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Artson Engineering Ltd.

BSE: 522134 Sector: Engineering
NSE: ARTSONENGG ISIN Code: INE133D01023
BSE 00:00 | 25 Nov 26.85 -0.05
(-0.19%)
OPEN

26.80

HIGH

27.10

LOW

26.05

NSE 05:30 | 01 Jan Artson Engineering Ltd
OPEN 26.80
PREVIOUS CLOSE 26.90
VOLUME 13972
52-Week high 45.55
52-Week low 18.20
P/E
Mkt Cap.(Rs cr) 99
Buy Price 26.40
Buy Qty 1.00
Sell Price 27.30
Sell Qty 500.00
OPEN 26.80
CLOSE 26.90
VOLUME 13972
52-Week high 45.55
52-Week low 18.20
P/E
Mkt Cap.(Rs cr) 99
Buy Price 26.40
Buy Qty 1.00
Sell Price 27.30
Sell Qty 500.00

Artson Engineering Ltd. (ARTSONENGG) - Auditors Report

Company auditors report

To the Members of Artson Engineering Limited

Report on the audit of the financial statements

Opinion

1. We have audited the accompanying financial statements of Artson Engineering Limited (the Company) which comprise the Balance Sheet as at March 31 2019 and the Statement of Profit and Loss (including Other Comprehensive Income) the Statement of Changes in Equity and statement of Cash Flows for the year then ended and notes to the financial statements including a summary of significant accounting policies and other explanatory

2. In our opinion and to the best of our information and according to the explanations given to us the aforesaid financial statements give the information required by the Companies Act 2013 (the Act) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at March 31 2019 and total comprehensive income (comprising of loss and other comprehensive income) changes in equity and its cash flows for the year then ended.

Basis for opinion

3. We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act.

Our responsibilities under those Standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. 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 ethical requirements that are relevant to our audit of the financialstatements under the provisions of the Act and the Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

4. Key audit matters are those matters that in our professional judgment were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole and in forming our opinion thereon and we do not provide a separate opinion on these matters.

Key audit matter description

Assessment of recoverability of Deferred Tax Asset in respect of unabsorbed tax losses

(Refer Note 7 to the financial statements)

The Company has recognised a deferred tax asset in respect of unabsorbed tax losses comprising of unabsorbed depreciation and business losses pertaining to the earlier assessment years. The balance of such deferred tax asset as at March 31 2019 was Rs. 1078 Lakhs (comprising of deferred tax asset of Rs. 141.02 Lakhs and Rs. 936.98 Lakhs in respect of unabsorbed depreciation and business losses respectively) which is included in Deferred tax assets (net) amounting to Rs. 1307.23 Lakhs. The deferred tax asset is recognised as it is considered to be recoverable based on the Company's projected taxable profits years. Under Indian Accounting Standard 12 Income Taxes the carrying amount of a deferred tax asset is required to be reviewed at the end of each reporting period.

This was considered as a key audit matter as the amount is material to the financial statements and significant judgement was required by the Company's Management in the preparation of forecasts of future taxable profits based on the underlying business plans.

How our audit addressed the key audit matters

Our procedures included the following:

 Evaluation of the design and testing operating effectiveness of Company's controls relating to the assessment of carrying amount of deferred tax assets the preparation of the forecast and its related inputs/ assumptions

 Comparing the Company's business forecast prepared in the previous year with its actual performance during the year;

 Assessing the business plans used by the Management in evaluating the utilization of the deferred tax asset;

 Testing along with Auditor's experts the reasonability of management estimates and key assumptions such as growth rate and estimated percentage of gross profit used in the management projections of the future taxable profits and whether the tax losses can be utilized within the forecast recoupment period;

 Evaluating the progress made by the Company in recent periods vis-a- vis the budget which inter-alia included monitoring of operational inefficiencies and related cost and improvement

Based on the above procedures our testing did not identify any exceptions with respect to the reasonability of the assumptions and estimates used by the management in assessing the recoverability of Deferred Tax Asset in respect of unabsorbed tax losses.

