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Suzlon Energy Ltd.

BSE: 532667 Sector: Engineering
NSE: SUZLON ISIN Code: INE040H01021
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VOLUME 28729478
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OPEN 7.48
CLOSE 7.45
VOLUME 28729478
52-Week high 13.10
52-Week low 5.70
P/E
Mkt Cap.(Rs cr) 7,518
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Suzlon Energy Ltd. (SUZLON) - Auditors Report

Company auditors report

To The Members of Sulon Energy Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements ofSuzlon Energy Limited (“the Company”) which comprise the Balance Sheet as at 31March 2021 and the Statement of Profit and Loss (including Other Comprehensive Income)the Statement of Cash Flows and the Statement of Changes in Equity for the year thenended and a summary of significant accounting policies and other explanatory informationin which are incorporated the Returns for the year ended on that date audited by thebranch auditors of the Company's branches located at Germany and the Netherlands.

In our opinion and to the best of our information and according to theexplanations given to us and based on the consideration of reports of the branch auditorson financial information of the branches referred to in the Other Matters section belowthe aforesaid standalone financial statements give the information required by theCompanies Act 2013 (“the Act”) in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended(“Ind AS”) and other accounting principles generally accepted in India of thestate of affairs of the Company as at 31 March 2021 and its loss total comprehensiveloss its cash flows and the changes in equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing specified under section 143(10) of the Act(SAs). Our responsibilities under those Standards are further described in theAuditor's Responsibility for the Audit of the Standalone Financial Statements sectionof our report. We are independent of the Company in accordance with the Code of Ethicsissued by the Institute of Chartered Accountants of India (ICAI) together with the ethicalrequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence obtained by us and the audit evidence obtainedby the branch auditors in terms of their reports referred to in the Other Matters sectionbelow is sufficient and appropriate to provide a basis for our audit opinion on thestandalone financial statements.

Emphasis of Matter

We draw attention to note 2.5 (b) of the standalone financialstatements which describes the undetermined circumstances relating to the COVID 19pandemic and its implications on the management's assessment of the Company'sability to generate sufficient cash flows to meet its financial obligations in theforeseeable future under such undetermined circumstances. Our opinion is not modified inrespect of this matter.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent year. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.

