To the members of the great eastern shipping company limited
Report on the audit of the standalone financial statements
We have audited the accompanying standalone financial statements ofthe great easternshipping company limited (the company) which comprise the balance sheetas at march 31 2021 and the statement of profit and loss (including other comprehensiveincome) the statement of changes in equity and the statement of cash flows for the yearthen ended and a summary of significant explanatory information.
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 a trueand fair view in conformity with the indian accounting standards prescribed under section133 of the act read with the companies (indian accounting standards) rules 2015 asamended (ind as) and other accounting principles generally accepted in indiaof the state of affairs of the company as at march 31 2021 and its profit totalcomprehensive income its changes in equity and cash flows for the year ended on thatdate.
Basis for opinion
We conducted our audit of the standalone financial statements in accordance with thestandards on auditing specified under section 143(10) of the act (sas). Ourresponsibilities under those standards are further described in the auditor'sresponsibility for the audit of the standalone financial statements section of our report.We are independent of the company in accordance with the code of ethics issued by theinstitute of chartered accountants of india (icai) together with the ethical requirementsthat are relevant to our audit of the standalone financial statements under the provisionsof the act and the rules made 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 obtained by us is sufficientand appropriate to provide abasis for our audit opinion on the standalone financial statements.
Key audit matter
Key audit matters is the matter that in our professional judgment was of mostsignificance in our audit of the standalone financial statements of the current period.This matter was addressed in the context of our audit of the standalone financialstatements and in forming our opinion thereon and we do not provide a separate opinionon this matter. We have determined the matter described below to be the key audit matterto be communicated in our report.
|Key audit matter ||Auditor's response |
|Assessment of recoverable amounts of vessels (refer notes 2(h) and 3 of the standalone financial statements) ||our principal audit procedures included but were not limited to: |
|As at march 31 2021 the carrying amounts of the company's vessels was rs. 5261.75 crores representing 49% of the total assets. || obtaining a detailed understanding of key controls and processes with regard to identification of impairment indications and assessment of recoverable amounts of the vessels where such indications exist and testing operating effectiveness of such controls. |
|The company assesses at the end of each reporting period whether there is any indication that a vessel may be impaired by considering internal and external sources of information. || assessing reasonableness of fair value of vessel considered by the management by comparing the same with the valuations provided by external professional valuers. |
|The management assesses recoverable amount of each of the vessels where such indications exist based on higher of fair value less cost to sell and value in use. The fair value of a vessel is estimated based on the valuation provided by external professional valuers which is based on brokers' price ideas and market knowledge. || evaluating and challenging the key inputs and assumptions considered for cash flow forecasts for estimating value in use' especially related to charter hire rates with reference to historical performance and published external industry forecast expected deployment with reference to historical pattern operating costs with reference to management budget and historical actuals scrap value with reference to prevailing and forecast rates and those considered for discount rate for which we also involved our internal experts and assessing mathematical accuracy of the value-in-use' model. |
|The value in use' is determined by discounting estimated future cash flows as per management forecast over balance useful life of a vessel to its present value. The future cash flows are estimated based on various assumptions relating to charter hire rates based on published external industry forecasts and historical performance deployment pattern operating costs and other expenses scrap value and discount rate. || assessing adequacy and appropriateness of the disclosures in the financial statements. |
Information other than the 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 board's report corporate governancereport business responsibility report the year at a glance financial highlights and 5years at a glance but does not include the standalone financial statements consolidatedfinancial statements and our auditor's reports thereon.
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 our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.
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.
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 ind as and other accounting principles generally accepted in india. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the act for safeguarding the assets of the company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation 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 financialstatement 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.
Those board of directors are also responsible for overseeing the company's financialreporting process.
Auditor's responsibility 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 skepticism 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 financial control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the act we are also responsible for expressing our opinion on whether thecompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the 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 standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
obtain sufficient appropriate audit evidence regarding the financial informationof the company to express an opinion on the standalone financial statements.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone 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 section 143(3) of the act based on our audit we report that:
A) we have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit. B) in ouropinion proper books of account as required by law have been kept by the company so faras it appears from our examination of those books.
