To the members of Vascon Engineers Limited
Report on the audit of the Standalone Financial Statements Opinion
We have audited the accompanying Standalone Financial Statements of Vascon EngineersLimited (hereinafter referred as "the Company") which comprise the Balancesheet as at March 31 2020 the Statement of Profit and Loss (including OtherComprehensive Income)
Statement and the Statement of Changes in Equity for the year then ended and Notes tothe Standalone Financial Statements including a summary of significant accountingpolicies and other explanatory information (hereinafter collectively referred as the"Standalone Financial Statements") In our opinion and to the best of ourinformation and according to the explanations given to us the aforesaid StandaloneFinancial Statements give the information required by the Companies Act 2013 (hereinafterreferred as "the Act") in the manner so required and give a true and fair viewin conformity with the Indian Accounting Standards prescribed Under Section 133 of the Actread with the Companies (Indian Accounting Standards) Rules 2015 as amended (hereinafterreferred as "Ind AS") and other accounting principles generally accepted inIndia of the state of affairs (financial position) of the Company as at March 31 2020its profits other comprehensive income its cash flows and the changes in equity for theyear ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (hereinafterreferred as "SAs") specified Under Section Act. Our responsibilities under thoseStandards are further described in the Auditor's responsibilities for the audit of theStandalone 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 (hereinafter referred as "ICAI") together with the ethical requirementsthat are relevant to our audit of the Standalone Financial Statements under the provisionsof the Act and the Rules there under and we have fulfilled our other ethicalresponsibilities in these requirements and the ICAI's Code of Ethics. We believe that theaudit evidence we have obtained is sufficient basis for our opinion.
Emphasis of Matter
We draw attention to Note 43 to the Standalone Financial Statements which describesthe economic and social consequences the entity is facing as a result of Covid-19 whichis impacting operations of the Company supply chains personnel available for work etc.
Our opinion is not modified in respect of this matter of emphasis.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Standalone Financial Statements of the current 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. 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 Revenue Recognition: ||Principal Audit Procedures: |
|Ind AS 115 prescribes detailed guidance for various elements of revenue recognition and requires detailed contract assessment as per the accounting principles. The revenue accounting standards application involves certain significant judgements regarding identification of distinct performance obligations recognition of revenue over the period recognition of contract acquisition costs appropriateness of the basis used for measuring the estimation of the total cost of completion of the projects over a wide range of customers and also wide range of contracts each having different risk profile based on its individual nature of performance and delivery characteristics. Accordingly this matter has been identified as KAM. Refer Note No. 2.04 of the Standalone Financial Statements. ||Our audit procedures on revenue recognition from construction contract consisted mainly the testing of the design and operating effectiveness of the laid down internal controls and then substantive testing of the transactions. |
| ||The audit procedures performed includes following: |
| ||Assessed the Company's process to identify revenue recognition and cost estimation as per the requirement of the revenue accounting standard. |
| ||Evaluation of the internal control designs relating to the revenue accounting standards Selected an appropriate samples of contracts and evaluated them along with the supporting evidence to determine whether various elements of revenue recognition as well cost allocations are assessed with the principles prescribed under Ind AS 115. |
| ||Read and assessed the disclosure made in the financial statements for assessing the compliance with the disclosure requirements. |
Information other than the Standalone Financial Statements and Auditor's Report thereon(hereinafter referred as "other information")
The Company's Management and Board of Directors are responsible for the preparation ofthe other information. The other information comprises the Board's report and managementdiscussion and analysis included in the annual report but does not include the StandaloneFinancial Statements and our report thereon. Other information is expected to be madeavailable to us after the date of our report.
Our opinion on the Standalone Financial Statements does not cover the other informationand we do not express any form of assurance and / or conclusions thereon.
Management Responsibilities for the Standalone Financial Statements
The Company's Management and Board of Directors are responsible for the matters statedin Section 134(5) of the Act with respect to the preparation of these Standalone FinancialStatements that give a true and fair view of the financial position financialperformance cash flows and changes in equity of the Company in accordance with theaccounting principles generally accepted in India including the Ind AS. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation 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 Standalone FinancialStatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error. In preparing the Standalone Financial Statements Company'sManagement and Board of Directors are responsible for assessing the Company's ability tocontinue as a going concern disclosing as applicable matters related to going concernand using the going concern basis of accounting unless management either intends toliquidate the Company or to cease operations or has no realistic alternative but to doso.
The Board of Directors are responsible for overseeing the Company's financial reportingprocess.
