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Garden Reach Shipbuilders & Engineers Ltd.

BSE: 542011 Sector: Others
NSE: GRSE ISIN Code: INE382Z01011
BSE 00:00 | 07 Feb 493.05 12.05
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OPEN 482.15
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VOLUME 39361
52-Week high 556.80
52-Week low 199.00
P/E 25.79
Mkt Cap.(Rs cr) 5,648
Buy Price 0.00
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Sell Price 0.00
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OPEN 482.15
CLOSE 481.00
VOLUME 39361
52-Week high 556.80
52-Week low 199.00
P/E 25.79
Mkt Cap.(Rs cr) 5,648
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Garden Reach Shipbuilders & Engineers Ltd. (GRSE) - Auditors Report

Company auditors report

To the Members of Garden Reach Shipbuilders & Engineers Limited

Report on the Audit of the Financial Statements Opinion

We have audited the accompanying financial statements of Garden ReachShipbuilders & Engineers Limited ("the Company") [The audit covered theCorporate Office and all units across India.] which comprise the Balance Sheet as at March31 2022 and the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of Changes in Equity and the Cash Flow Statement for the year then ended andnotes to the financial statements including a summary of significant accounting policiesand other explanatory information.

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the Company as at March 31 2022 and its profit (including othercomprehensive income) changes in equity and its cash flows for the year ended on thatdate.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Act. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of thefinancial statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions 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.

Emphasis of Matters

1) We draw attention to note no 48 of the accompanying financialstatements as at March 31 2022 regarding impact of the pandemic (COVID 19) on theoperations of the Company which affected the revenue and financial performance of theCompany for the reporting period. Management has assessed the potential impact of COVID 19based on the current circumstances and expects no significant impact on the continuity ofoperation of the business on long term basis. However the actual impact may be differentfrom the estimate as at the date of approval of the financial statements.

2) Attention is invited to the treatment of Rs 768.54 lakh shown asExceptional Item (Note no 49) due to loss of production hours and non-usage of Plant andMachinery during the days of nonoperation due to COVID 19 during the year.

Our opinion is not modified in respect of these matters.

Key Audit Matters

Key Audit Matters (KAM) are those matters that in our professionaljudgment were of most significance in our audit of the financial statements of thecurrent period. These matters were addressed in the context of our audit of the financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.

Sl. No. Key Audit Matter Our Response
1 Contract revenue from shipbuilding Our audit procedures on revenue recognized from shipbuilding contracts included:
Referred to in Note No.1.2(i)(A)(i) and No.20 of the financial statements. a) Understanding of the systems processes and control implemented by management for recording and calculating revenue based on input cost method deriving the associated contract assets
The Company has adopted Ind AS 115 "revenue from contract with customers" which is a new accounting standard effective from April 2018. The Company recognizes revenue for a performance obligation satisfied over time only when it can reasonably measure its progress towards complete satisfaction of performance obligation. Progress with respect to ship construction is recognized over time using input method i.e. by comparing the actual costs anticipated for the entire contract. The application of the accounting standard is complex and is an area of focus in the audit. We identified revenue recognition of shipbuilding contracts as a KAM considering: b) Assessment of the operating effectiveness of Key IT Controls including:
i) Treating the IT Controls over the completeness and accuracy of the cost and revenue reports generated by the systems.
(a) The revenue standard establishes a comprehensive framework for determining whether how much and when revenue is recognized. This involves certain key judgments relating to identification of distinct performance obligations determining transaction price of identified performance obligation determining variable consideration and to measure variable consideration the appropriateness of the basis used to measure revenue recognized over a period. ii) On selected samples of contracts we tested that the revenue recognized is in accordance with the applicable accounting standards.
(b) The standard mandates robust disclosures in respect of revenue and periods over which the remaining performance obligations will be satisfied subsequent to balance sheet date. c) Evaluated the appropriateness of the disclosures provided under the new accounting standard.
(c) There is significant involvement of IT systems. Recognition of work-in-progress in the Balance Sheet has been checked with the relevant Statement of Computation of Work-inprogress as on the reporting date and other relevant records of the Company.
At the year-end a significant amount of work-in-progress related to these contracts is recognized in the balance sheet.

Information Other than the financial statements and Auditor's ReportThereon

The Company's Board of Directors is responsible for the preparation ofother information. The other information comprises the information included in the AnnualReport but does not include the financial statements and our auditor's report thereon.

Our opinion on the financial statements does not cover the otherinformation and we do not express any form of assurance or conclusion thereon.

In connection with our audit of the financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the financial statements or ourknowledge obtained during the course of our audit or otherwise appears to be materiallymisstated. If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.

