Selan Explorations Technology Ltd.
|BSE: 530075||Sector: Oil & Gas|
|NSE: SELAN||ISIN Code: INE818A01017|
|BSE 10:50 | 06 Oct||300.75||
|NSE 10:34 | 06 Oct||300.45||
|Mkt Cap.(Rs cr)||457|
|Mkt Cap.(Rs cr)||457.14|
Selan Explorations Technology Ltd. (SELAN) - Auditors Report
Company auditors report
To the Members of Selan Exploration Technology Limited
Report on the Financial Statements
We have audited the accompanying Ind AS financial statements of SELANEXPLORATION TECHNOLOGY LIMITED ("the Company") which comprise the Balance Sheetas at 31 March 2022 the Statement of Profit and Loss (including Other ComprehensiveIncome) the Cash Flow Statement and the Statement of Changes in Equity for the year thenended and a summary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid Ind AS financial statements give the informationrequired by the Companies Act 2013 ("the Act") in the manner so required andgive a true and fair view in conformity with the Indian Accounting Standards prescribedunder section 133 of the Act read with relevant rules issued thereunder and otheraccounting principles generally accepted in India:
a) of the state of affairs of the Company as at 31 March 2022;
b) of the profit (including Other Comprehensive Income) for the yearended on that date;
c) of the changes in equity for the year ended on that date; and
d) of the cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Act. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of the IndAS financial 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 (ICAI) together with the independence requirements that are relevant to our audit ofthe Ind AS financial statements under the provisions of the Act and the Rules madethereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the ICAI's Code of Ethics. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our opinion on the IndAS financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the Ind AS financial statements of the currentperiod. These matters were addressed in the context of our audit of the Ind AS financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matter described below to be thekey audit matters to be communicated in our report.
Key Audit Matter
Valuation of inventory of crude oil
We identified valuation of inventory of crude oil as a key audit matterbecause inventory valuation involves management judgement and there is a risk that theremay be undervaluation / overvaluation of closing inventory with related implications onthe statement of profit and loss for the year.
(Refer Note No. 3.5 and 11 to the Financial Statements)
Auditors' Response Principal Audit Procedures
Our audit procedures amongst others included the following:
We obtained an understanding and tested the designimplementation and operating effectiveness of management's key internal control overinventory of crude oil.
We checked the method of valuation of inventory employed by theCompany.
We checked whether the accounting policy employed by the Companywith respect to valuation of inventory was in accordance with Ind AS 2.
We assessed the inventory valuation processes and relatedcontrols.
We obtained the closing stock certificate and quantative detailsof production and sales along with the details of cost and market value of inventories.
We also performed procedures to address the risk of error inaccounting records and the ability to override controls.
We compared on sample basis the costs incurred on extraction ofcrude oil with supporting documents.
We verified the calculation of cost and Net Realizable value(NRV).
The accounting records were checked for arithmetical accuracy.
We consider that the valuation of closing inventory of crude oil andits related disclosures are reasonable and adequate.
Information Other than the Standalone Ind AS Financial Statements andAuditor's Report thereon
The Company's Board of Directors is responsible for the preparation ofthe other information. The other information comprises the information included in theManagement Discussion and Analysis Directors' Report including Annexures to Directors'Report Corporate Governance and Shareholder's Information but does not include thestandalone Ind AS financial statements and our auditor's report thereon. Our opinion onthe standalone Ind AS financial statements does not cover the other information and we donot express any form of assurance/conclusion thereon. In connection with our audit of thestandalone Ind AS 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 during thecourse of our audit or otherwise appears to be materially misstated. If based on the workwe have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.
Management's Responsibility for the Standalone Ind AS FinancialStatements
The Company's Board of Directors is responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these Ind AS financialstatements that give a true and fair view of the state of affairs (financial position)profit or loss (financial performance including Other Comprehensive Income) cash flowsand changes in equity of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) specifiedunder section 133 of the Act read with relevant rules issued thereunder.
This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding of the assets of theCompany and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe Ind AS financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the Ind AS financial statements Management is responsiblefor assessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so. The Board of Directors are alsoresponsible for overseeing the Company's financial reporting process.
