TO THE MEMBERS OF LARSEN & TOUBRO LIMITED
Report on the Audit of Standalone Financial Statements Opinion
We have audited the accompanying standalone financial statements of Larsen & ToubroLimited (the "Company") which comprise the Balance Sheet as at March 31 2019and the Statement of Profit and Loss (including Other Comprehensive Income) the Statementof Cash Flows and the Statement of Changes in Equity for the year then ended and asummary of significant accounting policies and other explanatory information and whichincludes 29 joint operations whose legal status is an entity.(Hereinafter referred to asthe "Standalone Financial Statements").
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 Indian Accounting Standards prescribed under Section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2019 and its profit/loss totalcomprehensive income/loss its cash flows and the changes in equity for the year ended onthat date.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) specified under section 143(10) of the Companies Act 2013.Our responsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the ethicalrequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Companies Act 2013 and the Rules made thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theICAI's Code of Ethics. We believe that the audit evidence obtained by us is sufficient andappropriate to provide a basis for our audit opinion on the standalone financialstatements.
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. We have determined the matters described below to bethe key audit matters to be communicated in our report.
|Revenue recognition accounting for construction contracts || |
|Key audit matter description ||There are significant accounting judgements including estimation of costs to complete determining the stage of completion and the timing of revenue recognition. |
| ||The Company recognises revenue and profit/loss on the basis of stage of completion based on the proportion of contract costs incurred at balance sheet date relative to the total estimated costs of the contract at completion. The recognition of revenue and profit/loss therefore rely on estimates in relation to total estimated costs of each contract. |
| ||Cost contingencies are included in these estimates to take into account specific uncertain risks or disputed claims against the Company arising within each contract. These contingencies are reviewed by the Management on a regular basis throughout the contract life and adjusted where appropriate. |
| ||The revenue on contracts may also include variable consideration (variations and claims). Variable consideration is recognised when the recovery of such consideration is highly probable. |
| ||Refer to Note Number. 1(e) of the Standalone Financial Statements |
|Principal Audit Procedures ||Our procedures included : |
| ||Testing of the design and implementation of controls involved for the determination of the estimates used as well as their operating effectiveness; |
| || Testing the relevant information technology systems' access and change management controls relating to contracts and related information used in recording and disclosing revenue in accordance with the new revenue accounting standard; |
| || Testing a sample of contracts for appropriate identification of performance obligations; |
| || For the sample selected reviewing for change orders and the impact on the estimated costs to complete; |
| || Engaging technical experts to review estimates of costs to complete for sample contracts; and |
| || Performed analytical procedures for reasonableness of revenues disclosed by type and service offerings |
|Assessment of the carrying value of unquoted equity instruments in loss making subsidiaries and joint ventures. || |
|Key audit matter description ||The impairment review of unquoted equity instruments and debt with a carrying value of Rs 2669 crore is considered to be a risk area due to the size of the balances as well as the judgmental nature of key assumptions which may be subject to management override. |
| ||The carrying value of such unquoted equity instruments and debt is at risk of recoverability. The net worth of the underlying entities has significantly eroded and the orders in hand are below the break-even production levels of this facilities. The estimated recoverable amount is subjective due to the inherent uncertainty involved in forecasting and discounting future cash flows. Refer to Note Number 1(j) of the Standalone Financial Statements |
|Principal Audit Procedures ||Besides obtaining an understanding of Management's processes and controls with regard to testing the impairment of the unquoted equity instruments in loss making subsidiaries and joint ventures. Our procedures included the following: |
| || Engaged internal fair valuation experts to challenge management's underlying assumptions and appropriateness of the valuation model used; |
| || Compared the Company's assumptions with comparable benchmarks in relation to key inputs such as long-term growth rates and discount rates; |
| || Assessed the appropriateness of the forecast cash flows within the budgeted period based on their understanding of the business and sector experience; |
| || Considered historical forecasting accuracy by comparing previously forecasted cash flows to actual results achieved; and |
| || Performed a sensitivity analysis in relation to key assumptions. |
|Revenue recognition and measurement of contract assets in respect of un-invoiced amounts and measurement of receivables in respect of overdue invoices. || |
|Key audit matter description ||The Company in its contract with customers promises to transfer distinct services to its customers which may be rendered in the form of engineering procurement and construction (EPC) services through design-build contracts and other forms of construction contracts. The recognition of revenue is based on contractual terms which could range from cost plus fee to agreed unit price to lump-sum arrangements. |
| ||At each reporting date revenue is accrued for costs incurred against work performed that may not have been invoiced. Identifying whether the Company's performance have resulted in a service that would be billable and collectable where the works carried out have not been acknowledged by customers as of the reporting date or in the case of certain defence contracts where the evidence of work carried out and cost incurred are covered by confidentiality arrangements involves a significant amount of judgment. |
