To the Members of
Titagarh Wagons Limited
Report on the Audit of Standalone Financial Statements
1. We have audited the accompanying standalone financial statements of Titagarh WagonsLimited (the Company) which comprise the balance sheet as at March 31 2019and the statement of Profit and Loss (including Other Comprehensive Income) statement ofchanges in equity and statement of cash flows for the year then ended and notes to thefinancial statements including a summary of significant accounting policies and otherexplanatory information.
2. 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 2019 and total comprehensive income(comprising of profit and other comprehensive income) changes in equity and its cashflows for the year then ended.
Basis for opinion
3. 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 Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.
Key Audit matter
4. 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 year.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 our audit addressed the key audit matter |
|1 -Assessment of carrying value of Investment in subsidiaries (Refer to Note 2.8- Investments in subsidiaries and Joint Venture Refer Note 2.32 - Critical Estimates and Judgements - Impairment of Investments in Subsidiaries Note 4 - Non-Current Assets - Financial Assets - Investments and Note 43 - Fair Values). ||Our audit procedures included the following: |
| || Assessed and tested the design and operating effectiveness of the Company's key controls over the assessment of the carrying value of investments. |
|The Company has investments in equity and compulsorily convertible cumulative preference shares in subsidiaries aggregating to Rs 27190.22 Lacs which are carried at cost and an investment of Rs. 2500 Lacs in cummulative reedemable preference shares in a subsidiary which is carried at fair value in accordance with the accounting policies as stated in notes referred above. || Checked on a sample basis relevant input data used in the impairment assessment back to the latest budgets actual past results and other supporting documents as appropriate and also checked the mathematical accuracy of the impairment model. |
| || Togetherwith auditors' valuation experts:- |
|For investments carried at cost where an indication of impairment exists the carrying value of investment is assessed for impairment. For investments carried at fair value a fair valuation is done at the period end. || Assessed the appropriateness of the methodology used in the impairment model and the underlying assumptions used such as discount rate future growth rates and terminal value also considered historical performance vis-a-vis budgets. |
|Impairment assessment requires significant judgements and estimates such as future expected level of operations and related forecast of cash flows market conditions discount rates terminal growth rate etc. || Performed sensitivity analysis and evaluated whether any reasonablyforeseeable change in assumptions could lead to impairment or material change in fair valuation. |
| || Evaluated the adequacy of the disclosures made in the standalone financial statements. |
|Based on impairment assessment carried out by the management impairment loss of Rs. 10758.43 lacs has been provided for during the year ended March 31 2019 in respect of certain investments. ||Based on the above procedures performed we noted that the management's assessment in relation to the carrying value of investments in equity and preference shares in subsidiaries is reasonable. |
|Assessment of the carrying value of investments has been considered as a key audit matter as the amounts are significant to the financial statements and assessment of impairment involves significant management judgement and estimates. ||Our audit procedures included the following: |
| || Assessed and tested the design and operating effectiveness of key controls around estimation of contract margin and future costs to complete the contracts. |
|2 -Appropriateness of estimation of total costs to complete contracts and determination of contract margin (Refer to Note 2.18 - Revenue Recognition Refer Note 2.32 - Critical Estimates and Judgements - Accounting for revenue from contracts wherein company satisfies performance obligation and recognises revenue over time and Note 21 - Revenue from operations). || Discussed with the management the status of the contracts basis for estimates of future cost to complete the contracts and other factors such as consideration of any specific identified risks. |
| || Obtained the contract financial summaries and performed the following procedures: |
|In respect of certain contracts with customers the Company recognises revenue over a period of time in accordance with its accounting policy. This involves determination of margin to be recognised on the contract which are dependent on the total costs to complete contracts that is the cost incurred till date and estimation of future cost to complete the contract. This estimation involves exercise of significant judgement by the management in making cost forecasts considering future activities to be carried out in the contract and the related assumptions. ||(a) verified the contract revenue with the underlying contracts on a sample basis and its relevant terms and conditions |
| ||(b) obtained and examined the computation of the total costs to complete and percentage of contract project completion. |
| ||(c) verified the actual cost incurred upto the year end on sample basis with vendor invoices and other supporting documents as appropriate. |
|This has been considered as a key audit matter given the involvement of management estimates and judgments and complexities in determining future costs to complete and the contract margin ||(d) verified on sample basis future cost to complete with order placed with vendors management technical estimates and other relevant supporting documents as appropriate. |
| ||(e) verified the mathematical accuracy of the calculation of percentage completion including contract margin. |
| ||Based on the above procedures performed management's assessment of total costs to complete contracts and determination of contract margin is considered reasonable. |
5. The Company's Board of Directors is responsible for the other information. The otherinformation comprisesthe information included in the Directors report but does notinclude the financial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we donot 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 financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact.
We have nothing to report in this regard.
Responsibilities of management and those charged with governance for the financialstatements
6. 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 financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
7. In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so. Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.
Auditor's responsibilities for the audit of the financial statements
8. Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.
