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Nilkanth Engineering Ltd.

BSE: 512004 Sector: Financials
NSE: N.A. ISIN Code: INE582V01015
BSE 05:30 | 01 Jan Nilkanth Engineering Ltd
NSE 05:30 | 01 Jan Nilkanth Engineering Ltd

Nilkanth Engineering Ltd. (NILKANTHENGG) - Auditors Report

Company auditors report

TO THE MEMBERS OF NILKANTH ENGINEERING LIMITED

Report on the Audit of Standalone Financial Statements

Opinion

We have audited the Standalone Financial Statements of NILKANTH ENGINEERING LIMITED(hereinafter referred to as "the Company") which comprise the StandaloneBalance Sheet as at March 31 2020 and the Standalone Statement of Profit and Lossincluding Other Comprehensive Income the Standalone Cash Flow Statement and theStandalone Statement of Changes In Equity for the year then ended and notes to theStandalone Financial Statements including a summary of significant accounting policiesand other explanatory information (collectively referred to as 'Standalone FinancialStatements').

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 (hereinafter referred to as "the Act") in the mannerso required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2020and its loss total comprehensive income its cash flows and the changes in equity for theyear 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 Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the Standalone 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 providea basis for our opinion.

Emphasis of Matter

We draw your attention to Note No.41 to the Standalone Financial Statement for the yearended March 31 2020 which describes the impact of the outbreak of Coronavirus (COVID-19)on the business operations of the Company. In view of the highly uncertain economicenvironment a definitive assessment of the impact on the subsequent periods is highlydependent upon circumstances as they evolve.

Our conclusion is not modified in respect of this matter.

Key Audit Matters

Key Audit Matters are those matters that in our professional judgment were of mostsignificance in our audit of the Standalone Financial Statements for the year ended March31 2020. These matters were addressed in the context of our audit of the StandaloneFinancial Statements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe Key Audit Matters to be communicated in our report:

Sr. No. Key Audit Matter Our Response
1 Defined benefit obligation The valuation of the retirement benefit schemes in the Company is determined with reference to various actuarial assumptions including discount rate future salary increases rate of inflation mortality rates and attrition rates. Due to the size of these schemes small changes in these assumptions can have a material impact on the estimated defined benefit obligation. We have examined the key controls over the process involving member data formulation of assumptions and the financial reporting process in arriving at the provision for retirement benefits. We tested the controls for determining the actuarial assumptions and the approval of those assumptions by senior management. We found these key controls were designed implemented and operated effectively and therefore determined that we could place reliance on these key controls for the purposes of our audit.
We tested the employee data used in calculating the obligation and where material we also considered the treatment of curtailments settlements past service costs remeasurements benefits paid and any other amendments made to obligations during the year. From the evidence obtained we found the data and assumptions used by management in the actuarial valuations for retirement benefit obligations to be appropriate.
2 Modified Audit Procedures carried out in light of COVID- 19 outbreak: Due to the outbreak of COVID-19 pandemic that caused nationwide lockdown and other travel restrictions imposed by the Central and State Governments/local administration during the period of our audit we could not travel to the Company's Office and carry out the audit processes physically.
Due to COVID-19 pandemic Nation-wide lockdown and travel restrictions imposed by Central/ State Government/ Local Authorities during the period of our audit to facilitate carrying out audit remotely wherever physical access was not possible audit could not be conducted by visiting the premises of the Company. Wherever physical access was not possible necessary records/ reports/ documents/ certificates were made available to us through digital medium and emails. To this extent the audit process was carried out on the basis of such documents reports and records made available to us which were relied upon as audit evidence for conducting the audit and reporting for the current period.
As we could not gather audit evidence in person/physically/ through discussions and personal interactions with the officials at the Company's Office we have identified such modified audit procedures as a Key Audit Matter. Accordingly we modified our audit procedures as follows:
Accordingly our audit procedures were modified to carry out the audit remotely. a. Conducted verification of necessary records/ documents through emails wherever physical access was not possible.
b. Carried out verification of scanned copies of the documents deeds certificates and the related records made available to us through emails.
c. Making enquiries and gathering necessary audit evidence through Video Conferencing dialogues and discussions over phone calls/conference calls emails and similar communication channels.
d. Resolution of our audit observations telephonically/through email instead of a face-to-face interaction with the designated officials.

Other Information

The Company's Board of Directors are responsible for the other information. The otherinformation comprises the information included in the annual report but does not includethe Standalone Financial Statements and our auditor's report thereon.