Auditors' Responsibility for the Audit of the Standalone Ind ASFinancial Statements
Our objectives are to obtain reasonable assurance about whether the IndAS financial statements as a whole are free from material misstatement whether due tofraud or error and to issue an auditor's report that includes our opinion. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these Ind AS standalone financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of Ind ASfinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal financial controls relevantto the audit in order to design audit procedures that are appropriate in thecircumstances. Under section 143(3)(i) of the Act we are also responsible for expressingour opinion on whether the Company has adequate internal financial controls system 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 the 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 Ind AS 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 conditions maycause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of theInd AS financial statements including the disclosures and whether the Ind AS financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the Ind AS financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the Ind AS financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the Ind AS financial statements.
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.
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 sub-section(11) of Section 143 of the Act and on the basis of such checks of the books and recordsof the Company as we considered appropriate and according to the information andexplanation given to us we give in "Annexure A" a statement on the mattersspecified in the paragraph 3 and 4 of the said Order.
2. As required by section 143(3) of the Act we report that:
(a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit;
(b) In our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books;
(c) The Balance Sheet the Statement of Profit and Loss (includingOther Comprehensive Income) the Cash Flow Statement and the Statement of Changes inEquity dealt with by this Report are in agreement with the books of account;
(d) In our opinion the aforesaid Ind AS financial statements complywith the Indian Accounting Standards specified under Section 133 of the Act read with theCompanies (Indian Accounting Standards) (Amendment) Rules 2016;
(e) On the basis of written representations received from the Directorsas on 31 March 2022 and taken on record by the Board of Directors none of the Directorsis disqualified as on 31 March 2022 from being appointed as a Director in terms of Section164(2) of the Act.
(f) With respect to the adequacy of the Internal financial controlsover financial reporting of the Company and the operating effectiveness of such controlsrefer to our separate Report in Annexure B.
(g) With respect to the other matters to be included in the Auditor'sReport in accordance with the requirements of section 197(16) of the Act as amended:
In our opinion and to the best of our information 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 section 197 of the Act.
(h) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 asamended by the Companies (Audit and Auditors) Rules 2017 in our opinion and to the bestof our knowledge and information and according to the explanations given to us:
(i) The Company does not have any pending litigation which would impactits financial position;
(ii) There is no long-term contracts including derivative contractsrequiring provision for material foreseeable losses under the applicable law or accountingstandards;
(iii) There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.
(iv) (a) The Management has represented that to the best of itsknowledge and belief no funds (which are material either individually or in theaggregate) have been advanced or loaned or invested (either from borrowed funds or sharepremium or any other sources or kind of funds) by the Company to or in any other person orentity including foreign entity ("Intermediaries") with the understandingwhether recorded in writing or otherwise that the Intermediary shall whether directlyor indirectly lend or invest in other persons or entities identified in any mannerwhatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provideany guarantee security or the like on behalf of the Ultimate Beneficiaries;
(b) The Management has represented that to the best of its knowledgeand belief no funds (which are material either individually or in the aggregate) havebeen received by the Company from any person or entity including foreign entity("Funding Parties") with the understanding whether recorded in writing orotherwise 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 or the like on behalf of the UltimateBeneficiaries;
(c) Based on the audit procedures that have been considered reasonableand appropriate in the circumstances nothing has come to our notice that has caused us tobelieve that the representations under sub-clause (i) and (ii) of Rule 11(e) as providedunder (a) and (b) above contain any material misstatement.
(v) (a) The final dividend proposed in the previous year declared andpaid by the Company during the year is in accordance with Section 123 of the Act asapplicable.
(b) The Board of Directors of the Company have proposed final dividendfor the year which is subject to the approval of the members at the ensuing Annual GeneralMeeting. The amount of dividend proposed is in accordance with section 123 of the Act asapplicable.
ANNEXURE - A: REFERRED TO IN THE INDEPENDENT AUDITORS' REPORT TO THEMEMBERS OF SELAN
exploration technology limited on the accounts for the year ENDED 31march 2022
(i) (a) (A) The Company has maintained proper records showing fullparticulars including quantitative details and situation of Property Plant andEquipment.
(B) The Company has maintained proper records showing full particularsof Intangible Assets.
(b) The Management has physically verified the fixed assets during theyear and the frequency of which in our opinion is reasonable. No material discrepancieswere noticed on such physical verification.
(c) The Company does not own any Land and hence clause 3(i) (c) is notapplicable to the Company.
(d) The Company has not revalued its Property Plant and Equipment(including Right of Use assets) or intangible assets or both during the year.
