You are here » Home » Companies » Company Overview » Esab India Ltd

Esab India Ltd.

BSE: 500133 Sector: Engineering
NSE: ESABINDIA ISIN Code: INE284A01012
BSE 16:00 | 29 Nov 2758.00 60.50
(2.24%)
OPEN

2667.80

HIGH

2829.00

LOW

2563.65

NSE 15:59 | 29 Nov 2739.30 30.90
(1.14%)
OPEN

2630.00

HIGH

2840.00

LOW

2556.55

OPEN 2667.80
PREVIOUS CLOSE 2697.50
VOLUME 2696
52-Week high 3018.05
52-Week low 1343.00
P/E 54.11
Mkt Cap.(Rs cr) 4,245
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 2667.80
CLOSE 2697.50
VOLUME 2696
52-Week high 3018.05
52-Week low 1343.00
P/E 54.11
Mkt Cap.(Rs cr) 4,245
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Esab India Ltd. (ESABINDIA) - Auditors Report

Company auditors report

To the Members of

ESAB INDIA LIMITED

Report on the Audit of the Ind AS Financial Statements

Opinion

We have audited the accompanying Ind AS financial statements of ESABIndia Limited ("the Company") which comprise the Balance sheet as at March 312021 the Statement of Profit and Loss including the statement of Other ComprehensiveIncome the Cash Flow Statement and the Statement of Changes in Equity for the year thenended and notes to the Ind AS financial statements including a summary of significantaccounting policies and other explanatory information.

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid Ind AS financial statements give the informationrequired by the Companies Act 2013 as amended ("the Act") in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 312021its profit including other comprehensive loss its cash flows and the changes in equityfor the year ended on that date.

Basis for Opinion

We conducted our audit of the Ind AS financial statements in accordancewith the Standards on Auditing (SAs) as specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the 'Auditor'sResponsibilities for the Audit of the Ind AS Financial Statements' section of our report.We are independent of the Company in accordance with the 'Code of Ethics' issued by theInstitute of Chartered Accountants of India together with the ethical requirements thatare relevant to our audit of the financial statements under the provisions of the Act andthe Rules thereunder and we have fulfilled our other ethical

responsibilities in accordance with these requirements and the Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the Ind AS financial statements.

Emphasis of matter

We draw attention to Note 43 of the Financial Statements whichdescribes the impact of Covid-19 pandemic and its possible consequential implications ifany on the Company's operations including related uncertainties. Our opinion is notmodified in respect of the matter.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the Ind AS financial statements for thefinancial year ended March 31 2021. These matters were addressed in the context of ouraudit of the Ind AS financial statements as a whole and in forming our opinion thereonand we do not provide a separate opinion on these matters. For each matter below ourdescription of how our audit addressed the matter is provided in that context.

We have determined the matters described below to be the key auditmatters to be communicated in our report. We have fulfilled the responsibilities describedin the Auditor's responsibilities for the audit of the Ind AS financial statements sectionof our report including in relation to these matters. Accordingly our audit included theperformance of procedures designed to respond to our assessment of the risks of materialmisstatement of the Ind AS financial statements. The results of our audit proceduresincluding the procedures performed to address the matters below provide the basis for ouraudit opinion on the accompanying Ind AS financial statements.