Our opinion on the Standalone Financial Statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the Standalone Financial Statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the Standalone Financial Statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report the fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial 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 includingOther Comprehensive Income Cash Flows and Changes in Equity of the Company in accordancewith the Ind AS and other 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 of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the Standalone FinancialStatements that give a true and fair view and are free from materia! misstatement whetherdue to fraud or error.

In preparing the Standalone Financial Statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the 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 StandaloneFinancial Statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe 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 StandaloneFinancial Statements including the disclosures and whether the Standalone FinancialStatements represent 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 Standalone Financial Statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the Standalone 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.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the Standalone Financial Statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when 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 Act and on the basis of such checks of the books and records of the Company as weconsidered appropriate and according to the information and explanations given to us wegive in the Annexure-A a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable

2. As required by section 143(3) of the Act we report that :

a) We have sought and obtained ali 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 appears from our examination of those books;

c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Cash Flow Statement and the Statement of Changes in Equity dealt with by thisreport are in agreement with the books of account;

d) In our opinion the aforesaid Standalone Financial Statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014

e) On the basis of written representations received from the directors as on March 312020 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 from being appointed as a director in terms of Section 164 (2) ofthe Act.

f) 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 as amended:

In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of Section 197 of the Act.

g) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in Annexure-B.

h) With respect to the other matters to be included in the Auditor's Report inaccordance with the 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 uswe report that:

i) The Company does not have any pending litigations which would impact its financialposition other than those mentioned in notes to accounts.

ii) The Company did not have any long term contracts including derivative contracts forwhich there were any material foreseeable losses.

iil)There were no amounts which were required to be transferred to the InvestorsEducation and Protection Fund by the Company.

For and on behalf of KARNAVAT & CO.
Chartered Accountants
Firm Regn No. 104863W
(Viral Joshi)
Place : Mumbai Partner
Dated : July 31 2020 Membership No. 137686

NILKANTH ENGINEERING LIMITED ANNEXURE-A TO INDEPENDENT AUDITOR'S REPORT

The Annexure referred to in paragraph 1 under the 'Report on Other Legal and Regulatory

Requirements' our report to the members of NILKANTH ENGINEERING LIMITED ('theCompany') for the year ended on March 31 2020. We report that:-

i. In respect of its fixed assets:

(a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The Company has a regular programme of physical verification of fixed assets whichis in our opinion reasonable having regard to the size of the Company and the nature ofits assets. In accordance with this programme certain fixed assets have been physicallyverified by the management during the year and no material discrepancies have been noticedon such verification.

(c) As per the information and explanation given to us by the management the titledeeds of the immovable properties as disclosed in Property Plant & Equipments (NoteNo. 8 to the Standalone Financial Statements) are held in the name of the Company.

ii. In respect of its inventories:

The Company does not hold any inventory. Accordingly the provisions of Clause 3(ii) ofthe Order are not applicable to the Company.

iii. The Company has not granted any loans secured or unsecured to Companies firmsLimited Liability Partnerships or other parties covered in the register maintained undersection 189 of the Act and hence provisions of Clause 3(iii) of the aforesaid Order arenot applicable to the Company.

iv. The Company has not granted any loans or provided any guarantee or security to theparties covered under Section 185. Further the Company has complied with provisions ofSection 186 in respect of grant of loans and making investments as applicable. The Companybeing a Non Banking Financial Company nothing contained in the Section 186 exceptsub-section (1) shall apply.

v. In our opinion and according to the information and explanations given to us theCompany has not accepted deposits from the public within the meaning of Sections 73 7475 and 76 of the Act and the Rules framed thereunder to the extent notified.

vi. According to the information and explanations given to us the Company does notrequire maintaining cost records as prescribed by the Central Government under sub-section(1) of Section 148 of the Act.

vii. (a) According to the records of the Company the Company is generally regular indepositing with appropriate authorities undisputed statutory dues including providentfund employees' state insurance income-tax GST duty of customs or cess and otherstatutory dues applicable to it. No undisputed amounts payable in respect of providentfund employees' state insurance income-tax GST duty of customs or cess and otherstatutory dues were outstanding as at 31-03-2020 for a period of more than six monthsfrom the date they became payable.

