To the Members of
Taneja Aerospace and Aviation Limited
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of Taneja Aerospace and AviationLimited ("the Company") which comprise the Balance Sheet as at March 31 2020and the Statement of Profit and Loss Statement of Changes in Equity and Statement of CashFlows for the year then ended and notes to the standalone financial statements includinga summary of significant accounting policies and other explanatory information.
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 true andfair view in conformity with the Indian Accounting Standards prescribed under section 133of the Act read with Companies (Indian Accounting Standards) Rules 2015 as amended andother accounting principles generally accepted in India of the state of affairs of theCompany as at March 31 2020 and profit changes in equity and it's cash flows for theyear ended on that date.
Basis for Opinion
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 thereunder and we have fulfilledour other ethical responsibilities in accordance with these requirements and the Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion.
Emphasis of Matter
We draw attention to the following matters in the Notes to the Standalone FinancialStatements:
a) Note 47 which states that the Company had carried on the demerged charter businessand activities including banking transactions statutory compliances and all othercommercial activities relating to the demerged charter business for and on account of andin trust for TAAL Enterprises Limited until the time TAAL Enterprises Limited obtains therequisite statutory licenses for carrying on the demerged charter business. However theaccounting entries pertaining to the demerged charter business are accounted in the booksof account of TAAL Enterprises Limited. The said matter is being reported as an Emphasisof Matter in our Statutory Audit Reports for the year ended March 31 2017 onwards.
b) We draw attention to Note 52 to the financial statements which states that themanagement has performed an assessment of the impact of COVID-19 on the Company'soperations financial performance and position as at and for the year ended March 31 2020and has concluded that there is no material impact which is required to be recognised inthe financial statements. Accordingly no adjustments have been made to the financialstatements.
Our opinion is not modified in respect of the above matters.
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.
|Key Audit Matter ||How the Key Audit Matter was addressed in our audit |
|1 Accuracy of recognition measurement presentation and disclosures of revenues and other related balances as per Ind AS 115 "Revenue from Contracts with Customers" || |
|Refer the disclosures related to revenue recognition in Note 27 to the accompanying Financial Statements. ||Our Audit Procedures in respect of this area included: |
|The recognition of revenue involves certain key judgements relating to identification of distinct performance obligations determination of transaction price of the identified performance obligations the appropriateness of the basis used to measure revenue recognised over a period. Additionally revenue accounting standard contains additional qualitative disclosures. ||1. Evaluated the Company's process to identify the impact of adoption of the new revenue accounting standard. |
|Further recognition of revenues in respect of fixed price contracts involves critical estimates of percentage of completion of contract towards satisfaction of performance obligations. ||2. Performed the following procedures on test check basis for the samples selected: |
|Due to the significance of the judgement and estimate involved by the Management we have considered this as a key audit matter. || Reviewed analysed and identified the distinct performance obligations in these contracts. |
| || Compared these performance obligations with that identified and recorded by the Company. |
| || Considered the terms of the contracts to verify the transaction price used to compute revenue. |
| || In respect of fixed price contracts verified progress towards satisfaction of performance obligation used to compute recorded revenue based on the percentage of completion method using the technical estimates of management of stage of work completion. |
| || Verified revenues disaggregated by type and service offerings with the performance obligations specified in the underlying contracts. |
| ||Performed analytical procedures for reasonableness of revenues disclosed by type and service offerings. |
| ||Performed procedures relating to cut off for period end. |
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 Management report Board's report but does not include thestandalone financial statements and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do 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.
Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial 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 changesin equity and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Accounting Standards specified under section133 of the Act. 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 standalone financial statement that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
In preparing the standalone financial statements the Board of Directors 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 the Board of Directors either intends to liquidate the Company or tocease operations or has no realistic alternative but to do so.
Those Board of Directors are 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.
We give in "Annexure A" a detailed description of Auditor's responsibilitiesfor Audit of the Standalone Financial Statements.
Due to the Covid-19 related lockdown we were not able to participate in the physicalverification of inventory that was carried out by the Management subsequent to the yearend. Consequently we have performed alternate procedures to the audit of existence ofinventory as per the guidance provided in SA 501 "Audit Evidence Specific Considerations for Selected Items" and have obtained sufficient appropriateaudit evidence to issue our unmodified opinion on these standalone financial results.
