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Sterlite Technologies Ltd.

BSE: 532374 Sector: Engineering
NSE: STRTECH ISIN Code: INE089C01029
BSE LIVE 15:44 | 18 Oct 257.05 -5.60
(-2.13%)
OPEN

263.00

HIGH

263.00

LOW

253.50

NSE 15:58 | 18 Oct 257.00 -5.45
(-2.08%)
OPEN

262.50

HIGH

263.00

LOW

253.60

OPEN 263.00
PREVIOUS CLOSE 262.65
VOLUME 267868
52-Week high 277.40
52-Week low 85.00
P/E 56.00
Mkt Cap.(Rs cr) 10,290
Buy Price 257.05
Buy Qty 5089.00
Sell Price 0.00
Sell Qty 0.00
OPEN 263.00
CLOSE 262.65
VOLUME 267868
52-Week high 277.40
52-Week low 85.00
P/E 56.00
Mkt Cap.(Rs cr) 10,290
Buy Price 257.05
Buy Qty 5089.00
Sell Price 0.00
Sell Qty 0.00

Sterlite Technologies Ltd. (STRTECH) - Auditors Report

Company auditors report

Independent Auditor's Report

To the Members of Sterlite Technologies Limited

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of SterliteTechnologies Limited ("the Company") which comprise the Balance Sheet as atMarch 31 2017 the Statement of Profit and Loss including the statement of OtherComprehensive Income the Cash Flow Statement and the Statement of Changes in Equity forthe year then ended and a summary of significant accounting policies and otherexplanatory information.

Management's Responsibility for the Ind AS financial statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone Ind AS financial statements that give a true and fair view of the stateof affairs (financial position) profit or loss (financial performance including othercomprehensive income) cash flows and changes in equity of the Company in accordance withaccounting principles generally accepted in India including the Accounting Standardsspecified under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and the design implementationand maintenance of adequate internal financial control that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the Ind AS financial statements that give a true and fairview and are free from material misstatement whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit. We have taken into account the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the Rules made thereunder. We conductedour audit in accordance with the Standards on Auditing issued by the Institute ofChartered Accountants of India as specified under Section 143(10) of the Act. ThoseStandards require that we comply with ethical requirements and plan and perform the auditto obtain reasonable assurance about whether the standalone Ind AS financial statementsare free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the standalone Ind AS financial statements. The procedures selected dependon the auditor's judgment including the assessment of the risks of material misstatementof the standalone Ind AS financial statements whether due to fraud or error. In makingthose risk assessments the auditor considers internal financial control relevant to theCompany's preparation of the standalone Ind AS financial statements that give a true andfair view in order to design audit procedures that are appropriate in the circumstances.An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the standalone Ind AS financial statements. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our qualified audit opinion.

Basis for qualified opinion

As stated in Note 53 to the accompanying standalone Ind AS financial statements theCompany had in an earlier year received an order of CESTAT upholding a demand of `188crores (including penalties and excluding interest) (Rs 188 crores as at March 31 2016)in a pending excise/customs matter. The Company's appeal against this order with theHonourable Supreme Court has been admitted. Based on the current status and legal advicereceived provision for liability as recorded and disclosed in Note 20 in the accompanyingstandalone Ind AS financial statements is considered adequate by Management. In the eventthe decision of the Honourable Supreme Court goes against the Company on any of thegrounds of appeal additional provision against the said demand may be required. Pendingdisposal of the matter by the Honourable Supreme Court we are unable to comment on theadequacy of the provisions made towards the amount of excise / customs duty payable. Ouraudit opinion on the standalone financial statements for the year ended March 31 2016 wasalso qualified in respect of this matter.

Qualified opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matter described in the Basis forQualified Opinion paragraph above the aforesaid standalone Ind AS financial statementsgive the information required by the Act in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2017 of its profit including othercomprehensive income its cash flows and the changes in equity for the year ended on thatdate.

Emphasis of Matter

We draw attention to Note 54C to the standalone Ind AS financial statements whichdescribes the accounting for merger which has been done as per the Scheme of amalgamationapproved by the High Court. Our opinion is not qualified in respect of this matter.

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 ofthe Act we give in the Annexure 1 a statement on the matters specified in paragraphs 3and 4 of the Order.

