INDEPENDENT AUDITOR'S REPORT
To
The Members of
Mahanagar Telephone Nigam Limited
Report on the Audit of the Standalone Ind-AS Financial Statements
Qualified Opinion
We have audited the accompanying standalone Ind-AS financial statements of MAHANAGAR
TELEPHONE NIGAM LIMITED ("the Company"), which comprise the Balance Sheet as at
March 31, 2023, the Statement of Profit and Loss (including Other Comprehensive Income),
the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended,
and notes to financial statements, including a summary of the significant accounting policies
and other explanatory information (hereinafter referred to as "the standalone Ind- AS financial
statements").
In our opinion and to the best of our information and according to the explanations given to us,
except for the effects of the matters described in the basis for Qualified Opinion Section of our
report, the aforesaid standalone Ind- AS 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 Indian Accounting Standards prescribed under section 133 of the Act read
with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind-AS") and
other accounting principles generally accepted in India, of the state of affairs of the Company as
at March 31, 2023, net loss, changes in equity and its cash flows for the year ended on that date.
Basis for Qualified Opinion
We conducted our audit of the standalone Ind-AS financial statements in accordance with the
Standards on Auditing specified under section 143(10) of the Act (SAs). Our responsibilities
under those Standards are further described in the Auditor's Responsibilities for the Audit
of the standalone Ind AS Financial Statements section of our report. We are independent
of the Company in accordance with the Code of Ethics issued by the Institute of Chartered
Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit
of the standalone Ind AS financial statements under the provisions of the Act and the Rules
made there under, and we have fulfilled our other ethical responsibilities in accordance with
these requirements and the ICAI's Code of Ethics. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our qualified audit opinion on the
standalone Ind AS financial statements.
(i) The Net Worth of the Company has been fully eroded; The Company has incurred net cash
loss during the year ended March 31st, 2023, as well as in the previous year and the current
liabilities exceeded the current assets substantially.
Furthermore, Department of Public Enterprises vide its Office Memorandum No.
DPE/5(1)/2014-Fin. (Part-IX-A) has classified the status of the Company as "Incipient Sick
CPSE". Department of Telecommunication (DOT) has also confirmed the status vide its
issue no. I/3000697/ 2017 through file no. 19-17/2017 - SU-II.
However, the standalone Ind AS financial statements of the Company have been prepared
on a going concern basis keeping in view the majority stake of the Government of India.
Further, Union Cabinet has also approved the "Revival plan of BSNL and MTNL" by reducing
employee costs, administrative allotment of spectrum for 4G services, debt restructuring by
raising of sovereign guaranteed bonds, monetization of assets and in principle approval
for merger of BSNL and MTNL. Further, the Company had implemented the Voluntary
Retirement Scheme in FY 2019-20 resulted into reduction in Employees Cost and raised
funds by issuing Bonds for ? 6,500 crore in FY 2020-21 in line with cabinet note. Recently,
as per F.NO.20-28/2022-PR dated 2nd August 2022, the Union Cabinet in its meeting held
on 27.07.2022 has approved the raising of Sovereign guaranteed bonds for MTNL with a
tenure of 10 years or more for an amount of Rs. 17,571 crores in two calendar years i.e., 2022
& 2023 with waiver of guaranteed fee to repay its high-cost debt and restructure it with
new sustainable loan. During the year ended March 31, 2023, the company has raised Rs.
10,910/- Crore (refer note no. 78 to the standalone Ind-AS financial statements)
(ii) Bharat Sanchar Nigam Limited (BSNL):
a) The Company has certain balances receivable from and payables to Bharat Sanchar
Nigam Limited (BSNL). The net amount recoverable of Rs. 3535.34 Crores is subject to
reconciliation and confirmation. In view of non-reconciliation and non-confirmation
and in view of various pending disputes regarding claims and counter claims, we are not
in a position to ascertain and comment on the correctness of the outstanding balances
and resultant impact of the same on the standalone Ind-AS financial statements of the
Company.
b) The Company has not provided a provision for doubtful claims in respect of lapsed
CENVAT Credit due to non-payment of service tax to service providers within the
period of 180 days and due to transition provision under Goods and Service Tax (GST)
where the aforesaid CENVAT credit amounting to Rs. 115.97 Crores has not been
carried forward resulting in overstatement of Current Assets and understatement of
loss to that extent.
