TO THE MEMBERS OF
DUNCAN ENGINEERING LIMITED
Report on the Standalone Financial Statements
1. We have audited the accompanying financial statements of Duncan Engineering Limited("the Company") which comprise the Balance Sheet as at March 312021 theStatement of Profit and Loss (including other comprehensive income) the Statement ofChanges in Equity and the Statement of Cash Flow for the year then ended and notes to thefinancial statements including a summary of the significant accounting policies and otherexplanatory information (hereinafter referred to as "the financial statements").
2. 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 ("the Act) in the manner so required and give a true and fairview in conformity with Indian Accounting Standards prescribed under section 133 of theAct read with the Companies (Indian Accounting Standards) Rules 2015 as amended("IND AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2021 the profit and total comprehensiveincome changes in equity and its cash flow for the year ended on that date.
Basis for Opinion
3. We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules 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 we have obtained is sufficient and appropriate to providea basis for our opinion on the financial statements.
Emphasis of Matter
4. We draw attention to note no. 39 of the financial statement which states themanagement's evaluation of COVID-19 impact on the operations of the company.
Our report is not modified in respect of this matters.
Key Audit Matters
5. 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. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.
|Key audit matter ||Auditor's response |
|Assessment of recoverability of Deferred tax assets || |
|(Refer to 28c to the financial statements) ||Our audit procedures included: |
|The Company has recognized deferred tax assets(net) of INR 454.29 lacs on the carried forward business losses and unabsorbed depreciation post netting of deferred tax liability on difference in Written down value of fixed assets as per the Companies Act 2013 and the Income Tax Act 1961. || Evaluated and tested the design and operating effectiveness of the Company's controls over recognition and assessment of recoverability of deferred tax assets on Business loss and unabsorbed depreciation. |
|The deferred tax asset is recognised as it is considered to be recoverable based on the Company's projected taxable profits in the forthcoming years considering the stability and improvements in the business conditions and current and likely future state of the industry. Under Indian Accounting Standard 12 Income Taxes the carrying amount of a deferred tax asset is required to be reviewed at the end of each reporting period. || Reviewed the Company's accounting policy in respect of recognizing deferred tax assets on Business loss and unabsorbed depreciation. |
|The future taxable profit projections involve several key assumptions including past trends expected demand and stability and improvement in the business conditions and current and likely future state of the industry. || Evaluated whether the business loss and unabsorbed depreciation is legally available to the Company for the period considering the provisions of Income-tax Act 1961. |
|We considered this a key audit matter as the amount of deferred tax assets is material to the financial statements and significant management judgment is required in assessing its recoverability based on significant assumptions underlying the forecast of future taxable profits. Further recoverability of deferred tax assets depends on the achievement of Company's future business plan. || Reviewed the setoff of carry forward Business loss and unabsorbed depreciation in the past. |
| || Assessed the reasonableness of the assumptions underlying profit projections made by management by reviewing the past trends and relevant economic and industry indicators. |
| || Reviewed the adequacy of disclosures made in the financial statements with regards to deferred taxes. |
| ||Based on the above procedures performed by us we considered the management's assessment of recoverability of deferred tax assets is reasonable. |
Information Other than the Financial Statements and Auditor's Report Thereon
6. The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the Company'sannual report particularly with respect to the Management Discussion and Analysis Board'sReport including Annexures to Board's Report Business responsibility report and CorporateGovernance report but does not include the financial statements and our auditor's reportthereon. The other information is expected to be made available to us after the date ofthis auditor's 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 identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained during the course of our audit or otherwise appearsto be materially misstated.
When we read the other information identified above if we conclude that there is amaterial misstatement therein we are required to communicate the matter to those chargedwith governance.
Responsibilities of Management and Those Charged With Governance for the FinancialStatements
7. 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 financial statements that givea true and fair view of the financial position financial performance total comprehensiveincome changes in equity and cash flows of the Company in accordance with IND AS and theaccounting principles generally accepted in India. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring 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 are 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 unlessthe Board of Directors either intends to liquidate the Company or to cease operations orhas no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
8. 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 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 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.