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 bestof our knowledge and belief were necessary for the purpose of our audit;

(b) In our opinion proper books of account as required by law have been kept by theCompany so far as appears from our examination of those books;

(c) The Balance Sheet Statement of Profit and Loss including the Statement of OtherComprehensive income Cash Flow Statement and Statement of Changes in Equity dealt with bythis Report are in agreement with the books of account;

(d) Except for the possible effects of the matter described in the Basis for QualifiedOpinion paragraph in our opinion the aforesaid standalone Ind AS financial statementscomply with the Accounting Standards specified under section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended;

(e) The matter described in the Basis for Qualified Opinion paragraph above in ouropinion may have an adverse effect on the functioning of the Company;

(f) On the basis of written representations received from the directors as on March 312017 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2017 from being appointed as a director in terms of section 164(2) of theCompanies Act 2013;

(g) The qualification relating to the maintenance of accounts and other mattersconnected therewith is as stated in the Basis for Qualified Opinion paragraph above;

(h) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure 2" to this report;

(i) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. Except for the possible effect of the matter described in the Basis for QualifiedOpinion above the Company has disclosed the impact of pending litigations on itsfinancial position in its standalone Ind AS financial statements – Refer Notes 20 40and 53 to the standalone Ind AS financial statements;

ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts – Refer Note 23 to the standalone Ind AS financial statements;

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

iv. The Company has provided requisite disclosures in Note 54D to these standalone IndAS financial statements as to the holdings of Specified Bank Notes on November 8 2016 andDecember 30 2016 as well as dealings in Specified Bank Notes during the period fromNovember 8 2016 to December 30 2016. However we are unable to obtain sufficient andappropriate audit evidence to report on whether the disclosures are in accordance withbooks of account maintained by the Company and as produced to us by the Management.

For S R B C & Co LLP

Chartered Accountants

ICAI Firm Registration No. 324982E / E300003

per Paul Alvares

Partner

Membership Number : 105754

Place of Signature: Pune

Date: April 26 2017

Annexure 1 referred to in paragraph 1 under the heading "Report on Other Legal andRegulatory Requirements" of our report of even date

Re: Sterlite Technologies Limited (the "Company")

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) Fixed assets were physically verified by the management in earlier year inaccordance with a planned programme of verifying them once in three years which in ouropinion is reasonable having regard to the size of the Company and the nature of itsassets. No material discrepancies were noticed on such verification.

(c) According to the information and explanations given by the management the titledeeds of immovable properties included in fixed assets are held in the name of thecompany.

(ii) The inventory has been physically verified by the management during the year. Inour opinion the frequency of verification is reasonable. No material discrepancies werenoticed on such physical verification.

(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms or other parties covered inthe register maintained under section 189 of the Companies Act 2013. Accordingly theprovisions of clause 3(iii)(a) (b) and (c) of the Order are not applicable to the Companyand hence not commented upon.

(iv) In our opinion and according to the information and explanations given to usprovisions of section 185 and 186 of the Companies Act 2013 in respect of loans todirectors including entities in which they are interested and in respect of loans andadvances given investments made and guarantees and securities given have been compliedwith by the company.

(v) The Company has not accepted any deposits from the public.

(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records undersection 148 (1) of the Companies Act 2013 related to the manufacture of data cables andare of the opinion that prima facie the prescribed accounts and records have been madeand maintained. We have not however made a detailed examination of the same.

(vii) (a) The Company is regular in depositing with appropriate authorities undisputedstatutory dues including provident fund employees' state insurance income-taxsales-tax service tax customs duty excise duty value added tax cess and othermaterial statutory dues applicable to it.

(b) According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income-tax service taxsales tax customs duty excise duty value added tax cess and other material statutorydues were outstanding at the year end for a period of more than six months from the datethey became payable.

(c) According to the records of the Company the dues outstanding of income-taxsales-tax service tax customs duty excise duty value added tax and cess on account ofany dispute are as follows:

Name of the statute Nature of dues Amount (Rs in Crores) Period to which the amount relates Forum where dispute is pending
Central Excise Act 1944 Excise Duty 188.00 2001–2003 Supreme Court
0.70 2002-2003 Bombay High Court
28.77 2001-2008 Bombay High Court
3.06 2001-2003 Commissioner
Customs Act 1962 Custom Duty 67.24 2001-2004 Bombay High Court
Finance Act 1994 Service Tax 0.63 2003-2007 Bombay High Court
Income Tax Act 1961 Income Tax 1.75 AY11-12 AY13-14 CIT (Appeals)
AY14-15
0.06 AY09-10 AY12-13 ITAT

(viii) In our opinion and according to the information and explanations given by themanagement the Company has not defaulted in repayment of dues to a financial institutionbank or debenture holders or government. As stated in Note 40 to the standalone Ind ASfinancial statements the Company continues to dispute amounts aggregating Rs 18.87 Croresdebited by a bank in the earlier years towards import consignments under Letters ofCredit not accepted by the Company owing to discrepancies in documents.

