The Members of
Hardcastle and Waud Manufacturing Company Limited
Report on the Indian Accounting Standards ("Ind AS")Financial Statements Opinion
We have audited the accompanying Ind AS financial statements ofHardcastle and Waud Manufacturing Company Limited ("the Company") whichcomprise the Balance Sheet as at 31st March 2019 the Statement of Profit and Loss(including Other Comprehensive Income) the Statement of Changes in Equity and theStatement of Cash Flows for the year ended on that date and a summary of significantexplanatory information (hereinafter referred to as "Ind AS financialstatements").
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid Ind AS financial statements give the informationrequired by the Companies Act2013 ("the Act") in the manner so required andgive a true and fair view in conformity with the Indian Accounting Standards prescribedunder section 133 of the Act read with the Companies (Indian Accounting Standards) Rules2015 as amended ("Ind AS") and other accounting principles generally acceptedin India of the state of affairs of the Company as at 31st March 2019 the Profit andtotal comprehensive income changes in equity and its cash flow for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the Ind AS financial statements in accordancewith the Standards on Auditing (SAs) specified under section 143(10) of theAct. Our responsibilities under those Standards are further described in theAuditors Responsibilities for the Audit of the Ind AS 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 withthe ethical requirements that are relevant to our audit of the Ind AS financial statementsunder provisions of the Act and the Rules made there under and we have fulfilled ourother ethical responsibilities in accordance with these requirements and the ICAIsCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion on Ind AS financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the financial statements of the current period.These matters were addressed in the context of our audit of the financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters. We have determined the matters described below to be the key audit mattersto be communicated in our report.
Valuation of Investments
|The Companys investment portfolio consists of Non Current investments. ||Our audit procedures for this area included: |
|Total investment portfolio of the Company represents 50.36 per cent of the Companys total assets (net of provision). ||We assessed appropriateness of the pricing methodologies with reference to Companys accounting and valuation policy; |
|Current Investments are stated at lower of cost or market value determined on an individual investment basis. Long term investments are stated at cost less provision for diminution other than temporary in the value of these investments. ||We have assessed the process and tested the operating effectiveness of the key controls including the Companys review and approval of the estimates and assumptions used for the valuation including key authorization and data input controls; |
|In respect of the portfolio of quoted investments we do not consider these investments to be at a high risk of significant misstatement or to be subject to a significant level of judgement because they comprise liquid quoted investments. However due to their materiality in the context of the financial statements as a whole they are considered to be one of the areas which had significant impact on our overall audit strategy. ||For quoted investments recalculated the valuations of investments with independent pricing sources; |
|The portfolio of unquoted investments which includes equity shares and preference shares is 50.27 per cent of the Companys Total Assets. Valuation of unquoted investments involves judgement depending on the observability of the inputs into the valuation and further judgement in determining the appropriate valuation methodology where external pricing sources are either not readily available or are unreliable. Refer Note no. 4 to the Financial Statements and Note no. 1.17(v) of the significant policies. ||For unquoted investments we critically evaluated the valuation assessment and resulting conclusions in order to determine appropriateness of the valuations recorded with reference to the accounting Companys valuation guidelines. |
|The Companys investment properties consist of premises. ||Our audit procedures for this area included: |
|Total Investment properties of the Company represents 16.71 per cent of the Companys total assets. ||We have verified whether each of the properties are purchased to be held for capital appreciation or for earning rental income so as to classify it under investment properties. |
|Investment properties are valued at cost as per Ind AS 40 .Refer Note no. 1.05 of Significant the Financial Statements. ||We assessed the method of verification and AccountingPoliciesandNoteno.3to valuation of properties to ensure its reasonableness in the circumstances relating to each asset. |
The company has pending litigation Our audit procedures for this areaincluded: matters with various appellate
Obtained details of complete tax assessment and demands for the yearended March 31 2019 from authorities and at different forums management.
The Company has material uncertain
We involved our internal experts to challenge the managementsunderlying assumptions in estimating tax positions including matters under the taxprovision and the possible outcome of the disputes. dispute which involve significantjudgment to determine the possible Our internal experts also considered legal precedenceand other rulings in evaluating managements outcome of these disputes.. position onthese uncertain tax positions.
Refer Note 27.01 to the Financial Additionally we considered theeffect of new information in respect of uncertain tax positions as Statements. at April 12018 to evaluate whether any change was required to managements position on theseuncertainties.
The Companys Board of Directors is responsible for the otherinformation. Other information comprises the information included in the ManagementDiscussion and Analysis Boards Report including Annexures thereto CorporateGovernance and Shareholders Information but does not include the Ind AS financialstatements and our auditors report thereon. The other information as identifiedabove is expected to be made after the date of this auditors report.
Our opinion on the Ind AS financial statements does not cover the otherinformation and we will not express any form of assurance conclusion thereon. Inconnection with our audit of the Ind AS financial statements our responsibility is toread the other information identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the Ind ASfinancial statements or our knowledge obtained during the course of our audit or otherwiseappears to be materially misstated.
When we read the other information as identified above if we concludethat there is a material misstatement therein we are required to conclude the matter tothose charged with governance.
