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Welspun Corp Ltd.

BSE: 532144 Sector: Metals & Mining
NSE: WELCORP ISIN Code: INE191B01025
BSE 00:00 | 23 Jul 146.15 2.60
(1.81%)
OPEN

144.00

HIGH

149.40

LOW

142.95

NSE 00:00 | 23 Jul 146.05 2.20
(1.53%)
OPEN

145.20

HIGH

149.40

LOW

142.80

OPEN 144.00
PREVIOUS CLOSE 143.55
VOLUME 149330
52-Week high 165.00
52-Week low 79.50
P/E 3.81
Mkt Cap.(Rs cr) 3,814
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 144.00
CLOSE 143.55
VOLUME 149330
52-Week high 165.00
52-Week low 79.50
P/E 3.81
Mkt Cap.(Rs cr) 3,814
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Welspun Corp Ltd. (WELCORP) - Auditors Report

Company auditors report

To the Members of Welspun Corp Limited

Report on the audit of the standalone financial statements

Opinion

1. We have audited the accompanying standalone financial statements of Welspun CorpLimited (the "Company") which comprise the balance sheet as at March 31 2020the statement of profit and loss (including other comprehensive income) statement ofchanges in equity and statement of cash flows for the year then ended and notes to thestandalone financial statements including a summary of significant accounting policiesand other explanatory information.

2. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 (the "Act") in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the Company as at March 31 2020 and total comprehensive income(comprising of profit and other comprehensive income) changes in equity and its cashflows for the year then ended.

Basis for opinion

3. We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditors' responsibilities for the audit of the standalone financialstatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.

Key audit matters

4. 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.

Key Audit Matter How our audit addressed the key audit matter

Assessment of carrying value of investments in and recoverability of loans to a joint venture

(Refer note 48 and 52 to the standalone financial statements) Our procedures included amongst others the following:
The Company has investment in equity shares of Welspun Wasco Coatings Private Limited ("joint venture") of Rs.254.65 million as at March 31 2020. The Company has also granted loans to the joint venture with carrying value of Rs.247.01 million as at March 31 2020. These amounts are significant to the financial statements. • Understanding and evaluating the design and testing the operating effectiveness of the Company's controls over impairment assessment of investments in joint venture and expected credit loss model for loans and recognition of provision against the same; • In respect of assessment of carrying value of the investment in joint venture
Consequent to the negative net worth and continued losses of the joint venture the Company has assessed the carrying value of the investment in joint venture and loans granted to it for potential impairment. Based on the discounted cash flow valuation model (the "model") the Management has recorded a provision for impairment of Rs.254.65 million against investment in joint venture. (a) Understanding of the operating parameters used in the model and assessing consistency of our understanding of parameters with those considered in the model;
The Management has also recorded an impairment loss of Rs.247.01 million based on expected credit loss model ("ECL") in respect of the loans. (b) assessing reasonableness of the Management's historical business forecasts by comparing the business forecasts used in the prior year with the actual performance in the current year;
We considered this as a key audit matter due to significant judgement involved in estimating the future cash flows and significant assumptions of discount rate terminal growth rate etc. used in the model as well as the the ECL model. (c) Reviewing the reasonableness of the assumptions/ information considered in the models by examining source data and supporting documentation in light of the relevant economic and industry indicators;
(d) Comparing the business forecasts with the latest Board approved budgets;
(e) Assessing the work of the Management's external valuation expert including their independence and objectivity;
(f) Testing the mathematical accuracy of the underlying model;
(g) Performing sensitivity tests on the model by analysing the impact of using alternate assumptions for discount rates terminal growth rates etc. within a reasonable and foreseeable range.
• Considered the results of the aforesaid procedures in evaluating the recoverability of loans to "joint venture".
Based on the above procedures performed we found assessment of carrying value of investments in and recoverability of loans to a joint venture to be reasonable.

Other Information

5. The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in Management Discussion and AnalysisDirectors' Report Corporate Governance Report and Business Responsibility Report andOther Information in Annual Report including Annexure thereto but does not include thestandalone financial statements and our auditors' report thereon. Our opinion on thestandalone financial statements does not cover the other information and we do not expressany form of assurance conclusion thereon. In connection with our audit of the standalonefinancial statements our responsibility is to read the other information and in doingso consider 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.

We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the standalonefinancial statements

6. 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 changesin equity and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Accounting Standards specified under section133 of the Act. This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding of the assets of theCompany and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

7. In preparing the standalone 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 foroverseeing the Company's financial reporting process.

Auditors' responsibilities for the audit of the standalone financial statements

8. Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditors' 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 standalone financial statements.

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

• Identify and assess the risks of material misstatement of the standalonefinancial 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 control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under Section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls.

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

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditors' report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditors' report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

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

11. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.

12. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the standalone financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditors' 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.

