DCM SHRIRAM Auditors Report

Report on the Standalone Ind AS Financial Statements


We have audited the accompanying standalone Ind AS financial statements of DCM SHRIRAM LIMITED (“the Company”), which comprise the Balance Sheet as at March 31, 2017, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information.


Management’s Responsibility for the Standalone Ind AS Financial Statements


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 financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act.


This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgements and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, 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


Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit.


In conducting 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 of the standalone Ind AS financial statements in accordance with the Standards on Auditing 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.


An audit involves performing procedures to obtain audit evidence about the amounts and the 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 the 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 obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.


Opinion


In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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, and its profit, total comprehensive income, its cash flows and the changes in equity for the year ended on that date.


Report on Other Legal and Regulatory Requirements


1. 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 purposes 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.


c) The Balance Sheet, the Statement of Profit and Loss including 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.


d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards prescribed under section 133 of the Act.


e) On the basis of the written representations received from the directors as on March 31,2017 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.


f) 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 in “Annexure A”. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company’s internal financial controls over financial reporting.


g) 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, as amended, 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;


ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;


iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company;


iv. The Company has provided requisite disclosures in the standalone Ind AS financial statements as regards its holding and dealings in Specified Bank Notes as defined in the Notification S.O. 3407(E) dated 8th November, 2016 of the Ministry of Finance, during the period from 8th November 2016 to 30th December 2016. Based on audit procedures performed and the representations provided to us by the management we report that the disclosures are in accordance with the books of account maintained by the Company and as produced to us by the Management.


2. As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”) issued by the Central Government in terms of Section 143(11) of the Act, we give in “Annexure B” a statement on the matters specified in paragraphs 3 and 4 of the Order.


ANNEXURE B TOTHE INDEPENDENT AUDITORS REPORT


(Referred to in paragraph 2 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)


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


(b) The Company has a program of verification of property, plant and equipment to cover all the items in a phased manner over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the program, certain property, plant and equipment were physically verified by the Management during the year. According to the information and explanations given to us, no material discrepancies were noticed on such verification.


(c) According to the information and explanations given to us and the records examined by us and based on the examination of the registered sale deeds provided to us, we report that, the title deeds, comprising the immovable properties of land (freehold) and buildings, are held in the name of the Company and in case where such immovable properties has been transferred pursuant to the scheme of amalgamation under section 391 to 394 of the Companies Act, 1956, the transfer is through the Order of the Hon’ble High Courts. Further, freehold land located at Hyderabad measuring 5.03 acres amounting to Rs.1.56 crores and freehold lands located at Uttar Pradesh measuring 7.79 hectares amounting to Rs. 0.70 crores are pending for registration in favour of the Company.


(ii) As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals and no material discrepancies were noticed on physical verification.


(iii) According to the information and explanations given to us, the Company has, during the year, granted unsecured loans aggregating to Rs. 84.13 crores to three wholly owned subsidiaries covered in the register maintained under section 189 of the Companies Act, 2013. At the year end, the loans granted to five subsidiaries aggregate to Rs. 183.50 crores (net of provision of Rs.7.01 crores). These loans include interest free loan of Rs. 30.78 crores (including Rs 11.45 crores classified as investment) made to a wholly owned subsidiary, which, as explained to us, have been made for setting up new projects. In respect of these loans:


(a) The terms and conditions of the grant of such loans are, in our opinion, prima facie, not prejudicial to the Company’s interest after considering the purpose for which loans have been granted as indicated above.


(b) The schedule of repayment of principal and payment of interest has been stipulated and repayments or receipts of principal amounts and interest have been regular as per stipulations.


(c) There is no overdue amount remaining outstanding as at the year-end for more than 90 days.


The reporting under clauses (iii) (b) and (c) above has been done without considering the loan amount of Rs 7.01 crores in respect of one subsidiary and interest aggregating Rs. 24.67 crores in respect of three subsidiaries which has been provided/written-off in the books.


(iv) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 185 and 186 of the Companies Act, 2013 in respect of grant of loans and making investments.


(v) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 73 to 76 or any other relevant provisions of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014, as amended, with regard to the deposits accepted. According to the information and explanations given to us, no order has been passed by the Company Law Board or the National Company Law Tribunal or the Reserve Bank of India or any Court or any other Tribunal in respect of contravention of the above said sections and the relevant rules.


