ITI Ltd Auditor Reports

TO THE MEMBERS OF ITI LIMITED, BENGALURU Report on the Audit of the Standalone Financial Statements Qualified Opinion

We have audited the accompanying standalone financial statements of ITI 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 and the Statement of Cash Flows for the year then ended, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as "the Standalone financial statements") in which are incorporated the returns for the year ended on that date audited by the branch auditors of the companys branches located at Naini, Mankapur, Raebareli, Srinagar and Palakkad.

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 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 March 31, 2023, the profit/ (loss) and total comprehensive income/ (loss), changes in equity and its cash flow for the year ended on that date.

Basis for Qualified Opinion

1) The Company has not made provision for bad debts (credit losses) in respect of the following items included under Current Assets - Financial Assets, which are doubtful of recovery:

a) Rs 5,847.90 lakhs, receivable from C-DOT towards rent from premises leased out to them up to the period ending 31-3- 2011.

b) Recoverable from HCL Infosystems Limited of Rs 1,690.20 lakhs as compensation on account of the excess amount spent by the Mankapur Unit of the Company based on the agreement between ITI, HCL and Alcatel.

c) Recoverable from Himachal Futuristic Communications Ltd of Rs 1,049.41 lakhs towards Liquidated Damages.

d) Receivable from Mindarray towards encashment of letter of credit of Rs 1,023.00 lakhs

Accordingly, if provision for credit losses were made by the Company, the loss for the year would have been higher and the net current assets lesser by Rs 9610.51 lakhs.

2) The Company has not reversed the wrong GST input tax credit of Rs 889 lakhs taken during 2019-20 at the Palakkad Unit of the Company. The Naini Unit carries a debit balance of Rs 94.42 lakhs towards unavailed input tax credits that are time-barred. Consequently, the net profit for the year is overstated by Rs 983.42 lakhs, plus applicable interest.

3) In respect of the below-mentioned issues, the impact on the items of financial statements is not quantifiable/ unascertained:

a) The Company carries long outstanding balances under trade receivable, unbilled debtor balances, claims receivable, and rent receivable. These balances are subject to confirmation by the parties and reconciliations. The effect of the adjustment arising from reconciliation and the delay in settlement of the dues may result in a possible loss due to short/non-recovery. In the absence of sufficient and appropriate evidence, we are unable to comment on the impact of such unascertained losses on the carrying value of these receivables as well as on the Other Comprehensive Income.

b) The Companys inventories include old inventory, and it is in the process of an assessment of the ageing, usefulness, and serviceability of the inventories held at various units to ascertain the quantum of obsolete inventory. Consequently, we are unable to comment on whether the valuation of the inventories is at the lower of cost and net realisable value, which constitutes a departure from the requirements of Ind AS 2.

c) Regarding Goods & Services Tax, in certain cases, entries/ balances as per the books of accounts do not match with the returns filed and input tax credits reflected in the portal. Adjustment entries and reversal of ineligible input tax credits are pending.

d) The Company carries certain items of property, plant & equipment under Capital Work-in-Progress pending acceptance/ installation. This includes a let-out building costing Rs 6582.06 that is not yet capitalised as an investment property. A detailed list of such items, along with the date available for use, was not made available to ascertain the shortfall in providing depreciation, if any, as under Ind AS 16/ 40, depreciation shall commence from the date the items are available for use. In the absence of sufficient and appropriate evidence, we are unable to comment on the impact of such delayed capitalisation and the resultant shortfall in charging depreciation on the Other Comprehensive Income.

4) Finance costs for the year include the interest of Rs 3,006.98 lakhs towards delayed remittance of Provident Fund. This amount includes interest for current and previous years, and such a break-up is unavailable.

5) The Companys process for identifying suppliers covered by the Micro, Small and Medium Enterprises Development Act of 2006 and the payment of interest in cases of delays in payment appears to be inadequate and unverifiable. As a result, we are unable to verify whether the provision for interest on delayed payments is complete and comment on MSMED Act 2006 compliance or correctness of disclosure made by the Company under Schedule III of the Companies Act 2013.

We conducted our audit of the standalone 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 Auditors Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the 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 opinion on the standalone financial statements.