Key audit matter description

Appropriateness of estimation of total costs to be incurred for completion of contracts

(Refer Note 2.3 and Note 20 to the financial statements)

For all of its construction contracts the Company recognises revenue over a period of time and measures the progress based on the input method by considering the proportion of contract costs incurred for the work performed till the balance sheet date relative to the estimated total costs of the contract. The estimated total costs also include cost contingencies which take into account specific uncertain risks arising within each contract.

This has been determined as a key audit matter as the amount is significant to the financial statements. Also management judgement is involved in the assessment of project data and estimation of total costs including cost contingencies; and any variation in the cost has a consequential impact on the revenue recognised.

How our audit addressed the key audit matter

Our procedures included the following:

 Understood and evaluated the design and tested the operating effectiveness of controls around estimation of costs to complete including the review and approval of estimated project cost.

 Evaluated the methodology applied by the Management in estimating the total costs.

 On a sample basis obtained and reviewed project source documents such as contract agreements and estimated total costs.

 Tested on a sample basis the calculation of percentage of completion under Input method including the testing of costs incurred and recorded against the contract for occurrence and accuracy assessing the basis for determining the total costs and re-computing the percentage of completion.

Evaluated the reasonableness of significant judgements applied by Management in their estimates and the key assumptions in the total estimated costs including cost contingencies for a sample of contracts.

 Inspected Meeting minutes of project reviews performed by them to identify relevant changes in their assessments and estimates; and reviewed the status of the project.

Evaluated the adequacy of disclosures made in the financial statements.

Based on the above procedures we did not note any significant exceptions in the estimation of total costs to be incurred for completion of contracts.

Other Information

5. The Company's Board of Directors is responsible for the other information. The other information comprises the information included in the Board's Report including Annexures to Board's Report but does not include the financial statements and our Auditor's report thereon.

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

In connection with our audit of the financial statements our responsibility is to read the other information and in doing so consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If based on the work we have performed we conclude that there is a material misstatement of this other information we are required to report that fact.

We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the financial statements

6. The Company's Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these financial statements that give a true and fair view of the financial changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India including the Accounting Standards specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and accounting records relevant to the preparation and presentation of the financial statements that give a and are free from material misstatement whether due to fraud or error.

7. In preparing the financial statements management is responsible for assessing the Company's ability to concern disclosing as applicable matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations or has no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company's financial reporting process.

Auditor's responsibilities for the audit of the financial statements

8. Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement whether due to fraud or error and to issue an Auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if individually or in aggregate they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

9. As part of an audit in accordance with SAs we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

 Identify and assess the risks of material misstatement of the financial statements whether due to fraud or error design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficientand appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control.

 Obtain an understanding of internal control relevant to the audit in order to design 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 has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.

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

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

 Evaluate the overall presentation structure and content of the financial statements including the disclosures and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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

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

12. From the matters communicated with those charged with governance we determine those matters that were of most significance in the audit of the financialstatements of the current period and are therefore the key audit matters. We describe these matters in our Auditor's report unless law or regulation precludes public disclosure about the matter or when in extremely rare circumstances we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirements

13. 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 of the Act we give in the Annexure B a statement on the matters specified in paragraphs 3 and 4 of the Order to the extent applicable.

14. 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 best of 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 the Company so far as it appears from our examination of those books.

(c) The Balance Sheet the Statement of Profit and Loss (including other comprehensive income) the Statement of Changes in Equity and Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) In our opinion the aforesaid financial statements comply with the Accounting Standards specified under of the Act.

(e) On the basis of the written representations received from the Directors as on March 31 2019 taken on record by the Board of Directors none of the Directors is disqualified as on March 31 2019 from being appointed as a Director in terms of Section 164 (2) of the Act.

(f) With respect to the adequacy of the internal financial controls with reference to financial statements of the Company and the operating effectiveness of such controls refer to our separate Report in Annexure A.