Key Audit Matter Auditors Response
1 Impairment of investment in equity shares of and Inter Corporate Deposits given to SE Forge Limited Sulon Gujarat Wind Park Limited and Sulon Power Infrastructure Limited. Refer to Notes 12 and 14 to the standalone financial statements.
As at 31 March 2021 the carrying amount of investment in equity shares of and Inter Corporate deposits given to SE Forge Limited (‘SEFL') Suzlon Gujarat Wind Park Limited (‘SGWPL') and Suzlon Power Infrastructure Limited (‘SPIL') amounted to Rs. 581 crores net off impairment losses of Rs. 2865 crores. The management at each reporting date assesses if there are any further indicators that the investment in and inter corporate deposits given to the subsidiaries are impaired and if indicators exist performs an impairment analysis on these investments and Inter corporate deposits by making an estimate of recoverable amount being the higher of fair value less costs to sell and value in use. We performed the following principal audit procedures in relation to management's estimation of recoverable amount of investments in and inter corporate deposits given to SEFL SGWPL and SPIL:
The recoverable amount of the investment in and Inter corporate deposits given to subsidiaries are assessed based on complex assumptions that require the management to exercise their judgment such as future expected revenue future expected revenue growth rate gross margins future cash flows determination of historical trends and the most appropriate discount rate. As a result the Company recorded a total impairment as on 31 March 2021 of Rs. 2865 crores (for the year ended 31 March 2021 Nil) against these investments and Inter corporate deposits. a) Evaluated the design and implementation and tested the operating effectiveness of the controls relating to management's assessment of impairment indicators and estimation of recoverable amount of investments in and inter corporate deposits given to SEFL SGWPL and SPIL.
We focused on this area due to significant carrying amount of the investments in and inter corporate deposits given to SEFL SGWPL and SPIL and the significant management judgement and estimates involved in making an estimate of the recoverable amount. b) Evaluated the information based on which the impairment indicators are identified such as financial conditions order in hands market condition in which these entities operates.
c) Evaluated the cash flow projection by verifying key inputs such as orders in hand comparing with industry information and against historical figures performed retrospective review and sensitivity on the key inputs.
d) Involved valuation experts to assist in Evaluation of the appropriateness of the model adopted for impairment assessment;
Evaluation of key assumptions including discount rates long term growth rate based on assessment of information available in public domain; and
Performing sensitivity analysis around the key assumptions to ascertain the extent of change in those assumptions that either individually or collectively would be required for the investments in and Inter corporate deposits given to SEFL SGWPL and SPIL to be impaired.
e) Evaluated disclosures made in the Standalone financial statements and the related compliance with the requirements of the applicable accounting standards.
2 Impairment of Property Plant and Equipment and intangible assets- Refer to Notes 7 8 9 and 11 to the standalone financial statements.
As at 31 March 2021 the carrying amounts of Property Plant and equipment and intangible assets amounted to Rs. 558 crores and 198 crores respectively. We performed the following principal audit procedures in relation to management's assessment of impairment of PP&E and intangible assets:
As at 31 March 2021 certain Property plant and equipment (“PP&E”) and intangible assets has impairment indicators on account of challenging industry conditions existing in India and financial condition of the Company. The Company's performance and prospects have been impacted increasing the risk that the PP&E and intangible assets may be impaired. For cash generation units (“CGU”) to which these PP&E and intangible belong the determination of recoverable amount being the higher of fair value less costs to sell and value in use requires judgment on the part of management in both identifying and then valuing the relevant CGUs. a) Evaluated the design and implementation and tested the operating effectiveness of the control relating to management's assessment of impairment indicators for PP&E and intangible assets and determination of recoverable amount.
Recoverable amounts are based on management's view of variables such as future expected revenue future expected revenue growth rate gross margins future cash flows determination of historical trends and the most appropriate discount rate. b) Evaluated the appropriateness of management's grouping of these PP&E and intangibles with the relevant CGUs.
We focused on this area due to the significance of management judgements adopted in assessing the recoverable amount with regard to the impairment assessment of PP&E and intangible assets of the Company. c) Evaluated the cash flow projection by verifying key inputs such as orders in hand comparing with industry information and against historical figures performed retrospective review and sensitivity on the key inputs.
d) Involved valuation experts to assist in:-
Evaluation of the appropriateness of the model adopted for impairment assessment;
Evaluation of key assumptions including discount rates long term growth rate based on assessment of information available in public domain; and
Performing sensitivity analysis around the key assumptions to ascertain the extent of change in those assumptions that either individually or collectively would be required for the PP&E and Intangible assets to be impaired.
e) Evaluated disclosures made in the Standalone financial statements and the related compliance with the requirements of the applicable accounting standards.
3 Recoverability and valuation of allowance for impairment of certain overdue Trade receivables and other financial assets Power evacuation infrastructure receivables (‘PE receivables'). Refer Notes 13 and 15 of standalone financial statements.
