To the members of
MAZAGON DOCK SHIPBUILDERS LIMITED
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying Standalone financial statements of Mazagon DockShipbuilders Limited ("the Company") which comprise the Balance Sheet as at31st March 2021 the Statement of Profit and Loss (including Other Comprehensive Income)the Statement of Changes in Equity and the Statement of Cash Flows for the year ended onthat date and a summary of the significant accounting policies and other explanatoryinformation (hereinafter referred to as "the standalone financial statements").
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 Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2021 the profit and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the independencerequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules made thereunder and we have fulfilled our otherethical -responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the Standalone Financial Statements.
Emphasis of Matter
We draw attention to the following matters in the notes to the Standalone Ind ASfinancial statements:
1. Registration formalities and Renewals of certain Leasehold properties are pending.(Refer Note 2 Point no. (ii vii viii))
2. Balance due from / to Indian Navy are subject to reconciliation and confirmation.(Refer Note 36 Point no. 2)
3. Balance of Advances to Vendors and balances outstanding in Trade Payables aresubject to confirmation. (Refer Note 36 Point no. 1)
Our opinion is not modified in respect of these matters.
Information Other than the Standalone 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 Directors' Report Overall BusinessOperations Management and Corporate Governance but does not include the financialstatements 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 ofthe financial statements our responsibility is to read the other information identifiedabove and in doing so consider whether the other Information is materially inconsistentwith the financial statements or our knowledge obtained in the audit or otherwise appearsto be materially misstated.
If based on the work we have performed on the other information that we obtained priorto the date of this auditors' report we conclude that there is a material misstatement ofthis other information we are required to report that fact. We have nothing to report inthis regard.
When we read the Annual report if we conclude that there is a material misstatementtherein then we will communicate the matter to those charged with governance.
1. The opinion expressed in the present report includes the information facts andinputs made available to us through electronic means by the Company's Management andrelied upon by us because the COVID-19 induced restrictions on physical movements.
2. The Company has adequate resources to continue in operational existence for theforeseeable future. But going forward the uncertainties resulting from COVID-19 willresults into delay in completion of projects and may increase the exceptional losses.(Refer Note 52 of the Financial Statement)
3. The company is in non-compliance of Section 149 of Co. Act 2013 of not having aWoman Director and 1/3rd Directors as Independent Directors on the Board.
4. The company is in Non-compliance in respect of Section 177 of Companies Act 2013and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 concerningConstitution of Audit Committee of the Board since October 2020.
5. Pursuant to the observations of Comptroller and Audit General of India under Section143 (6) (a) of the Companies Act 2013 the financial statements adopted by the Board ofDirectors on 10.06.2021 have been revised. The revised financial statements are adopted bythe Board of Directors on 10.08.2021. The Impact of revision is disclosed under Note 55 tothe financial statements. Accordingly a revised Audit Report is issued now. This Auditreport supersedes our earlier report dated 10th June 2021 and the revision made are notmaterial considering the size and the nature of the items revised.
Our opinion is not modified in respect of above matters.
Management's Responsibility for the Standalone Financial 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 totalcomprehensive income changes in equity and cash flows of the Company in accordance withthe Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding 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 standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or errors
In preparing the standalone financial statements the Board of Directors is responsiblefor assessing 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 the Board of Directors either intends to liquidate the Company or tocease operations or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities 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 standalone 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 financial controls relevant to the audit in orderto 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 system in place and the operatingeffectiveness of such controls.
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 standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.
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 in terms of Section 143(11) of the Act we give in"Annexure I" a statement on the matters specified in paragraphs 3 and 4 ofthe Order.
2. As required by the directions issued by the office of the Comptroller & AuditorGeneral of India under Section 143(5) of the Act we give in "Annexure II"a statement on the matters referred to in those directions.
3. As required by Section 143(3) of the Act based on our audit 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 Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the relevant books of account.
d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules2014.
e) In view of the exemption given vide notification no. G.S.R 463(E) dated June 052015 issued by the Ministry of Corporate Affairs the provisions of Section 164(2) of theCompanies Act 2013 regarding disqualification of the directors are not applicable to theGovernment Company.
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 III". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internal financialcontrols over financial reporting.
g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act the exemption has beengiven for the said section vide notification no. G.S.R 463(E) dated June 05 2015 issuedby the Ministry of Corporate Affairs.
