Hardcastle & Waud Mfg Co Ltd Auditors Report.
The Members of
Hardcastle and Waud Manufacturing Company Limited
Report on the Indian Accounting Standards ("Ind AS") Financial Statements Opinion
We have audited the accompanying Ind AS financial statements of Hardcastle and Waud Manufacturing Company Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2019, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date, and a summary of significant explanatory information (hereinafter referred to as "Ind AS financial statements").
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Ind AS financial statements give the information required by the Companies Act,2013 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2019, the Profit and total comprehensive income, changes in equity and its cash flow for the year ended on that date.
Basis for Opinion
We conducted our audit of the Ind AS financial statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the Ind AS Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the Ind AS financial statements under provisions of the Act and the Rules made there under, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAIs Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on Ind AS financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.
Valuation of Investments
|The Companys investment portfolio consists of Non Current investments.||Our audit procedures for this area included:|
|Total investment portfolio of the Company represents 50.36 per cent of the Companys total assets (net of provision).||We assessed appropriateness of the pricing methodologies with reference to Companys accounting and valuation policy;|
|Current Investments are stated at lower of cost or market value, determined on an individual investment basis. Long term investments are stated at cost less provision for diminution other than temporary in the value of these investments.||We have assessed the process and tested the operating effectiveness of the key controls, including the Companys review and approval of the estimates and assumptions used for the valuation including key authorization and data input controls;|
|In respect of the portfolio of quoted investments we do not consider these investments to be at a high risk of significant misstatement, or to be subject to a significant level of judgement because they comprise liquid, quoted investments. However, due to their materiality in the context of the financial statements as a whole, they are considered to be one of the areas which had significant impact on our overall audit strategy.||For quoted investments, recalculated the valuations of investments with independent pricing sources;|
|The portfolio of unquoted investments which includes equity shares and preference shares is 50.27 per cent of the Companys Total Assets. Valuation of unquoted investments involves judgement depending on the observability of the inputs into the valuation and further judgement in determining the appropriate valuation methodology where external pricing sources are either not readily available or are unreliable. Refer Note no. 4 to the Financial Statements and Note no. 1.17(v) of the significant policies.||For unquoted investments, we critically evaluated the valuation assessment and resulting conclusions in order to determine appropriateness of the valuations recorded with reference to the accounting Companys valuation guidelines.|
|The Companys investment properties consist of premises.||Our audit procedures for this area included:|
|Total Investment properties of the Company represents 16.71 per cent of the Companys total assets.||We have verified whether each of the properties are purchased to be held for capital appreciation or for earning rental income so as to classify it under investment properties.|
|Investment properties are valued at cost as per Ind AS 40 .Refer Note no. 1.05 of Significant the Financial Statements.||We assessed the method of verification and AccountingPoliciesandNoteno.3to valuation of properties to ensure its reasonableness in the circumstances relating to each asset.|
The company has pending litigation Our audit procedures for this area included: matters with various appellate
Obtained details of complete tax assessment and demands for the year ended March 31, 2019 from authorities and at different forums management.
The Company has material uncertain
We involved our internal experts to challenge the managements underlying assumptions in estimating tax positions including matters under the tax provision and the possible outcome of the disputes. dispute which involve significant judgment to determine the possible Our internal experts also considered legal precedence and other rulings in evaluating managements outcome of these disputes.. position on these uncertain tax positions.
Refer Note 27.01 to the Financial Additionally, we considered the effect of new information in respect of uncertain tax positions as Statements. at April 1, 2018 to evaluate whether any change was required to managements position on these uncertainties.
The Companys Board of Directors is responsible for the other information. Other information comprises the information included in the Management Discussion and Analysis, Boards Report including Annexures thereto, Corporate Governance and Shareholders Information, but does not include the Ind AS financial statements and our auditors report thereon. The other information as identified above is expected to be made after the date of this auditors report.
Our opinion on the Ind AS financial statements does not cover the other information and we will not express any form of assurance conclusion thereon. In connection with our audit of the Ind AS financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the Ind AS financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.
