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Artefact Projects Ltd.

BSE: 531297 Sector: Engineering
NSE: N.A. ISIN Code: INE885B01014
BSE 14:49 | 20 Jan 83.05 9.45
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NSE 05:30 | 01 Jan Artefact Projects Ltd
OPEN 76.00
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VOLUME 188716
52-Week high 85.90
52-Week low 28.25
P/E 23.01
Mkt Cap.(Rs cr) 60
Buy Price 83.05
Buy Qty 77.00
Sell Price 83.80
Sell Qty 85.00
OPEN 76.00
CLOSE 73.60
VOLUME 188716
52-Week high 85.90
52-Week low 28.25
P/E 23.01
Mkt Cap.(Rs cr) 60
Buy Price 83.05
Buy Qty 77.00
Sell Price 83.80
Sell Qty 85.00

Artefact Projects Ltd. (ARTEFACTPROJECT) - Auditors Report

Company auditors report

To

The Members

ARTEFACT PROJECTS LIMITED

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying Ind AS financial statements of ARTEFACT PROJECTSLIMITED ("the Company") which comprise the Balance Sheet as at March 31 2021the Statement of Profit and Loss (including Other Comprehensive Income) the Cash FlowStatement for the year then ended and a summary of significant accounting policies andother explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 as amended ("the Act") in the manner so required andgive a true and fair view in conformity with the accounting principles generally acceptedin India of the state of affairs of the Company as at March 31 2021 its profitincluding other comprehensive income its cash flows and the changes in equity for theyear ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) as specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the ‘Auditor'sResponsibilities for the Audit of the Standalone Financial Statements' section of ourreport. We are independent of the Company in accordance with the ‘Code of Ethics'issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion on the standalone financial statements.

Emphasis on Matter:

We draw attention to:

1) Note No. 6.01 to the accompanying Statement of audited Financial Results regardinginvestment of Rs. 13.55 crores (Including cumulative interest of Rs 1.55 crores accruedthereon) in Unquoted fully compulsory convertible debentures in private unlisted companiesas at reporting date. The management has represented that all investments in the saidcompanies based on its assessment of cash flows investment being long term and strategicin nature and valuation report of registered external Valuers received by the company noprovision for impairment of expected Losses in accordance with Ind-As-109 "FinancialInstruments" is required and the amounts are fully recoverable. We have relied on themanagement representation and external valuers report in this regard.

2) Note no.6.02 to the accompanying Statement of audited standalone Financial Resultsregarding investment of Rs. 90 Lacs in equity shares of associate company. The managementbased on its assessment for the current financial year and considering that the companyhas earned profits and has positive net worth as per audited balance sheet for the yearending 31st March 2020 is of the opinion that there is no diminution in thevalue of its investment in the said company and hence no provision for impairment loss isrequired. We have relied on the management.

3) The impact of pandemic in immediate future cannot be quantified as on date. Howeverthe Management is of view that there is no expected significant adverse impact on thecontinuity of operations of the business on long term basis/ on useful life of the assets/on financial position etc.

Our opinion is not Qualified in respect of above matters.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements for the financial yearended March 31 2021. These matters were addressed in the context of our audit of thestandalone financial statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters. We have determined that there are no keyaudit matters to communicate in our report.

Information Other than the Financial Statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual report but does not includethe standalone financial statements and our auditor's report thereon. The Board's reportis expected to be made available to us after the date of this auditor's report.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether such other informationis materially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated.

When we read the Board's report if we conclude that there is a material misstatementtherein we are required to communicate the matter to those charged with governance andtake appropriate action as applicable under the relevant laws and regulations.

Responsibilities of Management for the Standalone 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 ofthese standalone financial statements that give a true and fair view of the financialposition financial performance (including Other Comprehensive Income) cash flows andchanges in equity of the Company in accordance with the accounting principles generallyaccepted in India including the Indian Accounting Standards (Ind AS) specified underSection 133 of the Act read with Companies (Indian Accounting standards) Rules 2015 asamended.

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.

