We have audited the accompanying standalone financial statements of MIS.L.P. Naval and Engineering Limited (Formerly known as Siddhi Vinayak Shipping CorporationLtd) ("The Company") which comprises the Balance Sheet as on 31st March 2020the Statement of Profit and Loss and Cash Flow statement for the year then ended andnotes lo 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 theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the company as at 31 st March 2020 and its profit (or Loss) and its cash flowsfor the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing(SAs) specified under Section 143(10) of the Companies Act 2013. Our responsibilitiesunder those standards are further described in the Auditor's Responsibilities for theAudit of the Financial Statements section of our report We are independent of the entityin accordance 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 thefinancial 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.
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 periodThese 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.
Uncertainty in Loan Recovery
The Company had given interest free advances to manager of company whohas not refund the amount.
Refer Point 3(b) of Caro Report Auditor's Response
We check that company has initiated legal proceeding against themanager for recovery of the loan amount and we also disclose the same in the CARO Report.
Accuracy of revenues and onerous obligation in re sped of fixedprice contracts involves critical estimate.
The company use the percentage of completion method in accounting forits contracts Use of the percentage of completion method requires the company to estimatethe efforts or cost expended to date as a proportion of the total efforts or costs to beexpended. Efforts or costs expended have been use to measure progress towards completionas there is direct relationship between input and productivity.
The Company derives revenues from business fabrications and relatedservices Revenue is
recognized upon the work certified by company s engineers
Our audit approach was a combination of test of internal controls andsubstantive procedure which
include the following:
Evaluate the design of internal controls relating to recordingof efforts incurred and estimations of efforts required to complete the performanceobligation
Tested the access and application controls pertaining to timerecording allocation and budgeting systems which prevents unauthorised changes torecording of efforts incurred
Select a sample of contract and through inspection of evidenceof performance of these controls tested the operating effectiveness of the internalcontrols relating to efforts incurred and estimated
Performed analytical procedure and test of details forreasonableness of incurred and estimated efforts.
Management's Responsibility for the Standalone Financial Statements:
The Company's Board of Directors is responsible far the matters statedin Section 134(5) of the Companies Ad 2013 ("the Act") with respect to thepreparation and presentation of these standalone financial statements that give a true andfair view of the financial position financial performance and cash flows of the Companyin accordance with the accounting principles generally accepted in India including theAccounting Standards specified under Section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding the assets of the Company and for preventing and delecting fraudsand other irregularities; selection and application of appropriate accounting policies;making judgments and estimates that are reasonable and prudent and design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error
In preparing the financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing thecompany's financial reporting process Auditor's Responsibility for the Audit of theFinancial Statements
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 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 reasonably be expected to influence the economic decisions of users takenon the basis of these financial statements.
As part of an audit in accordance with SAs. We exercises professionaljudgment and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thefinancial statements whether due to fraud or error; to design and perform auditprocedures responsive to those risks and to obtain audit evidence that is sufficient andappropriate to provide a basis for the auditor's opinion The risk of not detecting amaterial misstatement resulting from fraud is higher than for one resulting from error asfraud may involve collusion forgery intentional omissions misrepresentations or theoverride of Internal control.
Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Companies Act2013we are responsible for expressing our opinionon whether the company has adequate internal financial controls system in place and theoperating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management
Conclude on the appropriateness of management's use of the goingconcern basis of accounting and. based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify the opinion. Our conclusions are based on the audit evidence obtained up to
the date of the auditor s report However future events or conditionsmay cause an entity to cease to continue as a going concern
Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the standalonefinancial statements that individually or in aggregate makes it probable that theeconomics decisions of a reasonably knowledgeable user of the financial statement may beinfluenced We consider quantitative materiality and qualitative factor in (I) planning thescope of our audit work and in evaluating the result of our work and (ii) to evaluate theeffect of any identified misstatements in the financial statements
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 wehave complied with relevant ethical requirements regarding independence and communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.
Report on Other Legal and Regulatory Requirements:
1 As required by the Companies (Auditor's Report) Order. 2016 (orderdated 29.03 2016). issued by the Central Government of India in terms of section 143( 11)of the Companies Act. 2013 (hereinafter referred to as order ) and on the basis of testcheck as we considered appropriate and according to information and explanation providedto us. we enclose in the Annexture "A" statement on the matters specified inparagraphs 3 and 4 of the said Order.
