mishra dhatu nigam ltd share price Auditors report


To

The Members of

Mishra Dhatu Nigam Limited

Hyderabad.

Report on the Audit of the Standalone Financial Statements

We have issued an Independent Audit Report dated 26.05.2022 on the Ind AS Standalone Financial Statements as adopted by Board of Directors on even date. Pursuant to the observations of Comptroller and Auditor General of India, we are issuing this Revised Report by including additional disclosure under ‘Emphasis of Matter para. This report supersedes our earlier report issued on 26.05.2022.

Opinion

We have audited the accompanying standalone financial statements of Mishra Dhatu Nigam Limited (the "Company"), which comprise the Balance Sheet as at March 31, 2022, 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 then ended, and a summary of significant accounting policies and other explanatory information (hereinafter referred to as the "standalone financial statements").

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone 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 March 31, 2022, the profit and total comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing ("SA"s) 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 Standalone 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 standalone financial statements under the provisions of the Act and the Rules made thereunder, 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 obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Key Audit Matter

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The key audit matters that we have identified in the current year are as follows:

Key Audit matter How the matter was addressed in our audit
Revenue Recognition
Refer Accou nting Policy Note No.2.3 and Note No. 28 to the standalone financial statements. Following audit procedures were applied, considering the significance of the matter, amongst others to obtain sufficient appropriate audit evidence:
Revenue Recognition was identified as a key audit matter as the Company as well as its external stakeholders focus on Revenue as a key performance indicator. This could create an incentive for revenue to be overstated or recognised before control has been transferred. The standard on Revenue establishes a comprehensive framework for determining when, how much & whether, revenue could be recognized. Accordingly, this involves certain key judgements relating to identification of distinct performance obligations, determination of transaction price of identified performance obligation, the appropriateness of the basis used to measure revenue recognition. 1. Assessed the appropriateness of the revenue recognition accounting policies whether they are in line with applicable accounting standards.
2. Evaluated the design of key controls and operating effectiveness of the relevant key controls with respect to revenue recognition on selected transactions.
3. Performed substantive testing by sample selection of revenue transactions recorded during the year by testing the underlying documents.
4. Carried out analytical procedures on revenue recognised during the year to identify unusual variances, if any.
5. Tested on sampling basis, whether revenue transactions near to the reporting data have been recognised in the appropriate period by comparing the transactions selected with relevant underlying documentation, including goods delivery notes and the terms of sales.
6. Checked the underlying documentation to verify that the control and ownership has been transferred to the customer.

Emphasis of Matter

We draw attention to the following matters in the Notes to the Standalone Financial Statements:

a) Note No. 9 (Other Non-Current Assets), Note No.11 (Current Financial Assets - Trade Receivables), Note No. 14 (Current Financial Assets - Others), Note No. 15 (Other Current Assets), Note No. 22 (Other Non-current Liabilities), Note No. 24 (Current Financial Liabilities - Trade Payables), Note No. 25 (Current Financial Liabilities - Others) and Note No. 26 (Other Current Liabilities) to the standalone Financial Statements are subject to receipt of confirmation of balances/reconciliation.

b) We draw attention to Note No. 46 of the Standalone financial statements in which the Company describes the impact arising from the COVID-19 Pandemic.

c) We draw attention to Note No.30 ‘Cost of Raw Material consumed which includes scrap generated as a part of manufacturing process, majority of which will again be reused as Raw Material in the production process. At present there is no Ind AS or Guidance note on disclosures regarding changes in scrap and going by the significant value being re-used, Company is accounting for them as Raw Material consumption. Company had referred the matter regarding appropriate disclosure to the Expert Advisory Committee of Institute of Chartered Accountants of India and the response of the Expert Committee is awaited.

Our opinion on the Standalone Financial Statements is not modified in respect of the above matters.

Other Information

The Companys Board of Directors is responsible for the other information. The other information comprises the information contained in Directors Report including Annual Report on CSR Activities, Management Discussion & Analysis Report, Business Responsibility Report, Report on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and outgo, Report on Corporate Governance annexed thereto, Shareholder Information and other information contained in Annual Report, but does not include the standalone financial statements and our report thereon. These reports are expected to be made available to us after the date of this auditors report.

Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone 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 standalone 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, if we conclude that there is material misstatement therein, we are required to communicate the matter to those charged with governance.

Managements Responsibilities for the Standalone Financial Statements

The Companys Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance, including other comprehensive income, changes in equity and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Ind AS specified under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the 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 the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of the standalone financial statements by the Directors of the Company, as aforesaid.

In preparing the standalone financial statements, management is responsible 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 are responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone 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 standalone financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal financial control relevant to the audit in order to design 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 has adequate internal financial controls system in place and the operating effectiveness of such controls based on our audit.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors.

• Conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companys ability to continue as a going concern.

• If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the standalone 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.

• Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the business activities of the Company to express an opinion on the standalone financial statements. We are responsible for the direction, supervision and performance of the audit of the standalone financial statements of such entity included in.

Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the standalone financial statements may be influenced. We consider quantitative materiality and qualitative factors in (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 financial statements.

We communicate with those charged with governance of the Company 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 of the Company 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 of the Company, we determine those matters that were of most significance in the audit of the standalone 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, 2020 ("the Order") issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the

Annexure "A", a Statement on the Matters specified in the Paragraph 3 and 4 of the Order, to the extent applicable.

2) As required by Section 143(3) of the Act, based on our audit we report, to the extent applicable, 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 purposes of our audit.

b) In our opinion, proper books of accounts as required by law relating to preparation of the aforesaid standalone financial statements have been kept by the Company so far as it appears from our examination of those books.

c) The standalone Balance Sheet, the standalone Statement of Profit and Loss including Other Comprehensive Income, standalone Statement of Changes in Equity and the standalone Statement of Cash Flows dealt with by this Report are in agreement with the relevant books of accounts maintained for the purpose of preparation of the standalone financial statements.

d) In our opinion, the aforesaid standalone financial statements comply with the Ind AS specified under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended.

e) As per Section 164(2) of the Act regarding disqualification of directors is not applicable to the Company by virtue of Notification No. G.S.R. No.463 (E) dated 05.06.2015, Government companies are exempt from the applicability of the provisions of section 164(2) of the Act. Hence no comments offered.

f) With respect to the adequacy of the internal financial controls with reference to Financial Statements of the Company and the operating effectiveness of such controls, refer to our separate Report in Annexure "C". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Companys internal financial controls over financial reporting.

g) As required by Section 143(5) of the Act, we give in Annexure "D", a statement on the matters contained in directions issued by the Comptroller & Auditor General of India, the action taken thereon and its impact on the accounts and standalone financial statements of the company in terms of aforesaid section.

h) i. The Management has represented that, to the best of its knowledge and belief, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (Intermediaries), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other person or entities identified in any manner whatsoever by the Company (Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

ii. The Management has represented that, to the best of its knowledge and belief, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities (Funding Parties) with the understanding, whether writing or otherwise, that the Company shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries" or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

iii. Based on the audit procedures performed that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) or Rule 11(e ), as provided under (a) and (b) above, contain any material misstatement.

i) with respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our information and according to the explanations given to us :

i. The Company have pending litigations, the liabilities in respect of which is either provided for or disclosed as contingent liabilities - Refer Note 41 of the Notes on accounts to the standalone financial statements. The company has disclosed the impact of these pending litigations on the standalone financial position of the Company is subject to their judicial outcome;

ii. The company did not have any long term contracts including Derivative Contracts for which there were any material foreseeable losses.

iii. There were no amounts which were required to be transferred to the Investors Education and Protection Fund by the Company.

j) The dividend declared or paid during the year by the company is in compliance with section 123 of the Act

k) In our opinion and according to the information and explanations given to us, the remuneration paid by the company to its directors during the current year is in accordance with the provisions of Sec 197 of the Act.

