We have audited the accompanying standalone financial statements of SPML Infra 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 and the Statement of Cash Flows for the year then ended, and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us and based on the consideration of the reports of other auditors in respect of certain joint operations, as referred to in the Other Matters section of our report below, 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 accounting principles generally accepted in India including the Indian Accounting Standards (“Ind AS”) prescribed under Section 133 of the Act, of the state of affairs of the Company as at 31st March, 2024, its profit including other comprehensive income, changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit 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 we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Standalone Financial Statements.
Emphasis of Matters
We draw attention to the following notes to the standalone financial statements:
(i) Note no. 16.1, regarding the Company entering into a Master Restructuring Agreement with National Asset Reconstruction Company Ltd.(‘NARCL'), towards restructuring of it's debt and matters incidental thereto, including the accounting aspects thereof.
(ii) Note no. 30 regarding details of Exceptional Items.
(iii) Note no.15.1 regarding certain debts availed by the Company forming part of “Other Equity” as at 31st March, 2024, as equity shares/warrants were allotted there against on 23rd May, 2024 by the Company.
(iv) Note no. 43, regarding uncertainties relating to the recoverability of certain trade & other receivables as at 31st March, 2024 and recognition of interest income thereon, arising out of arbitration awards pronounced in favour of the Company.
(v) Note no. 46, regarding postponement of recognition of income from interest on unsecured loans given to certain subsidiaries, joint ventures and associates which are impaired fully/partially by way of expected credit losses.
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 year. These matters were addressed in the context of our audit of the standalone financial statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matter to be communicated in our report.
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Key Audit Matters
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Auditor’s response
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Accounting and other related matters, pursuant to
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Principal Audit Procedures:
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acquisition of entire secured debt of the Company from the SBI consortium by NARCL and subsequent restructuring of the debt by NARCL, as per the terms of the Master Restructuring Agreement (‘MRA’) (refer Note no. 16.1 to the standalone financial statements )
The Company had availed financial assistance from a consortium of banks, with the State Bank of India being the lead bank (‘SBI consortium') and had been under financial stress, thereby facing difficulty in servicing the existing
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Our audit procedures included but were not limited to the following in relation to accounting of debt restructuring and the treatment of resultant gains/losses arising therefrom:
• Assessed the appropriateness of the design and implementation of the Company's key internal controls relating to accounting, measurement, de-recognition and initial recognition of specific debt and specific arbitration awards and claims as per the terms of the MRA.
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facilities extended by the SBI consortium. NARCL,
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• Obtained an understanding of the terms of the Assignment
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Agreement, Sanction letter and the MRA, from management.
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the
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vide Assignment Agreement dated 29th August, 2023,
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• Reviewed the terms of the Sanction Letter and the MRA
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acquired the entire secured debt of the Company from
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to assess whether the accounting towards de-recognition
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the SBI consortium, amounting to R260,451.65 lakhs
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of specific debt and initial recognition of new debt was
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Thereafter, further to the discussions between the Company
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in accordance with the criteria given under the Indian
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and NARCL, the latter agreed to restructure the aforesaid
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Accounting Standards (‘Ind AS'), more particularly under Ind
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debt of the Company pursuant to which a sanction letter dt. 14th March, 2024 was issued which was accepted by
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AS 109, ‘ Financial Instruments'.
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the Company and thereafter, an MRA dt. 17th May, 2024
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• Verified that the accounting treatment for revision in the
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was executed between the Company and NARCL to give
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terms of original facilities is in accordance with Ind AS 109;
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effect to the restructuring of the debt as encapsulated in
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and
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the aforesaid sanction letter
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• Evaluated the appropriateness and adequacy of the
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Giving effect to the aforesaid restructuring in the books
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disclosures in the standalone financial statements in
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of account involved, inter alia, derecognition of certain existing liabilities/ assets and recognition of new liabilities/ assets, resultant gains due to revision of terms of facilities and derecognition/recognition of liabilities and assets, valuation aspects of new liabilities/assets recognized in the books, classification of certain transactions as exceptional items and many such incidental matters. The accounting treatment with respect to the aforesaid matters involved exercise of significant judgement by management and management's experts.
