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Dredging Corporation of India Ltd.

BSE: 523618 Sector: Others
NSE: DREDGECORP ISIN Code: INE506A01018
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OPEN 353.45
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VOLUME 3638
52-Week high 475.00
52-Week low 228.20
P/E
Mkt Cap.(Rs cr) 986
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Dredging Corporation of India Ltd. (DREDGECORP) - Auditors Report

Company auditors report

To the Members of Dredging Corporation of India Limited

Report on the Audit of the Ind AS Financial Statements

Opinion

We have audited the accompanying Ind AS financial statements ("financialstatements") of Dredging Corporation of India Limited ("the Company")which comprise the Balance Sheet as at 31 March2020 the Statement of Profit and Loss(including Other Comprehensive Income) the statement of changes in equity and theStatement of Cash Flows for the year then ended and notes to the financial statementsincluding a summary of the significant accounting policies and other explanatoryinformation.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 ("Act") in the manner so required and give a true and fairview in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at 31 March 2020 and the profit and othercomprehensive income changes in equity and its cash flows 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 Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our opinion

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.

1. Revenue Recognition:

The company executed different types of dredging contracts. Each type of contract hasvarious clauses in the agreement for determining the milestones quantity executed for thepurpose of arriving at the transaction price for the performance obligation based on thesurvey stages of completion and also has clauses relating to various deductions that aremade from the Bills. The estimate of works executed which is based on quantitative andqualitative parameters for both billed and unbilled

Operational Income for the purpose of determining the Revenue Recognition anddeductions involves high degree of Managementjudgement and assessment.

Auditor's Response:

Our audit approach included an analysis of systems and procedures as under:

? Reviewed the Accounting Principles and Internal Assessment procedure adopted by thecompany for recognition of Revenue.

? Analysed for the Performance obligations milestones and Surveys and identified theTransaction price with the data available and also considering the terms and conditionsstipulated in the contract agreement. Evaluated subsequent output technical data andreceipts after the reporting date wherever available.

? Compared the outcomes as above with the performance obligations and Transaction Pricerecorded by the Company.

? Performed Analytical Procedures to assess the reasonableness of the basis for revenuerecognition.

Emphasis of Matter

We draw attention to the following matters in the notes to the financial statements.Our opinion is not modified in respect of these matters.

a) Note N026(7) to the financial statements regarding estimating Unbilled OperationalIncome pertaining to M/s. Jawaharlal Nehru Port Trust wherein due to Covid-19lockdown situation joint progressive survey could not be completed during the first weekof April 2020 and hence a technical methodology was adopted by the Management forestimating the income up to 31st March 2020. We have relied upon technicalestimate provided by the management.

b) Note No 26(9) to the financial statements which state that Trade Receivables includea sum of 97.72 Crores due from M/s. Sethusamudram Corporation Limited (SCL) towardswork executed during 2005-06 to 2008-09 as has been settled by a Committee chaired byAdditional Secretary and Financial Advisor Ministry of Shipping Government of India (AS& FA Committee). The Committee stated that a note seeking approval of the Cabinetneeds to be moved for seeking Government Budgetary resources for SCL to make payment ofbalance outstanding dues to the Company.

c) Note No 26(11) to the financial statements which states that Outstanding balancesunder Trade Payables Other Payables Trade Receivables Advance to Suppliers are subjectto reconciliation the impact of which is not ascertainable.

d) Note No 26(1)(A) to the financial statements regarding Arbitral Award of 57.34Crores in favour o f M /s. Mercator Lines Limited (MLL). The Company has challengedthe Arbitral Award before the High

Court of Delhi and also before the Jurisdictional High Court of Justice Business andProperty Courts of England and Wales Commercial Court and the same have been dismissed.MLL filed Execution petition before the High Court of Delhi seeking execution/enforcementof Arbitral Awards. DCI has contested the award under Section 48 of the Arbitration andConciliation Act 1996 while praying for rejecting the execution petition of MLL on theground t h a t the award i s contrary to the public policy of India and also on the groundthat Arbitral procedure was not in accordance with the agreement of parties particularlyLMAA Rules. Accordingly the said Arbitral Award is shown as contingent liability. We haverelied upon the legal opinions obtained by the Company from Senior Counsels.

Other Information

The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report CorporateGovernance and Shareholder's Information but does not include the financial statementsand our auditor's report thereon. The said reports are expected to be made available to usafter the date of this audit report.

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

In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated.

When we read the given reports if we conclude that there is a material misstatementtherein we are required to communicate the matter to those charged with governance.

