To The Members of JSW Energy Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of JSW Energy Limited("the Company") which comprise the Balance Sheet as at 31 March 2021 and theStatement of Profit and Loss (including Other Comprehensive Income) the Statement of CashFlows and the Statement of Changes in Equity for the year then ended and a summary ofsignificant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at 31 March 2021 and its profit totalcomprehensive income its cash flows and the changes in equity for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing
specified under section 143(10) of the Act (SAs). Our responsibilities under thoseStandards are further described in the Auditor's Responsibility for the Audit of theStandalone 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 ethical requirements that are relevant to our audit of thestandalone financial statements under the provisions of the Act and the Rules madethereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the ICAI's Code of Ethics. We believe that the audit evidenceobtained by us is sufficient and appropriate to provide a basis for our audit opinion onthe standalone financial statements.
Key Audit Matter
Key audit matter is the matter that in our professional judgment was of mostsignificance in our audit of the standalone financial statements of the current period.This matter was addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on this matter. We have determined the matter described below to be thekey audit matter to be communicated in our report.
|Key Audit Matter ||Auditor's Response |
|Tariff related disputes with customers: ||Principle audit procedures: |
|The Company has certain tariff related disputes with its customers which involve significant judgement to determine the possible outcome. ||- Evaluating design and implementation and testing operating effectiveness of the controls relating to estimation of possible outcome of disputes. |
|[Refer note 3 on the critical accounting judgements note 12(d) on trade receivables and note 29(A)(1)(b) on contingent liability disclosures in standalone financial statements.] reversal of revenue and adequacy of disclosures in the financial statements based on the aforesaid assessment. ||- Evaluating the Management's assessment of possible outcome of the disputes by inquiry of the management including in-house legal counsel reviewing minutes of the meetings of those charged with governance and perusing opinions / advices obtained by the Management from the external legal counsels and obtaining and evaluating independent confirmations obtained from the external legal counsels on a test check basis. |
| ||- Assessing appropriateness of accounting including provision |
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Director's Report ManagementDiscussion and Analysis Corporate Governance Report Business Responsibility Report andother reports in the Annual Report but does not include the consolidated financialstatements standalone financial statements and our auditor's reports thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our audit 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 havenothing to report in this regard.
Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income cash flows and changes in equity of the Company in accordancewith the Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding 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 financialstatement that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibility for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone 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 standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal financial control 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 the 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 standalone 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 standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
Obtain sufficient appropriate audit evidence regarding the financial informationof the Company to express an opinion on the standalone financial statements.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone 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 standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or 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.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act based on our audit we report that:
a. We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
b. I n 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 Statement of Cash Flows and the Statement of Changes in Equity dealt with bythis Report are in agreement with the books of account.
d. I n our opinion the aforesaid standalone financial statements comply with the IndAS specified under Section 133 of the Act.
e. On the basis of the written representations received from the directors as on 31March 2021 taken on record by the Board of Directors none of the directors is
disqualified as on 31 March 2021 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 A". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
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 opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe provisions of section 197 of the Act.
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 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements;
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on longterm contracts includingderivative contracts;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
2. 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"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.
(Referred to in paragraph 1(f) under 'Report on Other Legal and RegulatoryRequirementsRs.section of our report of even date)
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of JSW EnergyLimited ("the Company") as of 31 March 2021 in conjunction with our audit of thestandalone Ind AS financial statements of the Company for the year ended on 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 Reporting("the Guidance Note") 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 therespective company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under theCompanies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting of the Company based on our audit. We conducted ouraudit in accordance with the Guidance Note issued by the ICAI and the Standards onAuditing prescribed under Section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls overfinancial reporting was established and maintained and if such controls operatedeffectively 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 includedobtaining an understanding of
internal financial controls over financial reporting 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 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
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.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controls
system over financial reporting and such internal financial controls over financialreporting were operating effectively as at 31 March 2021 based on the criteria forinternal financial control over financial reporting established by the Company consideringthe essential components of internal control stated in the Guidance Note issued by theICAI.
TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 2 under 'Report on Other
Legal and Regulatory RequirementsRs.section of our report of even date)
(i) (a) The Company has maintained proper records
showing full particulars including quantitative details and situation of fixed assets.
(b) The Company has a program of verification of fixed assets to cover all the items ina phased manner over a period of three years which in our opinion is reasonable havingregard to the size of the Company and the nature of its assets. Pursuant to the programcertain fixed assets were physically verified by the management during the year. Accordingto the information and explanations given to us no material discrepancies were noticed onsuch verification.
(c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered sale deed/ transfer deed/ conveyancedeed provided to us we report that the title deeds comprising all the immovableproperties of land and acquired buildings which are freehold are held in the name of theCompany as at the balance sheet date. In respect of immovable properties of land andbuildings that have been taken on lease and disclosed as right of use assets in thefinancial statements the lease agreements are in the name of the Company where theCompany is lessee in the agreement.
(ii) As explained to us the inventories were physically verified during the year bythe Management at reasonable intervals except for inventories lying with third partieswhere confirmations have been received by the management and no material discrepancieswere noticed on physical verification.
(iii) According to the information and explanations given to us the Company hasgranted unsecured loans to companies covered in the register maintained under section 189of the Companies Act 2013 in respect of which :
(a) The terms and conditions of the grant of such loans are in our opinion primafacie not prejudicial to the interest of the Company.
