The Members of Suprajit Engineering Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements ofSuprajit Engineering Limited ("the Company") which comprise the standaloneBalance sheet as at March 31 2021 the standalone Statement of Profit and Loss includingthe statement of Other Comprehensive Income / (Loss) the standalone Cash Flow Statementand the standalone Statement of Changes in Equity for the year then ended and notes tothe standalone financial statements including a summary of significant accountingpolicies and other explanatory information.
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 as amended ("the Act") in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2021 its profit including other comprehensive income/ (loss) its cash flows and thechanges in equity for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing (SAs) as specified under section 143(10) of theAct. Our responsibilities under those Standards are further described in the 'Auditor'sResponsibilities for the Audit of the Standalone Financial Statements' section of ourreport. We are independent of the Company in accordance with the 'Code of Ethics' issuedby the Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the financial statements under the provisions of the Actand the Rules thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion on the standalone financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements for thefinancial year ended March 31 2021. These matters were addressed in the context of ouraudit of the standalone financial statements as a whole and in forming our opinionthereon and we do not provide a separate opinion on these matters. For each matter belowour description of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key auditmatters to be communicated in our report. We have fulfilled the responsibilities describedin the Auditor's responsibilities for the audit of the standalone financial statementssection of our report including in relation to these matters. Accordingly our auditincluded the performance of procedures designed to respond to our assessment of the risksof material misstatement of the standalone financial statements. The results of our auditprocedures including the procedures performed to address the matters below provide thebasis for our audit opinion on the accompanying standalone financial statements.
|Key audit matters ||How our audit addressed the key audit matter |
|Impairment assessment of Investments in Subsidiaries (as described in Note 6(a) of the standalone financial statements) || |
|As at March 31 2021 the carrying value of investments in wholly owned subsidiaries included in the standalone balance sheet amounts to Rs. 2390.45 million (net of impairment provision). ||Our audit procedures included the following: |
|To assess if there is any impairment in these investments management conducts impairment tests annually or whenever changes in circumstances or events indicate that the carrying amount of such investment may not be recoverable. An impairment loss is recognized if the recoverable amount is lower than the carrying value. || We understood the Company's process for identification of indicators for impairment and evaluated the Company's internal controls over its impairment assessment of investment in subsidiaries. We understood the key assumptions applied by the management such as revenue growth operating margins discount rates and terminal growth rates in determining impairment; |
|The recoverable amount is estimated by calculating the value in use basis valuation conducted by an external valuation specialist ('management expert') factoring future business plans and such valuation report/ future business plans are reviewed and approved by the Audit Committee/ Board of Directors of the Company. In view of the COVID -19 pandemic the management has re-assessed its future business plans and key assumptions as at March 312021 while assessing the adequacy of impairment provision. || In respect of the external valuation specialist engaged by the management we obtained the valuation report from the management and assessed the independence objectivity and competence of the management expert; |
|This is a key audit matter as the testing of investment impairment is complex and involves significant judgement. The key assumptions included in impairment tests are projected revenue growth operating margins discount rates and terminal growth etc. || We tested the key assumptions and considered the sensitivity scenarios performed by management's expert; |
| || We tested the methodologies used and the computations by the management's expert in their valuation reports; and |
| || We assessed the disclosures made in the standalone financial statements. |
The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the Board ofDirectors' report including annexures but does not include the standalone financialstatements consolidated financial statements and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whethersuch other information is materially inconsistent with the standalone financial statementsor our knowledge obtained in the audit or otherwise appears to be materially misstated.If based on the work we have performed we conclude that there is a material misstatementof this other information we are required to report that fact. We have nothing to reportin this regard.
Responsibilities of Management and Those charged with Governance forthe Standalone Financial Statements
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 standalone financialstatements that give a true and fair view of the financial position financial performanceincluding other comprehensive income/ (loss) cash flows and changes in equity of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) specified under section 133 of the Actread with the Companies (Indian Accounting Standards) Rules 2015 as amended. 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; andthe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the standalone financial statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
Those Charged with Governance are also responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibilities for the Audit of the Standalone FinancialStatements
Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these 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 thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls with reference to financialstatements in place and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.
Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements for the financial year ended March 312021 and are therefore the keyaudit matters. We describe these matters in our auditor's report unless law or regulationprecludes public disclosure about the matter or when in extremely rare circumstances wedetermine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interestbenefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016("the Order") issued by the Central Government of India in terms of sub-section(11) of section 143 of the Act we give in the "Annexure 1" a statement on thematters specified in paragraphs 3 and 4 of the 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 standalone Balance Sheet the standalone Statement of Profitand Loss including the Statement of Other Comprehensive Income/ (Loss) the standaloneCash Flow Statement and standalone Statement of Changes in Equity dealt with by thisReport are in agreement with the books of account;
(d) In our opinion the aforesaid standalone financial statementscomply with the Accounting Standards specified under Section 133 of the Act read withCompanies (Indian Accounting Standards) Rules 2015 as amended;
(e) On the basis of the written representations received from thedirectors as on March 312021 taken on record by the Board of Directors none of thedirectors is disqualified as on March 312021 from being appointed as a director in termsof Section 164 (2) of the Act;
(f) With respect to the adequacy of the internal financial controls ofthe Company with reference to standalone financial statements and the operatingeffectiveness of such controls refer to our separate Report in "Annexure 2" tothis report;
(g) In our opinion the managerial remuneration for the year endedMarch 31 2021 has been paid/ provided by the Company to its directors in accordance withthe provisions of section 197 read with Schedule V to 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 in our opinion and to the best of our information and according to theexplanations given to us:
i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone financial statements - Refer note 37(a) to thestandalone financial statements;
ii. The Company has made provision as required under the applicablelaw or accounting standards for material foreseeable losses if any on long-termcontracts including derivative contracts - Refer note 20 and note 43(ii) to the standalonefinancial statements;
iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company
ANNEXURE 1 TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THESTANDALONE FINANCIAL STATEMENTS OF SUPRAJIT ENGINEERING LIMITED
Statement on the matters specified in paragraphs 3 and 4 of theCompanies (Auditor's Report) Order 2016 ("the Order")
(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of property plant andequipment.
(b) All property plant and equipment have not been physically verifiedby the management during the year but there is a regular programme of verification whichin our opinion is reasonable having regard to the size of the Company and the nature ofits assets. No material discrepancies were noticed on such verification.
(c) According to the information and explanations given by themanagement and confirmation from banks relating to title deeds of immovable propertiesmortgaged with the banks the title deeds of immovable properties are held in the name ofthe Company and in respect of immovable properties of land that have been taken on leaseand disclosed as Right-of-use assets in the standalone financial statements the leaseagreements are in the name of the Company.
(ii) The inventory has been physically verified by the managementduring the year. In our opinion the frequency of verification is reasonable. No materialdiscrepancies were noticed on such physical verification. Inventories lying with thirdparties have been confirmed by them as at year end and no material discrepancies werenoticed in respect of such confirmations.
(iii) According to the information and explanations given to us theCompany has not granted any loans secured or unsecured to companies firms LimitedLiability Partnerships or other parties covered in the register maintained under section189 of the Act. Accordingly the provisions of clause 3(iii)(a) (b) and (c) of the Orderare not applicable to the Company.
(iv) In our opinion and according to the information and explanationsgiven to us provisions of section 186 of the Act as applicable in respect of loans andadvances given investments made and guarantees and securities given have been compliedwith by the company. In our opinion and according to the information and explanationsgiven to us there are no loans to directors including entities in which they areinterested in respect of which provisions of section 185 of the Act are applicable andhence not commented upon.
(v) The Company has not accepted any deposits within the meaning ofsections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable.
(vi) We have broadly reviewed the books of account maintained by theCompany pursuant to the rules made by the Central Government for the maintenance of costrecords under section 148(1) of the Act related to the manufacture of automobilecomponents and are of the opinion that prima facie the specified accounts and recordshave been made and maintained. We have not however made a detailed examination of thesame.
(vii) (a) The Company is generally regular in depositing withappropriate authorities undisputed statutory dues including provident fund employees'state insurance income tax duty of custom goods and service tax cess and othermaterial statutory dues applicable to it.
(b) According to the information and explanations given to us noundisputed amounts payable in respect of provident fund employees' state insuranceincome- tax duty of custom goods and services tax cess and other statutory dues wereoutstanding at the year end for a period of more than six months from the date theybecame payable.