Emphasis of Matter

We draw attention to the following matters under various notes (referred against each item) of the financial statements. Our opinion is not modified in respect of these matters.

i. The Company had received funds towards capital expenditure as part of the financial assistance approved by CCEA when the Company was declared a Sick Company as per provisions of the Sick Industrial Companies Act, 1985. [Note No.31.14]

ii. The Company has postponed revenue recognition in respect of rent from a few parties due to uncertainty of ultimate collection owing to several reasons, including but not limited to the finalisation of the terms of the lease and not entering into formal agreements. [Note Nos. 31.10(b), 31.15, 31.17 and 31.19]

iii. The Company carries under other financial assets- current accumulated unbilled revenue of Rs 2,57,855 lakhs that were recognised during the current as well as the previous few years. [Note No. 9(b)]

iv. The Company has not provided for the demand of property tax based on the demand notice from BBMP, as it has disputed the demand by filing a writ in the High Court of Karnataka. [Note No.31.10 (a)(ii)]

v. The Company is not in compliance with the requirements of having a specified proportion/ number of independent directors and appointment of a Company Secretary. [Note No.31.36]

vi. The Company continues to carry a land admeasuring 77 acres having a carrying value of Rs 19,470 lakhs under Property, Plant & Equipment after receiving intimation of re-possession by the Government of Kerala as the Company has disputed the same, and the matter is under adjudication of the Apex Court. [as reported by the branch auditor]. [Note No.31.21 .(i)]

vii. Non-disclosure of fair value on the balance sheet date in respect of Investment Properties [Note No.3(iv)]

viii. The Palakkad Unit of the Company has made provision for bad debts only to the extent of Rs 242 lakhs after netting off the corresponding liability to the back-end partners in respect of overdue receivables from M/s.Karvy Data Management Services Limited and M/s.Telva Systems.[Note No.31.22]

Key Audit Matters

Key audit matters are those matters that in our professional judgement were of most significance in our audit of the 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, We have determined the matters described below to be the key audit matters to be communicated in our report

Key Audit Matters	Auditors Response
Revenue from contracts with customers:	Principal Audit Procedures
Accounting for revenue is an exercise of recognising revenue based on accounting policies for supply of goods or services. Revenue on Projects (Service/ Construction Contracts) such as fixed-price, fixed-time frame contracts, where the performance obligations are satisfied over time is recognized using the input (percentage-of-completion) method. Efforts or costs expended are used to determine progress towards completion as there is a direct relationship between input and productivity. Progress towards completion is measured as the ratio of costs or efforts incurred to date (representing work performed) to the estimated total costs or efforts.	Our audit procedures related to estimates of total expected costs or efforts to complete fixed-price contracts included among others the following:
Use of the percentage-of-completion method requires the Company to determine the actual efforts or costs expended to date as a proportion of the estimated total efforts or costs to be incurred. The estimation of total efforts or costs involves significant judgment and is assessed throughout the period of the contract to reflect any changes based on the latest available information.	We tested the effectiveness of controls relating to:
We identified the recognition of revenue as a key audit matter as the estimation of efforts or costs involves significant judgment throughout the period of the contract and is subject to revision as the contract progresses based on the latest available information. This estimate has a high inherent uncertainty and requires consideration of progress of the contract, efforts or costs incurred to- date and estimates of efforts or costs required to complete the remaining contract performance obligations over the life of the contracts.	(1) reviewing the efforts or costs incurred and estimation of efforts or costs required to complete the remaining contract performance obligations and
	(2) reviewing the controls pertaining to recording & allocation systems which prevent unauthorised changes to recording of efforts incurred.
	We selected a sample of fixed price contract accounted using percentage-of- completion method and performed the following :
	• Compared efforts or costs incurred with Companys estimate of efforts or costs incurred to date to identify significant variations and evaluate whether those variations have been considered appropriately in estimating the remaining costs or efforts to complete the contract.
	• Review the computations of total revenue recognisable and comparisons with the billing done up to the balance date to identify the unbilled revenue

Information Other than the Standalone Financial Statements and Auditors Report Thereon

The Companys Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in Management Discussion and Analysis, Boards Report including Annexures to Boards Report, Business Responsibility Report, Corporate Governance and Shareholders information, but does not include the standalone financial statements and our auditors report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance or 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 the 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.

