the members of
Hariyana Ship Breakers Limited
Report on the audit of the standalone financial statements
We have audited the accompanying standalone financial statements of Hariyana ShipBreakers Limited ("the Company") which comprises the Balance Sheet as at March31 2021 the Statement of Profit and Loss (including Other Comprehensive Income)statement of changes in equity and statement of cash flow for the year then ended andnotes to the financial statements including a summary of significant accounting policiesand other explanatory information (hereinafter referred as "the Standalone FinancialStatements").
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 accounting principles generally accepted in India ofthe state of affairs of the Company as at March 31 2021 and total comprehensive income(comprising of profit and other comprehensive income) changes in equity and its cashflows for the year ended.
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 Standards 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. We have determined the matters described below to bethe key audit matters to be communicated in our report.
|Key Audit Matter ||Auditor's Response |
|Evaluation of uncertain tax positions ||Our audit procedures included among others the following: |
|The Company has material uncertain tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. ||- Obtained details of completed tax assessments and demands for the year ended March 31 2021 from management. |
| ||- Obtained understanding of key uncertain tax positions. |
| ||- Discussed with appropriate senior management and evaluated management's underlying key assumptions in estimating the tax provisions. |
| ||- Assessed management's estimates of the possible outcome of the disputed cases. |
Information Other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's management and Board of Directors is responsible for the otherinformation. The other information comprises the information included in the AnnualReport but does not include the Standalone Financial Statements and our auditor's 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 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 material misstatementof this other information we are required to report that fact. We have nothing to reportin this regard.
Responsibility of Management and those charged with governance for the StandaloneFinancial 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 changesin equity and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the accounting Standards specified under section133 of the Act. This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding of the assets of theCompany and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate implementation and maintenance of accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone Ind AS financial statement that give a trueand fair view and are free from material misstatement whether due 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 foroverseeing the company's financial reporting 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 controls 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 with reference to Standalone FinancialStatements in place 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 the planned scope andtiming of the audit and significant audit findings including any significant deficienciesin internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the Standalone Financial Statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the Annexure - A statement on the matters specified in the paragraph 3and 4 of the Order to the extent applicable.
2. 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 balance sheet the statement of profit and loss (including other comprehensiveincome) the statement of changes in equity and the cash flow statement dealt with by thisReport are in agreement with the books of account;
d. in our opinion and except for the effects of our qualified opinion the aforesaidStandalone Financial Statements comply with the Accounting Standards specified underSection 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 B" to this report; and
g. 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 in our opinionand to the best of our information and according to the explanations given to us:
i. the Company has disclosed impact of pending litigations which could materiallyimpact its financial statements - Refer Note 3.8 of the Standalone Financial Statements;
ii. the Company did not have any long term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. there has been no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
h. 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.
Annexure A to the Independent Auditors' Report
The Annexure referred to in our Independent Auditors' Report to the members of theCompany on the Standalone Financial Statements for the year ended March 31 2021 wereport that:
i) a) The Company has maintained proper records showing the full particulars includingthe quantitative details and situation of its fixed assets.
b) All the assets have not been physically verified by the management during the yearbut as per the information and explanations provided to us there is a regular programmeof physical verification which in our opinion is reasonable having regard to the size ofthe Company and the nature of its assets. Pursuant to the programme a portion of thefixed assets has been physically verified by the management and no material discrepancieshave been noticed on such physical verification.
c) According to information and explanations given to us by the management the titledeeds of immovable properties as disclosed in Note 1.1 on property plant and equipmentto the standalone financial statements are held in the name of the Company except for:
Title deeds of warehouse/godown with net carrying amount of Rs. 25.90 Lakhs is held inthe name of director of the company.
2. In case of Green Plot Development (Alang) the company has done redevelopment workon a lease hold plot at Alang (Alang Ship Breaking Yard Alang).
ii) The physical verification of inventory has been conducted at reasonable intervalsby the management during the year. In our opinion the frequency of verification isreasonable and no material discrepancies were noticed on such physical verification.However as regards stock of raw materials the company is mainly engaged in ship breakingactivities and old and used ships are its main raw materials. Ascertaining actual weightof ship at the time of purchase and thereafter; is not possible due to its nature andsize loss of weight on account of corrosion and other factors during the usage of theship and its voyage for long period of the years. Inventory of raw materials at the end ofthe year is ascertained by reducing the weight of the scrap sold together with theestimated wastage of the material.
iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013. Accordingly the provisions of clause 3(iii)(a) (b) and (c) of theOrder are not applicable to the Company and hence not commented upon.
iv) In our opinion and according to the information and explanations given to us thecompany has complied with the provisions of section 185 and 186 of the Companies Act 2013in respect of the loans and investments made and guarantees and security provided by itas applicable.