| || Recognition of revenue before formal acknowledgment of receipt of services by the customer could lead to an over or under-statement of revenue and profit whether intentionally or in error; and |
| || Assessing the recoverability of amounts overdue against invoices raised which have remained unsettled for a significantly long period after the end of the contractual credit period also involves a significant amount of judgment. |
| ||Refer to Note Number 1(e) and 1(m) of the Standalone Financial Statements |
|Principal Audit Procedures ||The procedures performed included the following: |
| || Obtained an understanding of the Company's processes in collating the evidence supporting execution of work for each disaggregated type of revenue. Auditors have also obtained an understanding of the design of key controls for quantifying units of items / services that would be invoiced and the application of appropriate prices for each of such services; |
| || Tested the design and operating effectiveness of management's key controls in collating the units of services delivered and in the application of accurate prices for each of such services for samples of the un-invoiced revenue entries which included testing of access and change management controls exercised in respect of related information systems; |
| || Tested samples of un-invoiced revenue entries with reference to the reports from the information system that records the costs incurred against the services delivered to confirm the work performed and application of appropriate margin applied for the respective services. The auditors have also tested whether appropriate adjustments have been made for the element of variable consideration related to committed service levels of performance. With regard to incentives auditors tests were focused to ensure that accruals were restricted to only those items where contingencies were minimal; |
| || Tested cut-offs for revenue recognized against un-invoiced amounts by matching the revenue accrual against accruals for corresponding cost; |
| || For defence contracts which are covered under by statutory confidentiality arrangements the auditors have compared the revenue recognised with amounts collected from customers to ensure that the gap between revenue recognised and collections is below the materiality threshold; |
| || Extended the testing upto the date of approval of financial statements by the Board of Directors of the Parent entity to verify adjustments if any that may have been necessary upon receipt of approvals from customers for services delivered prior to the reporting date and/or collections there against; |
| || Reviewed the delivery and collection history of customers against whose contracts un-invoiced revenue is recognised; and |
| || Verification of subsequent receipts post balance sheet date. |
|Evaluation of uncertain tax positions || |
|Key audit matter description ||The Company has material uncertain tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. |
| ||Refer to Note. Number 1(u) and 1(w) of the Standalone Financial Statements |
|Principal Audit Procedures ||Our procedures included the following: |
| || Obtained understanding of key uncertain tax positions; |
| || Obtained details of completed tax assessments and demands for the year ended March 31 2019 from the management; |
| ||We along with our internal tax experts |
| ||i. Discussed with appropriate senior management and evaluated the Management's underlying key assumptions in estimating the tax provision; |
| ||ii. Assessed management's estimate of the possible outcome of the disputed cases; and |
| ||iii. Considered legal precedence and other rulings in evaluating management's position on these uncertain tax positions. |
| || Additionally considered the effect of new information in respect of uncertain tax positions as at April 1 2018 to evaluate whether any change was required to management's position on these uncertainties. |
| || |
Information Other than the Standalone Financial Statements and Auditor's Report
The respective Board of Directors of the Company and its Joint Operation Companies areresponsible for the preparation of other information. The other information comprise theinformation included in the Management Discussion and Analysis Board's Report includingAnnexures to Board's Report Business Responsibility Report Corporate Governance andShareholder's Information but does not include the standalone financial statements andour auditor's report.
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 there is 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 total comprehensive income cash flows and changes inequity of the Company including its joint operation companies in accordance with the IndAS and accounting principles generally accepted in India.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the respectiveCompanies 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. In preparing the standalonefinancial statements management is responsible for assessing the Company's ability tocontinue as a going concern disclosing as applicable matters related to going concernand using the going concern basis of accounting unless management either intends toliquidate the Company or to cease operations or has no realistic alternative but to doso. Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibility for the Audit of the Standalone Financial Statements
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 auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements. As part of an audit inaccordance with SAs we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalone financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal financial 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 systems in place and the operating effectiveness ofsuch controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's 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 ourauditor's 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 financial statementsincluding the disclosures and whether the standalone financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of theCompany and its joint operations to express an opinion on the standalone financialstatements. We are responsible for the direction supervision and performance of the auditof the standalone financial statements of such entities included in the standalonefinancial statements.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone financial statements.