Managements Responsibility for the Standalone Financial Statements

The Companys 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 financial statements that give true and fair view of the financial position, financial performance, total comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS and other accounting principles generally accepted in India, This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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 misstatements, whether due to fraud or error.

In preparing the standalone financial statements, Management of Company is responsible for assessing the Companys 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 Management of Company either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors are responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors 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 financial controls 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 disclosure made by the management.

• Conclude on the appropriateness of managements 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 Companys ability to continue as a going concern, If we conclude that a material uncertainty exists, we are required to draw attention in our auditors 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 auditors 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.

Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user 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 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 standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors 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

We did not audit the financial statements of Mankapur, Raebareli, Srinagar, Naini & Palakkad Branches included in the standalone financial statements of the Company whose financial statements reflect total assets of Rs

2,96,230.66 lakhs as at March 31, 2023 and total income of Rs 17,057.64 lakhs for the year ended on that date, as considered in the standalone financial statements (excluding inter-unit balances and transactions). The financial statements of these branches have been audited by the branch auditors whose report has been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of these branches is solely on the report of such Branch Auditors. Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1) As required by the Companies (Auditors Report) Order, 2016 (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) 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. and proper returns adequate for the purpose of our audit have been received from the branches not visited by us.

c) The reports on the accounts of the branch offices of the Company audited under Section 143(8) of the Act by branch auditors have been sent to us and have been properly dealt with by us in preparing this report.

d) 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 accounts.

e) In our opinion, the aforesaid financial statements comply with the Indian Accounting Standards prescribed under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules 2015.

f) In terms of Notification no. G.S.R. 463 (E) dt. 05-06-2015 issued by Ministry of Corporate Affairs, the Provision of Section 164(2) of the Companies Act, 2013 in respect of disqualification of directors are not applicable to the Company, being a Government Company.

g) The provisions of Section 197 are not applicable to a government Company (in terms of MCA Notification NO.GSR 463 (E) dated 05th June 2015) as the managerial remuneration is paid as per the appointment letter from the Government of India.

h) 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 B".

i) With respect to the other matters to be included in the Auditors 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 standalone financial statements. (Refer Note 31.10 to the 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.

iii) There has been no delay in transferring the amount, required to be transferred in accordance with the relevant provisions of the Companies Act, 2013 and the rules made thereunder to the Investor Education and Protection Fund by the Company.

iv) The management has represented that,

(1) to the best of its 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;

(2) to the best of its 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

(3) Based on such audit procedures we have 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) The Company has neither declared nor paid any dividend during the year and hence commenting on

the compliance with section 123 of the Companies Act, 2013 does not arise.

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 with effect from 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.

3) On the basis of such checks of the books and records of the Company, as we considered appropriate and according to the information and explanations given to us, we are enclosing our report in terms of Section 143(5) of the Act, on the directions and sub directions issued by the Comptroller and Auditor General of India in "Annexure C".

"Annexure A" to Independent Auditors Report

(Referred to in Paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date on the standalone financial statements of ITI Limited ("the Company"), for the year ended March 31, 2023

i. (a) (A) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets except in the case of Bangalore Plant, NS Unit and R&D Unit at Bangalore, where the records are not updated. (B) The Company does not have intangible assets.

(b) According to the information and explanations given to us, fixed assets have been physically verified by the management except for the assets located at the Bangalore Plant, Bangalore NS Unit, Regional Offices, Corporate Office and at Raebareli (Furniture and Vehicles). No material discrepancies were noticed on such verification. Pending physical verification of fixed assets in the above units, discrepancies, if any, could not be ascertained and accounted for.

(c) We are unable to comment on whether the title deeds of immovable properties are held in the name of the Company as sufficient information and appropriate evidence supporting the same in the Units where we have audited are not made available to us. The details of title deeds of immovable properties, in the opinion of the management that not held in the name of the Company are given in Note no. 31.21 to the Financial Statements and are given below:

Description of property	Gross carrying value (Rs In lakhs)	Held in name of	Whether promoter, director or their relative or employee	Period held - indicate range, where appropriate	Reason for not being held in name of company (also indicate if in dispute)
Land	19470	Title resumed by Government of Kerala	No	Over 10 years	Company has disputed the resumption
Land	9282	Absolute Sale Deed not yet executed	No	Over 10 years	Pending
Land	11620	Absolute Sale Deed not yet executed	No	Over 10 years	Pending due to non-submission of proof of compensation paid by ITI Limited to the landowners at the time of land acquirement

(d) The Company has not revalued any of its Property, Plant and Equipment (including right-of-use assets) and intangible assets during the year.

