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Dredging Corporation of India Ltd.

BSE: 523618 Sector: Others
NSE: DREDGECORP ISIN Code: INE506A01018
BSE LIVE 15:44 | 22 Sep 575.85 -23.25
(-3.88%)
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593.05

HIGH

596.00

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NSE 15:59 | 22 Sep 575.60 -24.10
(-4.02%)
OPEN

595.00

HIGH

595.15

LOW

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OPEN 593.05
PREVIOUS CLOSE 599.10
VOLUME 14469
52-Week high 752.40
52-Week low 360.20
P/E 218.13
Mkt Cap.(Rs cr) 1,612
Buy Price 0.00
Buy Qty 0.00
Sell Price 575.85
Sell Qty 77.00
OPEN 593.05
CLOSE 599.10
VOLUME 14469
52-Week high 752.40
52-Week low 360.20
P/E 218.13
Mkt Cap.(Rs cr) 1,612
Buy Price 0.00
Buy Qty 0.00
Sell Price 575.85
Sell Qty 77.00

Dredging Corporation of India Ltd. (DREDGECORP) - Auditors Report

Company auditors report

TO

THE MEMBERS OF

DREDGING CORPORATION OF INDIA LIMITED

Report on the Financial Statements

We have audited the accompanying financial statements of Dredging Corporation ofIndia Limited (‘the Company’) which comprise the Balance Sheet as at March31 2016 the Statement of Profit and Loss and the Cash Flow statement for the year thenended and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

The Company’s Board of Directors is responsible for the mattters stated in Section134(5) of the Companies Act 2013 ("The Act")with respect to the preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the Accountingprinciples generally accepted in India including the Accounting Standards specified underthe section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguaring the Assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofthe appropriate accounting policies; making judgements and estimates that are reasonableand prudent; design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the accuracy and completeness of theaccunting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on ouraudit.

We have taken into account the provisions of the Act the Accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder and the Order under section 143 (11)of the Act.

We conducted our audit of the financial statements in accordance with the Standards onAuditing specified under Section 143 (10) of the Act. Those standards require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor’s judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal financial control relevant to the Company’spreparation of the financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances but not for the purpose ofexpressing an opinion on whether the Company has in place an adequate internal financialcontrol system over financial reporting and the operating effectiveness of such controls.An audit also includes evaluating the appropriateness of the accounting policies used andthe reasonableness of the accounting estimates made by Company’s Directors as wellas evaluating the overall presentation of the financial statements. We believe that theaudit evidence we have obtained 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 accorrding to the explanationsgicen to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in confirmity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31stMarch 2016 and its profit and its cash flows for the year ended on that date.

EMPHASIS OF MATTERS:

We draw attention to the following matters in the Notes to the financial statements.Our opinion is not qualified in respeect of this matter.

a) Componentization: (Refer note No. V of the financial statements)

As per note 4 of Schedule II to the Companies Act 2013 -’’Useful lifespecified in Part C of the Schedule is for whole of the asset. Where cost of a part of theasset is significant to total cost of the asset and useful life of that part is differentfrom the useful life of the remaining asset useful life of that significant part shall bedetermined separately."

The above requirement is commonly known as ‘component accounting’. Companiesare required to identify and depreciate significant components with different useful livesseparately.

However management is of the view that no component is having more than 10% value oftotal cost of the dredger hence component accounting is not applicable.

b) We draw attention to the Note No VI of the financial statements where in theCompany has made investments in Equity shares amounting to 3000 lakhs in SethusamudramCorporation Limited(SCL) a Special Purpose Vehicle was incorporated on 06.1.2004 fordeveloping the Sethusamudram Channel Project. The dredging work at Palk Strait wassuspended from 16-072009.

Since the Balance sheet as on 31st March 2015 of Sethusamudram CorporationLimited (SCL) is showing positive net worth Management does not consider any diminutionin the value of the investment.

c) Trade Receivables includes 11433.18 lakhs receivable from M/s SethusamudramCorporation Ltd.(SCL) which is pending for more than 3 years. Out of the above Companyhas provided for doubtful debts to the extent of Rs 3019.27 lakhs. The company is of theview that an amount of Rs 30897.00 lakhs will be reimbursed by GOI (at whose behest thecontract with SCL was entered) to DCI to compensate the actual expenditure incurred onthis project. In view of this a provision for doubtful debts is not made in respect ofreceivables in this regard amounting to Rs 8413.91 lakhs.

d) The balances of sundry debtors creditors loans and advances other receivable andother payables being subject to confirmation and reconciliation resulting in the balancesas per books of account not verified by us.

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 bestof 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 theCompany so far as it appears from our examination of those books;

c. The Balance Sheet Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are in agreement with the books of account;

d. In our opinion the financial statements comply with the Accounting Standardsprescribed under section 133 of the Act.

e. On the basis of the written representation received from the directors as on 31March 2016 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2016 from being appointed as a director in terms of Section164(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 A". Our report expresses and unmodified opinion onthe adequacy and operating effectiveness of the Company’s internal controls overfinancial reporting.

