To the Members of GOCL Corporation Limited
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of GOCL Corporation Limited("the Company") which comprise the standalone balance sheet as at March 312020 and the standalone statement of profit and loss (including other comprehensiveincome) standalone statement of changes in equity and standalone statement of cash flowsfor the year then ended and notes to the standalone financial statements including asummary of the significant accounting policies and other 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 ("Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2020 and profit and other comprehensiveincome changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules thereunder 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 opinion.
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 aseparate opinion on these matters.
|The key audit matter ||How the matter was addressed in our audit |
|Revenue recognition ||Audit Procedures |
|Refer note 22 to the Standalone financial statements || |
|The Company's revenue is primarily derived from sale of energetics and related products. ||In view of the significance of the matter we applied the following audit procedures in this area among others to obtain sufficient appropriate audit evidence: |
|We have identified timing of revenue recognition as a key audit matter because there are variations in different sale contracts and consequently there is a risk of revenue being overstated on account of recognition before transfer of control particularly due to pressures for achieving the performance targets at the reporting period end. ||> We assessed the appropriateness of the revenue recognition accounting policies and compliance with applicable accounting standards; |
|> We evaluated the design and implementation of key internal financial controls with respect to revenue recognition and tested operating effectiveness of such controls on selected transactions; |
| ||> We performed substantive testing on samples selected using statistical sampling of revenue transactions recorded during the year by testing the underlying documents to assess whether criteria for revenue recognition are met; |
| ||> We tested sample journal entries selected based on specified risk-based criteria to identify unusual items; |
| ||> We tested on a sample basis using statistical sampling specific revenue transactions recorded around the year end date to check whether revenue has been recognised in the correct reporting period by testing the underlying documents. |
| ||> We carried out product wise year on year variance analysis on revenue recognised during the year to identify unusual variances. |
|Litigations and contingent liabilities ||Audit Procedures |
| ||Our audit procedures included the following: |
|The Company operates in multiple jurisdictions and is subject to periodic challenges by local tax authorities on a range of tax matters during the normal course of operations including transfer pricing and indirect tax matters. The company is also involved in multiple litigations/ legal actions arising out of commercial claims for customers/ vendors. ||> Evaluating the design implementation and testing the operating effectiveness of controls in respect of the recognition and measurement of provisions towards litigation and claims; |
| ||> Performing enquiries with the in-house legal compliance officer to evaluate the adequacy of provisions towards litigations and claims recognised by the Company; |
|These involve significant judgement by the Company to determine the possible outcome of the litigation consequently having an impact on related accounting and disclosures in the standalone financial statements. Considering the complexity possible interpretations and the magnitude of the potential exposures this is considered a key audit matter. ||> Read and analyzed selected key correspondence orders and appeals documents external legal opinions/ consultations obtained by the Company; |
|Refer note 35 to the standalone financial statements. ||> Obtaining independent confirmations from external lawyers where relevant; |
| ||> Involving our internal tax experts to assess various tax position taken by the Company with respect to complex tax matters; |
| ||> Assessing and challenging the Company's estimate of the possible outcome of the disputed cases considering legal precedence and other judicial rulings; and |
| ||> Assessing and testing the presentation and disclosures relating to litigation claims and contingencies. |
|Valuation of Trade receivables ||Audit Procedures |
| ||Our audit procedures included the following: |
|As at March 31 2020 trade receivables of the Company amounted to Rs 1746.89 Lakhs. The details of trade receivables and their credit risk have been disclosed in Note 11 to the financial statements. || |
|The Company's provision for doubtful trade receivables is based on the expected credit loss model (ECL). The Company measures the ECL by using various factors including customer credit history current market customer- specific conditions forward looking information on a case to case basis collective assessment based on historical experience of default which involves significant judgement and are inherently subjective. ||> Testing the methodology of ECL provision computation and the key underlying assumptions used in the process of estimation of expected credit losses and the mathematical accuracy of Company's model used to compute impairment provision; |
| ||> Obtaining an understanding and assessing the design implementation and operating effectiveness of Company's key internal controls relating to credit control debt collection and making provisions for doubtful debts; |
|The determination of the provision required to be made involves significant judgement and estimation of recoverable amount. Hence we have identified the audit risk surrounding the impairment losses on trade receivables as a key audit matter. ||> Checking appropriateness and challenging the reasonableness of the key data and assumptions used by the Company for computing ECL on trade receivables. Assessing assumptions includes historical default rate expected collections and other related factors; and |
| ||> Circulating and Obtaining independent customers confirmations on the outstanding balances on sample (using statistical sampling) basis. Agreed the balances obtained from customer with balance in the books along with applicable reconciling items. Checking subsequent bank receipts from customers and other relevant documents relating to closing trade receivable balances at March 31 2020 when confirmations are not received. |
The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the financial statements and our auditors' reportthereon.