(c) According to the records of the Company there are no dues ofincome-tax sales-tax service tax duty of custom duty of excise value added tax goodsand services tax and cess which have not been deposited on account of any dispute exceptthe following:
|Name of the statute ||Nature of the dues ||Amount (Rs. in Million) ||Payment under protest ||Period (financial year) to which the amount relates ||Forum where dispute is pending |
|The Income Tax Act 1961 ||Disallowance of certain expenses and benefit ||7.96 ||7.96 ||2010-11 & 2011-12 ||Commissioner of Income Tax (Appeals) |
|The Income Tax Act 1961 ||Disallowance of certain expenses and benefit ||9.43 ||9.43 ||2015-16 ||Commissioner of Income Tax (Appeals) |
|The Income Tax Act 1961 ||Adjustment for transfer pricing and other disallowances ||21.66* ||- ||2016-17 ||Income tax officer |
|The Income Tax Act 1961 ||Disallowance of certain benefit ||8.75* ||- ||2017-18 ||Income tax officer |
|Central Sales Tax Act 1956 ||Central sales tax (including interest) ||0.11 ||- ||2016-17 ||Deputy Commissioner of State Tax |
|Maharashtra Value Added Tax Act 2002 ||Maharashtra Value Added Tax (including interest) ||2.26 ||- ||2016-17 ||Deputy Commissioner of State Tax |
|Karnataka Value Added Tax Act 2003 ||Karnataka Value Added Tax (including interest and penalty) ||0.90 ||- ||2013-14 ||Assistant Commissioner of Commercial Taxes (Audit) |
*The aforesaid demand amounts are excluding advance tax payment of Rs.75.01 million pertaining to financial year 2016-17 and Rs. 17.5 million pertaining tofinancial year 2017-18 respectively which have not been considered by the Assessingofficer and hence the Company has filed necessary rectification application u/s 154 of theIncome tax Act 1961.
(viii) In our opinion and according to the information and explanationsgiven by the management the Company has not defaulted in repayment of loans or borrowingsto bank or dues to a financial institution. The Company did not have any outstanding duesto debenture holders or government during the year.
(ix) In our opinion and according to information and explanations givenby the management the Company has utilized the monies raised by way of term loans for thepurpose for which they were raised. The Company has not raised monies by way of initialpublic offer or further public offer (including debt instruments).
(x) Based upon the audit procedures performed for the purpose ofreporting the true and fair view of the standalone financial statements and according tothe information and explanations given by the management we report that no fraud by theCompany or no fraud on the Company by the officers and employees of the Company has beennoticed or reported during the year.
(xi) According to the information and explanations given by themanagement the managerial remuneration has been paid / provided in accordance with theprovisions of section 197 read with Schedule V to the Act.
(xii) In our opinion the Company is not a nidhi company. Thereforethe provisions of clause 3(xii) of the Order are not applicable to the Company.
(xiii) According to the information and explanations given by themanagement transactions with the related parties are in compliance with section 177 and188 of Act where applicable and the details have been disclosed in the notes to thestandalone financial statements as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and onan overall examination of the balance sheet the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year under review and hence reporting requirements under clause 3(xiv) are notapplicable to the Company.
(xv) According to the information and explanations given by themanagement the Company has not entered into any noncash transactions with directors orpersons connected with him as referred to in section 192 of the Act.
(xvi) According to the information and explanations given to us theprovisions of section 45-IA of the Reserve Bank of India Act 1934 are not applicable tothe Company.
ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THESTANDALONE FINANCIAL STATEMENTS OF SUPRAJIT ENGINEERING LIMITED
Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls with reference tostandalone financial statements of Suprajit Engineering Limited ("the Company")as of March 31 2021 in conjunction with our audit of the standalone financial statementsof the Company for the 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 andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence to theCompany'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 internalfinancial controls with reference to these standalone financial statements based on ouraudit. We conducted our audit in accordance with the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting (the "Guidance Note") and theStandards on Auditing as specified under section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial controls both issued by ICAI.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls with reference to these standalone financial statements was establishedand maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to these standalonefinancial statements and their operating effectiveness. Our audit of internal financialcontrols with reference to standalone financial statements included obtaining anunderstanding of internal financial controls with reference to these standalone financialstatements 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 financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols with reference to these standalone financial statements.
Meaning of Internal Financial Controls With Reference to theseStandalone Financial Statements
A company's internal financial controls with reference to standalonefinancial statements is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. A company'sinternal financial controls with reference to standalone financial statements includesthose policies and procedures that
(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;
(2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; and
(3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the company's assets thatcould have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls With Reference toStandalone Financial Statements
Because of the inherent limitations of internal financial controls withreference to standalone financial statements including the possibility of collusion orimproper management override of controls material misstatements due to error or fraud mayoccur and not be detected. Also projections of any evaluation of the internal financialcontrols with reference to standalone financial statements to future periods are subjectto the risk that the internal financial control with reference to standalone financialstatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects adequateinternal financial controls with reference to standalone financial statements and suchinternal financial controls with reference to standalone financial statements wereoperating effectively as at March 31 2021 based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note issued by the ICAI.
|For S.R. Batliboi & Associates LLP |
|Chartered Accountants |
|ICAI Firm Registration Number: 101049W / E300004 |
|per Rajeev Kumar |
|Membership Number: 213803 |
|UDIN: 21213803AAAACC1542 |
|Place of signature: Bengaluru |
|Date: May 29 2021 |