9. 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 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 asfraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under Section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention inour auditor's report to the related disclosures in thefinancial statements or ifsuch 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 financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
10. 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.
11. 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.
12. 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 year 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.
Report on other legal and regulatory requirements
13. As required by the Companies (Auditor's Report) Order 2016 (theOrder) issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in the Annexure B a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
14. 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 other comprehensiveincome) the Statement of Changes in Equity and Cash Flow Statement dealt with by thisReport 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.
(e) On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 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 over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in Annexure A.
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 ofthe Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
(i) The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements - Refer Note 14 and 37 to the financialstatements;
(ii) The Company has long-term contracts including derivative contracts as at March 312019 for which there were no material foreseeable losses.
(iii) There were no amounts which were required to transferred to the InvestorEducation and Protection Fund by the Company during the year ended March 31 2019.
(iv) The reporting on disclosures relating to Specified Bank Notes is not applicable tothe Company for the year ended March 31 2019.
For Price Waterhouse & Co
Chartered Accountants LLP
Firm Registration Number: 304026E/E-300009
| ||Pramit Agrawal |
|Kolkata ||Partner |
|May 30 2018 ||Membership Number 09903 |
Annexure A to Independent Auditors' Report
Referred to in paragraph 14(f) of the Independent Auditors' Report of even date to themembers of Titagarh Wagons Limited on the standalone financial statements as of and forthe year ended March 31 2019.
Report on the Internal Financial Controls with reference to financial statements underClause (i) of Sub-section 3 ofSection 143 of the Act
1. We have audited the internal financial controls with reference to financialstatements of Titagarh Wagons Limited (the Company) as ofMarch 31 2019 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.
Management's Responsibility for Internal Financial Controls
2. The Company's management is responsible for establishing and maintaining internalfinancial controlsbased on the internal control with reference to financial statementscriteria established by the Company considering the essential components of internalcontrol stated inthe Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued bythe Institute of Chartered Accountants of India (ICAI). Theseresponsibilities include the designimplementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Act.
3. Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (theGuidance Note) and the Standards on Auditing deemed tobe prescribedunder section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of internal financial controlsand both issued by the ICAI. Those Standards and the Guidance
Note require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls withreference to financial statements was established and maintained and if such controlsoperated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls system with reference to financial statements and theiroperating effectiveness.Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that amaterial weakness existsand testing and evaluating the design and operating effectiveness of internal controlbased on the assessed risk. The procedures selected depend on the auditor's judgementincluding the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error.
5. 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 systemwith reference to financial statements.
Meaning of Internal Financial Controls with reference to financial statements
6. A company's internal financial controls with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation offinancial statements for external purposes in accordancewith generally accepted accounting principles. Acompany's internal financial controls withreference to financial statements includes those policies and procedures that (1) pertainto the maintenance of records that in reasonable detailaccurately and fairly reflect thetransactions and dispositions of the assets of the company; (2)provide reasonableassurance that transactions are recorded as necessary to permit preparationof financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls with reference to financialstatements
7. Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial control controls with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.
8. In our opinion the Company has in all material respects an adequate internalfinancial controls system with reference to financial statements and such internalfinancial controls with reference to financial statements were operating effectively as atMarch 31 2019 based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India.
For Price Waterhouse & Co
Chartered Accountants LLP
Firm Registration Number: 304026E/E-300009
| ||Pramit Agrawal |
|Kolkata ||Partner |
|May 30 2019 ||Membership Number 099903 |
Annexure B to Independent Auditors' Report
Referred to in paragraph 13 of the Independent Auditors' Report of even date to themembers of Titagarh Wagons Limited on the standalone financial statements as of and forthe year ended March 31 2019.
i. (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The fixed assets are physically verified by the Management according to a phasedprogramme designed to cover all the items over a period of threeyears which in ouropinion is reasonable having regard to the size of the Company and the nature of itsassets. Pursuant to the programme a portion of the fixed assets has been physicallyverified by the Management during the year and no material discrepancies have been noticedon such verification.
(c) The title deeds of immovable properties as disclosed in Note 3 on property plantand equipment to the standalone financial statements are held in the name of the Companyexcept for the followings (details of which are set out in the note 3(a) to standalonefinancial statements).
|No. of cases ||Particulars ||Gross Carrying Amount (Rs. in lacs) ||Net Carrying Amount (Rs. in lacs) ||Remarks |
|1 ||Freehold Land ||9409.78 ||9409.78 ||Original copy of title deeds not available with the Company |
|1 ||Freehold Land ||3391.29 ||3391.29 ||Title deeds are not in the name of the Company |
|1 ||Buildings ||181.91 ||173.67 ||Registration of title deeds is pending |
|2 ||Buildings ||572.04 ||532.32 ||Title deeds are not in the name of the Company |
ii. The physical verification of inventory (excluding stocks with third parties)havebeen conducted at reasonable intervals by the Management during the year.In respect ofinventory lying with third parties these have substantially been confirmed by them.Thediscrepancies noticed on physical verification of inventory as compared to book recordswere not material and have been properly dealt with in the books of accounts.
iii. The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained underSection 189 of the Act. Therefore the provisions of Clause 3(iii) (iii)(a) (iii)(b) and(iii)(c) of the said Order are not applicable to the Company.
