To the Members of
G. G. Dandekar Machine Works Limited
Report on the audit of the Standalone Financial Statements
1. We have audited the accompanying standalonefinancial statements of G. G. DandekarMachine Works Limited ("the Company") which comprise the Balance Sheet as at 31March 2019 the Statement of Profit and Loss (including Other ComprehensiveIncome)Statement of Changes in Equity and the Statement of Cash Flows for the year thenended and notes to the standalone financial statements including a summary of significantaccounting policies and other explanatory information.
2. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 (" the Act") in the manner so required and give atrue and fair view in conformity with the accounting principles generally accepted inIndia including Ind AS specified under Section 133 of the Act of the state of affairs(financial position) of the Company as at 31 March 2019 and total comprehensive income(financial performance comprising loss and other comprehensive income) changes in equityand its cash flows 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 Statements'section 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 Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.
Key Audit Matters
4. Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.
5. Description of each key audit matter in accordance with SA 701.
|Sr. No. ||The key audit matters ||How our audit addressed the key audit matters |
|1. ||Disrupted activity of manufacture and sale of Food Processing Machinery: || We discussed with the Management and Management informed us initiatives/ efforts taken by the Company to streamline the operations. |
| ||After shifting the manufacturing operations from Bhiwandi to Nagpur in FY 2014-15 Company's manufacturing activity was expected to be disrupted temporarily. However the company has not been able to stabilise the activity even though significant time period has elapsed since the shifting. The activity is also facing a situation of negative working capital. This has resulted in piling up of creditors even after the funds infusion. This has also adversely affected the manufacturing schedules and consequently resulted in delays in execution of sales orders. || Accordingly the management is making funds available by selling of investments as and when required. Recruitments have been done on all the important positions. |
| || || Further the management is also in the process of identifying a partner to improve technological capability of the Company. |
| || || The management is confident that above steps will help to streamline the operations. |
|2 ||Assessments/ litigations in respect of Sales Tax: ||Our audit procedures include the following: |
| ||The Company has pending litigations in respect of certain sales tax matters. In this regard the Company has recognised provisions and has disclosed contingent liabilities as at March 31 2019. || We read and analysed relevant correspondences external legal consultations undertaken by the Management for uncertain tax positions; |
| ||Significant management judgment is required toassess these matters and to determine the probability of material outflow of economic resources and whether a provision should be recognised or a disclosure should be made. || We discussed with the Management and evaluated Management's assumptions in estimating the tax provisions and assessed Management's estimate of the possible out come of the disputed cases. |
| ||We focused on this area as the ultimate out come of the matters is uncertain and the positions taken by the management are based on the application of judgement related legal advice. || |
6. The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the standalone financial statements and our auditorsreport thereon.
7. Our opinion on the standalone financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.
8. In connection with our audit of the standalone financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained in the audit or otherwise appears to be materially misstated. Ifbased on the work we have performed we conclude that there is a material misstatement ofthis other information we are required to report that fact. We have nothing to report inthis regard.
Management's Responsibility for the Standalone Financial Statements
9. The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance changesin equity and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards ('Ind AS')specified under Section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended ("the Rules").
10. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgements 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 standaloneIndAS financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
11. In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so. Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibility for the audit of the financial statements
12. Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influencethe economic decisions of userstaken on the basis of these standalone financial statements.
13. As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under Section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls with reference to standalone financial statements inplace and the operating effectiveness 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 standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditors' report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
14. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
15. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.
16. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the standalone financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditors' report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
17. As required by the Companies (Auditors' Report) Order. 2016 ('the Order') issuedby the Central Government of India in terms of section 143(11) of the Act we enclose in"Annexure-A" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.
18. As required by sub-section 3 of Section 143 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 the Statement of OtherComprehensive Income the Statement of Changes in Equity and the Cash Flow Statement dealtwith by this Report are in agreement with the books of account.
d) In our opinion the aforesaid standalone financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act read with the Companies(Indian Accounting Standards) Rules 2015 as amended.
e) On the basis of the written representations received from the Directors as on 31March 2019 and taken on record by the Board of Directors none of the Directors aredisqualified as on 31 March 2019 from being appointed as a Director in terms of section164 (2) of the Act.
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" to this report.
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;
ii. The company did not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses; and
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
h) With respect to the matter to be included in the Auditors' Report under section197(16):
In our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under Section 197(16) which arerequired to be commented upon by us.
|For Joshi & Kulkarni ||Sd/- |
|Chartered Accountants ||Shantanu Ghanekar |
|[F.R. No. 115751-W] ||Partner |
| ||M.No. 102133 |
|Place : Pune || |
|Date : 16.05.2019 || |
"Annexure -A"to Independent Auditor's Report
(Referred to in paragraph 17 under 'Report on Other Legal and Regulatory Requirements'section of our report of even date)
(i) a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) The Company has physically verified all of its fixed assets during the year. Nomaterial discrepancies have been noticed on such verification. In our opinion theperiodicity of physical verification is reasonable having regard to the size of theCompany and the nature of its assets.
c) According to the information and explanations given to us the title deeds ofimmovable properties as disclosed in Note 8 to the standalone financial statements areheld in the name of the Company except land located at Plot no. 59 DandekarwadiBhiwandi.
(ii) The inventory has been physically verified by the management at reasonableintervals during the year. In our opinion the frequency of such verification isreasonable. In respect of inventory lying with third parties these have been confirmed bythem. The discrepancies noticed on verification between the physical stocks and the bookrecords were not material.
