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Shipping Corporation of India Ltd.

BSE: 523598 Sector: Infrastructure
NSE: SCI ISIN Code: INE109A01011
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OPEN 53.95
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VOLUME 87543
52-Week high 69.80
52-Week low 24.85
P/E 8.24
Mkt Cap.(Rs cr) 2,490
Buy Price 53.45
Buy Qty 32.00
Sell Price 53.45
Sell Qty 58.00
OPEN 53.95
CLOSE 53.00
VOLUME 87543
52-Week high 69.80
52-Week low 24.85
P/E 8.24
Mkt Cap.(Rs cr) 2,490
Buy Price 53.45
Buy Qty 32.00
Sell Price 53.45
Sell Qty 58.00

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 The ShippingCorporation of India Limited ("the Company") which comprise the Balance Sheetas at March 312019 the Statement of Profit and Loss (including Other ComprehensiveIncome) the Statement of Changes in Equity and the Statement of Cash Flows for the yearended on that date and a summary of the significant accounting policies and otherexplanatory information (hereinafter referred to as "the standalone financialstatements").

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2019 the profit and totalcomprehensive income 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 Companies Act 2013. Our responsibilities under those SAs arefurther described in the Auditor's Responsibilities for the Audit of the StandaloneFinan-cial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter

We draw attention to the following:

(i) We draw attention to Note No. 44 to the Financial Statements C&AG has raisedan observation relating to payment of Performance Related Pay (PRP) of Rs 11.03 crores forthe FY 2014-15. Audit observed that the company did not follow the DPE guidelines fordetermining the PBT for the FY 2014-15.The Company has submitted its response and thematter is under the consideration of C&AG and final outcome is awaited.

(ii) We draw attention to Note No. 45 to the Financial Statements the Company is inprocess of analyzing the probable impact of gratuity payable to its regular fleet officerswho have opted for Contract wages. On prudent basis gratuity liability has beenadequately provided in books of accounts.

(iii) We draw attention to Note No. 47 to the Financial Statements Trade Receivablesincluding reimbursables Trade Payables and Deposits are subject to the balanceconfirmations subsequent reconciliation and consequential adjustments if any as onMarch 312019.

Our Opinion is not modified in respect of these matters.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.

 

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" (new revenue accounting standard) We assessed the Company's process to identify the impact of adoption of the new 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 new 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 new 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 new 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 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.
We have performed the following procedures for verification of impairment testing of Fleets:
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. • 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.
The impairment loss if any is recognized in the Statement of Profit and Loss in the period in which impairment takes place. • Re-performed the valuation calculations; benchmarked the valuation model with generally accepted valuation techniques; compared historical estimates used by management to actual results.
We are able to conclude that the significant judgments are reasonable and free from bias as well as the appropriateness of the valuation models used and their consistent application.
3 The direct access of certain overseas foreian aaents to fund collected on account of freiaht and other charges. We assessed the Company's process to evaluate Agents on timely basis to identify the impact of on the revenue and collection of funds.
Liner division of SCI 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 SCI.

SCI depends on its agents for operation of Liner segment business.

• Company has conducted audit by external CA Firms of major overseas agents to whom direct access to collection of fund on account of freight & other charges have been given by the company in order to verify the performance and inspection of evidence in respect of operations.
Since all the activities are performed by the agents there is requirement of funds & also collection of incomes directly by agents & subsequent remittance to SCI which creates a risk on the part of the Company. • Company has also 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.
4 Evaluation of Dry Docking Cost & Repair Expenses of Vessels:- To assess the recognition of dry docking cost & repair cost we performed the following process:
As per Ind AS 116 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 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. • 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.
• 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.
A shipping company on periodic basis is required to bring all ships into dry dock for major inspection and overhaul. 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.
 

We are able to conclude that the repairs & dry-dock are reasonable and free from bias as well as the appropriateness of the dry-dock cost capitalized in the books of accounts.

Information Other than the Standalone Financial Statements and Auditors' Report Thereon

The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the standalone financial statements and our auditor's report thereon.