Materiality is the magnitude of misstatements in the financial statements thatindividually 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 audit work and in evaluating the results of our work; and
(ii) to evaluate the effect of any identified misstatements in the financialstatements.
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.
9. The comparative financial information for the year ended 31st March 2020 wereaudited by predecessor auditor whose report dated June 3rd 2020 expressed an unmodifiedopinion on those audited financial statements.
Report on Other Legal and Regulatory Requirements
A) 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 the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
B) 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 financial statements comply with the Ind AS specifiedunder Section 133 of the Act read with relevant rules issued thereunder.
e) On the basis of the written representations received from the directors as on March312021 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2021 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 with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internal financialcontrols with reference to the financial statements.
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 opinion and to the best of our information and according to the explanationsgiven to us remuneration paid by the Company to its director during the year is inaccordance with the 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 as on 31 March 2021 onits financial position in its financial statements. (refer note no. 31 of the financialstatements)
(ii) The Company did not have any long-term contract 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.
ANNEXURE A' TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Duncan Engineering Limited of evendate)
i. In respect of the Company's fixed assets:
a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) According to the information and explanation provided to us the property plant andequipment are physically verified by the management according to designed process to coverall the items once in three years. In our opinion this frequency is reasonable havingregard to the size of the company and the nature of its assets. Pursuant to thisprogramme part of property plant and equipment have been physically verified by themanagement during financial year. The discrepancies noticed on such physical verificationhad been properly dealt with in the books of account.
c) According to the information and explanations given to us and on the basis of ourexamination of records of the company the title deeds of immovable properties are held inthe name of the Company.
ii. As explained to us physical verification except stock lying with thirdparties/Goods in transit has been conducted by the management at reasonable intervalsduring the year in respect of inventory of raw materials work in progress finished goodsand by products. The discrepancies noticed on physical verification of inventories ascompared to book records were not material and have been properly dealt with in the booksof account
iii. In our opinion and according to the information and explanations given to us theCompany has not granted any loans secured or unsecured to Companies firms LimitedLiability partnerships or other parties covered in the register maintained under Section189 of the Companies Act. Therefore the provision of clause 3(iii) (iii)(a) (iii)(b)and (iii)(c) of the said Order are not applicable to the company
iv. As informed to us the company has not granted any loans or made any investment orprovided any guarantees or security to the parties covered under section 185 and 186.Therefore the provision of clause 3(iv) of the said Order are not applicable to thecompany.
v. In our opinion and as per the information and explanation provided to us theCompany has not accepted any deposits from the public within the meaning of directivesissued by the Reserve Bank of India and provisions of sections 73 to 76 or any otherrelevant provisions of the Companies Act 2013 and the rules framed thereunder to theextent notified.
vi. We have broadly reviewed the books of accounts maintained by the Company in respectof products where pursuant to the rule made by the Central Government of India themaintenance of cost records has been prescribed under section 148 (1) of the Companies Act2013 and are of the opinion that prima facie the prescribed records have been made andmaintained. We have not however made a detailed examination of the records with a viewto determine whether they are accurate or complete.
vii. According to the information and explanations given to us and the records of theCompany examined by us in our opinion:
a) the Company is generally regular in depositing undisputed statutory dues in respectof provident fund employees' state insurance income tax Goods and Services Tax cessand other material statutory dues as applicable with the appropriate authorities withslight delays in one case. Further there were no undisputed amounts outstanding at theyear-end for a period of more than six months from the date they became payable.
