TO THE MEMBERS OF S&S POWER SWITCHGEAR LIMITED
REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS
We have audited the accompanying Standalone Financial Statements of S&S PowerSwitchgear Limited (the Company') which comprise the Balance Sheet as at 31stMarch 2020 the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of Changes in Equity and the statement of Cash Flows for the year then ended andnotes to the standalone financial statements including a summary of the significantaccounting policies and other explanatory information (hereinafter referred to asthe Standalone Financial Statements). In our opinion and to the best of ourinformation and according to the explanations given to us the aforesaid StandaloneFinancial Statements give the information required by the Companies Act 2013 (theAct) in the manner so required and give a true and fair view in conformity with theIndian Accounting Standards prescribed under section 133 of the Act read with Companies(Indian Accounting Standards) Rules 2015 as amended (Ind AS) and otheraccounting principles generally accepted in India of the state of affairs of the Companyas at 31st March 2020 the loss and total comprehensive income the changes inequity and its cash flows for the year ended on that date.
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. Our responsibilitiesunder those Standards are further described in the Auditor's Responsibilities for theAudit of the Standalone Financial Statements section of our report. We are independent ofthe Company in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India (ICAI') together with the independence requirements that arerelevant to our audit of the Standalone Financial Statements under the provisions of theAct and the rules made thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI's Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion on Standalone Financial Statements.
We draw attention to Note 47 in the Standalone financial statements which indicatesthat the accounts are prepared on a going concern basis due to continued financial supportof the promoters. The Standalone financial statements do not include any adjustments thatwould results from the withdrawal of support which is described in the Note 47.
Emphasis of Matter
We draw attention to our observation in Going concern paragraph above whereby inspiteof the factor mentioned therein the results are prepared on going concern basis.
On account of our inability to conduct a physical verification as on 31st March 2020owing to the lockdown restrictions imposed by the Government as well as absence of thesaid verification procedures undertaken by the Company we have relied on details asprovided by the management and related adjustments to confirm the existence and conditionof inventory at the year- end; Our opinion is not modified in respect of these matters.
Key Audit Matters
Key audit matters are those matters that in our professional judgement were of mostsignificance in our audit of the Standalone Financial Statements of the current period.These matters were 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 a separateopinion on these matters.
We have determined the matters described below to be the key audit matters to becommunicated in our report.
|Key audit matter ||How our audit addressed the key audit matter |
|Impairment testing of investments in subsidiaries ||Our procedures included but were not limited to the following: |
|Refer Note 6 and 7 to the accompanying standalone financial statements || |
|As at 31 March 2020 the carrying amount of investment in subsidiaries viz Acrastyle Power (India) Limited Acrastyle EPS Technologies Limited and S&S Power Switchgear Equipment Limited is Rs 130199 thousands. Further the company has also advanced loans to these subsidiaries and the amount due along with interest accrued thereon as at 31st March 2020 (net of provisions) is Rs 117831 thousands. Acrastyle Power (India) Limited further has invested in two subsidiaries viz Acrastyle Limited UK and Acrastyle Switchgear Limited UK. || Obtained an understanding of management's process and evaluated design and tested operating effectiveness of controls around identification of indicators of impairment under Ind AS and around valuation of the business of the subsidiaries to determine recoverable value of the said investment and loans granted |
| || Assessed the appropriateness of methodology and valuation model used by the management to estimate the recoverable value of investment in the subsidiaries and loans granted; |
|As required under Ind-AS the management has performed an impairment assessment and has estimated the recoverable amount of its investment in the subsidiaries using applicable valuation models which is complex and involves the use of significant management estimates and assumptions that are dependent on expected future market and economic conditions. || Assessed the professional competence objectivity and capabilities of the valuation specialist engaged by the management; |
| || Assessed the reasonableness of assumptions relating to revenue growth rate gross margins discount rates etc. based on historical results current developments and future plans of the business estimated by management using expertise of our valuation specialist on required parameters; |
|Considering the materiality of the amounts involved the significant management judgement required in estimating the quantum of diminution in the value of investment and such estimates and judgements being inherently subjective this matter has been identified as a key audit matter for the current year audit. || Assessed cash flow forecasts to ensure consistency with current operations of the Company and performed sensitivity analysis on key assumptions used in management's calculated recoverable value. |
| ||Based on our procedures we also considered the adequacy of disclosures in respect of investment in the said subsidiaries and loans granted in the notes to the standalone financial statements. |
Information other than the Standalone Financial Statements and Auditor's report thereon
The Company's Management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Board'sReport including annexures to that Board's report Corporate Governance and Shareholder'sinformation but does not include the Standalone Financial Statements and our auditor'sreport 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 in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.
Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial 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 totalcomprehensive income changes in equity and cash flows of the Company in accordance withthe Ind AS and other accounting principles generally accepted in India including theAccounting Standards specified under Section 133 of the Act. 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 judgement and estimates that are reasonable and prudent; and 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 Standalone FinancialStatements 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 and Board of Directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless Board of Directors either intends to liquidate the Company orto cease operations or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities 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 Standards on Auditing we exercise professionaljudgement and maintain 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 control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Act we are also responsible for expressing our opinion on whether the Companyhas adequate internal financial control with reference to Standalone Financial Statementsin place and the operating effectiveness 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 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.
Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements 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 withthose charged with governance we determine those matters that were of most significancein the audit of the Standalone Financial Statements of the current period and aretherefore the key audit matters. We describe these matters in our auditor's report unlesslaw or regulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits 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 section 143(11) of the Act we givein the Annexure A a statement on the matters specified in paragraphs 3 and 4of the Order to the extent applicable.
2. As required by Section 143(3) of the Act we report that: a. We have sought andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit; b. In our opinion proper books ofaccounts as required by law have been kept by the Company so far as it appears from ourexamination of those books;
c. The Balance sheet the Statement of Profit and Loss (including Other ComprehensiveIncome) the Statement of Change in Equity and the Cash Flow Statement dealt with by thisReport are in agreement with the relevant books of accounts;
d. In our opinion the aforesaid Standalone Financial Statements comply with Ind ASspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014;
e. On the basis of the written representations received from the directors as on 31stMarch 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2020 from being appointed as a director in terms ofSection 164(2) of the Act;
f. With respect to the adequacy of the internal financial controls with reference toStandalone Financial Statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in Annexure B.
g. As required by Section 197(16) of the Act we report that the Company has paidremuneration to its directors during the year in accordance with the provisions of andlimits laid down under Section 197 read with Schedule V to the Act. h. With respect to theother matters to be included in the Auditor's Report in accordance with rule 11 of theCompanies (Audit and Auditors) Rules 2014 (as amended) in our opinion and to the bestof our information and according to the explanations given to us:
(i) The Company has disclosed the impact of pending litigations on its financialposition in the Standalone Financial Statements Refer note 42 to the Standalone FinancialStatements;
(ii) The Company did not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses;
(iii) There were no amounts that were required to be transferred to the InvestorEducation and Protection Fund by the Company during the year ended 31st March 2020.
For C N K & Associates LLP
Membership number: 212075
Date: 30th July 2020
ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements' in Independent Auditor's Report of even date to the members of S&S PowerSwitchgear Limited (the Company) on the standalone financial statements forthe year ended 31st March 2020)
(i) (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of property plant and equipment.
(b) As informed to us the company has a phased programme of physical verification ofits fixed assets so as to cover all assets once in three years. In accordance with thisprogramme certain fixed assets were verified during the year and no materialdiscrepancies were noticed on such verification. In our opinion this periodicity ofphysical verification is reasonable having regard to the size of the Company and thenature of its assets;
(c) The Company has provided the title deeds in respect of freehold land and buildingwhich are in the name of the Company as at the Balance Sheet date.
(ii) The inventory has been physically verified by the Management at reasonableintervals during the year and no material discrepancies have been noticed on suchverification. Our attendance at the physical inventories done by the Management wasimpracticable under the lockdown restriction imposed by the Government and we havetherefore relied on related alternate audit procedures to obtain comfort over theexistence and condition of the inventory at the year end. Our opinion is not modified inrespect of this matter.
(iii) The Company has granted unsecured loans to the parties covered in the registermaintained under Section 189 of the Act.
In respect of the aforesaid loans the terms and conditions under which such loanswere granted are not prejudicial to the Company's interest.
The aforesaid loans and interest are repayable on demand. The Company has not demandedthe repayment of the said loans and hence there does not arise a situation for commentingon the regularity of repayment of principal and payment of interest.
In respect of the aforesaid loans there is no amount which is overdue as at the yearend.
(iv) In our opinion the Company has complied with the provisions of Sections 185 and186 of the Act in respect of loans investments guarantees and security.
(v) In our opinion and as explained to us the Company has not accepted any depositsduring the year and therefore the provisions of sections 73 to 76 or any other relevantprovisions of the Companies Act 2013 and the rules framed thereunder are not applicableto the Company.
(vi) According to the information and explanations given to us the Company is notrequired to maintain cost records pursuant to the Companies (Cost Records and Audit)Amendment Rules 2016 and prescribed by the Central Government under sub-section (1) ofsection 148 of the Companies Act 2013;
(vii) (a) According to the information and explanation given to us and the records ofthe Company examined by us in our opinion the Company is generally regular in depositingthe undisputed statutory dues
(b) including provident fund employees' state insurance Income tax Duty of CustomsGoods and Service Tax and other material statutory dues as applicable with appropriateauthorities. However we noticed delays in such remittances extending to maximum of 90days.
There were no undisputed amounts payable in respect of provident fund Sales TaxService Tax value added tax goods and service tax and other material statutory dues inarrears as at 31st March 2020 for a period of more than six months from the date theybecame payable.
