The Members of
Welspun Enterprises Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of WelspunEnterprises Limited ("the Company") which comprise the balance sheet as at31 March 2019 the statement of profit and loss (including other comprehensive income)the statement of changes in equity and the statement of cash flows then ended and notesto the standalone financial statements including a summary of the significant accountingpolicies and other explanatory information (herein after referred to as "standalonefinancial 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 the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Actread with the Companies (Indian Accounting Standards) Rules 2015 as amended of thestate of affairs of the Company as at 31 March 2019 and its profit total comprehensiveincome changes in equity and its cash flows for the year ended on that date.
2. Basis for opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) prescribed under Section 143(10) of the Act. Ourresponsibilities the year 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 Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion.
3. 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 for the year ended 31March 2019. These matters were addressed in the context of our audit of the financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.
Key audit matter Auditor's response
Accuracy in respect of Principal audit procedures Construction contract
Our audit approach was a combination of test of internal controls and revenue involvescritical substantive procedures which included the following: estimates.
Evaluated the design of internal controls relating to recording of costs
Estimated cost is a incurred and estimation of efforts required to completethe performance critical estimate to obligations. determine revenues.
This estimate has
Tested the access and application controls pertaining to allocation and a highinherent budgeting systems which prevents unauthorized changes to recording of uncertaintyas it costs incurred. requires consideration
Selected a sample of contracts and tested the operating effectiveness of progressof the of the internal controls relating to costs incurred and estimated through contractcosts inspection of evidence of performance of these controls. incurred till date costsrequired to complete Selected a sample of contracts and performed a retrospective reviewof the remaining costs incurred with estimated efforts to identify significant variationsand contract performance verify whether those variations have been considered inestimating the obligations. remaining costs to complete the contract.
Reviewed a sample of contracts with unbilled revenues to identify possible delaysin achieving milestones which require change in estimated costs to complete the remainingperformance obligations.
Performed analytical procedures and test of details for reasonableness of incurredand estimated costs.
4. Other information
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Management Discussion and AnalysisBoard's Report including Annexures to Board Report and Chairman's Statement but does notinclude the standalone financial statements and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained 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 this regard.
5. Management's responsibility for the standalone financial
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 includingother comprehensive income changes in equity and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the IndianAccounting Standards (Ind AS) prescribed under Section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 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 standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
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.
The Board of Directors are also responsible for overseeing the Company's financialreporting process.
6. Auditor's responsibilities for the audit of the standalone financialStatements
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 in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit.
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 controls relevant to the audit in orderto design 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 theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such 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 the 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 standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
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 with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters.
We describe 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.
7. Report on Other Legal and Regulatory requirements
A. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of Section 143(11) of the Act and onthe 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 the"Annexure A" a statement on the matters specified in the paragraph 3 and 4 ofthe Order.
B. 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 the statement of cash flows dealt with bythis Report are in agreement with the books of account.
d) In our opinion the aforesaid standalone financial statements comply with the IndianAccounting 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 of theCompany as on 31 March 2019 and 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 over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B".
g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended :
In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of Section 197 of the Act.
h) 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. TheCompany has disclosed the impact of pending litigations on its financial position in itsstandalone 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 has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
For MGB & Co LLP
Firm Registration Number 101169W/W-100035
Membership Number 048215
Mumbai 15 May 2019
Annexure - A to the Independent Auditors' Report
Annexure referred to in paragraph 7 (A) under "Report on Other Legal andRegulatory Requirements" of our Report of even date to the members of the Company onthe standalone financial statements for the year ended 31 March 2019
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 which in our the opinion is reasonable havingregard 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. According to information and explanation given to us the Company has not grantedany loans secured or unsecured to companies firms limited liability partnerships orother parties covered in the 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. There are noundisputed amounts payable in respect of aforesaid dues outstanding as at 31 March 2019for a period of more than six months from the date they became payable except
Works Contract Tax amounting to Rs. 69462.
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 in (Rs. in Lakhs) ||Period to which the amount relate ||Forum where dispute is pending |
|The Income Tax Act 1961 ||Penalty ||1 ||F.Y. 2007-2008 ||Assistant Commissioner of Income Tax |
| || ||9 ||F.Y. 2007-08 and F.Y. 2009-2010 ||Commissioner of Income Tax (Appeals) |
| ||Income Tax ||67 ||F.Y. 2015-2016 ||Assistant Commissioner of Income Tax |
|The Central Excise Act 1944 ||Service tax ||70 ||F.Y. 2008-2009 to F.Y. 2010-2011 ||Additional Commissioner-Central Excise and Service Tax |
| || ||96 ||F.Y. 2007-2008 to F.Y. 2009-2010 ||Central Excise Service Tax Appellate Tribunal |
| || ||2173 ||F.Y. 2012-13 to F.Y. 2015-16 ||Directorate General of Goods and Service Tax Intelligence |
|Haryana Value Added Tax Act 2003 ||Value Added Tax ||171 ||F.Y. 2009-2010 ||Deputy Excise and Taxation Commissioner |
|Gujarat value Added Tax Act 2003 ||Value Added Tax ||4 ||F.Y. 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 give to us theCompany has not raised any money by way of initial public offer or further public offer(including debt instruments). Amount raised by way of term loan during the year has beenapplied for the purpose it was raised.
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 examined by us and information andexplanations given to us the Company has paid/provided for managerial remuneration inaccordance with the requisite approvals mandated by the provisions of Section 197 readwith Schedule V to the 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 standalone financial statements as required by the applicable IndianAccounting Standards.
xiv. According to the records of the Company examined by us and information andexplanations given to us the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year.
xv. According to the records of the Company examined by us and information andexplanations given to us the Company has not entered into non-cash transactions withdirectors or persons connected with him.
xvi. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.
For MGB & Co LLP
Firm Registration Number 101169W/W-100035
Membership Number 048215
Mumbai 15 May 2019
Annexure - B to the Independent Auditors' 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 7(B)(f)under "Report on Other Legal and Regulatory requirements" of our Report of evendate to the members of the Company on the standalone financial statements for the yearended 31 March 2019
We have audited the internal financial controls over financial reporting of WelspunEnterprises Limited ("the Company") as of 31 March 2019 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.
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 (the"Guidance 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 procedures selected depend on the auditor's judgment including the assessment ofthe risks of material misstatement of the standalone financial statements whether due tofraud or 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 financial reporting includes those policiesand procedures that
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of 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) Provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the 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 2019 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note issued by theInstitute of Chartered Accountants of India.
For MGB & Co LLP
Firm Registration Number 101169W/W-100035
Membership Number 048215
Mumbai 15 May 2019