2 As required by section 143(3) of the Act. we report that
2.1 We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of our audit
2.2 In our opinion proper books of account as required by law havebeen kept by the company as far as appears from our examination of thosa books.
2.3 The Balance Sheet Profit and Loss statement and Cash FlowStatement dealt with by this report are in agreement with the books of account.
2.4 In our opinion the aforesaid financial statements comply with theaccounting standards specified under section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014
2.5 On the basis of written representations received from thedirectors as on March 31 2020 taken on record by the Board of directors none of thedirectors are disqualified as on March 31 2020 from being appointed as a director undersection 164(2) of the Act.
2.6 With respect to the adequacy of financial controls over financialreporting of the company and the operative effectiveness of such controls refer to ourseparate report in Annexture B"; and
2.7 With respect to the others matters to be included in the auditor'sreport in accordance with Rule 11 of the companies (audit and auditors) rules 2014 in ouropinion and to the best of our information and according to the explanations given to us.
(i) There were no pending litigations which would impact the financialposition of the company
(il) The company did not have any material foreseeable losses on longterm contracts Including derivative contracts.
(iii)There were no amounts which were required to be transferred to theInvestor Education and Protection fund by the company.
On the baste of such checks as we considered appropriate and accordingto the information and explanations given to us during the course of audit we state that:
1 Fixed Assets
|(a) Whether the company Is maintaining proper records showing full particulars including quantitative details and situation of fixed assets. ||YES |
|(b) Whether these fixed assets have been physically verified by the management at reasonable intervals whether any material discrepancies were noticed on such verification and if so. whether the same have been property dealt with In the books of account; ||The management conducted physical verification of certain fixed assets in accordance with its policy of physical verification in a phased manner. In our opinion such frequency is reasonable having regard to the size of the Company and the nature of its fixed assets As explained to us. the discrepancies noticed on physical venfication as compared to book records maintained were not material and have been property dealt with in the books of account |
|(c) Whether title deeds of immovable properties are held in the name of the company If not. provide details thereof ||No. Lease deed for land will be executed on completion of construction & subject to compliance of prescribed conditions |
|2 Inventories |
Whether physical verification of inventory has been conducted at reasonable Intervals by the management and whether any material discrepancies were noticed and if so. how they have been dealt with in the books of account;
|The management conducted physical verification of inventory in accordance with its policy of physical verification In a phased manner In our opinion such frequency is reasonable having regard to the size of the Company and the nature of its inventory As explained to us. the discrepancies noticed on physical verification as compared to book records maintained were not material and have been properly dealt with in the books of account. |
|3 Loan Granted |
Whether the company has granted any loans secured or unsecured to companies firms LLPs or other parties covered in the register maintained u/s 189 of the Companies Act. 2013. If so.
|(a) Whether the terms and conditions of the grant of such loans are not prejudicial to the company's interest. ||As per explanation provided to us. YES |
|(b) Whether receipt of the principal amount and interest are regular. If not provide details thereof; and || ||R.K.Singh Manager of the company was given interest free loan in earlier years but has not refund the amount of Rs. 801506/- |
|(c) If overdue amount is more than rupees five lakhs whether reasonable steps have been taken by the company for recovery of the principal and Interest; ||YES Company has taken proper steps for recovery of amount Interest was not applicable |
|4 Loans Investments and gurantees |
In respect of loans investments and guarantees whether provisions of Section 185 and 186 of the Companies Ad. 2013 have been complied with If not. provide details thereof.
