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Artson Engineering Ltd.

BSE: 522134 Sector: Engineering
NSE: ARTSONENGG ISIN Code: INE133D01023
BSE 00:00 | 13 Sep 33.15 -0.70
(-2.07%)
OPEN

34.50

HIGH

34.50

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33.00

NSE 05:30 | 01 Jan Artson Engineering Ltd
OPEN 34.50
PREVIOUS CLOSE 33.85
VOLUME 24338
52-Week high 64.70
52-Week low 29.05
P/E 87.24
Mkt Cap.(Rs cr) 122
Buy Price 32.55
Buy Qty 200.00
Sell Price 34.50
Sell Qty 30.00
OPEN 34.50
CLOSE 33.85
VOLUME 24338
52-Week high 64.70
52-Week low 29.05
P/E 87.24
Mkt Cap.(Rs cr) 122
Buy Price 32.55
Buy Qty 200.00
Sell Price 34.50
Sell Qty 30.00

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 theStatement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and statement of Cash Flows for the year then ended and notes to thefinancial statements including a summary of significant accounting policies and otherexplanatory

2. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate 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 flowsfor the year then ended.

Basis for opinion

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

Our responsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Financial Statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India together with the ethical requirements that are relevantto our audit of the financialstatements under the provisions of the Act and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained 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 mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing 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 lossescomprising of unabsorbed depreciation and business losses pertaining to the earlierassessment years. The balance of such deferred tax asset as at March 31 2019 was

र 1078 Lakhs (comprising of deferred tax asset of र 141.02 Lakhs andर 936.98 Lakhs in respect of unabsorbed depreciation and business lossesrespectively) which is included in Deferred tax assets (net) amounting to र 1307.23 Lakhs. The deferred tax asset is recognised as it is considered to be recoverablebased on the Company's projected taxable profits years. Under Indian Accounting Standard12 Income Taxes the carrying amount of a deferred tax asset is required to be reviewedat the end of each reporting period.

This was considered as a key audit matter as the amount is material to the financialstatements and significant judgement was required by the Company's Management in thepreparation 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'scontrols relating to the assessment of carrying amount of deferred tax assets thepreparation of the forecast and its related inputs/ assumptions

• Comparing the Company's business forecast prepared in the previous year with itsactual performance during the year;

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

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

• Evaluating the progress made by the Company in recent periods vis-a- vis thebudget which inter-alia included monitoring of operational inefficiencies and relatedcost and improvement

Based on the above procedures our testing did not identify any exceptions with respectto the reasonability of the assumptions and estimates used by the management in assessingthe 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 oftime and measures the progress based on the input method by considering the proportion ofcontract costs incurred for the work performed till the balance sheet date relative tothe estimated total costs of the contract. The estimated total costs also include costcontingencies which take into account specific uncertain risks arising within eachcontract.

This has been determined as a key audit matter as the amount is significant to thefinancial statements. Also management judgement is involved in the assessment of projectdata and estimation of total costs including cost contingencies; and any variation in thecost 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 ofcontrols around estimation of costs to complete including the review and approval ofestimated project cost.

• Evaluated the methodology applied by the Management in estimating the totalcosts.

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

• Tested on a sample basis the calculation of percentage of completion underInput method including the testing of costs incurred and recorded against the contract foroccurrence and accuracy assessing the basis for determining the total costs andre-computing the percentage of completion.

Evaluated the reasonableness of significant judgements applied by Management in theirestimates and the key assumptions in the total estimated costs including costcontingencies for a sample of contracts.

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

Evaluated the adequacy of disclosures made in the financial statements.

Based on the above procedures we did not note any significant exceptions in theestimation 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 otherinformation comprises the information included in the Board's Report including Annexuresto Board's Report but does not include the financial statements and our Auditor's reportthereon.

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

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

We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the financialstatements

6. The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theAccounting Standards specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and accounting records relevant to thepreparation and presentation of the financial statements that give a and are free frommaterial misstatement whether due to fraud or error.

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

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

Auditor's responsibilities for the audit of the financial statements

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

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

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

• 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 financialstatements or if such the disclosures are inadequate to modify our opinion. Ourconclusions 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 financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.

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

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

12. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the financialstatements ofthe current period and are therefore the key audit matters. We describe these matters inour Auditor's report unless law or regulation precludes public disclosure about the matteror when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe 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 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in the Annexure B a statement on the matters specified inparagraphs 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 bestof our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.

(c) The Balance Sheet the Statement of Profit and Loss (including other comprehensiveincome) the Statement of

Changes in Equity and Cash Flow Statement dealt with by this Report are in agreementwith the books of account.

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

(e) On the basis of the written representations received from the Directors as on March31 2019 taken on record by the

Board of Directors none of the Directors is disqualified as on March 31 2019 frombeing 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 tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure A".

(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 45 to the financial statements;

ii. The Company has long-term contracts as at March 31 2019 for which there were nomaterial foreseeable losses. The Company did not have any derivative contracts as at March31 2019.