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 inaccordance with SAs we exercise professional judgment and maintain professionalscepticism throughout the audit. We also:
a) 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 opinion. The risk of notdetecting a material misstatement resulting from fraud is higher than for one resultingfrom error as fraud may involve collusion forgery intentional omissionsmisrepresentations or the override of internal control.
b) 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.
c) Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
d) 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.
e) Evaluate the overall presentation structure and content of the Standalone FinancialStatements including the disclosures and whether the
Standalone Financial Statements represent the underlying transactions and events in amanner that achieves fair presentation. Materiality is the magnitude of misstatements inthe Standalone Financial Statements that individually or in aggregate makes it probablethat the economic decisions of a reasonably knowledgeable user of the Standalone FinancialStatements may be influenced. We consider quantitative materiality and qualitative factorsin (i) planning the scope of our audit work and in evaluating the results of our work; and(ii) to evaluate the effect of any identified misstatements in the Standalone FinancialStatements.
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 audit . internal controlthatwe identifyduringour
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.
Due to the Covid-19 pandemic the lockdown and other restrictions were imposed by theGovernments (Centre and State) and local administration as such some of the auditprocesses carried out during and post lockdown were based on the remote access andevidence shared digitally. The Standalone Financials Statement for the year ended March31 2019 were audited by predecessor auditor whose report dated May 28 2019 express anunmodified opinion on those statements.
Our opinion has not been modified for the above other matters.
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 in terms of Section 143 (11) of the Act we give in the"Annexure A" a statement on the matters specified in paragraphs 3 and 4of the Order to the extent applicable.
2. As required by Section 143 (3) of the Act and 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 Flows dealt with by thisreport are in agreement with the books of account;
d) In our opinion the aforesaid Standalone Financial Statements comply with the Ind ASspecified under Section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended;
e) On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 from being appointed as a director in terms of Section 164 (2) of theAct;
f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure B". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internal financialcontrols over financial reporting;
g) 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 we report thatin our opinion and to the best of our information and according to the explanations givento us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of Section 197 of the Act; and h) With respect to the othermatters to be included in the auditor's report in accordance with rule 11 of the Companies(Audit and Auditors) Rules 2014 in our opinion and to the best of our information andaccording to the explanations given to us:
i. The Company has disclosed the impact of pending litigations as at March 31 2020 onits financial position in its Standalone Financial Statements - Refer note 30 to theStandalone Financial Statements.
ii. The Company has made provision as required under the applicable law or Ind AS formaterial foreseeable losses if any on long term contracts including derivativecontracts.
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1 under the heading "Report on Other Legal andRegulatory Requirements" Section of our report on even date) (i) (a) The Company hasmaintained proper records showing full particulars including quantitative details andsituation of fixed assets of the Company.
(b) The Company has a program of verification of fixed assets to cover all the items ina phased manner over a period of 3 years which in our opinion is reasonable havingregard to the size of the Company and the nature of its assets. Pursuant to the programcertain fixed assets were physically verified by the Management during the year. Accordingto the information and explanations given to us no material discrepancies were noticed onsuch verification.
(c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered documents provided to us we reportthat the title deeds comprising all the immovable properties of land and buildings areheld in the name of the Company as at the balance sheet date. Immovable properties of landand buildings whose title deeds have been pledged as security for loans and guarantees areheld in the name of the Company as at the balance sheet date.
(ii) In our opinion and according to the information and explanations given to ushaving regard to the nature of inventory the physical verification by way of verificationof title deeds site visits by the Management and certification of extent of workcompletion by competent persons are at reasonable intervals and no material discrepancieswere noticed on physical verification.
(iii) According to the information and explanations given to us the Company hasgranted loans secured or unsecured to companies firms Limited Liability Partnershipsor other parties covered in the register maintained under Section 189 of the CompaniesAct 2013 in respect of which:
(a) The terms and conditions of the grant of such loans are in our opinion primafacie not prejudicial to the Company's interest.
(b) The schedule of repayment of principal and payment of interest has not beenstipulated and in the absence of such schedule we are unable to comment on the regularityof the repayments or receipts of principal amounts and interest.
(c) There is no overdue amount remaining outstanding as at the year-end.
(iv) According to information and explanation provided to us the Company has compliedwith provisions of Section 185 and Section 186 of the Act.
(v) According to the information and explanations given to us the Company has compliedwith the provisions of Sections 73 to 76 or any other relevant provisions of the CompaniesAct 2013 and the Companies (Acceptance of Deposits) Rules 2014 as amended with regardto the deposits accepted. According to the information and explanations given to us noorder has been passed by the Company Law Board or the National Company Law tribunal or theReserve Bank of India or any Court or any other Tribunal.
(vi) The Central Government has specified maintenance of cost records under Section148(1) of the Act. We have broadly reviewed these records relating to materials labourand other items of cost maintained by the Company and are of the opinion that primafacie the prescribed cost accounts and records have been made and maintained. We havenot however made a detailed examination of records with a view to determine whether theyare accurate or complete.
(vii) According to the information and explanations given to us in respect ofstatutory dues:
(a) There were delays by the Company in depositing undisputed statutory dues includingProvident Fund Employees' State Insurance Income-tax Sales Tax Service Tax CustomsDuty Excise Duty Value Added Tax Cess and other material statutory dues applicable toit to the appropriate authorities.
