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Deep Energy Resources Ltd.

BSE: 532760 Sector: Others
NSE: DEEPENR ISIN Code: INE677H01012
BSE 00:00 | 27 Nov 44.35 -0.25
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NSE 00:00 | 23 Nov 44.35 0
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OPEN 43.95
PREVIOUS CLOSE 44.60
VOLUME 15363
52-Week high 130.00
52-Week low 36.85
P/E 295.67
Mkt Cap.(Rs cr) 142
Buy Price 173.00
Buy Qty 200.00
Sell Price 178.60
Sell Qty 100.00
OPEN 43.95
CLOSE 44.60
VOLUME 15363
52-Week high 130.00
52-Week low 36.85
P/E 295.67
Mkt Cap.(Rs cr) 142
Buy Price 173.00
Buy Qty 200.00
Sell Price 178.60
Sell Qty 100.00

Deep Energy Resources Ltd. (DEEPENR) - Auditors Report

Company auditors report

To

The Members

Deep Industries Limited.

Report on the Standalone Financial Statements Opinion

We have audited the accompanying Standalone financial statements of Deep IndustriesLtd. ("the Company") which comprises the Balance Sheet as at March31 2019 the Statement of Profit and Loss (including Other Comprehensive Income) thestatement of cash flows for the year statement of changes in equityfor the year thenended and notes to the financial statements including a summary of significant accountingpolicies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 (the Act) in the manner so required and give a true and fairview in conformity with the Indian Accounting Standards prescribed under section 133 ofthe Act read with Companies (Indian Accounting Standards) Rules 2015 as amended("Ind-AS'') and other accounting principles generally accepted in India of the stateof affairs of the Company as at March 312019 its profit and total comprehensiveincomechanges in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the ethicalrequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the standalone financial statements.

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.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 matters described below to bethe key audit matters to be communicated in our report.

Key Audit Matter How our audit addressed the Key audit matter
Refer to Note No. 10 of Notes forming parts of standalone financial statement. We have performed the following procedures in relation to the recoverability of trade receivables:
The company has net trade receivables of INR 11685.12 lakhs as at 31st March 2019. • Tested the accuracy of aging of trade receivables at year end on a sample basis;
Trade receivable of the company includes INR 6154.00 lakhs receivable from a single customer only which is 52.66% of total receivable of the company. The said increase is majorly on account of cancelled / terminated GDU project by ONGC on account of commercial dispute between Company and ONGC for which the company is contesting the matter with ONGC currently at High court of Andhra Pradesh and as informed to us and based on the Order of the High Court of Andhra Pradesh the company is hopeful of recovering the captioned amount of Debtors. • Obtained a list of outstanding receivables and identified any debtors with financial difficulty through discussion with management as well as conducting market research on the industry;
• Assessed the recoverability of the unsettled receivables on a sample basis through our evaluation of management's assessment with reference to the credit profile of the customers historical payment pattern of customers publicly available information and latest correspondence with customers and to consider if any additional provision should be made;
Trade Receivables are recognised at their anticipated realisable value. • Ensured that Sales and Debtors' balances are recorded correctly and accurately and within the accounting period;
The recoverable amount was estimated by management based on their specific recoverability assessment on individual debtor with reference to the aging profile historical payment pattern and the past record of the customer. Management would make specific provision against individual balances with reference to the recoverable amount. • Ensured that Trade Receivables are properly disclosed in the financial statements;
• Tested subsequent settlement of trade receivables after the balance sheet date on a sample basis if any
We found the key judgements and assumptions used by management is reasonable and in the recoverability assessment of trade receivables to be supportable based on the available evidence.
Valuation of trade receivable is a key audit matter in the audit due to the size of the trade receivable balance and the high level of management judgement used in determining the anticipated realisable value.

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

The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the standalone financial statements and our auditor's report thereon.

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

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

If based on the work we have performed we conclude that there is a materialmisstatement of this other information; we are required to report that fact. We havenothing to report in this regard.

Responsibility of Management for the Standalone Financial Statements

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 standalone financial statementsthat give a true and fair view of the state of affairs(financial position) profit or loss(financial performance including other comprehensive income) changes in equity and cashflows of the Company in accordance with the accounting principles generally accepted inIndia including the Indian Accounting Standards specified under section 133 of the Act.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate implementation and maintenance of accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the financial statement that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

The Board of Directors is also responsible for overseeing the company's financialreporting process.

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

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

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

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

• Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also 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 reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe 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.

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

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.

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

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

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial 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

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"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.