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company during the year ended March 31 2019. iv. Thereporting on disclosures relating to Specified Bank Notes is not applicable to the Companyfor 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 themembers 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 financialCompany") as of March 31 2019 in conjunction with our audit of the financialstatements 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 internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential internal control stated in theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting issued bythe Institute of Chartered Accountants of India (ICAI). These responsibilities include thedesign implementation and maintenance of adequate internal financial controls that wereoperating effectively 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 Act.

Auditors' Responsibility

3. 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 Internal Financial Controls OverFinancial Reporting (the "Guidance Note") and the Standards on Auditing deemedto be prescribed under section

143(10) of the Act to the extent applicable to an audit of internal financial controlsboth 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 andplan and perform the audit to obtain reasonable assurance about whether adequate internalstatements was established and maintained and if such controls operated financialeffectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial system with reference to financial statements and theiroperating effectiveness. Our audit of with reference to financial statements includedobtaining an understanding of internal financial financial statements assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the Auditor's judgement including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error.

5. 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

6. A Company's internal financial controls 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 controlswith reference to financial statements includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the Company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the Company are being made only in accordance withauthorisations of Management and Directors of the Company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the Company's assets that could have a material effect on the financialstatements.

Inherent Limitations of Internal Financial Controls with reference to financialstatements

7. 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 controls with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

Opinion

8. In our opinion the Company has in all material respects an adequate internalfinancial controls system with reference to financial statements and such internalfinancial controls with reference to financial statements were operating effectively as atMarch 31 2019 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.

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 themembers 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 particularsincluding quantitative details and situation of fixed assets.

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

(c) The title deeds of immovable properties as disclosed in Note 3 on Fixed Assets andNote 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 bythe Management during the year. The discrepancies noticed on physical verification ofinventory as compared to book records were not material. iii. The Company has not grantedany loans secured or unsecured to companies firms Limited Liability Partnerships orother parties covered in the register maintained under Section 189 of the Act. Thereforethe provisions of Clause 3(iii) (iii)(a) (iii)(b) and (iii)(c) of the said Order are notapplicable to the Company.

iv. The Company has not granted any loans or made any investments or provided anyguarantees or security to the parties covered under Section 185 and 186. Therefore theprovisions of Clause 3(iv) of the said Order are not applicable to the Company. v. TheCompany has not accepted any deposits from the public within the meaning of Sections 7374 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 isrequired to maintain cost records as specifiedunder Section 148(1) of the Act in respectof its products. We have broadly reviewed the same and are of the opinion that primafacie the prescribed accounts and records have been made and maintained. We have nothowever made a detailed examination of the records with a view to determine whether theyare accurate or complete. vii. (a) According to the information and explanations given tous and the records of the Company examined by us in our opinion the Company is generallyregular 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 indepositing undisputed statutory dues including provident fund professional tax salestax service tax duty of customs duty of excise value added tax cess goods andservice tax and other material statutory dues as applicable with the appropriateauthorities.

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

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

Name of the statute Nature of dues Amount disputed Amount deposited Period to which the amount relates Forum where the dispute is pending
( in Lakhs) ( in Lakhs)
Central Sales Tax Act 1956 Central Sales Tax 41.40 Nil F.Y 2007-08 Maharashtra Sales Tax Tribunal
MVAT Act 2002 Value Added Tax & Central Sales Tax 2.39 Nil F.Y 2008-09 Commissioner (Appeals)
MVAT Act 2002 Value Added Tax & Central Sales Tax 1.60 Nil F.Y 2011-12 Deputy Commissioner of Sales Tax (Appeals)
Punjab Value Added Tax Act 2005 Value Added Tax 4.84 1.21 F.Y 2009-10 Joint Director- cum- Deputy Excise & Taxation Commissioner (Appeals)
Punjab Value Added Tax Act 2005 Value Added Tax 2.32 Nil F.Y 2009-10 Excise & Taxation Officer -cum-Officer Incharge
West Bengal Value Added Tax Act 2003 Value Added Tax 1.99 Nil F.Y 2015-16 Joint Commissioner Sales Tax

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 or borrowingsto any financial institution or bank or Government or dues to debenture holders as at thebalance sheet date. ix. In our opinion and according to the information and explanationsgiven to us the term loans have been applied for the purposes for which they wereobtained. The Company has not raised any moneys by way of initial public offer and furtherpublic offer (including debt instruments).

x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company officers or employees on the Company byits noticed or reported during the year nor have we been informed of any such case by theManagement. xi. The Company has paid/ provided for managerial remuneration in accordancewith the requisite approvals mandated by the provisions of Section 197 read with ScheduleV to the Act.

xii. As the Company is not a Nidhi Company and the Nidhi Rules 2014 are not applicableto 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 withthe provisions of Sections 177 and 188 of the Act. The details of such related partytransactions have been disclosed in the financial statements as required under IndianAccounting Standard (Ind AS) 24 Related Party Disclosures specified under Section 133 ofthe Act. xiv. The Company has not made any preferential allotment or private placement ofshares 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 theCompany.

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