Managements Responsibility for the Ind AS Financial Statements
The Companys Board of Directors is responsible for the mattersstated in Section 134(5) of the Companies Act 2013 ("the Act") with respect topreparation of these Ind AS Financial Statements that give a true and fair view of thefinancial position financial performance total comprehensive income changes in equityand cash flows of the Company in accordance with the Indian Accounting Standards (Ind AS)prescribed under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended and other accounting principles generally accepted inIndia.
This responsibility also includes maintenance of adequate accountingrecords in accordance with provisions of the Act for safeguarding assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring accuracy and completenessof the accounting records relevant to preparation and presentation of the Ind ASFinancial Statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
Inpreparing the IndAS financial for assessing the Companysability to continue as a going concern disclosing as applicable matters related togoing concern and using the going concern basis of accounting unless management eitherintends to liquidate the Company or to cease operations or has no realistic alternativebut to do so. The Board of Directors is also responsible for overseeing the Companysfinancial reporting process.
Auditors Responsibilities for Audit of the Ind AS FinancialStatements
Our objectives are to obtain reasonable assurance about whether thefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditors report that includes our opinion. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also: disclosuresin the financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of ourauditors report. However future events or conditions may cause the Company to ceaseto continue as a going concern. v. Evaluate the overall presentation structure andcontent of the financial statements including the disclosures and whether the financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditors report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements:
1. As required by the Companies (Auditors Report) Order 2016("the Order") issued by the Central Government of India in terms of sub-section(11) of section143 of the Act we give in Annexure "A" hereto a statement on thematters specified in paragraph 3 and 4 of the Order to the extent applicable.
2. As required by section143(3) of the Act we report that:
a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purpose of our audit;
b) In our opinion proper books of account as required by law have beenkept by the Company so far as appears from our examination of those books;
c) The Balance Sheet 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 Ind AS financial statements complywith the accounting standards specified under section 133 of the Act read with Rule 7 ofthe Companies (Accounts) Rules 2014;
e) On the basis of written representations received from the directorsas on 31st March 2019 taken on record by the Board of Directors none of the directorsis disqualified as on 31st March 2019 from being appointed as a director in terms ofsection 164 (2) of the Act;
f) With respect to adequacy of the internal financial controls overfinancial reporting of the Company and operating effectiveness of controls refer to ourseparate report in "Annexure B"; and
g) With respect to other matters to be included in the AuditorsReport in accordance with the requirements of section 197(16) of the Act as amended: Inour opinion and to the best of our information and according to the explanations given tous the remuneration paid by the Company to its directors during the year is in accordancewith provisions of section 197 of the Act.
h) With respect to other matters to be included in the AuditorsReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on itsfinancial position in its Ind AS financial statements -Refer Note no. 27.01 of Ind AsFinancial Statements.
ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses; and
iii. There were no amounts which were required to be transferred to theInvestor Education and Protection Fund by the Company.
| ||Chartered Accountants |
| ||Firm No. 103429W |
| ||(CA Atul Jain) |
|Place: Mumbai ||Partner |
|Date: 24th May 2019 ||M. No. 037097 |
Annexure "A" to the Independent Auditors Report
(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of its fixed assets; (b) Some ofthe fixed assets were physically verified during the year by the management in accordancewith a phased programme of verification which in our opinion provides for physicalverificationof all the fixed assets at reasonable intervals .No material discrepanciesbetween the book records and physical inventory have been noticed; (c) The title deeds ofimmovable properties held as Fixed assets/Long term investments are in the name of theCompany;
(ii) Physical verification of inventory has been conducted atreasonable intervals by the management and no material discrepancies were noticed; (iii)The Company has not granted loans secured or unsecured to any firms companies or otherparties covered in the register maintained under Section 189 of the CompanysAct2013 ( the Act ) and hence provisions of clauses (iii) (a) (b) and(c) of paragraph 3of the Company (Auditors Report ) Order 2016 ( the Order ) are not applicable to theCompany; (iv) In respect of investments provisions of Section 185 and 186 of the Acthave been complied with; (v) The Company has not accepted any deposits from the publicwithin the meaning of Sections 73 to 76 of the Companies Act and the rules framed thereunder to the extent notified; (vi) The Central Government of India has not prescribedmaintenance of cost records under subsection (1) of Section 148 of the Act for any of theactivities of the Company; (vii) According to records of the Company examined by us andthe information and explanations given to us: (a) The Company is generally regular indepositing undisputed statutory dues including provident fund employees stateinsurance income-tax sales-tax service tax goods and service tax duty of customsduty of excise value added tax cess and other statutory dues with appropriateauthorities. There were no undisputed amounts payable for a period of more than six monthsfrom the date they became payable; (b) Details of dues of Sales tax duty of excise andincome tax which have not been deposited as at March 312019 on account of disputes aregiven below :
