To the members of Sterlite Technologies Limited
Report on the audit of the Standalone financial statements
1. We have audited the accompanying standalone financial statements ofSterlite Technologies Limited ("the Company") which comprise the balance sheetas at March 31 2021 and the statement of Profit and Loss (including Other Comprehensiveincome) statement of changes in equity and statement of cash flows for the year thenended and notes to the standalone financial statements including a summary ofsignificant accounting policies and other explanatory information.
2. In our opinion and to the best of our information and according tothe explanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ("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 312021and total comprehensive income (comprising of profit and other comprehensive income)changes in equity and its cash flows for the year then ended.
Basis for opinion
3. We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Act. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit ofthe Standalone financial statements section of our report. We are independent of theCompany in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India together with the ethical requirements that are relevant to our auditof the standalone financial statements under the provisions of the Act and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of matter
4. We draw attention to Note 46 to the standalone financial statementswhich describes that the Company had recognised Goodwill on amalgamation during thefinancial year ended March 312016 which has been amortised over a period of five yearsfrom the appointed date of September 29 2015 in accordance with the accounting treatmentprescribed under the Scheme of amalgamation approved by the Gujarat High Court. Ouropinion is not modified in respect of this matter.
Key audit matters
5. Key audit matters are those matters that in our professionaljudgment were of most significance in our audit of the standalone financial statements ofthe current period. These matters were addressed in the context of our audit of thestandalone financial statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters.
|Key audit matter ||How our audit addressed the key audit matter |
|1. Revenue Recognition || |
|(Refer note 2.1(b) 3 and 26 to the Standalone financial statements) ||We performed the following procedures: |
|The Company recognises revenue in accordance with Ind AS 115 "Revenue from Contracts with Customers". This involves application of significant judgements by Management with respect to: ||Understood and evaluated the design and tested the operating effectiveness of controls relating to revenue recognition. |
| Combination of contracts entered into with the same customer; ||In respect of certain large and complex contracts and certain other contracts our procedures included among other things: |
| Identification of distinct performance obligations; || Reading of selected contracts to identify significant terms of the contracts; |
| Total consideration when the contract involves variable consideration involved; || Assessing appropriateness of management's significant judgements in accounting for identified contracts such as identification of performance obligation and allocation of consideration to identified performance obligation; |
| Allocation of consideration to identified performance obligations; || Evaluation of the contract terms and consideration of the legal opinion obtained by Management with respect to assessment of the date of transfer of control; |
| Recognition of revenue over a period of time or at a point in time based on timing when control is transferred to customer. For assessment of the date of transfer of control Management has obtained legal opinion in respect of certain arrangements. || Testing of timing of recognition of revenue (including procedures related to cut off) in line with the terms of contracts; |
|Further for contracts where revenue is recognised over a period of time the Company makes estimates which impact the revenue recognition. Such estimates include but are not limited to: || Testing the appropriateness of key assumptions used by Management including the appropriateness and reasonability of Management's conclusion regarding the expected delays in impact on key estimates. Reading of the related contract terms and communications with the customers to assess the likelihood of availability of contractual remedies. |
| costs to complete || Testing of journal entries for unusual/irregular revenue transactions; and |
| contract risks || Evaluating adequacy of presentation and disclosures. |
| price variation claims ||Based on above procedures we did not note any significant exceptions in the estimates and judgements applied by the Management in revenue recognition including those relating to presentation and disclosures as required by the applicable accounting standard. |
| liquidated damages || |
|Further in determining the above estimates for ongoing contracts Management has also evaluated the estimates especially those resulting from expected delays in the completion of the performance obligations and available contractual remedies. || |
|We focused on this area because a significant portion of the revenue generated requires management to exercise judgement and therefore could be subject to material misstatement due to fraud or error. || |
6. The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in theDirector's report but does not include the standalone financial statements and ourauditor's report thereon.
Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained in the audit or otherwise appears to be materially misstated. Ifbased on the work we have performed we conclude that there is a material misstatement ofthis other information we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of management and those charged with governance forthe standalone financial statements
7. The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these standalonefinancial statements that give a true and fair view of the financial position financialperformance changes in equity and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.
8. In preparing the standalone financial statements management isresponsible 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 management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so. Those Board of Directors arealso responsible for overseeing the Company's financial reporting process.
Auditors' responsibilities for the audit of the standalonefinancial statements
9. Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.
10. As part of an audit in accordance with SAs we exerciseprofessional judgment and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thestandalone 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 material misstatement resulting from fraudis higher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of 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 standalonefinancial statements 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 thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern.
If we conclude that a material uncertainty exists we are required todraw attention in our auditor's report to the related disclosures in the standalonefinancial statements or if such disclosures are inadequate to modify our opinion. Ourconclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
11. 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.
12. We also provide those charged with governance with a statement thatwe have 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.
13. From the matters communicated with those charged with governancewe determine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on other legal and regulatory requirements
14. 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 B a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
15. 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) The Balance Sheet the Statement of Profit and Loss (includingother comprehensive income) the Statement of Changes in Equity and Cash Flow Statementdealt with by this Report are in agreement with the books of account.
(d) In our opinion the aforesaid standalone financial statementscomply with the Accounting Standards specified under Section 133 of the Act.
(e) On the basis of the written representations received from thedirectors as on March 31 2021 taken on record by the Board of Directors none of thedirectors is disqualified as on March 312021 from being appointed as a director in termsof Section 164 (2) of the Act.
(f) With respect to the adequacy of the internal financial controlswith reference to standalone financial statements of the Company and the operatingeffectiveness of such controls refer to our separate Report in "Annexure A".
(g) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 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 standalone financial statements - Refer Note 22 and 39 to thestandalone financial statements;
ii. The Company has made provision as required under the applicablelaw or accounting standards for material foreseeable losses if any on long-termcontracts including derivative contracts - Refer Note 20 to the standalone financialstatements;
iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.
iv. The reporting on disclosures relating to Specified Bank Notes isnot applicable to the Company for the year ended March 312021
16. The Company has paid/ provided for managerial remuneration inaccordance with the requisite approvals mandated by the provisions of Section 197 readwith Schedule V to the Act.
Annexure A to Independent Auditors' Report
Referred to in paragraph 15(f) of the Independent Auditors' Reportof even date to the members of Sterlite Technologies Limited on the standalone financialstatements for the year ended March 31 2021
Report on the Internal Financial Controls with reference to standalonefinancial statements under Clause (i) of Sub-section 3 of Section 143 of the Act
1. We have audited the internal financial controls with reference tostandalone financial statements of Sterlite Technologies Limited ("the Company")as of March 31 2021 in conjunction with our audit of the standalone financial statementsof the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
2. 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 and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Act.
3. Our responsibility is to express an opinion on the Company'sinternal financial controls with reference to standalone financial statements based on ouraudit. We conducted our audit in accordance with the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting (the "Guidance Note") and theStandards on Auditing deemed to be prescribed under section 143(10) of the Act to theextent applicable to an audit of internal financial controls both applicable to an auditof internal financial controls and both issued by the 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 standalone financial statements was established and maintained and ifsuch controls operated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidenceabout the adequacy of the internal financial controls system with reference to standalonefinancial statements and their operating effectiveness.
Our audit of internal financial controls with reference to standalonefinancial statements included obtaining an understanding of internal financial controlswith reference to standalone financial statements assessing the risk that a materialweakness exists and testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk. The procedures selected depend on theauditor's judgement including the assessment of the risks of material misstatementof the standalone financial statements whether due to fraud or error.
5. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system with reference to standalone financial statements.
