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Shipping Corporation of India Ltd.

BSE: 523598 Sector: Infrastructure
NSE: SCI ISIN Code: INE109A01011
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OPEN 138.00
PREVIOUS CLOSE 136.15
VOLUME 75901
52-Week high 152.70
52-Week low 86.00
P/E 9.94
Mkt Cap.(Rs cr) 6,263
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 138.00
CLOSE 136.15
VOLUME 75901
52-Week high 152.70
52-Week low 86.00
P/E 9.94
Mkt Cap.(Rs cr) 6,263
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Shipping Corporation of India Ltd. (SCI) - Auditors Report

Company auditors report

To the Members of

The Shipping Corporation of India Limited

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the accompanying Standalone Financial Statements of TheShipping Corporation of India Limited ("the Company") which comprise theBalance Sheet as at March 31 2022 the Statement of Profit and Loss (including OtherComprehensive Income) the Statement of Changes in Equity and the Statement of Cash Flowsfor the year then ended and notes to the Standalone Financial Statements including asummary of significant accounting policies and other explanatory information (hereinafterreferred to as "Standalone Financial Statements").

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 sorequired and give a true and fair view in conformity with the Indian Accounting Standardsprescribed under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended ("Ind AS") and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2022its profit (including other comprehensive income) changes in equity and its cash flowsfor the year ended on that date.

Basis for Opinion

We conducted our audit of the Standalone Financial Statements inaccordance with Standards on Auditing (SAs) specified under section 143(10) of the Act.Our responsibilities 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 theethical requirements that are relevant to our audit of the Standalone Financial Statementsunder the provisions of the Act and Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion on the Standalone Financial Statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the Standalone Financial Statements of thecurrent year. 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. We have determined the matters described below to bethe key audit matters to be communicated in our report.

