TO THE MEMBERS OF INCON ENGINEERS LIMITED HYDERABAD.
Report on the Audit of the Financial Statements
We have audited the financial statements of INCON ENGINEERS LIMITED ("theCompany") which comprise the balance sheet as at 31 st March 2021 the statement ofProfit and Loss (including Other Comprehensive Income) statement of changes in equitystatement of cash flows for the year then ended and notes to the financial statementsincluding a summary of 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 financial statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards prescribed under section 133 of the Act readwith the Companies (Indian Accounting Standards) Rules 2015 as amended (IndAS) of thestate of affairs of the Company as at March 312021 its profit the total 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 Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report We are independent of the Company in accordancewith the Code of Ethics issued by the Institute of Chartered Accountants of India togetherwith the ethical requirements that are relevant to our audit of the 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 providesbasis for our opinion on the financial statements.
Key Audit Matters
Key Audit Matters ('KAM') are those matters that in our professional judgement wereof most significance in our audit of the financial statements of current period. Thesematters were addressed in the context of our audit of the financial statements as a wholeand in forming our opinion thereon and we do not provide a separate opinion on thesematters. We have determined the matters described below to be the key audit matters to becommunicated in our report
|KAM Title |
|Valuation of Deferred Tax Assets |
|KAM Description |
|The company has not recognised deferred tax asset for deductible temporary differences and unused tax losses. As the utilisation of deferred tax assets is in part dependent on the company's ability to generate future taxable profits sufficient to utilize deductible temporary differences and tax losses before they expire. We determined this to be a key audit matter due to the inherent limitations in estimation and uncertainty in forecasting the amount and timing of future taxable profits and the reversal of temporary differences and utilization of tax losses. Management has supported the non-recoverability of the deferred tax assets mainly with taxable income projections which contain estimates of and tax strategies for future taxable income. Changes in the industrial scenario the business and its markets and changes in regulations may impact these projections. |
|Our Response |
|Our audit procedures included among others evaluating the projected tax computations prepared by the company to assess the recognition and measurement of the current and deferred tax assets and liabilities and evaluate the compliance with the tax legislation. We paid attention to the long-term forecasts and critically assessed the assumptions and judgments underlying these forecasts by considering the historical accuracy of forecasts and the sensitivities of the profit forecasts. We assessed the adequacy and the level of estimation involved. |
Emphasis of Matter
We draw attention to Note 42 to the financial statements which explains the managementsassessment of the internal and external information in respect of the ongoing globalCOVID-19 pandemic and its financial impact. The actual impact may be different from thatis considered in assessing the Company's financial performance as the same is highlydependent on future global economic development indicators. Our report is not modified inrespect of this matter.
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the company's annual report but does notinclude the financial 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 financial statements our responsibility is to readthe other information and in doing so consider whether such other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit 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 FinancialStatements
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 financial statements that give a true and fair view of the financial positionfinancial performance total comprehensive income changes in equity and cash flows of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards specified under section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative 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 Financial Statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.
As part of an audit in accordance with Standards on Auditing we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control. 0 Obtainan understanding of internal controls relevant to the audit in order to design auditprocedures that are appropriate in the circumstances. Under section 143(3)(i) of the Actwe are also responsible for expressing our opinion on whether the Company has adequateinternal financial controls system in place and the operating effectiveness of suchcontrols.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis ofaccounting 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 financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.
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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen 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 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 Balance Sheet the Statement of Profit and Loss the statement of changes onequity and the Cash Flow Statement dealt with by this Report are in agreement with thebooks of account.
(d) In our opinion the aforesaid financial statements comply with the AccountingStandards 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 31 stMarch 2021 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2021 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 with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".
(g) As the Company did not pay during the year any remuneration to its Directorsother matters to be included in the auditor's report in accordance with the requirementsof section 197(16) of the Act as amended are not applicable to the company.
(h) 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 financial statements - Refer Note 22 to the financial statements
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
| ||Chartered Accountants |
| ||Firms' R 357Chartered Accountants |
| ||Firms' Registration Number: 003109S |
| ||(T.SUKESH KUMAR) |
|Place : Hyderabad ||Partner |
|Date : 28.06.2021 ||Membership Number: 229963 |
| ||U DIN:20229963AAAAAI7357 |
ANNEXURE - A TO THE AUDITOR'S REPORT
The Annexure referred to in Para 1 under the heading of "Report on Other Legal andRegulatory Requirements" of our report of even dateto the members of INCON ENGINEESLIMITED HYDERABAD for the year ended March 312021.
1. a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b. As explained to us the management has physically verified the fixed assets duringthe year and there is a regular programme of physical verification which in our opinionis reasonable having regard to the size of the Company and the nature of the assets. Nodiscrepancies were 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 areheld in the name of the Company.
