To the Members of SwAN ENERGy LIMITEd.
Report on the Audit of the Standalone Financial Statements' (SFS)
We have audited the accompanying standalone financial statements of Swan Energy Limited("the Company") which comprise the Balance sheet as at 31st March 2020 theStatement of Profit and Loss (including other comprehensive income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year then ended and notes tothe standalone financial statements including a summary of significant accountingpolicies and other explanatory information (hereinafter referred to as "theSFS"). in our opinion and to the best of our information and according to theexplanations given to us the aforesaid SFS give the information required by the CompaniesAct 2013 (the Act') in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in india of the state ofaffairs of the Company as at 31st March 2020 its profit including other comprehensiveincome changes in equity and its cash flows for the year ended on that date.
II. Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specified ofthe Act. Our responsibilities under those SAs are further described in the Auditor'sResponsibilities for the Audit of the SFS' section of our report. We are independent ofthe Company 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 SFS under the provisions of the Act and the Rules thereunder and we have fulfilledour other ethical responsibilities in accordance with these requirements and the Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion on the SFS.
III. Emphasis of Matter
We draw your attention to the following matter.
Note 46 to the standalone financial statements which explains the management'sassessment of the financial impact due to lockdown / restrictions related to the COViD-19pandemic imposed by the Governments for which a definitive assessment of the impact isdependent upon future economic conditions.
Our opinion is not modified in respect of the above matter.
IV. Key Audit Matters
Key audit matters (KAM) are those matters that in our professional judgement were ofmost significance in our audit of the SFS of the current period. These matters wereaddressed in the context of our audit of the SFS as a whole and in forming our opinionthereon and we do not provide a separate opinion on these matters. We have determined thematters described below to be the key audit matters to be communicated in our report.
1 Key Audit Matter
(Refer Note no. 2.14 of the standalone financial statements)
Revenue is one of the key profit drivers and is therefore susceptible to misstatement.Cut-off is the key assertion in so far as revenue recognition is concerned since aninappropriate cut-off can result in material misstatement of results for the year.
We assessed the appropriateness of the revenue recognition accounting policies andapplicable accounting standards. Our audit procedures with regard to revenue recognitionincluded testing controls in place (both automated/manual) for dispatches/deliveriesinventory reconciliations circularization of receivable balances substantive testing forcut-offs and analytical review procedures.
2 Key Audit Matter
Provision for taxation litigation and other significant provisions
(Refer Note no. 2.20 6 21 34 and 26 of the standalone financial statements)
These provisions require the management to make judgements and estimates in relation tothe issues and exposures arising from a range of matters in the regular course ofbusiness. The key judgement lies in the estimation of provisions which may differ fromfuture obligations. Additionally there is a risk that provisions could be providedinappropriately that are not yet committed.
We discussed with the management and tested the effectiveness of the controls in placefor recognition of the provisions. We used our subject experts to perform retrospectivereview of prior year provisions and to assess the value of material provisions andassessing whether there was an indication of management bias.
3 Key Audit Matter
Assessment of contingent liabilities relating to litigations and claims
(Refer Note no. 2.19 and 38 of the standalone financial statements)
The company is subject to challenges/scrutiny on range of matters relating todirect/indirect taxes legal proceedings etc. Assessment of contingencies requiresmanagement to make judgements and estimates which is inherently subjective.
We discussed with the management and performed retrospective review of prior yearjudgements/estimates. We tested the effectiveness of the controls in place for recordingthe contingencies. We used our subject experts to assess the value of materialcontingencies and discussed the status and potential exposures with the company'sadvisors.
V. Information Other than the SFS and Auditors' Report Thereon
The Company's Board of Directors is responsible for the other information whichcomprise the information included in the Company's annual report but does not include theSFS and our auditors' report thereon. Our opinion on the SFS does not cover the otherinformation and we do not express any form of assurance conclusion thereon. in connectionwith our audit of SFS our responsibility is to read the other information and in doingso consider whether the other information is materially inconsistent with the SFS or ourknowledge obtained during the course of our audit or otherwise appears to be materiallymisstated. if based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
VI. Responsibility of Management for the SFS
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 SFS that give a true and fairview of the financial position financial including other comprehensive income changes inequity and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) specifiedunder section 133 of the Act. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and the design implementation and maintenanceof adequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the SFS that give a true and fair view and are free from materialmisstatement whether due to fraud or error. in preparing the SFS 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 the company's financialreporting process.
VII. Auditor's Responsibility for the Audit of the SFS
Our objectives are to obtain reasonable assurance about whether the SFS as a whole arefree from material misstatement whether due to fraud or error and to issue an auditor'sreport that includes our opinion. Reasonable assurance is a high level of assurance butis not a guarantee that an audit conducted in accordance with SAs will always detect amaterial misstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if individually or in the aggregate they could reasonably beexpected to influence the economic decisions of users taken on the basis of these SFS. Aspart 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 the SFS whether due to fraudor error design and perform audit procedures responsive to those risks and obtain auditevidence that is sufficient and appropriate to provide a basis for our opinion. The riskof not detecting a material misstatement resulting from fraud is higher than for oneresulting from error as fraud may involve collusion forgery intentional omissionsmisrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by the management.
