You are here » Home » Companies » Company Overview » Petron Engineering Construction Ltd

Petron Engineering Construction Ltd.

BSE: 530381 Sector: Engineering
NSE: PETRONENGG ISIN Code: INE742A01019
BSE LIVE 19:40 | 19 Oct 161.95 1.45
(0.90%)
OPEN

163.50

HIGH

163.50

LOW

157.50

NSE 19:40 | 19 Oct 162.05 3.10
(1.95%)
OPEN

162.50

HIGH

164.20

LOW

159.50

OPEN 163.50
PREVIOUS CLOSE 160.50
VOLUME 1209
52-Week high 217.15
52-Week low 119.50
P/E
Mkt Cap.(Rs cr) 122
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 163.50
CLOSE 160.50
VOLUME 1209
52-Week high 217.15
52-Week low 119.50
P/E
Mkt Cap.(Rs cr) 122
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Petron Engineering Construction Ltd. (PETRONENGG) - Auditors Report

Company auditors report

TO THE MEMBERS OF

PETRON ENGINEERING CONSTRUCTION LIMITED

Report on the Financial Statements

We have audited the accompanying financial statements of Petron EngineeringConstruction Limited ("the Company") which comprise the Balance Sheet as at31st March 2016 the Statement of Profit and Loss the Cash Flow Statement for the yearthen ended and a summary of the significant accountingpolicies and other explanatoryinformation.

Management’s Responsibility for the 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 preparationand presentation of these financial statements that the financial position financialperformance and cash flows of the Company in accordance with the accounting generallyaccepted in India including the Accounting Standards specified under Section 133 of theAct read with Rule 7 of the Companies (Accounts) Rules 2014. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding the assets of the Company and for preventing and detecting fraudsand other irregularities; selectionand application of appropriate accounting policies;making judgments and estimates that are reasonable and prudent; and design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and to the preparation and presentation of the financialstatements that give a true and fair view and are misstatement whether due to fraud orerror.

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

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. 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 financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.

Basis for qualified Opinion

Attention is drawn to:

i. Note no. 32 in respect of certain suspended / delayed contracts as of 31st March2016 trade receivables of Rs. 1923 lacs (net of mobilization advance of Rs.2934 lacs) (FY ended 31st March 2015 Rs. 1501 lacs net of mobilization advance of Rs.4240 lacs) and unbilled revenue of Rs. 6256 lacs (FY ended 31st March 2015 Rs. 7756lacs) receivables from customers are pending confirmation/ negotiation; trade payablesw.r.t. these stated customers aggregated to Rs. 819 lacs (FY ended 31st March 2015 Rs.1323 lacs) are subject to negotiation/ confirmation where we are unable to comment onthe same and its corresponding impact on profit and assets/liabilities as at that date.This was also qualified in the report of the predecessor auditors on the financial March2015.

ii. Note no. 33 (a) the company has recognised revenue of Rs. 1353 lacs duringearlier periods (till 31st March 2015 Rs. 2555/- lacs) on account of cost overruns oncertain contracts pending acceptance / confirmation from customers and our inability tocomment on the amounts ultimately receivable in respect of these contracts and its impacton the reported profit for the year ended 31st March’ 2016 and corresponding assetsas on date. This matter was also qualified in the report of the predecessor auditors onthe financial statements for the year ended 31st March’ 2015.

iii. Note no. 33 (b) regarding recognition Rs. 1621 lacs (till 31st March 2016revenues of Rs. 2922 lacs) during the year ended 31st March 2016 on account of costoverruns on certain contracts which are not in accordance with the principles set out inthe Accounting Standards AS-7 ‘Construction Contracts‘. Accordingly the Revenueand profit for the year ended 31st March2016 is higher by Rs. 1621 lacs and also balancein retained earnings and unbilled revenue balance as at 31st March 2016 is higher by Rs.2922 lacs (as at 31st March 2015 by Rs. 1301 lacs). This matter was also qualified inthe report of the predecessor auditors on the financial statements for

Qualified Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion paragraph above the aforesaid financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31st March 2016 and its profit and its cash flows for the year ended on that date.

Emphasis of Matters

Attention is drawn to note no. 43 (b):

The balances of certain trade receivable other liabilities and loan & advances aresubject to where the management is confident that there will not be any material impact onconfirmation /reconciliation on profit for the year.

Our opinion is not modified in respect of matter stated above.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act and on the basis of such checks of the books and records of theCompany as we considered appropriate and according to the information and the course ofaudit we give in the Annexure ‘A’ a statement on specified in the mattersparagraphs 3 and 4 of the Order.