(c) According to the information and explanations given to us and the records of theCompany examined by us the particulars of dues of income tax excise duty and customsduty as at 31st March 2020 which have not been deposited on account of a dispute are asfollows:. (Refer note 42 to the Financial Statements)
| || || ||Period to || || || ||(Rs. In Thousands) |
|Name of the || || ||which the || |
Forum where the matter is
| ||Nature of Dues ||Amount || || || || || |
|Statute || || ||amount || || |
| || || ||relates || || || || |
|Central Excise ||Excise Duty ||34190 ||1993 to ||The ||Company ||has ||obtained |
|Act 1944 || || ||1997 || |
favourable Order from CESTAT. The
| || || || || |
Orders were announced in the open
| || || || || |
court. However the company is yet
| || || || || |
to receive the written order copy.
|Foreign Trade ||Differential Customs ||17247 ||1998 to || |
| || |
|Policy ||Duty || ||1999 || || || || |
|Income Tax ||Tax on waiver of ||9298 ||AY 2007-08 || |
| || |
|Act 1961 ||principal portion of || || || || || || |
| ||loans by bankers || || || || || || |
(viii) According to the records of the Company examined by us and the information andexplanations given to us the Company has not borrowed from financial institutions bankor government as at the balance sheet date. The Company has not issued any debentures.Therefore the provisions of clause 3 (viii) of the order are not applicable to thecompany;
(ix) According to the records of the Company examined by us and the information andexplanation given to us the Company has not raised money by way of initial public offeror further public offer (including debt instruments) and term loans during the year.Accordingly the provisions of Clause 3(ix) of the Order are not applicable to theCompany;
(x) During the course of our examination of the books of account and records of theCompany carried out in accordance with the generally accepted auditing practices in Indiaand according to the information and explanations given to us we have neither came acrossany incidence of fraud on or by the Company noticed or reported during the year nor wehave been informed of any such case by the management;
(xi) In our opinion and according to Information and explanations given to us themanagerial remuneration has been paid in accordance with requisite approvals mandated bythe provisions of section 197 read with Schedule V of the Companies Act 2013;
(xii) The Company is not a Nidhi company and therefore the provisions of clause 3 (xii)of the order are not applicable to the company;
(xiii) In our opinion and according to information and explanations given to us thecompany is in compliance with the provisions of section 177 and 188 of the Companies Act2013 where applicable for all the transactions with the related parties and the detailsof related party transactions have been disclosed in the Standalone Financial Statementsas required by the applicable accounting standards;
(xiv) The company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review. Thereforeclause 3(xiv) is not applicable to the Company;
(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company during the year the Company has not enteredinto non-cash transactions with directors or persons connected with them. Accordinglyclause 3(xv) of the Order is not applicable to the Company;
(xvi) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company is not required to be registeredunder section 45-IA of the Reserve Bank of India Act 1934. Accordingly the provisions ofClause 3(xvi) of the Order are not applicable to the Company.
For C N K & Associates LLP
Membership number: 212075
Date: 30th July 2020
ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT
[Referred to in paragraph 2(f) under Report on Other Legal and RegulatoryRequirements' in the Independent Auditor's Report of even date to the members of S&SPower Switchgear Limited (the Company) on the Standalone Financial Statementsfor the year ended 31st March 2020]
Report on the Internal Financial Controls under Clause (i) of sub-section 3 of Section143 of the Companies Act 2013 (the Act)
We have audited the internal financial controls with reference to Standalone FinancialStatements of S&S Power Switchgear Limited (the Company) as of 31st March2020 in conjunction with our audit of the Standalone Financial Statements of the Companyfor 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 with reference to Standalone FinancialStatements 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 and maintenanceof adequate internal financial controls with reference to financial statements that wereoperating effectively for ensuring the orderly and efficient conduct of the Company'sbusiness 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.
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to Standalone 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 specified under Section 143(10) of the Act to the extent applicable to an auditof internal financial controls both issued by the ICAI. 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 withreference to Standalone Financial Statements were established and maintained and if suchcontrols operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to Standalone Financial Statements andtheir operating effectiveness. Our audit of internal financial controls with reference toStandalone Financial Statements included obtaining an understanding of internal financialcontrols with reference to Standalone 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 Standalone Financial Statements whether due to fraud or error. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the Company's internal financial controls with referenceto Standalone Financial Statements.
Meaning of Internal Financial Controls with reference to Financial Statements
A Company's internal financial controls with reference to Financial Statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of Financial Statements for external purposes in accordancewith generally accepted accounting principles. A Company's internal financial control withreference to Financial Statements includes those policies and procedures that: 1. pertainto the maintenance of records that in reasonable detail accurately and fairly reflectthe transactions 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 with reference to FinancialStatements
Because of the inherent limitations of internal financial controls with reference toFinancial Statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to Financial Statements to future periods are subject to the risk that internalfinancial control with reference to Financial Statements may become inadequate because ofchanges in conditions or that the degree of compliance with the policies or proceduresmay deteriorate.
In our opinion the Company has in all material respects adequate internal financialcontrols with reference to Standalone Financial Statements and such internal financialcontrols with reference to Standalone Financial Statements were operating effectively asat 31st March 2020 based on the internal control with reference to Standalone FinancialStatements 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 ICAI.
For C N K & Associates LLP
Membership number: 212075
Date: 30th July 2020