The Members of Welspun Investments and Commercials Limited
Report on the Audit of the Ind AS Financial Statements
We have audited the accompanying Ind AS financial statements of WelspunInvestments and Commercials Limited ("the Company") which comprise the BalanceSheet as at 31 March 2019 the Statement of Profit and Loss (including Other ComprehensiveIncome) the Statement of Changes in Equity and the Cash Flow Statement for the year thenended 31 March and other 2019 and explanatory summary of significant information(hereinafter referred to as "Ind AS financial statements").
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid Ind AS financial statements give the informationrequired by the Companies Act 2013 ("the Act") in the manner so required andgive a true and fair view in conformity with the accounting principles generally acceptedin India including the Ind AS of the state of affairs of the Company as at 31 March 2019and its loss (including other comprehensive income) the changes in equity and its cashflows for the year ended 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 Act. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit ofInd AS Financial Statements section of our report. We are independent of the Companyin accordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of the Ind ASfinancial statements under the provisions of the Act and Rules thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the IndAS financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the Ind AS financial statements of the yearended 31 March 2019. These matters were addressed in the context of our audit of the IndAS financial statements as a whole and in forming our opinion thereon and we do notprovide a separate opinion on these matters. We have determined the matters describedbelow to be the key audit matters to be communicated in our report.
|Sr. No. ||Key Audit Matter ||Auditor's Response |
|1. ||Guarantee given to bank against liabilities of MEP Cotton Limited || |
| ||The Company has given guarantee to Punjab National Bank for repayment of liabilities of MEP Cotton Limited ofर 107023661. Company has not provided updated status of guarantee to bank. ||There is no change in status of guarantee given to bank the same has been continued to be disclosed in books as contingent liability (Refer Note 21). |
The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the Annual Reportfor 2018-19 but does not include the Ind AS financial statements and our auditor'sreport thereon.
Our opinion on the Ind AS financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.
In connection with our audit of the Ind AS financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the Ind AS financial statements or ourobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.
Responsibilities of Management and Those Charged with Governance forthe Ind AS Financial Statements
The Company's Board of Directors is responsible for the mattersstated in Section 134(5) of the Act with respect to the preparation of these Ind ASfinancial statements that give a true and fair view of the financial position financialincluding other comprehensive income changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe 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 Ind AS financial statementsthat give a true and fair view and are free from material misstatement whether due tofraud or error.
In preparing the Ind AS financial statements management is responsiblefor assessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing thecompany's financial reporting process.
Auditors' Responsibility for the Audit of Ind AS FinancialStatements
Our objectives are to obtain reasonable assurance about whether the IndAS financial statements as a whole are free from material misstatement whether due tofraud or error and to issue an auditor's report that includes our opinion. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these Ind AS financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
1) Identify and assess the risks of material misstatement of the Ind ASfinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient to provide a basisfor our opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
2) 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 Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
3) Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
4) Conclude on the appropriateness of management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the entity's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the Ind AS financial statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor's report. However future events orconditions may cause the entity to cease to continue as a going concern.
5) Evaluate the overall presentation structure and content of the IndAS financial statements including the disclosures and whether the Ind AS financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the Ind AS financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the Ind AS financial statements may bequalitative factors in (i) planning the scope of our audit work and in influenced.evaluating the results of our work; and (ii) to evaluate the effect of any identifiedmisstatements in the Ind AS financial statements.
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 communicatewith them all relationships and other matters that may reasonably be thought to bear onour 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 Ind ASfinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would 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("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 A" a statement on thematters specified in paragraphs 3 and 4 of the 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.
c) The Balance Sheet the Statement of Profit and Loss Statement ofChanges in Equity and the Cash Flow Statement dealt with by this Report are in agreementwith the books of account.
d) In our opinion the aforesaid financial statements comply with theAccounting Standards specified under Ind AS Section 133 of the Act read with Companies(Indian Accounting Standards) Rules 2015 as amended.
e) On the basis of the written representations received from thedirectors as on 31 March 2019 taken on record by the Board of Directors none of thedirectors is disqualified as on 31 March 2019 from being appointed as a director in termsof Section 164(2) of the Act.
f) 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" to this report.
g) The Company has not paid / provided any managerial remuneration toits directors for the year ended 31 March 2019 as such compliance with provision ofSection 197 read with Schedule V of the Act is not required.
h) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 as amended in our opinion and to the best of our information and according tothe explanations given to us:
i. The Company has disclosed the impact of pending litigations on itsfinancial position in its financial statements - Refer Note 21 to the Ind AS financialstatements;
ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses.
iii. Following are the instances of delay in transferring amountsrequired to be transferred to the Investor Education and Protection Fund by the Company:
|Details of amount credited to the fund ||Amount involved ||Due Date ||Date of Payment |
| ||(##RR##) || || |
|Sale Proceeds of fractional shares arising out of demerger ||413352 ||06/01/2018 ||20/08/2018 |
For P Y S & CO LLP
Firm Registration No. 012388S/S200048
(G. D. Joglekar)
Membership No.: 039407
Dated: 14 May 2019
ANNEXURE A' TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 1 under the heading Report on OtherLegal and Regulatory Requirements' of our report of even date)
1. The Company does not have any fixed assets. Accordingly theprovisions of clause 3(i)(a) 3(i)(b) and 3(i)(c) of the Order are not applicable to theCompany.