Responsibility of Management and Those Charged with Governance for theFinancial Statements

The Company's Board of Directors is responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these financialstatements that give a true and fair view of the financial position financialperformance changes in equity and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; 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 Ind AS financial statement that give a true and fairview and are free from material misstatement whether due to fraud or error.

In preparing the financial statements management 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 is also responsible for overseeing the Company'sfinancial reporting process.

Auditor's Responsibilities for the Audit of the financial statements

Our objectives are to obtain reasonable assurance about whether thefinancial 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 influence the economic decisions of userstaken on the basis of these financial statements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of thefinancial 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 financial control relevantto the audit in order to design audit procedures that are appropriate in thecircumstances. Under section 143(3)(i) of the Act we are also responsible for expressingour opinion on whether the Company has adequate internal financial controls system inplace and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.

• Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's 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.

Other Matter

(i) Amount shown in Note No. 30 (A) (Contingent Liabilities) does notinclude interest/ penalty that may be payable on final settlement of claims.

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2020("the Order") issued by the Central Government of India in terms of sub-section(11) of section 143 of the Companies Act 2013 we give in the Annexure-A a statement onthe matters 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 explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.

(b) In our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books.

(c) The Balance Sheet the Statement of Profit and Loss (includingOther Comprehensive Income) the Statement of Changes in Equity and the Cash FlowStatement dealt with by this Report are in agreement with the books of account.

(d) In our opinion the aforesaid financial statements comply with theInd AS specified under Section 133 of the Act read with the companies (Indian AccountingStandards) Rules 2015 as amended.

(e) In our opinion provisions under section 164(2) of the Actregarding disqualification of Directors are not applicable to a Government Company interms of Notification No. G.S.R. 463(E) dated June 5 2015 issued by Ministry of CorporateAffairs.

(f) With respect to the adequacy of the internal financial controlsover financial reporting of the Company and the operating effectiveness of such controlsrefer to our separate Report in Annexure-B.

(g) In our opinion reporting requirements under provisions undersection 197 of the Act regarding the remuneration paid by the Company to its directorsduring the year are not applicable to a Government Company in terms of Notification No.G.S.R. 463(E) dated June 5 2015 issued by Ministry of Corporate Affairs.

(h) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 inour opinion and to the best of our information and according to the explanations given tous:

i. The Company has disclosed the impact of pending litigations on itsfinancial position in its financial statements (Refer to Note. 30A - ContingentLiabilities to the financial statements ) ;

ii. The Company did not have any long term contract includingderivative contracts for which there were any material foreseeable losses except provisionfor loss on onerous contract for Rs 783.32 lakh has been provided as stated in note no.19;

iii. There were no amounts which were required to be transferred to theInvestor Education and Protection Fund by the Company.

iv. (a) The Management has represented that to the best of itsknowledge and belief no funds (which are material either individually or in theaggregate) have been advanced or loaned or invested (either from borrowed funds or sharepremium or any other sources or kind of funds) by the Company to or in any other person orentity including foreign entity ("Intermediaries") with the understandingwhether recorded in writing or otherwise that the Intermediary shall whether directlyor indirectly lend or invest in other persons or entities identified in any mannerwhatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provideany guarantee security or the like on behalf of the Ultimate Beneficiaries;

(b) The Management has represented that to the best of its knowledgeand belief no funds (which are material either individually or in the aggregate) havebeen received by the Company from any person or entity including foreign entity("Funding Parties") with the understanding whether recorded in writing orotherwise that the Company shall whether directly or indirectly lend or invest inother persons or entities identified in any manner whatsoever by or on behalf of theFunding Party ("Ultimate Beneficiaries") or provide any guarantee security orthe like on behalf of the Ultimate Beneficiaries;

(c) Based on the audit procedures that have been considered reasonableand appropriate in the circumstances nothing has come to our notice that has caused us tobelieve that the representations under sub-clause (i) and (ii) of Rule 11(e) contain anymaterial misstatement.

The final dividend paid by the Company during the year in respect ofthe same declared for the previous year is in accordance with section 123 of the CompaniesAct 2013 to the extent it applies to payment of dividend.

The interim dividend declared and paid by the Company during the yearis in accordance with section 123 of the Companies Act 2013.

As stated in note 36 (b) to the financial statements the Board ofDirectors of the Company have proposed final dividend for the year which is subject to theapproval of the members at the ensuing Annual General Meeting. The dividend declared is inaccordance with section 123 of the Act to the extent it applies to declaration ofdividend.

