Mitcon Consultancy & Engineering Services Ltd.
|BSE: 515508||Sector: Others|
|NSE: MITCON||ISIN Code: INE828O01033|
|BSE 05:30 | 01 Jan||Mitcon Consultancy & Engineering Services Ltd|
|NSE 00:00 | 05 Mar||40.75||
Mitcon Consultancy & Engineering Services Ltd. (MITCON) - Auditors Report
Company auditors report
MITCON CONSULTANCY & ENGINEERING SERVICES LTD.
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of MITCONConsultancy & Engineering Services Limited ("the Company") which comprisethe Balance Sheet as at 31st March 2019 and the Statement of Profit and Loss andStatement 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 theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 (the Act') in the manner so requiredand give a true and fair view in conformity with the accounting standards prescribed undersection 133 of the Act and other accounting principles generally accepted in India of thestate of affairs of the Company as at 31 March 2019 and its profit and its cash flows forthe year ended on that date.
Basis for Opinion
We conducted our audit of the Standalone Financial Statements inaccordance with the Standards on Auditing (SAs) specified under section 143(10) of theCompanies Act 2013. Our responsibilities under those Standards are further described inthe Auditor's Responsibilities for the Audit of the Standalone Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the Standalone financial statements underthe provisions of the Companies Act 2013 and the Rules there under and we have fulfilledour other ethical responsibilities in accordance with these requirements and the Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto 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 period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matter described below to be thekey audit matters to be communicated in our audit report.
Emphasis of Matter
We draw attention to the following matters in the Note 40 to thestandalone financial statements regarding financial exposure of the company in the belowmentioned subsidiary companies -
Krishna Windfarms Developers Private Limited (KWDPL)
a. Company's investments in equity share capital of KWDPL of INR120388200 pledged with Axis Trustee Services Limited for Loan availed by KWDPL fromL&T Infrastructure Finance Company Limited
b. Issue of Corporate Guarantee on behalf of KWDPL of INR 420000000for availing loan from L&T Infrastructure Finance Company Limited
c. Outstanding trade receivable of INR 7910859
d. Outstanding inter-corporate loan of INR 148149525
e. Outstanding Interest on inter-corporate loan & debenturesaggregating to INR 24650634
f. Out of the inter-corporate loan granted in earlier year an amountof INR 75000000 was converted during the year into 7500000 10.50% CompulsorilyConvertible Debentures of Rs.10/- each which are convertible into equity shares after aperiod of 15 months and are outstanding as on 31st March 2019.
MITCON Sun Power Ltd. (MSPL)
a. Outstanding inter-corporate loan of INR 9600000
b. Outstanding Interest on inter-corporate loan of INR 376136 MITCONSolar Alliance Ltd. (MSAL)
a. Outstanding inter-corporate loan of INR 170917327
b. Outstanding Interest on inter-corporate loan of INR 4876191
Subsidiaries have incurred losses during current and / or previous yearand net-worth of subsidiaries as at 31 March 2019 have been substantially / fully eroded.However based on certain estimates like future business plans growth prospects andvaluation report of independent valuer the management is of the opinion that above statedinter corporate loans interest on inter corporate loans and trade receivables are goodand recoverable and investment in debenture and equity of the subsidiaries does notrequire any reduction in value of investment and hence no provision in respect ofaforesaid amounts has been made in the accompanying standalone financial statements.
Our opinion is not modified in respect of the matter above.
Information Other than the Standalone Financial Statements andAuditor's Report Thereon
The Company's Board of Directors is responsible for the preparation ofthe other information. The other information comprises the information included in theManagement Discussion and Analysis Board's Report including Annexures to Board's Reportbut does not include the standalone financial statements and our auditor's report thereon.These reports are expected to be made available to us after the date of our auditor'sreport.
Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statementsour responsibility is to read the other information identified above when it becomesavailable and in doing so consider whether the other information is materiallyinconsistent with the standalone financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated.
When we read the other information included in the above reports if weconclude that there is material misstatement therein we are required to communicate thematter to those charged with governance and determine the actions under the applicablelaws and regulations.
Responsibilities of Management and Those Charged with Governance forthe Standalone Financial Statements
The Company's Board of Directors is responsible for the matters statedin section 134(5) of the Companies Act 2013 ("the Act") with respect to thepreparation of these standalone financial statements that give a true and fair view of thefinancial position financial performance and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the accountingStandards specified under section 133 of the Act. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.
In preparing the standalone financial statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting 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 Responsibilities for the Audit of the Standalone financialstatements
Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof 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 Act 2013 we are also responsible for expressing ouropinion on whether the company has adequate internal financial controls system in placeand the operating 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 standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
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 tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.
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 of the Companies Act 2013 we give in the "Annexure A" astatement on the matters specified in paragraphs 3 and 4 of the Order to the extentapplicable.
2. As required by Section 143(3) of the Act we report that:
(a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.
(b) In our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books.
(c) The Balance Sheet the Statement of Profit and Loss and the CashFlow Statement dealt with by this Report are in agreement with the books of account.