Management's Responsibility for the Financial Statements

The Company's management and Board of Directors are responsible for the matters statedin section 134(5) of the Companies Act 2013 ("the Act") with respect to thepreparation of these financial statements that give a true and fair view of the state ofaffairs profit/loss and other comprehensive income changes in equity and cash flows ofthe Company in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) 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 accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the financialstatement that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the 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.

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

Auditor's Responsibility for the Audit of the Financial S t a t e m e n t s

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

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

b. 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) of theCompanies Act 2013 we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls with reference to financial statements inplace and the operating effectiveness of such controls.

c. Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management. d. Conclude on theappropriateness of management's use of the going concern basis of accounting and based onthe audit evidence obtained whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Company's ability to continue as a goingconcern. If we conclude that a material uncertainty exists we are required to drawattention in our auditor's report to the related disclosures in the financial statementsor if such disclosures are inadequate to modify our opinion. Our conclusions are basedon the audit evidence obtained up to the date of our auditor's report. However futureevents or conditions may cause the Company to cease to continue as a going concern. e.Evaluate the overall presentation structure and content of the financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.

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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen 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.

Other Matters

We did not audit the financial statements of branch at Bangladesh included in thefinancial statements of the Company which reflect total assets of 15691akhs as at 31stMarch 2020 and the total revenue of 7701 lakhs for the year ended on that date asconsidered in the financial statements. The financial statements of this branch have notbeen audited and have been incorporated based on management certified accounts. Ouropinion in so far as it relates to the amounts and disclosures included in respect of thisbranch is based solely on the financial statements certified by the Management. Ouropinion is not modified in respect of this matter.

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 paragraphs 3 and 4 of the Order to the extent applicable.

2. As required by Section 143(3) of the Act we report that:

a. We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

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

c. The Balance Sheet the Statement of Profit and Loss (including Other ComprehensiveIncome) the Statement of Changes in Equity and the Statement of Cash Flows dealt with bythis Report are in agreement with the books of account. d. In our opinion the aforesaidInd AS financial statements comply with the Accounting Standards specified under Section133 of the Act.

e. On the basis of written representations received from the directors on 31 March 2020taken on record by the Board of Directors none of the directors is disqualified as on 31March 2020 from being appointed as a director in terms of Section 164(2) of the Act.

f. With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B"

g. With respect to the other matters to be included in Auditors' Report under Section197(16) of the Act: In our opinion and according to the information and explanations givento us the remuneration paid by the Company to its directors during the current year is inaccordance with the provisions of section 197 of the Act. The remuneration paid to anydirector is not in excess of the limits laid down under section 197 of the Act. TheMinistry of Corporate Affairs has not prescribed other details under section 197(16) ofthe Act which are required to be commented upon by us.

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 financial statements - Refer Note 26(1)(A) to the 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.

3. As required under the directions and sub-directions issued by the Comptroller andAuditor General of India in terms of Sub-section (5) of Section 143 of the Companies Act2013 we are enclosing our report in "Annexure C".

(Referred to in paragraph 1 under 'Reports on Other Legal and Regulatory Requirements'section of our report of even date to the members of Dredging Corporation of India Limitedon the financial statements for the year ended 31st March 2020)

With reference to Annexure - A referred to in the Independent Auditor's Report to themembers of the Company on the financial statements for the year ended 31 March 2020wereport the following:

(i) In respect of Company's fixed assets

a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

b) The Company has a programme of physical verification of fixed assets on a yearlybasis which in our opinion is reasonable having regards to the size of the Company andnature of its business. Fixed assets were physically verified by the management during theyear. According to the information and explanations given to us no material discrepancieswere 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 ownedby the company are held in the name of the Company.

(ii) Physical verification of Inventory has not been conducted by the Management duringthe year.

(iii) According to the information and explanations given to us the Company has notgranted loans secured or unsecured to companies firms limited liability partnerships orother parties covered in the register maintained under section 189 of Companies Act 2013.

(iv) In our opinion and according to the information and explanations given to us theCompany has not entered in to any transaction attracting the provisions of section 185 and186 of the Act.

(v) According to the information and explanations given to us that the company has notaccepted any deposit from the public within the meaning of the directives issued by theReserve Bank: of India provisions of Section 73 to 76 of the Act or any other relevantprovisions of the Companies Act 2013 and rules framed thereunder.

(vi) To the best of our knowledge the Central Government has not prescribedmaintenance of cost records under section 148(1) of the Companies Act 2013 in respect ofthe Company's nature of business.

