Adani Green Energy Limited
Report on the Audit of the Standalone Financial StatementsQualified Opinion
We have audited the accompanying standalone financial statements of Adani Green Energy Limited (the "Company”), which comprise the Balance Sheet
as at March 31, 2023, the Statement of Profit and Loss, including the statement of Other Comprehensive Loss, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as the "standalone 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 matter described in the 'Basis for Qualified Opinion' section of our report, the aforesaid standalone financial statements give the information required by the Companies Act, 2013, as amended (the "Act”) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2023, its loss including other comprehensive loss, its cash flows and the changes in equity for the year ended on that date,
Basis for Qualified Opinion
We refer to Note 52 of the accompanying standalone financial statements, Pending completion of the ongoing investigations of Securities and Exchange Board of India and completion of proceedings before the Hon'ble Supreme Court against its order dated March 2, 2023, in respect of the matter stated in the said note, we are unable to comment on the possible consequential effects thereof, if any, on these standalone financial statements,
We conducted our audit of the accompanying standalone financial statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act, Our responsibilities under
those Standards are further described in the 'Auditor's Responsibilities for the Audit of the Standalone Financial Statements' section of our report, We
are independent of the Company in accordance with the 'Code of Ethics' issued by the Institute of Chartered Accountants of India together with the
ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules thereunder, and
we have fulfilled our other ethical responsibilities in accordance with these requirements and the 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 accompanying standalone financial statements,
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 for the financial year ended March 31, 2023, 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, In addition to the matter described in the 'Basis for Qualified Opinion' section we have determined the matters described below to be the key audit matters to be communicated in our report, For each matter below, our description of how our audit addressed the matter is provided in that context,
We have fulfilled the responsibilities described in the 'Auditor's responsibilities for the audit of the Standalone 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 standalone financial statements, The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying standalone financial statements,
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Key audit matters
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How our audit addressed the key audit matter
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1. Impairment assessment of Company's investments in and loans to subsidiaries (Also refer Note 5A and 6 to
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the standalone financial statements)
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As at March 31, 2023, the carrying value of the
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Our audit procedures in relation to impairment
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Company's investments (in equity shares, compulsorily
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assessment of Company's investment in and loans to
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convertible debentures, non-convertible debentures,
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subsidiaries included the following:
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optionally convertible debentures, unsecured perpetual securities and preference shares) and loans given to
the wholly owned subsidiaries, including step down subsidiaries amounted to H20,502 Crores and H2,095
Crores respectively.
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- We obtained an understanding, assessed and tested the design and operating effectiveness of
the Company's key controls related to impairment evaluation process.
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Above investments in subsidiaries are accounted
at cost (subject to impairment assessment). In accordance with Ind AS 36 Impairment of Assets',
management assesses at least annually whether there
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- We have obtained and discussed with management and evaluated the key judgements / assumptions
underlying management's assessment of potential indicators of impairment.
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are any indicators of impairment of the investments.
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- Where potential indicators of impairment were
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With regards loans given to subsidiaries, including step down subsidiaries, Ind AS 109 'Financial Instruments' requires the Company to provide for impairment of its
financial assets measured at amortised cost, if any, using the Expected Credit Loss ('ECL') approach.
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identified, we evaluated management's impairment
assessments and assumptions around the key drivers of the cash flow forecasts by comparing them to the approved budgets and our understanding of the internal and external factors. We also assessed the reasonableness of the forecasts by comparing
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Basis such assessment, the Company has recognized
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the same to past results and other supporting
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impairment allowance of H67 Crores during the year
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evidence.
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ended March 31, 2023, in respect of investments and loans given to certain subsidiaries as described in Note 42(i) of the standalone financial statements. Further, the Company also discontinued recognizing interest
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- We obtained and assessed the sensitivity analysis made by the management on key assumptions used for impairment assessment.
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income on loan from some of its subsidiaries due to
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- We compared the carrying values of the investments
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higher credit risk / uncertainty of recoverability of
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and loans to subsidiaries with their respective net
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underlying loan.
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assets values and earnings for the period.
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For the purpose of above impairment assessment,
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- We evaluated the disclosures made in the
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recoverable value has been determined by computing
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standalone financial statements for compliance
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the value in use of the underlying business. For
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with the requirements of Ind AS 36 'Impairment of
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determining value in use, discounted cash flow
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Assets', Ind AS 109 Financial Instruments' and Ind
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projections are used which involves significant estimates, assumptions and judgement of long-term
financial projections.
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AS 107 'Financial Instruments: Disclosures'.
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Considering significant estimates and management judgement involved, impairment assessment is
determined as a key audit matter.
