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Disclosure in auditor’s report explanatory

INDEPENDENT AUDITOR’S REPORT

To the Members of Polycab Wires Private Limited

Report on the Financial Statements

We have audited the accompanyingstandalone financial statements of Polycab Wires Private Limited (‘the Company’), which comprise the BalanceSheet as at March 31, 2015, the Statement of Profit and Lossand Cash Flow Statement for the year then ended, and a summaryof significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of theCompanies Act, 2013 (‘the Act’)with respect to the preparation of these standalonefinancialstatements that give a true and fair view of the financial position,financial performance and cash flows of the Company in accordancewith accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. Thisresponsibility 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 judgements and estimates that are reasonable and prudent; and the design, implementation and maintenanceof adequate internal financial control that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are freefrom material misstatement, whether due to fraud or error.

Auditor’s Responsibility
Our responsibility is to express an opinion on these standalone financialstatements 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 inaccordance with the Standards on Auditing, issued by the Instituteof Chartered Accountants of India, as specified under Section 143(10) of the Act. Those Standards require thatwe comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether the financialstatements are free from material misstatement.

An audit involves performing procedures to obtain audit evidenceabout the amounts and disclosures in the financial statements.The procedures selected depend on the auditor’s judgement,including the assessment of the risks of material misstatement ofthe financial statements, whether due to fraud or error. In makingthose risk assessments, the auditor considers internal financial controlrelevant to the Company’s preparation of thefinancial statements that give a true and fair view in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the effectiveness of such controls. An audit also includes evaluatingthe appropriateness of accounting policies used and thereasonableness of the accounting estimates made bythe Company’s Directors, as well as evaluating the overall presentation of thefinancial statements.We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for ouraudit opinion on the standalone financial statements.


Opinion

In our opinion and to the best of our information and according tothe explanations given to us, thestandalone financial statements give theinformation required by the Actin the manner so required and givea true and fair view in conformity with the accounting principlesgenerally accepted in Indiaof the state of affairs of theCompany as at March 31, 2015, its profit, andits cash flows forthe year ended on that date.

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditor’s report) Order, 2015 (‘the Order’) issued by the Central Government of India in terms of sub–section (11) of section 143 of the Act, we give in the Annexure 1 a statement on the matters specified in paragraphs 3 and 4 of the Order.

As required by section 143 (3) of the Act, we report that:
we have sought and obtained all the information and explanationswhich to the best of our knowledge and belief werenecessary for the purpose of our audit;
in our opinion proper books of account as required bylaw have been kept by the Company so far as it appearsfrom our examination of those books;
the Balance Sheet, Statement of Profit and Loss, andCash Flow Statement dealt with by this Report are inagreement with the books of account;
in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;
on the basis of written representations received fromthe directors as on March 31, 2015, and taken on recordby the Board of Directors, none of the directors isdisqualified as on March 31, 2015, from being appointedas a director in terms of section 164 (2) of the Act;
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:

The Company has disclosed the impact of pending litigations on its financial position in its financial statements – Refer Note 29(b) to the financial statements;

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

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

For S R B C & CO LLP
Chartered Accountants
ICAI Firm Registration Number: 324982E

perSudhirSoni
Partner
Membership Number: 41870
Place of Signature: Mumbai
Date: November 30, 2015

Annexure referred to in paragraph 1 under the heading “Report on Other Legal and Regulatory Requirements” of our report of even date
Re: Polycab Wires Private Limited (’the Company’)

(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
The Company has a programme for physical verification on a rotational basis to cover all fixed assets of the Company 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 business. Accordingly, Land, buildings, certain plant and machineries, electrical installation and windmills have been physically verified by the management during the year and no material discrepancies were noticed on such verification.

(a) The management has conducted physical verification of inventory except for goods–in–transit aggregating to Rs. 831.08 million and inventory lying with third parties aggregating to Rs. 645.96 million as at year end, which have not been verified during or at the end of the year. In our opinion, the frequency of verification is reasonable. Inventories lying with third parties have been confirmed by them as at year end.
The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.
The Company has maintained proper records of inventory except in respect of inventory of work–in–progress. No material discrepancies were noted on physical verification of inventories except work–in–progress. The closing inventory of work–in–progress is determined and recorded based on physical verification and hence we are unable to comment on the discrepancy, if any.

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

In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for purchase of fixed assets and sale of goods except for recognition of revenue at the year–end in the correct accounting period. The internal control system for purchase of inventory is adequate except documentation of quotation analysis for Engineering Procurement and Construction (EPC) business and vendor selection which needs strengthening. Except for the foregoing, there is no continuing failure to correct any major weakness in the internal control system of the Company.

The Company has not accepted any deposits from the public.

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 of electrical cable and conductors, 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.