Since the matter is in dispute we are unable to determine whether there is a defaultin repayment of dues to the said bank.

(ix) In our opinion and according to information and explanations given by themanagement monies raised by the company by way of debt instruments in the nature onnon-convertible debentures and term loans were applied for the purpose for which the loanswere obtained. Further according to the information and explanations given by themanagement the Company has not raised any money by way of initial public offer / furtherpublic offer during the year.

(x) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that no fraud by the company or no fraud on the companyby the officers and employees of the Company has been noticed or reported during the year.

(xi) According to the information and explanations given by the management themanagerial remuneration has been paid / provided in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the CompaniesAct 2013.

(xii) In our opinion the Company is not a nidhi company. Therefore the provisions ofclause 3(xii) of the order are not applicable to the Company and hence not commented upon.

(xiii) According to the information and explanations given by the managementtransactions with the related parties are in compliance with section 177 and 188 of theCompanies Act 2013 where applicable and the details have been disclosed in the notes tothe standalone Ind AS financial statements as required by the applicable accountingstandards.

(xiv) According to the information and explanations given to us and on an overallexamination of the balance sheet the company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review and hence reporting requirements under clause 3(xiv) are not applicable tothe company and hence not commented upon.

(xv) According to the information and explanations given by the management the Companyhas not entered into any non-cash transactions with directors or persons connected withhim as referred to in section 192 of Companies Act 2013.

(xvi) According to the information and explanations given to us the provisions ofsection 45-IA of the Reserve Bank of India Act 1934 are not applicable to the Company.

For S R B C & Co LLP

Chartered Accountants

ICAI Firm Registration No. 324982E / E300003

per Paul Alvares

Partner

Membership Number : 105754

Place of Signature: Pune

Date: April 26 2017

Annexure 2 to the Independent Auditor's Report of even date on the Standalone FinancialStatements of Sterlite Technologies Limted

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of SterliteTechnologies Limited ("the Company") as of March 31 2017 in conjunction withour audit of the standalone Ind AS financial statements of the Company for the year endedon that date.

Management's Responsibility for Internal Financial Controls

The Company's Management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to the Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing as specified under section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial 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 andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.

An audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's 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 financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe 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 thefollowing material weaknesses have been identified in the operating effectiveness of theCompany's internal financial controls over financial reporting as at March 31 2017:

The Company's internal financial controls over evaluation and assessment of provisionfor an excise/customs matter pending with the Honourable Supreme Court were not operatingeffectively which could potentially result in the Company not recognising sufficientprovision there against.

A ‘material weakness' is a deficiency or a combination of deficiencies ininternal financial control over financial reporting such that there is a reasonablepossibility that a material misstatement of the company's annual or interim financialstatements will not be prevented or detected on a timely basis.

In our opinion the Company has in all material respects maintained adequate internalfinancial controls over financial reporting as of March 31 2017 based on the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of Chartered

Accountants of India and except for the possible effects of the material weaknessdescribed above on the achievement of the objectives of the control criteria theCompany's internal financial controls over financial reporting were operating effectivelyas of March 31 2017.

Explanatory paragraph

We also have audited in accordance with the Standards on Auditing issued by theInstitute of Chartered Accountants of India as specified under Section 143(10) of theAct the standalone Ind AS financial statements of Sterlite Technologies Limited whichcomprise the Balance Sheet as at March 31 2017 the Statement of Profit and Lossincluding other comprehensive income the Cash Flow Statement the Statement of Changes inEquity for the year then ended and a summary of significant accounting policies and otherexplanatory information. This material weakness was considered in determining the naturetiming and extent of audit tests applied in our audit of the March 31 2017 standaloneInd AS financial statements of Sterlite Technologies Limited and this report affects ourreport dated April 26 2017 which expressed a qualified opinion on those standalone IndAS financial statements.

For S R B C & Co LLP

Chartered Accountants

ICAI Firm Registration No. 324982E / E300003

per Paul Alvares

Partner

Membership Number : 105754

Place of Signature: Pune

Date: April 26 2017