Sr. No. Key Audit Matter Auditor's Response
1 Accuracy of recognition measurement presentation and disclosures of revenues and other related balances in view of adoption of Ind AS 115 "Revenue from Contracts with Customers" (revenue accounting standard) Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows:
The application of the revenue accounting standard involves certain key judgments relating to identification of distinct performance obligations determination of transaction price of the identified performance obligations the appropriateness of the basis used to measure revenue recognized over a period. Additionally revenue accounting standard contains disclosures which involves collation of information in respect of disaggregated revenue and periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date. (Refer Note No 33 to the Standalone Financial Statements) Evaluated the design of internal controls relating to Implementation of the revenue accounting standard. Selected a sample of continuing and new contracts and tested the operating effectiveness of the internal control relating to identification of the distinct performance obligations and determination of transaction price. Selected a sample of continuing and new contracts and performed the following procedures:
Read analyzed and identified the distinct performance obligations in these contracts.
Compared these performance obligations with that identified and recorded by the Company.
Considered the terms of the contracts to determine the transaction price including any variable consideration to verify the transaction price used to compute revenue.
In respect of samples relating to fixed price contracts progress towards satisfaction of performance obligation used to compute recorded revenue was verified Sample of revenues disaggregated by type and service offerings was tested with the performance obligations specified in the underlying contracts.
2 Impairment testing of Fleets in line with the Ind AS 36
The Company at every reporting period assesses market conditions and other specific risks to determine if there are any triggering events that may be indicators of an impairment of the fleets. We have obtained the management's view to gain an overview of the triggering events market conditions (present & future) operational factors and other key assumptions supporting the impairment assessment.
The impairment loss if any is recognized in the Statement of Profit and Loss in the period in which impairment takes place. We have performed the following procedures for verification of impairment testing of Fleets:
The provision for impairment of fleets is identified as a Key Audit Matter as it involves significant management assumptions and judgment to assess the market conditions and other associated risks in assessment of provisions. Understanding the process for collecting the inputs into the valuation models to evaluate the design of the Company's controls over its impairment assessment and challenged the appropriateness of the inputs and significant assumptions including the cash flow projections discount rate costs and expenses.
Assessing the reasonableness of fair value of vessel considered by the management by comparing the same with the valuations provided by external professional valuers.
3 The direct access of certain overseas foreign agents to fund collected on account of freight and other charges.
Liner division of the Company has been carrying out its vessels operations and container marketing activities at various ports in India and abroad through its agency network. Agents perform various activities such as marketing booking clearing of cargo port calls of vessels & also collection of freight on behalf of the Company. We assessed the Company's process to evaluate Agents on timely basis to identify the impact on the revenue and collection of funds. The Company has obtained bank guarantee from major agents & also reviewed the same periodically to confirm its validity and completeness with respect to risk exposure on revenue due to direct access to agents.
The Company depends on its agents for operation of Liner segment business.
Since all the activities are performed by the agents there is requirement of funds. Collection of income is done directly by agents and subsequently remitted to the Company.
Therefore it involves a risk on the part of the Company and hence is identified as a Key Audit Matter.
4 Evaluation of Dry Docking Cost & Repair Expenses of Vessels:-
As per Ind AS 16 ‘Property Plant and Equipment' subsequent costs like expenditure on major maintenance refits or repairs including planned dry-dock are included in the asset's carrying amount or recognized as a separate asset as appropriate when they meet the recognition criteria i.e. only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. To assess the recognition of dry docking cost & repair cost we performed the following process: Evaluated the design of internal controls relating to the major cost like repairs & dry-docking which are of two types i.e. planned dry-dock & emergency dry-dock.
A shipping company on periodic basis is required to bring all ships into dry dock for major inspection and overhaul. Selected a sample to verify the operating effectiveness of the internal control relating to identification of the distinction between the two cost i.e. repair & dry-dock cost.
Overhaul expenditure might at first sight seem to be a repair to the ships but it is actually a cost incurred in getting the ship back into seaworthy condition. Tested the relevant information technology systems' relating to the dry-dock & Fleet related expenses.
The dry docking cost and repairs expenses of vessels are considered as Key Audit Matter as it requires management judgment to assess future economic benefits from the expenditure incurred and the measurement of the cost.
5 Provisions for taxes and Contingent Liabilities
The Company is involved in various taxes and other disputes for which final outcomes cannot be easily predicted and which could potentially result in significant liabilities. The assessment of the risks associated with the litigations is based on complex assumptions which require the use of judgment and such judgment relates primarily to the assessment of the uncertainties connected to the prediction of the outcome of the proceedings and to the adequacy of the disclosures in the financial statements. Because of the judgment required the materiality of such litigations and the complexity of the assessment process the area is a key matter for our audit. Our audit procedure in response to this key Audit Matter included among others Assessment of the process and relevant controls implemented to identify legal and tax litigations and pending administrative proceedings.
Assessment of assumptions used in the evaluation of potential legal and tax risks performed by the legal and tax department of the Company considering the legal precedence and other rulings in similar cases.
Inquiry with the legal and tax departments regarding the status of the most significant disputes and inspection of the key relevant documentation.
Analysis of opinion received from the experts where available.
Review of the adequacy of the disclosures in the notes to the financial statements.
We have observed that the provision for tax estimated as above including the deferred tax has not resulted in material deviation from the applicable rate of tax after considering the exemptions deductions and disallowances as per the provisions of the Income Tax Act.

Emphasis of Matter

We draw attention to the following matters in the notes to theStandalone Financial Statements: 1. Note no. 41 on the matter continued since FY 2014-15regarding payment of Performance Related Pay (PRP) of Rs.1103 lakhs vis-a-vis DPEguidelines with respect to computation of profits from core activities and non-observanceof "Bell Curve". The Company is pursuing the matter with the Ministry of PortsShipping and Waterways for resolution and final decision. 2. Note no. 44(a) regardingselection of the Company for Strategic Disinvestment process by the Government of India.The disinvestment process and the procedural aspects in relation to the same are inprogress.

3. Note no. 44(b) regarding the status of implementation of thedemerger scheme for hiving off the identified non-core assets of SCI to SCILAL and themanagement representation that considering the direction from the Ministry of PortsShipping and Waterways to SCI from time to time including re-iteration dated 22.04.2022 toexpedite the process of demerger and certainty of completion of the same in the nearfuture the necessary disclosures and continued accounting effects considered in thefinancial statements has been relied upon.

4. Note no. 45 regarding the practice of seeking balance confirmationsin respect of Trade receivables Trade payables and Deposits the process ofreconciliation and the management's assertion that it would not have any materialdifference affecting the financial results.

Our opinion is not modified in respect of these matters.

Other Information

The Company's Board of Directors are responsible for the otherinformation. The other information comprises the information included in theDirector's Report including Annexures to Director's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but doesnot 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 on the other information obtained prior to the date of this auditor'sreport 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 forthe Standalone Financial Statements

The Company's Management and Board of Directors are responsiblefor the matters stated in section 134(5) of the Act with respect to the preparation ofthese Standalone Financial Statements that give a true and fair view of the financialposition financial performance (including other comprehensive income) changes in equityand cash flows of the Company in accordance with the Ind AS and other accountingprinciples generally accepted in India. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; 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.

Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements

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 this Standalone Financial Statements. Aspart of an audit in accordance with SAs we exercise professional judgment and maintainprofessional skepticism throughout the audit. We also: dentify and assess the risks ofmaterial misstatement of the Standalone Financial Statements whether due to fraud orerror design and perform audit procedures responsive to those risks and obtain auditevidence that is sufficient and appropriate to provide a basis for our opinion. The riskof not detecting a material misstatement resulting from fraud is higher than for oneresulting from error as fraud may involve collusion forgery intentional omissionsmisrepresentations or the override of internal control.

Obtain an understanding of internal control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls with reference to financial statements inplace and 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 conditionsmay cause 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.

Materiality is the magnitude of misstatements in the StandaloneFinancial Statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the Standalone FinancialStatements may be influenced. We consider quantitative materiality and qualitative factorsin (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 Standalone FinancialStatements.

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 matterscommunicated with those charged with governance we determine those matters that were ofmost significance in the audit of the Standalone Financial Statements of the current yearand are therefore the key audit matters. We describe these matters in our auditor'sreport unless law or regulation precludes public disclosure about the matter or when inextremely rare circumstances we determine that a matter should not be communicated in ourreport because the adverse consequences of doing so would reasonably be expected tooutweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

(1) As required by the Companies (Auditor's Report) Order 2020("the Order") issued by the Central Government of India in terms of section143(11) of the Act we give in "Annexure 1" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.

(2) As required by section 143(3) of the Act we report that: a. Wehave sought and obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit; b. In our opinionproper books of account as required by law have been kept by the Company so far as itappears from our examination of those books; c. The Balance Sheet the Statement of Profitand Loss (including Other Comprehensive Income) the Statement of Changes in Equity andthe Statement of Cash Flows dealt with by this report are in agreement with the books ofaccount; d. In our opinion the aforesaid Standalone Financial Statements comply with theInd AS specified under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended; e. In our opinion and to the best of our informationand according to the explanations given to us the Company being a Government Companysection 164(2) related to disqualifications for appointment of directors is not applicableto it in accordance with exceptions modifications and adaptations provided videNotification No. G.S.R. 463 (E) dated June 5 2015 issued by Ministry of Corporate Affairs(the "Notification"). f. With respect to the adequacy of the internal financialcontrols with reference to Standalone Financial Statements of the Company and theoperating effectiveness of such controls refer to our separate report in "Annexure2"; g. With respect to the other matter to be included in the Auditor's Reportin accordance with the requirements of section 197(16) of the Act: In our opinion and tothe best of our information and according to the explanations given to us the Companybeing a Government Company section 197 of the Act related to the managerial remunerationis not applicable to it in accordance with exceptions modifications and adaptationsprovided vide Notification No. G.S.R. 463 (E) dated June 5 2015 issued by Ministry ofCorporate Affairs. h. With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 as amended in our opinion and to the best of our information and accordingto the explanations given to us: i. The Company has disclosed the impact of pendinglitigations on its financial position in its Standalone Financial Statements Refer Note 28to the Standalone Financial Statements; ii. The Company has made provision as requiredunder the applicable law or accounting standards for material foreseeable losses if anyon long-term contracts including derivative contracts; iii. There were no amounts whichwere required to be transferred to the Investor Education and Protection Fund by theCompany. iv. (a) The management has represented that to the best of its knowledge andbelief no funds have been advanced or loaned or invested (either from borrowed funds orshare premium or any other sources or kind of funds) by the company to or in any otherperson or entity including foreign entity ("Intermediaries") with theunderstanding whether recorded in writing or otherwise that the Intermediary shallwhether directly or indirectly lend or invest in other persons or entities identified inany manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries")or provide any guarantee security or the like on behalf of the Ultimate Beneficiaries;(b) The management has represented that to the best of its knowledge and belief nofunds have been received by the Company from any person or entity including foreignentity ("Funding Parties") with the understanding whether recorded in writingor otherwise that the Company shall whether directly or indirectly lend or invest inother persons or entities identified in any manner whatsoever by or on behalf of theFunding Party ("Ultimate Beneficiaries") or provide any guarantee security orthe like on behalf of the Ultimate Beneficiaries; and (c) In our opinion and based on theaudit procedures we have considered reasonable and appropriate in the circumstances;nothing has come to our notice that has caused us to believe that the representationsunder sub-clause (a) and (b) contain any material misstatement. v. As stated in Note 47 tothe standalone financial statements - The dividend declared or paid during the year by theCompany is in compliance with section 123 of the Companies Act 2013.