(iii) In our opinion and according to 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 Act. Accordingly paragraph 3(iii) of the Order is not applicable to theCompany.
(iv) In our opinion and according to information and explanations given to us theCompany has not given loans made investments or given guarantees which are covered by theprovisions of Section 185 and Section 186 of the Act. Accordingly paragraph 3(iv) of theOrder is not applicable to the Company.
(v) The Company has not accepted any deposits from the public in accordance with theprovisions of sections 73 to 76 of the Act and the rules framed there under.
(vi) We have broadly reviewed the records maintained by the Company pursuant to therules prescribed by Central Government for maintenance of cost records under sub section 1of Section 148 of the Act and are of the opinion that prima facie the prescribed accountsand records have been made and maintained. However we have not made a detailedexamination of the records.
(vii) (a) According to the information and explanations given to us and records of thecompany examined by us the company generally is regular in depositing undisputedstatutory dues including provident fund employees' state insurance income- taxsales-tax service tax value added tax cess and any other material statutory dues withthe appropriate authorities and there were no arrears of outstanding statutory dues as atthe last day of the financial year concerned for a period of more than six months from thedate they became payable;
(b) According to the information and explanation given to us there are no dues ofincome tax sales tax value added tax Service tax duty of customs duty of excise whichhave not been deposited with the appropriate authorities on account of any dispute otherthan those mentioned in Annexure I to this report
(viii) The Company does not have any loans or borrowings from any bank or financialinstitution or Government nor has it issued any debentures as at the balance sheet dateaccordingly the provisions of Clause 3(viii) of the Order are not applicable to theCompany.
(ix) The Company has not raised any money by way of initial public offer furtherpublic offer (including debt instruments) and term loans during the year. Accordingly theprovisions of Clause 3(ix) of the Order are not applicable to the Company.
(x) According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe year.
(xi) According to the information and explanations given to us and based on ourexamination of the records the Company has paid / provided for managerial remuneration inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V of the Act.
(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3 (xii) of the Order is notapplicable.
(xiii) According to the information and explanations given to us and based on ourexaminations of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable. The details of suchrelated party transactions have been disclosed in the financial statements as requiredunder Ind AS 24 Related Party Disclosures specified under Section 133 of the Act readwith Rule 7 of the Companies (Accounts) Rules 2014.
(xiv) According to the information and explanations give to us and based on ourexamination of the records the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year.Accordingly the provisions of Clause 3(xiv) of the Order are not applicable to theCompany.
(xv) According to the information and explanations give to us and based on ourexamination of the records the Company has not entered into non-cash transactions withdirectors or persons connected with him. Accordingly provisions of paragraph 3(xv) of theOrder are 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 Clause 3 (xvi) of the Order arenot applicable to the Company.
| ||Sd/- |
|For Joshi & Kulkarni ||Shantanu Ghanekar |
|Chartered Accountants ||Partner |
|[F.R. No. 115751-W] ||M.No. 102133 |
|Place : Pune || |
|Date : 16.05.2019 || |
|Statute ||Forum with Dispute is pending ||Amount (net of payments made) (Rs. in Lacs) |
|Income Tax Act 1961 ||High Court (Mumbai) ||394.34 |
|Income Tax Act 1961 ||Assistant Commissioner of Income Tax ||14.62 |
|Income Tax Act 1961 ||Deputy Commissioner of Income Tax ||296.40 |
|Wealth Tax Act 1957 ||Commissioner of Wealth Tax (Appeals) ||22.64 |
|Maharashtra Value Added Tax 2002 and Central Sales Tax ||Commissioner of Sales Tax ||389.76 |
|Maharashtra Value Added Tax 2002 and Central Sales Tax ||Assistant Commissioner of Sales Tax ||57.50 |
"AnnexureB" to the Independent Auditor's Report
(Referred to in Paragraph 18(f) under 'Report on Other Legal and RegulatoryRequirements' section of our report of even date)
Report on the Internal Financial Controls over Financial Reporting under Clause (i) ofsub-section 3 of Section 143 of the Companies Act 2013('the Act')
1. We have audited the internal financial controls over financial reporting of G. G.Dandekar Machine Works Limited ("the Company") as of 31 March 2019 inconjunction with our audit of the Ind AS financial statements of the Company for the yearended on that date.
Management's Responsibility for Internal Financial Controls
2. The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal controls 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 Reporting('the Guidance Note') issued by the Institute of Chartered Accountants of India ('ICAI').These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013 ('the Act').
3. Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the 'Guidance Note' issued by the ICAI and the Standards on Auditing prescribed undersection 143(10) of the Companies Act 2013 to the extent applicable to an audit ofinternal financial controls. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the 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 controls based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.
5. 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 control systemover financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
6. A company's internal financial controls over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial controls 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 financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
7. 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 controlsover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
8. In our opinion the Company has in all material respects an adequate internalfinancial control system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2019 based on theinternal controls over financial reporting criteria established by the Company consideringthe essential components of internal controls stated in the Guidance Note issued by theICAI.
|For Joshi & Kulkarni ||Sd/- |
|Chartered Accountants ||Shantanu Ghanekar |
|[F.R. No. 115751-W] ||Partner |
| ||M.No. 102133 |
|Place : Pune || |
|Date : 16.05.2019 || |