Key audit matters How our audit addressed the key audit matter
Revenue from Contract with Customers (as described in note 2.2(d) on revenue recognition of the Ind AS financial statements)
Revenue from Contracts with Customers amounting to $ 68116 (lakhs) involves key judgements relating to identification of distinct performance obligations determination of transaction price of the identified performance obligations the appropriateness of the basis used to measure revenue recognized at a point of time. Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows:
Due to the judgement relating to determination of point of time in satisfaction of performance obligations with respect to sale of products this matter is considered as Key Audit Matter. • We evaluated the design of internal controls relating to the revenue accounting standard.
• We selected a sample of continuing and new contracts and tested the operating effectiveness of the internal control relating to identification of the distinct performance obligations and determination of transaction price.
We carried out a combination of procedures involving inquiry and observation reperformance and inspection of evidence in respect of operating evaluation of these controls.
• We selected a sample of continuing and new contracts and performed the following procedures:
- Read analysed and identified the distinct performance obligations in these contracts;
- Compared these performance obligations with that identified and recorded by the Company;
- Considered the terms of the contracts to determine if the transfer of control of goods is satisfied at a point of time and the transaction price attributable to each performance obligation is recognised upon completion of each performance obligation.
• We tested on sample basis whether specific revenue transactions around the year end have been recognised in appropriate period on the basis of the sale contract.
Provisions and contingencies pertaining to disputes (as described in note 35(b) on contingent liabilities of the Ind AS financial statements)
The Company in the normal course of business is contesting various disputes lawsuits claims proceedings including matters relating to taxes and commercial issues that arise from time to time. Our audit procedures included the following:
The Company assesses the need to make provision or disclose a contingency on a case- to-case basis considering the underlying facts of each such litigation or dispute. • We assessed the Company's process for identification and evaluation of claims monitoring significant developments arising from contingencies and the measurement of provisions for disputes potential claims and litigation contingent liabilities and disclosures.
This assessment is significant to our audit to assess adequacy of disclosure or provision in the books of account. • We obtained a list of ongoing litigations from the Company. We selected a sample of litigations based on materiality and performed inquiries with the Company on the legal evaluation of these litigations.
The accounting and disclosure for contingent liabilities is complex & involves judgment in assessing the outcome of the matter and estimating the potential impact if the outcome is unfavorable and the amounts involved are or can be material to the financial statements. We have compared the said evaluation with the appropriateness of provision or disclosure in the financial statements.
We have tested the underlying computation of the management in relation to the measurement of provision or the contingency.
• We solicited legal letters from Company's external legal advisors with respect to the matters included in the summary. Where appropriate we inspected correspondences connected with the cases.
• We obtained the details of uncertain tax positions as at the year ended March 312021. We inspected relevant communication with tax authorities.
• We involved internal tax experts in assessing the nature and amount of material tax positions and assessed the technical merits of the Company's tax positions based on the correspondence assessments and settlements from the relevant tax authorities.
• Our internal tax experts also considered legal precedence and other rulings in evaluating management's position on these contingencies.
• We also evaluated the adequacy of disclosures in the financial statements.

Other Information

The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the Annualreport but does not include the Ind AS financial statements and our auditor's reportthereon.

Our opinion on the Ind AS financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.

In connection with our audit of the Ind AS financial statements ourresponsibility is to read the other information and in doing so consider whether suchother information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is a material misstatement of thisother information we are required to report that fact. We have nothing to report in thisregard.

Responsibilities of Management and Those Charged with Governance forthe Ind AS Financial Statements

The Company's Board of Directors is responsible for the matters statedin Section 134(5) of the Act with respect to the preparation of these Ind AS financialstatements that give a true and fair view of the financial position financial performanceincluding other comprehensive income cash flows and changes in equity of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under Section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and the designimplementation 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 Ind AS financial statementsthat give a true and fair view and are free from material misstatement whether due tofraud or error.

In preparing the Ind AS financial statements management is responsiblefor assessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

Those charged with governance are also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibilities for the Audit of the Ind AS FinancialStatements

Our objectives are to obtain reasonable assurance about whether the IndAS financial statements as a whole are free from material misstatement whether due tofraud or error and to issue an auditor's report that includes our opinion. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these Ind AS financial statements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of theInd AS financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.

• Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. UnderSection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls with reference to financialstatements in place and the operating effectiveness of such controls.

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

• Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor'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 theInd AS financial statements including the disclosures and whether the Ind AS financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the Ind ASfinancial statements for the financial year ended March 31 2021 and are therefore the keyaudit matters. We describe these matters in our auditor's report unless law or regulationprecludes public disclosure about the matter or when in extremely rare circumstances wedetermine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interestbenefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016("the Order") issued by the Central Government of India in terms of sub-section(11) of Section 143 of the Act we give in the "Annexure 1" a statement on thematters specified in paragraphs 3 and 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 explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit;

(b) In our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books;

(c) In our opinion the aforesaid Ind AS financial statements complywith the Accounting Standards specified under Section 133 of the Act read with Companies(Indian Accounting Standards) Rules 2015 as amended;