(3) As required under sub section (5) of Section 143 of the Act incase of the Government Company we give in the "Annexure 3" a statement on thematters specified in the directions and sub-directions issued by office of the Comptrollerand Auditor General of India.

ANNEXURE 1 TO THE INDEPENDENT AUDITOR'S REPORT

[Referred to in paragraph 1 under ‘Report on Other Legal andRegulatory Requirements' in the Independent Auditor's Report of even date to themembers of the company on the Standalone Financial Statements for the year ended March 312022] Based on the audit procedures performed for the purpose of reporting a true and fairview on the Standalone Financial Statements of the Company and taking into considerationthe information and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit we report that: (i) (a) As per theinformation and explanations given to us (A) the Company has maintained proper recordsshowing full particulars including quantitative details and situation of Property Plantand Equipment and relevant details of Right of Use assets.

(B) the Company has maintained proper records showing full particularsof intangible assets;

(b) As per the information and explanations given to us the PropertyPlant and Equipment and Right of Use assets have been physically verified by themanagement at reasonable intervals which in our opinion is reasonable having regard tothe size of the Company and the nature of its assets. According to information andexplanations given to us no material discrepancies were noticed on such verification. (c)According to the information and explanation given to us and on the basis of ourexamination of records of the Company the title deeds of immovable properties recorded asfixed assets in the books of account of the Company are held in the name of the Companyexcept for the details given below for which no records were made available to us forverification and in respect of some properties the written agreements are not on thetraditional stamp papers however such agreements are written on green ledger papers andduly signed by the all concerned parties.

Land/ Building* Total number of Flats / Garage Leasehold/ Freehold/ Tittle deeds Gross Block as on March 31 2022 Net Block as on March 31 2022 Remarks
GONDAVALI APTS 10 Not Available 18.79 7.52 Share certificates are available.
CHITRAKOOT APTS 02 Not Available 4.56 0.71 Share certificates are available.
KAVITA APTS 1 Not Available 2.62 1.05 Share certificates are available.
LANDS END APTS 1 Not Available 2.76 0.51 Share certificates are available.
AJANTA APTS 1 Not Available 2.35 0.94 Share certificates are available.
RAJHANS APTS 1 Not Available 1.47 0.12 Share certificates are available.
SOMMERSET HOUSE 1 Not Available 4.20 0.77 Share certificates are available.
ANITA APTS (Garage) 1 Not Available 0.12 0.02 Share certificates are available.
ASHARYA APTS (Garage) 1 Not Available 0.16 0.01 Share certificates are available.
SATNAM APTS (Garage) 1 Not Available 0.10 0.02 Share certificates are not available.
VIJAY APTS (Garage) 3 Not Available 0.70 0.21 Share certificates are not available.

*All the above mentioned immovable assets are to be transferred toShipping Corporation Of India Land and Assets Limited pursuant to the proposed demergerscheme.

(d) As per the information and explanations given to us theCompany has not revalued its Property Plant and Equipment (including Right of Use assets)or intangible assets or both during the year. Accordingly reporting under clause 3 (i) (d)of the order is not applicable to the Company.

(e) As per the information and explanations given to us no proceedingshave been initiated or are pending against the company for holding any benami propertyunder the Benami Transactions (Prohibition) Act 1988 (45 of 1988) and rules madethereunder. Accordingly reporting under clause 3 (i) (e) of the order is not applicable tothe Company.

(ii)

(a) The inventory has been physically verified by the management duringthe year. In our opinion the frequency of verification is reasonable and the coverage andprocedure of such verification by the management is adequate. In our opinion the Companyis maintaining proper records and no material discrepancies were noticed on physicalverification of inventory during the year.

(b) In our opinion and according to the information and explanationgiven to us the Company has availed unsecured working capital limits in excess of fivecrore rupees from Banks. The returns or statements filed by the Company with banks as persanction terms are in agreement with the books of accounts of the Company.