(g) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements Refer Note 45 to the financial statements;

ii. The Company has long-term contracts as at March 31 2019 for which there were no material foreseeable losses. The Company did not have any derivative contracts as at March 31 2019.

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company during the year ended March 31 2019.

iv. The reporting on disclosures relating to Specified Bank Notes is not applicable to the Company for the year ended March 31 2019.

For Price Waterhouse & Co

Chartered Accountants LLP

Firm Registration Number: 304026E/E-300009

Chartered Accountants

Sunit Kumar Basu

Partner

Membership Number: 55000

Mumbai 8th May 2019

ANNEXURE A TO INDEPENDENT AUDITORS' REPORT

Referred to in paragraph 14 (f) of the Independent Auditors' Report of even date to the members of Artson Engineering Limited on the financial statements for the year ended March 31 2019

Report on the Internal Financial Controls with reference to financial statements Section 143 of the Act

1. We have audited the internal financial controls with reference to financial Company) as of March 31 2019 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

2. The Company's management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design implementation and maintenance of adequate internal financial controls that were operating effectively conduct of its business including adherence to Company's policies the safeguarding of its assets the prevention and detection of frauds and errors the accuracy and completeness of the accounting records and the timely preparation of reliable financial information as required under the Act.

Auditors' Responsibility

3. Our responsibility is to express an opinion on the Company's internal financial controls with reference to financial statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the Guidance Note) and the Standards on Auditing deemed to be prescribed under section  143(10) of the Act to the extent applicable to an audit of internal financial controls both applicable to an audit of internal financial controls and both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal statements was established and maintained and if such controls operated financial effectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial system with reference to financial statements and their operating effectiveness. Our audit of with reference to financial statements included obtaining an understanding of internal financial financial statements assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the Auditor's judgement including the assessment of the risks of material misstatement of the financial statements whether due to fraud or error.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company's internal financial controls system with reference to financial statements.

Meaning of Internal Financial Controls with reference to financial statements

6. A Company's internal financial controls with reference to financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Company's internal financial controls with reference to financial statements includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the Company are being made only in accordance with authorisations of Management and Directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition use or disposition of the Company's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls with reference to financial statements

7. Because of the inherent limitations of internal financial controls with reference to financial statements including the possibility of collusion or improper management override of controls material misstatements due to error or fraud may occur and not be detected. Also projections of any evaluation of the internal financial controls with reference to financial statements to future periods are subject to the risk that the internal financial control controls with reference to financial statements may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

8. In our opinion the Company has in all material respects an adequate internal financial controls system with reference to financial statements and such internal financial controls with reference to financial statements were operating effectively as at March 31 2019 based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For Price Waterhouse & Co

Chartered Accountants LLP

Firm Registration Number: 304026E/E-300009

Chartered Accountants

Sunit Kumar Basu

Partner

Membership Number: 55000

Mumbai 8th May 2019

ANNEXURE B TO INDEPENDENT AUDITORS' REPORT

Referred to in paragraph 13 of the Independent Auditors' Report of even date to the members of Artson Engineering Limited on the financial statements as of and for the year ended March 31 2019

i. (a) The Company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

(b) The fixed assets are physically verified by the Management according to a phased programme designed to cover all the items over a period of three years which in our opinion is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the programme a portion of the fixed assets has been physically verified by the Management during the year and no material discrepancies have been noticed on such verification.

(c) The title deeds of immovable properties as disclosed in Note 3 on Fixed Assets and Note 8 on Other Assets to the financial statements are held in the name of the Company.

ii. The physical verification of inventory have been conducted at reasonable intervals by the Management during the year. The discrepancies noticed on physical verification of inventory as compared to book records were not material.

iii. The Company has not granted any loans secured or unsecured to companies firms Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the Act. Therefore the provisions of Clause 3(iii) (iii)(a) (iii)(b) and (iii)(c) of the said Order are not applicable to the Company.

iv. The Company has not granted any loans or made any investments or provided any guarantees or security to the parties covered under Section 185 and 186. Therefore the provisions of Clause 3(iv) of the said Order are not applicable to the Company.

