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Suzlon Energy | Auditor's Report > Power - Generation & Distribution > Auditor's Report from Suzlon Energy - BSE: 532667, NSE: SUZLON
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Suzlon Energy

BSE: 532667|NSE: SUZLON|ISIN: INE040H01021|SECTOR: Power - Generation & Distribution
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Auditor's Report (Suzlon Energy) Year End : Mar '17

Report on the Standalone Ind AS Financial Statements

1. We have audited the accompanying standalone Ind AS financial statements of Suzlon Energy Limited (“the Company”), which comprise the Balance Sheet as at March 31,2017, the Statement of Profit and Loss (including other comprehensive income), Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information, in which are incorporated the returns for the year ended on that date audited by the branch auditor of the Company’s branch at Germany and also the financial information of Suzlon Wind International Limited (‘SWIL’), SE Blades Limited (‘SEBL’), SE Electricals Limited (‘SEEL’) [SWIL, SEBL and SEEL together referred to as merged entities] and tower business of Suzlon Structures Limited (‘tower business’), for the year ended on that date, consequent to obtaining necessary regulatory approvals for their merger into the Company (hereinafter reference to the Company includes merged entities and tower business) with effect from January 1,2016 in case of merged entities and for demerger with effect from April 1, 2016 in case of tower business (hereinafter referred to as ‘the standalone Ind AS financial statements’). This report is issued in supersession of our earlier report dated May 19,2017, to the extent of matters stated in emphasis of matters paragraph 7 below.

Management’s Responsibility for the Standalone Ind AS Financial Statements

2. The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the state of affairs (financial position), profit or loss (financial performance including other comprehensive income), cash flows and changes in equity of the Company in accordance with accounting principles generally accepted in India, including the Indian Accounting Standards (‘Ind AS’) specified under section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015, as amended (“the Rules”). This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial control that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

3. Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India, as specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone Ind AS financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.

Opinion

5. In our opinion and to the best of our information and according to the explanations given to us, the standalone Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31,2017, its profit including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Emphasis of Matter

6. We draw attention to Note 6 of accompanying standalone Ind AS financial statements, in relation to accounting of financial guarantee provided by the Company (along with its three Indian subsidiaries and a jointly controlled entity) in respect of borrowing availed by one of its subsidiary based in The Netherlands and disclosure of the same as contingent liability as more fully described therein. Our opinion is not qualified in respect of this matter.

7. We draw attention to Note 5 of the accompanying standalone Ind AS financial statements. The standalone Ind AS financial statements of the Company for the year ended March 31,2017 were earlier approved by the Board of Directors at its meeting held on May 19, 2017. Those standalone Ind AS financial statements have been revised by the Company so as to give effect to the composite schemes of amalgamation and arrangement for merger under Sections 391 to 394 and other applicable provisions of the Companies Act, 1956 and Companies Act, 2013, of SWIL, SEBL and SEEL (wholly owned subsidiaries) and for demerger of tower business of Suzlon Structures Limited (a wholly owned subsidiary, now known as Suzlon Global Services Limited), into the Company, consequent to obtaining approvals from Honourable National Company Law Tribunal, Ahmedabad Bench vide its order dated May 31, 2017, filed by the Company with the Registrar of Companies, Gujarat on June 1, 2017, with effect from appointed dates, January 1, 2016 for the merger and April 1, 2016 for the demerger. As a result, the aforesaid standalone Ind AS financial statements have been revised by the Company to give effect to the said composite schemes of amalgamation and arrangement. Accordingly, we are issuing this revised report, on the revised standalone Ind AS financial statements of the Company for the financial year ended March 31, 2017 in supersession of the original report dated May 19, 2017, which hereby stands withdrawn. Our opinion is not modified in respect of these matters.

8. We draw attention to Note 7 of the accompanying standalone Ind AS financial statements, whereby the Company has recognised goodwill on amalgamation aggregating to Rs. 1,059.80 Crore and amortised the same in accordance with the composite scheme of amalgamation and arrangement approved by the National Company Law Tribunal. This accounting treatment is different from that prescribed under Indian Accounting Standard (IND AS) 103 - Business Combinations in case of common control business combinations as is more fully described in the aforesaid note. Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

9. 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 of the Act, we give in the Annexure 1a statement on the matters specified in paragraphs 3 and 4of theOrder.

10. 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 best of our knowledge and belief were necessary for the purpose of our audit;

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books and proper returns adequate for the purposes of our audit has been received from branch not visited by us;

(c) The report on the accounts of the branch office of the Company audited under section 143 (8) of the Act by branch auditor has been sent to us and has been properly dealt by us in preparing this report;

(d) The Balance Sheet, Statement of Profit and Loss including the Statement of Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account and with the return received from branch not visited by us;

(e) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015, as amended;

(f) On the basis of written representations received from the directors as on March 31,2017, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2017, from being appointed as a director in terms of section 164(2) of the Act;

(g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report dated August 11,2017 in “Annexure 2” to this report;

(h) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and 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 financial position in its standalone Ind AS financial statements - Refer Note42 to the standalone Ind AS financial statements;

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - Refer Note 24 to the standalone Ind AS financial statements;

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

iv. The Company has provided requisite disclosures in Note 19 (a) to these financial statements as to the holding of Specified Bank Notes on November 8, 2016 and December 30, 2016 as well as dealings in Specified Bank Notes during the period from November 8,2016 to December 30,2016. Based on our audit procedures and relying on the management representation regarding the holding and nature of cash transactions, including Specified Bank Notes, we report that these disclosures are in accordance with the books of accounts maintained by the Company and as produced to us by the Management.