Meaning of Internal Financial Controls with reference to standalonefinancial statements
6. A company's internal financial controls with reference tostandalone financial statements is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of standalonefinancial statements for external purposes in accordance with generally acceptedaccounting principles. A company's internal financial controls with reference tostandalone financial statements includes those policies and procedures 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 standalone financial statements in accordance withgenerally accepted accounting principles and that receipts and expenditures of thecompany are being made only in accordance with authorisations of management and directorsof the company; and
(3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the company's assetsthat could have a material eff'ect on the standalone financial statements.
Inherent Limitations of Internal Financial Controls with reference tostandalone financial statements
7. Because of the inherent limitations of internal financial controlswith reference to standalone financial statements including the possibility of collusionor improper management override of controls material misstatements due to error or fraudmay occur and not be detected. Also projections of any evaluation of the internalfinancial controls with reference to standalone financial statements to future periods aresubject to the risk that the internal financial controls with reference to standalonefinancial statements may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedures may deteriorate.
8. In our opinion the Company has in all material respects anadequate internal financial controls system with reference to standalone financialstatements and such internal financial controls with reference to standalone financialstatements were operating effectively as at March 31 2021 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
Annexure B to Independent Auditors' Report
Referred to in paragraph 14 of the Independent Auditors' Report ofeven date to the members of Sterlite Technologies Limited on the standalone financialstatements as of and for the year ended March 312021
i. (a) The Company is maintaining proper records showing fullparticulars including quantitative details and situation of fixed assets.
(b) The fixed assets are physically verified by the Managementaccording to a phased programme designed to cover all the items over a period of threeyears which in our opinion is reasonable having regard to the size of the Company andthe nature of its assets. Pursuant to the programme
a portion of the fixed assets has been physically verified by theManagement during the year and no material discrepancies have been noticed on suchverification. Further the physical verification of cables is impractical due the mannerin which they have been installed/laid.
(c) The title deeds of immovable properties as disclosed in Note 4 onfixed assets to the financial statements are held in the name of the Company.
ii. The physical verification of inventory excluding stocks with thirdparties have been conducted at reasonable intervals by the Management during the year. Inrespect of inventory lying with third parties these have substantially been confirmed bythem.
The discrepancies noticed on physical verification of inventory ascompared to book records were not material and have been appropriately dealt with in thebooks of accounts.
iii. The Company has not granted any loans secured or unsecured tocompanies firms Limited Liability Partnerships or other parties covered in the registermaintained under Section 189 of the Act. Therefore the provisions of Clause 3(iii)(iii)(a) (iii)(b) and (iii)(c) of the said Order are not applicable to the Company.
iv. In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of Section 185 and 186 of theCompanies Act 2013 in respect of the loans and investments made and guarantees andsecurity provided by it.
v. The Company has not accepted any deposits from the public within themeaning of Sections 73 74 75 and 76 of the Act and the Rules framed thereunder to theextent notified.
vi. Pursuant to the rules made by the Central Government of India theCompany is required to maintain cost records as specified under Section 148(1) of the Actin respect of in respect of manufacture of copper cables. We have broadly reviewed thesame and are of the opinion that prima facie the prescribed accounts and records havebeen made and maintained. We have not however made a detailed examination of the recordswith a view to determine whether they are accurate or complete.
vii. (a) According to the information and explanations given to us andthe records of the Company examined by us in our opinion the Company is generallyregular in depositing undisputed statutory dues in respect of income tax goods andservice tax labour welfare fund and professional tax though there has been a slightdelay in a few cases and is regular in depositing undisputed statutory dues includingprovident fund employees' state insurance duty of customs cess and other materialstatutory dues as applicable with the appropriate authorities.
