TO THE MEMBERS OF DCM Shriram Limited
Report on the Standalone Indian Accounting Standards (Ind AS)
1. We have audited the accompanying standalone financial statements of DCM ShriramLimited ("the Company") which comprise the Balance Sheet as at March 312018 the Statement of Profit and Loss (including Other Comprehensive Income) the CashFlow Statement and the Statement of Changes in Equity for the year then ended and asummary of the significant accounting policies and other explanatory information.
Management's Responsibility for the Standalone Ind AS Financial
2. 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 to give a true and fair view of the financialposition financial performance (including other comprehensive income) cash flows andchanges in equity of the Company in accordance with the accounting principles generallyaccepted in India including the Indian Accounting Standards specified in the Companies(Indian Accounting Standards) Rules 2015 (as amended) under Section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone Ind AS financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
3. Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit.
4. We have taken into account the provisions of the Act and the Rules made thereunderincluding the accounting and auditing standards and matters which are required to beincluded in the audit report under the provisions of the Act and the Rules madethereunder.
5. We conducted our audit of the standalone Ind AS financial statements in accordancewith the Standards on Auditing specified under Section 143(10)of the Act and otherapplicable authoritative pronouncements issued by the Institute of Chartered Accountantsof India. Those Standards and pronouncements require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe standalone Ind AS financial statements are free from material misstatement.
6. An audit involves performing procedures to obtain audit evidence about the amountsand the disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditors' judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the standalone Ind AS financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the standalone Ind ASfinancial statements.
7. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone Ind AS financial statements.
8. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India of the state of affairs of theCompany as at March 31 2018 and its total comprehensive income (comprising of profit andother comprehensive income) its cash flows and the changes in equity for the year endedon that date.
9. The Ind AS financial statements of the Company for the year ended March 31 2017were audited by another firm of chartered accountants under the Companies Act 2013 whovide their report dated May 01 2017 expressed an unmodified opinion on those financialstatements. Our opinion is not qualified in respect of this matter.
Report on Other Legal and Regulatory Requirements
10. As required by the Companies (Auditor's Report) Order 2016 issued by the CentralGovernment of India in terms of sub-section (11) of section 143 of the Act ("theOrder") and on the basis of such checks of the books and records of the Company aswe considered appropriate and according to the information and explanations given to uswe give in the Annexure B a statement on the matters specified in paragraphs 3 and 4 ofthe Order.
11. 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 purposes of our audit.
(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
(c) The Balance Sheet the Statement of Profit and Loss (including other comprehensiveincome) the Cash Flow Statement and the Statement of Changes in Equity dealt with by thisReport are in agreement with the books of account.
(d) In our opinion the aforesaid standalone Ind AS financial statements comply withthe Indian Accounting Standards specified under Section 133 of the Act.
(e) On the basis of written representations received from the directors as on March 312018 taken on record by the Board of Directors none of the other directors isdisqualified as on March 31 2018 from being appointed as a director in terms of Section164(2) of the Act.
(f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in Annexure A.
(g) With respect to the other matters to be included in the Auditors' Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our knowledge and belief and according to the information andexplanations given to us:
i The Company has disclosed the impact if any of pending litigations as at March 312018 on its financial position in its standalone Ind AS financial statements ReferNote 28;
ii. The Company did not have any long-term contracts including derivative contracts asat March 31 2018 for which there were any material foreseeable losses;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company during the year ended March 312018; and
iv. The reporting on disclosures relating to Specified Bank Notes is not applicable tothe Company for the year ended March 31 2018.
Annexure A to Independent Auditors' Report
Referred to in paragraph 11(f) of the Independent Auditors' Report of even date to themembers of DCM Shriram Limited on the standalone financial statements for the year endedMarch 31 2018
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Act
1. We have audited the internal financial controls over financial reporting of DCMShriram Limited ("the Company") as of March 31 2018 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.
Management's Responsibility for Internal Financial Controls
2. 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 (ICAI). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to 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 Act.
3. 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 deemed to be prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols both applicable to an audit of internal financial controls and both issued bythe ICAI. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the 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.
5. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
6. A company's internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures 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
7. 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.
8. In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2018 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
Annexure B to Independent Auditors' Report
Referred to in paragraph 10 of the Independent Auditors' Report of even date to themembers of DCM Shriram Limited on the standalone financial statements as of and for theyear ended March 31 2018
i. (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The fixed assets are physically verified by the Management according to a phasedprogramme designed to cover all the items over a period of 3years which in our opinionis reasonable having regard to the size of the Company and the nature of its assets.Pursuant to the programme a portion of the fixed assets has been physically verified bythe Management during the year and no material discrepancies have been noticed on suchverification.
(c) The title deeds of immovable properties as disclosed in Note 2.1 on fixed assetsto the financial statements are held in the name of the Company and in case where suchimmovable properties has been transferred pursuant to the scheme of amalgamation undersection 391 to 394 of the Companies Act 1956 the transfer is through the Order of theHon'ble High Courts. Further freehold land locatedat Hyderabad (Gross block - Rs. 1.56crores and Net block Rs. 1.56 crores) and freehold land located at Uttar Pradesh(Gross block - Rs. 0.63 crores and Net block Rs. 0.63 crores) are pending forregistration in favour of the Company.
ii. The physical verification of inventory excluding stocks with third parties havebeen conducted at reasonable intervals by the Management during the year. In respect ofinventory lying with third parties these have substantially been confirmed by them.Thediscrepancies noticed on physical verification of inventory as compared to book recordswere not material.
iii. The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained underSection 189 of the Act. Therefore the provisions of Clause 3(iii) (iii)(a) (iii)(b) and(iii)(c) of the said Order are not applicable to the Company.
iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Companies Act 2013in respect of the loans and investments made and guarantees and security provided by it.
v. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 73 74 75and 76 or any otherrelevant provisions of the Act and the Rules framed thereunder to the extent notifiedwith regard to the deposits accepted from the public. According to the information andexplanations given to us no order has been passed by the Company Law Board or NationalCompany Law Tribunal or Reserve Bank of India or any Court or any other Tribunal on theCompany in respect of the aforesaid deposits.
vi. Pursuant to the rules made by the Central Government of India the Company isrequired to maintain cost records as specified under Section 148(1) of the Act in respectof its products related to Sugar Cement Fertiliser Chemicals Poly vinyl chloride (PVC)resin Unplasticized polyvinyl chloride (UPVC) Doors and windows and electrical energybusinesses. We have broadly reviewed the same and are of the opinion that prima faciethe prescribed accounts and records have been made and maintained. We have not howevermade a detailed examination of the records with a view to determine whether they areaccurate or complete.
vii. (a) According to the information and explanations given to us and the records ofthe Company examined by us in our opinion the Company is regular in depositing theundisputed statutory dues including provident fund employees' state insurance incometax sales tax service tax duty of customs duty of excise value added tax cess goodsand service tax with effect from July 1 2017 and other material statutory dues asapplicable with the appropriate authorities.
(b) According to the information and explanations given to us and the records of theCompany examined by us there are no dues of goods and service tax which have not beendeposited on account of any dispute. The particulars of dues of income tax sales taxservice tax duty of customs duty of excise value added tax as at March 31 2018 whichhave not been deposited on account of a dispute are as follows:
|Name of Statute ||Nature of Dues ||Forum where Dispute is Pending ||Period to which the Amount Relates ||Amount Involved* (Rs. in crores) ||Amount paid under protest (Rs. in crores) ||Amount Unpaid (Rs. in crores) |
|Central Excise Act 1944 ||Excise duty ||High Court ||2005-06 2007-08 2008-09 2011-12 2012-13 ||2.61 ||0.70 ||1.91 |
| || ||Customs Excise and Service Tax Appellate Tribunal ||2008-09 2011-2012 2012-13 2013-14 ||1.25 ||- ||1.25 |
| || ||Appellate Authority upto Commissioner's level ||2006-07 2007-08 2008-09 2009-2010 2010-11 2011-12 ||0.50 ||0.09 ||0.41 |
|Finance Act 1994 ||Service Tax ||Customs Excise and Service Tax Appellate Tribunal ||2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 ||31.66 ||31.66 ||- |
| || ||Appellate Authority upto Commissioner's level ||2005-06 ||0.05 ||- ||0.05 |
|Sales Tax Laws ||Sales Tax ||Gujarat VAT Appellate Tribunal ||2011-12 ||0.17 ||0.05 ||0.12 |
| || ||Rajasthan State Board ||2011-12 ||0.28 ||0.28 ||- |
| || ||Appellate Authority upto Commissioner's level ||1999-2000 2000-2001 2001-02 2002-03 2004-05 2005-06 2007-082011-12 2012-13 2013-14 ||1.49 ||0.47 ||1.02 |
|Customs Tax Act 1962 ||Customs duty ||Customs Excise and Service Tax Appellate Tribunal ||2012-13 ||5.51 ||0.56 ||4.95 |
| || ||Appellate Authority upto Commissioner's level ||2012-13 and 2014-15 ||0.38 ||0.02 ||0.36 |
The following matters have been decided in favour of the Company although theDepartments have preferred appeal at higher levels.
