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South West Pinnacle Exploration Ltd.

BSE: 535049 Sector: Metals & Mining
NSE: SOUTHWEST ISIN Code: INE980Y01015
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South West Pinnacle Exploration Ltd. (SOUTHWEST) - Auditors Report

Company auditors report

On the Standalone Financial Statements of South West Pinnacle Exploration Limited

To

The Members of

South West Pinnacle Exploration Limited.

Report on the Standalone Financial Statements

Opinion

We have audited the standalone financial statements of South West Pinnacle ExplorationLimited ("the Company") which comprise the Standalone Balance Sheet as at 31March 2020 the Standalone Statement of Profit and Loss (including Other ComprehensiveIncome) the Standalone Statement of Changes in Equity and the Standalone Statement ofCash Flows for the year then ended and notes to the standalone financial statementsincluding a summary of the significant accounting policies and other explanatoryinformation (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 31 March 2020 the profit and totalcomprehensive income changes in equity and its cash flows for the year ended on that date.

Basic Option

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder Section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India (ICAI) togetherwith the ethical requirements that are relevant to our audit of the standalone financialstatements under the provisions of the Act and the rules made thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theICAI's Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion.

Key Audit Matters

Key audit matters (KAM) are those matters that in our professional judgment were ofmost significance in our audit of the standalone financial statements of the currentperiod. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.

Key audit matters How our audit addressed the key audit matter
Tax Litigations
The Company is subject to number of significant tax litigations. The total contingent liabilities as of March 31 2020 in relation to tax matters are INR 216.94 Lakhs (amount paid under protest is INR 41.22 Lakhs). Our audit procedures included the following:
Due to complexity of cases significant amount involved and time scales for resolution significant judgement and estimates are required by the management to assess the impact of these litigations on the financial positions results of operations and cash flows and thus there is a risk that such litigations may not be adequately provided for or disclosed in the standalone financial statements. • Obtained an understanding of the process of identification of tax litigations and related contingent liabilities and tested the operating effectiveness of management's key controls over recognition and disclosures of tax provisions and contingencies.
• Obtained the details of the tax litigations of the Company and discussed with the management to understand the detail of the underlying matters and basis for management's judgement and estimates on both the probability of success in significant cases and the magnitude of any potential loss.
Accordingly tax litigations have been identified as a key audit matter in our audit of the standalone financial statements (as described in note 46 of the standalone financial statements) • Obtained confirmation where appropriate from relevant third party legal counsel. Evaluated the objectivity competence and relevant experience of third party legal counsel.
• Assessed the relevant disclosures made within the standalone financial statements.

Information Other than the Standalone Financial Statements and Auditor's report thereon

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Company's annual report but doesnot include the standalone financial statements and our auditors' report thereon. Ouropinion on the standalone financial statements does not cover the other information and wedo 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 in the audit or otherwise appears to be materially misstated. If based on thework we 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 Responsibilities for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance (includingother comprehensive income) changes in equity and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the IndianAccounting Standards (Ind AS) specified under Section 133 of the Act. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the accuracy and completeness of the accounting records relevantto the preparation and presentation of the standalone financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone financial statements the Company's management isresponsible for assessing the ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless the 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.

Auditor's Responsibilities 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 auditor's 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 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 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 financial statements in place andthe 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 ourauditor's 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 financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

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.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors? Report) Order 2016 ("the Order")issued by the Central Government of India in terms of Section 143(11) of the Act we givein the "Annexure A" a statement on the matters specified in paragraphs 3 and 4of the Order to the extent applicable.

2. As required by Section 143(3) of the Act we report that: a. We have sought andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purposes of our audit;

b. In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;

c. The standalone Balance Sheet the standalone Statement of Profit and Loss (includingother comprehensive income) the Statement of Changes in Equity and the Statement of CashFlows dealt with by this Report are in agreement with the books of account;

d. In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014;

e. On the basis of the written representations received from the directors as on 31March 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2020 from being appointed as a director in terms of Section164(2) of the Act;

f. With respect to the adequacy of the internal financial controls over financialreporting of the Company with reference to standalone financial statements and theoperating effectiveness of such controls refer to our separate Report in "AnnexureB". Our report expresses an unmodified opinion on the adequacy and operatingeffectiveness of the Company's internal financial controls over financial reporting;

g. With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197 of the act as amended. In our opinionthe managerial remuneration for the year ended March 31 2020 has been paid / provided bythe Company to its directors in accordance with the provisions of section 197 read withSchedule V to the Act;

h. 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:

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements - Refer Note 46 to the standalonefinancial statements.

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection

Fund by the Company.

 

For Doogar & Associates

Chartered Accountants

Firm Registration No. 000561N

Vardhman Doogar

Partner

Membership No. 517347

UDIN: 20517347AAAAHB7165

Place: Gurugram

Date: June 22 2020

Annexure "A" to the Independent Auditor's Report

(Referred to in paragraph 1 under Report on Other Legal and Regulatory Requirements?section of our report to the members of South West Pinnacle Exploration Limited of evendate)

i. In respect of the Company's fixed assets: -

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

b. The Company has a program of verification to cover all the items of fixed assets ina phased manner which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets. Pursuant to the program certain fixed assets werephysically verified by the management during the year. According to the information andexplanations given to us no material discrepancies were noticed on such verification.

c. According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.

ii. The inventory has been physically verified by the management during the year. Inour opinion the frequency of such verification is reasonable. The Company has maintainedproper records of inventory. The discrepancies noticed on verification between thephysical stock and the book records were not material.