(iii) The Company has certain balances receivable from and payable to the Department of
Telecommunication (DOT). The net amount recoverable of Rs. 124.04 Crores, out of which
Rs.123.89 Crores is subject to reconciliation and confirmation. In view of non-reconciliation
and non-confirmation, we are not in a position to ascertain and comment on the correctness
of the outstanding balances and resultant impact of the same on standalone Ind AS financial
statements of the Company. (Also refer point no. (a) of note no. 70 to the standalone Ind-AS
financial statements).
(iv) Up to the financial year 2011-12 License Fee payable to the DOT on IUC charges to BSNL
was worked out on accrual basis as against the terms of License agreements requiring
deduction for expenditure from the gross revenue to be allowed on actual payment basis.
From financial year 2012-13, the license fee payable to the DOT has been worked out strictly
in terms of the license agreements. The Company continues to reflect the difference in
license fee arising from working out the same on accrual basis as aforesaid for the period
up to financial year 2011-12 by way of contingent liability of Rs. 140.36 Crores instead of
actual liability resulting in understatement of current liabilities and understatement of loss
to that extent. (Refer note no. 82 to the standalone Ind-AS financial statements).
(v) Except for the impairment loss of assets of CDMA units provided in earlier years, no
adjustment has been considered on account of impairment loss, if any, during the year, with
reference to Indian Accounting Standard - 36 "Impairment of Assets" prescribed under
Section 133 of the Act. In view of uncertainty in achievement of future projections made by
the Company, we are unable to ascertain and comment on the provision required in respect
of impairment in carrying value of cash generating units and its consequent impact on the
loss for the year ended March 31st, 2023, accumulated balance of other equity and also the
carrying value of the cash generating units. (Refer note no. 72 to the standalone Ind-AS
financial statements).
(vi) The Company does not follow a system of obtaining confirmations and performing
reconciliation of balances in respect of amount receivables from trade receivables, deposits
with Government Departments and others, claim recoverable from operators and other
parties and amount payable to trade payables, claim payable to operators, and amount
payable to other parties.
Accordingly, amounts receivable from and payable to the various parties are subject to
confirmation and reconciliation. Pending such confirmation and reconciliation, the impact
thereof on the standalone financial statements are not ascertainable and quantifiable. (Refer
note no. 67 to the standalone Ind-AS financial statements).
(vii) Unlinked credit of Rs. 88.69 Crore on account of receipts from subscribers against billing
by the Company which could not be matched with corresponding receivables is appearing
as liabilities in the balance sheet. To that extent, trade receivables and current liabilities
are overstated. Pending reconciliations, the impact thereof on the standalone financial
statement are not ascertainable and quantifiable. (Also refer note no. 66 and 77 to the
standalone Ind-AS financial statements).
(viii) Property, Plant and Equipment are generally capitalized on the basis of completion
certificates issued by the engineering department or bills received by the finance
department in respect of bought out capital items or inventory issued from the Stores.
Due to delays in issuance of the completion certificates or receipt of the bills or receipt
of inventory issue slips, there are cases where capitalization of the Property, Plant and
Equipment gets deferred to next year. We are unable to comment whether the Capital
Work-in-progress (CWIP) shown in books in the current year are actually part of CWIP
or have already been commissioned. The resultant impact of the same on the standalone
Ind AS financial statement by way of depreciation and amount of Property, Plant and
Equipment capitalized in the balance sheet cannot be ascertained and quantified.
