To the Members of W.S. INDUSTRIES (INDIA) LIMITED
Report on the Audit of the Standalone financial statements Qualified Opinion
We have audited the accompanying Standalone Ind AS financialstatements of W.S.INDUSTRIES (INDIA) LIMITED (the Company') which comprise the balance sheet as at 31stMarch 2020 the statement of profit and loss (including other comprehensive income) thestatement of cash flows and the statement of changes in equity for the year then ended anda summary of the significant accounting policies and other explanatory information (hereinafter referred to as "Standalone Ind AS financial statements").
In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of matter given in basis for qualified opinionparagraph the aforesaid standalone financial statements give the information required bythe Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 31 2020 and its loss total comprehensiveincomeitscashflowsand the changesin equity for the year ended on that date.
Basis for Qualified Opinion
The company's net worth has been completely eroded. The accumulated losses in thereporting year amounts to Rs.4953.12 millions (Previous year Rs.4347.16 millions).Further the company has overdue loans to various financial institutions amounting toRs.719.13 millions and interest accrued and due there on of Rs.132.70 millions and theturnover during the period ended 31stMarch 2020 is Rs.16.44 millions (previousyear Rs.7.26 millions) as per the books of accounts maintained.
Confirmation of Balances as at 31st March 2020 were not available for our verificationin respect of the financial institutions debtors creditors and others.
During the year under audit there was no production in the Chennai and Vizag plants.Chennai Insulator division (12 months) and Visakhapatnam Insulator division (w.e.f.01.10.2019 - 6 months) are being considered as discontinued operations. Turnkey ProjectBusiness Segment is being considered as Continuing Operations.
These factors along with other matters as set forth in the said notes which indicatesthe existence of a material uncertainty that may cause significant doubt about thecompany's ability to continue as a going concern. The company is in the discussion ofre-vitalization and long term stability and growth of its Turnkey Project Business unit.In light of the management's expectation of the outcome of above discussion andre-vitalization the financial statements have been prepared on a going concern basis.However in view of the above mentioned matter we are unable to comment on the ability ofthe company to continue as a going concern as per SA 570. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.
Emphasis of Matter Impact of COVID-19:
We draw attention to Note No: 2 of the financial statements which describes theeffects of COVID-19 pandemic on the Company's operations and compliances which does nothave any significant impact in the Company's overall performance during the currentperiod.
It is not appropriate to estimate the duration and severity of these Consequences aswell as their impact on the financial position and results of the company for futureperiods.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. In addition to the matter described in the Basis forQualified Opinion section we have determined the matters described below to be the keyaudit matters to be communicated in our report.
|Key audit matters ||Response to Key Audit Matters & Conclusion |
|1. Company has invested in a wholly owned subsidiary named WS Insulator private limited. ||The company has invested 50000 equity shares at a face value of Rs.10/- each in W S Insulators Private Limited. |
|2. Company has invested in a wholly owned subsidiary named Vidagara Tech Park Private Limited ||The investment of the company in Vidagara Tech Park Private Limited has increased by Rs.0.30 million consequent to the allotment of 30000 equity shares at a face value of Rs.10 each. |
|3. Disposal of investment in its wholly owned subsidiary W S T&D Limited. ||The company has sold its investment in its erstwhile subsidiary W S T&D Limited comprising of 50100 equity shares amounting to Rs.0.50 million. |
|4. Inventories worth Rs.18.48 millions has been written off. ||Inventories comprising of Raw Materials Work-in- progress Finished Goods and Stores and Spares to the extent of Rs.4.12 millions in Chennai division Rs.7.32 millions in Visakhapatnam division and Capital Work in Progress to the extent of Rs.7.04 millions in Visakhapatnam division have been fully written off at the end of the 3rd quarter of the current year because of discontinued Operations. |
|5. Impairment ofassetspertaining to discontinued operations. ||In accordance with Ind AS 105 assets relating to discontinued operations has been tested for impairment loss. As the carrying amount was greater than the realizable value impairment loss amounting to Rs.457.00 millions has been provided for the same as required under Ind AS 36. |
Information Other Than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the Information included in the Annual Report but does not includethe standalone financial statements and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.If based on the work we have performed we conclude that if there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
Management's Responsibility for the Standalone financial statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards specified under section 133 of the Act. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation 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 financial statement that givea true and fair view and are free from material misstatement whether due to fraud orerror.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative 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 standalone financial statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these standalone financial statements.
Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the "Annexure A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable. As required bySection 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 the Statement of Cash Flows andStatement of Changes in Equity dealt with by this Report are in agreement with the booksof account.
d) In our opinion the aforesaid standalone financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
e) The company has not redeemed the outstanding debentures nor made any payment ofinterest for the same. The company has obtained suitable opinion from an expert and basedon the same the company is in compliance with the provisions of sec 164 of the CompaniesAct 2013.
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".
g) 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 Company has disclosed the impact of pending litigations on its financialposition in its financial statements Refer Note 29 to the financial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. The Company is not required to transfer any amount to the Investor Education and
Protection Fund by the Company.
"Annexure A" to the Independent Auditors' Report of even date on the
Standalone financial statements of W.S. INDUSTRIES (INDIA) LIMITED.