C) the balance sheet the statement of profit and loss including other comprehensiveincome statement of changes in equity and the statement of cash flows dealt with by thisreport are in agreement with the books of account.
D) in our opinion the aforesaid standalone financial statements comply with the ind asspecified under section 133 of the act.
E) on the basis of the written representations received from the directors as on march31 2021 taken on record by the board of directors none of the directors is disqualifiedas on march 31 2021 from being appointed as a director in terms of section 164(2) of theact.
F) with respect to the adequacy of the internal financial controls over financialreporting of the company and the operating effectiveness of such controls refer to ourseparate report in annexure a. Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the company's internal financial controls overfinancial reporting.
G) with respect to the other matters to be included in the auditor's report inaccordance with the requirements of section 197(16) of the act as amended:
In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the company to its directors during the year is inaccordance with the provisions of section 197 of the act
H) with respect to the other matters to be included in the auditor's report inaccordance with rule 11 of the companies (audit and auditors) rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:
I. The company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements.
Ii. The company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts.
Iii. There has been no delay in transferring amounts required to be transferred tothe investor education and protection fund by the company.
2. As required by the companies (auditor's report) order 2016 (the order)issued by the central government in terms of section 143(11) of the act we give inannexure b a statement on the matters specified in paragraphs 3 and 4 of theorder.
Annexure a to the independent auditor's report
(referred to in paragraph 1(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)
We have audited the internal financial controls over financial reporting of the greateastern shipping company limited (the company) as of march 31 2021 inconjunction 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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to respective company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the companies act 2013.
Our responsibility is to express an opinion on the company's internal financialcontrols over financial reporting of the company based on our audit. We conducted ouraudit in accordance with the guidance note on audit of internal financial controls overfinancial reporting (the guidance note) issued by the institute of charteredaccountants of india and the standards on auditing prescribed under section 143(10) of thecompanies act 2013 to the extent applicable to an audit of internal financial controls.Those standards and the guidance note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the company's internal financial controls systemover financial reporting.
Meaning of internal financial controls over financial reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures 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
Because of the inherent limitations of internal financialcontrols over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
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 controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at march 31 2021 based on the criteria forinternal financial control over financial reporting 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 institute of charteredaccountants of india.
Annexure b to the independent auditor's report
(referred to in paragraph 2 under report on other legal and regulatoryrequirements' section of our report of even date) (i) in respect of the company's fixedassets:
(a) the company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) the company has a program of verification of fixed assets to cover all the items ina phased manner over a period of three years which in our opinion is reasonable havingregard to the size of the company and the nature of its assets. Pursuant to the programcertain fixed assets were physically verified by the management during the year. Accordingto the information and explanations given to us no material discrepancies were noticed onsuch verification.
(c) according to the information and explanations given to us the records examined byus and based on the examination of the sale deed/ transfer deed/ conveyance deed providedto us we report that the title deeds comprising all the immovable properties of landand buildings which are freehold are held in the name of the company as at the balancesheet date. In respect of immovable property of land with a carrying amount of rs. 43.72crores taken on perpetual lease and disclosed as fixed assets in the financial statementsthe deed of assignment is yet to be transferred in the name of the company. In respect ofimmovable properties of buildings that have been taken on lease and disclosed asright-of-use assets' in the financial statements the lease agreements are in thename of the company where the company is the lessee in the agreement.
(ii) as explained to us the inventories were physically verified during the year bythe management at reasonable intervals and no material discrepancies were noticed onphysical verification.
(iii) the company has not granted any loans secured or unsecured to companies firmslimited liability partnership or other parties covered in the register maintained undersection 189 of the act. Therefore provisions of the clause 3 (iii) of the order are notapplicable to the company.
(iv) in our opinion and according to the information and explanations given to us thecompany has complied with the provisions of section 186 of the act in respect of makinginvestments. According to the information and explanations given to us the company hasnot granted any loans or provided guarantees or securities to parties covered undersections 185 and 186 of the act.