Other Matter

11. We did not audit the financial statements and other financial information of a branch included in the accompanying standalone Ind AS financial statements of the Company whose financial statements and other financial information reflect total assets of Rs. 32.87 Crore as at March 31,2017, total revenues of Rs. Nil and loss before tax of Rs 5.90 Crore for the year ended on that date. The financial statements and other financial information of this branch has been audited by the branch auditor whose report has been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of this branch, is based solely on the report of such branch auditor. Our opinion is not modified in respect of this matter.

Annexure 1 - Annexure referred to in paragraph 9 of our report of even date under heading “Report on Other Legal and Regulatory Requirements”

Re: Suzlon Energy Limited

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of property, plant and equipment/fixed assets.

(b) All property, plant and equipment/fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) Based on our audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to information and explanations given by the management, the title deeds of immovable properties included in property, plant and equipment / fixed assets are held in the name of the company, except for one factory building for which the Company has obtained approval for local panchayat and it is in the process of obtaining the approval from the local town planning authority

(ii) The management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies were noticed on such physical verification.

(iii) (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Accordingly, the provisions of clause 3 (iii) (a), (b) and (c) of the Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, the Company has not advanced loans to directors/ to a company in which the Director is interested to which provisions of section 185 of the Companies Act 2013 apply and hence not commented upon. In our opinion and according to the information and explanations given to us, provisions of section 186 of the Companies Act 2013 in respect of loans and advances given, investments made and, guarantees, and securities given have been complied with by the company.

(v) The Company has not accepted any deposits from the public. Accordingly, the provisions of clause 3 (v) of the Order are not applicable to the Company and hence not commented upon.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Companies Act, 2013, related to the manufacture or service of wind turbine generators, and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

(vii) (a) Undisputed statutory dues including provident fund, employees’ state insurance, income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax, cess and other statutory dues have generally been regularly deposited with the appropriate authorities though there has been a slight delay in a few cases.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees’ state insurance, income-tax, wealth-tax, service tax, sales-tax, duty of custom, duty of excise, value added tax, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, duty of custom, duty of excise, value added tax and cess on account of any dispute, are as follows:

Name of the Statute

Nature of dues

Amount (in Rs. Crore)**

Period to which the amount relates

Forum where dispute is pending

Customs Act 1962

Customs duty

0.72

2008-09, 2012-13 to 2014-15

CESTAT

Customs Act 1962

Customs duty

0.31

2012-13,

Commissioner of Customs (Appeals)

Finance Act, 1994

Service tax

82.18

1999-2000 to 2000-03, 2007-08 to 2011-12

CESTAT

Tamil Nadu Value Added Tax Act 2006

Value added tax

0.04

2015-16

Joint Commissioner (Appeals)

Maharashtra Value Added Tax Act, 2002

Value added tax

0.08

2010-11

Joint Commissioner (Appeals)

Andhra Pradesh Value Added Tax Act, 2005

Value added tax

0.007

2015-16

Deputy Commissioner (Appeals)

Karnataka Value Added Tax Act, 2003

Value added tax

0.55

2008-09

Karnataka Appellate Tribunal

Gujarat Value Added Tax Act, 2003

Value added tax

1.85

2006-07 and 2007-08

Joint Commissioner (Appeals)

* amount deposited under protest Rs. 0.19 Crores

** amount less than Rs. 0.01 Crore

(viii) In our opinion and according to the information and explanations given by the management, the Company has not defaulted in repayment of loans or borrowing to a financial institution, bank or dues to debenture holders. The Company did not have any outstanding dues payable to the government during the year.

(ix) In our opinion and according to the information and explanations given by the management, the Company has utilised the monies raised by way of term loans for the purposes for which they were raised. According to the information and explanations given by the management, the Company has not raised any money way of initial public offer / further public offer / debt instruments.

(x) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no fraud on or by the officers and employees of the Company has been noticed or reported during the year.

(xi) Based on our audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that the managerial remuneration has been paid/provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.

(xii) In our opinion, the Company is not a nidhi company. Therefore, the provisions of clause 3 (xii) of the order are not applicable to the Company and hence not commented upon.

(xiii) According to the information and explanations given by the management, transactions with the related parties are incompliance with section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and on an overall examination of the balance sheet, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence not commented upon.

Based on our audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that out of the amounts of Rs. 1,800 Crore raised by the Company through private placement of equity shares during the year ended March 31, 2016, an amount of Rs. 405 Crore was available with the company as part of its treasury balances and was pending utilization as on March 31,2017.

(xv) Based on our audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, the Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in Section 192 of the Act.

(xvi) According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.

For SNK & CO. For S. R. Batliboi & CO. LLP

Chartered Accountants Chartered Accountants

ICAI Firm registration number: 109176W ICAI Firm registration number: 301003E/E300005

per Sanjay Kapadia per Shyamsundar Pachisia

Partner Partner

Membership No.: 038292 Membership No.: 049237

Place : Mumbai Place : Mumbai

Date : August 11, 2017 Date : August 11, 2017

Source : Dion Global Solutions Limited
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