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United Drilling Tools Ltd.

BSE: 522014 Sector: Engineering
NSE: UNIDT ISIN Code: INE961D01019
BSE 00:00 | 17 May 457.65 30.90
(7.24%)
OPEN

437.70

HIGH

477.80

LOW

437.00

NSE 00:00 | 17 May 460.70 28.20
(6.52%)
OPEN

439.00

HIGH

478.75

LOW

437.60

OPEN 437.70
PREVIOUS CLOSE 426.75
VOLUME 15271
52-Week high 605.35
52-Week low 281.65
P/E 20.02
Mkt Cap.(Rs cr) 929
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 437.70
CLOSE 426.75
VOLUME 15271
52-Week high 605.35
52-Week low 281.65
P/E 20.02
Mkt Cap.(Rs cr) 929
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

United Drilling Tools Ltd. (UNIDT) - Auditors Report

Company auditors report

To

The Members of

United Drilling Tools Ltd.

Report on the Audit of the Financial Statements

Opinion

1. We have audited the accompanying financial statements of United Drilling ToolsLimited ("the Company") which comprise the Balance Sheet as at March 31 2021the Statement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year ended on that date and asummary of the significant accounting policies and other explanatory information(hereinafter referred to as "the financial statements").

2. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies 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 the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2021 the profit and total comprehensiveincome changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

3. We conducted our audit of the financial statements in accordance with the Standardson Auditing (SAs) as specified under section 143(10) of the Act. Our responsibilitiesunder those Standards are further described in the Auditor's Responsibilities for theAudit of the financial statements section of our report. We are independent of the Companyin accordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the independence requirements that are relevant to our audit ofthe financial statements under the provisions of the Act and the Rules made thereunderand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the ICAI's Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our audit opinion on thefinancial statements.

Emphasis of Matter

4. We draw attention to Note no. 32 D (18) of the accompanying financial statementswhich describes the management's evaluation of impact of uncertainties related to COVID-I9and its consequential effects on the operations of the Company. Our opinion is notmodified in respect of this matter.

Key Audit Matters

5. Key audit matters (KAM) are those matters that in our professional judgment wereof most significance in our audit of the financial statements of the current period. Thesematters were addressed in the context of our audit of the financial statements as a wholeand in forming our opinion thereon and we do not provide a separate opinion on thesematters.

We have determined the matters described below to be the key audit matters to becommunicated in our report.

Key audit matters How our audit addressed the key audit matter
Revenue recognition - Refer Note 32B 2(C) of the financial statements
The company manufactures and sells a major products and services to its customers mainly through international competitive bids and supply them by plants situated in SEZ. Director General Hydro Carbon provides special status to import from SEZ to Indian Oil Drilling Companies under international competitive bidding at special import duty and issue Essential Certificate (EC) to these companies against each invoice issued by the seller to those importing domestic companies. To follow the process Invoice is issued and it takes some time to get EC by the buyer companies. Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows:
Being material ready for despatch but pending for delivery to buyer for want of submission of EC by the buyers are taken into sales and is part of revenue. The company has analysed this and concluded on the principles for deciding in which period or periods the company's sales transactions should be recognized as revenue. The accounting policies and the note to the standalone Ind AS financial statement provide additional information on how the company accounts for its revenue.(See Note 32B(2C). a. Evaluated the design of internal controls relating to revenue recognition b. Selected a sample and tested the operating effectiveness of the internal control.
b. Carried out a combination of procedures involving enquiry and observation performance and inspection of evidence in respect of operation of these controls.
c. Read analysed and identified the distinct performance obligations in these tenders.
d. Considered the terms of the contracts to determine the transaction price including any variable consideration to verify the transaction price used to compute revenue.
e. Samples in respect of revenue recorded customer acceptances subsequent invoicing and historical trend of collections and disputes.
f. Performed analytical procedures for reasonableness of revenues disclosed by type of product and service offerings.

Information Other than the Financial Statements and Auditor's Report hereon

6. The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information 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 during thecourse of our audit or otherwise appears to be materially misstated.

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 Financial

Statements

7. 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 financial statements that givea true and fair view of the financial position financial performance total comprehensiveincome changes in equity and cash flows of the Company in accordance with the Ind AS andother accounting principles generally accepted in India. 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 design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

8. In preparing the financial statements management and board of directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

9. The Board of Directors are responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

10. 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 withStandards of Auditing (SA's) will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements.

11. 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 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 financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness 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 financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions 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.

• Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.

12. 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.

13. 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.

14. 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 the matteror 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

15. With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended:

In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act.

16. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in''Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Orderto the extent applicable.

17. 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" Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.

18. As required by Section 143(3) of the Act based on our audit 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 Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the relevant books of account.

d. In our opinion the aforesaid financial statements comply with the Ind AS specifiedunder Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014.

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 matter to be included in the Auditors' Report under section197(16) of the Act as amended:

In our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act.

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 as amended in our opinion and to thebest 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 financial statements.

ii. The Company has made provision as required under the applicable law or 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.

For R S Dani & Co.
Chartered Accountants
(Firm's Registration No. 000243C)
Sd/-
Ashok Mangal
Place : Noida Partner
Date : 25 June 2021 (Membership No. 071714)

Annexure "A" to the Independent Auditors' Report on the Ind AS FinancialStatement of United Drilling Tools Ltd.