The Company had overdue Trade Receivables of Rs. 298 Crores which are outstanding for more than 365 days (‘overdue trade receivables') and PE receivables of Rs. 134 Crores as on 31 March 2021. We performed the following principal audit procedures in relation to recoverability of overdue trade receivables and PE receivables of the Company:
We focused on this area due to the significance of management judgements adopted in assessing the recoverability of overdue trade receivables PE receivables and determination of expected credit loss a) Evaluated the design and implementation of the control relating to management's assessment of recoverability and determination of expected credit loss of overdue trade receivables and PE receivables.
b) Tested the operating effectiveness of control relating to management's assessment of recoverability and determination of expected credit loss of overdue trade receivables and PE receivables.
c) Evaluated reasonableness of the method assumptions and judgements used by the management with respect to recoverability and determination of expected credit loss of overdue trade receivables and PE receivables.
d) Obtain balance confirmation for selected samples and verified the reconciliation for differences if any.
e) Obtained the list of long outstanding receivables and assessed the recoverability of these through inquiry with the management and by obtaining sufficient corroborative evidence to support the conclusion.
f) Determine the net exposure after considering the other liabilities payable such as liquidated damages Provision of Doubtful debt claims payables to each debtors.
g) Assessed the profile of trade receivables and the economic environment applicable to these trade receivables. Evaluated the simplified approach applied by the Company to identify lifetime expected credit losses. In doing so tested the historical provision rates and an evaluation was carried out for the need for it to be adjusted to reflect relevant reasonable and supportable information about expected recoveries in the future.
h) Compared receipts from debtors after the financial year-end relating to trade receivable balances as at 31 March 2021 with bank statements and/or relevant underlying documentation for selected samples.
4 Accounting of Term Loans Optionally Convertible Debenture Equity share and warrants and Financial liabilities towards Compulsory Convertible Preference Shares issued by Suzlon Global services as per Framework Restructuring Agreements (“FRA”). Refer notes 21 22 and 23 of the standalone financial statements.
The Company during the year entered in to a Framework restructuring agreement ('FRA') to give effect to the debt resolution plan with its lenders effective from 30 June 2020 (Effective date). As a result debts aggregating Rs. 12153 Crores (‘original borrowings') of "Suzlon - The Group" which comprises of Suzlon Energy Limited 3 Subsidiaries i.e. Suzlon Global Services Limited Suzlon Power Infrastructure Limited Suzlon Gujarat Wind Park Limited and a joint venture i.e. Suzlon Generators Limited were restructured as below: We performed the following principal audit procedures in relation to accounting of resolution plan and the treatment of resultant difference arising from the such restructuring:
a) Evaluated the design and implementation and tested the operating effectiveness of the control relating to accounting and measurement of Term loans OCD Shares and warrants and financial liabilities towards CCPS and resultant difference on extinguishment of original borrowings as per the terms of FRA.
b) Involved internal valuation expert to assist in Valuation of financial liabilities towards CCPS:
Evaluation of appropriateness of management's assessments of each exit option and liability arising thereof;
Evaluation of the appropriateness of the model adopted for determining the value of the liability;
a) Term loan of Rs. 3600 Crores (includes Rs. 3563 Crores pertaining to the Company) Evaluation of key assumptions including discount rates long term growth rate based on assessment of information available in public domain; and
b) Optionally Convertible Debentures (‘OCD') of Rs. 4100 Crores issued by the Company Performing sensitivity analysis around the key assumptions to ascertain the extent of change in those assumptions that either individually or collectively would be required for fair valuation of exit option liability.
c) Issue of equity shares and share warrants of the Company and c) Evaluated the allocation of probability towards various options liability.
d) Issue of Compulsory Convertible Preference Shares ('CCPS') by Suzlon Global Services Limited (a subsidiary of the Company) of Rs. 4453 Crores (‘financial liabilities towards CCPS'). d) Involved experts to assist in accounting of option liability and difference on extinguishment of original borrowing.
The accounting of Term Loans OCD equity share and warrants and financial liabilities towards CCPS and its resultant difference on account of extinguishment of original borrowings are based on complex assumptions and interpretation that require the management to exercise their judgment. e) Evaluated the management's assessment of the rights existing with the lenders to control the Company and verified the accounting treatment for resultant difference arising from extinguishment of the original borrowings.
Refer Note 21 of standalone financial statements for the accounting of resultant difference due to extinguishment of original borrowing and Notes 22 and 23 of standalone financial statements for recording and measurement of the carrying value of equity shares and warrants and financial liabilities. f) Evaluated disclosures made in the Standalone financial statements and the related compliance with the requirements of the applicable accounting standards.
We focused on the accounting of term loans OCD equity shares and warrants and financial liabilities towards CCPS and its resultant difference on account of extinguishment of original liabilities as well as the measurement due to significance of the amounts and complex judgements involved.

