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DCW Ltd.

BSE: 500117 Sector: Industrials
NSE: DCW ISIN Code: INE500A01029
BSE 00:00 | 19 Feb 13.75 0
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14.00

HIGH

14.15

LOW

13.70

NSE 00:00 | 19 Feb 13.80 0
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13.90

HIGH

14.15

LOW

13.70

OPEN 14.00
PREVIOUS CLOSE 13.75
VOLUME 11110
52-Week high 23.15
52-Week low 12.10
P/E 25.00
Mkt Cap.(Rs cr) 359
Buy Price 13.75
Buy Qty 2725.00
Sell Price 14.80
Sell Qty 500.00
OPEN 14.00
CLOSE 13.75
VOLUME 11110
52-Week high 23.15
52-Week low 12.10
P/E 25.00
Mkt Cap.(Rs cr) 359
Buy Price 13.75
Buy Qty 2725.00
Sell Price 14.80
Sell Qty 500.00

DCW Ltd. (DCW) - Auditors Report

Company auditors report

TO THE MEMBERS OF DCW LIMITED

1. Opinion

We have audited the accompanying Ind AS financial statements of DCW Limited("the Company") which comprises the Balance Sheet as at March 312019 theStatement of Profit and Loss (including other comprehensive income) Statement of Changesin Equity and Statement of cash flows for the year ended March 31 2019 and notes to thefinancial statements including a summary of significant accounting policies and otherexplanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Ind AS financial statements give the information required bythe Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India including the Ind AS of the state ofaffairs of the Company as at March 31 2019 and its loss and total comprehensive losschanges in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the financial statements in accordance with the Standards onAuditing specified under section 143(10) of the Act (SAs). Our responsibilities underthose Standards are further described in the Auditor's Responsibilities for the Audit ofthe IND AS Financial Statements section of our report. We are independent of the Companyin accordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the independence requirements that are relevant to our audit ofthe financial statements under the provisions of the Act and the Rules made thereunderand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the ICAI's Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our audit opinion on the INDAS financial statements.

2. Emphasis of Matter

We draw attention to Note No. 32 to the financial statements which describe theuncertainty related to the outcome of the petitions/appeals filed by the company in thematter of:

a. electricity tax demand of ' 5346.66 lakhs on captive power generated and othermatters during the period 2003 to 2012;

b. custom duty demand of ' 3164.60 lakhs of coal imported and other matters by thecompany during 2011 and 2012; and

c. Execution of assignment deeds of the lands at Sahupuram works in respect of whichthe state government has issued notice of repossession and demanded lease rent for theperiod occupied by the company. The land is treated as freehold.

No provision has been made for the aforesaid demands in view of the factors stated inthe said note.

Our opinion is not modified in respect of these matters.

3. Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the IND AS financial statements as a wholeand in forming our opinion thereon and we do not provide a separate opinion on thesematters.

The key audit matters identified in our audit are:

Key Audit matter Response to Key Audit Matter
1. Estimation of Provision & Contingent Liabilities Internal enquiry:
In the recognition and measurement of provisions there is uncertainty about the timing or amount of the future expenditure required to settle the liability. We enquired of the senior management and inspected the minutes of the board where relevant for claims arising and challenged whether provisions are required.
In respect of contingent liabilities there are estimates and assumptions made to determine the amount to be disclosed.
Tests of details:
In respect of significant claims we checked the amount of claim nature of issues involved management submissions and corroborated the same with external evidence where available.
As a result there is a high degree of judgment required for the recognition and measurement of provisions and disclosure of contingent liabilities.
In case of disputed demands for income tax and other indirect taxes the orders passed against the company and the management views in respect of the legal position has been perused by the Tax Team and based on their views the provision for the same is not considered necessary and accordingly the same are included in the contingent Liability.
2. Deferred Tax Internal enquiry:
The deferred tax asset has been created based on the management judgment in regard to reversal of timing difference. We enquired of the senior management and Internal Tax team where relevant in respect of ascertainment of permanent and timing difference.
As a result there is a high degree of judgment required for the recognition and measurement. Tests of details:
The deferred tax asset has been created based on the management judgment in regard to reversal of timing difference and the same has been verified with respect to estimated projections prepared by the management based on which reasonable certainty of tax benefits to be accrued has been ascertained and accordingly asset has been created.

4. Other Information

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Director's Report ManagementDiscussion & Analysis Report Business Responsibility Report and Corporate GovernanceReport but does not include the financial statements and our auditor's report thereon.

Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated.

If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact.

We have nothing to report in this regard.

5. Responsibilities of Management and Those Charged with Governance for the IND ASFinancial 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 Ind AS financial statements that give a true and fair view of the financialposition the financial performance total comprehensive income changes in equity andcash flows of the Company in accordance with the accounting principles generally acceptedin India including the Indian Accounting Standards (Ind AS) prescribed under section 133of the Act.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the Ind ASfinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the IND AS financial statements management is responsible for assessingthe Company's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

Those Board of Directors are also responsible for overseeing the Company's financialreporting process.

6. Auditor's Responsibilities for the Audit of the IND AS Financial Statements

Our objectives are to obtain reasonable assurance about whether the IND AS financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these IND AS financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the IND AS financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

• Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe IND AS financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

• Evaluate the overall presentation structure and content of the IND AS financialstatements including the disclosures and whether the IND AS financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

Materiality is the magnitude of misstatements in the IND AS financial statements thatindividually or in aggregate makes it probable that the economic decisions of a reasonablyknowledgeable user of the financial statements may be influenced. We consider quantitativemateriality and qualitative factors in (i) planning the scope of our audit work and inevaluating the results of our work; and (ii) to evaluate the effect of any identifiedmisstatements in the financial statements.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the IND AS financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about the matteror when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication

7. Report on Other Legal and Regulatory Requirements

7.1 As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in "AnnexureA" a statement on the matters specified in paragraphs 3 and 4 of the Order.

7.2 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 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 Ind AS financial statements comply with the IndianAccounting Standards prescribed under section 133 of the Act.

e. On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 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 over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B".

g. With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended:

In our opinion and to the best of our information and according to the explanationsgiven to us the Company has not paid any remuneration to its directors during the year.

h. 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. The Company has disclosed the impact of pending litigations on its financialposition in its Ind AS financial statements - Refer Note No 32 of the financialstatements;

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses - Refer Note No 36 of the financialstatements.

iii. There was no delay in transferring amounts which were required to be transferredto the Investor Education and Protection Fund by the Company.

For CHHAJED & DOSHI
Chartered Accountants
[Firm Reg. No.101794W]
CA. Aruna Dhanesha
Place: Mumbai Partner
Date: 28th May 2019 M. No.107863

ANNEXURE "A" TO AUDITOR'S REPORT

Annexure referred to in our report of even date to the members of DCW Limited on theaccounts for the year ended 31st March 2019

i. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation in respect of material Fixed Assets. The fixed Assetregister is maintained manually and is in process of integrating with the financialaccounting system.

(b) We have been informed that the fixed assets were physically verified by theManagement during the financial year. In our opinion the frequency of verification isreasonable. As per the information given to us by the management wherever materialdiscrepancies were noticed as compared to book records the same have been appropriatelydealt with in books of account.

(c) In our opinion and according to the information and explanations given to us thetitle deeds of immovable properties are held in the name of the company except in case ofcertain lands and buildings referred to in Note 2 32 and 37.

ii. The inventories of finished goods (except goods lying with in-transit) storesspare parts and raw materials have been physically verified by the management with thehelp of external agencies. The inventories lying with third party has not been physicallyverified and is subject to confirmation from the custodian of said inventories at the yearend. In our opinion the frequency of physical verification is reasonable except in caseof inventories lying at third party locations. We have been informed by the managementthat the discrepancies noticed on verification between the physical inventories and thebook inventories wherever material necessary adjustments have been made in the books ofaccount.

iii. According to the information and explanations given to us the company has notgranted any loans to companies firms limited liability partnerships or other partiescovered in the register maintained under section 189 of the Companies Act 2013.

iv. The company has not granted any loans guarantees or security and has not madeinvestments to which the provisions of section 185 and 186 of the Companies Act 2013apply.

v. In our opinion and according to the information and explanations given to us andrepresentation made by the management the amounts received as business advances and intercorporate deposits are not considered as deposits received from the public during theyear.

vi. The Central Government has prescribed maintenance of cost records under section148(1) of the Companies Act 2013 in respect of certain products manufactured by theCompany. We have broadly reviewed the records maintained by the Company pursuant to therules made by the Central Government for the maintenance of cost records under Section148(1)) of the Companies Act 2013 and are of the opinion that prima facie theprescribed accounts and records have been made and maintained.

vii. (a) According to the records maintained by the company the company during theyear has delayed in depositing with appropriate authorities undisputed statutory duesincluding provident fund employees' state insurance income tax Goods and Services TaxCess and other statutory dues with appropriate authorities.