3. As required by Section 143(5) of the Act we give in Annexure-C astatement on the matters specified in directions issued by the Comptroller & AuditorGeneral of India in respect of the company.

For Mookherjee Biswas & Pathak
Chartered Accountants
Firm's Registration Number 301138E
Sd/-
(Sudersan Mukherjee)
Partner
Place: Kolkata Membership No. 059159
Date: May 25 2022 ICAI UDIN: 22059159AJODXZ2847

(Referred to in paragraph no. 1 under ‘Report on Other Legal andRegulatory Requirements? section of our report of even date)

i. In respect of the Company's Property Plant and Equipment:

(a) (A) The Company has maintained proper records showing fullparticulars including quantitative details and situation of Property Plant andEquipment.

(B) The Company has maintained proper records showing full particularsof intangible assets.

(b) The Company has a program of physical verification of PropertyPlant and Equipment and right-of-use assets so to cover all the assets once every threeyears which in our opinion is reasonable having regard to the size of the Company andthe nature of its assets. Accordingly Property Plant and Equipment of some division/unit of the Company were verified internally by management during the year. Discrepanciesnoticed on such verification have been properly dealt with in the accounts. In ouropinion the periodicity of such physical verification is reasonable having regard to thesize of the Company and nature of its assets.

(c) Based on our examination of the property tax receipts and leaseagreement for land on which building is constructed registered sale deed / transfer deed/ conveyance deed provided to us we report that the title in respect of self-constructed buildings and title deeds of all other immovable properties (other thanproperties where the company is the lessee and the lease agreements are duly executed infavour of the lessee) disclosed in the financial statements included under PropertyPlant and Equipment are held in the name of the Company as at the balance sheet date.

(d) The Company has not revalued any of its Property Plant andEquipment (including right- of-use assets) and intangible assets during the year.

(e) No proceedings have been initiated during the year or are pendingagainst the Company as at March 31 2022 for holding any benami property under the BenamiTransactions (Prohibition) Act 1988 (as amended in 2016) and rules made thereunder.

ii. (a) The inventories (other than those lying with third parties)have been physically verified during the year by the management. The discrepancies betweenphysical stock and book records arising out of physical verification have been properlydealt with in the books of account. However there were no discrepancies of 10% or more inthe aggregate for each class of inventory.

(b) The Company has been sanctioned working capital limits in excess ofRs 5 crore in aggregate from banks or financial institutions on the basis of security ofcurrent assets. The original working capital limit sanctioned by banks in earlier yearswere revised during the year to Rs 11001 Lakh for Fund Based and Rs 456500 Lakh for NonFund Based. However the Company at present doesn't have any Fund Based utilization. Thereturns filed quarterly with the bank are in agreement with the books of account of theCompany.

iii. The Company has not made any other investments in companiesfirms Limited Liability Partnerships or any other parties except in the form ofinvestment in mutual funds and equity shares of a Company as disclosed in Note no 6(a)& 10(a) of the financial statements. The Company has not provided any guarantee orsecurity. The Company has provided advances to companies firms Limited LiabilityPartnerships or any other parties which are not in the nature of loan.

(a) The Company has not provided any guarantee or security. The Companyhas provided advances to companies firms Limited Liability Partnerships or any otherparties in the ordinary course of business which are not in the nature of loan Hencereporting under clause 3(iii)(a) of the Order is not applicable.

(b) The Investments made by the Company in mutual funds and equityshares of a Company [Disclosed in Note no 6(a) & 10(a)] are not prejudicial to theinterest of the Company. The Company has not made any other investments in companiesfirms Limited Liability Partnerships and granted unsecured loans to other parties duringthe year.

(c) The Company has not granted any loans or advances in the nature ofloans. Hence reporting under clause 3(iii)(c) of the Order is not applicable.

(d) The Company has not granted any loans or advances in the nature ofloans. Hence reporting under clause 3(iii)(d) of the Order is not applicable.

(e) The Company has not granted any loans or advances in the nature ofloans. Hence reporting under clause 3(iii)(e) of the Order is not applicable.

