To the members of
NIRAJ CEMENT STRUCTURALS LIMITED
Report on the Audit of the Standalone Ind AS Financial Statements Opinion
We have audited the accompanying standalone Ind AS Financial Statements of NirajCement Structurals Limited
(hereinafter referred to as "Company") which comprise the Balance Sheet asat 31st March 2020 the Statement of Profit and Loss (including othercomprehensive income) and the Cash Flow Statement and the Statement of Changes in Equityfor the year ended on that date and notes to the standalone Ind AS financial statementsincluding a summary of the significant accounting policies and other explanatoryinformation (herein after referred to as "the standalone Ind AS 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 required bythe Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the Company as at 31st March 2020 its profitincluding other comprehensive income their cash flows and the statement of changes inequity for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone Ind AS financial statements in accordance withthe Standards 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 fulfilled our other ethical responsibilities in and the Rulesmade thereunder and we have 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 IndAS financial statements.
Emphasis of Matter
(1) We draw your attention to Part B (point-r) of notes to account of the financialstatement Niraj Cement Structurals Ltd. has booked turnover and related cost of JointVenture entities and partners in its books of account. However the whole projects havebeen handled by Joint Venture Partners / Entities and related GST and TDS complied byJoint Venture Partners/ Entities.
(2) We draw your attention to Part B (point-g)of notes to account of the financialstatement The Company does not have a program of verification to cover all the items offixed assets in a phased manner Fixed assets were not physically verified by themanagement during the year.
(3) We draw your attention to Note Part A-17 the financial statement; As per Ind AS109 "Financial Instruments" the company is required to consider "Provisionfor Expected Credit Loss" on financial assets on the basis of expected probability ofrecoverability of such financial instrument.
During the year the company has provided Rs.9440000/- as Expected Credit Loss(ECL)and has written off in the financial statement. As per management explanations thereceivables and advances of Rs.211673409/- is in dispute and for the balancereceivable and advances the management is following up with the parties and is hopeful forrecovery. But in absence of adequate basis/supporting documents we are unable to commenton the measurement of carrying amount of all the financial assets appearing in thefinancial statement as on 31 st March 2020.
Further the company is also required to amortize financial assets as per the businessmodel selected by the company but in the absence of proper terms and conditionsamortization is not possible and the financial assets appear at carrying amount on 31stMarch 2020.
(4) We draw your attention to Part-C (Note C-9) of notes to account of the financialstatement balances of trade payables trade receivables advances received advancesgiven GST liabilities and Income Tax assets (Net of liabilities) are subject toreconciliation and confirmation. The management is in the process of reconciling the same.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone Ind AS financial statements of the currentperiod. 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 providea separate opinion on these matters.
|The key audit matters ||How the matter was addressed in our audit |
|Adoption of Ind AS 115 Revenue from Contracts with Customers || |
|The company has adopted Ind AS 115 Revenue from Contracts with Customers (Ind AS 115') which is the new revenue accounting standard. The application and transition to this accounting standard is complex and is an area of focus in the audit. The revenue standard establishes a comprehensive framework for determining whether how much and when revenue is recognized. This involves certain key judgments relating to identification of distinct performance obligations determination of transaction price of identified performance obligation the appropriateness of the basis used to measure revenue recognized over a period. Additionally the standard mandates robust disclosures in respect of revenue and periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date. ||Our audit procedures on adoption of Ind AS 115 Revenue from contracts with Customers (Ind AS 115') which is the new revenue accounting standard include |
| ||Evaluated the design and implementation of the processes and internal controls relating to implementation of the new revenue accounting standard; |
| ||Evaluated the detailed analysis performed by management on revenue streams by selecting samples for the existing contracts with customers and considered revenue recognition policy in the current period in respect of those revenue streams; |
| ||Evaluated the appropriateness of the disclosures provided under the new revenue standard and assessed the completeness and mathematical accuracy of the relevant disclosures |
Information Other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's Management and Board of Directors are responsible for the preparation ofthe other information. The other information comprises the information included in theCompany's annual report but does not include the standalone Ind AS financial statementsand our auditor's report thereon.
