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Dynamatic Technologies Ltd.

BSE: 505242 Sector: Engineering
NSE: DYNAMATECH ISIN Code: INE221B01012
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OPEN 1441.55
PREVIOUS CLOSE 1448.10
VOLUME 1
52-Week high 2153.85
52-Week low 1306.00
P/E 32.14
Mkt Cap.(Rs cr) 914
Buy Price 1446.05
Buy Qty 1.00
Sell Price 1470.30
Sell Qty 23.00
OPEN 1441.55
CLOSE 1448.10
VOLUME 1
52-Week high 2153.85
52-Week low 1306.00
P/E 32.14
Mkt Cap.(Rs cr) 914
Buy Price 1446.05
Buy Qty 1.00
Sell Price 1470.30
Sell Qty 23.00

Dynamatic Technologies Ltd. (DYNAMATECH) - Auditors Report

Company auditors report

TO THE MEMBERS OF DYNAMATIC TECHNOLOGIES LIMITED

Report on the Audit of Consolidated Ind AS Financial Statements

We have audited the accompanying consolidated Ind AS financial statements of DynamaticTechnologies Limited (hereinafter referred to as "the Holding Company") and itssubsidiaries (collectively referred to as "the Group") which comprise theConsolidated Balance Sheet as at 31 March 2018 the Consolidated Statement of Profit andLoss Consolidated Statement of Changes in Equity and the Consolidated Cash Flowstatement for the year then ended including a summary of significant accounting policiesand other explanatory information (hereinafter referred to as "the consolidated IndAS financial statements").

Management's Responsibility for the Consolidated Ind AS Financial Statements

The Holding Company's Board of Directors is responsible for the preparation of theseconsolidated Ind AS financial statements in terms of the requirements of the CompaniesAct 2013 (hereinafter referred to as "the Act") that give a true and fair viewof the consolidated state of affairs consolidated profit (including other comprehensiveincome) consolidated statement of changes in equity and consolidated cash flows of theGroup in accordance with the accounting principles generally accepted in India includingthe Indian Accounting Standards (Ind AS) specified under Section 133 of the Act. Therespective Board of Directors of the companies included in the Group are responsible formaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Group and for preventing and detecting frauds and otherirregularities; the selection and application of appropriate accounting policies; makingjudgements and estimates that are reasonable and prudent; and the 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 consolidated Ind AS financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or errorwhich have been used for the purpose of preparation of the consolidated Ind AS financialstatements by the Directors of the Holding Company as aforesaid.

In preparing the consolidated Ind AS financial statements the respective Board ofDirectors of the companies included in the Group are responsible for assessing the abilityof the Group to continue as a going concern disclosing as applicable matters related togoing concern and using the going concern basis of accounting unless management eitherintends to liquidate the Group or to cease operations or has no realistic alternative butto do so.

Auditor's Responsibility

Our responsibility is to express an opinion on these consolidated Ind AS financialstatements based on our audit. While conducting the audit we have taken into account theprovisions of the Act the accounting and auditing standards and matters which arerequired to be included in the Audit Report under the provisions of the Act and the Rulesmade thereunder.

We conducted our audit of the consolidated Ind AS financial statements in accordancewith the Standards on Auditing specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the consolidated Ind AS financial statements are freefrom material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the consolidated Ind AS financial statements. The procedures selecteddepend on the Auditor's judgement including the assessment of the risks of materialmisstatement of the consolidated Ind AS financial statements whether due to fraud orerror. In making those risk assessments the Auditor considers internal financial controlrelevant to the Holding Company's preparation of the consolidated Ind AS financialstatements that give a true and fair view in order to design audit procedures that areappropriate in the circumstances. An audit also includes evaluating the appropriateness ofthe accounting policies used and the reasonableness of the accounting estimates made aswell as evaluating the overall presentation of the consolidated Ind AS financialstatements. We are also responsible to conclude on the appropriateness of Management's useof the going concern basis of accounting and based on the audit evidence obtainedwhether a material uncertainty exists related to events or conditions that may castsignificant doubt on the ability of Group to continue as a going concern. If we concludethat a material uncertainty exists we are required to draw attention in the Auditor'sReport to the related disclosures in the financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our Auditor's Report. However future events or conditions maycause Group to cease to continue as a going concern.

