TO THE MEMBERS OF RAIL VIKAS NIGAM LIMITED
Report on the Audit of the Standalone Financial Statements
Opinion
We have audited the accompanying standalone financial statements of RAIL VIKAS NIGAM LIMITED, (the Company”), which comprise the Balance Sheet as at 31st March 2024, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity, Statement of Cash Flows for the year then ended, and notes to the 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, the aforesaid standalone 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 31st March, 2024, its profit (including other comprehensive profit), changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs) 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 ("ICAI”) 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 obtained by us, is sufficient and appropriate to provide a basis for our opinion on the standalone financial statements.
Emphasis of matter
We draw your attention to the following matters:
a. The Company receives advance payment from Joint Venture Companies for incurring expenditures on their projects. However, in case of one joint venture company i.e. Krishnapatnam Railway Company Limited (KRCL), the Company is incurring project expenditures on a regular basis but insignificant amount has been received from KRCL during the year and the total amount receivable from KRCL as on 31st March, 2024 is Rs.1453.39 crore (including accrued interest amounting to Rs. 14.32 crore) which includes Rs. 797.55 crore on account of Interest (refer note nos. 10.1 & 10.6 to the standalone financial statements).
b. In view of the representation made by KRCL for waiver of departmental charges and pending decision by the Board of Directors of the Company, the claim for departmental charges @ 5% of the completion cost of the project has not been raised on KRCL by the Company (refer note no. 46 to the standalone financial statements).
c. Balances of some of the Trade Receivables, Other Assets, Trade and Other Payable accounts are subject to confirmation/reconciliation from the respective parties. The management does not expect to have any material differences affecting the financial statements for the year ended 31st March, 2024 (refer note no. 52 to the standalone 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 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.
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Key Audit Matter
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Auditor's Response
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Provisions and Contingent liabilities relating to
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Our audit procedures included, but were not limited to the
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ongoing litigations
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following:
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The Company is subject to a number of legal, arbitration
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Obtained understanding of the process of
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and tax cases for which final outcome cannot be easily
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identification and measurement of provisions and
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predicted and which could potentially result in significant
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contingent liabilities relating to ongoing litigation
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liabilities.
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implemented by the Management, through various
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Management's disclosures with regards to provisions and
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discussions held with Company's finance personnel.
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contingent liabilities relating to provisions and contingent
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Tested the design and operating effectiveness of the
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liabilities relating to ongoing litigations are presented
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controls put in place by the management in relation to
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in note no. 37 to the Company's standalone financial
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assessment of the outcome of the pending litigations.
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statements.
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Inspected the summary of litigation matters and
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The assessment of whether a liability is recognised as a provision or disclosed as a contingent liability in the
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discussed key developments during the year with the Company's Finance personnel.
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standalone financial statements is inherently subjective
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Inspected and evaluated, where applicable, external
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and requires significant management judgement in
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legal and/or regulatory advice sought by the Company.
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determination of the cash outflows from the business,
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Discussed and challenged the management's
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interpretation of applicable laws and regulations, and
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assessment of the likelihood, magnitude and
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careful examination of pending assessments at various
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accounting of any liability that may arise in certain
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levels.
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material cases. Accordingly, we reviewed the amount of provisions recognized and contingent liabilities
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Since the amounts involved are significant and due to the
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disclosed in the standalone financial statements
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range of possible outcomes leading to high estimation
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and exercised our professional judgement to assess
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uncertainty that requires significant management and
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appropriateness of such conclusions, involving
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auditor judgement, this matter is considered to be a key
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experts as required.
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audit matter for the current year audit.
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Evaluated the adequacy of disclosures made in the Company's standalone financial statements in accordance with the applicable accounting standards.
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Recognition, measurement, estimation, presentation
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We
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have assessed the Company's internal process for
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and disclosures in respect of "Revenue from contracts
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adoption and evaluating the impact of this Ind AS. Our audit
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with Customers" under Ind AS 115
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approach consisted design and testing of effectiveness of internal controls and procedures as follows:
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The application of Ind AS 115 involves certain key judgments, estimation, identification of distinct
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Evaluated the process of implementation of this
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performance obligations, determination of transaction
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Ind AS on revenue recognition and effectiveness of
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price, measurement of revenue recognition and
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controls over the preparation of information that are
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disclosures including presentation of balances in the
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designed to ensure the completeness and accuracy.
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financial statements. Refer note no. 34 to the standalone financial statements.
The Company engages in Cost Plus contracts and Fixed
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Selected a sample of existing continuing contracts and new contracts, and tested the operating effectiveness of the internal control, relating to identification of the
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Price contracts, wherein, revenue is recognised as per
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distinct performance obligations and determination
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the input method based on the Company's estimate of
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of transaction price.
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contract cost.
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Tested the relevant information accounting systems and change relating to contracts and related
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Since the amounts involved are significant this matter is
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information used in recording and disclosing revenue
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considered to be a key audit matter for the current year
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and presentation of contract balances and trade
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audit.
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receivables in accordance with the Ind AS.
