The Members of Ducon Infratechnologies Limited
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of Ducon Infratechnologies Limited("the Company") which comprise the balance sheet as at March 31 2019 and thestatement of Profit and Loss statement of changes in equity and the statement of cashflows for the year then ended and notes to the financial statements including a summaryof significant 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 financial statements give the information required by theCompanies Act 2013 in the manner so required and give a true and fair view inconformity with accounting principles generally accepted in India of the state of affairsof the Company as at March 31 2019 and its profit changes in equity and its cash flowsfor the year ended on that date.
Basis of opinion
We conducted our audit in accordance with Standards on Auditing (SAs) specified undersection 143(10) of the Companies Act 2013. Our responsibilities under those standards arefurther described in the Auditor's Responsibilities for the Audit of the FinancialStatements section of our report. We are independent of the Company in accordance with theethical requirements that are relevant to our audit of the financial statements as per theICAI's Code of Ethics and the provisions of the Companies Act 2013 and we have fulfilledour other ethical responsibilities in accordance with these requirements. We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis forour opinion.
Emphasis of Matters
The Company has made investments in equity shares of a private limited companyaggregating to Rs. 500.00 lakhs as on March 31 2019 reported under Investments inNon-Current Assets. The investments are to be measured at fair value in the statement offinancial position as per requirements of Indian Accounting Standard 109. However themanagement is of the opinion that since the audited financials of the private limitedcompany is not finalised as on the date of audit and also keeping in view their long termbusiness synergy and potential it has been decided to value such investments at cost ason the year ended March 31 2019.
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) Evaluation of uncertain tax liabilities (Contingent Liabilities). Refer Note No.25.1forming part of financial statements. Considering its probable impact on profit / loss wehave considered this as Key Audit Matter.
We have performed following substantive audit procedures:-
a) Obtained details of completed tax assessments and demands up to the year ended March31 2019 from management.
b) We performed our internal procedures to analyse the management's underlyingassumptions in estimating the tax provision and the possible outcome of the disputes.
c) We also checked legal precedence referred to various case laws and other rulings inevaluating management's position on these uncertain tax litigations.
d) Additionally we considered the impact of latest information in respect of uncertaintax positions as on March 31 2019 to evaluate whether any change was required tomanagement's position on these uncertainties.
Information other than the Standalone Financials Statements and Auditors' ReportThereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Directors' Report includingAnnexures to Directors' Report and Secretarial Audit Report but does not include thefinancial statements and our auditor's report thereon. The Directors Report andSecretarial Audit Report is expected to be made available to us after the date of thisauditor's report.
Our opinion on the financial statements does not cover the other information and wewill not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.
When we read the Directors Report and Secretarial Audit Report if we conclude thatthere is a material misstatement therein we are required to communicate the matter tothose charged with governance.
Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theAccounting Standards specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding the assets of the Company and for preventing and detecting fraudsand other irregularities; selection and application of appropriate accounting policies;making judgments and estimates that are reasonable and prudent; and design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
In preparing the financial statements the Board of Directors 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.
The Board of Directors are responsible for overseeing the Company's financial reportingprocess.
Auditor's Responsibility for the Audit of Standalone Financial Statements
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 an 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:
Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company 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 financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions 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.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ('the Order') issued bythe Central Government of India in terms of sub-section (11) of section 143 of theCompanies 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 purpose 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 the Statement of Changes inEquity and the Cash Flow Statement dealt with by this Report are in agreement with thebooks of account;
d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014;
e) On the basis of written representations received from the directors as on March 312019 taken on record by the Board of Directors none of the directors is disqualified ason 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 B"; and
g) 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. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer Note 25.1 to the Standalone FinancialStatements.
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.
| ||For Hitesh Shah & Associates. |
| ||Chartered Accountants |
| ||Firm Registration No:- 103716W |
| ||Hitesh Shah Partner |
| ||Membership No: 040999 |
|Place : Mumbai || |
|Date : May 30 2019 || |
"Annexure A" forming part of Independent Auditor's Report
The Annexure referred to in our Independent Auditor's Report of even date to themembers of the Company on the financial statements for the year ended March 31 2019 wereport that:
On the basis of such checks as we considered appropriate and according to theinformation and explanations given to us during the course of our audit we report that:
i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) According to the information and explanation given to us the fixed assets havebeen physically verified by the management at the end of the year and the discrepanciesnoticed on such verification have been properly dealt with in the books of accounts.
(c) There are no immovable properties held in the name of the Company therefore thisclause of the Order is not applicable to the Company.
ii) Physical verification of inventories has been conducted at reasonable intervals bythe management. The Company is generally maintaining proper records of inventory and nomaterial discrepancies were noticed on physical verification between physical stock andthe books records.
iii) The Company has not granted any loan secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained u/s 189of the Act; hence the Clause (iii) of paragraph 3 of the Order are not applicable to theCompany.
iv) In our opinion and according to the information and explanations given to us theprovisions of section 186 of the Act in respect of loans and guarantees given andinvestments made have been complied by the Company. In our opinion and according to theinformation and explanations given to us the Company has not advanced any loans topersons covered under the provisions of Section 185 or granted securities or made anyinvestments under Section 186 of the Act.
v) The company has not accepted any deposit and hence directive issued by the ReserveBank of India and provisions of sections 73 to 76 or any other provisions of CompaniesAct 2013 and Rules framed thereunder will not be applicable to the Company.
vi) The Central Government has not prescribed the maintenance of cost records undersub- section (1) of section 148 of the Act for any of the activities of the Company; hencethe Clause (vi) of paragraph 3 of the Order are not applicable to the Company.
vii) a) According to the information and explanations given to us and on the basis ofour examination of the records the Company has been generally regular in depositingundisputed statutory dues including Provident Fund Employees State Insurance Income TaxGST and other statutory dues with the appropriate authorities.
