The Members of
Welspun Enterprises Limited
1. Report on the standalone Ind AS financial statements
We have audited the accompanying standalone Ind AS financial statements of WelspunEnterprises Limited (the Company) which comprise the balance sheet as at31 March 2018 the statement of profit and loss (including other comprehensive income)the statement of cash flows and the statement of changes in equity for the year then endedand a summary of the significant accounting policies and other explanatory information(herein after referred to as standalone Ind AS financial statements).
2. 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 Companies Act 2013 (the Act) with respect to the preparation ofthese standalone Ind AS financial statements that give a true and fair view of thefinancial position financial performance including other comprehensive income cash flowsand changes in equity of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) prescribedunder Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules2015 as amended.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalone IndAS financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
3. Auditor's responsibility
Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit. While conducting the audit we have taken into account theprovisions of the Act the accounting and auditing standards and matters which arerequired to be included in the audit report under the provisions of the Act and the Rulesmade thereunder.
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. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the standalone Ind AS financial statements are freefrom material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the standalone Ind AS financial statements. The procedures selected dependon the auditor's judgment including the assessment of the risks of material misstatementof the standalone Ind AS financial statements whether due to fraud or error. In makingthose risk assessments the auditor considers internal financial control relevant to theCompany's preparation of the standalone Ind AS financial statements that give a true andfair view in order to design audit procedures that are appropriate in the circumstances.An audit also includes evaluating the appropriateness of the accounting policies used andthe reasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the standalone Ind AS financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone Ind AS financial statements.
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 informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India of the state of affairs of theCompany as at 31 March 2018 and its profit total comprehensive income its cash flowsand the changes in equity for the year ended on that date.
5. Report on other Legal and Regulatory requirements
I. As required by the Companies (Auditor's Report) Order 2016 issued by the CentralGovernment of India in terms of section 143(11) of the Act (the Order) andon the basis of such checks of the books and records of the Company as we consideredappropriate and according to the information and explanations given to us we give in theAnnexure A a statement on the matters specified in the paragraph 3 and 4 of the Order.
II. As required by Section143 (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 cash flows and the statement of changes in equity dealt with bythis Report are in agreement with the books of account;
d) In our opinion the aforesaid standalone Ind AS financial statements comply with theIndian Accounting Standards specified under Section 133 of the Act read with the Companies(Indian Accounting Standards) Rules 2015 as amended;
e) On the basis of the written representations received from the directors as on 31March 2018 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2018 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 over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in Annexure B; and
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 standalone Ind AS financial statements;
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any in respect of long term contractsincluding derivative contracts; and
iii. There are no amounts required to be transferred to the Investor Education andProtection Fund by the Company during the year.
Annexure - A to the Independent Auditor's Report
Annexure referred to in paragraph 5(I) under Report on other Legal and Regulatoryrequirements of our report of even date to the members of the Company on thestandalone Ind AS financial statements for the year ended 31 March 2018
i. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The fixed assets have been physically verified by the management during the year asper the phased program designed to cover all the fixed assets over a period which in ouropinion is reasonable having regard to the size of the Company and nature of its assets.As informed to us no discrepancies were noticed on such verification.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company except in case of a Freehold Land of Rs. 36 lakhs whosetitle is not yet transferred in the name of the Company.
ii. The physical verification of inventory has been conducted by the Management atreasonable intervals during the year. As informed to us no discrepancies were noticed onsuch verification.
iii. The Company has granted loan to a Company covered in the register maintained underSection 189 of the Act.
(a) In our opinion the rate of interest and other terms and conditions on which theloans had been granted to the Company listed in the register maintained under Section 189of the Act were not prima facie prejudicial to the interest of the Company.
(b) In the case of the loans granted to a Company listed on the register maintainedunder section 189 of the Act the borrowers have been regular in the payment of theprincipal and interest as stipulated.
(c) There are no overdue amounts in respect of the loan granted to a Company listed inthe register maintained under section 189 of the Act.