Considering the complexities involved and material impact on the standalone financial statements for the current year, this area is significant to our audit and has accordingly been considered as key audit matter.
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accordance with the applicable Ind AS.
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Information other than the Standalone Financial Statements and Auditors’ 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 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 will 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 in the audit or otherwise appears to be materially misstated.
When we read the other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.
Responsibilities of Management and Those Charged with Governance 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, changes in equity and 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 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 financial statement 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 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 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 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 Companies Act, 2013, 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 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 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 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
a. We did not audit the financial statements / financial information of 4 (four) joint operations included in the standalone financial statements, whose financial statements/ financial information reflect total assets of R9,925.67 lakhs as at 31st March, 2024, total revenues of R32,492.84 lakhs and total net profit after tax of R47.14 lakhs for the year ended on that date, as considered in the standalone financial statements. These financial statements/ financial information have been audited by other auditors whose reports have been furnished to us by the Company's management and our opinion on the standalone financial statements, in so far as it relates to the amounts and disclosures included in respect of these joint operations, is based solely on the audit reports of such other auditors and on the procedures performed by us as stated in the section Auditor's Responsibilities for the Audit of the Standalone Financial Statements hereinabove.
b. We did not audit the financial statements / financial information of 5 (five) joint operations included in the standalone financial statements, whose financial statements/ financial information reflect total assets of R1,639.85 lakhs as at 31st March, 2024, total revenues of R5,723.52 lakhs and total net loss after tax of R2.13 lakhs for the year ended on that date, as considered in the standalone financial statements. These financial statements/ financial information are unaudited and have been furnished to us by the Company's management and our opinion on the standalone financial statements, in so far as it relates to the amounts and disclosures included in respect of these joint operations, is based solely on such un-audited financial statements/financial information. According to the information and explanations given to us by the Company's management, these financial statements/ financial information are not material to the Standalone Financial Statements.
c. Owing to non-availability of financial statements/financial information/financial results of 3 (three) joint operations,
the same were not included in the standalone financial statements. According to the information and explanations given to us by the Company's management, such financial statements/financial information/financial results are not material to the Standalone Financial Statements.
Our opinion is not modified in respect of these matters.
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 “Annexure - A” a statement on the matters specified in paragraphs 3 and 4 of the Order.
2. 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;
b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;
c) The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, Statement of Changes in Equity and the 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, read with Companies (Indian Accounting Standards) Rules, 2015, as amended ;
e) On the basis of the written representations received from the directors as on 31st March, 2024 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2024 from being appointed as a director in terms of Section 164 (2) of the Act.;
f) With respect to the adequacy of the internal financial controls with reference to standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure - B” ;
g) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, 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. 31 to the standalone financial statements;
ii. The Company has made provision, as required under the applicable law or Ind AS, for material foreseeable losses, if any, on long-term contracts including derivative contracts;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
iv. (a) The Management has represented that,
to the best of its knowledge and belief, 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 a 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 have been received by the Company from any person or entity, including a 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; and
(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) of the Companies (Audit and Auditors) Rules, 2014, as amended, as provided under (a) and (b) above, contain any material misstatement.
v. No dividend has been declared or paid during the year by the Company. Hence, compliance with Section 123 of the Act is not applicable.
vi. Based on our examination, which included test checks, the Company has used accounting softwares for maintaining its books of account for the financial year ended 31st March, 2024 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 softwares. Further, during the course of our audit we did not come across any instance of the audit trail feature being tampered with.
As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from April 1, 2023, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 on preservation of audit trail as per the statutory
requirements for record retention is not applicable for the financial year ended 31st March , 2024.
3. In our opinion and according to the information and explanations given to us, the remuneration paid by the Company to its director during the year is in accordance with the provisions of section 197 read with Schedule V to the Act
For Maheshwari & Associates
Chartered Accountants FRN:311008E
CA. Bijay Murmuria
Partner
Place: Kolkata Membership No.: 055788
Date: 30th May, 2024 UDIN no.: 24055788BKFELN4633
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