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Hindusthan Udyog Ltd.

BSE: 513039 Sector: Engineering
NSE: N.A. ISIN Code: INE582K01018
BSE 05:30 | 01 Jan Hindusthan Udyog Ltd
NSE 05:30 | 01 Jan Hindusthan Udyog Ltd

Hindusthan Udyog Ltd. (HINDUSTHANUDYOG) - Auditors Report

Company auditors report

To The Members of Hindusthan Udyog Limited

Report on the Audit of the Standalone Ind AS Financial Statements

Opinion

We have audited the Standalone Ind AS Financial Statements of Hindusthan Udyog Limited("the Company") which comprise the Balance Sheet as at 31st March 2020 andthe statement of Profit and Loss (including Other Comprehensive Income) Statement ofChanges in Equity and statement of Cash Flows for the year then ended and notes to theInd AS Financial Statements including a summary of significant accounting policies andother explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Standalone Ind AS Financial Statements give the informationrequired by the Companies Act 2013 in the manner so required and give a true and fairview in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2020 and its Profit changes in equityand 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 Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of the IndAS Financial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of the Ind ASFinancial Statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter

We draw attention to the following matters in the Notes to the Financial Statements:

(a) Note No. 2 to the Financial Statements which describes that no provision foramortization has been made for long term Leasehold Land at Durgapur.

(b) The company filed a lawsuit against Mahanadi Coalfields Ltd. For recovery of Rs91.93 lacs at Cuttack High court for which no provision has been made in the accounts.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Ind AS Financial Statements of the current period. Thesematters were addressed in the context of our audit of the Ind AS Financial Statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.

We have determined that there are no key audit matters to communicate in our report.

Information Other than the Ind AS Financial Statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Board's Report including Annexuresto Board's Report and Shareholder's Information but does not include the Ind ASFinancial Statements and our auditor's report thereon.

Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.

In connection with our audit of the Ind AS Financial Statements our responsibility isto read the other information and in doing so consider whether the other information ismaterially inconsistent with the Ind AS Financial Statements or our knowledge obtained inthe audit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information; weare required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Standalone IndAS Financial Statement.

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese Standalone Ind AS Financial Statements that give a true and fair view of thefinancial position financial performance changes in equity and cash flows of the Companyin accordance with the accounting principles generally accepted in India including theIndian Accounting Standard specified under Section 133 of the Act. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgements and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant of the preparation and presentation of the financial statement that givea true and fair view and are free from material misstatement whether due to fraud orerror.

In preparing the Ind AS Financial Statements the Board of Directors 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 unlessthe Board of Directors either intends to liquidate the Company or to cease operations orhas no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company's financialreporting process. Auditor's Responsibilities for the Audit of the Ind AS FinancialStatements

Our objectives are to obtain reasonable assurance about whether the Ind AS FinancialStatements as a whole are free from material misstatement whether due to fraud or errorand to issue and auditor's report that includes our opinion. Reasonable assurance is ahigh level of assurance but is not a guarantee that an audit conducted in accordance withSAs will always detect a material misstatement when it exists. Misstatements can arisefrom fraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decision of user taken on the basisof these Ind AS Financial Statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the Ind AS FinancialStatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

• 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 Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by 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 Ind AS 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 Ind AS FinancialStatements including the disclosures and whether the Ind AS Financial Statementsrepresent 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.

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 Companies Act 2013 we give in the Annexure 'A' a statement on the matters specifiedin paragraphs 3 and 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 Standalone Balance Sheet the Standalone Statement of Profit and Loss includingOther Comprehensive Income Standalone Statement of Changes in Equity and the Cash FlowStatement dealt with by this Report are in agreement with the books of account.

(d) In our opinion the aforesaid Standalone Ind AS Financial Statements comply withthe Ind AS specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.

(e) On the basis of the written representations received from the directors as on 31stMarch 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2020 from being appointed as a director in terms of Section164 (2) of the Act.

(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".

(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 the impact of pending litigations on its financialposition in its Ind AS Financial Statements - Refer Note 24.1 to the Ind AS FinancialStatements.

(ii) The Company did not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses.

(iii) There were no amount which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

(Referred to in Paragraph 1 of Report on Other Legal and Regulatory Requirements of ourReport of even date to the members)

On the basis of such checks as we considered appropriate and in terms of theinformation and explanations given to us we state that:

i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) As explained to us the Fixed Asset according to the practice of the Company arebeen physically verified by the management at reasonable intervals in as phasedverification programme designed to cover all the items over a period of three yearswhich in our opinion is reasonable having regard to the size of the company and nature ofits business. Pursuant to the programme a portion of the Fixed Assets has been physicallyverified by the management during the year and no material discrepancies between the booksrecords and the physical Fixed Asset has been noticed.

