GLOBAL VECTRA HELICORP LIMITED
Report on the Audit of the Ind-AS Financial Statements
Qualified Opinion
We have audited the accompanying Ind-AS financial statements of GLOBAL VECTRA HELICORP LIMITED (“the Company”), which comprise the Balance Sheet as at March 31, 2023, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity, the Statement of Cash Flows for the year then ended and the Notes to the Ind-AS 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, except for the effects of the matter described in the Basis for Qualified Opinion section of our report, the aforesaid Ind-AS financial statements give the information required by the Companies Act, 2013, (the Act) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (India Accounting Standard) Rules, 2015, as amended, (Ind-AS) and with other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2023, the loss, total comprehensive income, changes in equity and its cash flows for the year ended on that date.
Basis for Qualified Opinion
As detailed in Note No. 53 to the Ind-AS Financial Statements, during the current year, the Management became aware of a Lease Amendment Side Letter dated November 23, 2018, and Lease Amendment No. 1, between the Lessor on the one hand and the Company as a Lessee on the other, as well as an Amendment No. 2 to Aircraft Lease Agreements dated October 31, 2021, which were entered into by a senior personnel of the Company, who is no longer in the services of the Company, without sharing the amended agreements with the Management.
The lease accounting impact due to Amendment No. 2 to Aircraft Lease Agreement dated October 31,2021, has been given effect to in these Ind-AS Financial Statements and the figures of the previous year have been restated to give effect to the terms and conditions stipulated in the said Amendment No. 2 to Aircraft Lease Agreement.
In the absence of documentary evidence in respect of the said Lease Amendment Side Letter dated November 23, 2018, and Lease Amendment No. 1, we are unable to comment on the financial implications, if any, on the Ind-AS Financial Statements of the Company for the year ended March 31, 2023, as well as the previous year.
We conducted our audit of the Ind-AS financial statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Ind-AS Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the Ind-AS financial statements under the provisions of the Companies Act, 2013 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 opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Ind-AS financial statements of the current period. These matters were addressed in the context of our audit of the Ind-AS financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In addition to the 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.
|
Sr.
No.
|
Key audit matter description
|
How the scope of our audit addressed the key audit matter
|
|
1.
|
Revenue recognition and measurement
Refer to Note 1 (Statement of Significant Accounting Policies) for revenue recognition and measurement, Note 25 of the financial statements for aggregate revenue recognised as required by the applicable Ind-AS. As at March 31, 2023, the Company recognised revenues aggregating to Rs. 41,111.73 lakhs.
Service income and reimbursement of expenses is recognised as and when services are rendered in accordance with the terms of the specific contracts, net of all contractual deductions. Revenue is recognised net of all taxes and levies. Unbilled revenue represents services rendered for which billing is pending at the end of the reporting period.
There may be a risk of revenue being overstated due to pressure from Management to achieve performance targets at the reporting period end.
|
Our procedures included:
Accounting policies: Assessing the Company's revenue recognition policies.
Tests of controls:
Evaluating the design and testing the operating effectiveness of controls over the accuracy and correct timing of revenue recognition.
Tests of details:
-Verifying the supporting documentation for determining that the revenue was recognised in the correct accounting period.
-Verifying the manual journals posted to revenue to identify unusual or irregular items.
-To assess the recoverability of trade receivables, our procedures included an assessment of whether the provision against, or write off, impacted our view as to the initial recognition of the related revenue.
We also assessed as to whether the disclosures in respect of revenue were adequate.
|
|
2.
|
Impairment
As on March 31, 2023, the Written Down Value of Property, Plant and Equipment amounted to Rs. 12,091.65 lakhs which includes Written Down Value of Helicopters amounting to Rs. 11,689.21 lakhs as disclosed in note 2A to the financial statements.
The Company reviews the carrying amount of its helicopters on an annual basis to determine if there is an indication of impairment.
Management prepares an impairment assessment for helicopters as required under Ind-AS, which is based on a value in use calculation. Management has concluded that there is no impairment as on March 31, 2023.
The value in use is determined by discounting the estimated future cash flows of helicopters to present value using various estimates and assumptions and discount rate.
Risk identified:
This impairment assessment is sensitive to changes in assumptions (in particular the discount rate and the assumptions underlying future operating cash flows) which involves areas of judgement by the Management.
The impairment assessment requires management to consider both internal and external sources of information, in determining whether there is any indication that any helicopter may have been impaired.
|
Our procedures included:
Evaluating the key controls and processes with regard to identification of impairment indications.
Evaluating the key inputs and assumptions considered for cash flow forecasts for estimating the 'value in use'.
Assessing the accuracy of the 'value in use' model by assessing the methodology applied in determining the value in use compared with the requirements of Ind-AS 36 'Impairment of Assets' and checking the integrity of the 'value in use' model.