(d) In our opinion the aforesaid standalone financial statementscomply with the Accounting Standards specified under Section 133 of the Act read withRule 7 of the Companies (Accounts) Rules 2014.
(e) The matters described under Emphasis of Matter paragraph above mayhave an adverse effect on the functioning of the company.
(f) On the basis of the written representations received from thedirectors as on 31st March 2019 taken on record by the Board of Directors none of thedirectors is disqualified as on 31st March 2019 from being appointed as a director interms of Section 164 (2) of the Act.
(g) With respect to the adequacy of the internal financial controlsover financial reporting of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".
(h) With respect to the other matters to be included in the Auditor'sReport in accordance with the requirements of section 197(16) of the Act as amended:
In our opinion and to the best of our information and according to theexplanations given to us the remuneration paid by the Company to its director during theyear is in accordance with the provisions of section 197 of the Act.
(i) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 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 itsfinancial position in its standalone financial statements - Refer Note 26 to thestandalone financial statements;
ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to theInvestor Education and Protection Fund by the Company.
ANNEXURE A TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 1 of the Independent Auditors' Report of evendate to the members of the company on the standalone financial statements as of and forthe year ended March 31 2019)
i. In respect of its fixed assets:
a) The Company is maintaining proper records showing full particularsincluding quantitative details and situation of fixed assets.
b) As explained to us the fixed assets have been physically verifiedby the management during the year. The discrepancies noticed on such verification were notmaterial and have been properly dealt with in the books of account.
c) The title deeds of immovable properties as disclosed in Note 11 onProperty Plant and Equipment to the standalone financial statements are held in the nameof the company.
ii. As the company does not have any inventory at the end of the yearthe provisions of clause 3(ii) of the Order are not applicable to the company.
iii. The company has not granted any loans secured or unsecured tofirms limited liability partnerships or other parties covered in the register maintainedunder section 189 of the Act. The company has granted loans to the under mentionedcompanies covered in the register maintained u/s 189 of the Act :
Krishna Windfarms Developers Private Limited (KWDPL) - Wholly ownedsubsidiary:
As per the terms agreed with the Subsidiary Company repayment ofprincipal amount and interest shall be done upon repayment of term loan availed by thesaid Subsidiary Company from another financial institution or on availability of cashsurplus with Subsidiary Company after repayment of term loan and meeting all operationalexpenses. Repayment of INR 2160080 has been done towards principal amount during theyear.
Out of the inter-corporate loan granted to KWDPL in earlier year anamount of INR 75000000/- was converted during the year into 7500000 10.50%Compulsorily Convertible Debentures of INR 10/- each which are convertible into equityshares after a period of 15 months.
Inter-corporate loan aggregating to INR 148149525/- is outstandingfrom KWDPL as on 31.3.2019.
Interest on loans and debentures charged during the year amounts to INR24351212. Repayment of INR 12479139 has been done towards outstanding interest forprevious year including the amount of Tax Deducted at Source on the said interestdeposited by the Subsidiary Company with the Government Authority. Interest outstanding asat the end of the year amounts to INR 24650634.
MITCON Sun Power Limited (MSPL) - Wholly owned subsidiary:
Inter-corporate loan granted during the year aggregating to INR9600000 and interest thereon is INR 417929. As per the terms agreed with the SubsidiaryCompany repayment of principal amount and interest shall be done upon availability ofcash surplus with Subsidiary Company after meeting all operational expenses. No repaymentof principal amount and interest has been made by the Subsidiary Company during the yearexcept the amount of Tax Deducted at Source on the said interest and deposited by theSubsidiary Company with the Government Authority.
MITCON Solar Alliance Limited (MSAL) - Subsidiary of MSPL:
Inter-corporate loan granted during the year aggregating to INR270917327 and interest thereon is INR 5417992 As per the terms agreed with MSALrepayment of principal amount and interest shall be done upon availability of cash surpluswith MSAL after meeting all operational expenses. Repayment of INR 100000000 has beendone towards principal amount. No payment of interest has been made by MSAL during theyear except the amount of Tax Deducted at Source on the said interest and deposited byMSAL with the Government Authority.
iv. Based on the audit procedures conducted by us and according to theinformation and explanations given to us in our opinion the company has not given anyloans guarantees or securities to any of its Directors or to any other persons in whomthe Director is interested under provisions of Section 185 of the Act. In our opinion andaccording to the information and explanations given to us the company has complied withthe provisions of section 186 of the Act in respect of loans and investments made by it.
v. The company has not accepted any deposits from the public within themeaning of sections 73 74 75 and 76 of the Act and the Rules framed there under to theextent notified.
vi. The Central Government has specified maintenance of cost recordsunder Sec.148 (1) of the Act applicable in respect of wind power generation activity ofthe company and we are of the opinion that prima facie such accounts and records are madeand maintained. We have not however made a detailed examination of the records with aview to determine whether they were accurate or complete.
vii. (a) According to the information and explanations given to us andon the basis of our examination of records of the Company undisputed statutory duesincluding Provident Fund Employees' State Insurance Income-Tax Goods & Service TaxDuty of Customs Cess and other statutory dues have been regularly deposited with theappropriate authorities. As explained to us the company did not have any dues on accountof Sales Tax Service Tax and duty of Excise.