2. The Company is maintaining proper records of inventory. According toinformation and explanations given to us the Company has only purchases and salesdirectly from suppliers to buyers and as such no physical inventory is with the Companyduring the year. Accordingly the provisions of clause 3(ii) of the Order relating tophysical verification of inventory are not applicable to the Company during the year.
3. According to information and explanations given to us the Companyhas not granted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under Section 189 of theAct. Accordingly the provisions of clause 3(iii) of the Order are not applicable to theCompany.
4. According to information and explanations given to us in respect ofloans investments guarantees and securities the Company has complied with the provisionsof section 185 and 186 of the Companies Act 2013.
5. According to the information and explanations given to us theCompany has not accepted any deposits during the year within the meaning of Sections 73 to76 of the Act and the rules framed thereunder.
6. In our opinion and according to the information and explanationsgiven to us the requirement for maintenance of cost records pursuant to the Companies(cost records and audit) Rules 2014 specified by the Central Government of India underSection 148 of the Companies Act 2013 are not applicable to the Company for the yearunder audit.
7. (a) According to the information and explanation given to us theCompany has been generally regular in depositing the undisputed statutory dues includingprovident fund employees' state insurance income tax sales tax service taxcustom duty excise duty value added tax cess and other material statutory dues asapplicable with the appropriate authorities. No undisputed amounts payable in respect ofaforesaid statutory dues were outstanding as on the last day of the financial year for aperiod of more than six months from the date they became payable.
(b) According to the information and explanations given to us thereare no dues of income tax sales tax service tax customs duty excise duty value addedtax and cess which have not been deposited on account of any dispute except as under:
|Nature of Dues ||Assessment Year ||Disputed Amount ||Amount paid |
|Income Tax Demand ||2013-2014 ||##RR## 462250 ||##RR## 69500 (Amount paid under protest) |
8. According to the information and explanations given to us theCompany does not have any loans or borrowings from banks or financial institutions orgovernment or debenture holders. Accordingly paragraph 3(viii) of the Order is notapplicable to the Company.
9. According to the information and explanations given to us theCompany has not raised moneys by way of initial public offer or further public offer(including debt instruments). The Company does not have any term loans during the year.
10. According to the information and explanation given to us we haveneither come across any instances of fraud by the Company or any fraud on the Company byits officers or employees have been noticed or reported during the year nor have we beeninformed of any such cases by the management.
11. According to the information and explanations given to us theCompany has not paid or provided managerial remuneration during the year.
12. According to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly the provisions of clause 3(xii) of the Orderare not applicable to the Company.
13. According to the information and explanations given to us alltransactions with the related parties are in compliance with section 177 and 188 ofCompanies Act 2013 and the Company has disclosed related party transactions in theFinancial Statements as required by the accounting standards.
14. According to the information and explanations given to us theCompany has not made preferential allotment or private placement of shares or fully orpartly convertible debentures during the year.
15. According to the information and explanations given to us theCompany has not entered into any non-cash transactions with directors or persons connectedwith him during the year. Accordingly paragraph 3(xv) of the Order is not applicable tothe Company.
16. 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 lndiaAct 1934.
For P Y S & CO LLP
Firm Registration No. 012388S/S200048
(G. D. Joglekar)
Membership No.: 039407
Dated: 14 May 2019
ANNEXURE B' TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 2(f) under the heading Report on OtherLegal and Regulatory Requirements' of our report of even date) Report on the InternalFinancial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act2013 ("the Act")
We have audited the internal financial controls over financialreporting of Welspun Investments and Commercials Limited ("the Company") as of31 March 2019 in conjunction with our audit of the Ind AS financial statements of theCompany for the 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 by the Company consideringthe essential components of internal control control over financial stated in the GuidanceNote on Audit of Internal Financial Controls over Financial Reporting issued by theInstitute of Chartered Accountants of India. These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of its business includingadherence to company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under theCompanies Act 2013.
Our responsibility is to express an opinion on the Company'sinternal financial controls over financial audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extent financialcontrols both applicable to an audit of internal audit of Internal FinancialControls and both issued by the Institute of Chartered Accountants of India. 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 judgement including the assessment ofthe risks of material misstatement of the Ind AS financial statements whether due tofraud 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 internalfinancial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting isa process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of Ind AS financial statements for external purposes inaccordance with generally accepted accounting principles. A company's internalfinancial control over financial reporting includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation ofInd AS financial statements in accordance with generally accepted accounting principlesand that receipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the Ind ASfinancial 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 P Y S & CO LLP
Firm Registration No. 012388S/S200048
(G. D. Joglekar)
Membership No.: 039407
Dated: 14 May 2019