Information Other than the Financial Statements and Auditor'sReport Thereon

The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the Managementdiscussion and analysis Business responsibility Report Corporate Governance report andDirectors' Report including Annexures thereof but does not include the consolidatedfinancial statements standalone financial statements and our auditor'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 compare with the financialinformation of the branches audited by the branch auditors to the extent it relates tothese branches and in doing so place reliance on the work of the branch auditors andconsider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained during the course of our audit or otherwiseappears to be materially misstated. Other Information so far as it relates to the branchesis traced from the financial information audited by the branch auditors.

If based on the work we have performed we conclude that there is amaterial misstatement of this other information we are required to report that fact. Wehave nothing to report in this regard.

Management's Responsibility for the Standalone FinancialStatements:

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 standalone 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 Ind AS and other accounting principles generally accepted in India.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalonefinancial statement that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

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 are also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibility for the Audit of the Standalone FinancialStatements

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.As part of an audit in accordance with SAs we exercise professional judgment and maintainprofessional skepticism 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 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 financial 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 system in place and theoperating effectiveness of such controls.

Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by the 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 standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditionsmay cause the Company to cease to continue as a 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.

Obtain sufficient appropriate audit evidence regarding the financialinformation of the Company and its branches to express an opinion on the standalonefinancial statements. We are responsible for the direction supervision and performance ofthe audit of the financial statements of such entities or business activities included inthe standalone financial statements of which we are the independent auditors. For theother entities or business activities included in the standalone financial statementswhich have been audited by the branch auditors such branch auditors remain responsiblefor the direction supervision and performance of the audits carried out by them. Weremain solely responsible for our audit opinion.

Materiality is the magnitude of misstatements in the standalonefinancial statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the standalone financialstatements may be influenced. We consider quantitative materiality and qualitative factorsin

(i) planning the scope of our audit work and in evaluating the resultsof our work; and

(ii) to evaluate the effect of any identified misstatements in thestandalone financial statements.

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 we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour 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 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.

Other Matters

We did not audit the financial information of two branches included inthe standalone financial statements of the Company whose financial information reflecttotal assets of Rs. 164 Crores as at 31 March 2021 and total revenue of Rs. 104 Crores forthe year ended on that date as considered in the standalone financial statements. Thefinancial statements of these branches have been audited by the branch auditors whosereports have been furnished to us and our opinion in so far as it relates to the amountsand disclosures included in respect of these branches and our report in terms ofsubsection (3) of Section 143 of the Act in so far as it relates to the aforesaidbranches is based solely on the report of such branch auditors. Our opinion on thestandalone financial statements and our report on Other Legal and Regulatory Requirementsbelow is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act based on our audit and onthe consideration of the reports of the branch auditors on the financial information ofthe branches referred to in the Other Matters section above we report to the extentapplicable 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 have beenkept by the Company so far as it appears from our examination of those books and properreturns adequate for the purposes of our audit have been received from the branches notvisited by us.

c. The reports on the accounts of the branch offices of the Companyaudited under Section 143(8) of the Act by branch auditors have been sent to us and havebeen properly dealt with by us in preparing this report.

d. The Balance Sheet the Statement of Profit and Loss including OtherComprehensive Income the Statement of Cash Flows and Statement of Changes in Equity dealtwith by this Report are in agreement with the relevant books of account and with thereturns received from the branches not visited by us.

e. In our opinion the aforesaid standalone financial statements complywith the Ind AS specified under Section 133 of the Act.

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

g. With respect to the adequacy of the internal financial controls overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate Report in "Annexure A". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internal financialcontrols over financial reporting.

h. With respect to the other matters to be included in theAuditor's Report in accordance with the requirements of section 197(16) of the Actas amended In our opinion and to the best of our information and according to theexplanations given to us the remuneration paid by the Company to its directors during theyear is in accordance with the provisions of section 197 of the Act.

i. 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 as amended in our opinion and to the best of our information and according tothe explanations given to us:

i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone 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.

iii. There has been no delay in transferring amounts required to betransferred to the 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) ofthe Act we give in “Annexure B” a statement on the matters specified inparagraphs 3 and 4 of the Order.