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 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements. Refer Note 35 to the standalone financialstatements.
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts. Refer note 39 to the standalone financial statements.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
(Referred to in paragraph 3 under Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Mazagon Dock Shipbuilders Limited ofeven date)
i. In respect of the Company's Fixed Assets:
(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The Company has a program of verification to cover all the items of fixed assets ina phased manner which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets. Pursuant to the program certain fixed assets werephysically verified by the management through an External Auditor during the year.According to the information and explanations given to us no material discrepancies werenoticed on such verification.
(c) The Title deeds of the immovable properties are held in the name of the Companyexcept for the following-
|Sr. No. Plot No. ||Location ||Type of Property ||Area (Sq. Mtrs.) ||Remarks |
|1 Plot No. 355 PH-I ||Dockyard Road Mumbai ||Leasehold ||6240.14 ||Lease renewal of the plots is under consideration of MBPT. |
|2 Plot No. 355 PH-II ||Dockyard Road Mumbai ||Leasehold ||1960.93 || |
|3 Extension ||Dockyard Road Mumbai ||Leasehold ||3746.00 ||Awaiting formulation of Land Policy. |
|4 Additional Water Area for further extension of slipway to 20 Mtr. ||Dockyard Road Mumbai ||Leasehold ||1850.00 || |
|5 JN- 4 Type Sector 10 ||Vashi Navi Mumbai ||Quarters ||61.20 ||Deed of Apartments & its registration is under process. |
ii. In respect of the Company's Inventory:
(a) As per the information and explanations given to us the Inventory (except thoseheld with third parties) has been physically verified by the management and the externalauditor during the year at reasonable intervals.
(b) The discrepancies between the physical inventory and the book records noticed onphysical verification were not material and have been properly dealt with in the books ofaccounts.
iii. According to the information and explanation given to us the Company has notgranted any loan or given any guarantee or provided any security to companies firms orother parties covered in the register maintained under Section 189 of the Act.Accordingly the provisions of clause iii (a) (b) (c) of the order are not applicable tothe Company.
iv. The Company has not granted any loan given any guarantee or provided any securitycovered under Section 185 of the Act. Section 186 of the Act relating to investmentsloans granted guarantees given and security provided is not applicable to the Companybeing a Government Company engaged in Defense production.
v. According to the explanation and information given to us the Company has notaccepted deposits during the year and does not have any unclaimed deposits as at March 312021 and therefore the provisions of the clause 3 (v) of the Order are not applicable tothe Company.
vi. We have broadly reviewed the cost records maintained by the Company as prescribedby the Central Government under Section 148(1) of the Act and are of the opinion thatprima facie the prescribed cost records have been made and maintained. We have howevernot made a detailed examination of these records with a view to determine whether they areaccurate and complete.
vii. According to the information and explanations given to us in respect of statutorydues:
(a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income Tax Goods and Service TaxCustoms Duty Cess and other material statutory dues applicable to it with the appropriateauthorities. There were no undisputed arrears of statutory dues outstanding as at 31stMarch 2021 for a period of more than six months from the date they became payable.
(b) There were no undisputed amounts payable in respect of Provident Fund EmployeesState Insurance Income Tax Goods and Service Tax Customs Duty Cess and other materialstatutory dues in arrears as at March 31 2021 for a period of more than six months fromthe date they became payable.
(c) Details of dues of Income Tax Sales Tax Service Tax Excise Duty and Value AddedTax which have not been deposited as at March 31 2021 on account of dispute are givenbelow:
|Name of the Statute ||Period ||Amount (Rs. In Lakhs) ||Forum where dispute is pending ||Part-payment made under protest |
|Central Excise Act 1944 ||FY 2001-02 to FY 2003-04 and FY 2007-08 ||234.45 ||CESTAT Mumbai ||Nil |
| ||FY 2000-01 ||15 ||Additional Commissioner Mumbai ||Nil |
|BST Act 1959 ||FY 1980-81 to FY 2004-05 ||108428.37 ||Maharashtra Sales Tax Tribunal Mumbai ||442.67 |
|MVAT Act 2002 ||FY 2005-06 to FY 2013-14 ||7871.77 ||Jt. Commissioner of Sales Tax ||229 |
|Karnataka ||FY 1989-90 FY 1990-91 ||316.40 ||Karnataka Sales Tax ||12.6 |
|Sales Tax Act ||FY 1992-93 FY 1995-96 to FY 1996-97 || ||Appellate Tribunal || |
|Service Tax ||FY 2001-02 to FY 2003-04 ||4330.97 ||Bombay High Court ||Nil |
|Custom Duty ||FY 2007-08 ||8 ||Assistant Commissioner of Customs ||Nil |
viii. According to the information and explanation given to us the Company has nottaken any loans or borrowings from financials institution bank government or has notissued any debentures.