2. The inventory has been physically verified during the year by the management. In ouropinion the frequency of verification is reasonable and the procedures of physicalverification of inventories followed by the management are reasonable. The discrepanciesnoticed on physical verification between the physical stocks and book records were notmaterial.
3. a. During the year the Company has not granted any loans secured or unsecured toCompanies firms limited liability partnerships or other parties covered in the registermaintained under Section 189 of the Companies Act 2013.
b. In view of our comment in para (a) above Clause (III) (a) (b) and (c) of paragraph3 of the Companies (Auditor's Report) Order 2016 are not applicable to the Company.
4. In our opinion and according to the information and explanations given to us theCompany has not advanced any loan to any Director and no investments were made during theyear as referred to in sections 185 and 186 of the Act Therefore the provisions ofparagraph 3(iv)of the of the Companies (Auditor's Report) Order 2016 are not applicable tothe Company.
5. The Company has not accepted any deposits from the public. Hence the provisions ofSections 73 to 76 or any other relevant provisions of the Companies Act 2013 and therules framed there under do not apply to this Company.
6. The Central Government has not prescribed the maintenance of cost records undersub-section (1) of 148 Section of the Companies Act 2013 for the activities of theCompany
7. a. According to the records the company is regular in depositing undisputedstatutory dues including provident fund employees 'state insurance income-taxsales-tax service tax duty of customs duty of excise value added tax cess and allother material statutory dues with the appropriate authorities and there were no arrearsof statutory dues as at March 312021 for a period of more than six months from the datethey became payable.
b. According to the records of the Company and the information and explanations givento us there were no dues of income tax or sales tax or service tax or duty of customs orduty of excise or value added tax have not been deposited on account of any dispute.
8. As the Company has no borrowings from Banks Financial Institutions and Govt. andalso in the nature of Debentures the provisions of paragraph 3(viii) of the Companies(Auditor's Report) Order 2016 are not applicable.
9. The Company did not raise any money byway of initial public offer or further publicoffer (including debt instruments) and term loans during the year. Accordingly theprovisions of paragraph 3 (ix) of the Companies (Auditor's Report) Order 2016 are notapplicable.
10. According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.
11. During the year the Company did not pay any remuneration to its Directors.Therefore the provisions of Paragraph 3(xi) of the of the Companies (Auditor's Report)Order 2016 are not applicable to the Company.
12. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly the provisions of paragraph 3(xii) of theCompanies (Auditor's Report) Order 2016 are not applicable.
13. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties areincompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
14. According to the information and explanations give to us and based on ourexamination 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.
15. 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 non-cashtransactions with directors or persons connected with him. Accordingly the provisions ofparagraph 3(xv) of the Companies (Auditor's Report) Order 2016 are not applicable.
16. The Company is not required to be registered under section 45-IAofthe Reserve Bankof India Act 1934.
| ||for K.S. Rao & Co. |
| ||Chartered Accountants |
| ||Firms' Registration Number: 003109S |
| ||(T.SUKESH KUMAR) |
| ||Partner |
|Place : Hyderabad ||Membership Number: 229963 |
|Date : 28.06.2021 ||UDIN:21229963AAAAAV9499 |
ANNEXURE - B TO THE 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 the financialstatements of INCON ENGINEERS LIMITED HYDERABAD ("the Company") as of 31 March2021 in conjunction with our audit of the 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 with reference to the financialstatements 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 the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013. Auditors'Responsibility
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to the financial statements based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") and the Standards on Auditing to theextent applicable to an audit of internal financial controls both applicable to an auditof Internal Financial Controls and both issued by the Institute of Chartered Accountantsof India. 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 with reference to the financial statements 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 with reference to the financial statements andtheir operating effectiveness. Our audit of internal financial controls with reference tothe financial statements included obtaining an understanding of internal financialcontrols with reference to the 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 thefinancial 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.
Meaning of Internal Financial Controls with Reference to the Financial Statements
A company's internal financial control with reference to the 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 control withreference to the financial statements 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 with Reference to the FinancialStatements
Because of the inherent limitations of internal financial controls with reference tothe financial 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 the financial statements to future periods are subject to the risk that theinternal financial control with reference to the 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 the financial statements and such internalfinancial controls with reference to the financial statements were operating effectivelyas at 31 March 2021 based on the internal control with reference to the financialstatements 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 K.S. Rao & Co. |
| ||Chartered Accountants |
| ||Firms' Registration Number: 003109S |
| ||(T.SUKESH KUMAR) |
| ||Partner |
|Place : Hyderabad ||Membership Number: 229963 |
|Date : 28.06.2021 ||U DIN:21229963AAAAAV9499 |