(d) On the basis of the written representations received from thedirectors as on March 312021 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2021 from being appointed as a director in termsof Section 164 (2) of the Act;

(e) With respect to the adequacy of the internal financial controlsover financial reporting of the Company with reference to these Ind AS financialstatements and the operating effectiveness of such controls refer to our separate Reportin "Annexure 2" to this report;

(f) In our opinion the managerial remuneration for the year endedMarch 31 2021 has been paid / provided by the Company to its directors in accordance withthe provisions of section 197 read with Schedule V to the Act;

(g) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 asamended in our opinion and to the best of our information and according to theexplanations given to us:

i. The Company has disclosed the impact of pending litigations on itsfinancial position in its Ind AS financial statements - Refer Note 35(b) to the Ind ASfinancial statements;

ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses;

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

Annexure 1 to the Independent Auditor's Report of even dateon the Ind AS financial statements of ESAB India Limited

(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets.

(b) Fixed assets have been physically verified by the management duringthe year and no material discrepancies were identified on such verification.

(c) According to the information and explanations given by themanagement the title deeds of immovable properties included in property plant andequipment are held in the name of the Company.

(ii) The inventory has been physically verified by the managementduring the year. In our opinion the frequency of verification is reasonable. No materialdiscrepancies were noticed on such physical verification. Inventories lying with thirdparties have been confirmed by them as at year end and no material discrepancies werenoticed in respect of such confirmations.

(iii) (a) The Company has granted loan to a Fellow Subsidiary coveredin the register maintained under Section 189 of the Companies Act 2013. In our opinionand according to the information and explanations given to us the terms and conditions ofthe grant of such loan is not prejudicial to the Company's interest.

(b) The Company has granted loan to a Company covered in the registermaintained under Section 189 of the Companies Act 2013. The schedule of repayment ofprincipal and payment of interest has been stipulated for the loans granted and therepayment/receipts are regular.

(c) There are no amounts of loans granted to Companies firms or otherparties listed in the register maintained under Section 189 of the Companies Act 2013which are overdue for more than ninety days.

(iv) In our opinion and according to the information and explanationsgiven to us there are no investments guarantees and securities granted in respect ofwhich provisions of Section 185 and 186 of the Companies Act 2013 are applicable andhence not commented upon. In our opinion and according to the information and explanationsgiven to us provisions of Section 186 in respect of loans given have been complied withby the Company.

(v) The Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable.

(vi) We have broadly reviewed the books of account maintained by theCompany pursuant to the rules made by the Central Government for the maintenance of costrecords under Section 148(1) of the Companies Act 2013 relating to certain products ofthe Company to which such rules apply and are of the opinion that prima facie thespecified accounts and records have been made and maintained. We have not however made adetailed examination of the same.

(vii) (a) Undisputed statutory dues including provident fundemployees' state insurance duty of customs goods and service tax income tax and othermaterial statutory dues have generally been regularly deposited with the appropriateauthorities though there has been a slight delay in relation to employees' state insuranceand professional tax.

(b) According to the information and explanations given to us noundisputed amounts payable in respect of provident fund employees' state insurance dutyof customs goods and service tax income-tax and other material statutory dues applicableto it were outstanding at the year end for a period of more than six months from thedate they became payable.

(c) According to the records of the Company the dues of Sales taxExcise duty Service tax and Income tax on account of any dispute are as follows:

Name of the Statute Nature of Dues Amount * (Rs. in lakhs) Period to which the amount relates Forum where dispute is pending
973 1996-98 Assistant Commissioner Commercial Taxes
Sales Tax Non Submission of 54 2015-18 Deputy Commissioner Commercial Taxes
101 2011-15 Madras High Court
935 1997-00 Central Excise & Service Tax Appellate Tribunal
410 2007-11 Central Excise & Service Tax Appellate T ribunal
Act 1944 Excise duty 47 2011-15 Central Excise & Service Tax Appellate Tribunal
86 2011-15 Commissioner of Central Excise
10 Various periods Various forums
1 2016-17 Commissioner of Central Excise (Appeals)
Finance Act 1994 Service Tax 107 2006-11 Central Excise & Service Tax Appellate Tribunal
6 2003-05 Joint Commissioner Service Tax
Name of the Statute Nature of Dues Amount * (Rs. in lakhs) Period to which the amount relates Forum where dispute is pending
190 AY 2003-04 Deputy Commissioner of Income Tax
Income Tax Act 1961 Income Tax 78 AY 2004-05 Deputy Commissioner of Income Tax
238 AY 2017-18 Commissioner of Income Tax (Appeals)