According to the information and explanations given to us there were no outstandingstatutory dues as on March 31 2019 for a period of more than six months from the datethey became payable.
B) According to information and explanation given to us there are no disputedstatutory dues including Provident Fund Employees State Insurance Income Tax Sales TaxService Tax Gst and other statutory dues which have not been deposited on account ofdispute except as stated below :-
|Particulars ||Period to which the amount relates ||Forum where the dispute is pending ||Amount ( Rs. in Lakhs ) |
|Income Tax ||F.Y. 2010-11 ||Assessing Officer ||81.39 |
|Income Tax ||F.Y. 2009-10 ||Assessing Officer ||3.12 |
|Income Tax ||F.Y. 2008-09 ||Assessing Officer ||32.89 |
|Income Tax ||F.Y. 2012-13 ||Assessing Officer ||24 |
|Income Tax ||F.Y. 2016-17 ||Assessing Officer ||10 |
|Income Tax ||F.Y. 2013-14 ||CIT (A) ||0.56 |
|Income Tax ||F.Y. 2011-12 ||Assessing Officer ||0.36 |
|CST ||F.Y. 2010-11 ||Tribunal ||5.72 |
|VAT ||F.Y. 2012-13 ||Tribunal ||20.84 |
|CST ||F.Y. 2012-13 ||Tribunal ||35.95 |
|VAT ||F.Y. 2013-14 ||JCT Appeals ||23.18 |
|CST ||F.Y. 2014-15 ||JCT Appeals ||2.20 |
|Service Tax ||F.Y. 2008-09 to 2012-13 ||CESTAT ||23.97 |
viii) Based upon the audit procedures performed and according to the information andexplanations given to us the company has not defaulted in repayment of loans orborrowings to financial institutions banks. The company does not have debenturesoutstanding as on the balance sheet date.
ix) Based upon the audit procedures performed and according to the information andexplanations given to us the company has not raised money by way of initial public offeror further public offer (including debt instruments) and term loans during the financialyear hence clause (ix) of paragraph 3 of the Order is not applicable to the company.
x) To the best of our knowledge and belief and according to the information andexplanations given to us and considering the size and nature of the Company's operationsno fraud of material significance on or by the Company have been noticed or reportedduring the year and nor have we been informed of such case by the management.
xi) According to the information and explanation given to us and based on ourexamination of the records the Company has paid for managerial remuneration in accordancewith the requisite approvals mandated by the provisions of section 197 read with ScheduleV of the Act.
xii) In our opinion and according to the information and explanation given to us theCompany is not a Nidhi Company; hence Clause (xii) of paragraph 3 of the Order is notapplicable.
xiii) According to the information and explanations given to us and based on ourexamination of records of the Company transactions with the related parties are incompliance with section 177 and 188 of the Act where applicable and the details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
xiv) Based upon the audit procedures performed and according to the information andexplanations given by the management the company has not made any preferential allotmentor private placement of shares or fully or partly convertible debentures during the year;hence the clause (xiv) of paragraph 3 of the Order is not applicable to the Company.
xv) According to the information and explanations given to us and based on ourexamination of records of the Company the Company has not entered into any non-cashtransactions with directors or persons connected with him; hence the clause (xv) ofparagraph 3 of the Order is not applicable.
xvi) In our opinion and according to the information and explanations given to us thecompany is not required to be registered under section 45 - IA of Reserve Bank of IndiaAct 1934.
| ||For Hitesh Shah and Associates |
| ||Chartered Accountants |
| ||FR No.: 103716W |
| ||Hitesh Shah Partner |
| ||Membership No.: 040999 |
|Place : Mumbai || |
|Date : May 30 2019 || |
"Annexure B" forming part of Independent Auditor's Report
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act").
We have audited the internal financial controls over financial reporting of DuconInfratechnologies Limited ("the Company") as of March 31 2019 in conjunctionwith our audit of the Standalone Financial Statements of the Company for the year ended onthat 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") and the Standards on Auditingprescribed under section 143(10) of the Companies Act 2013 to the extent applicable toan audit of internal financial controls both issued by the Institute of CharteredAccountants of India. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the 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 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 Standalone Financial Statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of StandaloneFinancial Statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorizations of management of the company; and (3) provide reasonable assuranceregarding prevention or timely detection of unauthorized acquisition use or dispositionof the company's assets that could have a material effect on the Standalone FinancialStatements.
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 the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2019 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
| ||For Hitesh Shah and Associates |
| ||Chartered Accountants |
| ||FR No.: 103716W |
|Place : Mumbai ||Hitesh Shah Partner |
|Date : May 30 2019 ||Membership No.: 040999 |