To the Members of SWELECT ENERGY SYSTEMS LIMITED
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements ofSWELECT ENERGY SYSTEMS LIMITED ("the Company") which comprise the Balance Sheetas at 31 March 2021 and the Statement of Profit and Loss (including Other ComprehensiveIncome) the Cash Flow Statement and the Statement of Changes in Equity for the year thenended and a summary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standardsprescribed under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended ("Ind AS") and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at 31 March 2021and its profit total comprehensive income its cash flows and the changes in equity forthe 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 the Auditor'sResponsibility for the Audit of the Standalone Financial statements section of our report.We are independent of the Company in accordance with the Code of Ethics issued by theInstitute of Chartered Accountants of India (ICAI) together with the ethical requirementsthat are relevant to our audit of the standalone financial statements under the provisionsof the Act and the Rules made thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI's Code of Ethics. Webelieve that the audit evidence obtained by us is sufficient and appropriate to provide abasis for our audit opinion on the standalone financial statements.
Emphasis of Matter
We draw attention to Note 41 of the standalone financial statementswhich describes the management's assessment of impairment of investment in two operatingsubsidiaries and its assessment of the carrying value of investment and loans given tothose two operating subsidiaries either on account of accumulated losses or significantreduction in revenues in those subsidiaries. This assessment also considers theuncertainties arising from COVID 19 pandemic. Such estimates are based on current factsand circumstances and may not necessarily reflect the future uncertainties and eventsarising from the full impact of the COVID 19 pandemic.
Our opinion is not modified in respect 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 period. 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 ||Auditor's Response |
|1 Evaluation of impairment of investments and loans given to two operating subsidiaries of the Company which has either accumulated losses or significant reduction in revenues. ||Principal audit procedures performed: |
|Investments (net) aggregating Rs. 7186.18 lakhs [Refer Note 6 to the standalone financial statements] in the two operating subsidiaries and Loans given aggregating Rs. 4523.97 lakhs [Refer Note 7C to the standalone financial statements] to one of the subsidiaries of the Company which has either accumulated losses or significant reduction in revenue is considered good and recoverable based on Management's judgment. ||Our procedures relating to the impairment of investments and loans included the following among others: |
|The Management's judgment includes the valuation methodology estimating the forecasted revenues and cash flows which includes the likely impact on account of the COVID-19 pandemic on the discount rate and growth rate used in the projection period. Any adverse changes to these two assumptions could result into reduction in the fair value determined resulting in a potential impairment to be recognized. ||a. We tested the effectiveness of internal controls over the Company's forecasting process and investment impairment review including controls relating to the valuation methodology used the completeness and accuracy of the input data considered including the reasonableness of key assumptions considered in determining the future projections and the impairment calculations. |
| ||b. We obtained the investment valuation (prepared by the external valuation specialist or as prepared by the management as applicable) and we performed the following procedures: |
| ||i. We evaluated appropriateness of the valuation methodology used and the reasonableness of the key assumptions considered by the management such as discount rate and growth rate in consultation with internal fair valuation specialist duly considering the impact of the COVID-19 pandemic and also considering the historical accuracy of the Company's estimates in the prior periods. |
| ||ii. Compared the actual revenues and cash flows generated by these subsidiaries during the year as to the projections and estimates considered in the previous year. |
| ||iii. We also assessed the sensitivity of the valuation to key changes in assumptions and tested the mathematical accuracy of the impairment model. |
Information Other than the Financial Statements and Auditor's ReportThereon
The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the Board'sreport including the Annexures to the Board Report and Corporate Governance report butdoes not include the consolidated financial statements standalone financial statementsand our auditor's report thereon.
Our opinion on the standalone financial statements does notcover the other information and we do not express any form of assurance conclusionthereon.
In connection with our audit of the standalone financialstatements our responsibility is to read the other information and in doing so considerwhether the other information is materially inconsistent with the standalone financialstatements or our knowledge obtained during the course of our audit or otherwise appearsto be materially misstated.
If based on the work we have performed we conclude that thereis a material misstatement of this other information we are required to report that fact.We have nothing to report in this regard.
Management's Responsibility for the Standalone Ind AS 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 Ind ASFinancial Statements
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 professionaljudgment and maintain professional 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 relevantto the audit in order to design audit procedures that are appropriate in thecircumstances. Under section 143(3)(i) of the Act we are also responsible for expressingour opinion on whether the Company has adequate internal financial controls system inplace and the operating 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 conditions maycause 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.
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 results of our work; and(ii) to evaluate the effect of any identified misstatements in the standalone financialstatements.
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 wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
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 precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act based on our audit wereport 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.
c) The Balance Sheet the Statement of Profit and Loss including OtherComprehensive Income the Cash Flow Statement and Statement of Changes in Equity dealtwith by this Report are in agreement with the books of account.
d) In our opinion the aforesaid standalone financial statements complywith the Ind AS specified under Section 133 of the Act.
e) 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.
f) 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.
g) With respect to the other matters to be included in the Auditor'sReport in accordance with the requirements of section 197(16) of the Act as 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.
h) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 asamended in our opinion and to the best of our information and according to theexplanations given to us:
i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone financial statements
ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses.