* Out of the total disputed dues an amount of Rs. 88 lakhs forexcise and service tax related matters Rs. 152 lakhs for income tax matters and Rs. 132lakhs for sales tax matters was pre-deposited by the Company.

(viii) The Company did not have any outstanding loans or borrowingsdues in respect of a financial institution or bank or to government or dues to debentureholders during the year.

(ix) According to the information and explanations given by themanagement and audit procedures performed by us the Company has not raised any money byway of initial public offer / further public offer / debt instruments and term loanshence reporting under Clause (ix) is not applicable to the Company and hence notcommented upon.

(x) Based upon the audit procedures performed for the purpose ofreporting the true and fair view of the financial statements and according to theinformation and explanations given by the management we report that no fraud by theCompany or no fraud on the company by the officers and employees of the Company has beennoticed or reported during the year.

(xi) According to the information and explanations given by themanagement and audit procedures performed by us the managerial remuneration has been paid/ provided in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V to the Companies Act 2013.

(xii) In our opinion the Company is not a Nidhi Company. Thereforethe provisions of Clause 3(xii) of the order are not applicable to the Company and hencenot commented upon.

(xiii) According to the information and explanations given by themanagement and audit procedures performed by us transactions with the related parties arein compliance with Section 177 and 188 of Companies Act 2013 where applicable and thedetails have been disclosed in the notes to the financial statements as required by theapplicable accounting standards.

(xiv) According to the information and explanations given to us and onan overall examination of the balance sheet the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year under review and hence reporting requirements under Clause 3(xiv) are notapplicable to the Company and not commented upon.

(xv) According to the information and explanations given by themanagement and audit procedures performed by us the Company has not entered into anynon-cash transactions with directors or persons connected with him as referred to inSection 192 of Companies Act 2013.

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

Annexure 2 to the Independent Auditor's Report of even dateon the Ind AS financial statements of ESAB India Limited

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

We have audited the internal financial controls with reference tofinancial statements of ESAB India Limited ("the Company") as of March 31 2021in conjunction with our audit of the financial statements of the Company for the yearended on that date.

Management's Responsibility for Internal Financial Controls

The Company's Management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India("ICAI"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence to theCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls with reference to these financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting (the "Guidance Note") and the Standards onAuditing as specified under section 143(10) of the Act to the extent applicable to anaudit of internal financial controls both issued by ICAI. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlswith reference to these financial statements was established and maintained and if suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to these financialstatements and their operating effectiveness. Our audit of internal financial controlswith reference to financial statements included obtaining an understanding of internalfinancial controls with reference to these financial statements assessing the risk that amaterial weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgement including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols with reference to these financial statements.

Meaning of Internal Financial Controls With Reference to theseFinancial Statements

A company's internal financial controls with reference to financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. A company's internalfinancial controls with reference to financial statements includes those policies andprocedures that

(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;

(2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the Company arebeing made only in accordance with authorisations of management and directors of theCompany; and

(3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the company's assets thatcould have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls With Reference toFinancial Statements

Because of the inherent limitations of internal financial controls withreference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to financial statements to future periods are subject to the riskthat the internal financial control with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects adequateinternal financial controls with reference to financial statements and such internalfinancial controls with reference to financial statements were operating effectively as atMarch 312021 based on the internal control over financial reporting criteria establishedby the Company considering the essential components of internal control stated in theGuidance Note issued by the ICAI.

For S R BATLIBOI & ASSOCIATES LLP

Chartered Accountants ICAI Firm

Registration No. 101049W / E300004
Date : May 212021

Partner Membership No. 053315 per S Balasubrahmanyam

Place Chennai UDIN : 21053315AAAABQ5546

.