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Pradeep Metals Ltd.

BSE: 513532 Sector: Engineering
NSE: N.A. ISIN Code: INE770A01010
BSE 00:00 | 16 Sep 81.65 -1.25
(-1.51%)
OPEN

82.25

HIGH

83.30

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80.50

NSE 05:30 | 01 Jan Pradeep Metals Ltd
OPEN 82.25
PREVIOUS CLOSE 82.90
VOLUME 7209
52-Week high 86.60
52-Week low 30.60
P/E 12.98
Mkt Cap.(Rs cr) 141
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 82.25
CLOSE 82.90
VOLUME 7209
52-Week high 86.60
52-Week low 30.60
P/E 12.98
Mkt Cap.(Rs cr) 141
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Pradeep Metals Ltd. (PRADEEPMETALS) - Auditors Report

Company auditors report

To

The Members of Pradeep Metals Limited

Report on the Audit of Standalone Financial Statements Opinion

We have audited the accompanying standalone financial statements of Pradeep MetalsLimited (‘the Company') which comprise the Balance Sheet as at 31st March 2021the Statement of Profit and Loss (including other comprehensive income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year then ended and a summaryof significant accounting policies and other explanatory information (together referred toas 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 true andfair view in conformity with the Indian Accounting Standards (Ind AS) prescribed undersection 133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015as amended and other accounting principles generally accepted in India of the state ofaffairs of the Company as at 31st March 2021 and its profit including othercomprehensive income the changes in equity and its cash flows for the year ended on thatdate.

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

Reference is invited to note 5 of the notes to standalone financial statements. In viewof accumulated losses in the Wholly Owned Subsidiary (WOS) and Step Down Subsidiary (SDS)expected business impact of COVID-19 and provision for impairment of goodwill by SDS theCompany carried out impairment assessment in respect of its investment in WOS and loansgranted to WOS. Based on such assessment the Company has made a provision for impairmentof Rs. 270 lakhs for the year ended 31st March 2021 (aggregate impairment provision upto31st March 2021 is Rs. 540 lakhs). In the view of management considering the long termand strategic nature of investment the balance carrying value of investment would yieldthe required benefits and the loan given to the WOS is considered as fully recoverable.This matter was also reported under ‘Emphasis of matter' paragraph in our auditreport for the year ended 31st March 2020. Our opinion is not modified in respect ofabove matter. Our opinion was not modified in previous year also.

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 of the current year.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.

Key Audit Matter & how our audit addressed the key audit matter

1. Investments in WOS and loans granted to WOS

Refer note 5 of standalone financial statements in respect of investment made and loangranted to its WOS and Emphasis of Matter paragraph above. The Company has carried outimpairment assessment for the recoverability of loans & investments into WOS as at31st March 2021 and has made provision for impairment amounting to Rs. 270 lakhs for theyear ended 31st March 2021 (aggregate impairment provision upto 31st March 2021 is Rs.540 lakhs) for the investment in WOS. Accordingly we determined this to be a key auditmatter. As part of our audit procedures we have evaluated the assumptions and estimatesused by the management while conducting the impairment test. We have discussed the futurebusiness outlook the steps taken by the management to improve the performance of WOS andSDS the budgets presented to the Board of Directors and impact on account of COVID-19 onthe business operations of the WOS and SDS. In respect of loan we have verified thebalance confirmation and compliance with repayment schedule.

Based on the above and on the basis of discussion with management the loan to WOS isconsidered fully recoverable and carrying value of the investment net of impairment is inorder.

2. Inventory valuation (WIP)

The nature of items produced by the Company are customized and are unique (i.e. nonstandardized items) this poses a challenge of inventory valuation especially in respectof in work in progress (WIP). As at 31st March 2021 WIP value is Rs. 1439.22 lakhs. TheCompany has multiple control points which include detailed recording of movement of WIPitems in ERP System periodical physical verification and ascertainment of stage of WIP bythe management.

As part of our audit procedures we have performed test verification of inventoryduring the year and also performed analytical test to validate the closing stockquantities and values of WIP. Our analytical test included (a) verification of the overallinput-output ratio and inquiring the reasons for difference between standard and actualconsumption & yield (b) verifying the accuracy of the closing stock valuation worksheets (c) basis of ascertainment of stage of completion and (d) assessing the accuracyand completeness of the information used by management in comparing the cost of WIPinventory with net realizable value. The deviations were not significant and satisfactoryexplanation was provided to us.

