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Gati Ltd.

BSE: 532345 Sector: Services
NSE: GATI ISIN Code: INE152B01027
BSE 00:00 | 24 Sep 136.50 -2.95
(-2.12%)
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140.00

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140.75

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135.25

NSE 00:00 | 24 Sep 136.40 -3.10
(-2.22%)
OPEN

140.50

HIGH

140.65

LOW

135.00

OPEN 140.00
PREVIOUS CLOSE 139.45
VOLUME 49310
52-Week high 179.70
52-Week low 43.70
P/E
Mkt Cap.(Rs cr) 1,678
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 140.00
CLOSE 139.45
VOLUME 49310
52-Week high 179.70
52-Week low 43.70
P/E
Mkt Cap.(Rs cr) 1,678
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Gati Ltd. (GATI) - Auditors Report

Company auditors report

To the Members of Gati Limited

Report on the Audit of the Standalone Financial Statements

Qualified Opinion

We have audited the accompanying standalone financial statements of Gati Limited("the Company") which comprise the Balance sheet as at March 31 2020 theStatement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Cash Flow Statement for the year then ended and notes to thestandalone financial statements including a summary of significant accounting policiesand other explanatory information(hereinafter referred to as "the standalonefinancial statements").

In our opinion and to the best of our information and according to the explanationsgiven to us except for the indeterminate effect of the matter described in ‘Basisfor Qualified Opinion's section of our report the aforesaid standalone financialstatements give the information required by the Companies Act 2013 ("the Act")in the manner so required and give a true and fair view in conformity with the IndianAccounting Standards prescribed under section 133 of the Act read with the Companies(Indian Accounting Standards) Rules 2015 as amended ("Ind AS") and otheraccounting principles generally accepted in India of the state of affairs of the Companyas at March 31 2020 its loss including other comprehensive income changes in equity andits cash flows for the year ended on that date.

Basis for Qualified Opinion

We draw Attention to Note 48 of the accompanying standalone financial statement whichstates that in earlier years the Company has given operational advances to few partiesaggregating H. 184.9 million which is long overdue and the full recoverability of which isdoubtful. As set out in the aforesaid note the management is making necessary efforts toensure collection of dues from those parties. No impairment allowance for uncertainty incollectability has been recognized against above advances. Based on the informationreceived from the management of the Company regarding the assumptions used in assessingthe recoverability of this amount we were unable to determine the impact on thestandalone financial statements of a potential adjustment for impairment that might havebeen necessary in order to present the balance at its estimated recoverable value.

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements' section of ourreport. We are independent of the Company in accordance with the ‘Code of Ethics'issued by the Institute of Chartered Accountants of India (ICAI) together with the ethicalrequirements that are relevant to our audit of the Standalone financial statements underthe provisions of the Act and the Rules there under and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our qualified opinion on the Standalone financial statements.

Emphasis of Matter

We draw your attention to Note 46(D) to the standalone financial statement regardingloans given to a subsidiary amounting to H. 200.10 million in earlier years which areoutstanding as at the reporting date. The management is confident of recovery of theamount in due course and no provision is considered necessary for any possible losses thatmay arise in this behalf.

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

Key Audit Matters

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 a separateopinion on these matters. For each matter below our description of how our auditaddressed the matter is provided in that context.

In addition to the matter described in the ‘Basis for Qualified Opinion's sectionabove we have determined the matters described below to be the key audit matters to becommunicated in our report. For each matter below our description of how our auditaddressed the matter is provided in that context. We have fulfilled the responsibilitiesdescribed in the Auditor's responsibilities for the audit of the financial statementssection of our report including in relation to these matters. Accordingly our auditincluded the performance of procedures designed to respond to our assessment of the risksof material misstatement of the financial statements. The results of our audit proceduresperformed by us including those procedures performed to address the matters belowprovide the basis for our qualified audit opinion on the financial statements.

