To the Members of
Techno Electric & Engineering Company Ltd.
INDEPENDENT AUDITOR'S REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS
We have audited the accompanying standalone financial statements of Techno Electric& Engineering Company Limited ("the Company") which comprise the balancesheet as at March 31 2021 the statement of profit and loss (including the statement ofother comprehensive income) the cash flow statement and the statement of changes inequity for the year then ended and notes to the standalone financial statementsincluding a summary of significant accounting policies and other explanatory information(hereinafter referred to as "the standalone financial statements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the Company as at March 31 2021 its profit including othercomprehensive income its cash flows and the changes in equity for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) specified under section 143(10) of the Act. Ourresponsibilities under those standards are further described in the Auditor'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 (ICAI) of India together with the ethicalrequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules there under and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the standalone financial statements.
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 for the financial yearended March 31 2021. These matters were addressed in the context of our audit of theStandalone financial statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters. For each matter below our description ofhow our audit addressed the matter is provided in that context.
|Descriptions of Key Audit Matter ||How we addressed the matter in our audit |
|Revenue Recognition - The accuracy of amounts recorded as revenue is an inherent risk due to the complexity involve. ||As part of our audit we understood the Company's policies and processes control mechanisms and methods in relation to the revenue recognition and evaluated the design and operative effectiveness of the financial controls from the above through our test of control procedures. |
|The application of revenue recognition accounting standards Ind AS 115 is complex and involves a number of judgments and estimates. Further in EPC contract revenue is accounted for under the percentage completion method which also requires significant judgments and estimates in particular with respect to estimation the cost to complete. ||Tested a sample of sales transactions for compliance with the Company's accounting principles to assess the completeness occurrence and accuracy of revenue recorded. Also revenue is recognised when the Company satisfies a performance obligation. |
|Due to the estimates judgment and complexity involved in the application of the revenue recognition accounting standards we have considered this matter as a key audit matter. The Company's accounting policies relating to revenue recognition are presented in note 5.11 to the financial statements. ||Performing procedures to ensure that the revenue recognition criteria adopted by Company for all major revenue streams is appropriate and in line with the Company's accounting policies. |
| ||We tested the company's system generated reports based on which revenue is accrued at the year end and performed tests of details on the accrued revenue and accounts receivable balances recognized in the balance sheet at the year end. |
| ||We evaluated the management's process to recognize revenue over a period of time total cost estimates status of the projects and re-calculated the arithmetic accuracy of the same. |
| ||We examined contracts with exceptions including contracts with low or negative margins loss making contracts etc. to determine the level of provisioning. We examined contracts with exceptions including contracts with low or negative margins loss making contracts etc. to determine the level of provisioning. |
| ||Our tests of detail focused on transactions occurring within proximity of the year end and obtaining evidence to support the appropriate timing of revenue recognition based on terms and conditions set out in sales contracts and delivery documents or system generated reports. We considered the appropriateness and accuracy of any cut-off adjustments. |
| ||Traced disclosure information to accounting records and other supporting documentation. |
| ||Our Observation: |
| ||Based on the audit procedures performed we did not obtain any material exceptions in the revenue recognition. |
|Descriptions of Key Audit Matter ||How we addressed the matter in our audit |
|B. Valuation and existence of Investment in Bonds and Debentures and Mutual Funds. ||Understanding of the business processes employed by the Company for accounting for and valuing their investment portfolio. We obtained accounts confirmation for the investment in bonds and mutual funds and verified that the company was the recorded owner of all current investments. Our audit procedures over the valuation of the Investments included agreeing the fair valuation of all Investments held at March 31 2021 to the Net Assets Value provided by the respective Mutual funds & market quotes provided by the agents for the bonds. |
|Valuation and existence of current investments designated at fair value through profit or loss Investments designated at fair value through profit or loss (the Investments) are valued at Rs 58127.16 lakh and represent 26.45 % of total assets. Further disclosures on the Investments are included at Note 9 to the financial statements. This was an area of focus for our audit and the area where significant audit effort was directed. As at March 31 2021 all Investments are in debentures bonds & mutual funds and are actively traded with readily available quoted market prices. ||Our Observation: |
| ||Based on the audit procedures performed we are satisfied with valuation and existence of current investment. |
Information Other than the Standalone financial statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the preparation of the otherinformation.