We believe that the audit evidence obtained by us and the audit evidence obtained bythe other auditors in terms of their reports referred to in Other Matters paragraph belowis sufficient and appropriate to provide a basis for our audit opinion on the consolidatedInd AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us and based on the consideration of reports of other auditors on separatefinancial statements and on the other financial information of the subsidiaries theaforesaid consolidated Ind AS financial statements give the information required by theAct in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the consolidated state of affairs ofthe Group as at 31 March 2018 and their consolidated profit and other comprehensiveincome consolidated statement of changes in equity and consolidated cash flows for theyear ended on that date.

Other Matters

We did not audit the financial statements/ financial information of eight subsidiarieswhose financial statements/ financial information reflect total assets of Rs77541 lacsand net assets of Rs 43390 lacs as at 31 March 2018 total revenues (including otherincome) of Rs 82592 lacs and net cash outflows amounting to Rs 2286 lacs for the yearended on that date as considered in these consolidated Ind AS financial statements. Thesefinancial statements/ financial information have been audited by other auditors whosereports have been furnished to us and our opinion on the consolidated Ind AS financialstatements insofar as it relates to the amounts and disclosures included in respect ofthese subsidiaries and our report in terms of Section 143(3) of the Act insofar as itrelates to the aforesaid subsidiaries is based solely on the reports of the otherauditors. Of the above: The annual financial statements and other financial information oftwo subsidiaries incorporated in India have been audited by other auditors whose reportshave been furnished to us and our opinion on these consolidated Ind AS financialstatements to the extent they have been derived from such annual financial statements isbased solely on the report of such other auditors.

Five of these subsidiaries are located outside India whose financial statements andother financial information have been prepared in accordance with accounting principlesgenerally accepted in their respective countries. The Holding Company's Management hasconverted the financial statements of these subsidiaries located outside India fromaccounting principles generally accepted in their respective countries to accountingprinciples generally accepted in India. This has been done on the basis of a reportingpackage prepared by the Holding Company which covers accounting and disclosurerequirements applicable to the consolidated Ind AS financial statements under thegenerally accepted accounting principles in India. The reporting packages made for thispurpose have been audited by the other auditors and reports for consolidation purposes ofthose other auditors have been furnished to us. Our opinion on the consolidated Ind ASfinancial statements insofar as it relates to balances and affairs of such subsidiarieslocated outside India is based solely on the aforesaid audit reports of these otherauditors.

One subsidiary located outside India whose financial statements and other financialinformation has been prepared in accordance with accounting principles generally acceptedin that country and which has been audited by other auditors under generally acceptedauditing standards applicable in that country. The Holding Company's Management hasconverted the financial statements of such subsidiary located outside India fromaccounting principles generally accepted in that country to accounting principlesgenerally accepted in India. We have audited these conversion adjustments made by theHolding Company's Management. Our opinion on the consolidated Ind AS financial statementsinsofar as it relates to the balances and affairs of such subsidiary located outsideIndia is based solely on the report of the other auditors and the conversion adjustmentsprepared by the Management of the Holding Company and audited by us.

Our opinion above on the consolidated Ind AS financial statements and our report onOther Legal and Regulatory Requirements below is not modified in respect of the abovematters with respect to our reliance on the work done and the reports of the otherauditors.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act based on our audit and on theconsideration of report of the other auditors on separate financial statements and otherfinancial information of subsidiaries as noted in the ‘Other matters' paragraph wereport to the extent applicable that: (a) We have sought and obtained all theinformation and explanations which to the best of our knowledge and belief were necessaryfor the purposes of our audit of the aforesaid consolidated Ind AS financial statements;(b) In our opinion proper books of account as required by law relating to preparation ofthe aforesaid consolidated financial statements have been kept so far as it appears fromour examination of those books and reports of the other auditors; (c) The consolidatedbalance sheet the consolidated statement of profit and loss the consolidated cash flowstatement and consolidated statement of changes in equity dealt with by this Report are inagreement with the relevant books of account maintained for the purpose of preparation ofthe consolidated Ind AS financial statements; (d) In our opinion the aforesaidconsolidated Ind AS financial statements comply with the Indian Accounting Standardsspecified under Section 133 of the Act; (e) On the basis of the written representationreceived from Mr Shirish Saraf as on 31 March 2018 and taken on record by the Board ofDirectors of the Holding Company we report that he is disqualified from being appointedas a director of the Holding Company in terms Section 164 (2)(a) of the Act. As far asother directors are concerned on the basis of the written representation received fromsuch directors of the the Holding Company as on 31 March 2018 and taken on record by theBoard of Directors of Holding Company and the reports of the statutory auditors of itssubsidiary companies incorporated in India we report that none of the directors of theHolding Company and subsidiary companies incorporated in India are disqualified as on