Our opinion on the standalone Ind AS financial statements does not cover the otherinformation and 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 during the course of our audit or otherwise appears to be materially misstated.If based on the work we have performed we conclude that there is a material misstatementof this other information we are required to report that fact. We have nothing to reportin this regard.
Management's Responsibility for the Standalone Ind AS Financial Statements
The Company's management and Board of Directors are responsible for the matters statedin Section 134 (5) of the Companies Act 2013 ("the Act") with respect to thepreparation of these standalone Ind AS financial statements that give a true and fair viewof the state of affairs profit and other comprehensive income and cash flows andstatement of changes in equity of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) specifiedunder Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalone IndAS financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the standalone Ind AS financial statements management and Board ofDirectors are responsible for assessing the Company's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless management either intends to liquidate the Company orto cease operations or has no realistic alternative but to do so. The Board of Directorsis also responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone Ind ASfinancial 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 AS we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalone Ind ASfinancial 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 financial 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 through a separatereport on the complete set of financial statements on whether the company has adequateinternal financial controls with reference to financial statements in place and theoperating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management in the standalonefinancial statements
Conclude on the appropriateness of the Management on 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 the Company's ability to continue asa going concern. If we conclude that a material uncertainty significant exists we arerequired to draw attention in our auditor's report to the related disclosures in thestandalone Ind AS financial statements or if such disclosures are inadequate to modifyour opinion. Our conclusions are based on the audit evidence obtained up to the date ofour auditor's report. However future events or conditions may cause the Company to ceaseto continue as a going concern.
Evaluate the overall presentation structure and content of the standalone Ind ASfinancial statements including the disclosures and whether the standalone Ind ASfinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
Materiality is the magnitude of the statement in the standalone Ind AS financialaggregate makes it probable that the economic decisions of a reasonably knowledgeableuser of the financial statements may be influenced. We consider quantitative materialityand qualitative factors in
(i) planning the scope of our audit work and in evaluating the results of our work; and
(ii) to evaluate the effect of any identified misstatements in the financialstatements.
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 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 Ind AS financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.
The Company has considered the possible effects that may result from the pandemicrelating to COVID-19 on the carrying amounts of property plant and equipmentinvestments inventories receivables and other current assets. In developing theassumptions relating to the possible future uncertainties in the global economicconditions because of this pandemic the Company as at the date of approval of thesefinancial results has used internal and external sources on the expected futureperformance of the Company. The Company has performed sensitivity analysis on theassumptions used and based on current indicators of future economic conditions theCompany expects the carrying amount of these assets will be recovered and sufficientliquidity is available to fund the business operations for at least another 12 months.Given the uncertainty because of COVID-19 the final impact on the Company's assets infuture may differ from that estimated as at the date of approval of the financialaccounts.
Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditor's Report) Order 2016 (the Order') issuedby the Central Government in terms of Section 143 (11) of the Act we give in theAnnexure A' a statement on the matters specified in paragraphs 3 and 4 of the Orderto the extent applicable.
(A) As required by Section 143(3) of the Act we report that:
a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit;
b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;
c) The Balance Sheet the Statement of Profit and Loss (including Changes in Equity andthe Statement of Cash Flow dealt with by this Report are in agreement with the relevantbooks of account;
d) In our opinion the aforesaid standalone Ind AS financial statements comply with theInd AS specified under Section 133 of the Act;
e) On the basis of the written representations received from the directors as on 31stMarch 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31 st March 2020 from being appointed as a director interms of Section 164 (2) of the Act.
f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and operating effectiveness of such controls refer to ourseparate Report in "Annexure B". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
(B) 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.
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.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
(C) 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 opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe provisions of section 197 of the Act.
ANNEXURE "A" TO THE INDEPENDENT AUDITOR'S REPORT 31st MARCH 2020
(Referred to our report of even date)
i. In respect of the Company's fixed assets:
(a) The Company has not maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The Company does not have a program of verification to cover all the items of fixedassets in a phased manner which in our opinion is not reasonable having regard to thesize of the Company and the nature of its assets.
Fixed assets were not physically verified by the management during the year.