(vi) The maintenance of cost records has been specified by the Central Government under section 148(1) of the Companies Act, 2013 in respect of Sugar, Cement, Fertilizer, Chemicals, PVC Resin, UPVC doors and windows, and electrical energy businesses. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended prescribed by the Central Government under subsection (1) of Section 148 of the Companies Act, 2013, and are of the opinion that, prima facie, the prescribed cost records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.


(vii) According to the information and explanations given to us, in respect of statutory dues:


(a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees’ State Insurance, Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, cess and other material statutory dues applicable to it to the appropriate authorities.


(b) There were no undisputed amounts payable in respect of Provident Fund, Employees’ State Insurance, Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, cess and other material statutory dues in arrears as at March 31,2017 for a period of more than six months from the date they became payable.


(c) Details of dues of Income-tax, Sales Tax/ Value Added Tax, Service Tax, Customs Duty and Excise Duty which have not been deposited as on March 31,2017 on account of disputes are given below:























































































Name of Statute



Nature of Dues



Forum where Dispute is Pending



Period to which the Amount Relates



Amount Involved* (Rs. in crores)



Amount paid under protest (Rs. in crores)



Amount Unpaid (Rs. in crores)



Central Excise Law



Excise Duty



Appellate Authority upto Commissioner’s level



2006-07, 2007-08, 2008-09, 2009-10, 2010-11, 2011-12, 2012-13, 2013-14



0.48



0.05



0.43



Customs, Excise and Service Tax Appellate Tribunal



1997-98, 2004-05, 2007-08, 2008-09, 2009-10, 2010-11, 2011-12, 2012-13 2013-14



4.31



0.41



3.90



Finance Act, 1994



Service Tax



Customs, Excise and Service Tax Appellate Tribunal



2005-06, 2008-09, 2009-10, 2010-11, 2011-12, 2012-13



31.83



31.71



0.12



Income-tax Act, 1961



Income-tax



Appellate Authority upto Commissioner’s level



2010-11, 2011-12, 2012-13



6.44



6.44



Income Tax Appellate Tribunal



2009-10



2.21



2.21



-



Customs Act, 1962



Customs Duty



Customs, Excise and Service Tax Appellate Tribunal



2012-13



5.38



0.54



4.84



Sales Tax Laws



Sales Tax



Appellate Authority upto Commissioner’s level



1983-84, 2001-02, 2005-06, 2007-08, 2010-11, 2011-12, 2012-13, 2013-14



1.60



0.34



1.26



Appellate Tribunal



1994-95, 2009-10



2.39



0.95



1.44



* Amount as per demand orders including interest and penalty wherever indicated in the order.


The following matter has been decided in favour of the Company although the department has preferred appeal at higher levels:
















































Name of Statute



Nature of Dues



Forum where



Period to which the



Amount involved



Dispute is pending



amount relates



(Rs. crores)



Sales Tax Laws



Value Added Tax



Rajasthan Tax Board



2008-09, 2009-10, 2010-11, 2011-12



3.65



Central Excise law



Excise Duty



Customs, Excise and Service Tax Appellate Tribunal



2005-06, 2013-14



2.45



High Court



2001-02



1.31



Income-tax Act, 1961



Income-tax



Income Tax Appellate Tribunal



2009-10, 2010-11



2.83



(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to financial institutions, banks and government and dues to debenture holders.


(ix) The Company has not raised moneys by way of initial public offer or further public offer (including debt instruments). In our opinion and according to the information and explanation given to us, money raised by way of term loans have been applied by the Company during the year for the purposes for which they were raised.


(x) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company by its officers or employees has been noticed or reported during the year.


(xi) In our opinion and according to the information and explanations given to us, the Company has paid/provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.


(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of the Order is not applicable.


(xiii) In our opinion and according to the information and explanations given to us, the Company is in compliance with Section 188 and 177 of the Companies Act, 2013, where applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the standalone IND AS financial statements etc. as required by the applicable Indian accounting standards.


(xiv) During the year the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures and hence reporting under clause (xiv) of the order is not applicable to the Company


(xv) In our opinion and according to the information and explanations given to us, during the year the Company has not entered into any non-cash transactions with its directors or directors of its holding, subsidiary or joint venture company or persons connected with them and hence provisions of section 192 of the Companies Act, 2013 are not applicable.


(xvi) The Company is not required to be registered under section 45-IAofthe Reserve Bank of India Act, 1934.


For Deloitte Haskins & Sells


Chartered Accountants


(Firm’s Registration No. 015125N)


Vijay Agarwal


Place: New Delhi (Partner)


Date: May 1,2017 (Membership No. 094468)

CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.
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