To the members of seamec limited
Report on the audit of the standalone financial statements
We have audited the accompanying standalone financial statements of seamec limited("the company") which comprise the standalone balance sheet as at march 312020 and the standalone statement of profit and loss (including other comprehensiveincome) the standalone statement of cash flows and the standalone statement of changes inequity for the year then ended and notes to the standalone financial statementsincluding a summary of significant accounting policies and other explanatory information(hereinafter referred to as "the standalone financial statements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the companies act 2013 ("the act") in the manner so required and give a 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 2020 and its profit (includingother comprehensive income) changes in equity and its cash flows for the year ended onthat date.
2. Basis for opinion
We conducted our audit of the standalone financial statements in accordance with thestandards on auditing (sas) specified under section 143(10) of the act. Ourresponsibilities under those standards are further described in the auditor'sresponsibility for the audit of the standalone financial statements section of our report.We are independent of the company in accordance with the code of ethics issued by theinstitute of chartered accountants of india (icai) together with the ethical requirementsthat are relevant to our audit of the standalone financial statements under the provisionsof the act and the rules made thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the icai's code of ethics. Webelieve that the audit evidence obtained by us is sufficient and appropriate to provide abasis for our audit opinion on the standalone financial statements.
3. Emphasis of matter
We draw attention to note 55 to the accompanying standalone financial statement whichstates that the impact of covid-19 pandemic situation remained insignificant and explainsthe uncertainties and the management's assessment of the financial impact due to thelockdown and other restrictions related to the covid-19 pandemic situation for which adefinitive assessment of the impact in the subsequent period is highly dependent uponcircumstances as they evolve.
Our opinion is not modified in respect of this matter.
4. Key audit matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. 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 |
|A Carrying value useful life of the fleet (vessel) & fleet equipments of the Company amortization of dry dock Cost and cost of modification ||Our procedures in relation to the depreciable lives of the property plant And equipment included: |
|As on 31.03.2020 the net book value Of fleet and fleet equipments stands at Inr 1255.45 million this includes value Of vessels and value of equipments and Dry dock cost. The management reviews the estimated Useful life and the residual value of Property plant and equipment annually. Refer note 3 (a) (c) (d) and 4 of Standalone financial statements. ||Testing the key controls over the management's judgment in relation To the accounting estimates of the useful life of property plant and Equipment. |
| ||Assessing the management's estimates on the useful life of property Plant and equipment with reference to technical evaluation Practice followed by peers and useful life prescribed in relevant Schedule of companies act. |
| ||We have also assessed the company's process of assessing the Impairment requirement the revenue and cost related to each Vessel has been analyzed for the purpose of any sign with regard to Impairment. |
| ||We have also assessed the recognition of cost of modification Based on recognition criterion given in relevant ind as. |
|B Expected credit loss on trade Receivable ||Our procedures in relation to the expected credit loss On trade Receivable included: |
|As on 31.03.2020 trade receivables Stand at inr 1535.12 million after Providing expected credit loss Amounting to inr 1557.47 million. ||Testing with regard to trade receivable includes testing controls over Billing and collections ageing analysis etc. |
|Refer note 3 (t) and 8 and 15 of Standalone financial statements. ||Test the completeness and accuracy of the data |
| ||critically assessed and tested the significant judgments used by Management based on past experience |
| ||analyzing the key terms of contract with customers to ascertain Provision required for expected credit loss. |
5. Information other than the standalone financial statements and auditor'sreport thereon
The company's management and board of directors are responsible for the otherinformation. The other information comprises the information included in company's annualreport but does not include the standalone financial statements and our auditor's reportthereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not and 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.If based on the work performed we conclude that there is a material misstatement of thisother information we are required to report that fact. We have nothing to state in thisregard.
6. Responsibilities of management and Those charged with governance for thestandalone financial statements
The company's management and board of directors are responsible for the matters statedin section 134(5) of the act with respect to the preparation of these standalone financialstatements that give a true and fair view of the financial position financial performanceincluding other comprehensive income changes in equity and cash flows of the company inaccordance with the ind as and other accounting principles generally accepted in india.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the act for safeguarding the assets of the company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalonefinancial statement that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the standalone financial statements management and board of directors areresponsible 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.
The board of directors is also responsible for overseeing the company's financialreporting process.
7. Auditors' responsibility for the audit of the Standalone financial statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditors' report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith sas will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.
As part of an audit in accordance with sas we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalone financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal financial control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the act we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by the management.
Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast 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 tocontinue as a going concern.
Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
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 auditors' 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.
8. Report on other legal and regulatory Requirements
a. As required by the companies (auditors' report) order 2016 ("theorder") issued by the central government of india in terms of section 143(11) of thecompanies act 2013 we give in the "annexure a" a statement on thematters specified in paragraphs 3 and 4 of the order to the extent applicable.
B. As required by section 143(3) of the act we report that:
I. 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.
Ii. 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.
Iii. The standalone balance sheet the standalone
Statement of profit and loss including other comprehensive income standalone statementof changes in equity and the standalone cash flow statement dealt with by this report arein agreement with the books of account.
Iv. In our opinion the aforesaid standalone financial statements comply with theindian accounting standards specified under section 133 of the act read with the companies(indian accounting standards) rules 2015 as amended.
V. On the basis of the written representations received from the directors as on march31 2020 taken on record by the board of directors none of the directors is disqualifiedas on march 31 2020 from being appointed as a director in terms of section 164 (2) of theact.
Vi. With respect to the adequacy of the internal financial controls with reference tofinancial statement of the company and the operating effectiveness of such controls referto our separate report in "annexure b".
Vii. With respect to the other matters to be included in the auditor's report inaccordance with rule 11 of the companies (audit and auditors) rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous: a. The company has disclosed the impact of pending litigations on its financialposition in its standalone financial statement refer note 39; b. The company didnot have any long-term contracts including derivative contract for which there were anymaterial foreseeable losses; c. There were no amounts which were required to betransferred to the investor education and protection fund by the company. C. With respectto the other matters to be included in
Auditor's report in accordance with the requirements of section 197 (16) of the act asamended in our opinion and to the best of our informations and according to theexplanations given to us the remuneration paid by the company to its directors during theyear is in accordance with the provisions of the section 197 of the act.
Annexure a to the auditor's report
The annexure referred to in independent auditors' report to the member of the seaemclimited ("the company") on the standalone financial statement for the year endedmarch 31 2020 we report that;
(i) fixed assets a) the company has maintained proper records showing fullparticulars including quantitative details and situtation of its fixed assets.
B) the company has a regular program of physical verification to cover all the items offixed assets in a phased manner which in our opinion is reasonable having regard to thesize of the company and the nature of its assets. Pursuant to the program certain fixedassets were physically verified by the management during the year. According to theinformation and explanations given to us no material discrepancies were noticed on suchverification.
C) according to the information's and explanations given to us there is no immovableproperty in the books of accounts of the company. Thus the provision of clause 3(i)(c) ofthe order is not applicable to the company
The management has conducted physical verification of inventory at reasonable intervalsduring the year (year end veriifcation of inventory is carried out by the managementsubequent to balance sheet date due to pandemic situation) and no material discrepancieswere noticed on such physical verification.
(iii) loans given
According to the information and explanations given to us during the year the companyhas not granted any secured or unsecured loans to companies firms limited liabilitypartnerships or other parties covered in the register maintained under section 189 of thecompanies act 2013 and there are no opening balances outstanding with any of them.Accordingly reporting under paragraph 3 (iii) (a) (b) and (c) of the order is notapplicable to the company.
(iv) compliance of sec. 185 & 186
According to the information and explanations given to us the company has not givenloans or guarantees to directors or other persons in which a director is interested orprovide security in connection with a loan and as such section 185 of the companies act isnot applicable. In our opinion and according to the information and explanation given tous the company has made investments in securities and given guarantee on behalf of itssubsidiary which is in compliance with the provisions of section 186 of the companiesact 2013.
(v) public deposit
The company has not accepted any deposits from the public during the year and therewere no such outstanding amount during the year. Accordingly reporting under paragraph 3(v) of the order is not applicable to the company.
(vi) cost records
To the best of our knowledge and according to the information and explanation providedto us the central government has not prescribed the maintenance of cost records under subsection (1) of section 148 of the companies act.
(vii) statutory dues
a) according to the information and explanations given to us and on the basis of ourexamination of the books of account the company has generally been regular in depositingits undisputed statutory dues including provident fund employees state insuranceincome-tax goods and service tax custom duty cess etc. There are no undisputed duespayable outstanding as on march 31 2020 for a period of more than six months from thedate they became payable.