Sr. How our audit addressed the key audit matters
No Key Audit Matter
1 Recoverability of Trade Receivable (See Note 11 to the Standalone Financial Statements)
The gross balance of trade receivables as at March 31 2020 amounted toRs 315.30 million. Our audit with respect to determining recoverability of Trade Receivables included the following:
Due to the inherent subjectivity that is involved in making judgments in relation to credit risk exposures to determine the recoverability of trade receivables recoverability of trade receivables is considered a key audit matter. • Evaluating the Company's processes and controls relating to the monitoring of trade receivables and review of credit risks of customers.
• Examination of management's assessment of the credit review procedures of trade receivables obtaining trade receivable confirmations and mapping receipts from the trade receivables after the year end on test basis.
• Evaluation of management's assumptions used to determine the expected credit loss on the trade receivables through detailed analyses of ageing of receivables to historical patterns of receipts assessment of material overdue individual trade receivables and risks specific to the trade receivable.
2 Evaluation of uncertain tax positions (See Note 35 (I)to the Standalone Financial Statement)
The Company has material uncertain tax positions including matters under dispute which could have a significant impact on the Standalone Financial Statement if the potential expenses were to materialise. Our audit with respect to evaluation of uncertain tax positions included the following:
The outcome of such matters is uncertain and the position taken by management involves significant judgement • Assessing the appropriateness of the design and implementation of the Company's controls over the assessment of uncertain tax position including matters under dispute and completeness of disclosures. Supporting documentation are tested for the positions taken by the management meetings are conducted with in-house legal team to confirm the operating effectiveness of these controls.
• Involving our internal experts to review the management's underlying assumptions in estimating the tax provisions and the possible outcome of the disputes. Our internal experts also considered legal precedence and other rulings in evaluating the management's position on these uncertain tax positions including matters under dispute.
• Additionally we considered the effect of new information in respect of uncertain tax positions as at April 1 2019 to evaluate whether any change was required in the management's position on these uncertainties as at March 31 2020.

Information Other than the Standalone Financial Statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report but does not includethe standalone financial statements and our auditor's report thereon. The annual report isexpected to be made available to us after the date of this auditor's report.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon. In connection with ouraudit of the standalone financial statements our responsibility is to read the otherinformation and in doing so consider whether such other information is materiallyinconsistent with the standalone financial statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated. When we read theannual report if we conclude that there is a material misstatement therein we arerequired to communicate the matter to those charged with governance and take appropriateaction as applicable under the relevant laws and regulations.

Management's Responsibility for the Standalone Financial Statements

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 includingother comprehensive income changes in equity and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the IndianAccounting Standards (Ind AS) specified under section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding the assets of the Company and for preventing and detecting fraudsand other irregularities; selection and application of appropriate accounting policies;making judgments and estimates that are reasonable and prudent; and the designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone 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.

Board of Directors is also responsible for overseeing the Company's financial reportingprocess.

Auditor's Responsibilities for the Audit of the Standalone Financial Statements

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 influence the economic decisions of userstaken on the basis of these standalone financial statements.

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 these financial statements in placeand 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 ourauditor's 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 financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation. Materiality is the magnitude of misstatements in the standalone financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the standalone financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the financial statements.

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 standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.

2. 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 best of ourknowledge and belief were necessary for the purposes of our audit; (b) In our opinionexcept for matter described in ‘Basis for Qualified Opinion' section above properbooks of account as required by law have been kept by the Company so far as it appearsfrom our examination of those books; (c) The Balance Sheet the Statement of Profit andLoss including Other Comprehensive Income Statement of Changes in Equity and the CashFlow Statement dealt with by this Report are in agreement with the books of account; (d)Except for the indeterminate effects of the matter described in the ‘Basis forQualified Opinion' section above in our opinion the aforesaid standalone financialstatements comply with the Accounting Standards specified under section 133 of the Actread with the relevant rules thereon.

(e) The outcome of the matter described in Basis for Qualified Opinion and above in ouropinion may have an adverse effect on the functioning of the company.