(e) No proceedings have been initiated during the year or are pending against the Company as at March 31, 2023 for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (as amended in 2016) and rules made thereunder.

ii. (a) According to the information and explanations given to us, inventories (excluding those with third parties) have been physically verified by the management at reasonable intervals other than at (i) Bangalore Plant; (ii) NSU Unit & (iii) Regional Offices. According to the information and explanations given to us and based on the Report of the Other Auditors, no material discrepancies were noticed on physical verification of the inventories at the locations where Management had carried out physical verification.

(b) In our opinion and according to the books of account and records examined by us in the normal course of audit, the quarterly returns or statements filed by the company with banks who have sanctioned working capital limits to the Company, are in agreement with the books of account of the Company.

iii. According to the information given to us, during the year the Company has not made investments in, provided any guarantee or security or granted any loans or advances in the nature of loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or any other parties. Therefore, clauses (iii) (a) to (f) Paragraph 3 of the Order are not applicable to the Company.

iv. The Company has complied with the provisions of Sections 185 and 186 of the Companies Act, 2013 in respect of loans granted, investments made and guarantees and securities provided, as applicable.

v. The Company has not accepted any deposit or amounts which are deemed to be deposits. Hence, reporting under clause 3(v) of the Order is not applicable.

vi. We have broadly reviewed the books of account and records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules 2014 prescribed by the Central Government under section 148(1) of the Companies Act, 2013 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we are not required to and have not carried out any detailed examination of such accounts and records.

vii. According to the information and explanations given to us in respect of Statutory dues:

(a) The company is generally not regular in depositing undisputed statutory dues including Goods and Services Tax, provident fund, employees state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues to the appropriate authorities. The extent of the arrears of outstanding statutory dues as on 31-3-2023 for a period of more than six months from the date they became payable is given in the below table:

Particulars	BG Plant (Including RO Hyd)	Srinagar	NAINI	Raebareli	Mankapur	Palakkad	TOTAL
Statutory Dues PF	2,372.22	-	3,314.66	10,729.72	6,384.88	290.96	23092.44
WCT	-	-	8.08	-	-	-	8.08
Excise Duty	-	-	0.44	-	-	-	0.44
Sales Tax	-	-	1.23	-	-	-	1.23
TDS on GST	-	-	0.26	42.11	-	-	42.37
GST	66.08	-	-	35.37	-	-	101.45
GSLI	-	-	3.19	-	-	-	3.19
Service Tax	-	-	1.29	2,417.74	-	-	2,419.03
Total	2,438.30	-	3,329.15	13,224.94	6,384.88	290.96	25,668.23

(b) According to the information and explanations given to us, the statutory dues mentioned in the below table have not been deposited on account of any dispute.