(ix) Department of Telecommunication (DOT) had raised a demand of Rs. 3,313.15 Crore in
2012-13 on account of one-time charges for 2G spectrum held by the Company for GSM
and CDMA for the period of license already elapsed and also for the remaining valid
period of license including spectrum given on trial basis.
As explained the demand for spectrum usage for CDMA for Rs 107.44 Crore has been
withdrawn by DOT on account of rectification of actual usage.
Also as explained, pending finality of the issue by the Company regarding surrender of a
part of the spectrum, crystallization of issue by the DOT in view of the claim being contested
by private operators and because of the matter being sub-judice in the Apex Court on
account of dispute by other private operators on the similar demands, the amount payable,
if any, is indeterminate. Accordingly, no liability has been created for the demand made by
DOT on this account and Rs. 3,205.71 Crores has been disclosed as contingent liability till
FY 2018-19 although no further demand is there from DOT till date. However as explained
further, the TDSAT while setting aside the levy of OTSC on spectrum allotted beyond 6.2
MHz, directed Govt. to review the demand for spectrum allotted after 1-7-2008 and that
too w.e.f, 1-1-2013 in case the spectrum beyond 6.2 MHz was allotted before 1-1-2013. As
explained, as per the TDSAT orders also no further demand has been raised till now and as
per management based on TDSAT direction the demand, if any, cannot be more than Rs.
455.15 crores the same is considered as contingent liability.
In view of the above we are not in a position to comment on the correctness of the stand
taken by the Company and the ultimate implications of the same on the standalone Ind
AS financial statement of the Company. (Also refer note no. 61 to the standalone Ind-AS
financial statements).
(x) The company has recovered Electricity Charges from the tenants, on which liability for
Goods and Services Tax (GST) has not been considered, as the expenses recovered without
installing sub meter in some of the cases. The actual impact of the same on the standalone
Ind AS financial Statement for the year ended March 31st, 2023, has not been ascertained
and quantified.
(xi) The TDS on provision for Expenses (Accrued Liability) has not been deducted under
chapter XVII- B of Income Tax Act, 1961. The actual impact of the same on the standalone
Ind-AS financial statement for the year ended March 31st, 2023, has not been ascertained
and quantified.
(xii) The Company is making the provision for interest for late/non-payment to MSME vendors
which is subject to deduction of tax under section 194A of Income Tax Act, 1961.The actual
impact of the same on the standalone Ind-AS financial statements for the year ended March
31, 2023, is not ascertained and quantified.
(xiii) The income arising on account of rental income in respect of property occupied by the
BSNL amounting to Rs. 8.38 Crores and Rs. 33.52 Crores accrued during the year ended
March 31st, 2023, has not been recognized in Delhi unit in the Standalone Ind-AS financial
statement. Further, the Goods and Services Tax (GST) has also not been considered in
respect of income arising on account of rented property occupied by the BSNL for both
Delhi and Mumbai unit. The accumulated impact on the standalone Ind-AS financial
statement of such income and liability under Goods and Services Tax (GST) for the current
year and preceding years is not ascertained and quantified.
(xiv) Company's investment in its associates "United Telecom Limited (UTL)” aggregating Rs.
35.85 Crore has been classified as 'Assets-held-for-sale' however, we have not been made
available with the 'fair value less costs to sell' to arrive at the lower of 'carrying amount' and
'fair value less costs to sell' as required pursuant to the measurement principles enumerated
in IND AS 105. On our review of the latest available financial statements of the UTL, we
have noticed that the net worth has been fully eroded and is negative. Further, the said
investment has been classified as Asset-held-for-sale since year 2018, which is contrary
to the recognition principles of IND AS 105 as the expected sale has not been completed
within one year from classification. The impact of the aforesaid on the for the year ended
March 31, 2023 has not been ascertained and quantified.