31 March 2018 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 Holding Company its subsidiary companies incorporated inIndia and the operating effectiveness of such controls refer to our separate Report in"Annexure A"; and (g) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditor's) Rules2014 in our opinion and to the best of our information and according to the explanationsgiven to us and based on the consideration of the report of the other auditors on separatefinancial statements and also the other financial information of the subsidiaries asnoted in the ‘Other matters' paragraph: i. The consolidated Ind AS financialstatements disclose the impact of pending litigations on the consolidated financialposition of the Group. Refer Note 40 to the consolidated Ind AS financial statements; ii.The Group did not have any long-term contracts including derivative contracts for whichthere were any material foreseeable losses; iii. There has been no delay in transferringamounts required to be transferred to the Investor Education and Protection Fund by theHolding Company and its subsidiary companies incorporated in India during the year ended31 March 2018; and iv. The disclosure in the consolidated Ind AS financial statementsregarding holdings as well as dealings in specified bank notes during the period from 8November 2016 to 30 December 2016 have not been made since they do not pertain to thefinancial year ended 31 March 2018. However amounts as appearing in the auditedconsolidated Ind AS financial statements for the period

ANNEXURE - A

TO THE 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")

In conjunction with our audit of the consolidated Ind AS financial statements ofDynamatic Technologies Limited ("the Holding Company") and its subsidiaries(collectively referred to as "the Group") as of and for the year ended

31 March 2018 we have audited the internal financial controls over financial reportingof Dynamatic Technologies Limited and its subsidiary companies which are companiesincorporated in India as of that date.

Management's Responsibility for Internal Financial Controls

The respective Board of Directors of the Holding Company and its subsidiary companieswhich are companies incorporated in India are responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the ‘Guidance Note') issued by the Institute of CharteredAccountants of India (‘ICAI'). These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of its business includingadherence to the 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 internal financial controls overfinancial reporting of the Holding Company and its subsidiary companies incorporated inIndia based on our audit. We conducted our audit in accordance with the Guidance Noteissued by ICAI and the Standards on Auditing issued by ICAI and deemed to be prescribedunder Section 143(10) of the Act to the extent applicable to an audit of internalfinancial controls both issued by ICAI. Those Standards and the Guidance Note requirethat we comply with 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 includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the Auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained and the audit evidence obtained bythe other auditors of subsidiary companies incorporated in India in terms of theirreports referred to in the ‘Other Matters' paragraph below are sufficient andappropriate to provide a basis for our audit opinion on the internal financial controlssystem over financial reporting of the Holding Company and its subsidiary companiesincorporated in India.

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 consolidated Ind AS financial statements for external purposes inaccordance with generally accepted accounting principles. A company's internal financialcontrol over financial reporting includes those policies and procedures that (1) pertainto the maintenance of records that in reasonable detail accurately and fairly reflectthe transactions and dispositions of the assets of the Company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation ofconsolidated Ind AS financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of Management and Directors of the company; and (3) providereasonable assurance regarding prevention or timely detection of unauthorised acquisitionuse or disposition of the Company's assets that could have a material effect on thefinancial 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.

Opinion

In our opinion and based on the consideration of the reports of the other auditorsreferred to in the ‘Other Matters' paragraph below the Holding Company and itssubsidiary companies which are companies incorporated in India have in all materialrespects an adequate internal financial controls system over financial reporting and suchinternal financial controls over financial reporting were operating effectively as at 31March 2018 based on the internal control over financial reporting criteria established bythe respective companies considering the essential components of internal control statedin the Guidance Note issued by the ICAI.

Other Matters

Our aforesaid reports under Section 143(3)(i) of the Act on the adequacy and operatingeffectiveness of the internal financial controls over financial reporting insofar as itrelates to two subsidiary companies which are companies incorporated in India are basedsolely on the corresponding report of the auditor of such subsidiary companiesincorporated in India.

Our opinion is not modified in respect of the above matters.

for B S R & Co. LLP

Chartered Accountants

Firm registration number: 101248W/W-100022

Supreet Sachdev

Partner

Membership number: 205385

Place : Bengaluru

Date : 29 May 2018