Sl. No. Name of the statute	Nature of dues	Amount in Rs Lakhs (As on 31.03.2023)	Period to which the dispute relates	Forum where the dispute is pending	Unit
1 Central Excise Act, 1944	Nil rate of duty availed on Software disputed by CE dept (Net of Pre deposit Rs 200.00 lakhs)	637.00	2003-2005	Custom Excise & Service Tax Appellate Tribunal	BGP
2 Central Excise Act, 1944	ED Demanded on R&D prototype modules for field trail. Stay extended (net of pre deposit Rs 30.00 lakhs)	299.00	2006-07	Custom Excise & Service Tax Appellate Tribunal	BGP
3 Central Excise Act 1944	Nil Rate of Duty availed on software disputed by Central excise dept (Net of Pre deposit Rs Rs 14.00)	497.28	2001-2002 2002-2003	Custom Excise & Service Tax Appellate Tribunal	BGP
4 Central Excise Act 1944	CENVAT Credit	376.00	2007-2008	Custom Excise & Service Tax Appellate Tribunal	BGP
5 UP VAT	Sales Tax	264.89	1986-1989	UP Government	MKP
6 UP VAT	Sales Tax	15.32	1989-1996	UP Government	MKP
7 Finance Act, 1994	Service Tax	5,510.14	2009-10 to 2013-14	CESS Tax, Allahabad	MKP
8 Finance Act, 1994	Service Tax	1,992.19	2009-10 to 2013-14	CESS Tax, Allahabad	MKP
9 Central Sales Tax (CST)	Demand of other dues and Additional Tax against FORM C	1,013.98	2005-2006	Joint Commissioner (Appeals), Commercial Tax, Allahabad	NNI
10 Central Sales Tax	Demand of Additional Tax against FORM C	2.64	2007-08	Additional Commissioner (Appeals), Commercial Tax, Allahabad	NNI
11 CST/ UPVAT/ Entry Tax	Demand of other dues	9.23	2008-09	Addl Commissioner, (Appeals), Commercial Tax, Allahabad	NNI
12 Central Sales Tax	Demand of other dues and Additional Tax against FORM C	2.12	2009-10	Deputy Commissioner, Commercial Tax, Allahabad	NNI
13 CST/ UPVAT	Demand of other dues and Additional Tax against FORM C	60.57	2010-11	Additional Commissioner (Appeals),Commercial Tax, Allahabad	NNI
14 CST	Demand of other dues and Additional Tax against FORM C	10.96	2011-12	Tribunal, Commercial Tax, Allahabad	NNI
15 CST/ UPVAT	Demand of other dues and FORM C	146.75	2012-13	Deputy Commissioner Sector 14, Commercial Tax, Allahabad	NNI
16 CST/ UPVAT	Demand of Tax	86.75	2013-14	Deputy Commissioner Sector 14, Commercial Tax, Allahabad	NNI
17 Service Tax	Service Tax	109.44	2010-2011	CESTAT, Bangalore	PKD
18 Service Tax	Service Tax	140.34	2011-2012	CESTAT, Bangalore	PKD
19 Service Tax	Service Tax	161.27	2011-2012	CESTAT, Bangalore	PKD
20 Service Tax	Service Tax	2.76	2012-2013	CESTAT, Bangalore	PKD
21 Service Tax	Service Tax	2.69	2012-2013	CESTAT, Bangalore	PKD
22 CST	Sales Tax	28.04	2001-02	High Court, Eranakulam	PKD
23 CST	Sales Tax	504.13	2003-04	KVAT Tribunal, Palakkad	PKD
24 Customs, Central Excise & Service Tax	Service Tax	143.42	2016- 17 & 2017- 18	Commissioner Appeals, Kochi	PKD
25 Customs, Central Excise & Service Tax	Service Tax	3.93	Apr 2015 to Jun22017	Commissioner Appeals, Kochi	PKD
26 Sales Tax Act	Sales Tax	117.70	2010-11	Trade Tax Tribunal, Lucknow	RBL
27 Sales Tax Act	Sales Tax	87.39	2014-15	Trade Tax Tribunal, Lucknow	RBL
28 Karnataka VAT Act, 2003	Turnover Suppression	26.47	2013-14	Commercial Tax Officer, Thirpunithura	RO BG
29 Karnataka VAT Act, 2003	Turnover Suppression	48.92	2014-15	Appellate Assistant Commissioner, Commercial Taxes, Ernakulam	RO BG
30 Service Tax	Non payment of Service Tax on Royalty payments received	44.78	2012-13 to 2014-15	Commissioner of Central Excise	RO BG
31 KVAT	Turnover suppression	65.87	2012-13	Dy Commr (Appeals) - Commercial Tax, Ernakulam	RO BG
32 Sales Tax	Sales Tax	733.36	1987-88 to 1989-90,1996-97, 1999-00, 2002-03	High Court, J & K	SNR
33 Sales Tax	Sales Tax	226.05	2013-14	Commissioner of Sales Tax Bhubaneshwar	RO BBSR
34 Income Tax	Income Tax	691.72	2017-18	Commissioner of Income Tax	CORP
35 Income Tax	Income Tax	305.00	2020-21	Commissioner of Income Tax	CORP
	Total	14,368.10

viii. There were no transactions relating to previously unrecorded income that have been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (43 of 1961).

ix. (a) The Company received a soft loan of Rs 30,000 lakhs from the Ministry of Communications & IT, Department of Telecommunications, Government of India during the year 2014-15. As per the latest

(c) The Company has taken a term loan during the year, and the loan was applied for the purpose for which the loan was obtained.

