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Swelect Energy Systems Ltd.

BSE: 532051 Sector: Engineering
NSE: SWELECTES ISIN Code: INE409B01013
BSE 00:00 | 18 Feb 123.00 -2.10
(-1.68%)
OPEN

121.45

HIGH

123.00

LOW

121.05

NSE 00:00 | 18 Feb 121.65 -4.25
(-3.38%)
OPEN

128.10

HIGH

128.15

LOW

121.25

OPEN 121.45
PREVIOUS CLOSE 125.10
VOLUME 638
52-Week high 199.67
52-Week low 94.00
P/E 20.00
Mkt Cap.(Rs cr) 186
Buy Price 121.00
Buy Qty 1.00
Sell Price 131.00
Sell Qty 1.00
OPEN 121.45
CLOSE 125.10
VOLUME 638
52-Week high 199.67
52-Week low 94.00
P/E 20.00
Mkt Cap.(Rs cr) 186
Buy Price 121.00
Buy Qty 1.00
Sell Price 131.00
Sell Qty 1.00

Swelect Energy Systems Ltd. (SWELECTES) - Auditors Report

Company auditors report

To The Members of Swelect Energy Systems Limited

Report on the Standalone Ind AS Financial Statements

Opinion

We have audited the accompanying Standalone Ind AS financial statements of SwelectEnergy Systems Limited ("the Company") which comprise the Balance Sheet asat 31 March 2019 and the Statement of Profit and Loss (including Other

Comprehensive Income) Statement of Cash Flows and the Statement of Changes in Equityfor the year then ended and a summary of significant accounting policies and otherexplanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Standalone Ind

AS financial statements give the information required by the Companies Act 2013("the Act") in the manner so required and give a true and fair view inconformity with the Indian Accounting Standards prescribed under section 133 of the Actread with the Companies (Indian Accounting Standards) Rules 2015 as amended ("IndAS") and other accounting principles generally accepted in India of the state ofaffairs of the Company as at 31 March 2019 and its profit total comprehensive income itscash flows and the changes in equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the Standalone Ind AS financial statements in accordance withthe Standards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor's

Responsibilities for the Audit of the Standalone Ind AS financialstatements section ofour report. We are independent of the

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 Standalone Ind AS financialstatements under the provisions of the Act and the Rulesmade thereunder and we have fulfilled our other ethical responsibilities in accordancewith these requirements and the Code of Ethics. We believe that the audit evidenceobtained by us is sufficient and appropriate to provide a basis for our audit opinion onthe Standalone Ind AS financial statements.

Key Audit Matter

Key audit matters are those matters that significancein our audit of theStandalone ourprofessionaljudgmentwereofmost

Ind AS financial statements of the current period. These matters were addressed in thecontext of our audit of the Standalone Ind AS financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.

Key Audit Matter Auditor's Response
1 Evaluation of impairment of investments made and advances given to certain operating subsidiaries of the Company whose net worth is substantially eroded / incurring continuous losses. Principal audit procedures performed:
We have performed the following procedures:
Investments made aggregating to Rs. 10349.17 lakhs [Refer Note 6 to the Standalone Financial Statements] and loans given aggregating to Rs. 4674.96 lakhs [Refer Note 7C to the Standalone Financial Statements] and trade receivables Rs.406.04 lakhs [Refer Note 10 to the Standalone Financial Statements] to certain operating subsidiaries of the Company whose net worth is substantially eroded / incurring continuous losses is considered good and recoverable based on Management's judgment in estimating future cash flows used as part of the impairment analysis. a. Evaluated the design and implementation of the relevant controls and the operating effectiveness of such internal controls which inter-alia includes the completeness and accuracy of the input data considered reasonableness of assumptions considered in determining the future projections and the assumptions considered in preparing the impairment calculations.
b. Obtained the investment valuations (prepared by Management or as carried out by external valuations) and performed the following procedures:
i. Conducted discussions with the Company personnel to identify factors if any that should be taken into account in the analysis.
The judgment includes forecasted revenues/ cash flows and discount rate in the projection period. As any adverse changes to these two assumptions could result into reduction in the fair value determined resulting in a potential impairment to be recognised. ii. Compared the actual revenues and cash flows generated by the subsidiaries during the year as to the projections and estimates considered in the previous year/ or as considered during the initial bid/plan.
iii. Evaluated the appropriateness of the key assumptions considered including discount rate growth rate etc. considering the historical accuracy of the Company's estimates in the prior periods and comparison of the assumptions with public data wherever available.

Information Other than the Standalone Ind AS financial statements and Auditor's ReportThereon

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Board's report but does not includethe consolidated Ind AS financial statements Standalone Ind AS statements and ourauditor's report thereon.

Our opinion on the Standalone Ind AS financial statements does not cover the otherinformation and we do not form of assurance conclusion thereon.

