of the Company’s
Platform. These are offered in various forms of discounts and promotions and
include:

Targeted end-user
discounts and promotions: These
discounts and promotions are offered to a limited number of end-users in a
market to acquire, re-engage, or generally increase end-users use of the
platform, and are akin to coupon(s). An example is an offer providing a
discount on a limited number of rides or meal deliveries during a limited time
period. The Company records the cost of these discounts and promotions as sales
and marketing expenses at the time they are redeemed by the end-user.

End-user referrals: These referrals are earned when an existing
end-user (the referring end-user) refers a new end-user (the referred end-user)
to the Platform and the new end-user takes his / her first ride on the
Platform. These referrals are typically paid in the form of a credit given to
the referring end-user. These referrals are offered to attract new end-users to
the Platform. The Company records the liability for these referrals and
corresponding expense as sales and marketing expenses at the time the referral
is earned by the referring end-user.

Market-wide promotions: These promotions are pricing
actions in the form of discounts that reduce the end-user fare charged by
Partners to end-users for all or substantially all rides or meal deliveries in
a specific market. Accordingly, the Company records the cost of these promotions
as a reduction of revenue at the time the trip is completed.

Vehicle Solutions Revenues

The Company leases vehicles
to third parties who could potentially use them to provide Core Platform
services. These arrangements are classified as operating leases as defined
within ASC 840, “Leases” (“ASC 840”). The Company
recognises revenue from these arrangements as lease payments are collected.

Other

The Company has elected to
exclude from revenue taxes assessed by a governmental authority that are both
imposed on and are concurrent with specific revenue producing transactions, and
collected from Partners and remitted to governmental authorities. Accordingly,
such amounts are not included as a component of revenue or cost of revenue.

Practical Expedients

The Company has utilised
the practical expedient available under ASC 606-10-50-14 and does not disclose
the value of unsatisfied performance obligations for contracts with an original
expected length of one year or less. The Company has no significant financing
components in its contracts with customers.

BCAJ Admin

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