The Members of
TEXMACO RAIL & ENGINEERING LIMITED
Report on the Audit of the Standalone Ind AS Financial Statements
1. We have audited the accompanying standalone Ind AS financial statements of TEXMACORAIL & ENGINEERING LIMITED ("the Company") which comprise the BalanceSheet as at 31st MarcRs 2019 the Statement of Profit and Loss (including OtherComprehensive Income) the Statement of Cash Flows and the Statement of Changes in Equityfor the year then ended on that date including a summary of significant accountingpolicies and other explanatory information in which are incorporated the returns for theyear ended on that date audited by the branch auditor of the Kalindee unit (herein afterreferred to as "Standalone Ind AS Financial Statements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Companies Act 2013 ("the Act") in the manner so required andgive a true and fair view in conformity with the accounting principles generally acceptedin India of the state of affairs of the Company as at MarcRs 31 2019 its profit(including Other Comprehensive Income) Changes in equity and its cash flows for the yearended on that date.
Basis for Opinion
2. We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of the IndAS Financial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of the Ind ASfinancial statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
3. 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. We have determined the matters described below to bethe key audit matters to be communicated in our report.
|Key Audit Matter ||Auditor's Response |
|1 Accuracy of recognition measurement presenta- tion and disclosures of revenues and other related balances in view of adoption of Ind AS 115 "Reve- nue from Contracts with Customers" (new revenue accounting standard) ||Principal Audit Procedures |
|The application of the new revenue accounting stan- dard 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 pe- riod. Additionally new revenue accounting standard contains disclosures which involves collection of in- formation in respect of disaggregated revenue and periods over which the remaining performance obli- gations will be satisfied subsequent to the balance sheet date. ||We assessed the Company's process to identify the impact of adoption of the new revenue accounting standard. |
| ||Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows: |
| || Evaluated the design of internal controls relating to implementation of the new revenue accounting standard. |
| || Selected a sample of continuing and new contracts and performed the following procedures: |
| ||1. Read analysed and identified the distinct performance obligations in these contracts. |
| ||2. Compared these performance obligations with that identified and recorded by the Company. |
| ||3. Considered the terms of the contracts to determine the transaction price including any variable consideration to verify the transaction price used to compute revenue and to test the basis of estimation of the variable consideration. |
| ||4. Samples in respect of revenue recorded for material con- tracts were tested using a combination of customer acceptances subsequent invoicing and historical trend of collections and disputes. |
| || In respect of samples relating to fixed price contracts progress towards satisfaction of performance obligation used to compute recorded revenue was verifiedwith actual and estimated efforts. |
| || Performed analytical procedures for reasonableness of revenues disclosed. |
|2. Recoverability of Indirect tax receivables ||Principal Audit Procedures |
|As at MarcRs 31 2019 non-current assets in respect of input credits and indirect taxes recoverable amounting to 212 crores which are pending adjudication/ adjustment. ||With the assistance of internal tax specialists who have knowledge of relevant tax regulations we assessed management's processes and tested internal controls implemented for the identification recognition and measurement of tax positions. As part of our audit procedures for uncertain tax positions we evaluated whether management's assessment of the tax effect business transactions and events in current fiscal of significant year which could result in uncertain tax provisions or impact the measurement of existing uncertain tax positions comply with the applicable tax laws |
|3. Contingent Liabilities ||Principal Audit Procedures |
|The company has several on-going legal matters relating to statutory taxes which require management judgment to be applied in order to determine the likely outcome. ||In assessing the potential exposures to the Company we have completed a range of procedures including: |
| || assessing the design and implementation of controls in relation to the monitoring of known exposures; |
| || reading Board and other meeting minutes to identify areas subject to Company consideration; |
| || meeting with the Company's internal legal advisors in under- standing on-going and potential legal matters impacting the Company; |
| || reviewing third party correspondence and reports; and |
| || reviewing the proposed accounting and disclosure of actual and potential legal liabilities drawing on third party assess-ment of open matters. |
4. The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Management Discussion and Analysis;Board's Report including Annexures to Board Report Business Responsibility ReportCorporate Governance and Shareholders' Information but does not include the standalonefinancial statements and our auditor's report thereon.