Our opinion is not modified in respect of the above matter.
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 ofthe Act we give in "Annexure B" a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
2. As required by section 143(3) of the Act we report that:
(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
(c) The Balance Sheet the Statement of Profit and Loss the
Statement of Changes in Equity and the Statement of Cash Flow dealt with by this Reportare in agreement with the books of account.
(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
(e) 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.
(f) With respect to the adequacy of the internal financial controls with reference tostandalone financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure C".
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financialposition in it's standalone financial statements Refer Note 45 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 intransferring amounts required to be transferred to the Investor Education and ProtectionFund by the Company.
3. As required by The Companies (Amendment) Act 2017 in our opinion according toinformation explanations given to us the remuneration paid by the Company to it'sdirectors is within the limits laid prescribed under Section 197 of the Act and the Rulesthereunder.
ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT ON EVEN DATE ON THE STANDALONE FINANCIALSTATEMENTS OF TANEJA AEROSPACE AND AVIATION LIMITED
Auditor's Responsibilities for the Audit of the 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 financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the company hasinternal financial controls with reference to financial statements in place and theoperating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by 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 uncertainty existsrelated to events or conditions that may cast significant doubt on the Company's abilityto continue as a going concern. If we conclude that a material uncertainty exists we arerequired to draw attention in our auditor's report to the related disclosures in thefinancial statements or if such disclosures are inadequate to modify our opinion. Ourconclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions 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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen 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.
ANNEXURE B TO INDEPENDENT AUDITORS' REPORT OF EVEN DATE ON THE STANDALONE FINANCIALSTATEMENTS OF TANEJA AEROSPACE AND AVIATION LIMITED FOR THE YEAR ENDED MARCH 31 2020
[Referred to in paragraph under Report on Other Legal and RegulatoryRequirements' in the Independent Auditors' Report]
i. (a) The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets (Property Plant and Equipment).
(b) Fixed assets (Property Plant and Equipment) have been physically verified by themanagement during the year and no material discrepancies were identified on suchverification.
(c) According to the information and explanations given to us the title deeds ofcertain immovable properties of 105.74 Acres are pledged with the banks (Refer Note 5) andare not available with the Company. The same has not been independently confirmed by thebank and hence we are unable to comment on the same.
Additionally following immovable properties are not held in the name of the Company:
|No. of cases ||Leasehold/ Freehold ||Gross Block as at March 31 2020 ||Net Block as at March 31 2020 ||Remarks |
|1. ||Freehold ||Rs. 198.08 Lakhs ||Rs. 198.08 Lakhs ||Registration of Land documents is pending |
ii. The inventory has been physically verified during the year by the management. Inour opinion the frequency of verification is reasonable. No material discrepancies werenoticed on verification between the physical stock and the book records.
iii. The Company has not granted any loans secured or unsecured to Companies FirmsLimited Liability Partnerships (LLP) or other parties covered in the register maintainedunder section 189 of the Companies Act 2013 (the Act'). Accordingly the provisionsstated in paragraph 3 (iii) (a) to (c) of the Order are not applicable to the Company.
iv. In our opinion and according to the information and explanations given to us theCompany has not either directly or indirectly granted any loan to any of its directors orto any other person in whom the director is interested in accordance with the provisionsof section 185 of the Act and the Company has not made investments through more than twolayers of investment companies in accordance with the provisions of section 186 of theAct. Accordingly provisions stated in paragraph 3(iv) of the Order are not applicable tothe Company.
v. In our opinion and according to the information and explanations given to us thereare no amounts outstanding which are in the nature of deposits as on March 31 2020 andthe Company has not accepted any deposits during the year.
vi. We have broadly reviewed the books of account relating to materials labour andother items of cost maintained by the Company pursuant as specified by the CentralGovernment for the maintenance of cost records under sub-section (1) of section 148 of theAct and we are of the opinion that prima facie the prescribed accounts and records havebeen made and maintained. We have not however made a detailed examination of the recordswith a view to determine whether they are accurate or complete.
vii. According to the information and explanations given to us and the records of theCompany examined by us in our opinion undisputed statutory dues including providentfund employees' state insurance income-tax sales-tax service tax duty of custom dutyof excise value added tax goods and service tax cess and other statutory dues havegenerally been regularly deposited with the appropriate authorities though there has beena slight delay in a few cases.
