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Cochin Shipyard Ltd.

BSE: 540678 Sector: Others
NSE: COCHINSHIP ISIN Code: INE704P01017
BSE 15:40 | 17 Jan 549.35 -2.55
(-0.46%)
OPEN

552.10

HIGH

555.00

LOW

540.05

NSE 15:43 | 17 Jan 549.85 -2.20
(-0.40%)
OPEN

553.40

HIGH

555.30

LOW

540.10

OPEN 552.10
PREVIOUS CLOSE 551.90
VOLUME 28125
52-Week high 598.90
52-Week low 435.00
P/E 23.08
Mkt Cap.(Rs cr) 7,468
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 552.10
CLOSE 551.90
VOLUME 28125
52-Week high 598.90
52-Week low 435.00
P/E 23.08
Mkt Cap.(Rs cr) 7,468
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Cochin Shipyard Ltd. (COCHINSHIP) - Auditors Report

Company auditors report

To

The Members of Cochin Shipyard Limited

Report on the Ind AS Financial Statements

We have audited the accompanying Ind AS financial statements of Cochin Shipyard Limited('the Company') which comprise the Balance Sheet as at 31 March 2017 the Statement ofProfit and Loss (including Other Comprehensive Income) the Statement of Cash Flows andthe Statement of Changes in Equity for the year then ended and a summary of significantaccounting policies and other explanatory information (hereinafter referred to as 'Ind ASfinancial statements').

Management's Responsibility for the Ind AS 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 of these IndAS financial statements that give a true and fair view of the financial positionfinancial performance including other comprehensive income cash flows and changes inequity of the Company in accordance with the accounting principles generally accepted inIndia including the Indian Accounting Standards (Ind AS) prescribed under Section 133 ofthe Act.

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 Ind ASfinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor's Responsibility

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

In conducting our audit we have taken into account the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the Rules made there under.

We conducted our audit of the Ind AS financial statements in accordance with theStandards on Auditing specified under Section 143(10) of the Act. Those Standards requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the Ind AS financial statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the Ind AS financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of theInd AS financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of the Ind AS financial statements that give a true and fair view in order todesign audit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of the accounting policies used and the reasonableness ofthe accounting estimates made by the Company's Directors as well as evaluating theoverall presentation of the Ind AS financial statements.

We believe that the audit evidence obtained by us is sufficient and appropriate toprovide a basis for our audit opinion on the Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Ind AS financial statements give the information required bythe Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India including the Ind AS of the state ofaffairs of the Company as at 31 March 2017 and its profit total comprehensive incomeits cash flows and the changes in equity for the year ended on that date.

Emphasis of Matter

We draw attention to Note No.30 to the financial statements regarding the basis onwhich the Company has recognized revenue from ship building/ ship repair activities basedon the Company's own assessment of physical completion and further reliance is placed onthe technical assessment and activity based cost estimates defined by the Management forthe purpose of recognition of income;

Our opinion is not modified in respect of the above matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ('the Order') issued bythe Central Government of India in terms of sub-section (11) of section 143 of the Act wegive in " Annexure A" a statement on the matters specified in the paragraph 3and 4 of the Order.

2. Based on the verification of Records of the Company and based on information andexplanations given to us we give in "Annexure B" reports on the Directions andSubdirections respectively issued by the Comptroller and Auditor General of India interms of Sec 143(5) of the Companies Act 2013.

3. 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 Cash Flows and the Statement of Changes in Equity dealt with bythis Report are in agreement with the books of account;

d. in our opinion the aforesaid Ind AS financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act;

e. Being a Government Company the provisions of section 164(2) of the Act is notapplicable;

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 C"; and

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 Ind AS financialstatements - Refer Notes 4142 43 and 44 to the Ind AS 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. Further theCompany did not have any long-term derivative contracts for which there were any materialforeseeable losses. - Refer Note 53 to the Ind AS financial statements;

iii. there were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

iv. The Company has provided requisite disclosures in the Ind AS financial statementsas regards its holding as well as dealings in Specified Bank Notes during the period from8 November 2016 to 30 December 2016. Based on audit procedures and the representationsprovided to us by the management we report that the disclosures are in accordance withbooks of account maintained by the Company and as produced to us by the management- Referto Note 16 to the Ind AS financial statements.

For Krishnamoorthy & Krishnamoorthy
Chartered Accountants
Firm's registration number: 001488S
C.R Rema
Partner
Membership number: 029182
Cochin - 16
15 June 2017

Annexure A referred to under paragraph 1 of the report on Other Legal and RegulatoryRequirements of the

Auditor's Report

We report that:

i) In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) As explained to us the fixed assets have been physically verified by theManagement during the year and there is a regular programme of physical verificationwhich in our opinion is reasonable having regard to the size of the company and thenature of its assets. As explained to us no material discrepancies were noticed on suchverification.

(c) According to the information and explanation 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.

ii) As explained to us the inventories were physically verified during the year inaccordance with the inventory verification procedure adopted by the Management. In ouropinion the frequency of such physical verification needs to be increased. Discrepanciesnoticed on such physical verification between physical stock and book records have beenproperly dealt with in the books of accounts.

iii) The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained undersection 189 of the Act. Accordingly clause 3(iii) (a) (b) and (c) of the Order are notapplicable.

iv) In our opinion and according to the information and explanation given to us theCompany has not given any loans investments guarantees or security as per theprovisions of section 185 and I86 of the Act. Accordingly clause 3(iv) of the Order is notapplicable.

v) According to the information and explanation given to us the company has notaccepted any deposits from the public and hence the directives issued by the Reserve Bankof India and the provisions of Sections 73 to 76 or any other relevant provisions of theAct and the rules framed there under are not applicable. Accordingly clause 3(v) of theOrder is not applicable to the Company.

