You are here » Home » Companies » Company Overview » DCM Ltd

DCM Ltd.

BSE: 502820 Sector: Industrials
NSE: DCM ISIN Code: INE498A01018
BSE 00:00 | 19 Feb 20.50 0
(0.00%)
OPEN

20.50

HIGH

20.60

LOW

19.25

NSE 10:44 | 20 Feb 19.75 0.15
(0.77%)
OPEN

19.65

HIGH

20.55

LOW

19.65

OPEN 20.50
PREVIOUS CLOSE 20.50
VOLUME 514
52-Week high 47.45
52-Week low 17.20
P/E
Mkt Cap.(Rs cr) 38
Buy Price 19.85
Buy Qty 60.00
Sell Price 20.60
Sell Qty 20.00
OPEN 20.50
CLOSE 20.50
VOLUME 514
52-Week high 47.45
52-Week low 17.20
P/E
Mkt Cap.(Rs cr) 38
Buy Price 19.85
Buy Qty 60.00
Sell Price 20.60
Sell Qty 20.00

DCM Ltd. (DCM) - Auditors Report

Company auditors report

ON THE STANDALONE FINANCIAL STATEMENTS

INDEPENDENT AUDITOR'S REPORT

To The Members of DCM Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the standalone financial statements of DCM Limited ("theCompany") which comprise the standalone balance sheet as at 31 March 2019 and thestandalone statement of profit and loss (including other comprehensive income) standalonestatement of changes in equity and standalone statement of cash flows for the year thenended and notes to the standalone financial statements including a summary of thesignificant accounting policies and other explanatory information (hereinafter referred toas "standalone financial statements").

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 ("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 31 March 2019 and the profit and othercomprehensive income changes in equity and its cash 3ows for the year ended on thatdate.

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 SAs 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 with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to note 55 of the standalone financial statements which indicatesthat pursuant to approval of demerger of the Textile Division with effect from 1 April2019 by the National Company Law Tribunal ("NCLT") vide its order dated 1 May2019 the Company's net worth will be substantially reduced and the current liabilitieswill exceed current assets by Rs. 6739.35 lacs as at the beginning of 1 April 2019. TheCompany is facing liquidity issues and there are certain delays in making the statutorydues and vendor payments and subsequent to the year end the Company has also defaulted onits scheduled repayment of loans and interest payments aggregating Rs. 749.22 lacs to abank and a financial institution. Above financial position post demerger and thecontinuing losses in one of the remaining businesses of the Company indicate materialuncertainty as to the Company's ability to continue as a going concern which would bedependent upon realization of the Company's future plans as indicated in the note.

Our opinion is not modified in respect of this matter.

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 of the current period.3ese 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. In addition to the matter described in the MaterialUncertainty Related to Going Concern section we have determined the matter describedbelow to be key audit matter to be communicated in our report.

Description of Key Audit Matter

Impairment of property plant and equipment of Engineering division See note 3 to the standalone financial statements
Key audit matter How the matter was addressed in our audit
As at 31 March 2019 the Company's balance sheet includes property plant and equipment amounting to Rs. 17217.15 lacs. Our procedures in relation to management's impairment assessment included but not limited to the following procedures:
The Company has three cash- generating units (‘CGU') – Engineering division Textile division and Data System division out of these units the Engineering division has continuous losses and accordingly the management has assessed it for impairment. • testing the design and implementation of controls in place;
• obtaining and reviewing management assessment whether there were any indicators of impairment of property plant and equipment as at 31 March 2019;
The assessment of the recoverable value of the assets of the Engineering division aggregating Rs. 6113.03 lacs incorporates significant judgement in respect of factors such as valuation of land future production levels sales prices operating/capital costs and economic assumptions such as discount rates inflation rates etc. • obtaining valuation report in respect of land carried out by external valuer;
• assessing appropriateness of impairment assessment and methodologies used;
• evaluating reasonableness of key assumptions used in the valuation;
We identified assessing impairment of property plant and equipment of Engineering division as a key audit matter considering it to be significant to the Company's total assets involving significant judgement and estimation in determining the recoverable value. • assessing the adequacy of disclosures in the financial statements in respect of the property plant and equipment.

• Other Information

The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the financial statements and our auditor's reportthereon.

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 ouraudit of the standalone financial statements our responsibility is to read the otherinformation and in doing so consider whether the other information is materiallyinconsistent with the standalone 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.

Management's Responsibility for the Standalone Financial Statements

The Company's management and Board of Directors are responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the state of affairs profit and othercomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under section 133 of the Act. 3is 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 were operatingeffectively for ensuring the accuracy and completeness of the accounting records relevantto the preparation and presentation of the standalone financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone financial statements management and Board of Directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

Board of Directors is also responsible for overseeing the Company's financial reportingprocess.

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 mayarise 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:

t_ 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 those resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal controls.

t_ Obtain an understanding of internal controls 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.

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

t_ 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 of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

t_ 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 other matters theplanned scope and timing of the audit and significant audit 3ndings including anysignificant de3ciencies 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 statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or 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

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of section 143 (11) of the Act we give in the"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.