v) According to the information and explanations given to us the company has notaccepted any deposits from the public within the meaning of sections 73 to 76 of the actand the rules framed there under to the extent notified.
vi) Pursuant to the rules made by the Central Government of India the company isrequired to maintain cost records as specified under section 148(1) of the act in respectof its products. We have broadly reviewed the same and are of the opinion that primafacie the prescribed accounts and records have been made and maintained. We have nothowever made a detailed examination of the records with a view to determine whether theyare accurate complete.
vii) a) In our opinion and according to the information and explanations given to usthe Company is generally regular in depositing undisputed statutory dues includingprovident fund employees' state insurance income-tax sales-tax service tax duty ofcustoms duty of excise value added tax cess goods and service tax and other materialstatutory dues as applicable with the appropriate authorities and no such undisputedamounts were in arrears for a period of more than six months from the date they becamepayable.
b) According to the information and explanations given to us and the records of theCompany examined by us the particulars of dues of income-tax sales-tax wealth-taxservice tax duty of customs duty of excise value added tax cess goods and service taxas at March 31 2021 which have not been deposited on account of any dispute are asfollows:
|Name of the authority (where the dispute is pending) ||Related period ||Nature ||Amount |
|Hon. ITAT Mumbai ||AY 2007-08 ||Income Tax ||Rs.396780 |
|Hon. CIT (Appeal)-8 Mumbai ||AY 2014-15 ||Income Tax ||Rs.9853510 |
|Hon. CIT (Appeal)-8 Mumbai ||AY 2016-17 ||Income Tax ||Rs.8552117 |
|Hon. CIT (Appeal)-8 Mumbai ||AY 2012-13 ||Income Tax ||Rs.13971750 |
viii) In our opinion and according to the information and explanations given to us theCompany has not defaulted in repayment of loans or borrowings to any bank or financialinstitution. The Company has not taken any loan from government.
ix) The company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments) or tern loan during the year under report.
x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.
xi) The Company has paid/ provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct.
xii) As the Company is not a Nidhi Company and the Nidhi Rules 2014 are not applicableto it the provisions of Clause 3(xii) of the Order are not applicable to the Company.
xiii) According to the information and explanations given to us by the management theCompany has entered into transactions with related parties in compliance with theprovisions of Sections 177 and 188 of the Act. The details of related party transactionshave been disclosed in the standalone financial statements as required under IndianAccounting Standard (Ind AS) 24 Related Party Disclosures specified under Section 133 ofthe Act.
xiv) According to the information and explanations given by the management and based onthe examinations of the records of the company the company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year under review. Accordingly the provisions of Clause 3(xiv) of the Order are notapplicable to the Company.
xv) In our opinion and according to the information and explanations given to us by themanagement he Company has not entered into any non-cash transactions with its directorsor persons connected with him. Accordingly the provisions of Clause 3(xv) of the Orderare not applicable to the Company.
xvi) According to the information and explanations given to us by the management theCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934. Accordingly the provisions of Clause 3(xvi) of the Order are not applicable tothe Company.
Annexure B to the Independent Auditors' Report
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 with reference to financial statementsof Hariyana Ship Breakers 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 (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 with reference to standalone financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting (the "Guidance Note") and the Standards onAuditing deemed to be prescribed under section 143(10) of the Act to the extent applicableto an audit of internal financial controls both applicable to an audit of internalfinancial controls and both issued by the ICAI. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference tofinancial statements was established and maintained and if such controls operatedeffectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tostandalone financial statements included obtaining an understanding of internal financialcontrols with reference to financial statements assessing the risk that a materialweakness exists and testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thestandalone 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 systemwith reference to standalone financial statements.
Meaning of Internal Financial Controls with reference to financial statements
A company's internal financial controls with reference to financial statements 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 controls with referenceto financial statements 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 authorization ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls with reference to financialstatements
Because of the inherent limitations of internal financial controls with reference tofinancial statements 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 withreference to financial statements to future periods are subject to the risk that theinternal financial control controls with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system with reference to standalone financial statements and suchinternal financial controls with reference to standalone financial statements wereoperating effectively as at March 31 2021 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.
|For Lahoti Navneet & Co. ||For P. D. Goplani & Associates |
|Chartered Accountants ||Chartered Accountants |
|FRN : 116870W ||FRN : 118023W |
|CA Sanjay Soni ||CA Prem Goplani |
|Partner ||Partner |
|M. No. 114835 ||M. No. 103765 |
|UDIN : 21114835AAAAGT6376 ||UDIN : 21103765AAAABJ7011 |
|Mumbai || |
|June 30 2021 || |