Communication with those charged with governance
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards. From the matters communicated withthose charged with governance we determine those matters that were of most significancein the audit of the financial statements of the current period and are therefore the keyaudit matters. We describe these matters in our auditor's report unless law or regulationprecludes public disclosure about the matter or when in extremely rare circumstances wedetermine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interestbenefits of such communication.
(a) We did not audit the financial information of 24 joint operations included in thestandalone financial statements whose financial information reflect total assets of R 4540.71crore as at March 31 2019 total revenues of RS. 6018.63 crore and net cashoutflows amounting to RS. 170 crore for the year ended on that date as consideredin the standalone financial statements. The financial information of these jointoperations have been audited by the other auditors whose reports has been furnished to usby the management and our opinion in so far as it relates to the amounts and disclosuresincluded in respect of these joint operations and our report in terms of subsection (3) ofsection 143 of the Act in so far as it relates to the aforesaid joint operations isbased solely on the report of such other auditors.
Our opinion on the standalone financial statements and our report on Other Legal andRegulatory Requirements below is not modified in respect of these matters.
(b) The standalone financial statements also includes the financial information of 4joint operations which have not been audited by their auditors whose financialinformation reflect total assets of RS. 41.12 crore as at March 31 2019 and totalrevenues of RS. 4.99 crore and net cash outflows amounting to RS. 0.13 crorefor the year ended on that date as considered in the standalone financial statements. Thefinancial information of these joint operations has been unaudited and has been furnishedto us by the Management and our opinion on the standalone financial statements in so faras it relates to the amounts and disclosures included in respect of these jointoperations is based solely on such unaudited financial information which is certified bymanagement. In our opinion and according to the information and explanation given to us bythe Management the financial information of these joint operations are not material tothe Company.
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 subsection (11) of section 143 ofthe Companies Act 2013 we give in the Annexure a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable As required by Section 143(3) ofthe Act we report that: a) We have sought and obtained all the information andexplanations which to the best of our knowledge and belief were necessary for the purposesof 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 and the Cash Flow Statementdealt with by this Report are in agreement with the books of account. d) In our opinionthe aforesaid standalone financial statements comply with the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014.
e) On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 from being appointed as a director in terms of Section 164 (2) of theAct. 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 A".
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;
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
For DELOITTE HASKINS & SELLS LLP
(Firm Registration No. 117366W/W-100018)
SANJIV V. PILGAONKAR
(Membership No. 039826)
MUMBAI May 10 2019
ANNEXURE "A" TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1 (f) under Report on Other Legal and RegulatoryRequirements' section of our report of even date)
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 Larsen& Toubro Limited (the "Company") as at March 31 2019 in conjunction withour audit of the standalone Ind AS financial statements of the Company as for the yearended on that date which includes internal financial controls over financial reportingwhich is applicable to 1 of the 29 joint operations being a Company incorporated in Indiaaudited by another auditor.
Management's Responsibility for Internal Financial Controls
The Board of Directors of the Company and those charged with governance of the jointoperation referred to above which is a company incorporated in India are responsible forestablishing and maintaining internal financial controls based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia. 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 respective Company'spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting of the Company and its joint operation Companyincorporated in India based on our audit. We conducted our audit in accordance with theGuidance 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. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsover financial reporting was established and maintained and if such controls operatedeffectively 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 financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained and the audit evidence obtained bythe other auditor of the joint operation which is a Company incorporated in India interms of their report referred to in the Other Matters paragraph below is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial control over financial reporting is 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 to the best of our information and according to the explanations givento us and based on the consideration of the report of the other auditor on internalfinancial controls system over financial reporting of the joint operation referred to inthe Other Matters paragraph below 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 March 31 2019 basedon the internal control over financial reporting established by the respective companyconsidering the essential components of internal control stated in the Guidance Note.
Our aforesaid report under Section 143(3)(i) of the Act on the adequacy and operatingeffectiveness of the internal financial controls over financial reporting insofar as itrelates to 1 joint operation which is a company incorporated in India is solely based onthe corresponding report of the other auditor of such company.