(xv) The company has not recognized for loss allowance for trade receivables as per the
requirements of Ind AS 109 "Financial Instruments" amounting to Rs.68.06 Crore relating
to companies which are under insolvency process and certain trade receivables amounting
to Rs.11.55 Crore pertaining to infrastructure business, wherein there is significant increase
in credit risk.
The impact of the aforesaid on the standalone Ind-AS financial statements for the year ended
March 31, 2023 has not been ascertained and quantified.
The above basis for qualified opinion referred to in Para no. (i) to (xiii) were subject matter of
qualification in the Auditor's Report for the year ended on March 31, 2022.
In the absence of information, the effect of which can't be quantified, we are unable to comment
on the possible impact of the items stated in the point nos. (i), (ii)(a), (iii), (v), (vi), (vii),(viii), (ix),
(x), (xi) (xii), (xiii)., (xiv) and (xv) on the standalone Ind-AS financial statements of the Company
for the year ended on March 31, 2023.
Emphasis of Matters
We draw attention to the following notes on the standalone IND-AS financial statements being
matterspertaining to Mahanagar Telephone Nigam Limited requiring emphasis by us.
(i) Note no. 63 of Ind-AS financial statements regarding pending dispute with the Income Tax
Department before the Hon'ble Courts regarding deduction claimed by the Company u/s
80 IA of the Income Tax Act, 1961 we are unable to comment on the adequacy or otherwise
of the provision and/ or contingency reserve held by the Company.
(ii) Note no. 64(b) Impact of accounting of claims and counter claims of MTNL with M/S M&N
Publications Ltd., in a dispute over printing, publishing and supply of telephone directories
for MTNL, will be given in the year when the ultimate collection/ payment of the same
becomes reasonably certain.
(iii) Note no. 15 &19 Amount receivable from BSNL & Other Operators have been reflected as
loans and other financial assets instead of bifurcating the same into trade receivables and
other financial assets.
(iv) Note No.80 The operations and maintenance of wireless network has been handed over
to BSNL as an outsource agency from 1.4.2021 (in case of Delhi) and 1.9.2021 (in case of
Mumbai) onwards. Pending finalization of standard operating procedures, the financial
impact of the same (if any) will be accounted for on finalization of operational modalities.
(v) Note No.70(d) The Amounts recoverable from Department of Telecommunication (DOT)
in respect of settlement of General Provident Fund (GPF) of Combined Service Optees
absorbed employees in MTNL and the matter has been under review with DOT and the
full amount of GPF including interest thereon, claimed of the Company in respect of which
correspondence is going on between the Company and DOT are continued to be shown as
recoverable from DOT and payable to GPF.
(vi) Note No.78 In pursuance of DoT letter No. F.No. 30-04/2019-PSU Affairs dt. 29th October,
2019 and decision of Board of Directors of MTNL through circular regulation on 4th
November, 2019, the MTNL Voluntary Retirement Scheme has been introduced with
effect from 4th November, 2019 under which 14,387 number of MTNL employees opted for
VRS and the expenditure of ex-gratia on account of compensation to be borne by the DOT/
Government of India through budgetary supports as per approval of cabinet. Balance
amount payable to VRS opted employees as on 31 March 2023 is shown in the financial
statements of the company as receivable from DOT and payable to VRS retirees, to reflect
the actual position with reference to VRS scheme of 2019 of MTNL
(vii) Note No. 82 The payables towards license fees and spectrum usage charges have been
adjusted with excess pension payouts to Combined Pensioners Optees recoverable from
DOT in respect of which matter is under consideration and correspondence in going on
between the Company and DOT.
(viii) Note No. 82 The License agreement between Company and DOT does not have any
guidance on change in method of calculation of Adjusted Gross Revenue (AGR) due to
migration to Ind-AS from I-GAAP. Provisioning and payment of liability in respect of
license fees and spectrum usage charges payable to DOT has been done on the basis of
Ind-AS based financial statements. The amount of difference in computation of Adjusted
Gross Revenue (AGR) is under consideration of DOT.