(b) There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income-tax Sales Tax Service Tax Customs Duty Excise Duty ValueAdded Tax Goods and Service Cess and other material statutory dues in arrears as atMarch 31 2020 for a period of more than six months from the date they become payableexcept for as given below:
|Name of the Statute ||Nature of the Dues ||Amount (Rs.) ||Period to which the amount relates ||Due Date ||Date of Payment ||Amount Paid Subsequently |
|Employee Provident Fund Act 1952 ||Provident Fund ||40614 ||May 2018 to March 2019 ||15th of the following month ||_- ||- |
| || ||2880 ||April 2019 to May 2019 || ||_- ||- |
|Income Tax Act ||Tax Deducted At Source - Salary ||10284843 ||Aug 2019 to Sep 2019 ||7th of the following month ||_8th June 2020 ||10284843 |
|Sales Tax Act ||Sales Tax ||463199 ||April 2011 to March 2012 ||20th of every following month ||- ||- |
|Goods and Service Tax Act ||Goods and Service Tax Act ||10636644 ||May 2019 ||20th of every following month ||- ||- |
(c) Details of dues of Income tax Sales-tax Service tax Goods and Service taxCustoms Duty and Cess which have not been deposited as on March 31 2020 on account ofdisputes are given below:
|Name of the Statute ||Nature of disputed dues ||Forum where dispute is pending ||Period to which it relates ||Amount Involved ||Amount Unpaid |
|Income Tax Act 1961 ||Income Tax ||Income Tax Appellate Tribunal ||2009-10 ||23332629 ||23332629 |
|Sales Tax Act ||Sales Tax / Value ||Joint Commissioner Mumbai ||2008-09 to 2014-15 ||95728330 ||93665830 |
| ||Added Tax / Central Sales Tax ||Commercial Tax O_cer Goa ||2010-11 ||4468475 ||4468475 |
(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in the repayment of loans or borrowings to banks financialinstitutions and dues to debenture holders and there are no borrowings from government
(ix) The Company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments). In our opinion and according to the information andexplanations given to us money raised by way of term loan has been applied for thepurposes for which they were raised.
(x) Based upon the audit procedures performed by us and according to the informationand explanations provided to us no material fraud by the Company or any material fraud onthe Company by its officers or employees has been noticed or reported during the .
(xi) In our opinion and according to the information and explanations given to us theCompany has paid / provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of Section 197 read with Schedule V to the CompaniesAct 2013. (xii) The Company is not a Nidhi Company and hence reporting under clause 3(xii) of the Order is not applicable to the Company.
(xiii) In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 188 and 177 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the financial statements as required by the applicableIndAS.
(xiv) According to the information and explanation provided to us during the year theCompany has not made any preferential allotment or private placement of shares or fully orpartly convertible debentures and hence reporting under clause 3 (xiv) of the Order is notapplicable to the Company.
(xv) According to the information and explanation provided to us the Company has notentered into any non-cash transactions with directors or persons connected with them.Accordingly reporting on Para 3(xv) is not applicable.
(xvi) According to the information and explanation provided to us the Company is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 1934.
ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 2 (f) under the heading "Report on other legal andregulatory requirements" of our report on even date)
Report on the Internal Financial Controls Over Financial Reporting under Clause
(i) Section 143 (3) of the Companies Act 2013 ("the Act") Opinion
We have audited the internal financial controls over financial reporting of VasconEngineers Limited (hereinafter referred as "the Company") as of March 312020 in conjunction with our audit of the Standalone Financial Statements of the Companyfor the year ended on that date. In our opinion and to the best of our information andaccording to the explanations given to us the Company has in all material respects anadequate internal financial controls system over financial reporting and such internalfinancial controls over financial reporting were operating considering the control overfinancial effectively asat March 31 2020 based on the internal financial essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting (hereinafter referred as "the guidance note")issued by the Institute of Chartered Accountants of India (hereinafter referred as"ICAI").
Management's Responsibility for Internal Financial Controls
The Company's Management and Board of Directors are 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. These responsibilities include the designimplementation and maintenance of adequate internal financial controls that wereeffectively for ensuring the orderly and efficient conduct of its business includingadherence to the Company's policies the safeguarding operating of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.
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 and the Standards on Auditing issued by ICAI and deemed to beprescribed Under Section 143(10) of the Act 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 over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe 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 operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the Standalone Financial Statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide financial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting is a processdesigned to provide reasonable assurance regarding the reliability of A Company's internalfinancial control over financial Statements for external purposes in accordance withgenerally accepted accounting financial principles. A company's internal financial controlover financial 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 Standalone Financial Statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the Standalone Financial Statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols over financial reporting to future periods are subject to the risk that theinternal financial control over financial become inadequate because of changes inconditions or that the degree of compliance with the policies or procedures maydeteriorate.