B) according to the information and explanations given to us the following dues ofservice tax has not been deposited by the company on account of dispute;
|Name of the statute ||Nature of dues ||Amount (inr in million) ||Period to which Amount relates ||Forum where the dispute is pending |
|Finance act 1994 ||Service tax ||20.51 ||2014-15 ||Commissioner of gst and central excise |
|Finance act 1994 ||Service tax ||14.04 ||2013-14 to 2015-16 ||Commissioner of gst and central excise |
|Finance act 1994 ||Service tax ||38.51 ||2015-16 ||Commissioner of gst and central excise |
|Finance act 1994 ||Service tax ||22.53 ||2016-17 to april 2017- june 18 ||Commissioner of gst and central excise |
(ix) according to the information and explanations given to us and based on the recordsof the company examined by us the company has not defaulted in repayment of loans tobanks. The company did not have any loan from financial institutions or government andalso did not have any debentures outstanding during the year.
(x) the company didn't raise any money by way of initial public offer or further publicoffer or term loans during the year. Accordingly reporting under paragraph 3(ix) of theorder is not applicable to the company.
(xi) according to the information and explanation given to us and based on the auditprocedure performed by us we report that no fraud by the company or no fraud on thecompany by its officers or employees has been noticed or reported during the year.
(xii) according to information & explanations given to us the company has paidmanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of the section 197 read with schedule v to the companies act 2013.
(xiii) in our opinion and according to the information and explanations given to usthe company is not a nidhi company. Accordingly reporting under paragraph 3(xii) of theorder is not applicable to the company.
(xiv) as per the information and explanations given by the management all thetransactions with the related parties are in compliance with section 177 and 188 of theact where applicable and the details have been disclosed in the standalone financialstatements as required by the applicable accounting standards.
(xv) according to the information and explanations given to us the company has notmade any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year under review. Accordingly reporting underparagraph 3(xiv) of the order is not applicable to the company.
(xvi) as per the information and explanations given by the management the company hasnot entered into any non-cash transaction with directors or persons connected with him.Accordingly reporting under paragraph 3(xv) of the order is not applicable to thecompany.
(xvii) as per the information and explanations given by the management company is notrequired to be registered under section 45-ia of the reserve bank of india act 1934.Accordingly reporting under paragraph 3(xvi) of the order is not applicable to thecompany.
Report on the internal financial controls with reference to financial statement underclause (i) of sub-section 3 of section 143 of the companies act 2013 ("theact") opinion
We have audited the internal financial controls with reference to financial statementof seamec limited ("the company") as of march 31 2020 in conjunction with ouraudit of the standalone financial statements of the company for the year ended on thatdate.
In our opinion to the best of our information and according to the explanations givento us the company has in all material respects an adequate internal financial controlssystem with reference to financial statement and such internal financial controls withreference to financial statement were operating effectively as at march 31 2020 basedon the internal control with reference to financial statement criteria established by thecompany considering the essential components of internal control stated in the guidancenote on audit of internal financial controls over financial reporting issued by theinstitute of chartered accountants of india.
Management's responsibility for internal financial controls
The board of directors of the company is responsible for establishing and maintaininginternal financial controls based on "the internal control with reference tofinancial statement criteria established by the company considering the essentialcomponents of internal control stated in the guidance note on audit of internal financialcontrols over financial reporting issued by the institute of chartered accountants ofindia (icai)". These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the companies act 2013.
Our responsibility is to express an opinion on the company's internal financialcontrols with reference to financial statement based on our audit. We conducted our auditin accordance with the guidance note on audit of internal financial controls overfinancial reporting (the "guidance note") issued by icai and the standards onauditing prescribed under section 143(10) of the companies act 2013 to the extentapplicable to an audit of internal financial controls. 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 statement was established and maintained and if such controlsoperated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to financial statement and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statement included obtaining an understanding of internal financial controlswith reference to financial statement assessing the risk that a material weakness existsand testing and evaluating the design and operating effectiveness of internal controlbased on the assessed risk. The procedures selected depend on the auditor's judgementincluding 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 and appropriate toprovide a basis for our audit opinion on the company's internal financial controls systemwith reference to financial statement.
Meaning of internal financial controls with reference to financial statement
A company's internal financial control with reference to financial statement is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control withreference to financial statement includes those policies and procedures that (1) pertainto the maintenance of records that in reasonable detail accurately and fairly reflectthe transactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent limitations of internal financial controls with reference to financialstatement
Because of the inherent limitations of internal financial controls with reference tofinancial statement including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statement to future periods are subject to the risk that theinternal financial control with reference to financial statement may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.