(ix) Note No. 15(iv) Dues from the Operators being on account of revenue sharing agreements
are not treated as debtors and consequently are not taken into account for making
provision for doubtful debts. (Also refer clause no. (k) of note no. 3 to the standalone Ind-
AS financial statements).
(x) Note 58(A) Certain immovable properties transferred from Department of
Telecommunications ('DoT') to MTNL in earlier years, which were taken on lease by D oT
prior to incorporation of MTNL. On 30 March 1987, both DoT and MTNL entered into a
sale deed for transfer of the several movable and immovable assets from DoT to MTNL.
The said transfer includes the leasehold lands and buildings which are now in possession
of MTNL since the execution of the sale deed. These leasehold immovable properties
have not been mutated or renewed in the name of MTNL till date. However, considering
MTNL is a Public Sector Undertaking ('PSU'), the sale deed not registered at that time and
executed by DOT is deemed to have been registered for the purpose of transfer of all such
assets in terms of section 90 of the Indian registration act, 1908 as considered by the MTNL
and stamp duty payable, if any, will be borne and paid by Government as and when any
such occasion arises as per sale deed. Accordingly, these leasehold immovable properties
have been classified by the management under the heading 'Right of Use assets'.
(xi) Note No. 60 In certain cases of freehold and leasehold land the company is having title
deeds which are in the name of the Company but the value of which are not lying in the
books of accounts of the Company.
Our opinion is not modified in respect of the aforesaid matters.
Material uncertainty related to going concern
We draw attention to Note no. 78 in the Ind-AS financial statements, which indicates that the
Company has accumulated losses and its net worth has been fully/ substantially eroded, the
company has incurred net loss/net cash loss during the current and previous year(s) and the
company's current liabilities exceeded its current assets as at the balance date. These events or
conditions, along with other matters as set forth in Note 78, indicate that a material uncertainty
exists that may cast significant doubt on the Company's ability to continue as a going concern.
Further, Government of India has also approved the "Revival plan of BSNL and MTNL"
by reducing employee costs, administrative allotment of spectrum for 4G services, debt
restructuring by raising of sovereign guaranteed bonds, monetization of assets and in principle
approval for merger of BSNL and MTNL. Further, the Company implemented the Voluntary
Retirement Scheme in FY 2019-20 resulted into reduction in Employees Cost and also raised
funds by issuing Bonds for Rs. 6,500 Crore in FY 2020-21 in line with cabinet note.
Recently, as per F.NO.20-28/2022-PR dated 2nd August 2022, the Union Cabinet in its meeting
held on 27.02.2022 has approved the raising of the Sovereign Guarantee Bonds for MTNL with
the tenure of 10 years or more for the amount of Rs. 17,571 Crore in two financial years i.e. 2022
& 2023 with the waiver of guaranteed fee to repay its highest cost debt and restructure it with
new sustainable loan. During the year ended March 31, 2023, the company has raised Rs 10,910
Crore. Our opinion is not modified in respect of this matter.
Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance
in our audit of the standalone Ind-AS financial statements of the current period. These matters
were addressed in the context of our audit of the standalone Ind-AS financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters.
In addition to the matters described in the basis of qualified opinion section, we have determined
the matters described below to be the key audit matters to be communicated in our report
Information Other than the Standalone Ind-AS Financial Statements and Auditor's Report
Thereon
The Company's Board of Directors are responsible for the preparation of the other information.
The other information comprises in the Company's Annual Report but does not include the
standalone Ind-AS financial statements and our auditor's report there on. The above mentioned
other information is expected to be made available to us after the date of this auditor's report.
Our opinion on the standalone Ind-AS financial statements does not cover the other information
and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone Ind-AS financial statements, our responsibility
is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the standalone Ind-As financial statements or our knowledge
obtained during the course of our audit or otherwise appears to be materially misstated.