When we read the other information as identified above, if we conclude that there is a material misstatement therein, we are required to conclude the matter to those charged with governance.
Managements Responsibility for the Ind AS Financial Statements
The Companys Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to preparation of these Ind AS Financial Statements that give a true and fair view of the financial position, financial performance, total comprehensive income, changes in equity and cash flows of the Company in accordance with the Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, and other accounting principles generally accepted in India.
This responsibility also includes maintenance of adequate accounting records in accordance with provisions of the Act for safeguarding assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring accuracy and completeness of the accounting records, relevant to preparation and presentation of the Ind AS Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Inpreparing the IndAS financial for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. The Board of Directors is also responsible for overseeing the Companys financial reporting process.
Auditors Responsibilities for Audit of the Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: disclosures in the 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 auditors report. However, future events or conditions may cause the Company to cease to continue as a going concern. v. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements:
1. As required by the Companies (Auditors Report) Order, 2016 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section143 of the Act, we give in Annexure "A" hereto a statement on the matters specified in paragraph 3 and 4 of the Order, to the extent applicable.
2. As required by section143(3) of the Act, we report that:
a) We have sought and obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit;
b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;
c) The Balance Sheet, Statement of Profit and Loss (including other comprehensive income), the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;
d) In our opinion, the aforesaid Ind AS financial statements comply with the accounting standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;
e) On the basis of written representations received from the directors as on 31st March, 2019, taken on record by the Board of Directors, none of the directors is disqualified as on 31st March , 2019, from being appointed as a director in terms of section 164 (2) of the Act;
f) With respect to adequacy of the internal financial controls over financial reporting of the Company and operating effectiveness of controls, refer to our separate report in "Annexure B"; and
g) With respect to other matters to be included in the Auditors Report in accordance 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 explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with provisions of section 197 of the Act.
h) With respect to other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and 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 financial position in its Ind AS financial statements -Refer Note no. 27.01 of Ind As Financial Statements.
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses; and
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
|Firm No. 103429W|
|(CA Atul Jain)|
|Date: 24th May 2019||M. No. 037097|
Annexure "A" to the Independent Auditors Report
(i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets; (b) Some of the fixed assets were physically verified during the year by the management in accordance with a phased programme of verification, which in our opinion provides for physical verificationof all the fixed assets at reasonable intervals .No material discrepancies between the book records and physical inventory have been noticed; (c) The title deeds of immovable properties held as Fixed assets/Long term investments are in the name of the Company;
(ii) Physical verification of inventory has been conducted at reasonable intervals by the management and no material discrepancies were noticed; (iii) The Company has not granted loans, secured or unsecured to any firms, companies or other parties covered in the register maintained under Section 189 of the Companys Act,2013 ( the Act ) and hence provisions of clauses (iii) (a) ,(b) and(c) of paragraph 3 of the Company (Auditors Report ) Order 2016 ( the Order ) are not applicable to the Company; (iv) In respect of investments, provisions of Section 185 and 186 of the Act, have been complied with; (v) The Company has not accepted any deposits from the public within the meaning of Sections 73 to 76 of the Companies Act and the rules framed there under to the extent notified; (vi) The Central Government of India has not prescribed maintenance of cost records under subsection (1) of Section 148 of the Act for any of the activities of the Company; (vii) According to records of the Company, examined by us and the information and explanations given to us: (a) The Company is generally regular in depositing undisputed statutory dues including provident fund, employees state insurance, income-tax, sales-tax, service tax, goods and service tax, duty of customs, duty of excise, value added tax, cess and other statutory dues with appropriate authorities. There were no undisputed amounts payable for a period of more than six months from the date they became payable; (b) Details of dues of Sales tax, duty of excise and income tax which have not been deposited as at March 31,2019 on account of disputes are given below :