Conclude on the appropriateness of management's use of the going concern basis ofaccounting 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 SFS or if such disclosures are inadequate to modify our opinion. Our conclusions arebased on the audit evidence obtained up to the date of our auditor's report. Howeverfuture events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of the SFS including thedisclosures and whether the SFS represent the underlying transactions and events in amanner that achieves fair presentation We communicate with those charged with governance(TCWG') regarding among other matters the planned scope and timing of the auditand significant audit findings control that we identify during our audit.
We also provide TCWG with a statement that we have complied with relevant ethicalrequirements regarding independence and to communicate with them all relationships andother matters that may reasonably be thought to bear on our independence and whereapplicable related safeguards.
From the matters communicated with TCWG we determine those matters that were of mostsignificance in the audit of the SFS of the current period and are therefore the key auditmatters. We describe these matters in our auditor's report unless law or regulationprecludes public disclosure about the matter or when in extremely rare circumstances wedetermine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interestbenefits of such communication.
VIII. Other Matters
On account of lockdown consequent to outbreak of Covid-19 pandemic we were unable toparticipate in the year end physical verification of inventory that was carried out by theManagement. Consequently we have performed alternate procedures as per the guidanceprovided in SA 501 "Audit Evidence Specific
Consideration for Selected items" to audit the existence of inventory as at theyear end and have obtained sufficient appropriate audit evidence to issue our unmodifiedopinion on the SFS. The entire audit finalization process was carried from remotelocations i.e. other than the office/factory of the Company where books of account andother records are kept based on data/ details of financials information provided to usthrough digital medium owing to COViD-19.
IX. Report on Other Legal and Regulatory Requirements
(A) As required by the Companies (Auditor's Report) Order 2016 ("theOrder") issued by the Central Government of india in terms of Section 143 (11) ofthe Act we give in "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
(B) As required by Section 143(3) of the Act we report that:
(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
(b) in our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
(c) The Balance Sheet the Statement of Profit and Loss (including other comprehensiveincome) the Statement of changes in Equity and the Statement of Cash Flows dealt with bythis Report are in agreement with the books of account.
(d) In our opinion the aforesaid standalone financial statements (SFS) comply with theInd AS specified under Section 133 of the Act.
(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 of Section164 (2) of the Act. controls over financial
(f) With respect to the adequacy of the internal financial reporting of the Company andthe operating effectiveness of such controls refer to our separate Report in"Annexure B".
(C) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i. The impact of the pending litigation as on 31 March 2020 is not expected to bematerial on the financial position of the company.
ii. The Company did not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses.
iii. There has been no delay in transferring amounts required to be transferred to theinvestor Education and Protection Fund by the Company.
iv. No disclosure is required in the SFS regarding holdings as well as dealings inSpecified Bank Notes (SBN) for the period from 8 November 2016 to 30 December 2016.
(D) With respect to matter to be included in the Auditor's Report under Section 197(16): in our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act.
To the Independent Auditor's Report on the SFS of Swan Energy Limited for the yearended 31st March 2020
(Referred to in Paragraph iX(A) under Report on other legal and RegulatoryRequirements section of our report of even date)
(i) a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) The Company has a regular programme for physical verification in a phased periodicmanner which in our opinion is reasonable having regards to the size of the Company andthe nature of its assets.
No material discrepancies were noticed on such verification.
c) According to the information and explanations given to us the title deeds ofimmovable properties are held in the name of the Company.
(ii) The inventories have been physically verifiedby the management during the year. Inour opinion the frequency of such verification is reasonable. The material and have beenappropriately dealt with in the books of accounts.
(iii) The Company has granted unsecured loans to companies covered in the registermaintained under section 189 of the Act. There are no firms/LLPs/ other parties covered inthe register maintained under section 189 of the Act.
(a) in respect of the aforesaid loans the terms and conditions under which such loanswere granted are not prejudicial to the Company's interest.
(b) in respect of aforesaid loans the schedule of repayment of principal and interestif any has been stipulated and the parties are repaying the principal amounts and alsoregular in payment of interest if any applicable.
(c) in respect of the aforesaid loans there is no amount which is overdue for morethan ninety days.
(iv) According to the information and explanations given to us the company hascomplied with the provisions of section 185 and 186 of the companies Act 2013 in respectof the loans and investments made and guarantees and security provided by it.
(v) The Company has not accepted any deposits from the public within the meaning ofsections 73 to 76 of the Act and the notified Rules framed there under.
(vi) We have broadly reviewed the Cost records maintained by the company under Section148(1) of the Act and are of the opinion that prima facie the prescribed accounts andrecords have been made and maintained. However we have not made a detailed examination ofthe records.