In connection with our audit of the Standalone Ind AS financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the Standalone Ind AS 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 thatthere is a material misstatement of this other information we are required to report thatfact. We have nothing to report in this regard.

Management's Responsibility for the Standalone Ind AS financial statements

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 Standalone financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income cash flows and changes in equity of the Company in accordancewith the Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the Standalone Ind AS financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the Standalone Ind AS financial statements Management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessManagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

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

Auditor's Responsibility for the Audit of the Standalone Ind AS financial statements

Our objectives are to obtain reasonable assurance about whether the Standalone Ind ASfinancial statements as from material misstatement whether due to fraud or error and toissue an auditor's report that includes our opinion. Reasonable assurance is a high levelof assurance but is not a guarantee that an audit conducted in accordance with SAs willalways detect a material misstatement when it exists. Misstatements can arise from fraudor error and are considered material if individually or in the aggregate they couldreasonably be expected to influence the economic decisions of users taken on the basis ofthese Standalone Ind AS financial statements.

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 Standalone Ind ASfinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

Obtain an understanding of internal financial controls relevant to the audit in orderto design audit procedures that are appropriate in the circumstances. Under section143(3)(I) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such 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 relatedtoeventsorconditionsthatmaycastsignificantdoubt on the

Company'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 financialstatements or if such disclosures theStandaloneIndASare inadequate 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 the Standalone Ind ASfinancial statements including the disclosures and whether the Standalone Ind ASfinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

Materiality is the magnitude of misstatements in the Standalone Ind AS financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the Standalone Ind AS financial statementsmay be influenced. We consider quantitative materiality and qualitative factors in (i)planning the scope of our audit work and in evaluating the results of our work; and (ii)to evaluate the effect of any identifiedmisstatements in the Standalone Ind AS financialstatements.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal controls that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on our independenceand where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the Standalone Ind ASfinancialstatements 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 we report that: a) Wehave sought and obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit. b) In our opinionproper books of account as required by law have been kept by the Company so far as itappears from our examination of those books. c) The Balance Sheet the Statement of Profitand Loss including Other Comprehensive Income the Cash Flow Statement and Statement ofChanges in Equity dealt with by this Report are in agreement with the books of account. d)In our opinion the aforesaid Standalone financial statements comply with the Ind ASspecified under Section 133 of the Act. e) On the basis of the written representationsreceived from the Directors as on 31 March 2019 taken on record by the Board of Directorsnone of the Directors is disqualified as on 31 March 2019 from being appointed as aDirector in terms of

Section 164 (2) of the Act. f) With respect to the adequacy of the internal financialcontrols over financialreporting of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure A". Our report expresses anunmodified opinion on the adequacy and operating effectiveness of the Company's internalfinancial controls over financialreporting. g) With respect to the other matters to beincluded in the Auditor's Report in accordance with the requirements of section 197(16) ofthe Act as amended: In our opinion and to the best of our information and according tothe explanations given to us the remuneration paid by the Company to its Directors duringthe year is in accordance with the provisions of section 197 of the Act. h) With respectto the other matters to be included in the Auditor's Report in accordance with Rule 11 ofthe Companies (Audit and Auditors) Rules 2014 as amended in our opinion and to the bestof our information and according to the explanations given to us: i. The Company hasdisclosed the impact of pending litigations on its financial position in its StandaloneInd AS financial statements. ii. The Company did not have any material foreseeable losseson long-term contracts and the Company did not have any derivative contracts. iii. Therehas been no delay in transferring amounts which were required to be transferred to theInvestor 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) of the Act we give in "Annexure B" a statement on thematters specified in paragraphs 3 and 4 of the Order.

For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Registration No. 117366W/W-100018)
Jaideep S. Trasi
Place: Chennai Partner
Date: 28 May 2019 Membership No. 211095
Ref. : JT/MS/2019/47

ANNExURE A TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 1(f) under ‘Report on Other Legal and RegulatoryRequirements' Section of our report of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-Section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reportingof SwelectEnergy Systems Limited ("the Company") as of 31 March 2019 in conjunctionwith our audit of the Standalone Ind AS financial statements of the Company for the yearended on that date.

Management's Responsibility for Internal Financial Controls

The Company's Management is responsible for establishing and maintaining internalfinancial controls based on the internal controls over financial reporting criteriaestablished by the Company considering the essential components of internal controlsstated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting 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 the safeguarding of its assets the prevention and detection offrauds and errors the accuracy completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.

Auditor's Responsibility of the Company based on Ourresponsibilityisto express our financialcontrolsover financial opinion theCompany'sinternal audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial operatingeffectiveness of internal controls based on the assessed risk. The procedures selecteddepend on the auditor's judgement including the assessment of the risks of materialmisstatement 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 systemover financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial controls over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A Company's internal financial controls over financial ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the Company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures 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 Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper

Management override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrolsover financialreporting to future periods are subject to the risk that the internalfinancial controls over financial reporting may become inadequate because of changes inconditions or that the degree of compliance with the policies or procedures maydeteriorate.