(A) As required by Section 143(3) of the Act we report that: a) We have sought andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purposes of our audit; b) In our opinion proper books ofaccount as required by law have been kept by the Company so far as it appears from ourexamination of those books; c) The standalone balance sheet the standalone statement ofprofit and loss (including other comprehensive income) the standalone statement ofchanges in equity and the standalone statement of cash 3ows dealt with by this Report arein agreement with the books of account; d) In our opinion the aforesaid standalonefinancial statements comply with the Ind AS specified under section 133 of the Act; e) Onthe basis of the written representations received from the directors as on 31 March 2019and taken on record by the Board of Directors none of the directors is disqualified as on31 March 2019 from being appointed as a director in terms of Section 164(2) of the Act; f)The going concern matter described under the Material Uncertainty Related to Going Concernparagraph above in our opinion may have an adverse effect on the functioning of theCompany; and g) With respect to the adequacy of the internal financial controls withreference to financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure B".

(B) 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. TheCompany has disclosed the impact of pending litigations as at 31 March 2019 on itsfinancial position in its standalone financial statements - Refer Note 47 (b) to thestandalone financial statements; ii. The Company did not have any long-term contractsincluding derivative contracts for which there were any material foreseeable losses; iii.3ere has been no delays in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company; and iv. The disclosures in thestandalone financial statements regarding holdings as well as dealings in specified banknotes during the period from 8 November 2016 to 30 December 2016 have not been made inthese financial statements since they do not pertain

Annexure A referred to in our Independent Auditor's Report to the members of DCMLimited on the Standalone Financial Statements for the year ended 31 March 2019

(i) (a) According to the information and explanations given to us the Company hasmaintained proper records showing full particulars including quantitative details andsituation of fixed assets.

(b) According to the information and explanations given to us the Company has aregular programme of physical veri3cation of its fixed assets by which all fixed assetsare veri3ed in a phased manner over a period of three years. In our opinion thisperiodicity of physical veri3cation is reasonable having regard to the size of the Companyand the nature of its assets. In accordance with this programme certain assets have beenphysically veri3ed by the management during the current year. As informed to us nomaterial discrepancies were noticed on such veri3cation. (c) According to the informationand explanations given to us and on the basis of our examination of the records of theCompany the title deeds of the immovable properties as disclosed in Note 3 to thestandalone financial statements are held in the name of the Company. (ii) According tothe information and explanations given to us the inventories except good-in-transithave been physically veri3ed by the management at regular intervals during the year. Inour opinion the frequency of such veri3cation is reasonable having regard to the size ofthe Company and nature of its business. As informed to us the discrepancies noticed oncomparison of physical veri3cation of inventories with book records were not material andhave been properly dealt with in the books of account. (iii) According to the informationand explanations given to us the Company to the financial year ended 31 March 2019.

(C) With respect to the matter to be included in the Auditor's Report under section197(16): In our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limits laid down under Section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under Section 197(16) which arerequired to be commented upon by us.

For B S R & Co. LLP
Chartered Accountants
Firm's registration number: 101248W / W-100022
Kaushal Kishore
Place: New Delhi Partner
Date: 12 August 2019 Membership number: 090075
UDIN: 19090075AAAAAL6131

has not granted any loans secured or unsecured to companies firms or other partiescovered in the register maintained under Section 189 of the Act. Further there are nolimited liability partnerships covered in the register required under Section 189 of theAct. Accordingly paragraph 3 (iii) of the Order is not applicable.

(iv) According to the information and explanations given to us the Company has notgranted any loans and advances covered under the provisions of Section 185 and Section 186of the Act. 3us paragraph 3 (iv) of the Order is not applicable.

(v) As per the information and explanations given to us during the year the Companyhas not accepted any deposits as mentioned in the directives issued by the Reserve Bank ofIndia and the provisions of Section 73 to Section 76 or any other relevant provisions ofthe Act and the rules framed there under. Accordingly para 3(v) of the Order is notapplicable (vi) The Central Government has prescribed the maintenance of cost recordsunder sub-section (1) of section 148 of the Act for certain activities carried out by theCompany. We have broadly reviewed the books of account maintained by the Company pursuantto the Companies (Cost Records and Audit) Rules 2014 as amended and prescribed by theCentral Government for the maintenance of cost records under Section 148 of the Act andare of the opinion that prima facie the prescribed accounts and records have been madeand maintained. We have however not made a detailed examination of the cost records witha view to determine whether they are accurate or complete.

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted / accrued in the books ofaccount in respect of undisputed statutory dues including Provident fund Employee' stateinsurance Income-tax Cess and Other material statutory dues have generally beenregularly deposited with the appropriate authorities. Further there have been delays inlarge number of cases in deposit of Goods and Services Tax (‘GST') at one of thedivisions of the Company.

According to the information and explanations given to us no undisputed amountspayable in respect of Provident fund Employee' state insurance Income-tax Sales-taxGST Service tax Duty of customs Duty of excise Value added tax Cess and Othermaterial statutory dues were in arrears as at 31 March 2019 for a period of more than sixmonths from the date they became payable.

