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Swan Energy Ltd.

BSE: 503310 Sector: Industrials
NSE: SWANENERGY ISIN Code: INE665A01038
BSE 00:00 | 12 Aug 142.00 -5.10
(-3.47%)
OPEN

147.90

HIGH

148.30

LOW

141.40

NSE 00:00 | 12 Aug 141.75 -5.25
(-3.57%)
OPEN

147.80

HIGH

148.50

LOW

141.30

OPEN 147.90
PREVIOUS CLOSE 147.10
VOLUME 85938
52-Week high 158.30
52-Week low 97.00
P/E 835.29
Mkt Cap.(Rs cr) 3,469
Buy Price 141.00
Buy Qty 1.00
Sell Price 143.00
Sell Qty 1.00
OPEN 147.90
CLOSE 147.10
VOLUME 85938
52-Week high 158.30
52-Week low 97.00
P/E 835.29
Mkt Cap.(Rs cr) 3,469
Buy Price 141.00
Buy Qty 1.00
Sell Price 143.00
Sell Qty 1.00

Swan Energy Ltd. (SWANENERGY) - Auditors Report

Company auditors report

To the Members of SWAN ENERGY LIMITED.

Report on the Audit of the ‘Standalone Financial Statements' (SFS)

I. Opinion

We have audited the accompanying standalone financial statements of Swan Energy Limited("the Company") which comprise the Balance sheet as at 31st March 2019 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 the explanationsgiven to us the aforesaid SFS give the information required by the Companies Act 2013(‘the Act') in the manner so required and give a true and fair view in conformitywith the Indian Accounting Standards prescribed under section 133 of the Act read withrelevant Rules as amended (‘Ind AS') and other accounting principles generallyaccepted in India of the state of affairs of the Company as at 31st March 2019 and itsprofit (including other comprehensive income) changes in equity and its cash flows forthe year ended on that date.

II. Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder Section 143 (10) of the Act. Our responsibilities under those SAs are furtherdescribed in the ‘Auditor's Responsibilities for the Audit of the SFS' section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the SFS 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.

III. 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 Revenue recognition

(Refer Note no. 1.8 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.

Auditor's Response

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.1.10 and 25 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.

Auditor's Response

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 retrospective review of prior year provisionsand to assess the value of material provisions and assessing whether there was anindication of management bias.

3 Key Audit Matter

Assessment of contingent liabilities relating to litigations and claims (Refer Note no.1.13 and 36 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.

Auditor's Response

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.

4 Key Audit Matter System Upgradation

The company used Tally ERP 9 which was upgraded to Microsoft Excel Pro last year forwhich the accounting has been made during the year in Textile Division- Ahmedabad.

Risks identified as emanating from the aforesaid change were:

i) Inappropriate changes made to the application systems or programs that containrelevant automated controls (i.e configurable settings automated algorithms and/or reportlogic) and

ii) Systems not adequately configured or updated to restrict system access toauthorized users. Auditor's Response

Our audit procedures included obtaining detailed software support and maintenanceagreement entered with the vendor.

The audit procedures also involved testing of critical transactions segregation ofduties rules to ensure system access was restricted to authorized users and testing ofInterface controls between new Microsoft Excel Pro environment and other auxiliarysystems.

IV. Other Information

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 report thereon.

Our opinion on the SFS does not cover the other information and we do not express anyform of assurance conclusion thereon.

In connection with our audit of SFS our responsibility is to read the otherinformation and in doing so consider whether the other information is materiallyinconsistent with the SFS or our knowledge obtained during the course of our audit orotherwise appears to be materially misstated.

If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.

V. 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 performance changes in equity and cash flows ofthe Company in accordance with the Ind AS and other accounting principles generallyaccepted in India. This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe SFS that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the SFS management is responsible for assessing the Company's ability tocontinue as a going concern disclosing as applicable matters related to going concernand using the going concern basis of accounting unless management either intends toliquidate the Company or to cease operations or has no realistic alternative but to doso.

Those Board of Directors are also responsible for overseeing the company's financialreporting process.