(e) No proceedings have been initiated during the year or are pendingagainst the company as at 31 March 2022 for holding any Benami property under the"Benami Transactions (Prohibition) Act 1988 and rules made thereunder.
(ii) (a) The inventory of the Company consisting of crude oil sparesand consumables have been physically verified once during the year. In our opinion thefrequency of verification is reasonable. No material discrepancies were noticed on suchphysical verification.
(b) The Company has not been sanctioned working capital limits inexcess of ' 5 crores in aggregate from banks or financial institutions on thebasis of security of current assets. Hence reporting under clause 3 (ii) (b) of the orderis not applicable to the Company.
(iii) The Company has made investments but has not provided anyguarantee or security or granted any loans or advances in the nature of loans secured orunsecured to Companies Firms Limited Liability Partnerships or any other parties.Therefore the provisions of clause 3(iii) (a) (c)
(d) (e) & (f) of the Order are not applicable to the Company andfor clause 3(iii) (b) the investments made during the year in our opinion are primafacie not prejudicial to the Company's interest.
(iv) The Company has not given any loan or nor furnished any guaranteenor provided any security to the parties covered under section 185 of the Companies Act2013. The Company has not given any loans or made any investments or provided guaranteesor security covered under section 186 of the Companies Act 2013. Hence clause 3(iv) isnot applicable to the Company.
(v) The Company has not accepted any deposits from the public withinthe meaning of sections 73 to 76 of the Act and the rules framed there under. We areinformed by the Management that no order has been passed by the Company Law Board orNational Company Law Tribunal or Reserve Bank of India or any court or any other Tribunalin this regard.
(vi) We have broadly reviewed the books of accounts maintained by theCompany pursuant to the rules made under sub-section (1) of Section 148 of the Act formaintenance of cost records and are of the opinion that prima facie the prescribedaccounts and records have been maintained. We have however not made a detailedexamination of cost records with a view to determine whether they are accurate andcomplete.
(vii) (a) According to the information and explanations given to us andaccording to the records of the Company examined by us in our opinion the Company hasbeen generally regular in depositing with the appropriate authorities undisputed statutorydues including Provident Fund Employees' State Insurance Income-Tax Sales Tax ServiceTax Duty of Custom Duty of Excise Value Added Tax Cess Goods and Service Tax andother statutory dues wherever applicable.
According to the information and explanations furnished to us noundisputed amounts payable in respect of aforesaid dues were outstanding as on 31 March2022 for a period of more than six months from the date they became payable.
(b) According to the records of the Company there are no disputed duesrelating to Income-Tax Sales Tax Service Tax duty of Excise Value Added Tax Goods andService Tax or Cess which have remained unpaid as on 31 March 2022.
(viii) There were no transactions relating to previously unrecordedincome that have been surrendered or disclosed as income during the year in the taxassessments under the Income Tax Act 1961 (43 of 1961).
(ix) (a) The Company has not taken any loans or other borrowings fromany lender. Hence reporting under clause 3(ix)(a) of the Order is not applicable.
(b) The Company has not been declared wilful defaulter by any bank orfinancial institution or other lender.
(c) The Company has not taken any term loan during the year and thereare no outstanding term loans at the beginning of the year and hence reporting underclause 3(ix)(c) of the Order is not applicable.
(d) On an overall examination of the financial statements of theCompany funds raised on short term basis have prima facie not been used during the yearfor long-term purposes by the Company.
(e) The Company does not have any subsidiary associates or jointventure and hence clause 3(ix) (e) is not applicable to the Company.
(f) The Company has not raised any loans during the year and hencereporting on clause 3(ix)(f) of the Order is not applicable.
(x) (a) The Company had not raised money by way of initial public offeror further public offer (including debt instruments) during the year and hence clause3(ix) (a) is not applicable to the Company.
(b) During the year the Company has not made any preferentialallotment or private placement of shares or convertible debentures (fully or partly oroptionally) and hence reporting under clause 3(x)(b) of the Order is not applicable.
(xi) (a) Based on the audit procedures adopted and information andexplanations furnished to us by the management no case of material fraud on or by theCompany has been noticed or reported during the course of our audit.
(b) No report under sub-section (12) of section 143 of the CompaniesAct has been filed in Form ADT-4 as prescribed under rule 13 of Companies (Audit andAuditors) Rules 2014 with the Central Government during the year and upto the date ofthis report.