For Sarath & Associates
Chartered Accountants
Firm Regn. 05120S
Sd/-
CA S Srinivas
Partner
Date : 24.06.2022 M.No. 202471
Place : Hyderabad UDIN : 22202471ALOPUV5983

Annexure - "A"

ANNEXURE TO THE INDEPENDENT AUDITORS REPORT ON THE STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2022 OF MISHRA DHATU NIGAM LIMITED

(Referred to in paragraph 1 under "Report on Other Legal and Regulatory Requirements" of our report to Members of Mishra Dhatu Nigam Limited of even date) i. In respect of the Companys Plant, Property & Equipment:

(a) A. The company has maintained proper records showing full particulars, including quantitative details and situation of Plant, Property & Equipment.

B. The Company is maintaining proper records showing full particulars of intangible assets.

(b) The Company has a program of verification to cover all the items of Plant, Property & Equipment, which is, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed to us, all the Plant, Property & Equipment have been physically verified by the management during the year. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

(c) According to the information and explanation given to us and on the basis of our examination of the conveyance deeds provided to us, we report that, the title deeds of immovable properties comprising of land which are mentioned here under are not held in the name of the Company as at the Balance sheet date.

Sl No. Particulars Land details
1. Description of Property i. Factory Area: 132 acres and 31 Guntas
ii. Corporate Office: 8.00 Acres
iii. Township Area: 97 Acres and 05 Guntas
iv. Under lease to DRDO & Others: 37 Acres and 39 Guntas.
2. Gross Carrying Value Rs 128.80 Lakhs
3. Held in the name of DMRL, Ministry of Defence. However, in some land award proceedings, Midhanis name is mentioned as Super Alloy Plant of DMRL
4. Whether Promoter, Director or their relative or employee NO
5. Period Held. Indicate Range where appropriate Since 1975/1977/1985/1986
6. Reason for not being held in the name of the Company Conveyance Deed for 275 Acres and 35 Guntas of land acquired which are through various Allotment/Award Letters/GOs are yet to be executed in the name of the Company. Most of them are allotted/granted by the undivided Govt. of AP earlier. In the said Grant proceedings, Midhani is mentioned as Super Alloy Plant of DMRL (Defence Organization). Further, out of this 1.5 Acres land is under dispute on account of unauthorized occupancy by third party.

(d) As per the information and explanations given to us, the Company had not carried any revaluation in respect of its Assets.

Accordingly, the provisions of clause (d) of para 3 (i) are not applicable for the year under review

(e) There are no proceedings which were either initiated or pending against the Company for holding any benami properties under the Benami Transactions (Prohibition) Act 1988

ii. (a) The management has conducted the physical verification of inventories at reasonable intervals. In our opinion, the coverage & procedure of such verification is appropriate. The discrepancies noticed on physical verification of the inventory as compared to book records are not more than 10% and those have been properly dealt in the books of account.

(b) The Company had been sanctioned Working Capital Loan during the year under review on the basis of security of current assets. In respect of this Working Loan, the quarterly returns/ statements submitted by the Company to the Bank are in agreement with the books of accounts of the Company

iii. The Company has not made any investments in, or provided guarantee or security or granted any loans or advances in the nature of loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties during the period under review. Accordingly, the provisions of Clause 3(iii)(a) to Clause 3 (iii)(f) of the said Order are not applicable for the Company during the year under review

iv. According to the information and explanations given to us and based on our examination of records, the provisions of section 185 and 186 of the Act are not applicable to the Company vide Notification GSR No.463 (E) F.No.1/2/2014-CL.V dated 5th June 2015.

v. According to the information and explanations given to us and based on our examination of records, the Company has not accepted any deposits during the year and does not have any unclaimed deposits as at 31st March, 2022 and therefore, the provisions of the clause 3(v) are not applicable to the Company.

vi. We have broadly reviewed the cost records maintained by the Company as prescribed by the Central Government under sub-section (1) of Section 148 of the Act and are of the opinion that prima facie, the prescribed cost records have been made and maintained. We have, however, not made a detailed examination of these records with a view to determine whether they are accurate and complete.

vii. According to the information and explanations given to us and on the basis of examination of the records of the Company in respect of Statutory dues:

a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees State Insurance, Income Tax, Goods and Service Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Entry Tax, Cess and other material statutory dues applicable to it with the appropriate authorities.