v. The Company has not accepted any deposits from the public within the meaning of Sections 73 74 75 and 76 of the Act and the Rules framed there under to the extent notified.

vi. Pursuant to the rules made by the Central Government of India the Company is required to maintain cost records as specifiedunder Section 148(1) of the Act in respect of its products. We have broadly reviewed the same and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have not however made a detailed examination of the records with a view to determine whether they are accurate or complete.

vii. (a) According to the information and explanations given to us and the records of the Company examined by us in our opinion the Company is generally regular in depositing undisputed statutory dues in respect of income tax and employees' state insurance though there has been a slight delay in a few cases and is regular in depositing undisputed statutory dues including provident fund professional tax sales tax service tax duty of customs duty of excise value added tax cess goods and service tax and other material statutory dues as applicable with the appropriate authorities.

Also refer note 45(b) to the financial statements regarding management's assessment on certain matters relating to provident fund.

(b) According to the information and explanations given to us and the records of the Company examined by us there are no dues of income-tax service-tax duty of customs duty of excise goods and service tax which have not been deposited on account of any dispute. The particulars of dues of sales tax and value added tax as at March 31 2019 which have not been deposited on account of a dispute are as follows:

Name of the statuteNature of duesAmount disputedAmount depositedPeriod to which the amount relatesForum where the dispute is pending
(Rs. in Lakhs)(Rs. in Lakhs)
Central Sales Tax Act 1956Central Sales Tax41.40NilF.Y 2007-08Maharashtra Sales Tax Tribunal
MVAT Act 2002Value Added Tax & Central Sales Tax2.39NilF.Y 2008-09Commissioner (Appeals)
MVAT Act 2002Value Added Tax & Central Sales Tax1.60NilF.Y 2011-12Deputy Commissioner of Sales Tax (Appeals)
Punjab Value Added Tax Act 2005Value Added Tax4.841.21F.Y 2009-10Joint Director- cum- Deputy Excise & Taxation Commissioner (Appeals)
Punjab Value Added Tax Act 2005Value Added Tax2.32NilF.Y 2009-10Excise & Taxation Officer -cum-Officer Incharge
West Bengal Value Added Tax Act 2003Value Added Tax1.99NilF.Y 2015-16Joint Commissioner Sales Tax

viii. According to the records of the Company examined by us and the information and explanation given to us the Company has not defaulted in repayment of loans or borrowings to any financial institution or bank or Government or dues to debenture holders as at the balance sheet date.

ix. In our opinion and according to the information and explanations given to us the term loans have been applied for the purposes for which they were obtained. The Company has not raised any moneys by way of initial public offer and further public offer (including debt instruments).

x. During the course of our examination of the books and records of the Company carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us we have neither come across any instance of material fraud by the Company officers or employees on the Company by its noticed or reported during the year nor have we been informed of any such case by the Management.

xi. The Company has paid/ provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.

xii. As the Company is not a Nidhi Company and the Nidhi Rules 2014 are not applicable to it the provisions of Clause 3(xii) of the Order are not applicable to the Company.

xiii. The Company has entered into transactions with related parties in compliance with the provisions of Sections 177 and 188 of the Act. The details of such related party transactions have been disclosed in the financial statements as required under Indian Accounting Standard (Ind AS) 24 Related Party Disclosures specified under Section 133 of the Act. xiv. The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly the provisions of Clause 3(xiv) of the Order are not applicable to the Company.

xv. The Company has not entered into any non cash transactions with its directors or persons connected with him. Accordingly the provisions of Clause 3(xv) of the Order are not applicable to the Company. xvi. The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act 1934. Accordingly the provisions of Clause 3(xvi) of the Order are not applicable to the Company.

For Price Waterhouse & Co

Chartered Accountants LLP

Firm Registration Number: 304026E/E-300009

Chartered Accountants

Sunit Kumar Basu

Partner

Membership Number: 55000

Mumbai 8th May 2019

   

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