Other matter

13. Since it was impracticable for us to attend the physical verification of inventoryconducted by the Management under the current lock-down and other restrictions imposed bythe Government of India and other conditions related to the COVID-19 pandemic situationwe have relied on the alternate audit procedure to obtain comfort over the existence andcondition of inventory at year end. Our opinion is not modified in respect of this matter.

Report on other legal and regulatory requirements

14. As required by the Companies (Auditors' Report) Order 2016 (the"Order") issued by the Central Government of India in terms of sub-section (11)of section 143 of the Act we give in the Annexure B a statement on the matters specifiedin paragraphs 3 and 4 of the Order to the extent applicable.

15. As required by Section 143(3) of the Act we report that:

(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.

(c) The Balance Sheet the Statement of Profit and Loss (including other comprehensiveincome) the Statement of Changes in Equity and Statement of Cash Flows dealt with by thisReport are in agreement with the books of account.

(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act.

(e) On the basis of the written representations received from the directors subsequentto March 31 2020 taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2020 from being appointed as a director in terms of Section164 (2) of the Act.

(f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure A".

(g) With respect to the other matters to be included in the Auditors' 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 standalone financial statements - Refer Note 45 to the standalonefinancial statements.

ii. The Company has long-term contracts at March 31 2020 for which there were nomaterial foreseeable losses. The Company did not have any long-term derivative contractsas at March 31 2020.

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

iv. The reporting on disclosures relating to Specified Bank Notes is not applicable tothe Company for the year ended March 31 2020.

16. The Company has paid/ provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct.

For Price Waterhouse
Chartered Accountants LLP
Firm Registration Number: 012754N/N500016
Neeraj Sharma
Partner
Place: Pune Membership Number: 108391
Date: June 17 2020 UDIN: 20108391AAAADP7977

Annexure A to Independent auditors' report

Referred to in paragraph 15(f) of the Independent auditors' report of even date to themembers of Welspun Corp Limited on the standalone financial statements for the year endedMarch 31 2020

Report on the internal financial controls with reference to financial statements underclause (i) of sub-section 3 of section 143 of the Act

1. We have audited the internal financial controls with reference to financialstatements of Welspun Corp 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

2. 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). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.

Auditors' responsibility

3. Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") and the Standards on Auditing deemedto be prescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of internal financial controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls with reference to financial statementswas established and maintained and if such controls operated effectively in all materialrespects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditors'judgement including the assessment of the risks of material misstatement of thestandalone financial statements whether due to fraud or error.

5. 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 systemwith reference to financial statements.

Meaning of internal financial controls with reference to financial statements

6. A company's internal financial controls with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of standalone financial statements for external purposes inaccordance with generally accepted accounting principles. A company's internal financialcontrols with reference to financial statements includes those policies and proceduresthat (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) providereasonable assurance that transactions are recorded as necessary to permit preparation ofstandalone financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and (3) providereasonable assurance regarding prevention or timely detection of unauthorised acquisitionuse or disposition of the company's assets that could have a material effect on thestandalone financial statements.

Inherent limitations of internal financial controls with reference to financialstatements

7. Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial control controls with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

Opinion

8. In our opinion the Company has in all material respects an adequate internalfinancial controls system with reference to financial statements and such internalfinancial controls with reference to financial statements were operating effectively as atMarch 31 2020 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.

For Price Waterhouse
Chartered Accountants LLP
Firm Registration Number: 012754N/N500016
Neeraj Sharma
Partner
Place: Pune Membership Number: 108391
Date: June 17 2020 UDIN: 20108391AAAADP7977

Annexure B to Independent auditors' report

Referred to in paragraph 14 of the Independent auditors' report of even date to themembers of Welspun Corp Limited on the standalone financial statements as of and for theyear ended March 31 2020

i. (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of property plant and equipment.

(b) The property plant and equipment are physically verified by the Managementaccording to a phased programme designed to cover all the items over a period of 3 yearswhich in our opinion is reasonable having regard to the size of the Company and thenature of its assets. Pursuant to the programme a portion of the property plant andequipment has been physically verified by the Management during the year and no materialdiscrepancies have been noticed on such verification.

(c) The title deeds of immovable properties as disclosed in Note 3(a) on propertyplant and equipment Note 4 on investment property Note 3(b) on Right-of-use assets andNote 15(a) on assets or disposal group classified as held for sale to the standalonefinancial statements are held in the name of the Company.

ii. The physical verification of inventory excluding stocks with third parties havebeen conducted at reasonable intervals by the Management during the year and subsequent tothe year end. In respect of inventory lying with third parties these have substantiallybeen confirmed by them. The discrepancies noticed on physical verification of inventory ascompared to book records were not material. Also refer paragraph 13 of the main auditreport.

iii. The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained underSection 189 of the Act. Therefore the provisions of Clause 3(iii) (iii)(a) (iii)(b) and(iii)(c) of the said Order are not applicable to the Company.

iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Companies Act 2013in respect of the loans and investments made and guarantees and security provided by it.

v. The Company has not accepted any deposits from the public within the meaning ofSections 73 74 75 and 76 of the Act and the Rules framed there under to the extentnotified.

vi. Pursuant to the rules made by the Central Government of India the Company isrequired to maintain cost records as specified under Section 148(1) of the Act in respectof its products.