b) There were no undisputed amounts payable in respect of Provident Fund, Employees State Insurance, Income Tax, Goods and Service Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and other material statutory dues in arrears as at 31st March 2022 for a period of more than six months from the date they became payable.

c) Details of disputed Statutory Dues of Sales Tax, Value Added Tax, Customs Duty, Excise Duty, Entry Tax, Service Tax, Cess (as applicable) as at 31st March 2022, on account of disputes pending before appropriate authorities as given in Annexure – "B".

viii. There are no transactions not recorded in the books which have been surrendered or disclosed as Income during the year in the Tax Assessments under Income Tax Act

ix. (a) According to the information and explanations given to us and on the basis of examination of the records of the Company, the Company has not defaulted in repayment of dues to any financial institution or bank or government during the year. The Company has not issued any debentures.

(b) Company had not been declared a Wilful Defaulter by any Bank

(c) Company had availed Term Loans during the year, which was utilized for the purpose for which those were raised by the Company

(d) There are no instances of any short term funds raised which were used for Long Term purpose

(e) There are no funds which are raised by the Company to meet the obligations of any other entities

(f) Company had not raised any loans on the pledge of any securities held

x. According to the information and explanations given to us and on the basis of examination of the records of the Company, the Company did not raise any money by way of initial public offer or further public offer (including debt instruments) during the year. However, the Company has taken (unsecured) short term loan from Bank for meeting its working capital requirements and there are no overdues in the account towards interest and no principle is due for repayment during the year.

The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review.

xi. a) Based upon the audit procedures performed and the information and explanations given by the management, we report that no fraud by the Company or on the company by its officers or employees has been noticed or reported during the year. Accordingly, there are no instances of filing of Form ADT-4 as prescribed during the year under review.

b) As per the information and explanations given to us, there are no instances of any Whistle Blower complaints received during the year.

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. According to the information and explanations given to us and on the basis of examination of the records of the Company, all transactions with the related parties are in compliance with section 177 and 188 of the Act, where applicable and the details have been disclosed in the Standalone Financial Statements etc., as required by the applicable accounting standards.

xiv. a) The Company has an internal audit system commensurate with the size and nature of its business.

b) We have considered the reports of the Internal Auditor while framing our report.

xv. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with its Directors or persons connected to its directors and hence reporting under clause 3(xv) of the Order is not applicable to the Company.

xvi. The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. Further, the Company did not conduct any Non Banking Financial or House Finance Activities. The Company is not a Core Investment Company as defined in the regulations made by the Reserve Bank of India. Hence reporting under clause 3(xvi) of the Order is not applicable. xvii. The Company had not incurred any Cash losses during the year or in the immediate preceding financial year

xviii.During the year under review, there has been no instance of any resignation of the Statutory Auditors. Hence the provisions of para (xviii) of the said Order are not applicable

xix. Based on the information & explanations given to us and on the basis of the financial ratios, ageing and expected dates of realisation of financial assets and payment of financial liabilities, other information accompanying the financial statements, the auditors knowledge of the Board of Directors and management plans, we are of the opinion that no material uncertainty exists as on the date of the audit report that company is capable of meeting its liabilities existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date.

xx. There are no unspent amounts required to be transferred to Fund specified in Schedule VII of the Companies Act, whether for ongoing or other than ongoing projects. Accordingly, the provisions of para (xx) of the said Order are not applicable

xxi. There are no qualifications or adverse remarks by the Auditors of the Joint Controlled Entity, whose share of profit/loss is included in the consolidated financial statements of the Company

For Sarath & Associates
Chartered Accountants
Firm Regn. 05120S
Sd/-
CA S Srinivas
Partner
Date : 24.06.2022 M.No. 202471
Place : Hyderabad UDIN : 22202471ALOPUV5983

Annexure - "B"

ANNEXURE TO THE INDEPENDENT AUDITORS REPORT ON THE STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2022 OF MISHRA DHATU NIGAM LIMITED