5. Our opinion on the standalone Ind AS financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.
6. In connection with our audit of the standalone Ind AS financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone Ind AS financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.
7. If based on the work we have performed we conclude that there is a materialmisstatement of this other information; we are required to report that fact. We havenothing to report in this regard.
Management's Responsibility for the Standalone Ind AS Financial Statements
8. The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone Ind AS financial statements that give a true and fair view of thefinancial position financial performance changes in equity and cash flows of the Companyin accordance with the accounting principles generally accepted in India including theaccounting Standards specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe 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 wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the Ind AS financial statementthat give a true and fair view and are free from material misstatement whether due tofraud or error.
9. In preparing the Ind AS 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.
10. The Board of Directors are also responsible for overseeing the company's financialreporting process.
Auditor's Responsibility for the Audit of the Ind AS Financial Statements
11. Our objectives are to obtain reasonable assurance about whether the Ind ASfinancial 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 Ind AS financial statements.
12. As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
We also identify and assess the risks of material misstatement of the Ind ASfinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtained 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 Companies Act 2013 we are also responsible for expressing our opinion onwhether the company has adequate internal financial controls system in place and theoperating 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 Ind AS 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 Ind AS financialstatements including the disclosures and whether the Ind AS financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
13. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
14. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.
15. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about thematters or when we determine that a matter should not be communicated in our reportbecause the adverse consequences of doing so would reasonably be expected to outweigh thepublic interest benefits of such communication.
16. Materiality is the magnitude of misstatements in the standalone financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the financial statements.
17. We did not audit the financial statements of one unit included in the standaloneInd AS financial statements of the Company whose financial statements reflect total assetsRS 101528.87 lakhs as at 31st March 2019 and total revenues of RS 69193.99 lakhstotal net profit after tax of RS 2411.55 lakhs total comprehensive income of RS 2488.39lakhs and cash flows (net) of Rs (553.03 lakhs) for the year ended on that date. Thefinancial statements of this unit has been audited by the branch auditor whose report hasbeen furnished to us and our opinion in so far as it relates to the amounts anddisclosures included in respect of this unit is based solely on the report of such branchauditor.
Our Opinion on the Standalone Ind AS financial statements and our report on Other Legaland Regulatory Requirements below is not modified in respect of above matters.
Report on Other Legal and Regulatory Requirements
18. As required by the Companies (Auditor's Report) Order 2016
("the Order") issued by the Central Government of India in terms of subsection (11) of section 143 of the Act we give in the Annexure-A a statement onthe matters specified in paragraphs 3 and 4 of the Order to the extent applicable.
19. 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 report on the accounts of the unit of the Company audited under section 143(8)of the Act by branch auditor has been sent to us and has been properly dealt with by us inpreparing this report.
(d) The Balance Sheet the Statement of Profit and Loss (including other comprehensiveincome) and the Cash Flow Statement Statement of Changes in Equity dealt with by thisreport are in agreement with the books of account and with the returns received from theunit not visited by us.
(e) In our opinion the aforesaid standalone Ind AS financial statements comply withthe Accounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
(f) On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in terms of Section164 (2) of the Act;
(g) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B".
(h) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements ofsection197(16)oftheActasamended:Inouropinion and tothe best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe provisions of section 197 of the Act.
(i) 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:
a. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements Refer Note 1.36 of the standalone Ind ASfinancial statements.
b. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
c. There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.
| ||For L. B. Jha & Co. |
| ||Chartered Accountants |
| ||Firm Registration No : 301088E |
| ||(D.N.Roy) |
|Place : Kolkata ||Partner |
|Date : 13th May 2019 ||Membership No. 300389 |