Our opinion on the standalone financial statements does not cover the other informationand we will 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.

Management's Responsibility for the Standalone Financial Statements

The Company's management and Board of Directors are responsible for the matters statedin section 134(5) of the Companies Act 2013 with respect to the preparation of thesestandalone financial statements that give a true and fair view of the state of affairsprofit / loss (including other comprehensive income) changes in equity and cash flows ofthe Company in accordance with the accounting principles generally accepted in Indiaincluding the accounting Standards specified under section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statement that givea true and fair view and are free from material misstatement whether due to fraud orerror.

In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

The Board of Directors is also responsible for overseeing the Company's financialreporting process.

Auditors' Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under Section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls with reference to standalone financial statements inplace and the operating effectiveness of such controls.

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

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditors' report. However

future events or conditions may cause the Company to cease to continue as a goingconcern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by 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 and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.

(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

(e) As per Notification No. G.S.R. 463 (E) dated June 5th2015 issued by Ministry ofCorporate Affairs Section 164 (2) as regards the ‘Disqualifications of Directors' isnot applicable to the Company since it is a Government Company.

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

(g) 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 in our opinionand to the best of our information and according to the explanations given to us:

1. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer Note No. 28 to the 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.

2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure-B" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.

3. As required under sub section (5) of Section 143 of the Act in case of theGovernment Company we give in the "Annexure-C" a statement on the mattersspecified in the directions and sub -directions issued by Office of the Comptroller andAuditor General of India.

 

For G. D. Apte & Co. For A. Bafna & Co.
Chartered Accountants Chartered Accountants
FRN: 100515W FRN.003660C
CA Chetan R. Sapre CA Mukesh Kumar Gupta
Partner Partner
ICAI Membership No. 116952 ICAI Membership No.073515
Place: Mumbai Place: Mumbai
Date: May 28 2019 Date: May 28 2019

"Annexure A" to Independent Auditors' Report

(Referred to in paragraph II (f) under ‘Report on Other Legal and RegulatoryRequirements' section of our report)

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

To the Members of

The Shipping Corporation of India Limited

In conjunction with our audit of the standalone financial statements of The ShippingCorporation of India Limited ("the Company") as of and for the year ended March31 2019 we have audited the Internal Financial Controls over financial reporting of theCompany as of that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (‘ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Act.

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 on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed 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 Institute of Chartered Accountants of India.

Those Standards and the Guidance Note require that we comply with ethical requirementsand plan and perform the audit to obtain reasonable assurance about whether adequateinternal financial controls over financial reporting was established and maintained and ifsuch controls operated effectively 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 auditors' 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 Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide 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) Pertains to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

2) Provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and

3) Provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial 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.

Qualified Opinion

According to the information and explanation given to us and based on our audit thefollowing material weaknesses have been identified in the operating effectiveness of theCompany's internal financial control over financial reporting as at March 312019.

a) The timely updation and monitoring of the master data with respect to FleetPersonnel needs to be strengthened.

b) The Control on the timely updation of telegram for booking of bunker consumption incorrect voyage & recovery from charterer needs to be strengthened.

c) System for Monitoring and Clearing of Vendor Accounts (Including Agent Prefunding)GR/IR Accounts should be done on timely basis and Legacy Balances should be reconciled.

d) The system has to ensure that the TDS is deducted either at the time of booking ofexpenses or while making the provisions at cut-off date.

In our opinion the Company has in all material respects maintained adequate internalfinancial controls over financial reporting as of March 31 2019 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 and except for the possible effects of the material weaknessesdescribed above on the achievement of objectives of the control criteria the internalfinancial controls over financial reporting of the company were operating effectively asat March 31 2019.

We have considered the material weaknesses identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the financialstatements of the company as of March 31 2019 and these material weaknesses do not affectour opinion on the Standalone Financial statements of the Company.