The other information comprises the information included in the annual reports butdoes not include the standalone 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 financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the Standalone financial statements or our knowledge obtainedduring the course of our audit or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is a material misstatement of thisother information; we are required to report that fact. We have nothing to report in thisregard.
Management's Responsibility 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 statements that givea true and fair view of the financial position financial performance including othercomprehensive income cash flows and changes in equity of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under section 133 of the Act read with the Companies (IndianAccounting Standards) Rules 2015 as amended. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and the design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the Standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so. Those charged with governance are also responsible foroverseeing the Company's financial reporting 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 scepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the standalone financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
- Obtain an understanding of internal 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 hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.
- Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
- Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of 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 financial statementsincluding the disclosures and whether the standalone financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the financial statements.
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 auditor's 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 (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 the "Annexure A" a statement on the matters specified inparagraphs 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 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 including the Statement ofOther Comprehensive Income the Cash Flow Statement and Statement of Changes in Equitydealt with by this Report are 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 Companies (IndianAccounting Standards) Rules 2015 as amended from time to time;
(e) On the basis of the written representations received from the directors as on March31 2021 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2021 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 statement of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure B"
(g) In our opinion the managerial remuneration for the year ended March 31 2021 hasbeen paid/ provided by the Company to its directors in accordance with the provisions ofsection 197 read with Schedule V to the Act; and
(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 as amended inour opinion and to the best of our information and according to the explanations given tous:
I. The Company has disclosed the impact of pending litigations on its financialposition in its Standalone financial statements- Refer Note No. 45 to the standalonefinancial statements;
II. The Company has made provisions as required under the applicable laws of accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts.
III. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
| ||ForSinghi& Co. Chartered Accountants Firm Registration No. 302049E |
|Place: Kolkata Dated: 29th June 2021 ||(Navindra Kumar Surana) Partner Membership No. 053816 UDIN-21053816AAAAFL3960 |
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 Techno Electric & Engineering Company Limited
We report that:
i. In respect of its Property Plant & Equipment:
a) The Company has maintained proper records of Property Plant & Equipment showingfull particulars including quantitative details and situation of Property Plant &Equipment.
b) The Company has a phased program of physical verification of its Property Plant& Equipment which in our opinion is reasonable having regard to the size of theCompany and the nature of its business. In accordance with such program the managementhas physically verified certain Property
Plant & Equipment during the year and no material discrepancies were noticed onsuch 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. As explained to us inventories were physically verified during the year by themanagement at reasonable intervals. In our opinion and according to the information andexplanations given to us the discrepancies noticed on such verifications of inventories ascompared to the book records were not material and have been properly dealt with in thebooks of account.
iii. During the year the Company has not granted any secured or unsecured loans to abody corporate covered in the register maintained under section 189 of the Act.
Accordingly the provisions of paragraph 3(iii) 3(iii)(a) to 3(iii)(b) of the saidorder are not applicable.
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 investments made and providing guarantees and securities
v. According to information and explanations given to us the Company has not acceptedany deposits from public within the meaning of Section 73 74 75 and 76 of the Act andRules framed thereunder to the extent notified.
vi. We have broadly reviewed the books of accounts maintained by the Company in respectof wind power generation where pursuant to the rule made by the Central Government ofIndia the maintenance of cost records has been prescribed under section 148(1) of theCompanies Act 2013 and are of the opinion that prima facie the prescribed records havebeen maintained. We have not however made a detailed examination of the records with aview to determine whether they are accurate or complete. The Central Government has notprescribed the maintenance of cost records under section 148(1) of the Act forEngineering services rendered by the Company.
vii. According to the information and explanations given to us and the records of theCompany examined by us:
a) The Company is generally regular in depositing undisputed statutory dues in respectof Provident Fund Employees' State Insurance Income-tax excise duty service taxcustoms duty goods & service Tax cess and other statutory dues as applicable tothe appropriate authorities. There are no arrears in respect of the aforesaid dues as at31st March 2021 for a period of more than six months from the date they became payable.