(iii) The Company has made investments in provided any guarantee orsecurity or granted any loans or advances in the nature of loans secured or unsecured tocompanies firms Limited Liability Partnerships or any other parties as per detailsmentioned below:

a. DETAILS OF GUARANTEE SECURITY LOAN AND ADVANCES IN NATURE OF LOANS(Amount Rs.in lakhs)

Particulars Guarantees Security Loans Advances in nature of loans
Aggregate amount granted/ provided
during the year
Subsidiaries - Nil Nil 50.00 Nil
- Joint Ventures Nil Nil Nil Nil
Associates - Nil Nil Nil Nil
- Others Nil Nil 315.97 Nil
Balance outstanding as at balance
sheet date in respect of above cases:
Subsidiaries - Nil Nil 50.00 Nil
- Joint Ventures 5430.00 Nil 18540.00 Nil
- Associates Nil Nil Nil Nil
Others - Nil Nil 2398.91 Nil

b. The investments made guarantees provided security given and theterms and conditions of the grant of all loans and advances in nature of loans andguarantees provided are not prejudicial to the company's interest. c. In our opinionand according to the information and explanations given to us in respect of loans theschedule of repayment of principal and payment of interest has been stipulated and therepayments or receipts are regular. According to the information and explanations given tous there are no advances in the nature of loans during the year. In our opinion andaccording to the information and explanations given to us there are no overdue amountsfor more than ninety days. e. In our opinion and according to the information andexplanation given to us the Company has not granted any any loan or advance in the natureof loan granted which has fallen due during the year has been renewed or extended orfresh loans granted to settle the overdues of existing loans given to the same parties. f.The Company has granted loans either repayable on demand or without specifying any termsor period of repayments details for which have been mentioned below

(Amount Rs.in lakhs)

Related Parties

Particulars All Parties Promoters Joint Venture Subsidiary
Aggregate amount of loans/ advances in nature of loans:
- Repayable on demand (A) Nil Nil 18540.00 50.00
- Agreement does not specify any terms or period of repayment (B) Nil Nil Nil
(Repayable on demand as per agreement.) (Repayable on demand. Agreement not executed.)
Total (A+B) Nil Nil 18540.00 50.00
Percentage of loans/ advances in nature of loans to the total loans Nil Nil 99.73 0.27

(iv) Based on information and explanation given to us since theCompany has not advanced loans to the Directors/ to a Company in which the Directors areinterested the provisions of section 185 of the Act are not applicable to the Company.Further the Company has complied with the provisions of section 186 of the Act.

(v) In our opinion and according to the information and explanationsgiven to us the Company has not accepted any deposits nor amounts which are deemed to bedeposits from the public within the provisions of sections 73 to 76 of the Act and therules framed there under. Therefore clause 3(v) of the Order is not applicable to theCompany.

(vi) The Central Government has not prescribed the maintenance of costrecords for any of the business activities carried out by the Company under sub-section(1) of section 148 of the Act and the rules framed there under. Therefore clause 3(vi) ofthe Order is not applicable to the Company.

(vii)

(a) According to the information and explanation given to us theCompany is generally regular in depositing with appropriate authorities undisputedstatutory dues including Goods and Services Tax provident fund employees' stateinsurance income-tax sales-tax service tax duty of customs duty of excise valueadded tax cess and any other statutory dues applicable to it. There were no undisputedamounts payable in respect of Goods and Services Tax provident fund employees'state insurance income-tax sales-tax service tax duty of customs duty of excisevalue added tax cess and any other statutory dues applicable to it which wereoutstanding at the year end for a period of more than six months from the date theybecame payable.

(b) According to the information and explanation given to us statutorydues referred to in sub-clause (a) above which have not been deposited at the year-end onaccount of disputes are as follows:

(Amount Rs. in lakhs)