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 cost records have been maintained. We have however not made adetailed examination of the cost records with a view to determine whether they areaccurate or complete.

vii) According to the information and explanations given to us in respect of statutorydues:

(a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income Tax Sales Tax Service TaxDuty of Customs Duty of Excise Value Added Tax Cess and other material statutory duesapplicable to it with the appropriate authorities.

There were no undisputed amounts payable in respect of Provident Fund Employees' StateInsurance Income Tax Sales Tax Service Tax Duty of Customs Duty of Excise ValueAdded Tax Cess and other material statutory dues in arrears as at 31 March 2017 for aperiod of more than six months from the date they became payable.

(b) There are no dues of Duty of Excise which have not been deposited with theappropriate authorities on account of any dispute. The dues of Income tax Sales taxValue added tax Service Tax and Duty of Customs that have not been deposited by theCompany on account of disputes are as per "Annexure D".

viii) According to the information and explanations given to us the Company does nothave any loans or borrowings from any financial institution banks or government duringthe year. In respect of debentures the Company has not defaulted in payment of any dues.

ix) The Company has not raised any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Accordinglyparagraph 3(ix) of the Order is not applicable.

x) To the best of our knowledge and according to the information and explanations givento us no material fraud by the Company or on the Company by its officers or employees hasbeen noticed or reported during the course of our audit.

xi) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid/provided managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.

xii) In our opinion and according to the information given to us the Company is not aNidhi company. Accordingly paragraph 3(xii) of the Order is not applicable.

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 where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly paragraph 3(xiv) of the Order is not applicable.

xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cash

transactions with directors or persons connected with them. Accordingly paragraph 3(xv)of the Order is not applicable.

xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934. Accordingly paragraph 3(xvi) of the Order is not applicable.

For Krishnamoorthy & Krishnamoorthy
Chartered Accountants
Firm's registration number: 001488S
C.R Rema
Partner
Membership number: 029182
Cochin - 16
15 June 2017

Annexure B referred to in paragraph 2 under the heading "Report on Other Legal andRegulatory Requirements" of our Independent Auditors' Report of even date on the IndAS financial statements of Cochin Shipyard Limited for the year ended 31 March 2017

Directions/Sub-Directions issued by the Comptroller & Auditor General of Indiaunder Section 143(5) of the Companies Act 2013 indicating the areas to be examined by theStatutory Auditors.

We give below our report on the matters referred therein:

A. Directions

1. Whether the company has clear title / lease deeds for freehold and leasehold landrespectively? If not please state the area of freehold and leasehold land for which title/ lease deeds are not available.

Based on our examination of the records of the Company and according to the informationand explanations given to us and the confirmation from Bond Trustees in respect of titledeeds deposited with them and based on the details of land and buildings furnished to usby the Company the title / lease deeds for freehold and lease hold land respectively areheld in the name of the Company.

2. Whether there are any cases of waiver/write off debts/ loans/interest etc. if yesthe reasons therefore and the amount involved.

During the year the Company has written off advance paid to a Supplier amounting to'478.61 lakhs against which provision for doubtful debts was held since 201415. As per thepolicy followed by the company liquidated damages where the levies depend on decisionsregarding force majeure condition of contract are accounted for on completion of contractand/or when final decision is taken. Based on our examination of the records of theCompany and according to the information and explanations given to us Liquidated damagesaccounted for has not been waived /written off during the year. Based on the explanationgiven to us the Company does not have the practice of claiming interest on delayedpayment from customers though certain contracts provide for the same.

3. Whether proper records are maintained for inventories lying with third parties &assets received as gift/grant(s) from Government or other authorities.

Based on our examination of the records as we considered appropriate and further basedon the information and explanations given to us the Company is maintaining proper recordsof inventory sent out during the year and lying with third parties. The Company has notreceived any assets as gift or grant(s) from Government or other authorities.

B. Sub Directions

1. Whether accuracy of project-wise cost maintained under the new SAP-ERP system hasbeen verified.

Project wise cost details are maintained by the Company in the Integrated SAP-ERPsystem and based on our examination of these records no material discrepancies wereobserved in project-wise cost maintained. However there is scope for further strengtheningand improvement in timely booking of costs to a particular job order.

For Krishnamoorthy & Krishnamoorthy
Chartered Accountants
Firm's registration number: 001488S
C.R Rema
Partner
Membership number: 029182
Cochin - 16
15 June 2017

Annexure C referred to under paragraph 3 of the report on Other Legal and RegulatoryRequirements of the Auditor's Report

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of CochinShipyard Limited ("the Company") as of 31 March 2017 in conjunction with ouraudit of the Ind AS financial statements of the Company for the year ended on that date.

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 Reportingissued by the Institute of Chartered Accountants of India ('ICAI'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

Auditors' Responsibility

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 Financial Reporting('the Guidance Note') and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Companies Act 2013 to the extent applicable toan audit of internal financial controls both applicable to an audit of Internal FinancialControls and both issued by the Institute of Chartered Accountants of India. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand 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 proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the Ind AS financial statements whether due to fraud 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 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 authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized 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.

Opinion

In our opinion the Company has in all material respects adequate internal financialcontrols system over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at March 31 2017 based on the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For Krishnamoorthy & Krishnamoorthy
Chartered Accountants
Firm's registration number: 001488S
C.R Rema
Partner
Membership number: 029182
Cochin - 16
15 June 2017