(c) The title deeds of Immovable Properties are held in the name of the Company.

ii) The Management has conducted the physical verification of inventory at reasonableinterval and in respect of stocks with third parties at the year end writtenconfirmations have been obtained and no material discrepancies have been noticed onphysical verification of Inventory as compared to the book records.

iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies limited liability partnershipsfirms or other parties covered in the register maintained under section 189 of theCompanies Act 2013. Hence comment on paragraph (iii) of the said Order is not applicable.

iv) In our opinion and according to the information and explanations given to us by themanagement the Company has complied with the provisions of section 185 and 186 of theCompanies Act 2013 where applicable with respect to the loans investments guaranteesand security made.

v) According to the information and explanations given to us there are no suchdeposits taken by the Company for which directives issued by the Reserve Bank of Indiaand the provisions of sections 73 to 76 or any other relevant provisions of the CompaniesAct 2013 and the Companies (Acceptance of Deposit) Rules 2015 with regard to depositsaccepted from the public are not applicable.

vi) As informed to us the maintenance of Cost Records has not been specified by theCentral Government under sub section (1) of Section 148 of the Companies Act 2013 inrespect of the activities carried on by the company. Hence a comment on paragraph (vi) ofthe said Order is not applicable.

vii) (a) According to the information and explanations given to us the Company isgenerally regular in

depositing undisputed Statutory Dues like Provident Fund Employees' State Insuranceincome-tax sales-tax service tax duty of customs duty of excise value added taxGoods & Service Tax and other statutory dues applicable to it with the appropriateauthorities and there is no outstanding statutory dues as at 31.03.2020 for the period ofmore than six months from the date they became payable.

(b) According to information and explanation given to us by the management there wereno statutory dues payable in respect of income tax or sales tax or service tax or duty ofcustoms or duty of excise or value added tax or cess which have not been deposited onaccount of dispute save and except:

Name of the statute Nature of dues Amount (Rs in lacs) Related Year Forum in which Dispute is Pending
West Bengal Sales Tax Act1994 Assessed Dues 414263 2004- 2005 WBCT(A/R) Board
Central Sales Tax Act1956 Assessed Dues 181067 2004- 2005 WBCT(A/R) Board
Central Sales Tax Act1956 Assessed Dues 1634285 1998- 1999 Registrar Maharashtra Sales Tax Tribunal Mumbai
Central Sales Tax Act1956 Assessed Dues 5926481 1999- 2000 Deputy Commissioner of Sales Tax(Appeal) Nagpur
Bombay Sales Tax Act1959 Assessed Dues 1044631 2000- 2001 Deputy Commissioner of Sales Tax(Appeal) Nagpur
Central Sales Tax Act1956 Assessed Dues • 1389004 2000- 2001 Deputy Commissioner of Sales Tax(Appeal) Nagpur
Central Sales Tax Act1956 Assessed Dues 1202194 2001- 2002 Registrar Maharashtra Sales Tax Tribunal Mumbai
Bombay Sales Tax Act1959 Assessed Dues 949067 2002- 2003 Deputy Commissioner of Sales Tax(Appeal) Nagpur
Central Sales Tax Act1956 Assessed Dues 390538 2002- 2003 Deputy Commissioner of Sales Tax(Appeal) Nagpur
Central Sales Tax Act1956 Assessed Dues 6270042 2007- 2008 Maharashtra Sales Tax Tribunal Nagpur
Total 19401572

viii. According to the information and explanations given to us and on basis ofexamination of records of the company the company has not defaulted in repayment of loansor borrowings to financial institutions banks. The Company has not taken any loan fromgovernment and has not issued debentures.

ix. According to the audit procedures performed and information and explanation givento us by the management the Company has not raised any money by way of initial publicoffer or further public offer (including debt instruments) or term loans during the year.Hence comment on paragraph (ix) of the said Order is not applicable.

x. According to the information and explanations given to us by the managerrgTjt nofraud by the Company or on the Company by its officer or employees has been noticed orreported during the course of our audit. Hence comment on paragraph (x) of the said Orderis not applicable.

xi. According to the information and explanations given to us and on the basis ofexamination of records of the company the company has paid or provided managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V of the Companies Act 2013.

xii. In our Opinion the company is not a Nidhi Company. Hence paragraph (xii) of thesaid Order is not applicable.

xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company all the transactions with the related partiesare in compliance with Sections 177 and 188 of the Companies Act 2013 where applicableand such transactions have been disclosed in the Standalone Ind AS Financial Statements asrequired by the applicable Indian Accounting Standards.

xiv. According to the information and explanations given to us the company has notmade any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year under review. So a comment on paragraph (xiv) ofthe said order is not applicable.

xv. The company has not entered into any non-cash transactions with the directors orpersons connected with him. Hence a comment on paragraph (xv) of the said Order is notapplicable.

xvi. The Company is not required to obtain registration under section 45-IA of theReserve Bank of India Act 1934.

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act").

(Referred to Paragraph 2(f) of Report on Other Legal and Regulatory Requirements of ourReport of even date).

We have audited the internal financial controls over financial reporting of HINDUSTHANUDYOG LIMITED ("the Company") as of 31st March 2020 in conjunctionwith our audit of the Standalone Ind AS Financial Statements of the Company for the yearended 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 Companies Act 2013.

Auditors' Responsibility

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 deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate 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 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 judgment including the assessment of the risks ofmaterial misstatement of the Ind AS 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.

Opinion

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 31st March 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 Institute of CharteredAccountants of India.