(f) The Company has not granted any loans or advances in the nature ofloans either repayable on demand or without specifying any terms or period of repaymentduring the year. Hence reporting under clause 3(iii)(f) is not applicable.

iv. In our opinion and according to the information and explanationsgiven to us the Company has not given any loan guarantee or provided any securities inconnection with such loan and given/made any loan/investment within the meaning of Section185 and 186 of the Companies Act 2013. Further in terms of Notification No. G.S.R.463(E) dated June 5 2015 the provisions of section 186 of the Companies Act 2013 arenot applicable to the Company as the Company is a Government Company engaged in defenceproduction and as such reporting under this clause is not applicable to the Company.

v. The Company has not accepted any deposits during the year within themeaning of section 73 to 76 or any other relevant provision of the Companies Act 2013 anddoes not have any unclaimed deposits as at March 31 2022 as such reporting under thisclause is not applicable to the Company.

vi. According to the information and explanations given to usmaintenance of cost records by the Company has been prescribed by the Central Governmentunder section 148(1) of the Companies Act 2013 in respect of construction of shipsmanufacturing of engineering goods and diesel engines. We have broadly reviewed such costrecords and are of the opinion that prima facie prescribed accounts and records havebeen made and maintained.

vii. (a) According to information and explanations given to us and onthe basis of our examination of books and accounts the Company has been generally regularin depositing undisputed statutory dues including provident fund ESI income tax goodsand services tax duty of customs duty of excise cess and any other statutory dues withthe appropriate authorities and no undisputed amount payable in respect of aforesaid duesas on March 31 2022 for a period of more than six months from the date they becomepayable.

(b) According to the records of the Company and information andexplanations given to us the following are the details of disputed dues not deposited onMarch 31 2022:

Sl. No. Name of the Statute Nature of dues Year to which pertains Amount (' in Lakh) Forum where the dispute is pending
1 West Bengal Value Added Tax Act 2003 Value Added Tax 2007-08 506.83 West Bengal Taxation Tribunal
2 Income Tax Act 1961 Income Tax 2008-09 1624.58 Commissioner of Income Tax (Appeals)
3 Income Tax Act 1961 Income Tax 2013-14 1.92 Commissioner of Income Tax (Appeals)
4 Income Tax Act 1961 Income Tax 2016-17 8.61 Commissioner of Income Tax (Appeals)
Total 2141.94

The amounts mentioned above are exclusive of interest and penaltiesthat may be payable on final settlement of pending cases.

viii. There were no transactions relating to previously unrecordedincome that have been surrendered or disclosed as income during the year in the taxassessments under the Income Tax Act 1961 (43 of 1961).

ix. (a) The Company has working capital limits sanctioned by banks(Both Funded & Non-Funded facilities). The Company at present doesn't have any FundBased utilization. The Company has not defaulted in repayment of loans or other borrowingsin the payment of interest thereon.

(b) The Company has not been declared willful defaulter by any bank orfinancial institution or government or any government authority.

(c) The Company has not taken any term loan during the year and thereare no outstanding term loans at the beginning of the year and hence reporting underclause 3(ix)(c) of the Order is not applicable.

(d) On an overall examination of the financial statements of theCompany funds raised on short- term basis have prima facie not been used during theyear for long-term purposes by the Company.

(e) The Company does not have any subsidiary joint venture orassociate companies Hence reporting on clause 3(ix)(f) of the Order is not applicable.

(f) The Company does not have any subsidiary joint venture orassociate companies and has not raised any loan from such entities during the year andhence reporting on clause 3(ix)

(f) of the Order is not applicable.

x. (a) The Company has not raised moneys by way of initial public offeror further public offer (including debt instruments) during the year and hence reportingunder clause 3(x)(a) of the Order is not applicable.

(b) During the year the Company has not made any preferentialallotment or private placement of shares or convertible debentures (fully or partly oroptionally) and hence reporting under clause 3(x)(b) of the Order is not applicable.

xi. (a) No fraud by the Company and no material fraud on the Companyhas been noticed or reported during the year.

(b) No report under sub-section (12) of section 143 of the CompaniesAct has been filed in Form ADT-4 as prescribed under rule 13 of Companies (Audit andAuditors) Rules 2014 with the Central Government during the year and upto the date ofthis report.

(c) According to the information and explanations received no whistleblower complaints received by the Company during the year (and upto the date of thisreport) while determining the nature timing and extent of our audit procedures.

xii. In our opinion and according to the information and explanationsgiven to us the Company is not a Nidhi company. The provisions of clause 3(xii) are notapplicable and hence not commented upon.

xiii. According to the information and explanations given to us andbased on our examination of the records of the Company transactions with the relatedparties are in compliance with sections 177 and 188 of the Act where applicable anddetails of such transactions have been disclosed in the financial statements as requiredby the applicable accounting standards.

xiv. (a) In our opinion the Company has an adequate internal auditsystem commensurate with the size and the nature of its business.