|As explained to us and from the records verified the company has generally act complied the provision of section 185 and 186 of The Companies Act. 2013. |
|5 Deposit || || |
|In case the company has accepted deposits whether the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act 2013 and the rules framed thereunder where applicable have been complied with? If not. the nature of such contraventions be stated; If an order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal whether the same has been complied with or not? ||NA |
|6 Cost Records || || |
|Whether maintenance of cost records has been specified by the Central Government under sub-section (1) of section 148 of the Companies Ad. 2013 and whether such accounts and records have been so made and maintained. ||NA |
|7 Statutory dues |
(a) whether the company is regular In depositing undisputed statutory dues including provident fund employees' state insurance Income-tax. sales-tax service tax duty of customs duty of excise value added tax and any other statutory dues with the appropriate authorities and if not the extent of the arrears of outstanding statutory dues as at the last day of the financial year concerned for a period of more than six months from the date they became payable shall be indicated by the auditor
|According to the Information and explanations given to us and the record examined by us the company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund. Employee's State Insurance Income-tax Sales-tax and other material Statutory Dues applicable to it. There were no arrears as at 31st March 2020 for a period of more than six months from the date they became payable. |
|(b) Where dues of income tax or sales tax or service tax or duty of customs or duty of excise or value added tax have not been deposited on account of any dispute then the amounts involved and the forum where dispute is pending shall be mentioned (A mere representation to the concerned Department shall not be treated as a dispute) ||NA |
|Particulars F.Y. ||AMOUNT (In Rs.) STATUS |
|8 Default in Repayment |
Whether the company has defaulted in repayment of dues to a financial institution or bank or debenture holders? If yes. the period and amount of default to be reported (in case of banks and financial institutions lender wise details to be provided).
|9 Term Loan/ Money raised || |
|Whether moneys raised by way of public Issue/ follow- on offer (including debt Instruments) and term loans were applied for the purposes for which those are raised. If not. the details together with delays / default and subsequent rectification if any as may be applicable be reported. ||NA |
|10 Fraud |
Whether any fraud by the company or any fraud on the Company by its officers/ employees has been noticed or reported during the year; If yes the nature and the amount involved be indicated.
11 Managerial Remuneration
|To the best of our knowledge and according to the information and explanations given to us there have been no cases of fraud on or by the Company noticed or reported during the year under report |
|Whether managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with schedule V to the Companies Act? If not. stale the amount involved and steps taken by the company for securing refund of the same. ||YES |
|12 Nidhi Company |
Whether the Nidhi Company has complied with the Net Owned Fund in the ratio of 1: 20 to meet out the liability and whether the Nidhi Company is maintaining 10% liquid assets to meet out the unencumbered liability.
|13 Related Parties Transactions || |
|Whether all transactions with the related parties are in compliance with Section 188 and 177 of Companies Act 2013 where applicable and the details have been disclosed in the Financial Statements etc as required by the accounting standards and Companies Act 2013. ||As per the information and explanation provided to us and records produced before us. the company has generally complied with the provisions |
|14 Preferential allotment / Private placement || |
|Whether the company has made any preferential allotment / private placement of shares or fully or partly convertible debentures during the year under review and If so. as to whether the requirement of Section 42 of the Companies Act 2013 have been complied and the amount raised have been used for the purposes for which the funds were raised. If not provide details thereof ||NO |
|15 Non-cash transactions |
Whether the company has entered into any non-cash transactions with directors or persons connected with him and if so whether provisions of Section 192 of Companies Act. 2013 have been complied with
|16 Registration With RBI |
Wheteher the company is required to be registered under section 45-IA of the Reserve Bank of India Act 1934 and if so whether the registration is obtained
ANNEXURE - B TO THE AUDITORS' REPORT
Report on the Internal Financial Controls under Clause (I) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financialreporting of L. P. Naval and Engineering LIMITED (Formerly Known as Siddhi VinayakShipping Corporation Limited) ("The Company") as of 31 March 2020 in conjunctionwith our audit of the financial statements of the Company for the year ended on that date
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing 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 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
Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls over FinancialReporting (the "Guidance Note") and the Standards on Auditing issued by ICAIand deemed to be prescribed under section 143(10) of the Companies Act 2013 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 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 aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material Weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the financial statements 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 Company's internal financialcontrols system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting 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 overfinancial reporting 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 pnncipies and that receiptsand expenditures of the company are being made only in accordance with authorisations of
management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use. ordisposition of the company's assets that could have a material effect on the financialstatements.
Inherent Limitations of Internal Financial Controls over FinancialReporting
Because of the inherent limitations of internal financial controls overfinancial reporting 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 overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has. in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at 31 March 2020. based onthe internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India