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Key audit matters
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How our audit addressed the key audit matter
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2. Recoverability of Deferred Tax Assets in respect to unabsorbed tax losses and unabsorbed depreciation
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(Also refer Note 8 to the standalone financial statements)
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The Company has recognised gross deferred tax assets
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Our audit procedures in relation to recognition and
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in respect of brought forward tax losses/ unabsorbed
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measurement of deferred tax assets included the
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depreciation amounting to H81 Crores and net deferred tax assets of H436 Crores as at March 31, 2023,
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following:
- We obtained an understanding from the
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Deferred tax assets on unabsorbed depreciation or
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management, assessed and tested the design
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carry forward of losses are to be recognised only when
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and operating effectiveness of the Company's
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sufficient future taxable income will be available
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key controls related to the recognition and
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against which such deferred tax assets can be realised
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measurement of deferred tax assets,
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for the Company, Under Ind AS 12 'Income Taxes', the
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- We obtained and evaluated the projections of future
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carrying amount of deferred tax asset is required to be
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taxable profits by comparing the assumptions
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reviewed at the end of each reporting period,
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used to the underlying data such as contractual
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The Company has recognised deferred tax assets in
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agreements which includes Power Purchase
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respect of brought forward tax losses to the extent it
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Agreement with Discom, sale of Solar Power
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is probable that future taxable profits will be available
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Generation System and Wind Turbine Generator
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against which such carried forward tax losses can be
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with subsidiaries, including step down subsidiaries
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utilized before they expire,
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and with third parties and receipt of income on its
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Considering the involvement of management's
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investment in subsidiaries/others,
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estimation and judgment in determining reasonable
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- We performed sensitivity analysis on key underlying
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certainty of sufficient future taxable income, based
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assumptions used in forecasting future taxable
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on the financial projections, being available, which
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profits, expected timing of utilization of the carried
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will result in recoverability of the recognized deferred
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forward tax losses and amount of deferred tax
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tax assets, we have identified recognition and
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assets recognized in the books,
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measurement of deferred tax assets as a key audit matter,
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- We evaluated the Company's accounting policies with respect to recognition of tax credits in accordance with Ind AS 12 'Income Taxes',
- We assessed the adequacy of the disclosures made in relation to deferred tax in the standalone financial statements for compliance with the requirements of relevant Ind AS,
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Information Other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible
for the other information, The other information comprises the information included in the Annual
report, but does not include the accompanying standalone financial statements and our auditor's report thereon,
Our opinion on the accompanying standalone 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 accompanying standalone financial statements, our responsibility
is to read the other information and, in doing so, consider whether such other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated, If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard,
Responsibilities of Management for the Standalone 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 financial statements that give a true and fair view
of the financial position, financial performance including other comprehensive loss, cash flows and changes in equity 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 the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone 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 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.
The Board of Directors are also responsible for
overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the accompanying standalone
financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs, we exercise
professional judgment and maintain professional
skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by management.
• Conclude on the appropriateness of
management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the accompanying standalone financial statements, including the disclosures, and whether the accompanying standalone
financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the accompanying standalone financial statements for the financial year ended March 31, 2023 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.
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 terms of sub-section (11) of section 143 of the Act, we give in the "Annexure
1” a statement on the matters specified in paragraphs 3 and 4 of the Order.
2. As required by Section 143(3) of the Act, we report
that:
(a) We have sought and except for the matter described in the Basis for Qualified Opinion
paragraph, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;
(b) Except for the matter described in the Basis for Qualified Opinion paragraph, 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 the Statement of Other Comprehensive Loss, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;
(d) Except for the effects of the matter described in the Basis for Qualified Opinion
paragraph above, in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;
(e) The matter described in the Basis for Qualified Opinion paragraph above, in our opinion, may
have an adverse effect on the functioning of the Company;
(f) On the basis of the written representations received from the directors as on March 31, 2023 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2023 from being appointed as a director in terms of Section 164 (2) of the Act;
(g) The qualification relating to the maintenance
of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph above;
(h) With respect to the adequacy of the internal
financial controls with reference to these standalone financial statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure 2” to this report;
(i) In our opinion, the managerial remuneration
for the year ended March 31, 2023 has been paid / provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act;
(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, as amended in our
opinion and to the best of our information and according to the explanations given to us:
i. The Company does not have any pending litigations which would impact its financial position;
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 37 to the standalone financial statements;
iii. There were no amounts which were 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, other than as disclosed in the Note 31 to the standalone financial statements, no funds 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 entities ("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, as disclosed in the Note 31 to the standalone financial statements, no funds have been received by the Company from any person or entity, including foreign entities ("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; and
c) Based on such audit procedures that were 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 (a) and (b) contain any material misstatement.
v. No dividend has been declared or paid during the year by the Company.
vi. As proviso to rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable
for the company only w.e.f. April 1, 2023, reporting under this clause is not
applicable.
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