As required by Section 143(3) of the Act based on our audit 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 Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the relevant books of account.

d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014.

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 disqualifiedas on March 312019 from being appointed as a director in terms of Section 164 (2) of theAct.

f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.

g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended: In our opinionand to the best of our information and according to the explanations given to us thecompany has not paid any remuneration to its directors during the year.

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 Note No. 36 of Notes forming partsof accounts.

II. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts.

III. There is no amount required to be transferred to the Investor Education andProtection Fund by the Company. Hence this clause is not applicable.

For DHIRUBHAI SHAH & CO LLP
Chartered Accountants
FRN: 102511W/W100298
Place : Ahmedabad Harish B. Patel
Date :May 28 2019 Partner
Membership number: 014427

Annexure- A to the Independent Auditor's Report

The Annexure referred to in Independent Auditors' Report to the members of the companyon the standalone financial statements for the year ended 31 March 2019 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 the fixed assets have been physically verified by themanagement at reasonableintervals. In our opinion the program of verification isreasonable having regard to the size of thecompany and the nature of its assets. We havebeen informed that no material discrepancies were 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 have been physically verified during the yearby the management. In our opinion the frequency of verification is reasonable.Discrepancies noticed on physical verification of inventory as compared to book recordswere not material.

(iii) The Company has not granted any loans secured or unsecured to companies firms orother parties covered in the register maintained under section 189 of the Companies Actand therefore the provisions of clauses (iii) (a) (iii) (b) & (iii) (c) of the Orderare not applicable to the Company.

(iv) As explained to us there is no transaction of loans investments guarantees andsecurity prescribed in the provisions of section 185 and 186 of the Act during the yearunder audit. Hence reporting under this clause is not applicable to the company.

(v) In our opinion the Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable.

(vi) The Company is not required to maintain cost records as per the Companies (CostRecords and Audit) Rules 2014 prescribed by Central Government under subsection (1) ofsection 148 of the Companies Act; hence this clause is not applicable to the company.

(vii) (a) The Company is regular in depositing undisputed statutory dueswithappropriate authority which includes provident fund employees' state insurance taxdeducted at sources sales tax service tax goods and service tax duty of customs dutyof excise value added tax cess and any other statutory dues during the yearexcept partdeposition of advance tax. Moreover as at 31st March 2019 there are no suchundisputed dues payable for a period of more than six months from the date they becamepayable.

(b) According to information and explanations given to us and records of the companyexamined by us there areno dues ofwealth tax sales tax duty of customs duty of excisevalue added tax goods and service tax and cess etc. which have not been deposited onaccount of dispute. However particulars of the dues as at March 2019 which have not beendeposited on account of dispute are as follow:

Name of Statute Nature of Dues Amount (^ Lakhs) Period to which the amount relates From where the dispute is pending
Finance Act 1994 Service tax 96.36 F.Y. 2006-07 to 2011-2012 CESTAT Ahmedabad
Finance Act 1994 Service tax 101.88 F Y 2012-13 to 30.09.2014 CESTAT Ahmedabad
Finance Act 1994 Service tax 1.70 F Y 2009-10 CESTAT Ahmedabad
Income Tax Act 1961 Income-Tax 6.14 F Y 2013-14 ITAT
Income Tax Act 1961 Income-Tax 46.81 F Y 2015-16 CIT (A)

(viii) In our opinion and according to the information and explanation given to us theCompany has not defaulted in repayment of dues to a financial institution banks andgovernment or debenture holders during the year.

(ix) The company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. According tofurther information and explanations given to us the term loans raised during the yearwere applied for the purpose for which those were raised.

(x) According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.

(xi) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not paid/provided formanagerial remuneration during the year. Hence reporting under this clause is notapplicable.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the standalone financial statements as required by theapplicable accounting standards.

(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made preferential allotmentof shares during the year.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.

(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

For DHIRUBHAI SHAH & CO LLP
Chartered Accountants
FRN: 102511W/W100298
Place : Ahmedabad Harish B Patel
Date : May 28 2019 Partner
Membership number: 014427

ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 1 (f) under ‘Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Deep Industries Ltd.of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of DeepIndustries Ltd. ("the Company") as of March 312019 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.

Management's Responsibility for Internal Financial Controls

The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to respective company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting 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 judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the internal financial controls system overfinancial reporting of the Company.

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 anddispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; 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.

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.

Opinion

In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2019 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.

For DHIRUBHAI SHAH & CO LLP
Chartered Accountants
FRN: 102511W/W100298
Place : Ahmedabad Harish B Patel
Date : May 28 2019 Partner
Membership number: 014427

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