In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so. Those Board of Directors are also responsible foroverseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgeiy intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsfor the financial year ended March 31 2021 and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Other Matters

The Financial statements and other financial information include the companiesproportionate share in jointly controlled total assets of Rs. 116.56 Lacs revenue of Rs.53.39 Lacs expenditure of Rs.52.72 Lacs and share of profit of Rs. 0.67 Lacs in jointventures for the year ended March 31 2021 and the elements making up the cash flowstatements and related disclosures in respect of unincorporated joint ventures which isbased on the audited financial statements of the respective joint ventures audited 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 the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account;

d. In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Companies (IndianAccounting Standards) Rules 2015 as amended;

e. On the basis of the written representations received from the directors as on March31 2021 and taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2021 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 with reference tothese standalone financial statements of the company and the operating effectiveness ofsuch controls refer to our separate Report in "Annexure A" to this report.

g. In our opinion the managerial remuneration for the year ended March 31 2021 hasbeen paid / provided by the Company to its directors in accordance with the provisions ofsection 197 read with Schedule V to the Act.

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 2016 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 Ind AS financial statements as referred to in Note no. 32 to thestandalone financial statements.

ii. The Company does not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses.

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

2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in "Annexure B" a statement on the matters specified inparagraphs 3 and 4 of the Order.

"ANNEXURE A" TO THE INDEPENDENT AUDITORS* REPORT

(Referred to in Paragraph 1 (f) of the Independent Auditors Report of even date to themembers of Artefact Projects Limited on the standalone Financial Statements as of and forthe year ended March 31 2021)

Report on the Internal Financial Controls With reference to financial statements underClause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("theAct")

We have audited the Internal Financial Controls with reference to Financial Statementsof ARTEFACT PROJECTS LIMITED ("the Company") as of March 31 2021 in conjunctionwith our audit of the 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 reporting (the"Guidance Note") issued by the Institute of Chartered Accountants of India(ICAI). These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note on Audit of Financial Controls over financialreporting and the Standards on Auditing issued by the ICAI and deemed to be prescribedunder Section 143(10) of the Act to the extent applicable to an audit of internalfinancial controls. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls with reference to financial statements wasestablished and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements 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 systemwith reference to financial statements.

Meaning of Internal Financial Controls with reference to financial statements

A company's internal financial control with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control withreference to financial statements includes those policies and procedures that (1) pertainto the maintenance of records that in reasonable detail accurately and fairly reflectthe transactions 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 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 with reference to financialstatements

Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial control with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial control system with reference to financial statements and such internalfinancial controls with reference to financial statements were operating effectively as atMarch 31 2021 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 . Also refer paragraph"Emphasis on Matters" in main audit report

"ANNEXURE B" TO THE INDEPENDENT AUDITORS* REPORT

(Referred to in Paragraph 2 of the Independent Auditors Report of even date to themembers of Artefact Projects Limited on the standalone Financial Statements as of and forthe year ended March 31 2021)

i. In respect of its fixed assets:

a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets on the basis of available information.

b. According to the information and explanations given to us the Company hasphysically verified all the fixed assets and no material discrepancies were noticed onsuch physical verification as compared with the available records.

c. According to the information and explanations given to us the original title deedsof immovable properties have been pledged as security for loans with a lender The Companyhas produced the photocopy of the title deeds of these immovable properties and based onsuch documents the title deeds are held in the name of the Company except that the Landon which the building has been constructed is jointly owned by the Company some of thedirectors and their relatives (Refer Note No. 3.01 to the Financial Statements).

ii. In respect of its inventories:

The Company does not have any Inventories of Raw Material Finished Goods and Stores& Spares. The Inventory/ WIP at the year end represents expenditure incurred inrespect of the Project Management Consultancy Services executed but remained un-billed ason the reporting date and accordingly the provisions of Clause (ii) of Paragraph 3 of theOrder as far as it relates to Physical Verification of Inventories are not applicable tothe Company.

iii. In respect of loans secured or unsecured granted by the Company to companiesfirms limited liability Partnerships or other parties covered in the register maintainedunder section 189 of the Act:

a. The Company has given advances in the nature of loan to three joint ventures and toone Company and LLP in which director or his relative is director or partner. As per theinformation and explanations given to us the loans are repayable on demand.

b. As the loans are repayable on demand the question of overdue amount does not arise.

iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Act asapplicable in respect of loans granted investments made and guarantees and securitiesprovided.

v. According to the information and explanations given to us the Company has notaccepted any deposit from the public within the meaning of Sections 73 to 76 of the Actand the Companies (Acceptance of Deposits) Rules 2014 (as amended). Therefore theprovisions of Clause (v) of paragraph 3 of the Order are not applicable to the Company.

vi. According to the information and explanations given to us the Central Governmenthas not prescribed maintenance of the cost records under sub section (1) of section 148 ofthe act in respect of business activities carried on by the company. Therefore theprovisions of Clause (vi) of paragraph 3 of the Order are not applicable to the Company.