Our opinion is not modified in respect of this matter.
For DELOITTE HASKINS & SELLS LLP
(Firm Registration No. 117366W/W-100018)
SANJIV V. PILGAONKAR
(Membership No. 039826)
MUMBAI May 10 2019
ANNEXURE "B" TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 2 under Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Larsen & Toubro Limited of evendate)
(i) In respect of the Company's property plant and equipment:
(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant and equipment.
(b) The Company has a program of physical verification of its property plant andequipment to cover all the items of property plant and equipment in a phased manner overa period of 3 years which in our opinion is reasonable having regard to the size of theCompany and the nature of its property plant and equipment. Pursuant to the programcertain property plant and equipment were physically verified by the Management duringthe year. According to the information and explanations given to us no materialdiscrepancies were noticed on such verification.
(c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered sale deed / transfer deed /conveyance deed provided to us we report that the title deeds comprising all theimmovable properties of land and buildings are held in the name of the Company as at thebalance sheet date except the following:
| || || || || ||Rs. crore |
|Type of asset ||Total no. of cases ||Leasehold / freehold ||Gross block as at March 31 2019 ||Net block as at March 31 2019 ||Remarks |
|Land ||3 ||Freehold ||1.27 ||1.27 ||Conveyance deed pending to be executed as the matter is sub judice. |
|Buildings ||2 ||Freehold ||3.53 ||0.59 || |
In respect of immovable properties of land and buildings that have been taken on leaseand disclosed as property plant and equipment in the financial statements the leaseagreements are in the name of the Company where the Company is the lessee in theagreement.
(ii) As explained to us the inventories were physically verified during the year bythe Management at reasonable intervals and no material discrepancies were noticed onphysical verification between the physical stock and the books of accounts.
(iii) According to the information and explanations given to us the Company has notentered into any contracts or arrangements covered under section 189 of the Companies Act2013 (the "Act") and hence reporting under paragraph 3 (iii) of the Order is notapplicable to the Company. (iv) In our opinion and according to the information andexplanations given to us the Company has complied with the provisions of Sections 185 and186 of the Act in respect of grant of loans making investments and providing guaranteesand securities as applicable.
(v) According to the information and explanations given to us the Company has notaccepted any deposits during the year and does not have any unclaimed deposits as at March31 2019 and hence the provisions of the clause 3 (v) of the Order is not applicable tothe Company.
(vi) The maintenance of cost records has been specified by the Central Government undersection 148(1) of the Act. We have broadly reviewed the cost records maintained by theCompany pursuant to the Companies (Cost Records and Audit) Rules 2014 as amended andprescribed by the Central Government under sub-section (1) of Section 148 of the Act andare of the opinion that prima facie the prescribed cost records have been made andmaintained by the company. We have however not made a detailed examination of the costrecords with a view to determine whether they are accurate or complete.
(vii) According to the information and explanations given to us in respect ofstatutory dues:
(a) The Company has been generally regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income-tax Goods and Service TaxCustoms Duty cess and other material statutory dues applicable to it to the appropriateauthorities. (b) There were no undisputed amounts payable in respect of Provident FundEmployees' State Insurance Income-tax Goods and Service Tax Customs Duty cess andother material statutory dues in arrears as at March 31 2019 for a period of more thansix months from the date they became payable.