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 AUDITOR'S REPORT
(Referred to in paragraph 1(f) 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 SWELECT ENERGY SYSTEMS LIMITED ("the Company") as of 31 March 2021in conjunction with our audit of the standalone financial statements of the Company forthe year ended on that date.
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 company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.
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 of therisks of material misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols system over financial 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 themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls 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.
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.
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 generally maintained proper records showingfull particulars including quantitative details and situation of Property Plant andEquipment.
(b) The Property Plant and Equipment are physically verified inaccordance with a regular programme of verification which in our opinion provides forphysical verification of all the Property Plant and Equipment at reasonable intervals.According to the information and explanation given to us no material discrepancies werenoticed 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/conveyancedeed provided to us we report that the title deeds comprising all the immovableproperties of land and buildings which are freehold are held in the name of the Companyas at the balance sheet date.
In respect of immovable property of land and building that have beentaken on lease and disclosed as Property Plant and Equipment in the Standalone financialStatements the lease agreements are in the name of the Company where the Company is thelessee in the agreement.
(ii) The Company has physically verified the inventory during the yearin accordance with a regular programme of verification which in our opinion provides forphysical verification of all the inventory at reasonable intervals. According to theinformation and explanations given to us no material discrepancies were noticed on suchverification.
(iii) According to the information and explanations given to us theCompany has granted loans secured or unsecured to Companies Firms Limited LiabilityPartnerships or other parties covered in the register maintained under Section 189 of theCompanies Act 2013 in respect of which:
a. The terms and conditions of the grant of such loans are in ouropinion prima facie not prejudicial to the Company's interest.
b. The schedule of repayment of principal and payment of interest hasbeen stipulated and repayments or receipts of principal amounts and interest have beenregular as per stipulations.
c. There is no overdue amount remaining outstanding as at the balancesheet date.
(iv) I n our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of Sections 185 and 186 of theCompanies Act 2013 in respect of grant of loans making investments and providingguarantees and securities as applicable.
(v) According to the information and explanations given to us theCompany has not accepted any deposits during the year.
(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 Companies Act 2013 and are of the opinion that prima facie the prescribed costrecords have been made and maintained.
(vii) According to the information and explanations given to us inrespect of statutory dues:
(a) The Company has generally been regular in depositing undisputedstatutory dues including Provident Fund Income-tax Goods & Service Tax cess andother material statutory dues applicable to it to the appropriate authorities.
(b) There were no undisputed amounts payable in respect of ProvidentFund
Income-tax Goods & Service Tax Excise Duty Value Added Tax cessand other material statutory dues in arrears as at 31 March 2021 for a period of more thansix months from the date they became payable.
(c) Details of dues of Income-tax Sales tax Value Added Tax andCentral Excise Act which have not been deposited as on 31 March 2021 on account ofdisputes are given below:
|Name of the statute ||Nature of dues ||Amount (in Rs. lakhs) ||Period to which the amount relates ||Forum where dispute is pending |
|Kerala Sales Tax Act1963 ||Penalty ||6.67 ||2000-2001 ||Deputy Commissioner |
|Commercial Taxes Delhi Vat Act2004 ||Disputed turnover ||5.04 ||2006-2007 ||Commissioner Appeals |
|The Central Tax (Assam) Rules 1957 ||Non submission of F-Forms & C-Forms to the Department ||13.77 ||2011-2012 & 2012-2013 ||Asst. Commissioner Appeals |
|Central Excise Act ||Levy of CVD and SAD on imports ||606.26 ||2009-2015 ||2009 - 2012 -The Excise Appellate Tribunal 2012- 2013 -Commissioner of Central Excise 2013- 2015 - The Excise Appellate Tribunal |
|Income Taxes ||Disallowances of items ||2810.54 ||2009-2010 2012- 2013 2013- 2014 2015- 2016 2016- 2017 ||Commissioner of Income Tax (CIT) Appeals |
(viii) In our opinion and according to the information and explanationsgiven to us the Company has not defaulted in the repayment of dues to banks. The Companyhas not issued any debentures and has not borrowed any money from financial institutions.
(ix) The Company has not raised moneys by way of initial public offeror further public offer (including debt instruments). The term loans raised during theyear were applied for the purposes for which they were raised.
(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) According to the information and explanations given to us themanagerial remuneration has been paid/provided in accordance with the requisite approvalsmandated by the provisions of Section 197 read with Schedule V to the Companies Act 2013.
(xii) The Company is not a Nidhi Company and hence reporting underclause (xii) of the CARO 2016 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 Companies Act2013 where applicable for all transactions with related parties and the details ofrelated party transactions have been disclosed in the standalone financial statements asrequired by the applicable accounting standards.
(xiv) During the year the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures andhence reporting under clause (xiv) of CARO 2016 is not applicable to the Company.
(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 subsidiaries or persons connected with them andhence provisions of Section 192 of the Companies Act 2013 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) |
| ||C Manish Muralidhar |
| ||Partner |
|Place: Hyderabad ||(Membership No.213649) |
|Date: 14th June 2021 ||(UDIN: 21213649AAAACK8917) |