According to the information and explanations given to us noundisputed amounts payable in respect of Provident Fund Employees' State InsuranceIncome-Tax Value added Tax
Sales Tax Service Tax Goods & Service Tax Cess and otherstatutory dues were in arrears as at 31st March 2019 for a period of more than six monthsfrom the date they became payable.
(b) According to the information and explanations given to us and therecords of the Company examined by us there are no dues of Sales Tax Service Tax Goodsand Service Tax duty of Custom duty of Excise Value added Tax and Cess as at 31st March2019 which have not been deposited on account of any dispute.
viii. According to the records of the Company examined by us and theinformation and explanation given to us the Company has not defaulted in repayment ofloans or borrowings from a Bank. The Company does not have any loan or borrowings fromFinancial Institutions or Government. There are no debenture holders.
ix. The company has not raised any moneys by way of initial publicoffer further public offer (including debt instruments). The moneys raised by way of termloan from a bank during the year were applied for the purposes for which they were raised.
x. Based upon the audit procedures performed and information andexplanations given to us by the Management we have neither come across any instance offraud on or by the Company or on the Company by its officers or employees noticed orreported during the year nor have we been informed of such case by the management.
xi. According to the information and explanations given to us and basedon our examination of the records of the company the company has paid / provided formanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of section 197 read with schedule V to the Act.
xii. As the Company is not a nidhi company and the nidhi rules 2014 arenot applicable to it the provisions of clause 3 (xii) of the Order are not applicable tothe Company.
xiii. According to the information and explanations given to us andbased on our examination of the records of the company transactions with the relatedparties are in compliance with Sections 177 and 188 of the Act where applicable anddetails of such transactions have been disclosed in the standalone financial statements asrequired by the applicable accounting standards.
xiv. The company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year underreview. Accordingly the provisions of clause 3(xiv) of the Order are not applicable tothe company (See Note 39(iv) of Standalone financial statements).
xv. According to the information and explanations given to us and basedon our examination of the records of the company the company has not entered into anynon-cash transactions with its directors or persons connected with him. Accordingly theprovisions of clause 3(xv) of the order are not applicable to the company.
xvi. The company is not required to be registered under section 45-IAof the Reserve Bank of India act 1934. Accordingly the provisions of clause 3(xvi) ofthe Order are not applicable to the company.
Annexure B to Independent Auditors' Report
Referred to in paragraph 2(g) of the Independent Auditors' Report ofeven date to the members of MITCON Consultancy & Engineering Services Ltd. on thestandalone financial statements for the year ended 31st March 2019
Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of section 143 of the Companies Act 2013 (The Act').
1. We have audited the internal financial controls over financialreporting with reference to standalone financial statements of MITCON Consultancy &Engineering Services Ltd. ("the Company") as of March 31 2019 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat date.
Management's Responsibility for Internal Financial Controls
2. 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). 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 company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Act.
3. Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting with reference to standalonefinancial statements based on our audit. We conducted our audit in accordance with theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting (the"Guidance Note) and the Standards on Auditing as specified under section143(10) of the Act to the extent applicable to an audit of internal financial controlsboth applicable to an audit of internal financial controls and both issued by thelnstitute of Chartered Accountants of India. Those standards and the Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting with reference to standalone financial statements was established and maintainedand if such controls operated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidenceabout the adequacy of the internal financial controls system over financial reporting withreference to standalone financial statements and their operating effectiveness. Our auditof internal financial controls over financial reporting with reference to standalonefinancial statements included obtaining an understanding of internal financial controlsover financial reporting with reference to standalone financial statements assessing therisk that a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone financial statements whether due to fraud or error.
5. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting with reference to standalone financialstatements.
Meaning of Internal Financial Controls over Financial Reporting
6. 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 standalone financial statements for external purposes inaccordance with generally accepted accounting principles. A company's internal financialcontrol over financial reporting includes those policies and procedures that (1) pertainto the maintenance of records that in reasonable detail accurately and fairly reflectthe transactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of standalonefinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3)provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the company's assets that could have a material effect on the standalonefinancial statements.
Inherent Limitations of Internal Financial Controls over FinancialReporting
7. Because of the inherent limitations of internal financial controlsover financial 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 with reference to standalone financial statements maybecome inadequate because of changes in conditions or that the degree of compliance withthe policies or procedures may deteriorate.
8. In our opinion the Company has in all material respects anadequate internal financial controls system over financial reporting with reference tostandalone financial statements and such internal financial controls over financialreporting with reference to standalone financial statements were operating effectively asat March 31 2019 based on the internal control over financial reporting criteriaestablished by the Company considering the essential components
of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.