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 in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.
Management's Responsibility for the Standalone Financial Statements
The Company's management and Board of Directors are responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the state of affairs profit/loss and othercomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the accuracy and completeness of the accounting records relevantto the preparation and presentation of the standalone financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.
In preparing the standalone financial statements management and Board of Directors areresponsible 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.
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 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 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 thecompany has adequate internal financial controls with reference to financial statements inplace and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of 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.
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 auditors' 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
As required by the Companies (Auditors' Report) Order 2016 ("the Order")issued by the Central Government in terms of section 143 (11) of the Act we give in the"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.
(A) As required by Section 143(3) of the Act we report that:
a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
c) The standalone balance sheet the standalone statement of profit and loss (includingother comprehensive income) the standalone statement of changes in equity and thestandalone statement of cash flows dealt with by this Report are in agreement with thebooks 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 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.
f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".
(B) With respect to the other matters to be included in the Auditors' Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations as at March 31 2020 onits financial position in its standalone financial statements - Refer Note 35 to thestandalone financial statements
ii. The Company has long-term contracts other than derivative contracts for which therewere no material foreseeable losses.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
iv. The disclosures in the standalone financial statements regarding holdings as wellas dealings in specified bank notes during the period from 8 November 2016 to 30 December2016 have not been made in these standalone financial statements since they do not pertainto the financial year ended March 31 2020.
(C) With respect to the matter to be included in the Auditors' Report under section197(16):
In our opinion and according to the information and explanations given to us theremuneration paid by the company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under Section 197(16) which arerequired to be commented upon by us.
for B S R & Associates LLP
ICAI Firm Registration Number: 116231W/W-100024
Membership number: 049642
Date: June 30 2020
Annexure A to the Independent Auditor's Report on the standalone financial statements
With reference to the Annexure A referred to in the Independent Auditor's Report to theMembers of the Company on the standalone financial statements for the year ended March 312020 we report the following:
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant and equipment.
(b) The property plant and equipment are physically verified by the Managementaccording to a phased programme designed to cover all the items over a period of threeyears which in our opinion is reasonable having regard to the size of the Company andthe nature of its assets. Pursuant to the programme a portion of the property plant andequipment has been physically verified by the management during the year and no materialdiscrepancies have been noticed on such verification.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties asdisclosed in Note 3 on property plant and equipment to the standalone financialstatements are held in the name of the Company. In respect of immovable property of landthat has been taken on lease the lease agreement is in the name of the Company where theCompany is the lessee in the agreement and is under dispute [Refer note 35(4)].
(ii) The inventory apart from goods in transit and inventory lying with outside partieshave been physically verified by the Management during the year and the discrepanciesnoticed on such verification between the physical stock and book records were notmaterial. In our opinion the frequency of such verification is reasonable. Inventorieslying with outside parties have been substantially confirmed by them as at the year- endand no material discrepancies were noticed in respect of such confirmations.
(iii) The Company has granted loans to Companies covered in the register maintainedunder Section 189 of the Companies Act 2013 ('the Act'):
(a) In our opinion and according to the information given to us the terms andconditions of the loans given by the Company are prima facie not prejudicial to theinterest of the Company.
(b) The schedule of repayment of principal and payment of interest has been stipulatedand repayments of principal amounts and /or receipts of interest have been regular as perstipulations.
(c) There are no overdue amounts as at the year-end in respect of both principal andinterest.
(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Companies Act2013 in respect of grant of loans making investments and providing guarantees andsecurities as applicable.
(v) The Company has not accepted any deposits from the public in accordance with theprovisions of Section 73 to 76 of the Act and Rules framed thereunder. Accordinglyparagraph 3(v) of the Order is not applicable to the Company.
(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the Companies (Cost Records and Audit) Rules 2014 as amended prescribed by theCentral Government under section 148 of the Act and are of the opinion that prima faciethe prescribed accounts and records have been made and maintained. However we have notmade a detailed examination of such records.