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 Act.
v. The Company has not accepted any deposits from the public within the meaning ofSections 73 to 76 of the Act and the rules framed thereunder.
vi. We have broadly reviewed the cost records maintained by the Company prescribed bythe Central Government under Section 148(1) of the Act and are of the opinion that primafacie the prescribed accounts and records have been made and maintained. We have howevernot made a detailed examination of such records with a view to determine whether they areaccurate or complete.
vii. According to the records of the Company examined by us and information andexplanations given to us:
a) Undisputed statutory dues including provident fund employees' state insuranceincome tax sales tax service tax goods and service tax duty of customs duty ofexcise value added tax cess and others as applicable have generally been regularlydeposited with the appropriate authorities except delay in few cases and also the companyhas not paid professional tax of Rs. 9785 on account of pending registration process andWorks Contract Tax amounting to Rs. 69462. There are no undisputed amounts payable inrespect of aforesaid dues outstanding as at 31 March 2018 for a period of more than sixmonths from the date they became payable except Works Contract Tax amounting to Rs.219334.
b) There are no dues of duty of customs sales tax and duty of excise which have notbeen deposited on account of any dispute. The disputed dues of income tax service tax andvalue added tax which have not been deposited are as under:
|Name of the statute ||Nature of the dues ||Amount (Rs. in Lakhs) ** ||Period to which the amount relates ||Forum where the dispute is pending |
|The Income Tax Act 1961 ||Penalty ||1 ||FY 2007-2008 ||Assistant Commissioner of Income Tax |
| || ||70 ||FY 2008-2009 to ||Additional Commissioner- |
| || || ||FY 2010-2011 ||Central Excise and Service Tax |
|The Central Excise Act 1944 ||Service tax || || || |
| || ||96 ||FY 2007-2008 to FY 2009-2010 ||Central Excise Service Tax Appellate Tribunal |
|Haryana Value Added Tax Act 2003 ||Value Added Tax ||171 ||FY 2009-2010 ||Deputy Excise and Taxation Commissioner |
|Gujarat value Added Tax Act 2003 ||Value Added Tax ||4 ||FY 2011-12 ||Deputy Commissioner of Commercial Tax |
viii. According to the records of the Company examined by us and the information andexplanations given to us the Company has not defaulted in repayment of loans orborrowings to financial institution and banks. The Company has not taken any loans fromGovernment and has not issued any debentures.
ix. In our opinion and according to the information and explanations given to us theCompany has not raised any money by way of initial public offer or further public offer(including debt instruments) and term loans during the year.
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 been informed of any such case by theManagement.
xi. According to the records of the Company examinedbyusandinformationandexplanationsgiven to us the Company has paid/provided for managerial remuneration in accordance withthe requisite approvals mandated by the provisions of Section 197 read with Schedule V tothe Act.
xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company and the Nidhi Rules 2014 are not applicable to it.
xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with Sections 177 and 188 of the Act and details of such transactions have beendisclosed in the financial statements as required by the applicable accounting standards.
xiv. According to the records of the Company examinedbyusandinformationandexplanationsgiven to us the Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year.
xv. According to the records of the Company examinedbyusandinformationandexplanationsgiven to us the Company has not entered into non-cash transactions with directors orpersons connected with him.
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
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 (the Act) as referred to in paragraph 5(II)(f)under Report on other Legal and Regulatory requirements of our report of evendate to the members of the Company on the standalone Ind AS financial statements for theyear ended 31 March 2018
We have audited the internal financial controls over financial reporting of WelspunEnterprises Limited (the Company) as of 31 March 2018 in conjunction with ouraudit of the standalone Ind AS financial statements of the Company for the year ended onthat 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 Reporting (theGuidance Note) issued by the Institute of Chartered Accountants of India(ICAI). These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Act.
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 FinancialReporting (the Guidance Note) issued by the Institute of CharteredAccountants of India and the Standards on Auditing prescribed under Section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controls.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 judgment including the assessment of the risks ofmaterial misstatement of the standalone Ind AS financial statements whether due to fraudor 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 control 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 control over financialreporting includes those policies and procedures that (1) pertain to the maintenance 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 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.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2018 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
For MGB & Co LLP
Firm Registration Number 101169W/W-100035
Membership Number 048215
Mumbai 10 May 2018