We have broadly reviewed the same and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. We have not however madea detailed examination of the records with a view to determine whether they are accurateor complete.

vii. (a) According to the information and explanations given to us and the records ofthe Company examined by us in our opinion the Company is regular in depositing theundisputed statutory dues including provident fund employees' state insurance incometax duty of customs cess goods and service tax and other material statutory dues asapplicable with the appropriate authorities.

Further for the period March 01 2020 to March 31 2020 the company has paid Goodsand Service Tax and filed Form GSTR 3B after the due date but within the timelines allowedby Central Board of Indirect Taxes and Customs under the Notification No. 31/2020 datedApril 03 2020 on fulfilment of conditions specified therein.

Also refer note 37 to the standalone financial statements regarding management'sassessment on certain matters relating to provident fund.

(b) According to the information and explanations given to us and the records of theCompany examined by us the particulars of dues of income tax sales tax service taxduty of customs and duty of excise duty value added tax and goods and service tax as atMarch 31 2020 which have not been deposited on account of a dispute are as follows:

Annexure B to Independent auditors' report

Referred to in paragraph 14 of the Independent auditors' report of even date to themembers of Welspun Corp Limited on the standalone financial statements as of and for theyear ended March 31 2020

Name of the statute Nature of dues Amount (in Rs. Million) Period to which the amount relates Forum where the dispute is pending
Central Excise Act 1944 Duty of Excise 3.38 FY 2008-2009 Commissioner (Appeals)
113.25 FY 2005-2006 to 2013-2014 Custom Excise Service Tax Appellate Tribunal (CESTAT)
160.68 FY 2010-2011 to 2013-2014 Commissioner of Central Excise & Service Tax
235.35 FY 2007-2008 to 2011-2012 High Court
Gujarat Sales Tax Act 1969 and Gujarat Value Added Tax Act 2003 Central Sales Tax 4.26 FY 2008-2009 Gujarat Value Added Tax Tribunal
Gujarat Sales Tax Act 1969 and Gujarat Value Added Tax Act 2003 Sales Tax/ Value Added Tax 1429.29 FY 1999-2000 to 2003-2004 and FY 2005-2006 to 2010-2011 Gujarat Value Added Tax Tribunal
1.89 FY 2005-2006 Supreme Court
1.27 FY 2009-2010 and 2013-14 Joint Commissioner of Commercial Tax
The Service Tax under the Finance Act 1994 Service Tax 95.34 FY 2005-2006 to 2012-2013 Custom Excise Service Tax Appellate Tribunal (CESTAT)
FY 2014-2015 and 2015-2016
0.6 FY 2013-2014 Commissioner (Appeal)
20.47 FY 2015-2016 Joint Commissioner of Commercial Tax
Custom Act 1962 Duty of Customs 2.19 FY 2012-2013 and 2013-2014 Custom Excise Service Tax Appellate Tribunal (CESTAT)
0.52 FY 2013-2014 Additional Commissioner of Customs
Goods and Service Act 2016 GST 0.47 FY 2019-2020 Joint Commissioner (Appeal)
Income Tax Act 1961 Income Tax 2.33 AY 2014-2015 Income Tax Appellate Tribunal

viii. According to the records of the Company examined by us and the information andexplanation given to us the Company has not defaulted in repayment of loans or borrowingsto any financial institution or bank or dues to debenture holders as at the balance sheetdate. The Company does not have loans or borrowings from government as at the balancesheet date.

ix. The Company has not raised any moneys by way of initial public offer furtherpublic offer. In our opinion and according to the information and explanations given tous the moneys raised by way debt instruments and term loans have been applied for thepurposes for which they were obtained.

x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.

xi. The Company has paid/ provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct. Also refer paragraph 16 of our main audit report.

xii. As the Company is not a Nidhi Company and the Nidhi Rules 2014 are not applicableto it the provisions of Clause 3(xii) of the Order are not applicable to the Company.

xiii. The Company has entered into transactions with related parties in compliance withthe provisions of Sections 177 and 188 of the Act. The details of such related partytransactions have been disclosed in the standalone financial statements as required underIndian Accounting Standard (Ind AS) 24

Related Party Disclosures specified under Section 133 of the Act

xiv. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review. Accordingly theprovisions of Clause 3(xiv) of the Order are not applicable to the Company.

xv. The Company has not entered into any non-cash transactions with its directors orpersons connected with them within the meaning of Section 92 of the Act. Accordingly theprovisions of Clause 3(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. Accordingly the provisions of Clause 3(xvi) of the Order are notapplicable to the Company.

For Price Waterhouse
Chartered Accountants LLP
Firm Registration Number: 012754N/N500016
Neeraj Sharma
Partner
Place: Pune Membership Number: 108391
Date: June 17 2020 UDIN: 20108391AAAADP7977

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