(a)Undisputed statutory dues including provident fund, employees’ state insurance, income–tax, sales–tax, wealth–tax, service tax, customs duty, excise duty, cess and other material 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, undisputed dues in respect of provident fund, investor education and protection fund, employees’ state insurance, income–tax, wealth–tax, service tax, sales–tax, customs duty, excise duty cess and other material statutory dues which were outstanding, at the year end, for a period of more than six months from the date they became payable, are as follows:

Name of the statute

Nature of
the dues

Amount (INR in Million)

Period to which the amount relates

Due Date

Dateof Payment

Employees’ state InsuranceAct, 1948

Employee's State Insurance

0.04

2014–15

Various dates in FY 14–15

May 5,2015

Bihar Value Added Tax Act 2005

Value Added Tax

0.32

2014–15

Various dates in FY 14–15

October 15, 2015


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

Name of the
Statute

Nature of Dues

Amount (INR in Million) (Net of amount paid under protest)

Period to which the amount relates

Forum where dispute
is pending




The Central
Excise Act,
1944

Denial of input Credit of business auxiliary services

6.67

Apr–2010
to Oct–10

Commissioner
(Appeals), Daman

Denial of CENVAT
credit

16.40

2008–2010

CESTAT, Ahmedabad

Denial of CENVAT
Credit on capital goods

13.08

2007–08
to 2011–12

CESTAT, Ahmedabad

Denial of rebate claim

0.45

2012–13

J.S.(R.A) GOI, New Delhi

Central Sales
Tax Act, 1956

CST liability for statutory declarations not collected(“C” forms)

115.16

2007–2009

Assistant Officer
(VAT), Daman

138.30

2010–11

Income Tax
Act, 1961

Income Tax

7.07

2011–12

CIT(Appeals),
Mumbai

FinanceAct,
1994

Denial of service tax credit

4.34

Feb–10 to Mar–13

CESTAT, Ahmedabad

301.47


According to the information and explanations given to us, the provisions of investor education and protection fund in accordance with relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder are not applicable to the Company.

The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.


Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

According to the information and explanations given to us, the Company has given guarantee for loans taken by others from banks, the terms and conditions whereof, in our opinion, are not prima–facie prejudicial to the interest of the Company. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from financial institutions.

The Company did not have any term loans outstanding during the year.

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

For S R B C & CO LLP
Chartered Accountants
ICAI Firm Registration Number: 324982E


perSudhirSoni
Partner
Membership Number: 41870

Place: Mumbai
Date: November 30, 2015

Disclosure relating to quantitative details of fixed assets

The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

Disclosure relating to physical verification and material discrepancies of fixed assets

The Company has a programme for physical verification on a rotational basis to cover all fixed assets of the Company 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 business. Accordingly, Land, buildings, certain plant and machineries, electrical installation and windmills have been physically verified by the management during the year and no material discrepancies were noticed on such verification.

Disclosure of physical verification of inventories at fixed intervals

The management has conducted physical verification of inventory except for goods–in–transit aggregating to Rs. 831.08 million and inventory lying with third parties aggregating to Rs. 645.96 million as at year end, which have not been verified during or at the end of the year. In our opinion, the frequency of verification is reasonable. Inventories lying with third parties have been confirmed by them as at year end.

Disclosure of procedure followed for physical verification of inventories

The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

Disclosure about maintenance of inventory records and material discrepancies

The Company has maintained proper records of inventory except in respect of inventory of work–in–progress. No material discrepancies were noted on physical verification of inventories except work–in–progress. The closing inventory of work–in–progress is determined and recorded based on physical verification and hence we are unable to comment on the discrepancy, if any.

Disclosure in auditors report relating to internal control system

In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for purchase of fixed assets and sale of goods except for recognition of revenue at the year–end in the correct accounting period. The internal control system for purchase of inventory is adequate except documentation of quotation analysis for Engineering Procurement and Construction (EPC) business and vendor selection which needs strengthening. Except for the foregoing, there is no continuing failure to correct any major weakness in the internal control system of the Company.

Disclosure in auditors report relating to maintenance of cost records

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 of electrical cable and conductors, 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.

Disclosure in auditors report relating to accumulated losses

The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

Disclosure in auditors report relating to default in repayment of financial dues

Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

Disclosure in auditors report relating to guarantee given

According to the information and explanations given to us, the Company has given guarantee for loans taken by others from banks, the terms and conditions whereof, in our opinion, are not prima–facie prejudicial to the interest of the Company. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from financial institutions.

Disclosure in auditors report relating to term loans used for purpose other than for purpose they were raised

The Company did not have any term loans outstanding during the year.

Disclosure in auditors report relating to any material fraud reported during period

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

Disclosure in auditors report relating to loans

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

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