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

a) Some months delay has been noticed in depositing undisputed statutory dues inrespect of ESIC Provident fund Profession tax GST and TDS with the appropriateauthorities during the year. According to the information and explanations given to usundisputed amounts payable in respect of such statutory dues outstanding as at March 312021 for a period of more than six months from the date they became payable are as givenbelow:

Name of the Statute Nature of the Dues F.Y. to which it relates Amount (In Rs.)
Income Tax Act 1961 Tax Deducted at Source (TDS) 2020-21 1385498.00
TOTAL 1385498.00

b) According to Information and explanation given to us and the records of the companyexamined by us there are no dues of Goods and Service Tax which have not been depositedon account of any dispute. The particulars of dues of income tax as at March 312021 whichhave not been deposited on account of dispute are as follows:

Name of the statute Nature of dues Amount F.Y. to which the amount relates Forum where The dispute is Pending
Income Tax Act 1961 Income Tax 2309910.00 2016-17 CIT(Appeals)
Total 2309910.00

viii) According to the records of the company examined by us and the information andexplanation given to us the company has not defaulted in repayment of loans andborrowings to any financial institution or bank as at the balance sheet date. The companydoes not have any loans or borrowings from government nor has it issued any debentures onthe balance sheet date.

ix) The company has not raised any money by initial public offer further public offer(including debt instruments) during the year. The company has obtained term loans frombanks during the year. According to the records of the company examined by us and theinformation and explanation given to us the term loans were applied for the purpose forwhich those were raised.

x) Based on our audit procedures performed for the purpose of reporting the true andfair view of the financial statements and on the basis of information and explanationsgiven by the management no fraud by the Company or on the Company by its officers oremployees has been noticed or reported during the year.

xi) According to the information and explanations given to us the managerialremuneration has been paid or provided in accordance with the provisions of section 197read with Schedule V to the Act.

xii) In our opinion the Company is not a Nidhi Company. Therefore the provisions ofClause 3 (xii) of the Order are not applicable to the Company.

xiii) According to the information and explanations given to us the transactionsentered with the related parties are in compliance with section 177 and 188 of the Actwhere applicable and the details of related party transactions have been disclosed in thefinancial statements as required by the applicable accounting standards.

xiv. According to the records of the company examined by us and the information andexplanation given to us the company has received 75% allotment money of Rs. 35400000/-against allotment of 14.75 lacs equity shares (2.75 Lacs to promotors and 12 Lacs to Nonpromotors) on conversion of 14.75 lacs warrants issued in previous year. The company hadreceived Rs 118 Lacs (25% amount) as subscription for share warrants in the previous year.The warrants (2.75 Lacs to promotors and 12 Lacs to Non promotors) of Rs.10/- each atRs.32/- (including premium of Rs.22/-) for total consideration of Rs. 472 Lacs carrying anoption / entitlement to subscribe to equivalent number of equity shares of Rs 10/- each ata price of Rs 32/-each including premium of Rs 22/each as per valuation determined byindependent valuer at a future date not exceeding 18 months from the date of issue of suchwarrants were issued in the previous year. The company has complied with the requirementsof section 42 of the Companies Act 2013 and the funds received during the year have beenused for the purpose for which they have been raised.

xv. According to the information and explanations given to us during the year thecompany has not entered into any non-cash transactions with directors or persons connectedwith him. Therefore the provisions of Clause (xv) of paragraph 3 of the Order are notapplicable to the Company.

xvi. In our opinion and according to information and explanations provided to us theCompany is not required to be registered under section 45-LA of the Reserve Bank of IndiaAct 1934.

.