(b) We have considered the internal audit reports for the year underaudit issued to the Company during the year and till date in determining the naturetiming and extent of our audit procedures.

xv. According to the information and explanations given to us and basedon our examination of the records of the Company the Company has not entered intonon-cash transactions with directors or persons connected with them and as such reportingunder this clause is not applicable to the Company.

xvi. (a) In our opinion the Company is not required to be registeredunder section 45-IA of the Reserve Bank of India Act 1934. Hence reporting under clause3(xvi)(a) (b) (c) and (d) of the Order is not applicable.

xvii. The Company has not incurred cash losses during the financialyear covered by our audit and the immediately preceding financial year.

xviii. There has been no resignation of the statutory auditors of theCompany during the year.

xix. On the basis of the financial ratios ageing and expected dates ofrealisation of financial assets and payment of financial liabilities other informationaccompanying the financial statements and our knowledge of the Board of Directors andManagement plans and based on our examination of the evidence supporting the assumptionsnothing has come to our attention which causes us to believe that any materialuncertainty exists as on the date of the audit report indicating that Company is notcapable of meeting its liabilities existing at the date of balance sheet as and when theyfall due within a period of one year from the balance sheet date. We however state thatthis is not an assurance as to the future viability of the Company. We further state thatour reporting is based on the facts up to the date of the audit report and we neither giveany guarantee nor any assurance that all liabilities falling due within a period of oneyear from the balance sheet date will get discharged by the Company as and when they falldue.

xx. (a) In respect of other than ongoing projects the Company has nounspent funds towards Corporate Social Responsibility (CSR) required to be transferred toa Fund specified in Schedule VII to the Companies Act in compliance with second proviso tosub-section (5) of Section 135 of the said Act. Accordingly reporting under clause3(xx)(a) of the Order is not applicable for the year.

(b) The Company does not have any ongoing projects. Hence this clauseis not applicable.

For For Mookherjee Biswas & Pathak
Chartered Accountants
Firm's Registration Number 301138E
Sd/-
(Sudersan Mukherjee)
Partner
Place: Kolkata Membership No. 059159
Date: May 25 2022 ICAI UDIN: 22059159AJODXZ2847

Report on the Internal Financial Controls under clause (i) ofsubsection 3 of Section 143 of the Companies Act 2013 ("The Act")

We have audited the internal financial controls over financialreporting of Garden Reach Shipbuilders & Engineers Limited ("the Company")as of March 31 2022 in conjunction with our audit of the financial statements of theCompany for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Board of Directors of the Company is responsible for establishingand maintaining 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 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.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") and the Standards on Auditing both issued byICAI and prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls overfinancial reporting were established and maintained and if such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control 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.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A Company's internal financial control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A Company's internal financial control overfinancial reporting includes those policies and procedures that:

(1) Pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of theCompany;

(2) Provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the Company arebeing made only in accordance with authorisations of management and directors of theCompany; and

(3) Provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the Company's assets thatcould have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over FinancialReporting

Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion to the best of our information and according to theexplanations given to us 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 2022 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 ICAI.

For For Mookherjee Biswas & Pathak
Chartered Accountants
Firm's Registration Number 301138E
Sd/-
(Sudersan Mukherjee)
Partner
Membership No. 059159
Place: Kolkata ICAI UDIN: 22059159AJODXZ2847
Date: May 25 2022
Sl. No. Direction Auditor's Comments
1 Whether the Company has system in place to process all the accounting transactions through IT system? If yes the implications of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications if any may be stated. Yes the Company has system in place to process all the accounting transactions through IT system and no accounting transaction is processed outside IT system. Therefore any implication of processing accounting transactions outside IT system on the integrity of the accounts along with financial implication does not arise.
2 Whether there is any restructuring of an existing loan and cases of waiver/write off of debts/loans/interest etc. made by a lender to the Company due to the Company's inability to repay the loan? If yes the financial impact may be stated. Whether such cases are properly accounted for? (In case lender is a Government company then this direction is also applicable for statutory auditor of lender company) There is no instance of restructuring of an existing loan and cases of waiver/written off of debts/loans/interest etc. made by any lender to the Company due to the Company's inability to repay the loan. Therefore the financial impact due to above reasons does not arise.
3 Whether funds (grants/subsidy etc.) received/receivable for specific schemes from Central/State Government or its agencies were properly accounted for/utilized as per its term and conditions? List the cases of deviation. No such cases of receipts/receivables of any amount by the Company in the financial year 2021-22 for specific schemes from Central/ State Government or its agencies have come to our notice nor have we been informed of receipts/receivables of any such amount by the management.
For For Mookherjee Biswas & Pathak
Chartered Accountants
Firm's Registration Number 301138E
Sd/-
(Sudersan Mukherjee)
Partner
Place: Kolkata Membership No. 059159
Date: May 25 2022 ICAI UDIN: 22059159AJODXZ2847

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