When we read the other information, if we conclude that there is material misstatement therein,
we are required to communicate the matter to those charged with governance.
Responsibilities of the Management and those charged with governance for the Standalone
Ind-AS Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section 134(5) of
the Act with respect to the preparation of these standalone Ind-AS financial statements that
give a true and fair view of the financial position, financial performance including other
comprehensive income, changes in equity and the Statement of cash flows of the Company in
accordance with the accounting principles generally accepted in India, including the Indian
Accounting Standards (Ind-AS) specified under section 133 of the Act, read with the Companies
(Indian Accounting Standards) Rules, 2015, as amended.
This responsibility also includes maintenance of adequate accounting records in accordance with
the provisions of the Act for safeguarding of the assets of the Company and for preventing and
detecting frauds and other irregularities; selection and application of appropriate accounting
policies; making judgments and estimates that are reasonable and prudent; and design,
implementation and maintenance of adequate internal financial controls, that were operating
effectively for ensuring the accuracy and completeness of the accounting records, relevant to the
preparation and presentation of the standalone Ind AS financial statements that give a true and
fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone Ind AS financial statements, management is responsible for assessing
the Company's ability to continue as a going concern, disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless management either
intends to liquidate the Company or to cease operations, or has no realistic alternative but to do
so.
Those Board of Directors are also responsible for overseeing the Company's financial reporting
process.
Auditor's Responsibilities for the Audit of the Standalone Ind-AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone Ind-AS financial
statements as a whole are free from material misstatement, whether due to fraud or error, and
to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of
assurance but is not a guarantee that an audit conducted in accordance with SAs will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these standalone Ind-AS financial
statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the standalone Ind-AS financial
statements, whether due to fraud or error, design and perform audit procedures responsive
to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis
for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal financial controls relevant to the audit in order to
design audit procedures that are appropriate in the circumstances. Under section 143(3)
(i) of the Act, we are also responsible for expressing our opinion on whether the Company
has an adequate internal financial controls system in place and the operating effectiveness
of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Company's
ability to continue as a going concern. If we conclude that a material uncertainty exists,
we are required to draw attention in our auditor's report to the related disclosures in the
standalone Ind-AS financial statements or, if such disclosures are inadequate, to modify
our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor's report. However, future events or conditions may cause the Company to cease to
continue as a going concern.
• Evaluate the overall presentation, structure and content of the standalone Ind-AS financial
statements, including the disclosures, and whether the standalone Ind-AS financial
statements represent the underlying transactions and events in a manner that achieves fair
presentation.
Materiality is the magnitude of misstatements in the standalone Ind-AS financial statements
that, individually or in aggregate, makes it probable that the economic decisions of a reasonably
knowledgeable user of the financial statements may be influenced. We consider quantitative
materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating
the results of our work; and (ii) to evaluate the effect of any identified misstatements in the
financial statements.
We communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence,
and where applicable, related safeguards.
From the matters communicated with those Charged with governance, we determine those
matters that were of most significance in the audit of the standalone Ind-AS financial statements
of the current period and are therefore the key audit matters. We describe these matters in our
auditor's report unless law or regulation precludes public disclosure about the matter or when,
in extremely rare circumstances, we determine that a matter should not be communicated in our
report because the adverse consequences of doing so would reasonably be expected to outweigh
the public interest benefits of such communication.
Other Matters:
The comparative Ind-AS financial statements for the year ended 31st March 2022 included in
these Standalone Ind-AS financial statements have been audited by SPMG & Co. Chartered
Accountants jointly with another firm of chartered accountants, whose audit report dated 30 th
May 2022 expressed modified opinion on the comparative Ind AS financial statements.
Our opinion is not modified in respect of this matter
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order, 2020 ("the Order"), issued by the
Central Government of India in term of sub section (11) of section 143 of the Companies Act
2013, we give in the ''Annexure A'' a statement on the matters specified in paragraph 3 and
4 of the Order, to the extent applicable.