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 of the Board's Report including Annexures to Board's ReportManagement Discussion and Analysis Corporate Governance and Shareholder's Information butdoes not include the 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 ouraudit of the standalone financial statements our responsibility is to read the otherinformation 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. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that 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 changesin equity and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Ind AS specified under section 133 of the Actread with the Companies (Indian Accounting Standard) Rules 2015 as amended from time totime. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due 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

s

Report on other legal and regulatory requirements

As required by the Companies (Auditor's Report) Order 2016 (‘the Order') issuedby the Central Government of India in terms of Section 143(11) of the Act we give in"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

As required by Section 143 (3) of the Act we report that: a) We have sought andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purposes of our audit. b) In our opinion proper books ofaccount as required by law have been kept by the Company so far as it appears from ourexamination of those books. c) The Balance Sheet the Statement of Profit and Lossincluding Other Comprehensive Income the Statement of Changes in Equity and the Cash FlowStatement dealt with by this Report are in agreement with the books of account. d) In ouropinion the aforesaid standalone financial statements comply with the Indian AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014. e) On the basis of the written representations received from thedirectors as on 31st March 2021 taken on record by the Board of Directors none of thedirectors is disqualified as on 31st March 2021 from being appointed as a director interms of Section 164 (2) of the Act. f) With respect to the adequacy of the internalfinancial controls over financial reporting of the Company and the operating effectivenessof such controls refer to our separate report in "Annexure B. g) With respect to theother matters to be included in the Auditor's Report in accordance with the requirementsof section 197(16) of the Act as amended in our opinion and to the best of ourinformation and according to the explanations given to us the remuneration paid/providedby the Company to its directors for the year ended 31st March 2021 is in accordance withthe provisions of section 197 read with Schedule V of the Act; and h) With respect to theother matters to be included in the Auditor's Report in accordance with Rule 11 of theCompanies (Audit and Auditors) Rules 2014 as amended from time to time in our opinionand to the best of our information and according to the explanations given to us: i. TheCompany has disclosed the impact of pending litigations on its financial position in itsstandalone financial statements – Refer note 36(A)(a) 36(A)(c) and 36(d) to thestandalone financial statements. ii. The Company did not have any long term contractincluding derivative contract for which there are any material foreseeable losses. iii.According to the information and explanations given to us and on the basis of ourexamination of records of the Company there are no amounts which were required to betransferred to the Investor Education and Protection Fund by the Company.

For N. A. Shah Associates LLP
Chartered Accountants
Firm Registration No.: 116560W/W100149
Milan Mody
Partner
Membership No.: 103286
UDIN: 21103286AAAACL7379
Place: Mumbai
Date : 27th May 2021

Annexure A to Independent Auditors' Report for the year ended 31st March 2021

[Referred to in ‘Other legal and regulatory requirements ‘of our report ofeven date] i. a) The Company has maintained proper records showing full particularsincluding quantitative details and situation of fixed assets. b) The Company hasphysically verified all the fixed assets (except dies) during the year. Further as perthe phased program dies are physically verified once in 3 years and will be due forverification in the next financial year. In our opinion frequency of physicalverification is reasonable having regard to the size of the Company and the nature of itsassets. No discrepancies were noticed on such verification. c) According to theinformation and explanations given to us and on the basis of our examination of therecords of the Company the title deeds of immovable properties are held in the name ofthe Company which have been verified from photocopies of the agreements since the originaldocuments are deposited with banks against credit facilities granted by them for which wehave received confirmation from the bank. ii. The inventory (other than lying with thirdparties) has been physically verified by the management during the year. In respect ofinventory lying with third parties confirmations were obtained by the Company during theyear. In our opinion the frequency of verification is reasonable. As per the informationand explanation given to us discrepancies noticed on physical verification were notmaterial and have been properly dealt with in the books of accounts. iii. The Company hasgranted loan to one company [Wholly Owned Subsidiary (WOS)] covered in the registermaintained under Section 189 of the Companies Act 2013. The Company has not granted loanto any other companies firms limited liability partnerships or other parties as listedin the said register during the current year.

(a) In our opinion the rate of interest and other terms and conditions on which theloan has been granted to the party listed in the register maintained under Section 189 ofthe Act are not prima facie prejudicial to the interest of the Company. (b) In respectof loan granted repayment of principal was not due as per revised repayment schedule andpayment of interest is regular as stipulated. (c) There are no overdue amounts in respectof the loan granted to party listed in the register maintained under section 189 of theAct. iv. According to the information and explanation given to us in respect of corporateguarantee loan given securities given for loan taken by WOS and investment made in WOSthe Company has complied with the provisions of Section 185 and Section 186 of the Act asapplicable. v. In our opinion and according to the information and explanation given tous the Company has not accepted any deposits. Therefore question of reporting compliancewith directive issued by the Reserve Bank of India and the provisions of sections 73 to 76or any other relevant provisions of the Act and rules framed thereunder does not arise. Wehave been informed that no order relating to Company has been passed by the Company LawBoard or National Company Law Tribunal or Reserve Bank of India or any Court or any otherTribunal. vi. As per information and explanation given to us maintenance of cost recordsin respect of closed dies forging and processing is prescribed for the Company pursuant tothe Rules made by the Central Government under section 148(1) of the Act. We have broadlyreviewed the books of account maintained by the Company pursuant to the Rules made by theCentral Government for the maintenance of cost records under section 148 of the Act andare of the opinion that prima facie the prescribed accounts and records have been madeand maintained. vii. (a) According to the information and explanations given to us and onthe basis of our examination of records of the Company in respect of amountsdeducted/accrued in the books of account the Company has been generally regular indepositing undisputed statutory dues including provident fund employees' state insuranceincome tax sales tax duty of customs duty of excise goods and services tax cess andany other statutory dues as applicable to the Company during the year with theappropriate authorities. There are no arrears of outstanding statutory dues as at 31stMarch 2021 for a period of more than six months from the date they became payable.