 

For G. D. Apte & Co. For A. Bafna & Co.
Chartered Accountants Chartered Accountants
FRN: 100515W FRN.003660C
CA Chetan R. Sapre CA Mukesh Kumar Gupta
Partner Partner
ICAI Membership No. 116952 ICAI Membership No.073515
Place: Mumbai Place: Mumbai
Date: May 28 2019 Date: May 28 2019

"Annexure B" to Independent Auditors' Report

(Referred to in paragraph I under ‘Report on Other Legal and RegulatoryRequirements' section of our Independent Auditors' Report to the members of the Company onthe Financial Statements for the year ended March 312019)

(i) a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

b) As per the information and explanations given to us the fixed assets have beenphysically verified by the management at reasonable intervals which in our opinion isreasonable having regard to the size of company and nature of its business.

c) According to the information and explanations given to us and on the basis of ourexamination of records of the company the title deeds for all immovable properties areheld in the name of the Company except as mentioned in the Table No.1 for which norecords were made available to us for verification.

(Amount in lakhs)

 

Apartment Name No Of Flats Gross Block Net Block as on 31.03.19 Title Deeds Share Certificates
GONDAVALI APTS 10 18.79 8.14 Not Available Available
CHITRAKOOT APTS 2 4.57 0.86 Not Available Available
KAVITA APTS 1 2.62 1.14 Not Available Available
LANDS END APTS 1 2.76 0.60 Not Available Available
AJANTA APTS 1 2.35 1.02 Not Available Not Available

(ii) The physical verification of inventories has been conducted at reasonableintervals by the management during the year. No material discrepancies were noticed onsuch verification.

(iii) The Company has granted loans to four Body Corporates covered in the registermaintained under section 189 of the Act.

a) The terms and conditions of the grant of such loans are not prejudicial to thecompany's interest

b) In the case of loans granted the terms of arrangement do not stipulate anyrepayment schedule and the loans are repayable on demand. Payment of interest has beenstipulated and the receipts thereof are regular except in case of loan granted to jointventure company India LNG Transport Company (No. 3) Limited interest instalment amountingto Rs 280.32 Lakhs for the period December 29 2018 to March 28th 2019 due onMarch 29 2019 has not been received by the company.

c) There are no overdue amounts for more than ninety days in respect of the loansgranted.

(iv) According to information and explanation given to us and in our opinion theCompany has not advanced loans to the Directors/ to a Company in which the Directors areinterested to which the provisions of section 185 of the Act apply. The Company hascomplied with the provision of Section 186 to the extent applicable.

(v) In respect of deposits accepted in our opinion and according to the informationand explanations given to us directives issued by the Reserve Bank of India and theprovisions of section 73 to 76 of the Act or any other relevant provisions of the Actand the rules framed there under are not applicable and hence not commented upon.

(vi) To the best of our knowledge and as explained the Central Government has notspecified the maintenance of cost records under clause 148(1) of the Companies Act 2013for the Company and therefore the provisions of clause (vi) of the order are notapplicable to the company.

(vii) a) According to the records of the Company verified by us we report that theCompany is generally regular in payment of undisputed statutory dues including ProvidentFund Employees' State Insurance Income Tax Sales Tax Service Tax Duty of CustomsDuty of Excise Value Added Tax Cess and other statutory dues with the appropriateauthorities except

According to the information and explanations given to us following undisputed amountsof provident fund were in arrears as at March 31 2019 for a period of more than sixmonths from the date they became payable.

 

Nature of the Statute Nature of the Dues Amount (in Rs.) Period to which the amount relates Due Date Date of Payment
The Seamen's Provident Fund Act 1966 Employee's Contribution 58845 FY 2015-2019 Various Dates 22/05/2019
The Seamen's Provident Fund Act 1966 Employer's Contribution 58845 FY 2015-2019 Various Dates 22/05/2019
Employees Provident Fund Act 1952 Employee's Contribution 113681 FY 2014-2019 Various Dates 22/05/2019
Employees Provident Fund Act 1952 Employer's Contribution 113681 FY 2014-2019 Various Dates 22/05/2019
TOTAL 345052

b) According to the information and explanations given to us there are no dues ofduty of Customs and Excise which have not been deposited with the appropriateauthorities on account of any dispute. However according to information and explanationgiven to us the following dues in respect of Income Tax Sales Tax Service Tax and ValueAdded Tax which have not been deposited on account of dispute:

Amount (Rs. in Lakhs

 

Sr  No Name Of The Statute Nature Of The Dues The Forum/Authority Where Dispute Is Pending Financial Year Sum of Amount Involved Sum of Amount Paid Under Protest Sum of Unpaid Amount
1 Finance Act 1994 Service tax CESTAT April 09 to Sep 2015 86350 3099 83251
2 Finance Act 1994 Service tax Commissioner (A) July 12 to Sep 15 8 0 8
3 Finance Act 1994 Service tax Commissioner LTU Oct 09 to Sep 14 76474 0 76474
4 Finance Act 1994 Service tax Joint Commissioner LTU Oct 08 to Sep 12 134 1 133
5 Income Tax Act 1961 Tax U/s 143(3) Bombay High Court 2004 to 2007 3707 0 3707
6 Income Tax Act 1961 Tax U/s 143(3) CIT(A) Mumbai 2009-10 2011-12 2012-13 & 2014-15 5800 851 4949
7 Income Tax Act 1961 Tax U/s 143(3) ITAT Mumbai 2007-08 1013 0 1013
8 Income Tax Act 1961 Tax U/s 147 CIT(A) Mumbai 2010-11 38 14 24
9 Income Tax Act 1961 Tax U/s 147 ITAT Mumbai 2004-05 & 2005-06 2524 0 2524
10 Income Tax Act 1961 Tax U/s 201(1) 201(1A) CIT(A) Mumbai 2011-12 2170 109 2061
11 Income Tax Act 1961 U/s 195 Bombay High Court 2003-04 & 2005-06 9820 0 9820
12 AP VAT Act 2005 VAT CTO 2011-12 10 0 10
13 Sales Tax VAT Bombay High Court 1993-941994-95 & 2017-18 131 0 131
TOTAL 188179 4074 184105

(viii) According to the information and explanations given to us we are of the opinionthat the company has not defaulted in repayment of loans or borrowings to financialinstitutions and banks. The company has not issued any debentures.

(ix) The Company has unutilized proceeds amounting to Rs. 13385 Lakhs raised throughFurther Public Offer (FPO) in the earlier years. During the year the company has notutilized the same and the unutilized proceeds are kept in fixed deposits. In our opinionthe term loans have been applied for the purpose for which those have been raised.

(x) We report that certain complaints have been received by the vigilance division ofthe company for the reporting period for which the investigations are under process. Weneither came across any instance of fraud by the company nor any fraud on the company byits officer or employees were noticed or reported during the year or have been informed ofany such case by the management.

(xi) The Company is a Government Company and the provisions of section 197 are notapplicable to the company. Therefore clause (xi) of the said order is not applicable tothe company.

(xii) In our opinion the company is not a Nidhi Company. Therefore clause (xii) of thesaid order is not applicable to the company.

(xiii) According to the information and explanations given by the managementtransactions with the related parties are in compliance with sections 177 and 188 ofCompanies Act 2013 where applicable and the details have been disclosed in the financialstatements etc. as required by the applicable accounting standards.

(xiv) The company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review andtherefore clause (xiv) of the said order is not applicable to the company.

(xv) The company has not entered into any non-cash transactions with the directors orpersons connected with him and therefore the clause (xv) of the said order is notapplicable to the company.

(xvi) According to the information and explanation provided by the management thecompany is not required to be registered under section 45-IA of the Reserve Bank of IndiaAct 1934.

