THE MEMBERS OF TD POWER SYSTEMS LIMITED
Report on the Audit of the Standalone Financial Statements Opinion
We have audited the Standalone Financial Statements of TD PowerSystems Limited ("the Company") which comprise the Balance Sheet as atMarch 31 2019 the Statement of Profit and Loss (including Other Comprehensive Income)the Statement of Changes in Equity the Statement of Cash Flows for the year then endedand notes to the financial statements including a summary of significant accountingpolicies and other explanatory information (hereinafter referred to as "the financialstatements") in which are included the financial statements for the year ended onthat date audited by the Branch Auditor of the Company's branch located in Japan.
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 March 312019its profit total Comprehensive income changes in equity and its cash flows for the yearended on that date.
Basis for Opinion:
We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Companies Act 2013. Our responsibilitiesunder those Standards are further described in the Auditor's Responsibilities for theAudit of the Standalone Financial Statements section of our report. We are independent ofthe Company in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India (ICAI) together with the ethical requirements that are relevant toour audit of the financial statements under the provisions of the Companies Act 2013 andthe Rules thereunder and we have fulfilled our other ethical responsibilities inaccordance with the requirements and the ICAI's Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion.
Emphasis of Matter
As stated in Note no 51 no further provision for impairment in thecarrying value of investments in subsidiaries is considered necessary by the managementfor the reasons stated therein.
Our opinion is not modified in respect of the above 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.
Revenue Recognition for contracts with customers: Reasons why thematter was determined to be a key audit matter:
The Company generates a significant portion of the business bymanufacturing AC Generators and Electric Motors for various applications which arespecifically designed and tailor-made to suit the needs of the customers based on theirrequirements and specifications. The Company recognises revenue in accordance with IND AS115 Revenue from contracts with customers generally when or as the entity satisfies aperformance obligation by transferring a promised goods services to a customer; i. e.when the customer is able to direct the use of the transferred goods or services andobtains substantially all of the remaining benefits provided a contract with enforceablerights and obligations exists and amongst others collectability of consideration isprobable taking into account our customer's creditworthiness. These assessments includein particular the scope of deliveries and services required to fulfill contractuallydefined obligations.
Auditor's response: As part of our audit we obtained anunderstanding of the Company's internally established methods processes and controlmechanisms from order to delivery. We have also assessed the design and operatingeffectiveness of the internal controls by obtaining an understanding of such businesstransactions and testing controls over these processes.
As part of our substantive audit procedures we evaluated themanagement's assumptions based on a risk-based selection of a sample of contracts.Detailed substantive testing of sales was carried out to verify the related documentswhich include the documents for dispatch of goods or acknowledgement of acceptance of thegoods by the customer. We performed cut-off procedures to ensure that all year-end salesare in line with the revenue recognition policy of the Company. The performance ofobligations are considered to be complete generally when the customer has accepted thegoods.
Attention is invited to the following:
We did not audit the financial statements of Japan Branch included inthe standalone financial statements of the Company whose financial statements reflecttotal assets of Rs. 4518.63 lakhs as at 31st March 2019 and total revenues of Rs.3436.61 lakhs for the year ended on that date as considered in the standalone financialstatements. The financial statements of the Branch have been audited by the branchauditors whose report has been furnished to us and our opinion in so far as it relates tothe amounts and disclosures included in respect of the Branch is based solely on thereport of such Branch Auditors.
Our opinion is not modified in respect of the above matter.
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 Management Discussion and Analysis Boardof Directors' report Corporate Governance Report and other information published alongwith but does not include the financial statements and our auditor's report thereon.
Our opinion on the Standalone Financial Statements does not cover theother information and we do not and will not express any form of assurance conclusionthereon.
In connection with our audit of the Standalone Financial Statementsour responsibility is to read the other information identified above and in doing soconsider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated. If based on the work we have performed we conclude that there is amaterial misstatement of this other information we are required to report that fact. Wehave nothing to report in this regard.
Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters statedin section 134(5) of the Companies Act 2013 ("the Act") with respect to thepreparation and presentation of these standalone financial statements that give a true andfair view of the financial position financial performance including other comprehensiveincome changes in equity and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Indian Accounting Standards (Ind-AS)specified under Section 133 of the Act read with relevant rules issued thereafter.