(c) Details of dues of Income-tax Sales Tax Service Tax Customs Duty Excise DutyGoods and Service Tax and Value Added Tax which have not been deposited as on March 312019 on account of disputes are given below:-
|Name of Statute ||Nature of Dues ||Forum where Dispute is Pending ||Period to which Amount Relates ||Amount Involved ||Amount Unpaid |
| || || || ||(Rs. crore) ||(Rs. crore) |
|The Central Excise Act1944Service Tax under Finance Act 1994 and Customs Act1962 ||Classification dispute and other matters ||Supreme Court ||2002-2003 2003- 2004 2011-12 to 2015-16 ||7.34 ||6.79 |
| ||Dispute regarding questions of law classification dispute and other matters ||High Court ||2003-04 to 2012-13 ||114.28 ||85.25 |
| ||Disallowance of CENVAT credit short payment of service tax MRP Valuation disputes dispute regarding classification of services disallowances of excise duty exemption Non Maintenance of Separate Books of Accounts Export rebate disallowance and other matters. ||CESTAT ||1991-92 2001-02 to 2013-14 2016-17 ||303.46 ||297.35 |
| ||Disallowance of CENVAT credit short payment of service tax service tax rate dispute valuation dispute and other matters ||Commissioner (Appeal) ||2006-07 to 2012-13 ||7.27 ||6.13 |
|The Central Sales Tax Act Entry tax Local Sales Tax Act Works ContractTax Act and Goods & Services Tax Act ||Taxability of sub-contractor turnover rate of tax for declared goods disallowance of labour turnover and non- submission of forms ||Supreme Court ||2000-01 to 2006-07 2010-11 ||16.07 ||7.03 |
| ||Dispute regarding questions of law classification dispute local VAT and Works contract disputes. ||High Court ||1986-87 1987-88 1993-94 1994-95 1999-00 to 2012-13 ||71.55 ||65.18 |
| ||Non submission of Forms classification disputes inter-state sale turnover Rate of tax of declared goods Labour & service charges disallowed Disallowance of exemptions claimed for imports & Sales in transit Sale mismatch & levy of tax on import of goods through Way bill Road permit issue and other matters ||Sales Tax/VAT Tribunal ||1989-90 1991-92 1993-94 to 1996-97 1999-00 to 2015-16 ||593.04 ||510.07 |
| ||Dispute regarding questions of law classification dispute sales in transit high sea sales non- submission of C forms & E1 forms disallowance of ITC valuation of goods and other matters ||Commissioner (Appeal) ||1999-00 to 2015-16 ||31.92 ||30.66 |
| || ||AdditionalCommissioner ||2005-06 2007-08 to2014-15 ||4.08 ||3.10 |
| || ||Joint ||2007-08 to 2015-16 ||14.04 ||10.00 |
| || ||Commissioner Joint Commissioner (Appeal) ||1995-96 1996-971999-00 to 2017-18 ||2443.83 ||2377.28 |
|The Central Sales Tax Act Entry tax Local Sales Tax Act Works Contract Tax Act and Goods & Services Tax Act ||Dispute regarding questions of law classification dispute sales in transit high sea sales non- submission of C forms & E1 forms disallowance of ITC valuation of goods and other matters ||Assistant/ Deputy Commissioner ||1996-97 to 2017-18 ||531.73 ||528.68 |
| || ||Assessing / Commercial Tax Officer ||1996-97 to 2016-17 ||8.80 ||8.22 |
|Income Tax Act 1961 ||Demand arising out of Regular Assessment/Reassessment ||ITAT ||2004-05 & 2009-10 to 2012-13 ||1066.36 ||287.60 |
| ||Demand arising out of Regular Assessment/Reassessment ||CIT(A) ||2015-16 ||569.35 ||569.35 |
| || || || || || |
(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in the repayment of loans or borrowings to financialinstitutions and banks and dues to debenture holders. The Company has not borrowed anyfunds from the government (ix) In our opinion and according to the information andexplanations given to us the Company has not raised any money by way of initial publicoffer or further public offer (including debt instruments) or term loans and hencereporting under paragraph 3 (ix) of the Order is not applicable to the Company.
(x) To the best of our knowledge and according to the information and explanationsgiven to us no material fraud by the Company and no material fraud on the Company by itsofficers or employees has been noticed or reported during the year.
(xi) In our opinion and according to the information and explanations given to us theCompany has paid / provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act. (xii)In our opinion and according to the information and explanations given to us the Companyis not a Nidhi Company and hence reporting under paragraph 3 (xii) of the Order is notapplicable to the Company.
(xiii) In our opinion and according to the information and explanations given to usthe Company is in compliance with Section 177 and 188 of the Act where applicable forall transactions with related parties and the details of such related party transactionshave been disclosed in the financial statements as required by the applicable accountingstandards. (xiv) According to the information and explanations given to us during theyear the Company has not made any preferential allotment or private placement of shares orfully or partly convertible debentures and hence reporting under paragraph 3 (xiv) of theOrder is not applicable to the Company.
(xv) In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsdirectors or persons connected with him and hence provisions of section 192 of the Act isnot applicable to the Company.
(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
For DELOITTE HASKINS & SELLS LLP
(Firm Registration No. 117366W/W-100018)
SANJIV V. PILGAONKAR
(Membership No. 039826)
May 10 2019