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 financialposition in its financial statements- refer note XVI 1a-e to the financial statements;

ii. The company did not have any long term contracts including derivative contracts forwhich there were any material foreseeable losses.

iii. There are no amounts which are required to be transferred to the InvestorEducation and Protection Fund by the company.

2) As required by the Companies (Auditor’s Report) Order 2015 ("theOrder") issued by the Central Government in terms of section 143 of the Act we givein the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

3) Directions under Section 143(5) of the Companies Act 2013 are for part of thisreport.

For Tukaram & Co
Chartered Accountants
[Firm Regn No. 004436S]
Place : Hyderabad (P.MURALI)
Date : 30.05.2016 Partner : Membership No. 221625

ANNEXURE "A" TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in Paragraph 1(f) under "Report on other Legal and Regulatoryrequirements" section of our report of even date)

Report on the Internal Financial Controls Over Financial Reporting under Caluse (i) ofSub-Section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of DREDGINGCORPORATION OF INDIA LIMITED ("the Company") as of 31 March 2016 inconjunction with our audit of the financial statements of the Company for the year endedon 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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding 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.

Auditor’s 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") issued by the Institute of Chartered Accountants of Indiaand the Standards on Auditing prescribed under Section 143(10) of the Companies Act 2013to the extent applicable to an audit of internal financial controls. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated 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 judgement including the assessment of the risks ofmaterial misstatement of the 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 controlssystem over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company’s internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company’s internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised 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 to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at 31 March 2016 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.

For Tukaram & Co
Chartered Accountants
[Firm Regn No. 004436S]
Place : Hyderabad (P.MURALI)
Date : 30.05.2016 Partner : Membership No. 221625

ANNEXURE "B" TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in Paragraph 2 under "Report on other Legal and Regulatoryrequirements" section of our report of even date)

(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) The fixed assets were physically verified during the year by the management inaccordance with a regular program of verification which in our opinion provides forphysical verification of all the fixed assets at reasonable intervals. According to theinformation and explanations given to us no material discrepancies were noticed on suchverificati on.

(c) As per the information provided by the management all the title deeds of immovableproperties are held in the name of the Company.

(ii) According to the explanantion the Company has carried out physical verificationof spares on booard dredgers only in respect In respect of eight dredgers as against itsfleet strength of sixteen (Ref. note No. XVII 5 f) as such we are unable to comment onthe physical verification of spares and stores.

(iii) The company has not granted any loans secured or unsecured to companiesfirms or Limited Liability Partnerships or other parties covered in the Registermaintained u/s 189 of the Act.

(iv) The Company has not granted any loans made any investments or provideguarantees and hence reporting under clause (iv) of the CARO 2016 Order is not applicable.

(v) According to the information and explanations given to us the Company has notaccepted any deposits from the public.

(vi) To the best of our knowledge the Central Government has not prescribedmaintenance of the cost records under Section 148 (1) of the Act in respect of the natureof business carried on by the Company.

(vii) According to the information and explanations given to us in respect ofStatutory Dues

(a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Income Tax Service Tax Duty of CustomsValue Added Tax Cessand other material statutory dues applicable to it with the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Provident Fund Income TaxService Tax Duty of CustomsValue Added Tax Cess and other material statutory dues inarrear as at March 312016 for aperiod of more than six months from the date they becamepayable.

(c) There are no dues in respect of Income Tax Service Tax Customs Duty and ValueAdded Tax as on 31st March 2016 on account of disputes.

(viii) In our opinion and according to the information and explanations given tous the Company has not defaulted in repayment of of loans or borrowings to banksfinancial institutions and government.

(ix) During the period the Company has not raised moneys by way of initial publicoffeer or further offer (including debt instruments) or term loans and hence reportingunder clause (ix) of the CARO 2016 Order is not applicable.

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

(xi) Managerial remuneration paid during the year is within the limits prescribedunder the provisions of section 197 of the Companies Act 2013.

(xii) The Company is not a Nidhi Company and hence reporting under Clause (xii) ofthe CARO 2016 Order is not applicable.

(xiii) All transactions with related parties are in accordance with the provisionsof section 177 and section 188 of the Companies Act 2013. In our opinion and accroding tothe information and explanantions given to us the Company has disclosed the details ofrelated party transactions in the financial statements as required by the applicableaccounting standrads.

(xiv) During the year the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debetures and hence reportingunder Clause (xiv) of CARO 2016 Order is not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to usduring the year the company has not entered into any non-cash transactions with itsdirectors or persons connected with him and hence provisions of section 192 of theCompanies Act 2013 are not applicable.

(xvi) The Company is notrequired to be registered under section 45-I of the ReserveBank of India Act 1934.

For Tukaram & Co
Chartered Accountants
[Firm Regn No. 004436S]
Place : Hyderabad (P.MURALI )
Date : 30.05.2016 Partner : Membership No. 221625