According to the information and explanations given to us no undisputed amounts inrespect of the aforesaid statutory dues were in arrears as at 31st March 2019 for aperiod of more than six months from the date they became payable except provident fundamounting to ' 355.87 lakhs which are in arrears for more than six months from the duedate as at 31st March 2019.

(b) According to the information and explanations given to us and the records of thecompany the dues of sales tax/ value added tax / customs duty / service tax / excise duty/ Cess which have not been deposited on account of dispute are as follows:

Name of the Statute / Nature of Dues Period

Forum where dispute is pending

Supreme Court High Court Appellate Tribunal* Appellate Authority** Grand Total
Customs Act 1962 (Custom Duty Including Penalty &Interest wherever applicable) 1997 to 2017 - 95.79 6379.49 - 6475.28
Central Excise Act 1944 (Excise Duty Including Penalty & Interest wherever applicable) 1997 to 2015 94.81 353.01 447.82
Sales Tax legislations (sales tax including penalty & interest wherever applicable) 1982 to 2017 - 1738.93 86.40 1239.62 3064.95
Service Tax 2005 to 2015 - - 39.17 110.45 149.62
Local cess local cess surcharge [land revenue including penalty and interest wherever applicable] 1989 to 2017 3167.61 4402.11 7.31 452.47 8029.50
GRAND TOTAL 3167.61 6331.64 6865.38 1802.54 18167.17

* Appellate Tribunal includes STAT CESTAT & ITAT

** Appellate Authority includes Commissioner Appeals Assistant Commissioner AppealsDeputy Commissioner Appeals Joint Commissioner Appeals and Deputy Commissioner CommercialTaxes Appeals

viii. On the basis of verification of records and according to the information andexplanations given to us the Company has not defaulted in repayment of dues toBanks/Financial Institutions. The company has not taken any loan from any Government or byway of issue of debentures.

ix. According to the information and explanations given to us and the records of thecompany the company has not raised money by way of initial public offer or further publicoffer during the year. During the year the Company has raised fresh term loans which wasutilised for purpose of working capital needs of the Company.

x. According to the information and explanations given to us and based on auditprocedures performed and representations obtained from the management we report that nofraud on the Company by its officers or employees or by the company has been noticed bythe management or reported during the year under audit.

xi. According to the information and explanations given to us and based on verificationof records the Company has not paid any remuneration to its directors during the year.

xii. The Company is not a Nidhi Company and hence clause (xii) of the order is notapplicable.

xiii. In our opinion and according to the information and explanations given to us andconsidering the approval of the Central Government in respect of payment of remunerationto relatives of Directors and approval of the Audit Committee the company has compliedwith provisions of section 177 and 188 of Companies Act 2013 with respect to relatedparty transactions entered in to during the year under review and the details have beendisclosed in the Financial Statements etc. as required under Ind AS24.

xiv. The company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year.

xv. According to the information and explanations given to us and based on verificationof records the company has not entered into any non-cash transactions with directors orpersons connected with them.

xvi. According to the information and explanations given to us the company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.

For CHHAJED & DOSHI
Chartered Accountants
[Firm Reg. No.101794W]
CA. Aruna Dhanesha
Place: Mumbai Partner
Date: 28th May 2019 M. No.107863

ANNEXURE "B" TO AUDITOR'S REPORT

Annexure referred to in our report of even date to the members of DCW Limited on theaccounts for the year ended 31st March 2019

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

1. Report on the Internal Financial Controls

We have audited the internal financial controls over financial reporting of DCW Limitedas at 31st March 2019 in conjunction with our audit of the financial statements of theCompany for the year ended on that date.

2. 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 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 Companies Act 2013.

3. Auditors' 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 issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. 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.

Our 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 included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk.

The procedures selected depend on the auditor's judgement including the assessment ofthe risks of material misstatement of the financial statements whether due to fraud orerror.

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.

4. 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.

5. 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.

6. Opinion

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 312019 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"

For CHHAJED & DOSHI
Chartered Accountants
[Firm Reg. No.101794W]
CA. Aruna Dhanesha
Place: Mumbai Partner
Date: 28th May 2019 M. No.107863