VI. 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.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the SFS whether dueto fraud or error design and perform audit procedures responsive to those risks andobtain audit evidence that is sufficient and appropriate to provide a basis for ouropinion. The risk of not detecting a material misstatement resulting from fraud is higherthan for one resulting from error as fraud may involve collusion forgery intentionalomissions misrepresentations or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe 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 includingthe disclosures and whether the SFS represent the underlying transactions and events in amanner that achieves fair presentation.

Materiality is the magnitude of misstatements in the SFS that individually or inaggregate makes it probable that the economic decisions of a reasonably knowledgeableuser of the SFS may be influenced. We consider quantitative materiality and qualitativefactors in (i) planning the scope of our audit work and in evaluating the results of ourwork; and (ii) to evaluate the effect of any identified misstatements in the SFS.

We communicate with those charged with governance (‘TCWG') regarding among othermatters 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 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.

VII. 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 ofthe 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 2019 taken on record by the Board of Directors none ofthe directors isdisqualified as on 31st March 2019 from being appointed as a director in terms of Section164 (2) of the Act.

(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure 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 2019 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.

For N. N. Jambusaria & Co.
Chartered Accountants
Firm Registration No. 104030W
Nimesh N. Jambusaria
Partner
Mumbai May 30 2019 M. No. 038979

ANNEXURE A

To the Independent Auditor's Report on the SFS of Swan Energy Limited for the yearended

31st March 2019

(Referred to in Paragraph VII (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 offixed assets.

b) As explained to us all the fixed assets have been physically verified by themanagement in accordance with a phased program of verification designed to cover all itemsover a period of three years Considering the size and the nature of business thefrequency of verification is reasonable and the discrepancies noticed on such verificationwhich has been properly dealt with in the books of accounts were not material.

c) The title deeds of immovable properties are held in the name of the Company.

(ii) The inventories have been physically verified during the year by the management.In our opinion the frequency of verification is reasonable and the discrepancies noticedon such verification which has been properly dealt with in the books of accounts were notmaterial.

(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 as 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) According to the information and explanations given to us and the records ofthe Company examined by us in our opinion the Company is regular in depositing theundisputed statutory dues including provident fund employee state insurance income taxgoods and service tax duty of customs cess professional tax and other materialstatutory dues as applicable with the appropriate authorities.

(b) According to the information and explanation given to us no undisputed amountspayable in respect of provident fund employee state insurance income tax goods andservice tax duty of customs cess professional tax and other material statutory dueswere in arrears as at 31 March 2019 for a period of more than six months from the datethey became payable.

c) According to the information and explanations given to us there are no amountswhich are payable in respect of Income Tax Sales Tax Service Tax goods and service taxDuty of Custom Duty of

Excise Value Added Tax and Cess which have not been deposited with appropriateauthorities 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 Rs. 1522.98 A.Y 2009-10 High Court Department has gone in appeal
Income Tax Act 1961 Income Tax Rs. 1233.98 A.Y 2010-11 High Court Department has gone in appeal
Income Tax Act 1961 Income Tax Rs. 414.18 A.Y 2011-12 High Court Department has gone in appeal

(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) According to the information and explanations given to us no material fraud by thecompany or on the Company by its officers or employees has been noticed or reported duringthe 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 Sec. 192 of Companies Act 2013 are notapplicable.

(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.

For N. N. Jambusaria & Co.
Chartered Accountants
Firm Registration No. 104030W
Nimesh N. Jambusaria
Partner
Mumbai May 30 2019 M. No. 038979

ANNEXURE B

To the Independent Auditor's Report on the SFS of Swan Energy Limited for the yearended 31st March 2019

(Referred to in Paragraph VII (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 Companies Act2013 ("the Act") Opinion

We have audited the internal financial controls with reference to financial statementsof Swan Energy Limited ("the Company") as of March 312019 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 2019 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.

Auditor's Responsibility

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 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 controlswith reference to financial statements include 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 ofthe 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 ofthe inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

For N. N. Jambusaria & Co.
Chartered Accountants
Firm Registration No. 104030W
Nimesh N. Jambusaria
Partner
Mumbai May 30 2019 M. No. 038979