Statutory dues which were outstanding as at March 31 2020 for a period of more thansix months from the date they became payable are as follows:
|Name of the statute ||Nature of the dues ||Amount ||Period to which the amount relates ||Due Date ||Date of Payment ||Remarks if any |
|Employees' State Insurance Act 1948(ESI Act) ||Employees State Insurance dues ||8111 ||April- June 2019 ||May-July 2019 ||Not yet paid ||Payment pending due to non-availability Aadhaar details of employee |
(a) According to the information and explanation given to us and examination of recordsof the Company the outstanding dues of income-tax goods and service tax customsduty cess and any other statutory dues on account of any dispute are as follows:
|Name of the statute ||Nature of dues ||Amount (Rs. in lakhs) ||Period to which the amount relates ||Forum where dispute is pending |
|Customs Act 1962 ||Customs duty ||622.67 ||2007-08 ||CESTAT |
|Finance Act 1994 ||Service tax ||124.37 ||2008-09 to 2012-13 ||CESTAT |
|Central Excise Act 1944 ||Excise duty ||76.24* ||2008-09 to 2011-12 ||CESTAT |
|Central Excise Act 1944 ||Excise duty ||21.36* ||2012-13 ||CESTAT |
|Central Excise Act 1944 ||Excise duty ||53.19* ||2013-14 to 2014-15 ||CESTAT |
|Central Excise Act 1944 ||Excise duty ||6.93* ||2013-14 ||CESTAT |
* Net amount after adjusting Rs. 11.38 lakhs paid under protest viii. In our opinionand according to the information and explanations given to us the Company has notdefaulted in repayment of dues to the financial institution bank or debenture holders.ix. In our opinion according to the information explanation provided to us money raisedby way of term loans during the year have been applied for the purpose for which they wereraised. The Company has not raised any money by way of initial public offer or furtherpublic offer (including debt instruments) during the year.
x. During the course of our audit examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employees.
xi. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid/ provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.
xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly the provisions stated in paragraph 3(xii) ofthe Order are not applicable to the Company.
xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
xiv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly the provisions stated in paragraph 3 (xiv) of the Order are notapplicable to the Company.
xv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly provisions statedin paragraph 3(xv) of the Order are not applicable to the Company.
xvi. In our opinion the Company is not required to be registered under section 45 IAof the Reserve Bank of India Act 1934 and accordingly the provisions stated in paragraphclause 3 (xvi) of the Order are not applicable to the Company.
ANNEXURE C TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE STANDALONE FINANCIALSTATEMENTS OF TANEJA AEROSPACE AND AVIATION LIMITED
[Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements' in the Independent Auditors' Report]
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls with reference to standalone financialstatements of TANEJA AEROSPACE AND AVIATION LIMITED ("the Company") as of March31 2020 in conjunction with our audit of the standalone financial statements of theCompany for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's Management is responsible for establishing and maintaining internalfinancial controls based on the internal control with reference to standalone financialstatements 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) (the"Guidance Note"). 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 Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to standalone financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note and the Standards on Auditingissued by ICAI and deemed to be prescribed under section 143(10) of the Act 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 internal financial controls with reference tostandalone financial statements was established and maintained and if such controlsoperated effectively in all material respects. Our audit involves performing procedures toobtain audit evidence about the internal financial controls with reference to 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 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 standalone financial statements whether due tofraud 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 With Reference to Standalone FinancialStatements
A Company's internal financial control with reference to standalone financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of standalone financial statements for externalpurposes in accordance with generally accepted accounting principles. A Company's internalfinancial control with reference to standalone financial statements includes thosepolicies and procedures that
(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) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of standalone financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the standalone financial statements.
Inherent Limitations of Internal Financial Controls With Reference to StandaloneFinancial Statements
Because of the inherent limitations of internal financial controls with reference tostandalone financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand 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 internal financial controlswith reference to standalone financial statements and such internal financial controlswith reference to standalone financial statements were operating effectively as at March31 2020 based on the internal control with reference to standalone financial statementscriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note.
|For MSKA & Associates |
|Chartered Accountants |
|ICAI Firm Registration No. 105047W |
|Deepak Rao |
|Membership No. 113292 |
|UDIN: 20113292AAAAKN6080 |
|Place: Bengaluru |
|Date: 24 June 2020 |