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 Companies Act 2013in respect of the loans and investments made and guarantees and security provided by itas applicable.
v. The Company has not accepted any deposits from the public within the meaning ofSections 73 74 75 and 76of the Act and the Rules framed there under to the extentnotified.
vi. Pursuant to the rules made by the Central Government of India the Company isrequired to maintain cost records as specified under Section 148(1) of the Act in respectof its products.We have broadly reviewed the same and are of the opinion that primafacie the prescribed accounts and records have been made and maintained. We have nothowever made a detailed examination of the records with a view to determine whether theyare accurate or complete.
vii. (a) According to the information and explanations given to us and the records ofthe Company examined by us in our opinion the Company is generally regular in depositingundisputed statutory dues in respect of goods and service tax though there has been aslight delay in a few cases and is regular in depositing undisputed statutory duesincluding provident fund employees' state insurance sales tax income tax service taxduty of customs duty of excise value added tax cess and other material statutory duesas applicable with the appropriate authorities.Also refer note 50 to the financialstatements regarding management's assessment on certain matters relating to providentfund.
(b) According to the information and explanations given to us and the records of theCompany examined by us there are no dues of service tax and goods and service tax whichhave not been deposited on account of any dispute. The particulars of dues of income taxsales tax duty of customs duty of excise and value added taxas at March 31 2019 whichhave not been deposited on account of a dispute are as follows:
|Name of the statute ||Nature of dues ||Amount (Rs. in lacs) ||Period to which the amount relates ||Forum where dispute is pending |
|The Customs Act 1962 ||Customs duty ||1280.61 ||2006-2007 to 2012-2013 ||Customs Excise and Service Tax appellate Tribunal |
|The West Bengal Sales Tax Act 1944 ||Sales tax ||5.24 ||2004-05 ||West Bengal Taxation Tribunal |
|The West Bengal Value Added Tax Act 2003 ||Value added tax ||17.43 ||2010-11 ||Additional Commissioner of Commercial Tax West Bengal |
| ||Value added tax ||1199.64 ||2012-13 to 2015-16 ||West Bengal Taxation Tribunal |
|Foreign Trade Development and Regulation Act 1992 ||Terminal excise duty ||693.2 ||2008-10 ||Directorate General of Foreign Trade |
|The Central Excise Act 1944 ||Excise duty ||1096.42 ||2007-08 2008-09 August 2007 to April 2009 April 2012 to June 2012 ||Customs excise and service tax appelate Tribunal |
| ||Excise duty ||525.37 ||2011-12 to 2015-16 ||Additional Commissioner of Central Excise and Service Tax |
| ||Excise duty ||74.58 ||2009-10 to 2010-11 2014-15 and 2015-16 ||Assistant Commissioner of Central Excise and Service Tax |
| ||Excise duty ||18718.89 ||1995-96 to 2013-14 ||Commissioner of Central Goods and Service Tax |
| ||Excise duty ||157.57 ||2006-07 to 2013-14 ||Commissioner of Central Excise (Appeal) |
| ||Excise duty ||329.21 ||2013 to 2015 ||Joint Commissioner of Central Excise and Service Tax |
|The Income- tax Act 1961 ||Income Tax ||91.41 ||AY 2011-12 AY 2013-14 AY 2015-16 ||Commissioner of Income Tax (Appeal) |
viii. According to the records of the Company examined by us and the information andexplanation given to us the Company has not defaulted in repayment of loans or borrowingsto any financial institution or bank or Government or dues to debenture holders asapplicable as at the balance sheet date.
ix. The Company has not raised any moneys by way of initial public offer furtherpublic offer (including debt instruments) and term loans. Accordingly the provisions ofClause 3(ix) of the Order are not applicable to the Company.
x. During the course of our 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 employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.
xi. The Company has paid/ provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct.
xii. As the Company is not a Nidhi Company and the Nidhi Rules 2014 are not applicableto itthe provisions of Clause 3(xii) of the Order are not applicable to the Company.
xiii. The Company has entered into transactions with related parties in compliance withthe provisions of Section 188 of the Act. The details of such related party transactionshave been disclosed in the financial statements as required under Indian AccountingStandard (Ind AS) 24 Related Party Disclosures specified under Section 133 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 under review. Accordingly theprovisions of Clause 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 him. Accordingly the provisions of Clause 3(xv) of the Order arenot 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 notapplicable to the Company.
For Price Waterhouse & Co
Chartered Accountants LLP
Firm Registration Number: 304026E/E-300009
| ||Pramit Agrawal |
|Kolkata ||Partner |
|May 30 2018 ||Membership Number 09903 |