Name of the statute Nature of dues The Forum / Authority where Dispute is pending Period to which the amount relates Sum of Amount Involved Sum of Amount Paid Under Protest Sum of Unpaid Amount
Finance Act 1994 Service Tax CESTAT April 09 to June 2017 193834.11 3205.05 190629.06
Finance Act 1994 Service Tax Commissioner (Appeals) Oct 12 to Mar 13 479.86 13.03 466.83
Finance Act 1994 Service Tax Joint Commissioner LTU Oct 15 to Jun 17 472.33 18.00 454.33
AP VAT Act 2005 VAT CTO Bombay High FY 2011-12 FY 1993-94 FY 10.00 Nil 10.00
Sales Tax VAT Court/ Asst Comm(GVAT) 1994-95 & FY 2017-18 215.64 95.00* 120.64
Income Tax Act 1961 U/s 195 Bombay High Court FY 2003-04 to FY 2005-06 9820.00 Nil 9820.00
Income Tax Act 1961 Tax U/s 143(3) Bombay High Court FY 2004-05 1804.00 Nil 1804.00
Income Tax Act 1961 Tax U/s 147 Bombay High Court FY 2005-06 1619.00 Nil 1619.00
Income Tax Act 1961 Tax U/s 143(3) Bombay High Court FY 2006-07 2883.97 Nil 2883.97
Income Tax Act 1961 Tax U/s 143(3) ITAT Mumbai FY 2007-08 1010.34 Nil 1010.34
Income Tax Act 1961 Tax U/s 143(3) Bombay High Court FY 2008-09 104.00 Nil 104.00
Income Tax Act 1961 Tax U/s 143(3) ITAT Mumbai/ CIT (A) FY 2009-10 2523.15 Nil 2523.15
Income Tax Act 1961 Tax U/s 201(1) 201(1A) CIT(A) Mumbai FY 2010-11 2170.00 109.00 2061.00
Income Tax Act 1961 Tax U/s 143(3) CIT(A) Mumbai FY 2011-12 186.00 Nil 186.00
Income Tax Act 1961 Tax U/s 143(3) CIT(A) Mumbai FY 2012-13 # 1004.00 Nil 1004.00
Income Tax Act 1961 Tax U/s 143(3) CIT(A) Mumbai FY 2014-15 4991.00 851.00 4140.00
Income Tax Act 1961 Tax U/s 143(3) CIT(A) Mumbai FY 2015-16 # 2349.00 Nil 2349.00
Income Tax Act 1961 Tax U/s 143(3) CIT(A) Mumbai FY 2016-17 # 2368.00 Nil 2368.00
Income Tax Act 1961 Tax U/s 143(3) CIT(A) Mumbai FY 2018-19 # 31115.00 Nil 31115.00

*(According to the directions received from Bombay High Court inrespect of financial year 2017-18 the Company has deposited the amount of Rs.95 lakhswith the Prothonotary and Senior master of High Court until the issue is decided by theHon'ble court.)

# Refer Note No.28 for further details.

(viii) According to the information and explanations given to us therewere no transactions relating to previously unrecorded income that have been surrenderedor disclosed as income during the year in the tax assessments under the Income Tax Act1961 (43 of 1961). (ix) According to the information and explanations given to us (a) theCompany has not defaulted in repayment of loans or other borrowings or in the payment ofinterest thereon to any lender.

(b) the Company has not been declared willful defaulter by any bank orfinancial institution or other lender. (c) the Company has applied the term loans for thepurpose for which the loans were obtained. (d) the Company has not utilised the fundsraised on short term basis for long term purposes.

(e) the Company has not taken any funds from any entity or person onaccount of or to meet the obligations of its subsidiaries and joint ventures and hencereporting under clause 3(ix)(e) is not applicable.

(f) the Company has not raised loans on the pledge of securities heldin its subsidiaries and joint ventures during the year and hence reporting under clause3(ix)(f) is not applicable.

(x)

(a) The company has unutilized proceeds amounting to Rs. 13385 lakhsraised through further public offer (FPO) in the earlier years. During the year alsocompany has not utilized the same and the unutilized proceeds are kept in fixed deposits.(b) According to the information and explanations given to us the company has not madeany preferential allotment or private placement of shares or convertible debentures(fully partially or optionally convertible) during the year.

(xi)

(a) During the course of our examination of the books and records ofthe Company carried out in accordance with the generally accepted auditing practices inIndia and according to the information and explanations given to us we have neither comeacross any instance of fraud by the Company or any fraud on the Company noticed orreported during the year nor have we been informed of any such instance by themanagement. (b) During the year no report under sub-section (12) of section 143 of theCompanies Act has been filed by the auditors in Form ADT-4 as prescribed under rule 13 ofCompanies (Audit and Auditors) Rules 2014 with the Central Government.

(c) According to the information and explanations given to us theCompany has not received any whistle-blower complaints during the year.

(xii) In our opinion and according to the information and explanationsgiven to us the Company is not a Nidhi Company. Therefore paragraph 3(xii) (a) (b) and(c) of the Order are not applicable to the Company.