(b) According to the records of the Company and information and explanations given tous there are no dues of income tax sales tax service tax duty of customs duty ofexcise goods and services tax which have not been deposited with appropriate authoritieson account of any dispute except demands raised for income tax aggregating to Rs.144.38lakhs for financial years 2013-14 and 2017-18 under Income Tax Act 1961. In respect ofthese demands the Company has filed rectification application seeking to give credit oftaxes paid and after necessary rectifications we are informed that after rectificationno demand will be payable. viii. Based on our audit procedures and as per the informationand explanations given by the management we are of the opinion that the Company has notdefaulted in repayment of dues to the bank. The Company has not borrowed any money fromfinancial institution government and has not issued any debentures. ix. The Company hasnot raised money by way of initial public offer or further public offer [including debtinstruments]. As per information and explanations given and based on our verificationterm loans raised by the Company are applied for the purpose for which those are raised.x. During the course of our examination of the books of account and records of theCompany carried out in accordance with generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither noticed norhave been informed by the management any incidence of fraud by the Company or on theCompany by its officers or employees. xi. In our opinion and according to the informationand explanation given to us managerial remuneration has been paid or provided inaccordance with the requisite approvals mandated by the provision of section 197 read withSchedule V of the Act. xii. In our opinion and according to the information andexplanation given to us the Company is not a Nidhi company. Therefore clause (xii) ofparagraph 3 the Order is not applicable. xiii. According to the information andexplanations given to us and based on our examination of the records of the Companytransactions with the related parties are in compliance with sections 177 and 188 of theAct where applicable and details of such transactions have been disclosed in thestandalone financial statements as required by the applicable Indian accounting standards.xiv. The Company has not made any preferential allotment or private placement or fully orpartly convertible debentures during the year. Therefore question of our comment oncompliance with provisions of Section 42 of Act does not arise. xv. In our opinion andaccording to the information and explanations given to us the Company has not enteredinto any non-cash transaction with directors or person connected with him. Thereforeclause (xv) of paragraph 3 the Order is not applicable. xvi. In our opinion and accordingto the information and explanations given to us the Company is not required to beregistered under Section 45-IA of the Reserve Bank of India Act 1934.

For N. A. Shah Associates LLP
Chartered Accountants
Firm Registration No.: 116560W/W100149
Milan Mody
Partner
Membership No.: 103286
UDIN: 21103286AAAACL7379
Place: Mumbai
Date: 27th May 2021

Annexure B to Independent Auditors' Report of even date on the standalone financialstatements of Pradeep Metals Limited

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013

Opinion

We have audited the internal financial controls over financial reporting of PradeepMetals Limited ("the Company") as of 31st March 2021 in conjunction withour audit of the standalone financial statement of the Company for the year ended on thatdate. In respect of inventory (recording of WIP and allocation of overheads) internalfinancial controls needs to be further strengthened to commensurate with the size of theCompany and nature of its business. This matter was reported in earlier year also.

In our opinion read with our comment with respect to inventories above the Companyhas in all material respects an adequate internal financial controls system overfinancial reporting and such internal financial controls over financial reporting wereoperating effectively as at 31st March 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 (‘the Guidance Note') issued by the Institute of CharteredAccountants of India (‘ICAI').

Responsibilities of Management and Those Charged with Governance for Internal FinancialControls over Financial Reporting

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 the Guidance Note issued by the ‘ICAI'. These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of its business includingadherence to Company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under the Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.

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 standalone financial statement whether due to fraud orerror.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.

Meaning of Internal Financial Controls over Financial Reporting

The Company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of standalone financial statement for external purposes in accordance withgenerally accepted accounting principles. The Company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the Company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of standalonefinancial statement in accordance with generally accepted accounting principles and thatreceipts and expenditures of the Company are being made only in accordance withauthorizations 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 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.

For N. A. Shah Associates LLP
Chartered Accountants
Firm Registration No.116560W/W100149
Milan Mody
Partner
Membership No. 103286
UDIN: 21103286AAAACL7379
Place: Mumbai
Date: 27th May 2021

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