b) there are no dues of income tax service tax and Goods and Services Tax which havenot been deposited on account of any dispute except for the following:
|Name of the Statute ||Nature of Dues ||Amount (lacs) ||Period to which the amount relates (AY) ||Forum where the dispute is pending |
|Income Tax Act 1961 ||Income Tax ||0.52 ||2006-07 ||Income tax traces |
| ||Demands ||3.71 ||2007-08 ||Income tax traces |
| || ||1.07 ||2010-11 ||Assessing Officer Pune^ |
|Central Excise Act 1944 ||Excise Duty ||7.14 ||2005-06 ||High Court Mumbai |
| || ||27.40 ||2009-10 ||The Addl Commissioner of Central Excise Mumbai III |
| || ||1.10 ||2012-13 ||Dy. Commissioner of Central Excise Pune |
|Service Tax Regulations ||Service Tax ||15.43* ||2014-17 ||Assistant Commissionerate Division IIIPune |
* Inclusive of Interest amounting to INR 5.14 and Penalty amounting to INR 5.14 lac
^ Source income tax traces
viii. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not defaulted in repayment ofloans or borrowings to any financial institution bank or Government. The Company hadneither any outstanding debenture at the beginning of the year nor it has issued anydebenture during the year.
ix. As per the information and explanation given to us and on the basis of ourexamination of the records the company has not raised moneys by way of initial publicoffer or further public offer (including debt instruments or term loans). Hence reportingunder clause (ix) of para 3 of the order is not applicable to the company.
x. As per the information and explanation given to us and on the basis of ourexamination of the records we have neither come across any instance of material fraud bythe company or on the company by its employees noticed or reported during the year norhave been informed of such case by the management.
xi. As per the information and explanation given to us and on the basis of ourexamination of the records the Company has paid /provided managerial remuneration inaccordance with the requisite approvals mandated by provisions of section 197 of the Actread with schedule V of the Act.
xii. The company is not Nidhi Company. Accordingly Clause (xii) of Para 3 of the orderis not applicable to the Company.
xiii. As per the information and explanation given to us and on the basis of ourexamination of the records Company has transacted with the related parties which are incompliance with section 177 and 188 of the Act and the details have been disclosed in thefinancial statements as required by Indian Accounting standard (Ind-As)xiv.A ccording tothe information and explanations give to us and based on our examination of the records ofthe Company the Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures and hence reporting under clause (xiv) ofthe order is not applicable to the company.
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. Accordingly the provisions of the clause 3(xvi) of the Order arenot applicable to the company.
ANNEXURE "B" TO THE INDEPENDENT AUDITOR'S REPORT
Report on the Internal Financial Controls with reference to the financial statementsunder Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("theAct").
We have audited the internal financial controls with reference to the financialstatements of Duncan Engineering Limited ("the Company") as at 31st March2021 in conjunction with our audit of the financial statements of the Company for the yearended 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 with reference to the financialstatements criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting 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 company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to the financial statements 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 Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Act to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls with reference to the financial statements wasestablished and maintained and if such controls operated effectively in all materialrespects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to the financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference to thefinancial statements included obtaining an understanding of internal financial controlswith reference to the financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements 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 controls with reference tothe financial statements.
Meaning of Internal Financial Controls with reference to the financial statements
A company's internal financial control with reference to the 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 withreference to the financial statements includes those policies and procedures 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 the financialstatements
Because of the inherent limitations of internal financial controls with reference tothe financial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur
and not be detected. Also projections of any evaluation of the internal financialcontrols with reference to the financial statements to future periods are subject to therisk that the internal financial control with reference to the financial statements maybecome inadequate because of changes in conditions or that the degree of compliance withthe 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 aspect an adequate internal financial controlswith reference to the financial statements and such internal financial control withreference to the financial statements were operating effectively as at 31st March 2021based on the criteria for internal financial controls with reference to the financialstatements established by the company considering the essential components of internalcontrols stated in guidance note on audit of internal financial controls over financialreporting issued by the Institute of Chartered Accountants of India.
| ||For S S Kothari Mehta & Company |
| ||Chartered Accountants |
| ||Firm's Registration Number: 000756N |
| ||Naveen Aggarwal |
|Place: New Delhi ||Partner |
|Date: 07th May 2021 ||Membership Number: 094380 |
| ||UDIN 21094380AAAADY6647 |