ANNEXURE “A” TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 1(g) under ‘Report on Other Legal andRegulatory Requirements' section of our report of even date)

Report on the Internal Financial Controls Over Financial Reportingunder Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 (“theAct”)

We have audited the internal financial controls over financialreporting of Suzlon Energy Limited (“the Company”) as of 31 March 2021 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date which includes internal financial controls over financialreporting of the Company's branches.

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. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to respective 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 Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting of the Company based on our audit. Weconducted our audit in accordance with the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting (the “Guidance Note”) issued by the Instituteof Chartered Accountants of India and the Standards on Auditing prescribed under Section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment ofthe risks of material misstatement of the financial statements whether due to fraud orerror.

We believe that the audit evidence we have obtained and the auditevidence obtained by the branch auditors of branches in terms of their reports referredto in the Other Matters paragraph below is sufficient and appropriate to provide a basisfor our audit opinion on the Company's internal financial controls system overfinancial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting 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 overfinancial reporting 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 financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorizations of management and directors of thecompany; and

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

Inherent Limitations of Internal Financial Controls Over FinancialReporting

Because of the inherent limitations of internal financial controls overfinancial reporting 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 overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion to the best of our information and according to theexplanations given to us the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2021 based on thecriteria for internal financial control over financial reporting established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India.

Other Matters

Our aforesaid report under Section 143(3)(i) of the Act on the adequacyand operating effectiveness of the internal financial controls over financial reportinginsofar as it relates to 2 branches located in Germany and Netherland is based on thecorresponding reports of the branch auditors.

Our opinion is not modified in respect of this matter.

ANNEXURE “B” TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 2 under ‘Report on Other Legal andRegulatory Requirements' section of our report of even date)

i. a. The Company has maintained proper records showing fullparticulars including quantitative details and situation of property plant andequipment.

b. The property plant and equipment were physically verified duringthe year by the Management in accordance with a regular program of verification which inour opinion provides for physical verification of all the property plant and equipmentat reasonable intervals. According to the information and explanation given to us nomaterial discrepancies were noticed on such verification.

c. According to the information and explanations given to us and therecords examined by us and based on the examination of the registered sale deed providedto us we report that the title deeds comprising all the immovable properties of landand buildings which are freehold are held in the name of the Company as at the balancesheet date.

Immovable properties of land and buildings whose title deeds have beenpledged as security for loans guarantees etc. are held in the name of the Company basedon the confirmations directly received by us from lenders / parties. In respect ofimmovable properties of land and buildings that have been taken on lease and disclosed asRight-of-Use assets in the financial statements the lease agreements are in the name ofthe Company where the Company is the lessee in the agreement except for the following:

Particulars Gross block Net Block Remarks
(Rs. in Crore) Rs. in Crore
Factory building constructed on land admeasuring 34.5 acre at Coimbatore. 44.47 9.81 The Company is in the process of obtaining approval from local town planning committee

ii. As explained to us the inventories were physically verified duringthe year by the Management at reasonable intervals and no material discrepancies werenoticed on physical verification.

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.

iv. The Company has not granted any loans or provided guarantees underSection 185 of the Act and hence reporting under clause 3 (iv) of the Order is notapplicable. In our opinion and according to the information and explanations given to usthe Company has complied with the provisions of Sections 186 of the Act in respect ofgrant of loans making investments and providing guarantees and securities.

v. According to the information and explanations given to us theCompany has not accepted any deposit during the year. Accordingly provisions of clause3(v) of the Order are not applicable.

vi. The maintenance of cost records has been specified by the CentralGovernment under section 148(1) of the Act. 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 Act and are of the opinion that prima facie the prescribed cost records have beenmade and maintained. We have however not made a detailed examination of the cost recordswith a view to determine whether they are accurate or complete.

vii. According to the information and explanations given to us inrespect of statutory dues:

(a) The Company has not been regular in depositing undisputed statutorydues up to the date of debt restructuring i.e 30 June 2020 and post restructuring theCompany has generally been regular in depositing undisputed statutory dues includingProvident Fund Employees' State Insurance Income-tax Customs Duty Goods andService Tax cess and other material statutory dues applicable to it to the appropriateauthorities

(b) There were no undisputed amounts payable in respect of ProvidentFund Employees' State Insurance Income-tax Customs Duty Goods and Services Taxcess and other material statutory dues in arrears as at 31 March 2021 for a period ofmore than six months from the date they became payable.