2. As required by section 143(5) of the Act, we give in "Annexure B" a statement on the matters
specified by the Comptroller and Auditor General of India for the Company.
3. As per the Notification No. GSR 463(E) dated 5th June 2015 issued by the Ministry of
Corporate Aff airs, Government of India, Section 197 is not applicable to the Government
Companies. Accordingly, reporting in accordance with the requirement of provisions of
section 197(16) of the Act is not applicable on the Company.
4. As required by Section 143(3) of the Act, based on our audit 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 except for the
matters described in the Basis for Qualified Opinion Paragraph above.
b) Except for the possible effects of the matters described in the Basis for Qualified Opinion
Paragraph above, in our opinion, proper books of account as required by law have
been kept by the Company so far as it appears from our examination of those books.
c) The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive
Income, Statement of Changes in Equity and the Statement of Cash Flows dealt with by
this Report are in agreement with the relevant books of account.
d) In our opinion, except for the matters described in the Basis of Qualified Opinion
Paragraph above, the aforesaid standalone Ind-AS financial statements comply with
the Ind AS specified under Section 133 of the Act.
e) Being the Government Company pursuant to the Notification No. GSR 463(E) dated 5
June 2015 issued by the Ministry of Corporate Affairs, Government of India, provisions
of sub-section (2) of section 164 of the Act, are not applicable to the Company.
f) The matters described in the Basis of Qualified Opinion Paragraph above, in our
opinion, may have an adverse effect on the functioning of the company.
g) With respect to the adequacy of the internal financial controls over financial reporting
of the Company and the operating effectiveness of such controls, refer to our separate
Report in "Annexure C".
h) The qualification relating to the maintenance of accounts and other matter connected
there with are as stated in the Basis of Qualified Opinion Paragraph 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:
i. The Company has disclosed the impact of pending litigations on its financial
position in its standalone Ind-AS financial statements. (Refer to note no. 50 of the
Standalone Ind-AS 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; and
iii. There has been no delay in transferring the amounts required to be transferred to
the Investor Education and Protection Fund by the Company.
iv. (a) The Management has represented that, to the best of its knowledge and belief,
no funds (which are material either individually or in the aggregate) have been
advanced or loaned or invested (either from borrowed funds or share premium
or any other sources or kind of funds) by the Company to or in any other person
or entity, including foreign entity ("Intermediaries"), with the understanding,
whether recorded in writing or otherwise, that the Intermediary shall, whether,
directly or indirectly lend or invest in other persons or entities identified in any
manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or
provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
(b) The Management has represented, that, to the best of its knowledge and belief,
no funds (which are material either individually or in the aggregate) have been
received by the Company from any person or entity, including foreign entity
("Funding Parties"), with the understanding, whether recorded in writing or
otherwise, that the Company shall, whether, directly or indirectly,
lend or invest in other persons or entities identified in any manner whatsoever
by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any
guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(c) Based on the audit procedures that have been considered reasonable and
appropriate in the circumstances, nothing has come to our notice that has caused
us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as
provided under (a) and (b) above, contain any material misstatement.
v. The company has not declared or paid any dividend during the year. Accordingly,
the provision of Section 123 of the Act is not applicable.
vi. 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 & Auditors)
Rules, 2014 is not applicable for the financial year ended March 31, 2023.
For SPMG & Co. For SCV & Co. LLP
Chartered Accountants Chartered Accountants
Firm Registration No.: 509249C Firm Registration No.: 000235N/
N500089
CA Mandeep Singh Arora CA Abhinav Khosla
Partner Partner
Membership No.: 091243 Membership No.: 087010
UDIN: 23091243BGSKCK7314 UDIN: 23087010BGZFEP2308
Place: New Delhi
Date:29th May,2023
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