To The Members of DISA India Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of DISA India Limited("the Company") which comprise the Balance Sheet as at March 31 2019 and theStatement of Profit and Loss (including Other Comprehensive Income) the Cash FlowStatement and the Statement of Changes in Equity for the year then ended and a summary ofsignificant accounting policies 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 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 2019 and its profit totalcomprehensive income its cash flows and the changes in equity for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibility for the Audit of the Standalone Financial Statements section of our report.We are independent of the Company in accordance with the Code of Ethics issued by theInstitute of Chartered Accountants of India (ICAI) together with the ethical requirementsthat are relevant to our audit of the standalone financial statements under the provisionsof the Act and the Rules made thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI's Code of Ethics. Webelieve that the audit evidence obtained by us is sufficient and appropriate to provide abasis 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 ||Auditor's Response |
|Revenue recognition under Ind AS 115 Revenue from Contracts with Customers |
The Company adopted Ind AS 115 Revenue from contracts with customers from April 1 2018. The
|Principal audit procedures performed among other procedures included the following: |
We performed an understanding of the systems and processes to recognise revenue.
|Company has identified the performance obligations and assessed the satisfaction of this for the purpose of recognising revenue. ||We carried out testing of management's internal controls over revenue recognition with a focus on those related to the timing of revenue recognition due to impact of Ind AS 115. |
|We consider revenue recognition under the new standard to be a key area of focus for our audit due to the significant change in the standard and the existence of large number of different contracts and ||For sample revenue transactions verified the satisfaction of performance obligation by analyzing the contracts and determining whether the management has appropriately identified performance obligations; |
|the judgement involved. ||For a sample of revenue transactions around the period end we confirmed that the date on which revenue was recognized was appropriate by examining the associated invoice terms of the sales contract and the relevant delivery documentation. |
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. Theother information comprises the information included in the Management Discussion andAnalysis Board's report including Annexures to the Board's report and Shareholders'Information but does not include the consolidated financial statements standalonefinancial statements and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained during the course of our audit or otherwise appears to bematerially 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.
Management's Responsibility 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 financial position financial performance includingother comprehensive income cash flows and changes in equity of the Company in accordancewith the Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation 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 financialstatement that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
Those Board of Directors are 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 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 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 control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)^) 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 the 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 standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone 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
1. 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.
c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Cash Flow Statement and Statement of Changes in Equity dealt with by thisReport are in agreement with the books of account.
d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 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 disqualifiedas on March 31 2019 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 A". 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 theremuneration paid by the Company to its directors during the year is in accordance withthe provisions of section 197 of the Act.
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 ;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
2. 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 B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.
| ||For Deloitte Haskins & Sells |
| ||Chartered Accountants |
| ||(Firm's Registration No.008072S) |
| ||S. Sundaresan |
|Bengaluru: May 23 2019 ||Partner |
|SS/JKS/LS/2019 ||(Membership No. 25776) |
ANNEXURE "A" TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph i(f) under 'Report on Other Legal and RegulatoryRequirements' section of our report 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 DISA IndiaLimited ("the Company") as of March 31 2019 in conjunction with our audit ofthe standalone Ind AS financial statements of the Company for the year ended on that date.
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 Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting of the Company based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") issued by the Institute of CharteredAccountants of India and the Standards on Auditing prescribed under Section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controls.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 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 design andoperating 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 Company's internal financial controls systemover financial reporting.
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 thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
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.
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 criteria forinternal financial control over financial reporting 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.
| ||For Deloitte Haskins & Sells |
| ||Chartered Accountants |
| ||(Firm's Registration No.008072S) |
| ||S. Sundaresan |
|Bengaluru: May 23 2019 ||Partner |
|SS/JKS/LS/2019 ||(Membership No. 25776) |
ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 2 under 'Report on Other Legal and Regulatory Requirements'section of our report of even date)
Report of even date on Companies (Auditor's Report) Order
2016 ("the Order") issued by the Central Government in
terms of Section 143(11) of the Act
(i) (a) The Company has maintained proper records showing
full particulars including quantitative details and situation of fixed assets.
(b) The fixed assets were physically verified during the year by the Management inaccordance with a regular programme of verification which in our opinion provides forphysical verification of all fixed assets at reasonable intervals. According to theinformation and explanation given to us no material discrepancies were noticed on suchverification.
(c) According to the information and explanations given to us and the records examinedby us the immovable properties of land and buildings whose title deeds have been pledgedas security for loans are held in the name of the Company based on the confirmationreceived from lender.
(ii) As explained to us the inventories were physically verified during the year bythe Management at reasonable intervals and no material discrepancies were noticed onphysical verification.
(iii) According to the information and explanations given to us the Company hasgranted loans secured or unsecured to companies firms Limited Liability Partnershipsor other parties covered in the register maintained under section 189 of the CompaniesAct 2013 in respect of which:
(a) The terms and conditions of the grant of such loans are in our opinion primafacie not prejudicial to the Company's interest.