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Further explanation why we consider this as a key audit
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We have performed analytical procedure including
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matter is as follows:
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comparison of the financial information and other related items considering materiality.
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Key Audit Matter
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Auditor’s Response
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The application of the revenue accounting standard involves certain key judgements relating to identification of distinct performance obligations, determination of transaction price of the identified performance obligations, the appropriateness of the basis used to measure revenue recognised at a point in time or over time. Additionally, revenue accounting standard contains disclosures which involves collation of information in respect of disaggregated revenue and periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date.
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Assessment and recoverability of Trade Receivables and Contract Assets
The Company have trade receivables outstanding (net of provision) of Rs. 1106.48 crore and contract assets of Rs. 324.71 crore at the end of 31st March, 2024. These balances are related to revenue recognized in line with Ind AS 115"Revenue from contracts with customers” for ongoing contracts and completed contracts. The assessment of its recoverability is a key audit matters in the audit due to its size and high level of management judgment. Refer note nos. 10.1 & 10.6 to the standalone financial statements.
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We have assessed the Company's internal process to recognize the revenue and review mechanism of trade receivables and contract assets. Our audit approach consisted testing of the design and operating effectiveness of internal controls and procedures as follows:
* Evaluated the process of invoicing, verification, and reconciliation with customers.
* Obtained the list of project wise outstanding details and its review mechanism by the management.
* Discussed the Company's practice on impairment of trade receivables and contract assets.
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Tested the accuracy of aging of trade receivables and contract assets at the year-end on sample basis.
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Performed analytical procedures and test of details for reasonableness, recoverability and other related material items.
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Information other than the standalone financial statements and auditor's report thereon
The Company's Management and Board of Directors are responsible for the other information. The other information comprises the information included in the Management Discussion and Analysis, Director's Report including Annexures to Director's Report, Business Responsibility Report, Corporate Governance and Shareholder's Information, but does not include the consolidated financial statements, standalone financial statements and our auditor's report thereon. The annual report is expected to be made available to us after the date of this auditor's report.
Our opinion on the 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 standalone financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained during the course of our 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 communicate the fact. We have nothing to report in this regard.
Responsibilities of the management and those charged with governance for the standalone financial statements
The accompanying standalone financial statements have been approved by the Company's Board of Directors. The Company's Management and Board of Directors are 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, other comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015. 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 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, the Management and Board of Directors are 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 the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors is 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 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 the Standards on Auditing, specified under section 143(10) of the Act, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the 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 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 the Management and Board of Directors.
• Conclude on the appropriateness of Management and Board of Directors 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 financial statements, including the disclosures, and whether the 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 standalone 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.
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 A”, a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
2. The Comptroller & Auditor General of India has issued directions indicating the areas to be examined in terms of Sub section (5) of Section 143 of the Act, compliance of which are set out in 'Annexure B”.
3. 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;
(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 Standalone Balance Sheet, the Standalone Statement of Profit and Loss (including other comprehensive income), the standalone Statement of Changes in Equity and the Standalone Statement of Cash Flow 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 Indian Accounting Standards specified under Section 133 of the Act;
(e) As per the notification number G.S.R. 463(E) dated 5th June, 2015 issued by Ministry of Corporate Affairs, section 164(2) of the Act regarding the disqualifications of Directors is not applicable to the Company, since it is a Government Company;
(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 C”;
(g) With respect to the other matters to be included in the Auditor's Report, as per notification number G.S.R. 463 (E) dated 5th June, 2015 issued by Ministry of Corporate Affairs, section 197(16) of the Act regarding the Managerial Remuneration is not applicable to the Company, since it is a Government Company.
(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:
i) The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements (refer note no.37 to the standalone financial statements);
ii) The Company did not have any longterm contracts including derivative contract for which there were any material foreseeable losses;
iii) There was no amount which were required to be transferred to the Investor Education and Protection Fund by the Company.
iv) (a) The Management has represented to
us 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, 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 to us 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, 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 such audit procedures that we 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 dividend declared or paid during the year by the Company is in compliance with Section 123 of the Act.
vi) Based on the information and explanations furnished to us, 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 (revised 2024 edition) issued by the Institute of Chartered Accountants of India, 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. However, as explained a separate log file has not been maintained due to resource constraint for all relevant transactions recorded in the software.
However, as explained to us, editing facility is not available in accounting software except for in the fields of assignments/texts.
Place: New Delhi Date: 17th May, 2024
We did not come across any instance of the audit trail feature being tampered with.
Our examination of the audit trail was in the context of an audit of financial statements carried out in accordance with the Standard of Auditing and only to the extent required by Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (revised 2024 edition) issued by the Institute of Chartered Accountants of India. We have not carried out any audit or examination of the audit trail beyond the matters required by the aforesaid Rule 11 (g) nor have we carried out any standalone audit or examination of the audit trail.
For V. K. DHINGRA & CO.,
Chartered Accountants FRN.: 000250N
Sd/-
(VIPUL GIROTRA)
PARTNER M. No. 084312 UDIN: 24084312BKCTET6512
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