Referred to in Paragraph 1 under the heading Report on Other Legal &Regulatory Requirement' of our report of even date:
(i) In respect of its fixed assets:
(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets;
(b) We are unable to form any opinion with regard to any material discrepancies on thephysical verification of fixed assets in the absence of any record for the verificationof the same as on the end of the financial period.
(c) We are informed that the title deeds of immovable properties are held in the nameof the company.
(ii) According to the information and explanations given to us there is no inventory ason 31st
March 2020 in the books of accounts. Hence this clause is not applicable.
(iii) According to the information and explanations given to us and on the basis of ourexamination of the books of accounts the company has not granted loans to a bodycorporate covered in the register maintained under Sec 189 of the Companies Act 2013 andhence clause (iii) (a) to (c) are not applicable to the company.
(iv) The company has complied with the provisions of sections 185 and 186 of thecompanies Act 2013 in respect of loans investments provided by the company. Thecompany has not provided any guarantee or security to any company covered under Section185.
(v) According to the information and explanations given to us the Company has notaccepted any deposits from the public to which the directives issued by the Reserve Bankof India and the provisions of sections 73 to 76 of the Companies Act 2013 and the rulesframed there under are applicable.
(vi) According to information and explanations given to us the Central Government hasnot prescribed maintenance of cost records under sub-section (1) of section 148 of theCompanies Act 2013.
(vii) According to information and explanations given to us and on the basis of ourexamination of the books of account and records the Company is regular in depositingundisputed statutory dues including Provident Fund Income-Tax Goods and Service TaxDuties of Customs and any other statutory dues with the appropriate authorities. Accordingto the information and explanations given to us undisputed amounts provided for March 312020 and payable for a period of more than six months are given below:
|S.NO NATURE OF DUES ||AMOUNT OUTSTANDING FOR MORE THAN SIX MONTHS (IN MILLIONS) |
|1. TDS ||8.12 |
|2. PROPERTY TAX ||4.61 |
|3. GRATUITY TO LIC ||0.43 |
(viii) In our opinion and according to the information and explanations given to usthe company has defaulted in repayment of dues to banks and financial institutions asbelow:
|Name of the Bank / Financial Institution ||Amount outstanding as at 31stMARCH 2020 (In Million) |
|EARC Assigned by PNB ||347.08 |
|EARC Assigned by IOB ||144.93 |
|EARC Assigned by Exim Bank ||117.64 |
|Allium Finance Limited ||30.00 |
|EARC Assigned by Exim Bank Security Receipts ||59.48 |
|Non Convertible Debentues ||20.00 |
|TOTAL ||719.13 |
(ix) According to the information and explanations given to us the company has notraised moneys by way of initial public offer or further public offer including debtinstruments and term Loans. Accordingly clause (ix) of the Order is not applicable to theCompany.
(x) In our opinion and according to the information and explanations given to us thecompany has not noticed any fraud by the company or any fraud on the company by itsOfficers or employees or reported during the year.
(xi) According to the information and explanations given to us the Company has notprovided for managerial remuneration during the year.
(xii) The Company is not a Nidhi Company. Therefore Clause (xii) of the Order are notapplicable to the Company.
(xiii) In our opinion all transactions with the related parties are in compliance withsection 177 and 188 of Companies Act 2013 and the details have been disclosed in theStandalone Financial Statements as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us the Company has notmade any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year under review
(xv) According to the information and explanations given to us the company has notentered into any non-cash transactions with directors or persons connected with him.Accordingly clause (xv) of the Order are not applicable to the Company.
(xvi) The company is not required to be registered under section 45 IA of the ReserveBank of India Act 1934.
"Annexure B" to the Independent Auditor's Report of even date on the
Standalone financial statements of W.S. INDUSTRIES (INDIA) LIMITED
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 reporting of W.S.INDUSTRIES (INDIA) LIMITED ("the Company") as of March 31 2020 inconjunction with our audit of the Standalone financial statements of the Company for theyear ended 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 control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI)". 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 internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance
Note on Audit of Internal Financial Controls Over Financial Reporting (the"Guidance Note") issued by the Institute of Chartered Accountants of India andthe Standards on Auditing prescribed under Section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial controls and both issued by theInstitute of Chartered Accountants of India. Those
Standards and the Guidance Note require that we comply with ethical requirements andplan and 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 reportingassessing 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 judgement including the assessment of the risks ofmaterial misstatement of the Standalone financial statements whether due to fraud orerror.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of
Standalone financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes 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 Standalone financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the Standalone 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 ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
The system of internal financial controls over financial reporting with regard to thecompany were made available to us to determine whether the company has establishedadequate internal financial control over financial reporting and whether such internalfinancial controls were operating effectively as at 31st March 2020. Howeverin addition to above internal financial controls over financial reporting is based onmanagement's assurance. We give a disclaimer as reported above in respect of the internalfinancial controls over financial reporting considering the nature timing and extent ofaudit tests in our audit of the Standalone financial statements of the Company and henceour opinion is subject to the said disclaimer on the Standalone financial statements ofthe company.