Opinion

In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reportingandsuchinternalfinancialcontrols over financial reportingwere operating effectively as at 31 March 2019based financialcontrols overfinancial reporting established by the Company considering the thecriteriaforinternalessential components of internal controls stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Registration No. 117366W/W-100018)
Jaideep S. Trasi
Place: Chennai Partner
Date: 28 May 2019 Membership No. 211095
Ref. : JT/MS/2019/47

ANNExURE B TO THE INDEPENDENT AUDITOR'S REPORT

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

(i) (a) The Company has generally maintained proper records showing full particularsincluding quantitative details and situation of Property Plant and Equipment.

(b) The Property Plant and Equipment are physically verified in accordance with aregular programme of verification which in our opinion provides for physicalverification of all the Property Plant and Equipment at reasonable intervals. Accordingto the information and explanation given to us no material discrepancies were noticed onsuch verification.

(c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered sale deed/conveyance deed provided tous we report that the title deeds comprising all the immovable properties of land andbuildings which are freehold are held in the name of the Company as at the balance sheetdate.

In respect of immovable property of land and building that have been taken on lease anddisclosed as Property Plant and Equipment in the Standalone Ind AS Financial Statementsthe lease agreements are in the name of the Company where the Company is the lessee inthe agreement.

(ii) The Company has physically verified the inventory during the year in accordancewith a regular programme of verification which in our opinion provides for physicalverification of all the inventory at reasonable intervals. According to the informationand explanations given to us no material discrepancies were noticed on such verification.

(iii) According to the information and explanations given to us the Company hasgranted loans secured or unsecured to

Companies Firms Limited Liability Partnerships or other parties covered in theregister maintained under Section 189 of the Companies Act 2013 in respect of which: a.The terms and conditions of the grant of such loans are in our opinion prima facie notprejudicial to the Company's interest. b. The schedule of repayment of principal andpayment of interest has been stipulated and repayments or receipts of principal amountsand interest have been regular as per stipulations. c. There is no overdue amountremaining outstanding as at the balance sheet date.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Companies Act2013 in respect of grant of loans making investments and providing guarantees andsecurities as applicable.

(v) According to the information and explanations given to us the Company has notaccepted any deposit during the year.

(vi) The maintenance of cost records has been specified by the Central Government underSection 148(1) of the Act. We have broadly reviewed the cost records maintained by theCompany pursuant to the Companies (Cost Records and Audit) Rules 2014 as amendedprescribed by the Central Government under sub-section (1) of Section 148 of the CompaniesAct 2013 and are of the opinion that prima facie the prescribed cost records have beenmade and maintained. (vii) According to the information and explanations given to us inrespect of statutory dues: (a) The Company has generally been regular in depositingundisputed statutory dues including Provident Fund Income-tax Goods & Service Taxcess and other material statutory dues applicable to it to the appropriate authorities.(b) There were no undisputed amounts payable in respect of Provident Fund Income-taxSales Tax Service Tax Goods & Service Tax Excise Duty Value Added Tax cess andother material statutory dues in arrears as at 31 March 2019 for a period of more than sixmonths from the date they became payable.

(c) Details of dues of Income-tax and Service Tax which have not been deposited as on31 March 2019 on account of disputes are given below:

Name of the statute Nature of dues Amount (in 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.
Service tax Differential tax and Interest 2.92 2011-2012 Central Excise and Service Tax Appellate Tribunal (CESTAT)
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 2009-2010 / Commissioner of Income Tax (CIT)
1950.76 2012-2013 Appeals
2013-2014
2015-2016

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in the repayment of dues to banks. The Company has notissued any debentures and has not borrowed any money from financial institutions.

(ix) The Company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments). The term loans raised during the year were applied forthe purposes for which they were raised.

(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no material fraud on the Company by its officersor employees has been noticed or reported during the year.

(xi) According to the information and explanations given to us the managerialremuneration has been paid/provided in accordance with the requisite approvals mandated bythe provisions of Section 197 read with Schedule V to the Companies Act 2013.

(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) ofthe CARO 2016 Order is not applicable (xiii) In our opinion and according to theinformation and explanations given to us the Company is in compliance with Section 177 and188 of the Companies Act 2013 wherever applicable for all transactions with relatedparties and the details of related party transactions have been disclosed in the financialstatements as required by the applicable accounting standards.

(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underclause (xiv) of CARO 2016 is not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsdirectors or directors of its holding subsidiary or associate company or personsconnected with them and hence provisions of Section 192 of the Companies Act 2013 arenot applicable.

(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.

For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Registration No. 117366W/W-100018)
Jaideep S. Trasi
Place: Chennai Partner
Date: 28 May 2019 Membership No. 211095
Ref. : JT/MS/2019/47