(b) According to the information and explanations given to us and therecords of the Company examined by us there are no dues of Central Sales Tax ServiceTax Goods and Service Tax and duty of excise which have not been deposited on account ofany dispute. The particulars of dues of income tax and duty of customs and as at March 312021 which have not been deposited on account of a dispute are as follows:
|Name of the statute ||Nature of dues ||Amount (Rs. in crores) ||Period to which the amount relates ||Forum where the dispute is pending |
|Customs Act 1962 ||Customs Duty ||67.82 ||2001-03 ||CESTAT Mumbai |
| ||Customs Duty ||0.68 ||2011-16 ||CESTAT Ahmedabad |
| ||Customs Duty ||1.53 ||2013-14 ||CESTAT Mumbai |
| ||Customs Duty ||1.54 ||2014-19 ||Commissioner (Appeals) - Mumbai |
| ||Customs Duty ||15.00 ||2002-03 ||Supreme Court of India |
|Income Tax Act 1961 ||Income Tax ||17.46 ||AY 2018-19 ||Commissioner (Appeals) |
| ||Income Tax ||3.88 ||AY 2013-14 AY 2015-16 ||Commissioner (Appeals) - Mumbai |
| ||Income Tax ||1.20 ||AY 2002-03 ||Mumbai High Court |
| ||Income Tax ||0.07 ||AY 2001-02 ||Mumbai High Court |
| ||Income Tax ||0.43 ||AY 2014-15 AY 2016-17 ||Commissioner (Appeals) - Pune |
| ||Income Tax ||0.33 ||AY 2011-12 AY 2013-14 ||Commissioner (Appeals) - Ahmedabad |
| ||Income Tax ||0.53 ||AY 2012-13 ||Gujarat High Court |
| ||Income Tax ||0.12 ||AY 2009-10 AY 2010-11 ||Income Tax Appellate Tribunal - Ahmedabad |
viii. According to the records of the Company examined by us and theinformation and explanation given to us the Company has not defaulted in repayment ofloans or borrowings to any financial institution or bank or Government or dues todebenture holders as at the balance sheet date. As stated in Note 39 to the standalonefinancial statements the Company continues to dispute amounts aggregating Rs. 18.87crores claimed by a bank in the earlier years towards import consignments under letter ofcredit not accepted by the Company owing to discrepancies in documents. Since the matteris in dispute we are unable to determine whether there is a default in repayment of duesto the said bank.
ix. In our opinion and according to the information and explanationsgiven to us the moneys raised by way of term loans have been applied for the purposes forwhich they were obtained. The Company has not raised any moneys by way of initial publicoffer or further public offer.
x. During the course of our examination of the books and records of theCompany carried out in accordance with the generally accepted auditing practices inIndia and according to the information and explanations given to us we have neither comeacross any instance of material fraud by the Company or on the Company by its officers oremployees noticed or reported during the year nor have we been informed of any such caseby the Management.
xi. The Company has paid/ provided for managerial remuneration inaccordance with the requisite approvals mandated by the provisions of Section 197 readwith Schedule V to the Act.
Also refer paragraph 16 of our main audit report.
xii. As the Company is not a Nidhi Company and the Nidhi Rules 2014are not applicable to it the provisions of Clause 3(xii) of the Order are not applicableto the Company.
xiii. The Company has entered into transactions with related parties incompliance with the provisions of Sections 177 and 188 of the Act. The details of suchrelated party transactions have been disclosed in the financial statements as requiredunder Indian Accounting Standard (Ind AS) 24 Related Party Disclosures specified underSection 133 of the Act.
xiv. The Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year underreview. Accordingly the provisions of Clause 3(xiv) of the Order are not applicable tothe Company.
xv. The Company has not entered into any non cash transactions with itsdirectors or persons connected with him. Accordingly the provisions of Clause 3(xv) ofthe Order are not applicable to the Company.
xvi. The Company is not required to be registered under Section 45-IAof the Reserve Bank of India Act 1934. Accordingly the provisions of Clause 3(xvi) ofthe Order are not applicable to the Company.
|For Price Waterhouse Chartered Accountants LLP |
|Firm Registration Number: 012754N/N500016 |
|Neeraj Sharma |
|Membership Number: 108391 |
|UDIN: 21108391AAAADF3548 |
|April 29 2021 |