To the Members of
Cochin Shipyard Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Cochin ShipyardLimited (the Company) which comprise the Balance Sheet as at 31st March 2020the Statement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year then ended and notes tothe financial statements including a summary of significant accounting policies and otherexplanatory 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 (the Act)in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended (Ind AS) and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2020 and its profit (includingOther Comprehensive Income) changes in equity and its cash flows for the year ended onthat date.
Basis for Opinion
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 furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance withthe Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI)together with the ethical requirements that are relevant to our audit of the standalonefinancial statements under the provisions of the Companies Act 2013 and the
Rules thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgement were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matter described below to be thekey audit matter to be communicated in our report.
1. Measurement of Physical Completion and Ship Repair activities.
The company recognises revenue from ship building and ship repair activities based onpercentage of completion method. The percentage of completion is arrived at based onestimated percentage of physical completion as assessed by the management of the companywhich involves exercise of significant judgements. Refer Note 2.4 (Critical AccountingEstimates & Judgements - Revenue Recognition) & 2.19(a) (Revenue RecognitionRevenue from Operations) to the Standalone Financial Statements. The physical completionis ascertained as per an in-house procedure manual developed by the management of thecompany. The procedure and the assumptions therein are based on certain judgements made bythe management based on inputs received from the planning design and technicaldepartments of the company. Further the ascertainment of the actual physical completionof each sub- on reporting date also involves management estimation Our audit approachconsisted of understanding the basis and assumptions made in adopting such procedureunderstanding the system for capturing data and monitoring the progress of completion ofvarious works for internal reporting to the management evaluating the internal controlsin such system selecting samples and performing substantive checking and analyticalprocedures. However we have placed substantial reliance on the technical assessment andactivity-based cost estimate defined by the management for the purpose of recognition ofincome.
Emphasis of Matter Effects of COVID-19
We draw attention to Note 53 of the standalone financial statements which describes theCompany's assessment on the impact of COVID-19 on its financial results and itsoperations.
Our opinion is not modified in respect of this matter.
Information Other than the Financial Statements and Auditors' Report Thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the Director's Report Management Discussion and Analysis
Business Responsibility Report Report on Corporate
Governance but does not include the standalone financial statements and our auditor'sreport thereon. The annual report is expected to be made available to us after the date ofthis 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 identified above when it becomes available and in doingso consider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained in the audit or otherwise appears to be ematerially misstated.
When we read the other information if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance and take necessary actions as per applicable laws and regulations. ofManagement and Those Charged with Responsibilities
Governance 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) changes in equityand cash flows of the Company in accordance with the accounting principles generallyaccepted in India including the Indian Accounting Standards specified in the Companies(Indian Accounting Standards) Rules 2015(as amended) under section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other selection and application of appropriate accountingpolicies; making judgements and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the standalone financial statements the Board of Directors areresponsible for assessing the Company's ability to continue as going concern disclosingas applicable matters relating to going concern and using the going concern basis ofaccounting unless the Board of Directors either intends to liquidate the Company or tocease operations or has no realistic alternative but to do so. The Board of Directors arealso responsible for overseeing the Company's financial reporting process.
Auditors' 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 aggregatethey could reasonably be expected to the economic decisions of users taken on the basis ofthese 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 standalone financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3) (i) ofthe Companies Act 2013 we are responsible for expressing our opinion on whether thecompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis ofaccounting 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 standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date ofauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation We communicate with those charged with governance regarding among othermatters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit. We also provide those charged with governance with tion 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. From the matters communicatedwith those charged with governance we determine those matters that were of mostsignificance in the audit of the standalone financial statements of the current period andare therefore the key audit matters. We describe these matters in our auditor's reportunless law or regulation precludes public disclosure about the matter or when inextremely rare circumstances we determine that a matter should not be communicated in ourreport because the adverse consequences of doing so would reasonably be expected tooutweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. 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 Companies Act 2013 we give in the Annexure A a statement on thematters specified in paragraph 3 and 4 of the Order.
2. Based on the verification of records of the Company and based on information andexplanation given to us we give in Annexure B report on the Directionsand Sub-Directions issued by the Comptroller and Auditor General of India in terms ofsub-section (5) of Section 143 of the Companies Act 2013
3. As required by Section 143(3) of the Act we report that:
(a) We have sought and obtained all information and explanations which to the best ofour 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 standalone Balance Sheet the standalone
Statement of Profit and Loss (including Other Comprehensive Income) the standalone
Statement of Changes in Equity and the standalone Statement of Cash Flows dealt with bythis Report are in agreement with the books of account.
(d) In our opinion the aforesaid standalone financial statements comply with theIndian Accounting Standards specified under Section 133 of the Act. (e) In view of theexemption given vide notification no. G.S.R 463(E) dated June 5 2015 issued by Ministryof Corporate Affairs provisions of Section disqualifica 164(2) of the Actregarding of
Directors are not applicable to the Company. (f) With respect to the adequacy of theinternal financial controls over financial reporting of the Company and the operatingeffectiveness of such controls refer to our separate Report in
(g) With respect to the other matters to be included in the Auditors' Report inaccordance with the requirements of Section 197(16) of the Act we offer no comments asthe Company is exempted from the provisions of Section 197 vide notification no. G.S.R.463(E) dated June 5 2015.