(d) On an overall examination of the financial statements of the Company, funds raised on short-term basis have, prima facie, not been used during the year for long-term purposes by the Company

(e) On an overall examination of the financial statements of the Company, the Company has not taken any funds from any entity or person on account of or to meet the obligations of its subsidiaries.

(f) The Company has not raised any loans during the year on the pledge of securities held in its subsidiaries, joint ventures or associate companies and hence reporting on clause 3(ix)(f) of the Order is not applicable.

x. (a) The Company has not raised moneys by way of initial public offer or further public offer (including debt instruments) during the year and hence reporting under clause 3(x)(a) of the Order is not applicable.

(b) During the year, the Company has not made any preferential allotment or private placement of shares or convertible debentures (fully or partly or optionally) and hence reporting under clause 3(x)(b) of the Order is not applicable.

xi. (a) No fraud by the Company and no material fraud on the Company has been noticed or reported during the year.

(b) No report under sub-section (12) of section 143 of the Companies Act has been filed in Form ADT-4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules, 2014 with the Central Government, during the year and upto the date of this report.

(c) We have taken into consideration the whistle blower complaints received by the Company during the year (and upto the date of this report), while determining the nature, timing and extent of our audit procedures.

xii. The Company is not a Nidhi Company and hence reporting under clause (xii) of the Order is not applicable.

xiii. In our opinion, the Company is in compliance with Section 177 and 188 of the Companies Act, 2013 with respect to applicable transactions with the related parties and the details of related party transactions have been disclosed in the standalone financial statements as required by the applicable accounting standards.

xiv. (a) The Company has an internal audit system. However, in our opinion it is not commensurate with the size and the nature of its business. (b) We have considered, the internal audit reports for the year under audit, issued to the Company during the year and till date, in determining the nature, timing and extent of our audit procedures.

xv. In our opinion during the year the Company has not entered into any non-cash transactions with its Directors or persons connected with its communications, the repayment of 1/5th principal would start from FY 2022-23. However, the terms with respect to servicing of interest is unclear. Apart from this, the Company has not defaulted in repayment of loans or borrowings to financial institutions, banks or the Government according to the records of the Company examined by us and the information and explanations given to us. The Company has not issued any debentures.

xvi. (a) In our opinion, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. Hence, reporting under clause 3(xvi)(a), (b) and (c) of the Order is not applicable.

(d) In our opinion, there is no core investment company within the Group (as defined in the Core Investment Companies (Reserve Bank) Directions, 2016) and accordingly reporting under clause 3(xvi)(d) of the Order is not applicable.

xvii. The Company has incurred cash losses during the financial year covered by our audit but not in the immediately preceding financial year.

xviii. There has been no resignation of the statutory auditors of the Company during the year.

xix. On the basis of the financial ratios, ageing and expected dates of realisation of financial assets and payment of financial liabilities, other information accompanying the financial statements and our knowledge of the Board of Directors and Management plans and based on our examination of the evidence supporting the assumptions, nothing has come to our attention, which causes us to believe that any material uncertainty exists as on the date of the audit report indicating that Company is not capable of meeting its liabilities existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date. We, however, state that this is not an assurance as to the future viability of the Company. We further state that our reporting is based on the facts up to the date of the audit report and we neither give any guarantee nor any assurance that all liabilities falling due within a period of one year from the balance sheet date, will get discharged by the Company as and when they fall due.

xx. (a) In respect of other than ongoing projects, the company has transferred unspent amount to a Fund specified in Schedule VII to the Companies Act, 2013 within a period of six months of the expiry of the financial year in compliance with the second proviso to sub-section (5) of section 135 of the said Act.

(b) The Company does not have any ongoing projects in respect of any amount remaining unspent under section (5) of section 135 of Companies Act and hence the question of transfer to special account under the provisions of sub section (6) of section 135 of the said Act does not arise.

Nature of borrowing, including debt securities	Name of lender*	Amount not paid on the due date	Whether principal or interest	No. of days delay or unpaid	Remarks, if any
Loan	GOI, Ministry of Communications & IT Dept. of Telecommunications	Rs 6000.00 lakhs	Principal	Payable during FY 22-23	The letter of sanction does not specify the date of repayment but only states that 1/5th is payable annually.