Evaluating whether the Management's judgements used for impairment assessment are supportable by considering our knowledge of the business.
|
|
Sr.
No.
|
Key audit matter description
|
How the scope of our audit addressed the key audit matter
|
|
3.
|
Inventories
As at March 31, 2023, the value of inventory held by the Company was Rs. 2,542.81 lakhs as disclosed in note 7 to the financial statements.
Risk identified:
There is significant management judgement in assessing which items may be slow-moving or obsolete. No provision has been made for the old inventories.
|
Our procedures included:
Management has undertaken technical review of such old inventories which comprises of critical components, general spares and specialist tools which have an indefinite shelf life and certified that the inventory is still in useable condition and not redundant.
We have evaluated that these inventories are useable on the existing fleet of helicopters and also for repair operations.
|
|
4.
|
Leases
As at March 31, 2023, the Current Lease Liability was Rs. 13,396.55 lakhs and the Non-Current Lease Liability was Rs. 23,644.53 lakhs as disclosed in note 16 to the financial statements and Right-of-use assets was Rs. 30,197.45 lakhs as disclosed in note 2B to the financial statements.
Risk identified:
Significant Management judgement required in the assumptions and estimates used to determine the Right of Use (ROU) asset and lease liability, viz assessment of lease term (including modification terms), determination of appropriate incremental borrowing rate.
|
Our audit procedures included:
Accounting policies:
Verifying that the Company's accounting policies are in compliance with requirements of Ind AS 116 Tests of controls:
Evaluating the design, implementation and operating effectiveness of Management's key internal controls over process for identifying lease contracts.
Tests of details:
- performed tests of details to examine the inputs used for determining right of use assets and lease liabilities related to leases with underlying lease agreements and verified the computation of lease liability and the right to use assets
- assessed the inputs used for determination of the incremental borrowing rate including, assessment of lease term by reference to the underlying lease contracts.
We also assessed as to whether the disclosures in respect of Leases were adequate.
|
Information Other than the Ind-AS Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. The other information comprises the Director's Report and Report on Corporate Governance but does not include the Ind-AS financial statements and our auditor's report thereon which are expected to be made available to us after the date of this auditor's report.
Our opinion on the Ind-AS financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the Ind-AS 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 Ind-AS financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
Responsibilities of Management and Those Charged with Governance for the Ind-AS Financial Statements
The Company's Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these Ind-AS financial statements that give a true and fair view of the financial position, financial performance, changes in equity and the 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. 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 Ind-AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the Ind-AS financial statements, Management is responsible for assessing the Company's ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless Management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Ind-AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the Ind-AS financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Ind-AS financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the 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.
Materiality is the magnitude of misstatements in the financial statements that, individually or in aggregate, makes it probable that the economic decisions of the users of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the Ind-AS financial statements.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Ind-AS financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order, 2016 (“the Order”), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
2. As required by section 143(3) of the Act, 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) Except for the effects of the matter described in the Basis of Qualified Opinion paragraph above, in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.
c) The Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity, dealt with by this Report are in agreement with the books of account.
d) In our opinion, except for the effects of the matter described in the Basis of qualified opinion paragraph above, the aforesaid Ind-AS financial statements comply with the Ind AS specified under Section 133 of the Act.
e) On the basis of the written representations received from the Directors of the Company as on March 31, 2023, taken on record by the Board of Directors, none of the Directors of the Company are disqualified as on March 31,2023, 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 financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure A”.
g) According to information and explanations given to us and based on our examination of the records of the Company, the Company has paid / provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 of the Act.
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, 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 Ind-AS financial statements - Refer Note 34 to the Ind-AS financial statements.
ii) The Company has made provision, as required under the applicable law or Accounting Standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - Refer Note 17, 18, 24 and 48 to the Ind-AS financial statements.
iii) There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
iv) (i) The Management has represented that, to the best of it's knowledge and belief, other than as disclosed in the
notes to the accounts, 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(s) or entity(ies), 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.
(ii) The Management has represented, that, to the best of it's knowledge and belief, other than as disclosed in the notes to the accounts, no funds have been received by the company from any person(s) or entity(ies), 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
Based on such audit procedures performed by us which is 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) contain any material mis-statement.
v) There is no dividend declared or paid during the year by the Company.
vi) Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company w.e.f. April 1,2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31, 2023.
For KALYANIWALLA & MISTRY LLP CHARTERED ACCOUNTANTS
Firm Regn. No.: 104607W/W100166
Daraius Z. Fraser pARTNER M. No.: 42454
Mumbai: May 30, 2023. UDIN: 23042454BGXFRC1845
|