(v) according to the information and explanations given to us the company has notaccepted any deposit within the meaning of section 73 to section 76 of the act during theyear and does not have any unpaid deposits as at march 31 2021. Therefore the provisionsof clause 3(v) of the order are not applicable to the company.
(vi) to the best of our knowledge and as explained to us by the management themaintenance of cost records has not been specified by the central government under section148(1) of the act for business activities carried out by the company. Therefore theprovisions of clause (vi) of the order are not applicable to the company.
(vii) according to the information and explanations given to us in respect ofstatutory dues:
(a) the company has generally been regular in depositing undisputed statutory duesincluding provident fund employees' state insurance income-tax customs duty goods andservices tax cess and other material statutory dues applicable to it with the appropriateauthorities.
(b) there were no undisputed amounts payable in respect of provident fund employees'state insurance income-tax customs duty goods and services tax cess and other materialstatutory dues in arrears as at march 31 2021 for a period of more than six months fromthe date they became payable.
(c) details of dues of income-tax sales tax and customs duty which have not beendeposited as on march 31 2021 on account of disputes are given below:
|Name of statute ||Nature of dues ||Period for which the amount relates ||Forum where dispute is pending ||Amount (rs. Crore)* |
|Income tax act 1961 ||Income tax ||2007-08 to 2013-14 ||Income tax appellate tribunal mumbai ||1.13 |
| || ||2015-16 to 2016-17 ||Assistant commissioner of income tax ||2.59 |
| || ||2011-12 to 2018-19 ||Deputy commissioner of income tax ||5.02 |
|The central sales tax act 1956 ||Sales tax ||1998-99 ||The sales tax appellate tribunal ||0.87 |
|The bombay sales tax act 1959 ||Sales tax ||1998-99 ||The sales tax appellate tribunal ||3.86 |
|Customs act 1962 ||Custom duty regarding vessels at different ports ||2009-10 ||Commissioner of customs (appeal) jamnagar ||0.04 |
| || ||2010-11 to 2011-12 ||Cestat ahmedabad ||0.51 |
| || ||2011-12 ||Commissioner of customs (appeal) bhubaneshwar ||0.02 |
| || ||2012-13 ||The high court at ahmedabad bhubaneshwar and chennai ||5.56 |
| || ||2012-13 ||Commissioner of customs (appeal) jamnagar ||0.37 |
| || ||2013-14 ||Commissioner of customs (appeal) kolkata ||0.01 |
| || ||2020-21 ||Commissioner of customs (appeals) ahmedabad ||0.02 |
(viii) in our opinion and according to the information and explanations given to usthe company has not defaulted in the repayment of loans or borrowings to banks ordebenture holders. The company has not taken any loans or borrowings from financialinstitutions and government. (ix) in our opinion and according to the information andexplanations given to us the term loans have been applied by the company during the yearfor the purposes for which they were raised other than temporary deployment pendingapplication of proceeds. The company has not raised moneys by way of initial public offeror further public offer during the year.
(x) to the best of our knowledge and according to the information and explanationsgiven to us no fraud by the company or no material fraud on the company by its officersor employees has been noticed or reported during the year.
(xi) in our opinion and according to the information and explanations given to us thecompany has paid/ provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with schedule v to the act.
(xii) the company is not a nidhi company. Therefore the provisions of clause (xii) ofthe order are not applicable to the company.
(xiii) in our opinion and according to the information and explanations given to usthe company is in compliance with sections 177 and 188 of the act where applicable forall transactions with the related parties and the details of related party transactionshave been disclosed in the standalone financial statements etc. As required by theapplicable accounting standards. (xiv) during the year the company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures. Therefore the provisions of clause (xiv) of the order are not applicable tothe company.
(xv) in our opinion and according to the information and explanations given to usduring the year the company has not entered into any non-cash transactions with itsdirectors or directors of its subsidiary companies or persons connected with them.Therefore the provisions of clause (xv) of the order are not applicable to the company.
(xvi) the company is not required to be registered under section 45-ia of the reservebank of india act 1934.
For deloitte haskins & sells llp
(firm's registration no. 117366w/w-100018)
Samir r. Shah
Membership no. 101708
Mumbai may 07 2021