(xiii) According to the information and explanation given to us alltransactions entered into by the Company with the related parties are in compliance withsections 177 and 188 of Act where applicable and the details have been disclosed in theStandalone Financial Statements as required by the applicable accounting standards.

(xiv)

(a) In our opinion and according to the information and explanationsgiven to us the company has an internal audit system commensurate with the size andnature of its business.

(b) We have considered the internal audit reports for the year underaudit issued to the Company and till date in determining the nature timing and extentof our audit procedures.

(xv) In our opinion and according to the information and explanationsgiven to us the Company has not entered into any non-cash transactions with directors orpersons connected with them during the year and therefore paragraph 3(xv) of the Order isnot applicable to the Company.

(xvi)

(a) According to the information and explanation given to us theCompany is not required to be registered under section 45-IA of the Reserve Bank of IndiaAct 1934 and therefore paragraph 3(xvi) (a) of the Order is not applicable to theCompany.

(b) According to the information and explanation given to us there areno Non-Banking Financial or Housing Finance activities and therefore paragraph 3(xvi) (b)of the Order is not applicable to the Company.

(c) According to the information and explanation given to us thecompany is not a Core Investment Company (CIC) as defined in the regulations made by theReserve Bank of India and therefore paragraph 3(xvi) (c) of the Order is not applicableto the Company. (d) According to the information and explanation given to us the Groupdoes not have any CIC as part of the Group and hence clause 3(xvi)(d) of the order is notapplicable to the Company.

(xvii) On an overall examination of the financial statements and in ouropinion the Company has not incurred cash losses in the financial year and in theimmediately preceding financial year.

(xviii) During the year there has not been any resignation of thestatutory auditors and therefore paragraph 3(xviii) of the Order is not applicable to theCompany.

(xix) On the basis of the financial ratios ageing and expected datesof realization of financial assets and payment of financial liabilities other informationaccompanying the financial statements our knowledge of the Board of Directors andmanagement plans we are of the opinion that no material uncertainty exists as on the dateof the audit report that the company is not capable of meeting its liabilities existing atthe date of balance sheet as and when they fall due within a period of one year from thebalance sheet date. We however state that this is not an assurance as to the futureviability of the Company. We further state that our reporting is based on the facts up tothe date of the audit report and we neither give any guarantee nor any assurance that allliabilities falling due within a period of one year from the balance sheet date will getdischarged by the Company as and when they fall due.

(xx)

(a) There are no unspent amounts as on 31 March 2022 that are requiredto be transferred to a fund specified in Schedule VII of the Companies Act (the Act) incompliance with second proviso to sub section 5 of section 135 of the Act. This matter hasbeen disclosed in note 26(b) to the financial statements.

(b) According to the information and explanations given to us anyamount remaining unspent under section (5) of section 135 of Companies Act pursuant toany ongoing project has been transferred to special account in compliance with provisionof sub section (6) of section 135 of the said Act.

For V.Sankar Aiyar & Co. For CHOKSHI & CHOKSHI LLP
Chartered Accountants Chartered Accountants
FRN: 109208W FRN: 101872W/W100045
G. Sankar Kiran Bhoir
Partner Partner
Membership No.46050 Membership No.159960
UDIN: 22046050AINEER5377 UDIN: 22159960AINFJF2872
Place: Mumbai
Date: 06.05.2022

ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT

[Referred to in paragraph 2(f) under ‘Report on Other Legal andRegulatory Requirements' section in our Independent Auditor's Report of evendate to the members of The Shipping Corporation of India Limited on the StandaloneFinancial Statements for the year ended March 31 2022] Report on the Internal FinancialControls with reference to Standalone Financial Statements under clause (i) of sub-section3 of section 143 of the Companies Act 2013 ("the Act") We have audited theinternal financial controls with reference to Standalone Financial Statements of TheShipping Corporation of India Limited ("the Company") as of March 31 2022 inconjunction with our audit of the Standalone Financial Statements of the Company for theyear ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control with reference tofinancial statements criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting (the "Guidance Note") issued by the Instituteof Chartered Ac-countants of India ("ICAI"). These responsibilities include thedesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company'sinternal financial controls with reference to financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note and the Standards on Auditingspecified under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both issued by the ICAI. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls withreference to financial statements was established and maintained and if such controlsoperated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to financial statements andtheir operating effectiveness.

Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of internal financial controls withreference to financial statements assessing the risk that a material weakness exists andtesting and evaluating the design and operat-ing effectiveness of internal controls basedon the assessed risk. The procedures selected depend on the auditor's judgmentincluding the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls with reference to financial statements.

Meaning of Internal Financial Controls with reference to FinancialStatements

A company's internal financial control with reference to financialstatements is a process designed to provide reasonable assurance regard-ing thereliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. Acompany's internal financial control with reference to financial statements includesthose policies and procedures that (1) pertain to the maintenance of records that inreasonable detail accurately and fairly reflect the transactions and dispositions of theassets of the company; (2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with 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 pre-vention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could havea material effect on the financial statements.

Inherent Limitations of Internal Financial Controls with reference toFinancial Statements

Because of the inherent limitations of internal financial controls withreference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to financial statements to future periods are subject to the riskthat the internal financial controls with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

Opinion

In our opinion and to the best of our information and according toexplanations given to us the Company has in all material respects adequate internalfinancial controls with reference to financial statements and such internal financialcontrols with reference to financial statements were operating effectively as at March 312022 based on the internal control with reference to financial statements criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note issued by the ICAI.

For V.Sankar Aiyar & Co. For CHOKSHI & CHOKSHI LLP
Chartered Accountants Chartered Accountants
FRN: 109208W FRN: 101872W/W100045
CA G. Sankar CA Kiran Bhoir
Partner Partner
Membership No.46050 Membership No.159960
UDIN: 22046050AINEER5377 UDIN: 22159960AINFJF2872
Place: Mumbai
Date: 06.05.2022

ANNEXURE 3 TO THE INDEPENDENT AUDITOR'S REPORT

Annexure 3(a) - Directions under Section 143(5) of the Companies Act2013

On the accounts of The Shipping Corporation of India Limited for thefinancial year 2021-22

Sr. No. Directions Auditors' comments including Action taken wherever required to be taken Impact on the Accounts and financial statements
1 Whether the company has system in place to process all the accounting transactions through IT system? If No the implications of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications if any may be stated. The company has one Accounting System i.e. SAP and other major operating software's such as Danaos Afsys etc. All these software's are integrated with each other and there are no transactions which are accounted outside the IT System. No Impact
2 Whether there is any restructuring of an existing loan or cases of waiver/write off of debts /loans/interest etc. made by a lender to the company due to the company's inability to repay the loan? If yes the financial impact may be stated. As observed during the course of audit and explained to us there is no restructuring of an existing loan or cases of waiver/write off of debts / loans/interest etc. made by a lender to the company due to the company's inability to repay the loan. No Impact
3 Whether funds received/receivable for specific schemes from central/ state agencies were properly accounted for/ utilized as per its term and conditions? List the cases of deviation. As observed during the course of audit and explained to us the Company has received two subsidies in earlier years status of the same is as follows:-
a) During the financial year 2020-21 the Company has received subsidy amounting to Rs.21.10 crores for carrying out Cargo Shipping Service between India and Maldives and out of the above an amount of Rs. 8.03 crores has been utilised as per the terms and conditions specified in the sanction letter dated 10.08.2020. Impact
Further the unutilized amount of Rs. 13.07 crores has been disclosed as liability after adjusting the expenses net of income against the subsidy amount as on 31.03.2022. The balance amount is placed in Fixed Deposit and Interest earned against such deposit will be remitted to the Consolidated Fund of India after finalisation of accounts. Also the same is in compliance with the provisions of Ind AS 20 Government Grants.
b) Related to Myanmar Service the Company has accounted and utilised the grant as per its terms and conditions and the amount spent in excess of the grant amounting to Rs.4.67 crores is shown as receivable and provision for doubtful advances is created on the same. No Impact
5 Whether balance payable to Agents as at the year-end is correctly reflected under the "Liability" head in Balance Sheet? Yes as observed during the course of audit at the end of the year and explained to us where money is payable to the agent such balances are disclosed under the "Liability" head in the balance sheet subject to reconciliation with Agents. No Impact
For V.Sankar Aiyar & Co. For CHOKSHI & CHOKSHI LLP
Chartered Accountants Chartered Accountants
FRN: 109208W FRN: 101872W/W100045
CA G. Sankar CA Kiran Bhoir
Partner Partner
Membership No.46050 Membership No.159960
UDIN: 22046050AINEER5377 UDIN: 22159960AINFJF2872
Place: Mumbai
Date: 06.05.2022

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