GMM Pfaudler Ltd.
|BSE: 505255||Sector: Engineering|
|NSE: GMMPFAUDLR||ISIN Code: INE541A01023|
|BSE 00:00 | 13 Nov||1544.45||
|NSE 00:00 | 13 Nov||1545.15||
|Mkt Cap.(Rs cr)||2,255|
|Mkt Cap.(Rs cr)||2254.90|
GMM Pfaudler Ltd. (GMMPFAUDLR) - Auditors Report
Company auditors report
To The Members of GMM Pfaudler Limited
REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS
We have audited the accompanying standalone financial statements of GMMPfaudler Limited ("the Company") which comprise the Balance Sheet as at 31stMarch 2019 and the Statement of Profit and Loss (including Other Comprehensive Income)the Statement of the Cash Flow Statement and the Statement of Changes in Equity for theyear then ended and a summary of significant accounting policies and other explanatoryinformation.
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the -Indian Accounting Standardsprescribed under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended("Ind AS") and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at 31st March 2019and its profit total comprehensive income its cash flows and the changes in equity forthe year ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing specified under section 143(10) of the Act(SAs). Our responsibilities under those Standards are further described in theAuditor's Responsibility for the Audit of the Standalone Financial Statements sectionof our report. We are independent of the Company in accordance with the Code of Ethicsissued 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 made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence obtained by us is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
Revenue Recognition on long-term contracts (percentage of completionaccounting)
Key Audit Matter Description
The Company generates its revenue from long-term customer specificcontracts where performance obligations are satisfied over a period of time. Thesecontracts are accounted under the percentage of completion method (POC).
This area is considered as key audit matter due to the size of revenuegenerated from long-term customer specific contracts. Furthermore accounting for thecontracts involves both judgement in assessing whether the criteria set out in theaccounting standards have been met and estimates related to future costs the finaloutcome of the contract and the stage of completion.
How the Key Audit Matter was addressed in the Audit
As part of our audit we obtained an understanding of the methodologyapplied the internal processes and the controls used to determine the percentage ofcompletion. We evaluated the processes and technical systems used to record actual costsincurred tested the manual controls and automated controls implemented in the systems.
As part of our work we focused on management's judgement inapplying the methodology and the estimates made to determine the amount of revenue to berecorded in their project calculations.
We obtained and reviewed contract list and calculation and tested thecalculation of stage of completion including the cost incurred and recorded against thecontract for occurrence and accuracy assessing the basis for determining the costs tocomplete and total contract cost and then re performing the percentage of completioncalculation.
We challenged management in respect of the reasonableness of judgementsmade regarding the cost to complete estimate and the timing of recognition of changeorders.
We also assessed whether management's policies and processes formaking these estimates continue to be appropriate and are applied consistently overtimeand to contracts of a similar nature.
On the basis of the audit procedure above we have gained sufficientevidence to address the risk of material misstatements in revenue recognition on long-termcontracts (POC).
Information Other than the Financial Statements and Auditor'sReport Thereon
The Company's Board of Directors is responsible for theother information. The other information comprises the information included in theManagement Discussion and Analysis Board's report including Annexures toBoard's report Corporate Governance but does not include the consolidated financialstatements standalone financial statements and our auditor's report thereon.
Our opinion on the standalone financial statements does notcover the other information and we do not express any form of assurance conclusionthereon.
In connection with our audit of the standalone financialstatements our responsibility is to read the other information and in doing so considerwhether the other information is materially inconsistent with the standalone financialstatements or our knowledge obtained during the course of our audit or otherwise appearsto be materially misstated.
If based on the work we have performed we conclude that thereis a material misstatement of this other information; we are required to report that fact.We have nothing to report in this regard.
Management's Responsibility for the Standalone FinancialStatements
The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these standalonefinancial statements that give a true and fair view of the financial position financialperformance including other comprehensive income cash flows and changes in equity of theCompany in accordance with the Ind AS and other accounting principles generally acceptedin India. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalonefinancial statement that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the standalone financial statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibility for the Audit of the Standalone FinancialStatements
Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone 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 thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
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 the management.
Conclude on the appropriateness of management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the standalone financial statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor's report. However future events orconditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
Materiality is the magnitude of misstatements in the standalonefinancial statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the standalone financialstatements may be influenced. We consider quantitative materiality and qualitative factorsin (i) planning the scope of our audit work and in evaluating the results of our work; and(ii) to evaluate the effect of any identified misstatements in the standalone financialstatements.
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 standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act based on our audit wereport 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 have beenkept by the Company so far as it appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss including OtherComprehensive Income the Cash Flow Statement and Statement of Changes in Equity dealtwith by this Report are in agreement with the books of account.
d) In our opinion the aforesaid standalone financial statements complywith the Ind AS specified under Section 133 of the Act.
e) On the basis of the written representations received from thedirectors as on 31st March 2019 taken on record by the Board of Directors none of thedirectors is disqualified as on 31st March 2019 from being appointed as a director interms of Section 164(2) of the Act.
f) With respect to the adequacy of the internal financial controls overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate Report in "Annexure A". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internalfinancial controls over financial reporting.
g) With respect to the other matters to be included in theAuditor's Report in accordance with the requirements of section 197(16) of the Actas amended.
In our opinion and to the best of our information and according to theexplanations given to us the remuneration paid by the Company to its directors during theyear is in accordance with the provisions of section 197 of the Act.
h) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 as amended in our opinion and to the best of our information and according tothe explanations given to us:
i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone financial statements.
ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses.
iii. There has been no delay in transferring amounts required to betransferred to the 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) ofthe Act we give in "Annexure B" a statement on the matters specified inparagraphs 3 and 4 of the Order.
To The Independent Auditor's Report
Report on the Internal Financial Controls Over Financial Reportingunder Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("theAct")
We have audited the internal financial controls over financialreporting of GMM Pfaudler Limited ("the Company") as of March 312019 inconjunction with our audit of the standalone Ind AS financial statements of the Companyfor the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India. 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 timely preparation of reliable financialinformation as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting of the Company based on our audit. Weconducted our audit in accordance with the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting (the "Guidance Note") issued by the Instituteof Chartered Accountants of India and the Standards on Auditing prescribed under Section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively 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 themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over 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.
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 2019 based on thecriteria for internal financial control over financial reporting established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India.
To The Independent Auditor's Report
(Referred to in paragraph 2 under Report on Other Legal andRegulatory Requirements' section of our report of even date)
(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets.
(b) The Company has a program of verification of fixed assets to coverall the items in a phased manner over a period of 3 years which in our opinion isreasonable having regard to the size of the Company and the nature of its assets. Pursuantto the program certain fixed assets were physically verified by the Management during theyear. According to the information and explanations given to us no material discrepancieswere noticed on such verification.
(c) According to the information and explanations given to us and therecords examined by us and based on the examination of the registered sale deed / transferdeed / conveyance deed provided to us we report that the title deeds comprising all theimmovable properties of land and buildings which are freehold are held in the name of theCompany as at the balance sheet date.
(ii) As explained to us the inventories were physically verifiedduring the year by the Management at reasonable intervals and no material discrepancieswere noticed on physical verification. The physical verification of inventories lying withthird parties or goods- in-transit is performed by performing alternate procedures such asobtaining confirmations.
(iii) According to the information and explanations given to us theCompany has granted loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013 in respect of which:
(a) The terms and conditions of the grant of such loans are in ouropinion prima facie not prejudicial to the Company's interest.
(b) The schedule of repayment of principal and payment of interest hasbeen stipulated and repayments or receipts of principal amounts and interest have beenregular as per stipulations.
(c) There is no overdue amount remaining outstanding as at theyear-end.
(iv) In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of Sections 185 and 186 of theCompanies Act 2013 in respect of grant of loans making investments and providingguarantees and securities as applicable.
(v) According to the information and explanations given to us theCompany has not accepted any deposits from the public to which the directives issued bythe Reserve Bank of India and the provisions of section 73 to 76 or any other relevantprovisions of the Act and the Companies (Acceptance of Deposit) Rules 2014 as amendedwould apply. Accordingly paragraph 3(v) of the Order is not applicable to the Company.
(vi) The maintenance of cost records has been specified by the CentralGovernment under section 148(1) of the Companies Act 2013. We have broadly reviewed thecost records maintained by the Company pursuant to the Companies (Cost Records and Audit)Rules 2014 as amended prescribed by the Central Government under sub-section (1) ofSection 148 of the Companies Act 2013 and are of the opinion that prima facie theprescribed cost records have been made and maintained We have however not made adetailed examination of the cost records with a view to determine whether they areaccurate or complete.
(vii) According to the information and explanations given to us inrespect of statutory dues:
(a) The Company has generally been regular in depositing undisputedstatutory dues including Provident Fund Income-tax Sales Tax Service Tax CustomsDuty Excise Duty Value Added Tax Goods & Service Tax cess and other materialstatutory dues applicable to it to the appropriate authorities.
(b) There were no undisputed amounts payable in respect of ProvidentFund Income-tax Sales Tax Service Tax Customs Duty Excise Duty Value Added TaxGoods & Service Tax cess and other material statutory dues in arrears as at March 312019 for a period of more than six months from the date they became payable.
(c) Details of dues of Income-tax Sales Tax Service Tax Excise DutyValue Added Tax which have not been deposited as on March 31 2018 on account of disputesare given below:
According to the information and explanations given to us there are nodues of Customs Duty that have not been deposited as on March 312019 on account ofdisputes.
(viii) In our opinion and according to the information and explanationsgiven to us the Company has not defaulted in the repayment of loans or borrowings tobanks. The Company has not issued any debentures and has not taken any loans from thefinancial institutions and government.
(ix) The Company has not raised moneys by way of initial public offeror further public offer (including debt instruments) or term loans and hence reportingunder clause (ix) of the Order is not applicable.
(x) To the best of our knowledge and according to the information andexplanations given to us no material fraud by the Company and no material fraud on theCompany by its officers or employees has been noticed or reported during the year.
(xi) In our opinion according to the information and explanationsgiven to us the Company has paid / provided managerial remuneration in accordance withthe requisite approvals mandated by the provisions of section 197 read with Schedule V tothe Companies Act 2013.
(xii) The Company is not a Nidhi Company and hence reporting underclause (xii) of the Order is not applicable.
(xiii) In our opinion and according to the information and explanationsgiven to us the Company is in compliance with Section 188 and 177 of the Companies Act2013 where applicable for
all transactions with the related parties and the details of relatedparty transactions have been disclosed in the financial statements etc. as required by theapplicable accounting standards.
(xiv) During the year the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures andhence reporting under clause (xiv) of the Order is not applicable to the Company.
(xv) In our opinion and according to the information and explanationsgiven to us during the year the Company has not entered into any noncash transactionswith its directors or persons connected with him and hence provisions of section 192 ofthe Companies Act 2013 are not applicable.
(xvi) The Company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934.