(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 (as amended) inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on its financialposition in its Standalone financial statements Refer Notes 41 43 44 and 45 to theFinancial Statements.
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts. Further thecompany did not have any long-term derivative contracts for which there were any materialforeseeable losses; - Refer Note 56 to the Financial Statements. iii. There were noamounts which were required to be transferred to the Investor Education and ProtectionFund by the Company.
ANNEXURE-A TO THE INDEPENDENT AUDITORS' REPORT
The Annexure referred to in our Independent Auditors' Report to the members of theCompany on the audit of standalone financial statements for the year ended 31st March2020.
We report that:
(i) (a) The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) As explained to us there is a regular program of physical verification of fixedassets which in our opinion is reasonable having regard to the size of the company andthe nature of assets. During the year as informed to us no material discrepancies havebeen noticed on such verification.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.
(ii) As explained to us the inventories were physically verified during the year inaccordance with the inventory verification procedure adopted by the Management. In ouropinion the frequency of such physical verification needs to be increased. Based oninformation provided to us the discrepancies noticed on such physical verification werenot material.
(iii) According to the information and explanation given to us Company has not grantedany loans secured or unsecured to companies firms limited liability partnerships orother parties covered in register maintained under Section 189 of the Companies Act 2013.Accordingly the provisions of clause (iii) (a) (b)
(c) of the Order are not applicable to the Company.
(iv) In our opinion and according to the information and explanation provided to usthe company has complied with the provisions of Sections 185 and 186 of the Companies Act2013 in respect of loans investments guarantees and securities.
(v) According to the information and explanation given to us the company has notaccepted any deposits from public and hence the directives issued by the Reserve Bank ofIndia and the provisions of Section 73 to 76 or any other relevant provisions of theCompanies Act 2013 and the rules framed thereunder are not applicable.
(vi) We have broadly reviewed the books of accounts maintained by the company pursuantto the Rules made by the Central Government for the maintenance of cost records underSection 148(1) of the Act and are of the opinion that prima facie the prescribedaccounts and records have been made and maintained.
We have not however made detailed examination of the records with a view to determinewhether they are accurate and complete.
(vii) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company in respect of statutory dues: (a) The companyhas been generally regular in depositing undisputed statutory dues including providentfund employees' state insurance income-tax sales tax service tax goods and servicetax duty of customs duty of excise value added tax cess and other statutory dues withthe appropriate authorities. According to the information and explanation given to us noundisputed amounts payable in respect of the above were in arrears as at 31st March 2020for a period of more than six months from the date they become payable.
(b) There are no dues of income tax sales tax service tax goods and service taxduty of customs duty of excise and value added tax which have not been deposited with theappropriate authorities on account of disputes except the following:
Rupees in lakhs
|Name of the Statute ||Nature of Dues ||Amount (Rs.) ||Amount deposited/ adjusted ||Amount unpaid ||Financial year to which the amount relates ||Forum where dispute is pending |
|Income Tax Act 1961 ||Income Tax ||1406.41 ||1406.41* ||- ||AY 2010-11 ||Commissioner of Income Tax |
| || || || || ||AY 2011-12 ||(Appeals) |
| || || || || ||AY 2014-15 || |
| || || || || ||AY 2017-18 || |
| ||Income Tax ||700.86 ||700.86* ||- ||AY 2010-11 ||Income Tax Appellate Tribunal |
| || || || || ||AY 2011-12 || |
|Kerala General Sales Tax 1963 ||Sales Tax ||515.11 ||20.38 ||494.73 ||1996-97 ||Assessing Officer Commercial |
| || || || || ||2000-01 ||Taxes |
| || || || || ||2001-02 || |
| ||Sales Tax ||293.51 ||- ||293.51 ||1999-2000 ||Assessing Officer Commercial Taxes (Remanded back to Assessing Officer by Kerala Sales Tax Appellate Tribunal) |
| ||Sales Tax ||202.22 ||6.55 ||195.67 ||2004-05 ||Hon'ble Kerala Sales Tax Appellate Tribunal |
|Kerala Value Added Tax Act 2004 Finance Act1994 ||Value Added Tax ||356.47 ||80 ||276.47 ||2007-08 ||Hon'ble Kerala Sales Tax |
| ||Service Tax ||5439.06 ||26 ||5413.06 ||2007-08 to ||Appellate Tribunal Customs Excise & Service Tax |
| || || || || ||2014-15 ||Appellate Tribunal Bangalore |
| || ||24.08 ||- ||24.08 ||2003-04 to ||Hon'ble High Court of Kerala |
| || || || || ||2014-15 || |
|Customs Act1962 ||Duty of Customs ||27.46 ||- ||27.46 ||1984-1990 ||Chief Commissioner of Customs Bangalore |
| || ||301.03 ||261.22 ||39.81 ||2003-2004 ||Customs Excise & Service Tax |
| || || || || ||2013-2014 ||Appellate Tribunal Bangalore |
| || ||25.8 ||- ||25.8 ||2004-2005 ||Commissioner of Customs Kochi |
| || || || || ||2017-2018 || |
| || ||14961.22 ||- ||14961.22 ||2010-2015 ||- do - |
| || || || || || ||(Case dismissed by Hon'ble High Court of Kerala directing department to file appeal under Section 130E of the Customs Act with the Hon'ble Supreme Court) |
|Employees' State Insurance Act 1948 ||Employees' State Insurance ||10.59 ||1 ||9.59 ||2010-2013 ||Hon'ble Insurance Court Alappuzha |
*Adjusted against the refund due for the subsequent years.