This responsibility also includes the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of 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 design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
In preparing the financial statements the Board of Directors 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 the Board of Directors either intends to liquidate the Companyor to cease operations or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether thefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Companies Act 2013 we are also responsible for expressing our opinionon whether the Company has adequate internal financial controls system in place and theoperating effectiveness of such controls. l Evaluate the appropriateness of accountingpolicies used and the reasonableness of accounting estimates and related disclosures madeby 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 financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained upto the dateof our auditor's report. However future events or conditions may cause the Company tocease to continue as a going concern.
l Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
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 financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ('theOrder') issued by the Central Government of India in terms of section 143(11) of the Actwe give in the 'Annexure A' a statement on the matters specified in the paragraph 3and 4 of the said Order to the extent applicable.
2. As required by Section 143 (3) of the Act we report that:
a. We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit;
b. In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books and properreturns adequate for the purpose of our audit have been received from the Branch notvisited by us but audited by the Branch Auditors.
c. The report on the accounts of one branch offices audited undersection 143 by a person other than the company's auditor has been forwarded to us asrequired by sub-section (8) of section 143 and have been properly dealt with in preparingour report in the manner considered necessary by us;
d. The Balance Sheet the Statement of Profit and Loss including OtherComprehensive Income Statement of Changes in Equity and the Statement of Cash Flow dealtwith by this Report are in agreement with the books of account and with the returnsreceived from the branch not visited by us but audited by the Branch Auditors.
e. In our opinion the aforesaid standalone financial statements complywith the Accounting Standards specified under Section 133 of the Act read with Rule 7 ofthe Companies (Accounts) Rules 2014;
f. On the basis of the written representations received from thedirectors as on 31st March 2019 taken on record by the Board of Directors none of thedirectors is disqualified as on 31st March 2019 from being appointed as a director interms of Section 164 (2) of the Act.
g. With respect to the adequacy of the internal financial controls overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate report in 'Annexure B'; and
h. 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 within the limit laid down under the provisions of section 197 of the Act.
i. 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 inour opinion and to the best of our information and according to the explanations given tous:
i. the Company has disclosed pending litigations in its standalonefinancial statements the impact if any on the final settlement of these litigations onits financial position is not ascertainable at this stage Refer Note No 36 ofstandalone financial statements;
ii. the Company has made provision as required under the applicable lawor accounting standards for material foreseeable losses if any on long-term contractsincluding derivative contracts Refer Note No 40 (c)(i) of standalone financialstatements; and
iii. there were no amounts which were required to be transferred to theInvestor Education and Protection Fund by the Company during the year.
| ||For VARMA & VARMA |
| ||Chartered Accountants |
| ||FRN 004532S |
| ||K.P.SRINIVAS |
|Place: Bangalore ||Partner |
|Date: 22-05-2019 ||M. No. 208520 |
ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT
Annexure referred to in paragraph 1 under the heading 'report on OtherLegal and Regulatory Requirements' of our Independent Auditor's Report of even date on theStandalone Financial Statements of TD Power Systems Limited for the year ended 31st March2019.
I. In respect of its Property plant and equipment:
(a)The Company has maintained proper records which are showing fullparticulars including quantitative details and situation of fixed assets.
(b)The Company has a programme of physical verification of Propertyplant and equipment of the Company which in our opinion is reasonable having regard tothe size of the Company and nature of its assets. According to the information andexplanations given to us there were no material discrepancies identified on suchverification when compared with available records of the Company.
(c)According to the information and explanations given to us and as perverification of the records of the Company the title deeds of the immovable propertiesare held in the name of the Company as at the balance sheet date.
II. The inventory has been physically verified by the management duringthe year. In our opinion the frequency of verification is reasonable. No materialdiscrepancies were noticed on such physical verification.
III. According to the information and explanations given to us theCompany has granted unsecured loans to wholly owned foreign subsidiaries which are coveredin the register maintained under section 189 of the Act.
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 the loans are renewed on maturity and the interest has been received asstipulated.
c. There is no overdue amount remaining outstanding as at the balancesheet date.
IV. In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of the section 185 and 186 ofthe Act in respect of the investments made loans granted. The Company has not given anyguarantees and securities to directors.
V. According to the information and explanations given to us theCompany has not accepted any deposit from the public during the year. Accordingly theprovisions of paragraph 3(v) of the Order is not applicable.