b) The particulars of dues of income tax and value added tax which have not beendeposited by the Company on account of disputes are as follows:
|Name of the Statue ||Nature of Dues ||Amount (Rs) ||Period to which the amount relates ||Forum Where Dispute is Pending |
|Orissa Value Added Tax Act 2004 ||Due to non submission of books of Accounts at the time of assessment ||4951605 ||2005-06 to 2008-09 ||Tribunal Authority Angul |
|Madhya Pradesh Vat Act 2002 ||Dispute on account of Extra freight & Entry Tax charge on Purchase etc ||2058719 ||2012-13 ||Appellate Authority Jabalpur |
|Madhya Pradesh Vat Act 2002 ||TDS Credit not admitted. ||510404 ||2014-15 ||Appellate Authority Jabalpur |
viii. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not defaulted in repayment ofdues to any financial institution bank as at Balance sheet date. The Company does nothave any borrowings or loans from Central Government and dues to debenture holders as atBalance Sheet date.
ix. Based on our audit procedures and according to the information and explanationsgiven to us the company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year.
x. Based upon the audit procedure performed for the purpose of reporting the true andfair view of the standalone financial statements and according to the information andexplanations given to us no material fraud by the Company or on the Company by itsofficers or employees has been noticed or reported during the year
xi. The Company has paid/provided for managerial remuneration in accordance with
the requisite approvals mandated by the provisions of section 197 read with Schedule Vto the Act.
xii. In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.
xiii. The Company has entered into transactions with related parties in compliance withthe provisions of Sections 177 and 188 of the Act. The details of such related partytransactions have been disclosed in the standalone financial statements as required underIndian Accounting Standard (Ind AS) 24 Related Party Disclosures specified under Section133 of the Act.
xiv. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year. Accordingly the provisions ofClause 3(xiv) of the Order are not applicable to the Company.
xv. The Company has not entered into any non cash transactions with its directors orpersons connected with them to which Section 192 of the Act applies. Accordingly theprovisions of Clause 3(xv) of the Order are not applicable to the Company
xvi. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934. Accordingly the provisions
of Clause 3(xvi) of the Order are not applicable to the Company.
| ||For Singhi & Co. Chartered Accountants Firm Registration No. 302049E |
|Place: Kolkata Dated: 29th June 2021 ||(Navindra Kumar Surana) Partner Membership No. 053816 U D1N-21053816AAAAFL3960 |
Annexure - B to the Independent Auditor's Report
(Referred to in paragraph 2 (f) under 'Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Techno Electric & EngineeringCompany Limited of even date)
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 over financial reporting with referenceto standalone financial statement of Techno Electric & Engineering Company Limited("the Company") as of March 31 2021 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 of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control 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. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to respective 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 Companies Act 2013.
Our responsibility is to express an opinion on the internal financial controls overfinancial reporting 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") issued by theInstitute of Chartered Accountants of India and the Standards on Auditing prescribed underSection 143(10) of the Companies Act 2013 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 with reference to standalone financialstatement was established and maintained and if such controls operated effectively in allmaterial respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls over financial reporting system with reference to thesestandalone financial statements and their operating effectiveness. Our audit of internalfinancial controls over financial reporting with reference to these standalone financialstatements included obtaining an understanding of internal financial controls withreference to financial statement assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control based onthe assessed risk. The procedures selected depend on the auditor's judgement includingthe assessment of the risks of material misstatement of the financial statements whetherdue 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 overfinancial reporting system with reference to these standalone financial statements.
Meaning of internal financial controls over financial reporting with reference tostandalone financial Statements
A company's internal financial control over financial reporting with reference to thesestandalone financial statements is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accountingprinciples. A company's internal financial control with reference to these standalonefinancial statements includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of Standalonefinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the standalonefinancial 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 these standalone financial statements including thepossibility of collusion or improper management override of controls materialmisstatements due to error or fraud may occur and not be detected. Also projections ofany evaluation of the internal financial controls over financial reporting with referenceto these standalone financial statements to future periods are subject to the risk thatthe internal financial control over financial reporting with reference to these standalonefinancial statements may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedures may deteriorate.
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 controlsover financial reporting system with reference to these standalone financial statementsand such internal financial controls over financial reporting with reference to thesestandalone financial statements were operating effectively as at March 31 2021 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.
| ||ForSinghi& Co. Chartered Accountants Firm Registration No. 302049E |
|Place: Kolkata Dated: 29th June 2021 ||(Navindra Kumar Surana) Partner Membership No. 053816 UDIN-21053816AAAAFL3960 |