|Nature of ||Nature of Dues ||Forum where dispute is pending ||Period to which the Amount relates ||Amount* |
|Statute || || || ||(in `) |
|Sales Tax ||Sales Tax ||Deputy Commissioner (Ct) Chennai ||2002-032003-04 2004-05 ||465848 |
|Sales Tax ||Sales Tax ||Appellate Assistant Commissioner Chennai ||2009-102010-11 ||84299 |
|Sales Tax ||Sales Tax ||Appellate Assistant Commissioner Chennai ||2002-032003-042004-052005-06 ||661561 |
|Sales Tax ||Sales Tax ||DY Comm. OF Sales Tax Appeals ||2000-2001 ||267492 |
|Sales Tax ||Sales Tax ||Assessing Officer ||2004-05 ||330744 |
|Central Excise ||Excise Duty & Penalty ||CCE (APPEALS)Mumbai ||1988-89 ||889214 |
|Central Excise ||Excise Duty & Penalty ||CCE (APPEALS)Mumbai ||1988-89 ||69641 |
|Sales Tax ||Sales Tax ||Deputy Commissioner Appeal(Mumbai) ||2013-2014 ||250744 |
|Sales Tax ||CST ||Deputy Commissioner Appeal (Mumbai) ||2012-2013 ||536431 |
|Income Tax ||Income Tax ||CIT(A) ||2007-2008 ||242105 |
|Income Tax ||Income Tax ||CPC ||2009-2010 ||1284140 |
*The amount includes र: 1148513 which has been deposited with SalesTax Authorities in respect of contested demands raised against the Company. There were nodues of duty of customs and goods & service tax which have not been deposited as atMarch 31 2019 on account of any dispute; (viii) The Company has not taken any loan fromany financial Institution bank or government and has not issued any debentures; (ix) TheCompany has not raised money by way of initial public offer or further public offer andterm loans therefore clause (ix) of para 3 of the Order is not applicable; (x) To the bestof our knowledge and belief and according to the information given to us no fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe year; (xi) Managerial remuneration paid or provided is within permissible limits asprescribed by section 197 read with Schedule V of the Act; (xii) As the Company does notfall into the category of a Nidhi company clause (xii) of para 3 of the Order is notapplicable to the Company; (xiii) According to the information and explanations given tous all transactions with related parties are in compliance with Sections 177 and 188 ofthe Act wherever applicable and details have been disclosed in the Ind AS FinancialStatements as required by applicable accounting standards; (xiv) The Company has not madeany preferential allotment or private placement of shares or fully or partly convertibledebentures during the year under review; (xv) According to the information andexplanations given to us the Company has not entered into any non-cash transactions withdirectors or persons connected with them under provisions of section 192 of Act; and (xvi)The Company is not required to be registered under section 45-IA of the Reserve Bank ofIndia Act 1934
| ||For GMJ & Co. |
| ||Chartered Accountants Firm No. 103429W |
| ||(CA Atul Jain) |
|Place: Mumbai ||Partner |
|Date: 24th May 2019 ||M. No. 037097 |
Annexure "B" to Auditors Report
Report on Internal Financial Controls under Clause (i) of Sub-section 3of Section 143 of the Act
We have audited the internal financial controls over financialreporting of Hardcastle and Waud Manufacturing Company Limited ("the Company")as of 31st March 2019 in conjunction with our audit of the Ind AS Financial Statements ofthe Company for the year ended on that date.
Managements Responsibility for Internal Financial Controls
The Companys 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 (ICAI).These responsibilities include design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring orderly and efficientconduct of its business including adherence to Companys policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of accounting records and the timely preparation of reliable financialinformation as required under the Act.
Our responsibility is to express an opinion on the Companysinternal financial controls over financial reporting 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 suchcontrol operated effectively in all material respects. Our audit involved performingprocedures to obtain audit evidence about adequacy of the internal financial controlssystem over financial reporting and their operating effectiveness. Our audit of internalfinancial controls over financial reporting included obtaining an understanding ofinternal financial controls over financial reporting assessing the risk that a materialweakness exists and testing and evaluating the design effectiveness of internal controlbased on the assessed risk. The procedures selected depend on the auditors judgmentincluding assessment of the risks of material misstatement of the Ind AS FinancialStatements 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 Companys internalfinancial reporting controls system over financial
Meaning of Internal Financial Controls Over Financial Reporting
A companys internal financial control over financial reporting isa process designed to provide reasonable assurance regarding reliability of reporting andthe preparation of Ind AS Financial Statements for external purposes in accordance withgenerally accepted accounting principles. A companys internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to maintenanceof records that in reasonable detail accurately and fairly reflect the transactions anddispositions of assets of the company; (2)provide reasonable assurance that transactionsare recorded as necessary to permit preparation of Ind AS Financial Statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompanys assets that could have a material effect on the Ind AS FinancialStatements.
Inherent Limitations of Internal Financial Controls Over FinancialReporting
Because of inherent limitations of internal financial controls overfinancial reporting including 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 internal financial control overinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.
In our opinion and 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 31st March 2019 based on theinternal control over financial reporting criteria established by the Company consideringessential 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 GMJ & Co |
| ||Chartered Accountants |
| ||Firm No. 103429W |
| ||(CA Atul Jain) |
|Place : Mumbai ||Partner |
|Date : 24th May 2019 ||M. No. 037097 |