2. 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 were necessary for the purposes of our audit;

(b) Except for the effects of the matter described in the Basis for Qualified Opinionparagraph in our opinion proper books of account as required by law have been kept bythe Company so far as it appears from our examination those books;

(c) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account;

(d) Except for the effects of the matter described in the Basis for Qualified Opinionparagraph in our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules2014;

(e) The matters described in the basis for qualified Opinion paragraph above in ouropinion may have an adverse effect on the functioning of the Company;

(f) On the basis of the written representations received from the directors as on 31stMarch 2016 taken on record by the Board of Directors none of the directors isdisqualified as on31st March 2016 from being appointed as a director in terms of Section164 (2) of the Act;

(g) As required by section 143(3)(i) of the Companies Act 2013 and based on thechecking of the books and records of the Company as we considered appropriate andaccording to the information and report on the Internal Financial Controls over FinancialReporting is as per Annexure ‘B’;

(h) 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 explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements Refer Note no. 31 and Note No. 35 to the financialstatements.

ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any; on long-term derivative contracts ReferNote No. 7 to the including financial statements. The Company does not have any derivativecontracts for which there were any material foreseeable losses;

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

For LODHA & CO.
Chartered Accountants
Firm’s Registration No. 301051E
N.K. Lodha
Place: New Delhi Partner
Date: 31st May2016 Membership No.085155

Annexure-A referred to in paragraph 1 under the heading "Report on other legal andregulatory requirements" of our report of even date on the Standalone FinancialStatements of Petron Engineering Construction Ltd. for the year ended 31st March 2016

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

(b) The Company has a regular programme of Physical Verification of its Fixed assets bywhich fixed asset are verified in a phased manner over a period of three years. Inaccordance with this programme certain fixed assets were verified during the year and nomaterial discrepancies were noticed on such verification. In our opinion this periodicityof physical verification is reasonable having regard to the size of the Company and thenature of its assets.

(c) As per the records and information and explanations given to us title deeds ofimmovable the name of the Company.

2. The inventories of the Company have been physically verified by the management atreasonable intervals and the procedures of physical verification of inventory followed bythe Management are reasonable in relation of the Company and nature of its business. Thediscrepancies noticed compared to book records were not material.

3. According to the records and information and explanations made available to us theCompany has loans secured or unsecured to companies firms LLP and other parties section189 of the Companies Act 2013.

4. According to the information explanations and representations provided by themanagement and based upon audit procedures performed the Company has not granted anyloans investments guarantees and security; accordingly the provisions of Clause 3(iv)of the Order are not applicable.

5. In According to the information and explanations given to us the Company has notaccepted any public within the provisions of Section 73 to76 of the Act or any otherrelevant provisions of the Act and the rules framed there under. According to theinformation and explanations given to us no order has been Company Law Board or NationalCompany Law Tribunal or Reserve Bank of India or any Court or other tribunal in thisregard.

6. We have broadly reviewed the books of account maintained by the Company pursuant tothe rules made by the Central Government for the maintenance of cost records under section148 (1) of the Act related to the manufacture of Machinery andMechanicalappliancesandpartsthereofandexecutionof projects having application ofMechanical Engineering Fabrication Construction and Refractory products and are of theopinion that prima facie the prescribed accounts and records have been made andmaintained. We have not however made a detailed examination of the said records with aview to determine whether they are accurate or complete.

7. a) According to the records of the Company undisputed statutory dues includingincome tax custom duty excise duty and other material statutory dues have generally beenregularly deposited with the appropriate authorities though there have been delay in somecases of tax deducted at source provident fund employees’ state insurance servicetax and sales-tax and there were no undisputed statutory dues payable for a period of morethan six months from the date they became payable as at 31st March 2016. However therewas one instance whereprovidentfundamounting to of technical issues with Rs. 4214889/-was paid post resolution delay of 4 days.

b) According to the records and information & explanations given to us there areno dues in Tax Duty of Custom that have not been deposited with the appropriateauthorities to the extent applicable on account of any dispute and the dues in respect ofService Tax Duty of Excise Income Tax VAT or cess that have not been deposited with theappropriate authorities on account of dispute and the forum where the dispute is pendingare given below: -

Name of Statute Nature of Dues Period Amount (in Rs.) Forum where dispute is pending
Finance Act 1994 Service Tax 2005-09 46822758 CESTAT Ahmedabad
Finance Act 1994 Service Tax 2007-08 251566 Deputy Commissioner (Appeals) Central Excise Panipat
Finance Act 1994 Service Tax 2008-09 184672 Commissioner (Appeals) of Central Excise Haldia
Finance Act 1994 Service Tax 2006-07 2475194 CESTAT New Delhi
Central Excise Act 1944 Excise Duty 2001-02 252640 CESTAT Navi Mumbai
Central Excise Act 1944 Excise Duty 2004-05 219156 CESTAT Vadodara
Central Sales Tax 1956 Central Sales Tax 2006-07 807261 Joint Commissioner Sales Tax West Bengal
Bombay Sales Tax Act 1959 Sales Tax 2004-05 169822 Joint Commissioner of Sales Tax (Appeals)
West Bengal Value Added Tax VAT 2007-08 2589556 Joint Commissioner of Commercial Taxes
West Bengal Value Added Tax Act 2003 VAT 2009-10 17483088 Joint Commissioner of Sales Tax
Central Sales Tax (West Bengal) Rules 1958 Central Sales Tax 2009-10 1514805 Joint Commissioner of Sales Tax
West Bengal Value Added Tax Act 2003 VAT 2010-11 16694017 Joint Commissioner of Sales Tax
Building and Other Construction Workers’ Welfare Cess Act 1996 Labour Welfare Cess 2007-08 3970102 Bihar Building and Other Construction Workers’ Welfare Board
Income Tax Act 1961 Income Tax 2011-12 264790 Commissioner of Income-tax (Appeals) Mumbai
Orissa Value Added Tax 2004 VAT 2002-03 244655 Sales Tax Authority Angul Orissa
Income Tax Act 1961 Income Tax 2009-10 29048080 Comm. of Income Tax (Appeals) Mumbai