(vii) (a) According to the information and explanations given to us and on the basis ofexamination of the records of the Company the Company has generally been regular indepositing undisputed statutory dues including Provident Fund Employees State InsuranceFund Income Tax Sales Tax Service Tax Goods and Services Tax Duty of Customs Duty ofExcise Value Added Tax Cess and other material statutory dues with appropriateauthorities except Service Tax Payable on receipt basis amounting to 252 lakhs in respectof Sale of Services to M/s. Sethusamudram Corporation Limited. Further no undisputedStatutory dues were in arrears as at 31st March 2020 for a period of more than six monthsfrom the date they became payable.

(b) According to the information and explanations given to us the following dues ofService Tax have not been deposited by the company on account of disputes:

S.No Name of Statute Nature of Dues

Forum where dispute Period to which is pending relates

amount Amount (in lakhs) Rupees
1 Finance Act 1994 Service Tax CESTAT 2005-06 to 2015-16 13061

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in the repayment of loans or borrowings to banks financialinstitutions and government or dues to 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. Hence reportingunder clause

(ix) of the CARO 2016 Order is not applicable.

(x) In our opinion and according to the information and explanations given to us nomaterial fraud by the Company or on the Company by its officers or employees has beennoticed or reported during the year.

(xi) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid/provide for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V to the Act.

(xii) The Company is not a Nidhi company. Accordingly Clause 3(xii) of the Order isnot applicable.

(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 Ind AS financial statements as required by theapplicable 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 year.Accordingly Clause 3(xiv) of the Order is not applicable.

(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 them. Accordingly Clause 3(xv) ofthe Order is not applicable.

(xvi) The nature of the business and activities of the Company are such that theCompany is not required to obtain registration under Section 4S-IA of the Reserve Bank ofIndia Act 1934.

For Sriramamurthy & Co Chartered Accountants FRN 003032S

CA. D. TEJA SAGAR Partner No: 227878

Place: Visakhapatnam Date: 30th July 2020

Annexure - B to the Independent Auditors' Report

(Referred to in paragraph 2(f) under 'Reports on Other Legal and RegulatoryRequirements' section of our report of even date to the members of Dredging Corporation ofIndia Limited on the financial statements for the year ended 31st March 2020)

Report on the Internal Financial Controls with reference to financial statements underClause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ('the Act')

Opinion

We have audited the internal financial controls over financial reporting with referenceto financial statements of Dredging Corporation of India Limited ('the Company') as ofMarch 31 2020 in conjunction with our audit of the financial statements of the Companyfor 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 2020 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 with reference to FinancialStatements

The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls with reference to financial statements basedon the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note.These responsibilities include the design implementation and maintenance of adequateinternal financial controls with reference to financial statements 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 of reliable financial information as required under the Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting with reference to financial statements based on ouraudit. We conducted our audit in accordance with the Standards on Auditing prescribedunder Section 143(10) of the Act and the Guidance Note to the extent applicable to anaudit of internal financial controls. Those Standards and the Guidance Note require thatwe comply with the ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting was established and maintained and if such controls operated effectively in allmaterial 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 included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditors' judgment including the assessment of the risks of materialmisstatement 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 with reference to financial statements.

Meaning of Internal Financial Controls with reference to Financial Statements

A company's internal financial control 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 control overfinancial reporting with reference to financial statements includes those policies andprocedures that

(1) Pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions 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 authorizations of management and directors of the company; and

(3) Provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.

Inherent Limitations of Internal Financial Controls with reference to FinancialStatements Because of the inherent limitations of internal financial controls withreference to Financial Statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols over financial reporting 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 Sriramamurthy & Co Chartered Accountants FRN 003032S

CA. D. TEJA SAGAR Partner No: 227878

Place: Visakhapatnam Date: 30th July 2020

ANNEXURE-C to the Independent Auditors' Report

Report on Directions issued by the Comptroller and Auditor General of India undersection 143(5) of the 'Companies act 2013

S.No Areas Examined Observations /Findings

1 Whether the company has system in place to process allThe Company has system in placeto process all the accounting transactions through IT system? If yes thethe accountingtransactions through IT System. implications of processing of accounting transactionsoutsideI.e. Microsoft Dynamics. It is suggested that the IT system on the integrity of theaccounts along with theCompany shall make a policy for getting Systems financialimplications if any may be stated. Audit done periodically.

2 Whether there is any restructuring of an existing loan orAccording to the informationand explanations cases of waiver / write off of debts/loans/interest etc. madegiven to usand based on our examination of the by a lender to the company due to the company'sinabilityrecords of the Company there has been no to repay the loan? If yes. Thefinancial impact may be stated.restructuring! Waiver/write off of any existing loan takenby the Company.