(b) The Company has not been declared a wilful defaulter by any directors. and hence provisions of section 192 of the Companies Act, bank or financial institution or government or any government authority. 2013 are not applicable to the Company.

"ANNEXURE B" TO THE INDEPENDENT AUDITORS REPORT OF EVEN DATE ON THE STANDALONE FINANCIAL STATEMENTS OF ITI LIMITED

Report on the Internal Financial Controls under Clause (I) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls over financial reporting of ITI Limited ("the Company^) as of March 31,2023 in conjunction with our audit of the Standalone financial statements of the Company for the year ended on that date. Managements Responsibility for Internal Financial Controls The Companys management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the Auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companys internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting A Companys internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Companys internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that. in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorisations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the Companys assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Qualified Opinion

According to the information and explanations given to us, and based on our audit, the following material weaknesses have been identified as at March 31,2023:

i. The company did not have an appropriate internal control system for obtaining confirmation of balances on a periodic basis, and reconciliation of unmatched Receivables, Advances, and Payables.

ii. The company, in respect of Goods & Services Tax, did not have an effective system for timely accounting of entries, reversal of ineligible input tax credit, and reconciling the account balances with the returns filed thereof.

iii. At Raebareli Unit, the ERP software BaaN is not updated appropriately, and the audit was completed with information obtained from various departments.

iv. The internal control system to ensure no delay in the information furnished by the user departments to the accounts department regarding installation and acceptance of items of property, plant and equipment is weak, resulting in accounting for backlog depreciation in a few cases.

In our opinion, except for the effects/possible effects of the material weaknesses described above on the achievement of the objectives of the control criteria, the Company has maintained in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2023, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

Other Matter

We did not audit the internal financial controls over financial reporting of Mankapur, Raebareli, Srinagar, Naini & Palakkad Branches included in the standalone financial statements of the Company whose financial statements reflect total assets of Rs 2,96,230.66 lakhs as at March 31, 2023 and total income of Rs 17,057.64 lakhs for the year ended on that date, as considered in the standalone financial statements (excluding inter-unit balances and transactions). The internal financial controls over financial reporting of these branches have been audited by the branch auditors whose report has been furnished to us, and our opinion in so far as it relates to the adequacy of the internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2023 included in respect of these branches is solely on the report of such Branch Auditors.

Our opinion is not modified in respect of these matters.

"ANNEXURE C" TO INDEPENDENT AUDITORS REPORT

Directions issued by the Comptroller & Auditor General of India under Section 143(5) of the Companies Act, 2013 indicating the areas to be examined by the Statutory Auditors during the course of audit of annual accounts of ITI Limited (Standalone) for the year 2022-23

Sl. No. Areas Examined	Auditors Observations
1. Whether the company has system in place to process all the accounting transitions through IT system? If yes, the implications of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications, if any, may be stated.	Yes. The company has a system in place to process all the accounting transitions through IT software. Different units of the Company use different systems. However sub-systems such as inventory, invoicing, order processing, payroll is outside the accounting software. We have not come across any adverse implications on the integrity of the accounts.
2. Whether there is any restructuring of an existing loan or eases of waiver/ write off of debts/loan/interest etc. made by a lender to the company due to the companys inability to repay the loan? If yes, the financial impact may be stated. Whether such cases are properly accounted for?	According to the information and explanations given to us and based on our examination of the records of the company, during the year there has been no restructuring of an existing loan or cases of waiver/write off of debts/loan/interest etc. made by a lender to the company due to the companys inability to repay the loan.
3. Whether funds (grants/subsidy etc) received/receivable for specific schemes from Central/State Government or its agencies were properly accounted for /utilized as per its term and conditions? List the cases of deviation.	The Funds (grants/subsidy etc) received/receivable for specific schemes from Central/State Government or its agencies were properly accounted for /utilized as per its term and conditions. Details of unspent grant/ subsidy as on 31-3-2023 is as follows: 1) Grant towards VRS - Rs 4,496.42 lakhs 2) Grant-in-aid (capital) - Rs 10700.00 lakhs

ANNUAL REPORT 2022-23

	For GRSM & ASSOCIATES
	Chartered Accountants
	[FRN: 000863S]
	UDIN: 23205296BGWRPM3312
	RAJGOPAL A
Place: Bangalore	Partner
Date: 29th May 2023	M.No.205296