(b) The schedule of repayment of principle and payment of interest has been stipulatedand repayment or receipt of principle amounts and interest have been regular as perstipulations.
(c) There is no overdue amount remaining outstanding as at the year-end.
(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 if the Companies Act 2013in respect of grant of loans making investments and providing guarantees and securitiesas applicable.
(v) According to the information and explanations given to us the Company has notaccepted any deposits from the public to which directives issued by the Reserve Bank ofIndia and the provisions of Sections 73 to 76 or any other relevant provisions of the Actand the Companies (Acceptance of Deposit) Rules 2014 as amended would apply. Hencereporting under clause (v) of the Order is not applicable.
(vi) The maintenance of cost records has been specified by the Central Government undersection 148(1) of the Companies Act 2013. We have broadly reviewed the cost recordsmaintained by the Company pursuant to the Companies (Cost Records and Audit) Rules 2014as amended prescribed by the Central Government under sub-section (1) of Section 148 ofthe Companies Act 2013 and are of the opinion that prima facie the prescribed costrecords have been made and maintained. We have however not made a detailed examinationof the cost records with a view to determine whether they are accurate or complete.
(vii) According to the information and explanations given to us in respect ofstatutory dues:
(a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income- tax Sales Tax Service TaxCustoms Duty Excise Duty Value Added Tax Goods & Services Tax Cess and othermaterial statutory dues applicable to it to the appropriate authorities.
(b) There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income-tax Sales Tax Service Tax Customs Duty Excise Duty ValueAdded Tax Goods & Services Tax cess and other material statutory dues in arrears asat March 31 2019 for a period of more than six months from the date they became payable.
(c) Details of dues of Income Tax Sales Tax Service Tax Excise Duty and Value AddedTax which have not been deposited as on March 31 2019 on account of disputes are givenbelow:
|Name of Statue ||Nature of Dues ||Forum where Dispute is Pending ||Period to which the Amount Relates ||Amount Involved and Unpaid* (Rs. in Millions) |
|Central Excise Act 1944 ||Excise Duty ||CESTAT ||F.Y. 2009-2011 ||0.12 |
|Central Excise Act 1944 ||Excise Duty ||Commissioner (Appeals) ||F.Y. 2014-2016 ||1.19 |
|Karnataka Value Added Tax Act 2003 ||Value Added Tax ||Joint Commissioner (Appeals) ||F.Y. 2010-2011 ||0.05 |
|Central Sales Tax Act 1956 ||Central Sales Tax ||Joint Commissioner (Appeals) ||F.Y. 2007-2011 ||5.12 |
|Central Sales Tax Act 1956 ||Central Sales Tax ||Karnataka Appellate Tribunal ||F.Y. 2012-2013 ||4.15 |
|Central Sales Tax Act 1956 ||Central Sales Tax ||Joint Commissioner (Appeals) ||F.Y. 2015-2016 ||1.71 |
|Karnataka Tax on Entry of Goods Act 1974 ||Entry Tax ||Karnataka Appellate Tribunal ||F.Y. 2012-2013 ||0.11 |
|Income Tax Act 1961 ||Income Tax ||Income Tax Appellate Tribunal ||A.Y. 2013-2014 ||5.65 |
There are no dues of duty of custom duty and Goods and Services Tax that have not beendeposited as at March 31 2019 on account of disputes. * Net of Rs.15.86 millions paidunder protest.
(viii) The company has not taken any loans or borrowings from financial institutionsbanks and government or has not issued any debentures. Hence reporting under clause3(viii) of the Order is not applicable to the Company.
(ix) The Company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments) or term loans and hence reporting under clause 3(ix) ofthe Order is not applicable to the Company.
(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no fraud on the Company by its officers oremployees has been noticed or reported during the year.
(xi) In our opinion and according to the information and explanations given to us theCompany has paid managerial remuneration in accordance with the requisite approvalsmandated by the provisions of section 197 read with Schedule V to the Companies Act 2013.
(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of theOrder is not applicable.
(xiii) In our opinion and according to the information and
explanations given to us the Company is in compliance with Section 188 and 177 of theCompanies Act 2013 where applicable for all transactions with the related parties andthe details of related party transactions have been disclosed in the financial statementsetc. as required by the applicable accounting standards.
(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underclause (xiv) of the Order is not applicable.
(xv) In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsdirectors or persons connected with him and hence provisions of section 192 of theCompanies Act 2013 are not applicable.
(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
For Deloitte Haskins & Sells
Chartered Accountants (Firm's Registration No.008072S)
| ||S. Sundaresan |
|Bengaluru; May 23 2019 ||Partner |
|SS/JKS/LS/2019 ||(Membership No. 25776) |