|Nature of||Nature of Dues||Forum where dispute is pending||Period to which the Amount relates||Amount*|
|Sales Tax||Sales Tax||Deputy Commissioner (Ct), Chennai||2002-03,2003-04, 2004-05||4,65,848|
|Sales Tax||Sales Tax||Appellate Assistant Commissioner, Chennai||2009-10,2010-11||84,299|
|Sales Tax||Sales Tax||Appellate Assistant Commissioner, Chennai||2002-03,2003-04,2004-05,2005-06||6,61,561|
|Sales Tax||Sales Tax||DY Comm. OF Sales Tax Appeals||2000-2001||2,67,492|
|Sales Tax||Sales Tax||Assessing Officer||2004-05||3,30,744|
|Central Excise||Excise Duty & Penalty||CCE (APPEALS),Mumbai||1988-89||8,89,214|
|Central Excise||Excise Duty & Penalty||CCE (APPEALS),Mumbai||1988-89||69,641|
|Sales Tax||Sales Tax||Deputy Commissioner Appeal(Mumbai)||2013-2014||2,50,744|
|Sales Tax||CST||Deputy Commissioner Appeal (Mumbai)||2012-2013||5,36,431|
|Income Tax||Income Tax||CIT(A)||2007-2008||2,42,105|
|Income Tax||Income Tax||CPC||2009-2010||12,84,140|
*The amount includes र: 11,48,513 which has been deposited with Sales Tax Authorities in respect of contested demands raised against the Company. There were no dues of duty of customs and goods & service tax which have not been deposited as at March 31, 2019 on account of any dispute; (viii) The Company has not taken any loan from any financial Institution, bank or government and has not issued any debentures; (ix) The Company has not raised money by way of initial public offer or further public offer and term loans therefore clause (ix) of para 3 of the Order is not applicable; (x) To the best of our knowledge and belief and according to the information given to us, no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year; (xi) Managerial remuneration paid or provided is within permissible limits as prescribed by section 197 read with Schedule V of the Act; (xii) As the Company does not fall into the category of a Nidhi company, clause (xii) of para 3 of the Order is not applicable to the Company; (xiii) According to the information and explanations given to us, all transactions with related parties are in compliance with Sections 177 and 188 of the Act wherever applicable and details have been disclosed in the Ind AS Financial Statements as required by applicable accounting standards; (xiv) The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review; (xv) According to the information and explanations given to us, the Company has not entered into any non-cash transactions with directors or persons connected with them under provisions of section 192 of Act; and (xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934
|For GMJ & Co.|
|Chartered Accountants Firm No. 103429W|
|(CA Atul Jain)|
|Date: 24th May 2019||M. No. 037097|
Annexure "B" to Auditors Report
Report on Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Act
We have audited the internal financial controls over financial reporting of Hardcastle and Waud Manufacturing Company Limited ("the Company") as of 31st March, 2019 in conjunction with our audit of the Ind AS Financial Statements of the Company for the year ended on that date.
Managements Responsibility for Internal Financial Controls
The Companys management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring orderly and efficient conduct of its business, including adherence to Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of accounting records, and the timely preparation of reliable financial information, as required under the Act.
Our responsibility is to express an opinion on the Companys internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such control operated effectively in all material respects. Our audit involved performing procedures to obtain audit evidence about adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgment, including assessment of the risks of material misstatement of the Ind AS Financial Statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companys internal financial reporting controls system over financial
Meaning of Internal Financial Controls Over Financial Reporting
A companys internal financial control over financial reporting is a process designed to provide reasonable assurance regarding reliability of reporting and the preparation of Ind AS Financial Statements for external purposes in accordance with generally accepted accounting principles. A companys internal financial control over financial reporting includes those policies and procedures that (1) pertain to maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets of the company; (2)provide reasonable assurance that transactions are recorded as necessary to permit preparation of Ind AS Financial Statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the Ind AS Financial Statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of inherent limitations of internal financial controls over financial reporting, including possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that internal financial control over inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion and to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March, 2019, based on the internal control over financial reporting criteria established by the Company considering essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
|For GMJ & Co|
|Firm No. 103429W|
|(CA Atul Jain)|
|Place : Mumbai||Partner|
|Date : 24th May 2019||M. No. 037097|