We have audited the accompanying standalone financial statements of Capacit'e Infraprojects Limited ("the Company”), which comprise the Balance sheet as at March 31, 2024, the Statement of Profit and Loss, including the Statement of Other Comprehensive Income, 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 material accounting policies and other explanatory information.
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 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, 2024, its profit including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.
Basis for Qualified Opinion
As described in Note 55 to the standalone financial statements, trade receivables as at March 31, 2024 includes Rs.1,155.93 lakhs in respect of one party which was earlier considered as Bad Debts/ Provided as Expected Credit Loss Allowance, the management has now recorded recovery of the said receivable by giving effect in Other Income/Expected Credit Loss Allowance during the year ended March 31, 2024, based on future recoverability projections. In the absence of sufficient appropriate evidence about the recoverability of the said Receivable, we are unable to comment on the recoverability and provision, if any, required on such Receivable.
We conducted our audit of the 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 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 standalone financial statements.
Emphasis of Matter
We draw attention to Note 56 to the standalone financial statements in respect of Company's operations included trade receivables, other exposures and contract assets with long time outstanding amount of INR 6,761.76 lakhs as on March 31, 2024. The Company has taken legal course against those parties, including enforcement of available security, to recover those assets. The outcome of such legal action is not ascertainable at present. The management is confident of its recoverability and hence no further provision is required in these audited standalone financial statements. 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 financial statements for the financial year ended March 31, 2024. 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.
Key audit matters
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How our audit addressed the key audit matter
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Revenue recognition for long terms construction contracts (as described in Note 3(c) and 27 of the standalone financial statements)
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The Company's derives its revenue from Engineering Procurement
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Our audit procedures included the following:
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and Construction (EPC) contracts, which are complex in nature
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• Read the Company's revenue recognition accounting policies
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and span over a number of reporting periods, disclosed under
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and assessed compliance of the policies with Ind AS 115.
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Note 3(c) and 27 'Revenue from contracts with customers' as construction contract revenue, which are recognized over a
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• Evaluated the design and tested the operating effectiveness
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period of time in accordance with the requirements of Ind AS
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of key controls over the contract revenue and cost
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115, 'Revenue from Contracts with Customers'
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estimation process through the combination of procedures
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Due to the nature of the contracts, revenue is recognized based
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involving inquiry, observations, reperformance and inspection of evidence.
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on percentage of completion method which is determined based on proportion of contract costs incurred to date compared
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• Selected a sample of contracts to test, using a risk-based
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to estimated total contract costs, which involves significant
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criteria's which included individual contracts with significant
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judgments including estimate of future costs, revision to original
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revenue recognized during the year, significant accrued
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estimates based on new knowledge such as delay in timelines,
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value of work done balances held at the year-end, or low
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changes in scope and consequential revised contract price and
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profit margins/no profit margins.
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recognition of the liability for loss making contracts/ onerous
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• Verified underlying documents such as original contract, and
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obligations.
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its amendments, key contract terms and milestones, etc. for
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Accuracy of revenues, onerous obligations and profits may
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verifying the estimation of contract revenue and costs and/
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deviate significantly during project execution on account of
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or any change in such estimation.
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change in judgements and estimates.
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• We assessed management's estimates by comparing
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We identified revenue recognition from long term contracts as
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estimated cost with actual costs and discussion on the
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a key audit matter because the estimation of total revenue and
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project specific considerations with the relevant project
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total cost to complete the contract is inherently subjective,
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managers including on our project site visits. We assessed
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complex and require significant judgment. The same may
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that, fluctuations in commodity, delays, cost overruns
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get subsequently changed due to change in prevailing
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related to the performance of work are appropriately
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circumstances, assumptions, contract variations, etc., and could
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taken into consideration while estimating costs to come
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result in significant variance in the revenue and profit or loss from
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and also assessed the accounting treatment of expected
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contract for the reporting period.
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loss on projects including variable consideration which is
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recognized in accordance with the Company's accounting policy of revenue recognition.
• We assessed that the disclosure of revenue in accordance with Ind AS 115 'Revenue from contracts with customers' are appropriately presented and disclosed in Note 3(c), 27 and 47 to the standalone financial statements.