(c) No whistle blower complaints were received by the Company duringthe year (and upto the date of this report)
(xii) The Company is not a nidhi company. Hence the provisions ofclause 3(xii) of the Order are not applicable to the Company.
(xiii) In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of section 177 and section 188of the Act in respect of transactions with the related parties and the details have beendisclosed in the Ind AS financial statements as required by the applicable Indianaccounting standards.
(xiv) (a) In our opinion the Company has an adequate internal auditsystem commensurate with the size and the nature of its business.
(b) We have considered the internal audit reports for the year underaudit issued to the Company during the year and till date in determining the naturetiming and extent of our audit procedures.
(xv) According to the information and explanations given to us theCompany has not entered into any non-cash transactions with directors or persons connectedwith them. Hence the provisions of clause 3(xv) of the Order are not applicable to theCompany.
(xvi) According to the information and explanations given to us theCompany is not required to be registered under section 45-IA of the Reserve Bank of IndiaAct 1934. Hence reporting under clause 3(xvi)(a) (b) and (c) of the Order is notapplicable. In our opinion there is no core investment company within the Group (asdefined in the Core Investment Companies (Reserve Bank) Directions 2016) and accordinglyreporting under clause 3(xvi)(d) of the Order is not applicable.
(xvii) The Company has not incurred cash losses during the financialyear covered by our audit and the immediately preceding financial year.
(xviii) There has been no resignation of the statutory auditors of theCompany during the year.
(xix) On the basis of the financial ratios ageing and expected datesof realisation of financial assets and payment of financial liabilities other informationaccompanying the financial statements and our knowledge of the Board of Directors andManagement plans and based on our examination of the evidence supporting the assumptionsnothing has come to our attention which causes us to believe that any materialuncertainty exists as on the date of the audit report indicating that Company is notcapable of meeting its liabilities existing at the date of balance sheet as and when theyfall due within a period of one year from the balance sheet date. We however state thatthis is not an assurance as to the future viability of the Company. We further state thatour reporting is based on the facts up to the date of the audit report and we neither giveany guarantee nor any assurance that all liabilities falling due within a period of oneyear from the balance sheet date will get discharged by the Company as and when they falldue.
(xx) (a) There are no unspent amounts towards Corporate SocialResponsibility (CSR) on other than ongoing projects for the F.Y. 2021-2022 and F.Y.2020-2021 requiring a transfer to a Fund specified in Schedule VII to the Companies Act incompliance with second proviso to sub-section (5) of Section 135 of the said Act and hencereporting under clause 3(xx)(a) of the Order is not applicable for the year. (b) There areno unspent amounts towards Corporate Social Responsibility (CSR) on ongoing projectsrequiring a transfer to a Special account within a period of 30 days from the end of thesaid financial year in compliance with the provision of section 135(6) of the Act andhence reporting under clause 3(xx)(b) of the Order is not applicable for the year.
(xxi) The provisions of clause 3 (xxi) is not applicable to theCompany.
annexure b - referred to in the independent auditors' report to themembers of selan exploration technology limited on the accounts for the year ended 31march 2022
Report on the Internal Financial Controls over Financial Reportingunder clause (i) of sub-section 3 of section 143 of the Companies Act 2013 ("theAct")
We have audited the internal financial controls over financialreporting of Selan Exploration Technology Limited ("the Company") as of 31 March2022 in conjunction with our audit of the Ind AS financial statements of the Company forthe year 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 over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India (ICAI).These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Act.
Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") and the Standards on Auditing issued by ICAIand deemed to be prescribed under section 143(10) of the Act to the extent applicable toan audit of internal financial controls both applicable to an audit of Internal FinancialControls both issued by the Institute of Chartered Accountants of India. Those Standardsand the Guidance Note require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks of material misstatement of the Ind AS financial statements whether due to fraud orerror.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A Company's internal financial control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of Ind AS financial statements for external purposes inaccordance with generally accepted accounting principles. A company's internal financialcontrol over financial reporting 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 Ind ASfinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorizations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the company's assets that could have a material effect on the Ind ASfinancial statements.
Inherent Limitations of Internal Financial Controls over FinancialReporting
Because of the inherent limitations of internal financial controls overfinancial reporting 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 overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at 31 March 2022 based onthe internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.