To

The Members of United Drilling Tools Ltd.

The Annexure referred to in paragraph 1 under report on Other Legal and RegulatoryRequirements' section of our report of even date to the members of United Drilling ToolsLtd. on the Ind AS financial statements for the year ended 31 March 2021

Based on the audit procedures performed for the purpose of reporting a true and fairview on the financial statements of the Company and taking into consideration theinformation and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit and to the best of our knowledge and beliefwe report that:

(i) In respect of fixed assets :

(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) As explained to us the Company has a regular program of physical verification ofits fixed assets by which fixed assets are verified and no material discrepancies werenoticed on such verification. In our opinion the periodicity of physical verification isreasonable having regard to the size of the Company and the nature of its assets.

(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/lease deeds of immovableproperties (which are included under the Note 1 of the financial statements -'Propertyplant and equipment) are held in the name of the Company except for the immovableproperties which were acquired by entities that have since been amalgamated with theCompany.

(ii) As explained to us physical verification of inventory has been conducted atreasonable intervals by the management and discrepancies noticed on such physicalverification between physical stocks and book records were not material considering theoperations of the Company and the same have been properly dealt with in the books ofaccount.

(iii) According to the information and explanations given to us and on the basis of ourexamination of the records of the

Company the Company has granted unsecured loans to entities covered in the registermaintained under section 189 of the Companies Act 2013 and with respect to the same:

(a) in our opinion the terms and conditions of grant of such loans are not primafacie prejudicial to the Company's interest.

(b) the schedule of repayment of principal and payment of interest has been stipulatedand the repayment/ receipts of the principal amount and the interest are regular;

(c) there is no overdue amount in respect of loans granted;

(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 loans and advances given investments made guarantees and securities given.

(v) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the Company has not accepted any deposits fromthe public and consequently the directives issued by the Reserve Bank of India and theprovisions of Sections 73 to 76 or any other provision of the Companies Act and the rulesframed there under are not applicable to the company.

(vi) We have broadly reviewed the cost records maintained by the company as prescribedby the Central Government of India under section 148(1) of the Companies Act 2013 andare of the opinion that prima facie the prescribed records have been made and maintained.However we have not made a detailed examination of the records with a view to determinewhether they are accurate or complete.

(vii) In respect of statutory dues :

(a) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including provident fund income-taxsales tax value added tax duty of customs service tax GST and cess and other materialstatutory dues have been generally regularly deposited during the year by the Company withthe appropriate authorities. As explained to us the Company did not have any dues onaccount of employees' state insurance duty of excise and GST. According to theinformation and explanations given to us no undisputed amounts payable in respect ofprovident fund income tax sales tax value added tax duty of customs service tax GSTcess and other material statutory dues were in arrears as at 31 March 2021 for a period ofmore than six months from the date they became payable.

(b) According to the information and explanations given to us there are no materialdues of duty of customs income tax sales tax duty of excise service tax GST and valueadded tax which have not been deposited with the appropriate authorities on account of anydispute.

(viii) In our opinion and according to the information & explanations given to usthe company has not defaulted in repayment of dues to banks and financial institutions.The Company does not have any loans or borrowings from government or debenture holdersduring the year.

(ix) In our opinion and according to the information and the explanations given to usthe term loans have been applied for the purposes for which they were obtained. Further asper the records the Company did not raise any money by way of initial public offer orfurther public offer (including debt instruments).

(x) Based upon the audit procedures performed and to the best of our knowledge andbelief and according to the information and explanations given to us no fraud by thecompany or any fraud on the Company by its officers or employees has been noticed orreported during the year.

(xi) According to the information and explanations give 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 Companies Act 2013.

(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) 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 Ind AS financial statements as required by theapplicable Ind AS.

(xiv) According to the information and explanations give 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 paragraph 3 (xiv) of the Order is not applicable.

(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 paragraph 3(xv) ofthe Order is not applicable.

(xvi) According to the information and explanations given to us the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.

For R S Dani & Co.
Chartered Accountants
(Firm's Registration No. 000243C)
Sd/-
AshokMangal
Place : Noida Partner
Date : 25 June 2021 (Membership No. 071714)

Annexure "B" to the Independent Auditors' Report on the Ind AS FinancialStatement of United Drilling Tools Ltd.

To

The Members of United Drilling Tools Ltd.

The Annexure referred to in paragraph 2(f) under report on Other Legal and RegulatoryRequirements' section of our report of even date to the members of United Drilling ToolsLtd. on the Ind AS financial statements for the year ended 31 March 2021.

Report on the Internal Financial Controls under Clause (i) of Subsection 3 of Section143 of the Companies Act 2013 ("the Act")

1. We have audited the internal financial controls over financial reporting of UnitedDrilling Tools Ltd. ("the Company") as of 31 March 2021 in conjunction with ouraudit of the Ind AS financial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

2. The Board of Directors of the Company is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India ('ICAI').These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to 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.

Auditors' Responsibility

3. Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the Ind AS financial statements 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 systemover financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

6. A company's internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies 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 Ind AS 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 Ind AS financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

7. Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

8. In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2021 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For R S Dani & Co.
Chartered Accountants
(Firm's Registration No. 000243C)
Sd/-
AshokMangal
Place : Noida Partner
Date : 25 June 2021 (Membership No. 071714)

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