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Recoverability of trade receivables and contract assets (as described in Note 3(c), 9 and 14 of the standalone financial statements)
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Our audit procedures amongst others included the following:
As at March 31, 2024, Trade receivables and contract assets (net of expected credit loss) amounting to Rs. 61,819.49 lakhs and Rs. 1,19,298.56 lakhs respectively, constitutes approximately 58.75% of total assets of the Company. The Company is required to regularly assess the recoverability of its Trade receivables and contract assets.
Recoverability of Trade receivables and contract assets was significant to our audit due to the value of amounts which also represents significant portion of the Company's working capital.
In assessing the recoverability of the aforesaid balances and determination of allowance for expected credit loss, management's judgement involves consideration of aging status, historical payment records, evaluation of litigations, the likelihood of collection based on the terms of the contract and the credit information of its customer.
• We obtained an understanding of the process, evaluated the design and tested the operating effectiveness of management control over assessing the recoverability of the trade receivables and contract assets.
• We evaluated the Management's assessment of the financial circumstances and ability to pay of relevant entities with trade receivables and contract assets balances. These considerations include whether there are regular receipts from the customers, past collection history as well as an assessment of the customers' credit ability to make payments, including any project disputes which may result in future claims against the Company.
Key audit matters
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How our audit addressed the key audit matter
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Company has taken legal course against certain Trade receivables
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•
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Performed test of details and tested relevant contracts and
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and contract assets including enforcement of available security
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documents with focus on measurement of work completed
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to recover those assets and secure its commercial interest. The
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during the period for material unbilled revenue balances
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outcome of such legal action is not ascertainable at present.
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included in contract asset.
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We considered this as key audit matter due to the materiality of the
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•
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Performed additional procedures which include, on test
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amounts and significant estimates and judgements as stated above.
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check basis, reading the communications to / from
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Accordingly, the recoverability of Trade receivables and contract assets is a key audit matter in our audit of the standalone financial
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customer, physical site visits, verification of last bills certified and subsequent client certifications.
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statements due to the materiality of the amounts and significant
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•
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Tested the ageing of trade receivables at year end.
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estimates and judgements as stated above.
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•
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We assessed the Company's Expected Credit Loss model applied in determining the recoverable amount.
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•
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We assessed that the disclosures of trade receivables and contract assets in accordance with Ind AS 109 'Financial Instruments' are appropriately presented and disclosed in Note 3(c), 9 and 14 to the standalone financial statements.
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Information Other than the 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 Report of Board of directors, its annexure, management discussion, analysis report, Business Responsibility and Sustainability Report but does not include the standalone financial statements and our auditor's report thereon.
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 and, in doing so, consider whether such other information is materially inconsistent with the 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 the 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 income, 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.
Those charged with governance 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 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 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 financial statements, including the disclosures, and whether the 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 standalone financial statements for the financial year ended March 31, 2024 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, to the extent applicable, 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) In our opinion, proper books of account as required by law have been kept by the Company, so far as it appears from our examination of those books except for the matters stated in paragraph 2(i)(vi) below on reporting under Rule 11(g);
(c) The Balance Sheet, the Statement of Profit and Loss including the Statement of Other Comprehensive Income, 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) On the basis of the written representations received from the directors as on March 31, 2024 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2024 from being appointed as a director in terms of Section 164 (2) of the Act;
(f) The modification relating to the maintenance of accounts and other matters connected therewith are as stated in the paragraph (b) above on reporting under Section 143(3)(b) and paragraph 2(i)(vi) below on reporting under Rule 11(g);
(g) With respect to the adequacy of the internal financial controls with reference to standalone financial statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure 2” to this report;
(h) In our opinion, the managerial remuneration for the year ended March 31, 2024 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;
(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 financial statements - Refer Note 41 to the standalone financial statements;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;
iii. There 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 59 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, other than as disclosed in the Note 59 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 performed 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 (a) and (b) contain any material misstatement.
v. No dividend has been declared or paid during the year by the Company.
vi. The Company has migrated to a new accounting software from legacy accounting software during the year. Based on our examination which included test checks, the Company has used accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software, except in respect of legacy accounting software where audit trail feature was not enabled, as described in Note 57 to the financial statements. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with in respect of new accounting software.
For S R B C & CO LLP
Chartered Accountants ICAI Firm Registration Number: 324982E/E300003
per Jai Prakash Yadav
Partner
Membership Number: 066943 UDIN: 24066943BKGFPI5866 Place of Signature: Mumbai Date: 28 May 2024
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