iii. According to the information and explanations given to us the Company has grantedunsecured loans to two bodies corporate covered in the register maintained under Section189 of the Companies Act 2013 in respect of which:

a. The terms and conditions of the grant of such loan are in our opinion prima facienot prejudicial to the Company interest.

b. The schedule of repayment of principal has been stipulated and repayments ofprincipal amounts have been regular as per stipulations.

c. There is no overdue amount remaining outstanding as at the year-end.

iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act with respectto the loans and investments made.

v. The Company has not accepted any deposits within the meaning of Section 73 to 76 ofthe Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended). Accordinglythe provisions of clause 3(v) of the Order are not applicable to the Company.

vi. The Central Government has not prescribed the maintenance of cost records underSection 148 of the Act for any of the services rendered by the Company.

vii. According to the information and explanations given to us in respect of statutorydues:

a. Undisputed statutory dues including Provident Fund Employees? State InsuranceIncome-Tax Sales-Tax Service Tax Duty of Custom Value Added Tax Goods and ServicesTax Cess and Other Statutory Dues have generally been regularly deposited with theappropriate authorities though there has been a delay in a few cases.

b. There were no undisputed amounts payable in respect of Provident Fund Employees?State Insurance Income-Tax Service Tax Sales Tax Goods and Services Tax Duty ofCustom Duty of Excise Value Added Tax Cess and Other Statutory Dues were outstandingat the year end for a period of more than six months from the date they become payable.Details of the dues of Income Tax Duty of Custom Duty of Excise Goods & ServicesTax and Value Added Tax which have not been deposited (along with amount deposited underprotest) by the Company on account of any dispute are given below-

(Rs. in Lakhs)
Sl. No. Nature of Statute Nature of dues Forum where dispute is pending Period(s) to which the amount relates (F.Y.) Amount Gross Amount deposited under protest
1. Income Tax Act 1961 Income Tax ITAT 2011-12 509370 509370
2. Income Tax Act 1961 Income Tax CIT(Appeal) 2013-14 9231180 1385000
3. Income Tax Act 1961 Income Tax CIT(Appeal) 2015-16 9197987 1839600
4. Value Added Tax Sales Tax Appellate boards 2010-11 to 2014-15 450243 30017

viii. In our opinion on the basis of audit procedures and according to the informationand explanation given to us the company has not defaulted in repayment of loans andborrowings to financial institutions and banks. The company has neither taken any loanfrom the government nor having any outstanding debentures during the year

ix. On the basis of information and explanation given to us term loans have beenapplied for the purposes for which they were obtained. The Company did not raise any moneyby way of initial public offer or further public offer (including debt instruments).

x. To the best of our knowledge and according to the information and explanations givento us no material fraud by the Company or on the Company by its officers or employees hasbeen noticed or reported during the course of our audit.

xi. In our opinion and according to the information and explanations given to us theCompany has paid/provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of Section 197 read with Schedule V to the Act.

xii. The Company is not a Nidhi Company and hence reporting under clause 3 (xii) of theCARO 2016 is not applicable

xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company all transactions with the related parties arein compliance with Sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the standalone financial statements as required by theapplicable accounting standards.

xiv. 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. Accordingly paragraph 3(xiv) of the Order is notapplicable to the Company.

xv. According to the information and explanations given to us the Company has notentered into non-cash transactions with directors or persons connected with him.Accordingly paragraph 3(xv) of the Order is not applicable to the Company.

xvi. According to the information and explanations given to us the Company is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 1934.

 

For Doogar & Associates

Chartered Accountants

Firm Registration No. 000561N

Vardhman Doogar

Partner

Membership No. 517347

UDIN: 20517347AAAAHB7165

Place: Gurugram

Date: June 22 2020

Annexure B to the Independent Auditors' Report

(Referred to in paragraph 2 under Report on Other Legal and Regulatory Requirementssection of our report to the members of South West Pinnacle Exploration Limited of evendate)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of South WestPinnacle Exploration Limited as of 31 March 2020 in conjunction with our audit of thestandalone financial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Board of Directors are responsible for establishing and maintaining internalfinancial controls based on the internal financial controls over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India ("the GuidanceNote"). These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to the Company'spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013(hereinafter referred to as "the Act").

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to the standalone financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note and the Standards on Auditingprescribed under Section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting with referenceto standalone financial statements 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 over financial reporting with reference to standalonefinancial statements and their operating effectiveness. Our audit of internal financialcontrols over financial reporting included obtaining an understanding of such internalfinancial controls over financial reporting assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the standalonefinancial 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 withreference to standalone financial statements.

Meaning of Internal Financial Controls over Financial Reporting with Reference toStandalone Financial Statements

A company's internal financial controls over financial reporting with reference tostandalone financial statements are a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of standalonefinancial statements for external purposes in accordance with generally acceptedaccounting principles. A company's internal financial controls over financial reportingwith reference to standalone financial statements include those policies and proceduresthat (1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation ofstandalone financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and (3) providereasonable assurance regarding prevention or timely detection of unauthorized acquisitionuse or disposition of the company's assets that could have a material effect on thestandalone financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting withReference to standalone Financial Statements

Because of the inherent limitations of internal financial controls over financialreporting with reference to standalone financial statements including the possibility ofcollusion or improper management override of controls material misstatements due to erroror fraud may occur and not be detected. Also projections of any evaluation of theinternal financial controls over financial reporting with reference to standalonefinancial statements to future periods are subject to the risk that the internal financialcontrols may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.

Opinion

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 over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2020 based on the internal controlover financial reporting 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.

 

For Doogar & Associates

Chartered Accountants

Firm Registration No. 000561N

Vardhman Doogar

Partner

Membership No. 517347

UDIN: 20517347AAAAHB7165

Place: Gurugram

Date: June 22 2020

.