ix. In our opinion and according to the information and explanation given to us theCompany had completed an IPO of Equity shares of Rs. 10 each through an Offer for Sale(OFS). Since the amount raised through an OFS goes to the Promoters of the Company theutilization of funds by the Company is not applicable.
x. To the best of our knowledge and according to the information and explanations givento us no fraud by the Company or no material fraud on the Company by its officers oremployees has been noticed or reported during the year.
xi. In view of the exemption given vide notification no. G.S.R 463(E) dated June 052015 issued by the Ministry of Corporate Affairs provision of Section 197 read withSchedule V of the Companies Act 2013 regarding managerial remuneration are not applicableto the Company.
xii. The Company is not a Nidhi Company and hence reporting under clause 3 (xii) of theOrder is not applicable to the Company.
xiii. In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the standalone financial statements as required by theapplicable accounting standards.
xiv. During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly paid convertible debentures and hence reportingunder clause 3 (xiv) of the Order is not applicable to the Company.
xv. In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsDirectors or persons connected to its directors and hence provisions of section 192 of theCompanies Act 2013 are not applicable to the Company.
xvi. According to the information given to us and as per the records examined by usthe Company is not required to be registered under section 45-IA of the Reserve Bank ofIndia Act 1934
To the Members of
Mazagon Dock Shipbuilders Limited
As referred to in Paragraph 2 under Report on Other Legal and RegulatoryRequirements' in our Auditor's Report of even date and as required by the directionsissued by the Office of the Comptroller & Auditor General of India under Section143(5) of the Companies Act 2013 we give below our comments on the matters referredtherein:
1. Whether the Company has System in place to process all the accountingtransactions through IT System? If yes the implications of processing of accountingtransactions outside IT System on the integrity of the accounts along with the financialimplications if any may be stated.
According to the information and explanations given to us and based on the recordsof the Company examined by us the Company has ERP system in place to process all thetransactions through IT System. All the processes and transactions are mapped through ERP.
2. Whether there is restructuring of an existing loan or cases of waiver/ writeoff of debt/loans/interest etc. made by a lender to the Company due to the Company'sinability to repay the loan? If yes the financial impact may be stated. Whether suchcases are properly accounted for? (In case lender is a Government Company then thisdirection is also applicable for statutory auditor of lender company).
According to the information and explanations given to us and based on the recordsof the Company examined by us there were no cases of waiver/ write off ofdebt/loans/interest etc. made by a lender to the Company due to the Company's inability torepay the loan in FY 2020-21.
3. Whether funds received/ receivable for specific schemes from Central/Stateagencies were properly accounted for/ utilized as per its terms and conditions? List thecases of deviation.
According to the information and explanations given to us and based on the recordsof the Company examined by us there were no cases of any funds received by the Companyduring FY 2020-21 from Central/State governments under any scheme.
(Referred to in paragraph 3 (f) under Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Mazagon Dock Shipbuilders Limited ofeven date)
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) OfSubsection 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of MAZAGONDOCK SHIPBUILDERS 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 Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to respective 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 internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section143(10) of the CompaniesAct2013 to the extent applicable to an audit of internal financial controls. ThoseStandards and the Guidance Note require that we comply with ethic al requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols 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 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 internal financial controls system overfinancial reporting of the Company.
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 ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
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.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over
financial reporting and such internal financial controls over financial reporting 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 M/s. JCR & Co. |
| ||Chartered Accountants |
| ||FRN- 105270W |
| ||CA Rajeshwari B. Joshi |
| ||Partner |
| ||Mem. No. 187779 |
|Date: 10th August 2021 || |
|Place: Mumbai || |
|UDIN: 21187779AAAAAI3696 || |