For G. D. Apte & Co. For A. Bafna & Co.
Chartered Accountants Chartered Accountants
FRN: 100515W FRN.003660C
CA Chetan R. Sapre CA Mukesh Kumar Gupta
Partner Partner
ICAI Membership No. 116952 ICAI Membership No.073515
Place: Mumbai Place: Mumbai
Date: May 28 2019 Date: May 28 2019

"Annexure C" to Independent Auditors' Report

Directions under Section 143(5) of the Companies Act 2013

On the Accounts of The Shipping Corporation of India Ltd. for the year 2018-19

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 & other major operating softwares such as Danaos & Afsys etc. All these softwares are integrated with each other & 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 explained to us and observed during the course of audit 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 explained to us & observed during the course of audit the Company has received two subsidies in earlier years status of the same is as follows:- No Impact
a) Related to Myanmar Service Company has accounted and utilised the grant as per its term and conditions and amount spent exceeding the grant amounting to Rs. 4.67 Crores is shown as receivable and provision for doubtful advances is created on the same
b) Related to new service from India to Bangla- desh-Myanmar and Sri Lanka- Maldives. SCI has received the grant and is still awaiting directions from Ministry to start the service or refund the grant. Company has initiated the process of remitting the interest earned on the grant to the Ministry. (Refer Note No. 43 of Financial statements )

Sub-directions under Section 143(5) of the Companies Act 2013 in respect of theShipping Corporation of India Limited for the year 2018-19

 

Sub-directions Auditors' comments including Action taken wherever required to be taken Impact on the Accounts and financial statements
1 Whether Substantial portion of Revenue Booked/ invoices raised are reversed or cancelled? As explained to us and observed during the course of audit No substantial portion of revenue booked / invoices raised by company are reversed or cancelled except that in normal course of business and due to provision created at the cut-off date as per relevant Ind AS. No Impact
2 State the system for providing Impairment to vessels To determine Impairment of each vessel carrying amount of the vessel is compared with its recoverable amount. Where the carrying amount of the vessel exceeds the recoverable amount an impairment loss for the vessel is recognized. Recoverable amount of the vessel is higher of its Market Value & Value in use as on the balance sheet date. Market value of vessels at Balance Sheet date are based on valuation reports provided by reputed international Valuation firms. Value in use of vessels is based on projections of Future Cash inflows & Outflows generated from the use of the vessel and its subsequent sale. Cash inflows and outflows used in the calculation are based on market report of research and advisory firms like Drewry (where available) as well as best available management estimates. Cash Inflow on sale of vessels is considered as their Scrap Value at the end of their useful life. The Value in use of Vessels as on the reporting date is arrived at by discounting the Net Cash Inflows by using Weighted Average Cost of Capital (WACC). No Impact
3 State the system for bifurcating repairs and expense for capitalization and charging to revenue. Whether repairs and expenses which do not add to useful life of vessels are capitalized? As per the company's accounting policy expenses incurred during the planned dry docking of vessels and other major repair expenses of vessels like replacement of auxiliary engine etc. are capitalised in the asset's carrying amount if it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably as per the recognition criteria of Ind AS 16. All other repairs and expenses that do not meet the recognition criteria of Ind AS 16 are charged to revenue. As observed during the course of audit repairs and other expenses which do not add to useful life of vessels are not capitalised by the Company and the same are charged to revenue. No Impact
4 Whether Title to all investments /FD actually available with the Company? Title to all Investments including investments in shares & fixed deposits are available with the company. No Impact
5 Whether balance payable to Agents as at the yearend is correctly reflected under the "Liability" head in Balance Sheet? Yes As explained & observed during the course of audit at the end of the year the company has a process to identify the Agent balances as receivable or payable. Agents having Credit balances i.e. where money is payable to the agent such balances are disclosed under the "Liability" head in the balance sheet. No Impact
For G. D. Apte & Co. For A. Bafna & Co.
Chartered Accountants Chartered Accountants
FRN: 100515W FRN.003660C
CA Chetan R. Sapre CA Mukesh Kumar Gupta
Partner Partner
ICAI Membership No. 116952 ICAI Membership No.073515
Place: Mumbai Place: Mumbai
Date: May 28 2019 Date: May 28 2019