(b) According to the records of the Company and information and explanations given tous no dues of income tax GST duty of customs or cess that have not been deposited onaccount of any disputes.

viii. Based on our audit procedures and according to the information and explanationsgiven to us by the management we are of the opinion that the Company has not defaulted inrepayment of dues to financial institutions and bank.

ix. The Company has not raised any money by way of Initial public offer further publicoffer (including debt instruments) and term loans and hence provisions of Clause 3(ix) ofthe aforesaid Order are not applicable to the Company.

x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by themanagement.

xi. In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of Section 197 of the Act.

xii. The Company is not a Nidhi Company and the Nidhi Rules 2014 are not applicable tothe Company and hence provisions of Clause 3(xii) of the aforesaid Order are notapplicable to the Company.

xiii. The Company has entered into the transaction with the related parties incompliance with the provisions of the Section 177 and 188 of the Act. The detaiis of suchrelated party transactions have been disclosed in the Standalone Financial Statements asrequired under Accounting Standard (AS)18 Related Party Disclosures specified underSection 133 of the Act read with Ruie 7 of the Companies (Accounts) Rules 2014.

xiv. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review and henceprovisions of Clause 3(xlv) of the aforesaid Order are not applicable to the Company.

xv. The Company has not entered into any non-cash transactions with its directors orthe persons connected with him and hence provisions of Clause 3(xv) of the aforesaid Orderare not applicable to the Company.

xvt. According to the information and explanations given to us the Certificate ofRegistration of the Company to carry on the Business as a Non Banking Financial Company(NBFC) has been cancelled by the Reserve Bank of India (RBI) vide its order dated June 282018 passed under Section 45-1A (6) of The Reserve Bank of India Act 1934 on the groundthat Net Owned Fund (NOF) are below Rs. 2 Crores. The Company has filed an appeal underSection 45-1A (7) on 9th November 2018 before the Appellate Authority of NBFCRegistration New Delhi and the same is pending for disposal. As advised by the RBI as on31.03.2020 the Company has not transacted any business of a NBFC. The Company does notintent to carry on the business of NBFC during the period of disposal of appeal.

For and on behalf of KARMA VAT & CO.
Chartered Accountants
Firm Regn No. 1Q4863W
(Viral Joshs)
Place : Mumbai Partner
Dated : July 31 2020 Membership No. 137686

NILKANTH ENGINEERING LIMITED ANNEXURE-B TO INDEPENDENT AUDITOR'S REPORT

The Annexure referred to in paragraph 2(f) under the 'Report on Other Legal andRegulatory Requirements' our report to the members of NILKANTH ENGINEERING LIMITED ('theCompany') for the year ended on March 31 2020.

Report on the Internal Financial Controls under Clause (I) of Sub-Section 3 of Section143 of the Act

We have audited internal financial controls over financial reporting of NILKANTHENGINEERING LIMITED ("the Company") as of March 31 2020 in conjunction with ouraudit of the Standalone Financial Statements of the Company for the year then ended onthat date.

Management's Responsibility for the Internal Financial Controls

The Company's management is responsible for establishing and maintaining Internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin Guidance Note on Audit of Internal Financial Controls over Financial Reporting issuedby the Institute of Chartered Accountants of India (ICAI). These responsibilities includesdesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the orderly and efficient conduct of businessincluding adherence to Company's policies the safeguarding of the assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Act.

Auditor's Responsibility

Our responsibility is to express an opinion on Company's internal financial controlsover financial reporting based on our audit. We conducted our audit in accordance with theGuidance Note on Audit of Internal Financial Controls over Financial Reporting ('theGuidance Note') and the Standards on Auditing deemed to be prescribed 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 the ICAI.Those Standards and Guidance note require that we comply with ethical requirements andplan and perform audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in ail material respects.

Our audit involves performing procedure 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 controls based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks of material misstatement of the Standalone Financial Statements whether due tofraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A Company's internal financial control over financial reporting is a process designedto provide a reasonable assurance regarding the reliability of financial reporting andpreparation of Standalone Financial Statements for external purpose in accordance withgenerally accepted accounting principles. A Company's internal financial control overfinancial reporting 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 the transactions are recorded as necessary topermit preparation of Standalone Financial Statements in accordance with the generallyaccepted accounting principles and that receipts and expenditures of the Company arebeing made only in accordance with authorisations of management and directors of theCompany; 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 Standalone Financial Statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial control over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material aspects an adequate internalfinancial control system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2020 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in Guidance Note on Audit of InternalFinancial Controls over Financial Reporting issued by the Institute of CharteredAccountants of India.

For and on behalf of KARNAVAT & CO.
Chartered Accountants
Firm Regn No. 104863W
Place: Mumbai (Viral Joshi) Partner
Dated: July 31 2020 Membership No. 137686

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