Also refer to Note 47 (d) of the Standalone Financial Statements wherein it has beenexplained that the Company has not recognised any additional Provident Fund liability withrespect to recent Hon'ble Supreme Court's judgement dated 28 February 2019 in this regard.While the Company is in the process of assessing its impact if any for the past yearsthe relatable impact on the current year is not expected to be significant.

(b) According to the information and explanations given to us there are no dues inrespect of Income-tax Sales-tax GST Service tax Duty of custom Duty of excise andValue added tax which have not been deposited with the appropriate authorities on accountof any dispute except for the following:

(Rs. in Lacs)

Name of the Statute Nature of dues Amount involved * Amount paid under protest Financial year to which amount relates Forum where dispute is pending
Income Tax Act 1961 Income Tax 39.54 39.54 2015-16 Commissioner of Income tax (Appeals)
Customs Act 1962 Customs duty 12.55 - 1988-89 Assistant Commissioner of customs (Appeals)
Central Excise Act 1944 Excise duty 0.50 - 2002-03 2003-04 Supreme court
Punjab VAT Act Sales tax 146.96 36.75 2010-11 Punjab VAT Appellate Tribunal
130.25 35.09 2009-10
2005
218.17 15.50 2012-13

* amounts as per demand orders including interest and penalty wherever indicated in thedemand.

For the above purposes statutory dues payable in India have been considered. Furtherthe demands raised and already set off by the Income-tax authorities against the carriedforward losses of the Company or the refunds due to the Company being no longer due forpayment have not been considered.

The following matters which have been excluded from the table have been decided infavour of the Company although we are informed that the concerned regulatory authorityhas preferred appeal at a higher level:

(Rs. in Lacs)
Name of the Statute Nature of dues Amount Financial year to which amount relates Forum where dispute is pending
Income Tax Act 1961 Income Tax 442.48 1982-83 to 1989-90 High Court
48.74 2010-11 High Court
66.08 2011-12 High Court
51.37 2012-13 Income tax appellate tribunal
48.33 2013-14 Income tax appellate tribunal

(viii) According to the information and explanations given to us and on the basis ofour examination of the records of the Company the Company has not defaulted in repaymentof loans or borrowings to any financial institution bank or debenture holder during theyear. The Company has not availed any loan or borrowings from government.

(ix) According to the information and explanations given to us the Company did notraise any money by way of initial public offer or further public offer (including debtinstruments) during the year. In our opinion and according to the information andexplanation given to us the term loans taken by the Company have been applied for thepurpose for which they were raised. (x) According to the information and explanationsgiven to us no fraud by the Company and neither any fraud on the Company by its officersor employees has been noticed or reported during the year.

(xi) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the managerial remuneration has been paid orprovided by the Company in accordance with the provisions of Section 197 read withSchedule V of the Act. (xii) According to the information and explanations given to usthe Company is not a Nidhi Company. Accordingly paragraph 3(xii) of the Order is notapplicable.

(xiii) According to the information and explanation given to us and on the basis of ourexamination of the records of the Company all the transactions with related parties arein compliance with the provisions of Section 177 and 188 of the Act where applicable anddetails of such transactions have been disclosed in the Standalone Financial Statements asrequired by the applicable accounting standards.

(xiv) According to the information and explanation given to us and on the basis of ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.

(xv) According to the information and explanations given to us the Company has notentered into any non-cash transactions with directors or person connected with him.Accordingly paragraph 3 (xv) of the Order is not applicable.

(xvi) According to the information and explanations given to us the Company is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 1934.

For B S R & Co. LLP
Chartered Accountants
Firm's registration number: 101248W / W-100022
Kaushal Kishore
Partner
Place: New Delhi Membership number: 090075
Date: August 12 2019 UDIN: 19090075AAAAAL6131
D C M

Annexure B to the Independent Auditor's report on the standalone financial statementsof DCM Limited for the year ended 31 March 2019. Report on the internal financial controlswith reference to the aforesaid standalone financial statements under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 (Referred to in paragraph 1(A)(g)under ‘Report on Other Legal and Regulatory Requirements' section of our report ofeven date) Opinion

We have audited the internal financial controls with reference to financial statementsof DCM Limited ("the Company") as of 31 March 2019 in conjunction with our auditof the standalone financial statements of the Company for the year ended on that date.

In our opinion the Company has in all material respects adequate internal financialcontrols with reference to financial statements and such internal financial controls wereoperating effectively as at 31 March 2019 based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India (the "Guidance Note").

Management's Responsibility for Internal Financial Controls

The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note. 3eseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and effcientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013 (hereinafter referred to as"the Act").

Auditor's 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 and the Standards on Auditing prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols with reference to financial statements. 3ose Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference tofinancial statements were established and maintained and whether such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of such internal financial controlsassessing 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 judgement including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror.

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 withreference to financial statements.

Meaning of Internal Financial controls with Reference to Financial Statements

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 include 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

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 controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

For B S R & Co. LLP
Chartered Accountants
Firm's registration number: 101248W / W-100022
Kaushal Kishore
Partner
Place: New Delhi Membership number: 090075
Date: August 12 2019 UDIN: 19090075AAAAAL6131