(c) According to the information and explanations given to us the records examined byus and based on the examination of the conveyance deeds / registered sale deed provided tous we report that the title deeds comprising all the immovable properties of land andbuildings which are freehold are held in the name of the Company as at the balance sheetdate. In respect of immovable properties of land and building that have been taken onlease fixed assets in the standalone disclosed financial statements thelease agreements are in the name of the Company.
ii. Balance of inventory appeared for a long time in Financial Statement is in respectof work-in-progress. Based upon the information and explanation given to us management isconfident that the project to which the inventories relates are on hold due to reasons onwhich management is not having any control. However the management is confident that theproject will be completed in due course of time and inventories of work-in-progress willbe adjusted against the billings to the clients against various projects. This being atechnical matter and hence relied on the management representation.
iii. The Company has not granted loans or advances in the nature of loan secured orunsecured to related parties covered in the registered maintained under section 189 of theAct.
iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Act in respect ofgrant of loans.
v. The Company has not accepted deposits during the year and does not have anyunclaimed deposits as at 31st March 2020 and therefore the provisionsof the clause 3 (v) of the Order are not applicable to the Company.
vi. The maintenance of cost records has not been specified by the Central Governmentunder section 148(1) of the Companies Act 2013 for the business activities carried out bythe Company. Thus reporting under clause 3(vi) of the order is not applicable to theCompany.
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.
(b) There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income Tax Goods and Service Tax Customs Duty Cess and other materialstatutory dues in arrears as at 31st March 2020 for a period of morethan six months from the date they became payable. The following liabilities in respect ofIncome Tax/ TDS are disputed by the Company the status of the disputed tax liabilities isas under.
|Name of the statute ||Nature of dues ||Amount (in lakhs) ||Period for which the amount relates ||Forum where the dispute is pending |
|Income Tax Act 1961 ||Income tax ||474.06 ||2010-11 ||CIT (A) Mumbai |
|Income Tax Act 1961 ||Income tax ||431.74 ||2011-12 ||CIT (A) Mumbai |
|Income Tax Act 1961 ||Income tax ||348.14 ||2012-13 ||CIT (A) Mumbai |
|Income Tax Act 1961 ||TDS ||144.83 ||Various years ||Income Tax |
viii. In our opinion and according to the information and explanations given to us theCompany has not defaulted in the repayment of dues to banks. The Company has not taken anyloans or borrowings from financial institutions banks and government or has not issuedany debentures. Hence reporting under clause 3 (viii) of the Order is not applicable tothe Company.
ix. The Company has issued 21500000 share warrants at a price of Rs. 16/-perwarrant convertible in to equity shares at the option of the warrant holder. The warrantare issued to meet the long term working capital requirements of the Company and generalcorporate purposes. The Company has so far received Rs.172000000/- against the sharewarrants. The amount raised against share warrants has been utilized for the purposes forwhat it is raised.
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 our opinion and according to the information and explanations given to us theCompany has paid/provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act.
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. Based upon the information and explanations given by the management the Companyhas not made any preferential allotment of shares during the year under review.
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. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
ANNEXURE "B" TO THE INDEPENDENT AUDITOR'S REPORT 31st MARCH 2020
(Referred to in paragraph A (f) under Report on Other Legal and RegulatoryRequirements section of our report of even date)
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 financial reporting andsuch internal financial internal controls system over controls over financial reportingwere operating effectively as at 31st March 2020 based on the internalcontrol over financial reporting criteria established by the Company considering theessential 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 (The Guidance Note').
Management's Responsibility for Internal Financial Controls
The Company's management and Board of Directors of the Company are responsible forestablishing and maintaining internal financial controls based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia. These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to respective company'spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the internal financial controls overfinancialreporting of the Company based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") issued by the Institute of Chartered Accountants of Indiaand the Standards on Auditing prescribed under Section 143(10) of the Companies Act 2013to the extent applicable to an audit of internal financial controls with reference tostandalone Ind AS financial require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such operatedeffectively 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 judgement 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 with Reference to Standalone Ind AS FinancialStatements
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 authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised 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.