(c) Details of dues of Customs Duty and Service Tax which have not beendeposited as on 31 March 2021 on account of disputes are given below:

Name of statute Nature of dues Forum where dispute is pending Period to which the amount relates Amount Rs. in Crore Amount paid under protest Rs. in Crore
Customs Act 1962 Customs Duty The Customs Excise and Service Tax Appellate Tribunal 2014-15 0.49
Customs Act 1962 Customer Duty Commissioner of Customs (Appeal) 2015-16 0.12
2012-13 and 2014-15 25.55 Nil
Finance Act 1994 Service Tax The Customs Excise and Service Tax Appellate Tribunal 2010-11 to 2013-14 5.52
The Supreme Court of India 2007-08 to 2011-12 88.00

There are no dues of Income Tax Sales Tax Value Added Tax ExciseDuty and Goods and Services Tax as on 31 March 2021 on account of disputes. viii. In ouropinion and according to the information and explanations given to us the Company hasdefaulted in the repayment of loans or borrowings to financial institutions and banksduring the year as under:

Due to Banks (including working capital loans):
Axis Bank Limited 274.23
Bank of Baroda 1167.45
Bank of India 82.48
Central Bank of India 502.03
Corporation Bank / Union Bank of India 135.09
ICICI Bank Limited 313.90
IDBI Bank 1571.29
Indian Overseas Bank 575.45
Punjab National Bank/ Oriental Bank of Commerce 974.72 April 2020 to June 2020
Saraswat Co-operative Bank Limited 43.42
EXIM Bank 129.50
State Bank of India 4208.22
Yes Bank Limited 109.24
Bank of Maharashtra 156.42
Dues to financial institutions:
Life Insurance Corporation of India 386.07
Power Finance Corporation Limited 1035.00

Such defaults has been waived off on account of restructuring beforethe balance sheet date. Further the Company does not have any borrowings from Governmentnor has it issued any debentures.

ix. The Company has not raised moneys by way of initial public offer orfurther public offer (including debt instruments) or term loans and hence reporting underclause 3 (ix) of the Order is not applicable.

x. To the best of our knowledge and according to the information andexplanations given to us no fraud by the Company and no material fraud on the Company byits officers or employees has been noticed or reported during the year.

xi. In our opinion and according to the information and explanationsgiven to us the Company has paid / provided managerial remuneration in accordance withthe requisite approvals mandated by the provisions of section 197 read with Schedule V tothe Act.

xii. The Company is not a Nidhi Company and hence reporting underclause 3(xii) of the Order is not applicable.

xiii. In our opinion and according to the information and explanationsgiven to us the Company is in compliance with Section 177 and 188 of the Act 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. According to the information and explanations given to us theCompany has made private placement of shares during the year under review. In respect ofthe above issue we further report that:

a. the requirement of Section 42 of the Companies Act 2013 asapplicable have been complied with; and

b. the amounts raised have been applied by the Company during the yearfor the purposes for which the funds were raised other than temporary deployment pendingapplication.

xv. In our opinion and according to the information and explanationsgiven to us during the year the Company has not entered into any non-cash transactionswith its directors or directors of its subsidiary or associate company or personsconnected with them and hence provisions of section 192 of the Act are not applicable.

xvi. The Company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934.

For Deloitte Haskins & Sells LLP
Chartered Accountants
(Firm's Registration No. 117366W/W-100018)
Saira Nainar
Partner
Place : Mumbai Membership No. 040081
Date : 29 June 2021 UDIN: 21040081AAAACR8163

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