(vii) a) The Company is generally regular in depositing with appropriate authoritiesundisputed statutory dues including Provident fund Employee State insurance income taxSales tax Goods and Services tax Duty of custom Duty of Excise Value added tax CessProfessional tax and other Statutory Dues applicable to it.
(b) According to the information and explanation given to us no undisputed amountspayable in respect of Provident fund Employee State insurance income tax Sales taxGoods and Services tax Duty of custom Duty of Excise Value added tax CessProfessional tax and other Statutory Dues were outstanding at the year end for a periodof more than six months from the date they became payable.
(c) According to the information and explanations given to us there are no dues ofincome Tax Sales Tax Service Tax Goods and service tax Duty of Custom Duty of ExciseValue Added Tax and Cess as on 31st March 2020 which have not been deposited withappropriate authorities on account of any dispute other than those mentioned below:
|Name of the statute ||Nature of dues ||Amount demanded (Rs. in Lakhs) ||period to which the amount relates ||Forum where dispute is pending ||Remark if any |
|income Tax Act 1961 ||income Tax ||1522.98 ||A.Y. 2009-10 ||High Court ||Department has gone in appeal |
|income Tax Act 1961 ||income Tax ||1233.98 ||A.Y. 2010-11 ||High Court ||Department has gone in appeal |
|income Tax Act 1961 ||income Tax ||415.18 ||A.Y. 2011-12 ||High Court ||Department has gone in appeal |
| ||Total: ||3172.14 || || || |
(viii) in our opinion and according to the information and explanation given to us theCompany has not defaulted in repayment of its dues to banks financial institutionsGovernment and debenture holders during the year.
(ix) in our opinion and according to the information and explanations given to us theterm loans have been applied for the purposes for which they were obtained.
(x) based upon audit procedures performed and according to the information andexplanations given to us no material fraud by the company officers or employeeshas been on the Company by its noticed or reported during the year.
(xi) According to the information and explanations given by the management and based onthe audit procedure performed the managerial remuneration has been paid / provided inaccordance with the requisite approvals mandate by the provisions of section 197 read withSchedule V to the Companies Act 2013.
(xii) in our opinion the Company is not a Nidhi company. Therefore the provision ofclause 3(xii) of the order is not applicable to the Company.
(xiii) According to the information and explanations given by the management in ouropinion transactions with related parties are in compliance with section 177 and 188 ofthe Companies Act 2013 where applicable and the details have been disclosed in the notesto the financial statements as required by the applicable accounting standards.
(xiv) According to the information and explanations given by the management thecompany has not made any preferential allotment or private placement of equity shares orfully or partly convertible debentures during the year. Therefore the provisions ofclause 3(xiv) of the Order are not applicable to the company.
(xv) According to the information and explanations given by the management the Companyhas not entered into any non-cash transactions with directors or persons connected withhim. Accordingly paragraph 3(xv) of the Order and Section 192 of Companies Act 2013 arenot applicable.
(xvi) in our opinion 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.
To the Independent Auditor's Report on the SFS of Swan Energy Limited for the yearended 31st March 2020
(Referred to in Paragraph iX (B) (f) under Report on other legal and RegulatoryRequirements section of our report)
Report on the Internal Financial Controls under Section 143 (3) (i) of the CompaniesAct 2013 ("the Act") Opinion
We have audited the internal financial controls with reference to financial statementsof Swan Energy Limited ("the Company") as of March 31 2020 in conjunction withour audit of the SFS of the Company for the year ended on that date.
In our opinion the Company has in all material aspects an adequate internalfinancial control system with reference to financial statements and such internalfinancial controls were operating effectively as at 31st March 2020 based on theinternal financial controls with reference to financial statements criteria established bythe Company considering the essential components of internal controls stated in theGuidance Note on Audit of internal Financial Controls over Financial Reporting issued bythe institute of Chartered Accountants of india (the Guidance Note').
Management's Responsibility for Internal Financial Controls
The Company's Board of Directors is responsible for establishing and maintaininginternal financial controls based on the internal financial controls with reference tofinancial statements criteria established by the Company considering the essentialcomponents of internal controls stated in the Guidance Note. These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness 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 financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols with reference to financial statements. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference tofinancial statements were established and maintained and whether such controls operatedeffectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of such internal financial controlsassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls withreference to financial statements.
Meaning of Internal Financial Controls with reference to financial statements
A company's internal financial control with reference to financial statements is aprocess reasonable assurance regarding the reliability of financial reporting and thepreparation of for external purposes in accordance with generally accepted accountingprinciples. A company's internal financial controls with reference to financial statementsinclude those policies and procedures that:
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial 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 the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls with reference tofinancial statements to future periods are subject to the risk that the internal financialcontrols with reference to financial statements may become inadequate because of changesin conditions or that the degree of compliance with the policies or procedures maydeteriorate.