|Name of Statute ||Nature of Dues ||Forum where Dispute is pending ||Period to which the amount relates ||Amount involved |
| || || || ||(Rs. crores) |
|Sales Tax Laws ||Sales Tax ||Supreme Court ||2000-01 2003-04 ||17.05 |
| || ||High Court ||2005-06 2006-07 2007-08 ||0.85 |
| || ||Customs Excise and Service ||2005-06 ||2.19 |
| || ||Tax Appellate Tribunal || || |
| || ||Appellate Authority upto ||2010-11 2011-12 ||0.23 |
| || ||Commissioner's level || || |
| || ||Rajasthan Tax Board ||2007-08 2008-09 2009-10 ||3.65 |
| || || ||2010-11 2011-12 || |
| || ||Appellate Authority upto ||2007-08 ||0.01 |
| || ||Commissioner's level || || |
|Income Tax Act ||Income Tax ||High Court ||2001-02 ||1.99 |
Also refer Note 36
viii. According to the records of the Company examined by us and the information andexplanation given to us the Company has not defaulted in repayment of loans or borrowingsto any financial institution or bank or Government or dues to debenture holders as at thebalance sheet date. ix. The Company has not raised any moneys by way of initial publicoffer further public offer (including debt instruments).In our opinion and according tothe information and explanations given to us the moneys raised by way of term loans havebeen applied for the purposes for which they were obtained. x. During the course of ourexamination of the books and records of the
Company carried out in accordance with the generally accepted auditing practices inIndia and according to the information and explanations given to us we have neither comeacross any instance of material fraud by the Company or on the Company by its officers oremployees noticed or reported during the year nor have we been informed of any such caseby the Management. xi. The Company has paid/ provided for managerial remuneration inaccordance with the requisite approvals mandated by the provisions of Section 197 readwith Schedule V to the Act. xii. As the Company is not a Nidhi Company and the NidhiRules 2014 are not applicable to it the provisions of Clause 3(xii) of the Order are notapplicable to the Company.
xiii. The Company has entered into transactions with related parties in compliance withthe provisions of Sections 177 and 188 of the Act. The details of such related partytransactions have been disclosed in the financial statements as required under AccountingStandard (AS) 18 Related Party Disclosures specified under Section 133 of the Act readwith Rule 7 of the Companies (Accounts) Rules 2014. xiv. The Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year under review. Accordingly the provisions of Clause 3(xiv) ofthe Order are not applicable to the Company. xv. The Company has not entered into anynon-cash transactions with its directors or persons connected with him. Accordingly theprovisions of Clause 3(xv) of the Order are not applicable to the Company. xvi. TheCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934. Accordingly the provisions of Clause 3(xvi) of the Order are not applicable tothe Company.
| ||For Price Waterhouse Chartered Accountants LLP |
| ||(Firm Registration Number: 012754N/N500016) |
| ||Chartered Accountants |
| ||Harinderjit Singh |
|Place: New Delhi ||Partner |
|Date: April 24 2018 ||(Membership Number: 086994) |