(viii) According to the information and explanation given to us the Company does nothave any loans or borrowings from any financial institutions banks or government duringthe year. In respect of bonds issued the Company has not defaulted in payment of anydues.
(ix) In our opinion and according to the information and explanation given to us moneyraised by way of initial public offer have been applied by the Company during the year forthe purposes for which they are raised. The Company has not raised any term loan duringthe year.
(x) To the best of our knowledge and according to the information and explanationsprovided to us we report that no fraud by the Company or on the Company by its officersand employees was noticed or reported during the year.
(xi) In view of exemption given vide notification no. G.S.R. 463(E) dated June 52015issued by the Ministry of Corporate Affairs provisions of Section 197 read with ScheduleV of the Companies Act 2013 regarding managerial remuneration are not applicable to thecompany.
(xii) The Company is not a Nidhi company as prescribed under Section 406 of theCompanies Act 2013 and therefore the reporting under Clause 3(xii) of the Order is notapplicable.
(xiii) In our opinion and based on the information and explanation provided to us alltransactions with the related parties are in compliance with section 177 and 188 ofCompanies Act 2013 where applicable and the details have been disclosed in thestandalone Financial Statements as required by the applicable Indian Accounting Standards.
(xiv) According to the information and explanations given to us and based on ourexamination of records of the Company the Company has not made any preferential allotmentor private placement of shares or fully or partly convertible debentures during the yearand therefore provisions of Section 42 of the Companies Act 2013 are not applicable tothe Company.
(xv) According to the information and explanations provided to us the Company has notentered into any non-cash transaction with directors or persons connected with them asreferred to in Section 192 of Companies Act 2013.
(xvi) In our opinion the company is not required to be registered under Section 45-IAof the Reserve Bank of India Act 1934.
ANNEXURE B TO THE INDEPENDENT AUDITORS' REPORT
With reference to the Annexure B referred to in the Independent Auditors' Report to themembers of the Company on the audit of standalone financial statements for the year endedMarch 31 2020 we report the following: A. General Directions
1. Whether the company has system in place to process all the accountingtransactions through IT system? If yes the implications of processing of accountingtransactionsoutside IT system on the integrity of the accounts along withthefinancialimplications if any may be stated.
In our opinion the company has a system in place to process all the accountingtransactions through IT system. Based on the information and explanations given to us andbased on procedures performed by us we are of the opinion that the company has anadequate internal control system to prevent and detect processing of accountingtransactions outside the IT system. As per information provided to us there has been nosuch instance reported during the year.
2. Whether there is any restructuring of any existing loan or cases of waiver writeoff of debts/loans/ interest etc. made by a lender to the company due to the company'sinability to repay the loan? If yes the financial impact may be stated.
According to the information and explanation given to us and based on ourexamination of the records of the company there has not been any restructuring of anyexisting loan or cases of waiver/ write off of debts/ loans/ interest etc. made by alender to the company.
3. Whether funds received/receivable for specific schemes from Central/ Stateagencies were properly accounted for/ utilized as per its term and conditions? List thecases of deviation.
In our opinion and based on the information and explanations given to us the fundsreceived/ receivable for specific schemes from Central/ State agencies were properlyaccounted for/ utilized as per their terms and conditions.
B. Sub Directions
No Sub Directions were issued for the period under audit.
ANNEXURE C TO THE INDEPENDENT AUDITORS' REPORT
The Annexure referred to in our Independent Auditors' Report to the members of CochinShipyard Limited on the audit of standalone financial statements for the year ended 31stMarch 2020.
Report on the Internal Financial Controls under clause (i) of Sub-section3 of Section143 of the Companies Act 2013 (the Act)
We have audited the internal financial controls over financial reporting of CochinShipyard Limited (the Company) as of March 31 2020 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2020 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and 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 and ofthe assets of the company; (2) provide reasonable assurance that transactions are recordedas necessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorizations of management and directors of thecompany; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
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 issued by the Institute ofChartered Accountants of India (ICAI'). These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of its business includingadherence to company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation ofreliable financial information as required under theCompanies Act 2013.
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 and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the GuidanceNote require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over was established and maintained and if suchcontrols operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the Company's internal financial controls system overfinancial reporting.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
| ||For Elias George & Co. |
| ||Chartered Accountants |
| ||Firm Regn. No. 000801S |
| ||Ranjit Mathews P |
| ||Partner |
|Kochi ||Membership No. 205377 |
|20 June 2020 ||UDIN: 20205377AAAADJ5804 |