3 Whether funds received/receivable for specific schemes fromNo such Funds have beenreceived/ receivable for central/ state agencies were properly accounted for/utilizedspecific schemes from central / state agencies. as per its term and conditions?List the cases of deviation.

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 143(6)(b) OF THECOMPANIES ACT 2013 ON THE FINANCIAL STATEMENTS OF DREDGING CORPORATION OF INDIA LIMITEDFOR THE YEAR ENDED 31 MARCH 2020

The preparation of financial statements of Dredging Corporation of India Limited forthe year ended on 31 March 2020 in accordance with the financial reporting frameworkprescribed under the Companies Act 2013 (Act) is the responsibility of the management ofthe Company. The Statutory Auditors appointed by the Comptroller and Auditor General ofIndia under Section 139(5) of Act are responsible for expressing opinion on thesefinancial statements under Section 143 of the Act based on the independent audit inaccordance with the Standards on Auditing prescribed under Section 143(10) of the Act.This is stated to have been done by them vide their Audit Report dated 30 July 2020.

I on the behalf of the Comptroller and Auditor General of India have conducted asupplementary audit under Section 143(6)(a) of the Act of the financial statements ofDredging Corporation of India Limited for the year ended on 31 March 2020.This supplementary audit has been carried out independently without access to the workingpapers of the Statutory Auditors and is limited primarily to inquiries of theStatutory Auditors and Company personnel and selective examination of some of theaccounting records.

Based on my supplementary audit. I would like to highlight the following significantmatters under section 143(6)(b) of the Act which have come to my attention and which in myview are necessary for enabling a better understanding of the financial statements and therelated audit report:

A. Comments on Profitability Statement of Profit and Loss

Revenue from Operations (Note-18): 74968.93 lakh (i) Sale of Service (core) - 73343.42lakh

1. This does not include 183.54 lakh being the amount payable to Paradip Port Trust andGangavaram Port towards net de-escalation of fuel charges for maintenance dredging workscarried out at respective ports during the year 2019-20. This resulted in overstatement ofSale of Service and understatement of ‘Payables to Customers' under OtherCurrent Liabilities by 183.54 lakh each. Consequently. the Profit before tax for theyear was overstated by 183.54 lakh.

2. In the months of November 2019 and December 2019 DCI deployed the contractualdredgers of Cochin Port Trust (CoPT) at Cochin Shipyard Limited (CSL) for dredging work.While releasing the payments for the months of November 2019 and December 2019 CoPTrecovered 107.541 lakh towards the release of Dredgers for purposes other thanrepair/bunkering. etc. without necessary approvals on the plea that DCI earned revenue atCSL during the contract period of CoPT. However DCI did not withdraw the deducted amountof 75.892 lakh from the books of accounts. This resulted in overstatement ofSale of Services as well as Trade Receivables by 75.89 lakh. Consequently the ProfitBefore Tax for the year was overstated by 75.89 lakh.

3. While releasing the payments for the year 2019-20 against the maintenance dredgingwork at Cochin Port Trust (CoPT) CoPT recovered 36.123 lakh towards

(i) shortfall in working / deploying the Dredgers below the limits specified

(ii) non-working of both dredgers beyond 24 hrs at a time in a day as per ClauseNo.2.47.2 of Special Conditions of Contract and

(iii) non-conducting fortnightly survey as per Clause No. IO of technicalspecifications. Though CoPT recovered the above amount as per contractual terms DCI didnot withdraw the deducted amount from the books of accounts. This resulted inoverstatement of Sale of Services as well as

Trade Receivables by 36.12 lakh. Consequently the Profit Before Tax for the year wasoverstated by 36.12 lakh.

B. Comments on Financial Position

Balance sheet Assets Non-current assets

(b) Capital Work-in-progress (Note-09): 827.97 lakh

4. DCI awarded the works of construction of DCI Office building at Seethammadhara toCPWD at a cost of

4126.00 lakh. As on 31 March 2020. CPWD completed 90.50% of the work amounting to3778.64 lakh. Against this DCI paid 2950.67 lakh as advance and showed the amount underOther Current Assets as

Advances on Capital Assets. Since the work is of capital nature and CPWD also submittedthe work completion certificate the advance amount paid should be shown under CapitalWork-in- progress instead of Advances on Capital Assets. This resulted in understatementof Capital Work-in-progress and overstatement of Advances on Capital Assets by2950.67lakh.

.