(This is to be read with Note No.35)

8. In our opinion on the basis of audit procedures and according to the informationand explanations given to us and based on the confirmation received the Company has notdefaulted in repayment of loans and borrowings to banks. The company did not have anyoutstanding dues in respect of debentures financial institutions and government (bothState and Central) during the year.

9. On the basis of information and explanations given to us term loans have beenapplied for they were obtained. The company did not raise any money by way of initial /further public offer.

10. Based on the audit procedure performed and on the basis of information andmanagement no fraud by the Company and no fraud on the Company by its officers orreported during the course of the audit.

11. On the basis of records and information and explanations made available and basedon records of the company the company has paid/ provided managerial remuneration inaccordance with the requisite approvals mandated under Section 197 read with Schedule V ofthe Act.

12. The Company is not a chit fund or a nidhi /mutual benefit fund /society the saidOrder are not applicable to the Company hence we are not offering any comment.

13. As per the information and explanations and records made available by themanagement of procedure performed for the related parties transactions entered during theyear the Company has complied with the provisions of Section177 and 188 of the Act whereapplicable. As explained and as per records / details the related parties transactionshave been disclosed as per the applicable Accounting Standards.

14. According to the information and explanations given to us the Company has not madeof shares or fully / partly convertible debentures during the year in terms of provisionsof Section 42 of the Act.

15. On the basis of records made available to us and according to information andCompany has not entered into non-cash transactions with the directors or persons connectedwith him. Accordingly paragraph 3(xv) of the Order is not applicable.

16. The company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934 as the provision of section is not applicable to the Company.

For LODHA & CO.
Chartered Accountants
Firm’s Registration No. 301051E
N.K. Lodha
Place: New Delhi Partner
Date: 31st May2016 Membership No.085155

Annexure - B to the Auditors’ 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 ofPetronEngineering ConstructionLimited ("the Company") as of 31st st March 2016 inconjunction with our audit of the 2016 financial statements of the year ended on thatdate.

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’). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the conduct of itsbusiness including adherence to company’s policies the safeguarding of its assetsthe prevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation reliable financial information as requiredunder the CompaniesAct 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 deemed tobe prescribed under section 143(10) of the Companies Act 2013 to the extent applicableto an audit of internal financial controls both applicable to an audit of InternalFinancial Controls and both issued by the Institute of Chartered Accountants of India.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and 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 performingprocedures to obtain audit evidence about the adequacy of the internal financial controlssystem over financial reporting and their operating effectiveness.

Our audit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness and testing and evaluating the design and operatingeffectiveness of internal the assessed risk. 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.

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 financialreporting is a process designed toprovide reasonable assurance regardingthereliabilityoffinancialreportingand 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 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 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 collusion or improper management override of controls materialmisstatements due to error or fraud may occur and not be detected. Also projections ofany evaluation of the internal financial controls over financial periods are subject tothe risk that the internal financial control over financial reporting may becomeinadequate because of changes in conditions or that the degree of compliance withthepolicies or procedures may deteriorate.

Opinion

In our opinion read with the matters described below under Emphasis of Matters underthe heading "Basis of Qualified Opinion" the Company has maintained in allmaterial respects adequate internal financial controls over financial reporting and suchinternal financial controls over financial reporting were operating effectively as ofMarch 31st 2016 based on the internal control over financial reporting criteria Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.

Emphasis of Matters

Attention is drawn to:

(a) Note No. - 43 (a) regarding the Company’s practice for the revision in costrelated with the projects and estimated revenue on account of prolongation of thecontracts’ tenure as per the requirement of the clients owing to uncertainsurrounding completion of the projects pending confirmation / negotiation with the to befurther strengthen / improved to make it commensurate with the size of the company andnature of business in order to correct variance in costs estimatedand was subsequentlyincurred. [ This is to be read with Note No. 43 (b)]

(b) Note No. - 43 (b) regarding the balances of certain trade receivables loans andadvances and other liabilities that there will not be any material impact subjecttoconfirmation/reconciliation where management is confident onconfirmation/reconciliation.

Our opinion is not modified in respect of matter stated above. identified reportedabove in determining the nature timing and extent of audit

We have considered the weaknesses tests applied in our audit of the March 31st 2016financial statements of the Company and these weaknesses do not affect our opinion on the2016 financial statements of the Company.

For LODHA & CO.
Chartered Accountants
Firm’s Registration No. 301051E
N.K. Lodha
Place: New Delhi Partner
Date: 31st May2016 Membership No.085155