VI. We have broadly reviewed the books of account and recordsmaintained by the Company pursuant to the Rules made by the Central Government for themaintenance of cost records under Section 148(1) of the Companies Act 2013 and are of theopinion that prima facie the prescribed accounts and records have been made andmaintained. We have however not made a detailed examination of the records with a viewto determining whether they are accurate or complete.
VII.(a) According to the information and explanations given to us andas per our verification of the records of the Company the Company has been generallyregular in depositing undisputed statutory dues including Provident fund Employee's StateInsurance Income Tax Sales Tax VAT Custom Duty Excise Duty Goods and Service TaxCess and other statutory dues with the appropriate authorities during the year to theextent applicable. There are no arrears of undisputed statutory dues of a material natureoutstanding as at the last day of the financial year for a period of more than six monthsfrom the date on which they became payable.
(b) According to the information and explanations given to us and asper our verification of the records of the Company no disputed amounts of Income tax orsales tax or Goods and service tax or duty of custom or duty of excise or value added taxor cess have not been deposited with appropriate authorities as at 31st March 2019 exceptfor the following:
|Name of the Statute ||Nature of the dues ||Amount ||Period (financial year) to which the amount relates to ||Forum where dispute is pending |
| || ||(Rs. In Lakhs) || || |
|Income Tax Act 1961 ||Income Tax ||15.80 ||2012-13 ||Commissioner of Income Tax (Appeals) |
|Income Tax Act 1961 ||Income Tax ||27.56 ||2015-16 ||Commissioner of Income Tax (Appeals) |
VIII. According to the information and explanations given to us and asper our verification of the records of the Company the Company has not defaulted inrepayment of its dues to the banks and financial institution.
IX. According to the information and explanation given to us and as perour verification of records of the Company the Company has not raised money by way ofinitial public offer or further public offer (including debt instruments) during the year.Accordingly the provisions of paragraph 3(ix) of the Order is not applicable.
X. According to the information and explanations given to us and as perour verification of records of the Company no fraud either by the Company or on theCompany by its officers and employees has been noticed or reported during the year.
XI. According to the information and explanations given to us and asper our verification of records of the Company the Company has paid / provided formanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of the Section 197 read with Schedule V of the Act.
XII.In our opinion and according to the information given to us theCompany is not a Nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.
XIII.According to the information and explanations given to us and asper our verification of records of the Company transactions with the related parties arein compliance with the sections 177 and 188 of the Act and details of such transactionshave been disclosed in the standalone financial statements as required by the applicableIndian Accounting Standards.
XIV. According to the information and explanations given to us and asper our verification of records of the Company the Company has not made preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly paragraph 3(xiv) of the Order is not applicable.
XV.According to the information and explanations given to us and as perour verification of records of the Company the Company has not entered into non-cashtransactions with the directors or persons connected with the directors. Accordinglyparagraph 3 (xv) of the Order is not applicable.
XVI. According to the information and explanations given to us theCompany is not required to be registered under section 45-IA of the Reserve Bank of IndiaAct 1934.
| ||For VARMA & VARMA |
| ||Chartered Accountants |
| ||FRN 004532S |
| ||K.P.SRINIVAS |
|Place : Bangalore ||Partner |
|Date : 22-05-2019 ||M. No.208520 |
ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT
ANNEXURE REFERRED TO IN PARA 2 (g) "REPORT ON OTHER LEGAL ANDREGULATORY REQUIREMENTS" OF THE INDEPENDENT AUDITOR'S REPORT OF REPORT ON THEINTERNAL FINANCIAL CONTROLS UNDER CLAUSE (I) OF SUBSECTION 3 OF SECTION 143 OF THECOMPANIES ACT 2013 ("THE ACT")
We have audited the internal financial controls over financialreporting of TD Power Systems Limited ("the Company") as of 31 March 2019in 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 based on our 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 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 judgment including the assessment of therisks of material misstatement of 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 the Company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at 31 March 2019 based onthe internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.
| ||For VARMA & VARMA |
| ||Chartered Accountants |
| ||FRN 004532S |
| ||K.P.SRINIVAS |
|Place: Bangalore ||Partner |
|Date : 22-05-2019 ||M No.208520 |