(f) On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 from being appointed as a director in terms of Section 164(2) of theAct.

(g) The reservation relating to maintenance of accounts and other matters connectedtherewith are as stated in the ‘Basis for Qualified Opinion' section above.

(h) With respect to the adequacy of the internal financial controls over financialreporting with reference to standalone financial statement of the Company and theoperating effectiveness of such controls refer to our separate Report in "AnnexureB" of this report. (i) With respect to the other matters to be included in theAuditor's Report in accordance with the requirements of section 197(16) of the Act asamended: In our opinion and to the best of our information and according to theexplanations given to us the provisions of Section 197 read with Schedule V of the Actare not applicable to the Company for the year ended March 31 2020.

(j) 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 on its financialposition in its financial statements – Note 37 (I) 47 and 48 to the standalonefinancial statements; ii. The Company has made provision as required under the applicablelaw or accounting standards for material foreseeable losses if any on long-termcontracts including derivative contracts. iii. There has been no delay in transferringamounts required to be transferred to the Investor Education and Protection Fund otherthan one instance of delay forRs 0.65 million on account of unclaimed dividend declared onAugust 10 2012.

For Singhi & Co.
Chartered Accountants
(Firm's Registration No. 302049E)
(Anurag Singhi)
Partner
Date: July 3 2020 Membership No. 066274
Place: Kolkata UDIN: 20066274AAAAAZ5925

Annexure - A to the Independent Auditor's Report

(Referred to in paragraph 1 under the heading ‘Report on Other Legal andRegulatory Requirements' section of our report of even date) We report that: i. a). TheCompany has maintained proper records showing full particulars including quantitativedetails and situation of property plant and equipment. b). As per the information andexplanations given to us physical verification of property plant and equipment have beencarried out in terms of the phased program of its verification adopted by the Company andno material discrepancies were noticed on such verification. In our opinion the frequencyof verification is reasonable having regard to size of the Company and nature of itsbusiness. c). According to the information and explanations given to us and on the basisof our examination of the records of the Company the title deeds of immovable propertiesare held in the name of the Company. ii. As explained to us inventories were physicallyverified during the year by the management at reasonable intervals and no materialdiscrepancies were noticed on such verification. iii. The Company has not granted anyloans secured or unsecured to companies firms limited liability partnership or otherparties listed in the register maintained under Section 189 of the Companies Act 2013.Accordingly the provisions of paragraph 3(iii) 3(iii) (a) to 3(iii) (c) of the saidOrder are not applicable. iv. In our opinion and according to the information andexplanations given to us the Company has complied with the provisions of section 185 and186 of the Act with respect to the loans investments made and providing guarantees andsecurities as applicable.

v. According to information and explanations given to us the company has complied withthe directives issued by Reserve Bank of India and the provisions of Section 73 to 76 orany other relevant provisions of the Act and the rules framed there under with respect todeposits (from public). According to the information and explanation's given to us noorder has been passed by the Company Law Board or National Company Law Tribunal or ReserveBank of India or any Court or any other Tribunal on the Company in respect of theaforesaid deposits. vi. The Central Government has not prescribed the maintenance of costrecords under section 148(1) of the Act for any of the services rendered by the Company.vii. a). According to the information and explanations given to us and on the basis of ourexamination of the records of the company examined by us the company is generally regularin depositing undisputed statutory dues Including Provident Fund Employees' StateInsurance Income-tax Goods and Services Tax duty of customs cess and other materialstatutory dues as applicable to the appropriate authorities.