(b) The schedule of repayment of principal and payment of interest has been stipulatedand receipts of interest has been regular as per stipulations. There were no principalamount due for repayment during the year.
(c) There is no overdue amount remaining outstanding as at the balance sheet date.
(iv) Based on the legal advice obatined by the Company provisions of Section 185 ofthe Act are not applicable to grant of loans of Rs.71 crore during the year (cumulativeoutstanding balance as at 31 March 2021 is Rs.65 crore) to a company in which a directoris interested. Having regard to the aforesaid in our opinion and according to theinformation and explanation given to us the Company has complied with the provisions ofsection 185 and 186 of the Act in respect of grant of loans making investments andproviding guarantees and securities during the year as applicable.
(v) According to the information and explanations given to us the Company has notaccepted any deposit and hence reporting under paragraph 3(v) of the Order is notapplicable.
(vi) The maintenance of cost records has been specified by the Central Government undersection 148(1) of the Companies Act 2013. We have broadly reviewed the cost recordsmaintained by the Company pursuant to the Companies (Cost Records and Audit) Rules 2014as amended prescribed by the Central Government under sub-section (1) of Section 148 ofthe Companies Act 2013 and are of the opinion that prima facie the prescribed costrecords have been made and maintained. We have however not made a detailed examinationof the cost records with a view to determine whether they are accurate or complete.
(vii) According to the information and explanations given to us in respect ofstatutory dues:
(a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund EmployeesRs.State Insurance Income-tax Goods & ServicesTax Customs Duty cess and other material statutory dues applicable to it with theappropriate authorities.
(b) There were no undisputed amounts payable in respect of Provident FundEmployeesRs.State Insurance Income-tax Sales Tax Service Tax Goods & Services TaxCustoms Duty Excise Duty Value Added Tax cess and other material statutory dues inarrears as at 31 March 2021 for a period of more than six months from the date they becamepayable.
(c) Details of dues of Income-tax Service Tax Customs Duty Value Added Tax Goodsand Service Tax and Customs Duty which have not been deposited as on 31 March 2021 onaccount of disputes are given below:
|Name of statute ||Nature of dues ||Forum where dispute is pending ||Period(s) to which the amount relates ||Amount unpaid* (Rs.in crore) ||Amount paid under protest (Rs.in crore) |
|The Income Tax Act 1961 ||Income Tax ||Income Tax Appellate Tribunal ||A.Y. 2013-14 ||50.97 ||- |
|The Income Tax Act 1961 ||Income Tax ||Commissioner of Income Tax (Appeals) ||A.Y. 2015-16 ||216.58 ||- |
|Finance Act 1994 ||Service Tax ||Appellate Tribunal ||F.Y. 2011-12 to F.Y. 2013-14 F.Y. 2016- 17 and F.Y. 2017- 18 ||17.66 ||1.43 |
|The Custom Act 1962 ||Customs Duty ||Supreme Court ||F.Y. 2011-12 and F.Y. 2012-13 ||213.37 ||29.71 |
|Sales tax and VAT laws ||VAT ||Joint Commissioner of Commercial Taxes (Appeals) ||F.Y. 2013-14 ||0.71 ||0.32 |
|Goods & Service Act 2017 ||GST ||High Court ||F.Y. 2019-20 ||**0.58 ||26.97 |
*excludes interest and penalty.
**paid on 20 April 2021.
There are no dues of Excise Duty as on 31 March 2021 on account of disputes.
(viii) I n our opinion and according to the information and explanations given to usand having regard to the moratorium for repayment of loans and interest thereon opted bythe Company as per package announced by Reserve Bank of India due to COVID 19 pandemicthe Company has not defaulted in the repayment of loans or borrowings to financialinstitutions and banks and dues to debenture holders. The Company has not taken any loansor borrowings from the Government.
(ix) I n our opinion and according to the information and explanations given to usmoney raised by way of the term loans have been applied by the Company during the year forthe purposes for which they were raised other than temporary deployment pendingapplication of proceeds. The Company has neither raised any moneys by way of initialpublic offer/ further public offer (including debt instruments) nor were such proceedspending to be applied during the current year.
(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no material fraud on the Company by its officersor employees has been noticed or reported during the year.
(xi) I n our opinion and according to the information and explanations given to us theCompany has paid/ provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the CompaniesAct 2013.
(xii) The Company is not a Nidhi Company and hence reporting under paragraph 3(xii) ofthe Order is not applicable.
(xiii) I n our opinion and according to the information and explanations given to usthe Company is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the standalone financial statements etc. as requiredby the applicable accounting standards.
(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underparagraph 3(xiv) of the Order is not applicable to the Company.
(xv) I n our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsdirectors or directors of its subsidiaries an associate and a joint venture or personsconnected with him. Accordingly paragraph 3(xv) of the Order is not applicable.
(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
For Deloitte Haskins & Sells LLP
Chartered Accountants (Firm's Registration No. 117366W-W-100018)
| ||Samir R. Shah |
| ||(Partner) |
|Place: Mumbai ||(Membership No. 101708) |
|Date:25 June 2021 ||(UDIN: 21101708AAAACV8817) |