(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including Provident Fund Employees' StateInsurance Income-tax Duty of Customs Goods and Services tax Cess and other materialstatutory dues have been regularly deposited during the year by the Company with theappropriate authorities
According to the information and explanations given to us no undisputed amountspayable in respect of Provident fund Employees' state insurance Income-tax Goods andService tax duty of Customs Cess and other material statutory dues were in arrears as atMarch 31 2019 for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us there are no dues ofincome tax sales tax service tax goods and service tax duty of customs duty of exciseor value added tax which have not been deposited by the Company on account of disputesexcept for the following:
|Name of the Statute ||Nature of Dues ||Forum where Dispute is Pending ||Period to which the Amount Relates ||Amount Involved (Lakhs) ||Amount Deposited (Lakhs) |
|Central Excise Act 1944 ||Excise Duty ||Assistant Commissioner ||1980-81 to 1986-87 2001-02 and 200203 ||18.14 ||12.02 |
| || ||Commissioner (Appeals) ||1992-93 to 1995-96 ||2.87 ||1.00 |
| || ||High Court of Andhra Pradesh & Telangana ||2003-04 ||1.91 ||- |
|Central Sales Tax Act 1956 ||Sales Tax ||Assistant Commissioner ||1977-78 to 1983-84 2000-01 to 2003-04 and 2007-08 to 2009-10 ||246.25 ||197.06 |
| || ||Deputy Commissioner ||2008-09 2010-11 and 2011-12 ||52.25 ||4.50 |
| || ||Additional Commissioner ||2011-12 to 2012-13 ||68.26 ||60.92 |
| || ||Commissioner ||1997-98 ||51.70 ||- |
| || ||Joint Commissioner ||2006-07 to 2007-08 and 2009-10 ||109.34 ||34.17 |
|Central Sales Tax Act 1956 ||Sales Tax ||Sales Tax Tribunal of Orissa Cuttack ||1992-93 1994-95 to 1995-96 1998-99 and 2002-03 to 2005-06 ||1800.66 ||269 |
| || ||High Court of Odisha ||1976-77 to 1987-88 and 1989-90 to 1990-91 ||2787.94 ||537.4 |
|Finance Act 1994 ||Service Tax ||Central Excise and Service Tax Appellate Tribunal ||2012-13 to 2014-15 ||352.29 ||13.21 |
|Income-tax Act 1961 ||Income Tax ||Commissioner Appeals ||1996-97 2002-03 2008-09 2009-10 and 2010-11 ||1766.28 ||1660.82 |
| || ||Income Tax Appellate Tribunal ||2011-12 ||7.46 ||- |
| || ||High Court of Andhra Pradesh & Telangana ||2010-11 ||6.28 ||6.28 |
| || ||Supreme Court of India ||2005-06 ||14.89 ||14.89 |
(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of loans or borrowings to banks. The Companydid not have any outstanding loans or borrowings from financial institutions or governmentand there are no dues to debenture holders during the year.
(ix) The Company has not raised any money by way of initial public offer or furtherpublic offer (including debt instrument) or term loans during the year. Accordinglyparagraph 3(ix) of the Order is not applicable to the Company.
(x) According to the information and explanations given to us no material fraud on theCompany by its officers and employees or fraud by the Company has been noticed or reportedduring the course of our audit.
(xi) According to the information and explanations given to us and based on examinationof the records of the Company the Company has paid/ provided for managerial remunerationin accordance with the requisite approvals mandated by the provisions of Section 197 readwith Schedule V to the Act.
(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly paragraph 3(xii) of the Order is notapplicable to the Company.
(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with Section 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the standalone financial statements as required by theapplicable Indian accounting standards.
(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year. Accordingly paragraph3(xiv) of the Order is not applicable to the Company.
(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 any noncashtransaction with the directors or person connected with him. Accordingly paragraph 3(xv)of the Order is 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. Accordingly paragraph 3(xvi) of the Order is not applicable tothe Company.
For B S R & Associates LLP
ICAI Firm Registration Number: 116231W/W-100024
Membership number: 049642
Date: June 30 2020
Annexure B to the Independent Auditor's Report on the standalone financial statements
Report on the Internal Financial Controls under Clause (i) of sub-section 3 of Section143 of the Companies Act 2013 (the Act')
We have audited the internal financial controls over financial reporting of GOCLCorporation Limited ('the Company') as of March 31 2020 in conjunction with our audit ofthe standalone financial statements of the Company for the year 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'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to 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 Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the 'Guidance Note') and the Standards on Auditing issued by ICAI and deemed to beprescribed under Section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.
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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; 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 financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial 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 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 2020 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 B S R & Associates LLP
ICAI Firm Registration Number: 116231W/W-100024
Membership No.: 049642
Date: June 30 2020