There are no arrears in respect of the aforesaid dues as at March 312020 for a periodof more than six months from the date they became payable except provident fund ofRs 0.14million which are due for more than 6 months. b). According to the information andexplanations given to us the dues outstanding in respect of dues of income tax salestax duty of excise service tax duty of customs value added tax and goods and servicestax has not been deposited by the Company on account of disputes are as follows:

Name of the Statute Nature Of Dues Amount (J.in Millions) Period to which the Forum where dispute is amount relates pending
Finance Act 1994 Service Tax 444.50 From Year 2005 -2018 CESTAT Audit Commissionerate
Income tax Act Income tax 112.14 2012-2013 Hon'ble High Court Telangana

viii. According to the information and explanations given 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 has it issued anydebenture during the year. ix. The Company has not raised any money by way of initialpublic offer or further public offer (including debt instruments) during the year.According to the information and explanation given to us by the management term loanswere applied for the purpose for which the loans were obtained. x. According to theinformation and explanations given to us no fraud by the Company or on the Company by itsofficers or employees has been noticed or reported during the course of our audit. xi.According to the information and explanations given to us and based on our examination ofthe records of the Company the provisions of Section 197 read with Schedule V of the Actare not applicable to the Company for the year ended March 31 2020.

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 onour examination of the records of the Company transactions with the related parties arein compliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the standalone financial statements as required by theapplicable accounting standards. xiv. The Company has made preferential allotment ofequity shares during the year under review. The Company has complied with the provisionscontained under section 42 of The Companies Act 2013 and the amount raised frompreferential allotment has been utilized for the purpose for which it was and idle fundhave been parked as temporary investment in mutual funds.

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 undersection 45-IA of the Reserve Bank of India Act 1934. Accordingly paragraph 3 (xvi) ofthe order is not applicable to the company

For Singhi & Co.
Chartered Accountants
(Firm's Registration No. 302049E)
(Anurag Singhi)
Partner
Date: June 3 2020 Membership No. 066274
Place: Kolkata UDIN: 20066274AAAAAZ5925

Annexure – B to the Independent Auditor's Report

(Referred to in paragraph 2(h) 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) ofSubsection3of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting with referenceto these financial statementsof Gati Limited (‘the Company') as of March 31 2020inconjunction with our audit of the standalone financial statements of the Company for theyear ended 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 over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (‘ICAI'). 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 timelypreparation of reliable financialinformation as required under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting with reference to these financial statements based onour audit. We conducted our audit in accordance with the Guidance Note on Audit ofInternal Financial Controls over Financial Reporting (the ‘Guidance Note') issued bythe Institute of Chartered Accountants of India and the Standards on Auditing prescribedunder section 143(10) of the Companies Act 2013 to the extent applicable to an audit ofinternal financial controls with reference to these financial statements.Those Standardsand the Guidance Note require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting with reference to these 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 over financial reporting with reference to these financialstatements and their operating effectiveness. Our audit of internal financial controlsover financial reporting with reference to these financial statements included obtainingan understanding of internal financial controls over financial reporting assessing therisk that a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgement including the assessment of the risks of materialmisstatement of the financial statements 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 financial controls overfinancial reporting with reference to these financial statements.

Meaning of Internal Financial Controls over Financial Reporting

A Company's internal financial control over financial reporting with reference to thesefinancial statements is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of standalone financial statementsfor external purposes in accordance with generally accepted accounting principles. ACompany's internal financial control over financial reporting includes those policies andprocedures 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 as necessary topermit preparation of standalone 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 timely detection ofunauthorised acquisition use or disposition of the Company's assets that could have amaterial effect on the standalone financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting with reference to these financial statements including the possibility ofcollusion or improper management override of controls material misstatements due to erroror fraud may occur and not be detected. Also projections of any evaluation of theinternal financial controls over financial reporting with reference to these financialstatements to future periods are subject to the risk that the internal financial controlover financial reporting with reference to these financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

Opinion

In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlsover financial reporting with reference to these financial statements and such internalfinancial control were operating effectively as at March 31 2020 based on the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For Singhi & Co.
Chartered Accountants
(Firm's Registration No. 302049E)
(Anurag Singhi)
Partner
Date: July 3 2020 Membership No. 066274
Place: Kolkata UDIN: 20066274AAAAAZ5925

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