(Referred to in paragraph vii(c) of Annexure A, a statement on the matters specified in the Companies (Auditors Report) Order, 2020 (as amended) of the Company for the year ended on 31st March, 2022)

According to the records of the company dues on account of any dispute with respect to Sales Tax, Value Added Tax, Customs Duty, Excise Duty, Service Tax, Entry Tax, Cess and the particulars are furnished below:

Rs
Name of the Statue Nature of Dues Disputed Amount Paid under Protest Balance Period to which the amount relates Forum where dispute is pending
CST Act, 1956 CST 165.66 82.83 82.83 2010-11 VAT Tribunal
VAT Act, 2005 VAT 3.80 0.95 2.85 2010-11 Appellate Deputy Commissioner
CST Act, 1956 CST 2.32 2.07 0.25 2011-12 Appellate Deputy Commissioner
VAT Act, 2005 VAT 64.21 22.32 41.89 02/2014 to 06/2017 Appellate Deputy Commissioner
AP Entry Tax Act, 2001 Entry Tax 21.03 10.51 10.52 2013-14 & 2014- 15 Appellate Deputy Commissioner
Customs Act, 1962 Customs Duty & Penalty 106.20 - 106.20 2011-12 CESTAT
Central Excise Tari_ Act, 1985 Excise Duty & Penalty 225.97 - 225.97 2006-07 to 2008-09 Comm. of Customs, Central Excise & Service Tax
Central Excise Tari_ Act, 1985 Duty on account of non-reversal of ITC for material sent on job work 46.46 4.12 42.34 2012-13 & 2013- 14 Comm. of Customs, Central Excise & Service Tax
Finance Act, 1994 Service Tax on LD received from Vendors 154.20 7.71 146.49 07/2012 to 03/2016 CESTAT
Finance Act, 1994 Service Tax on LD received from Vendors 33.21 3.32 29.89 2016-17 Comm. Of Customs, Central Excise & Service Tax
Customs Act, 1962 Customs Duty & Penalty 540.89 20.28 520.61 2009-12 CESTAT
Total 1363.95 154.11 1209.84

Annexure - "C"

ANNEXURE TO THE INDEPENDENT AUDITORS REPORT ON THE STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2022 OF MISHRA DHATU NIGAM LIMITED

(Referred to in paragraph 2(f) under "Report on Other Legal and Regulatory Requirements" of our report to Members of Mishra Dhatu Nigam Limited of even date)

Report on the Internal Financial Controls with reference to Financial Statements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls with reference to Financial Statements of the Company, as of 31st March 2022 in conjunction with our audit of the Standalone Financial Statements of the Company for the year ended on that date.

Managements Responsibility for Internal Financial Controls:

The Board of Directors of the Company is responsible for establishing and maintaining internal financial controls with reference to Financial Statements 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. These responsibilities include the design, implementation and maintenance of adequate internal financial controls with reference to Financial Statements that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to respective companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information, as required under the Act.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls with reference to Financial Statements 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 ICAI and the Standards on Auditing, prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls with reference to Financial Statements.

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 with reference to Financial Statements was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls with reference to Financial Statements and their operating effectiveness. Our audit of internal financial controls with reference to Financial Statements included obtaining an understanding of internal financial controls with reference to Financial Statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the Standalone 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 controls with reference to Financial Statements.

Meaning of Internal Financial Controls with reference to Financial Statements

A companys internal financial control with reference to Financial Statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Standalone Financial Statements for external purposes in accordance with generally accepted accounting principles.

A companys internal financial control with reference to Financial Statements includes those policies and procedures that

(1) Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of Standalone 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 Standalone Financial Statements.

Inherent Limitations of Internal Financial Controls with reference to Financial Statements

Because of the inherent limitations of internal financial controls with reference to Financial Statements, including the 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 with reference to Financial Statements to future periods are subject to the risk that the internal financial control with reference to Financial Statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion:

In our opinion, to the best of our information and according to the explanation given to us, the Company has, in all material respects, an adequate internal financial controls with reference to Financial Statements and such internal financial controls with reference to Financial Statements were operating effectively as on 31st March, 2022, 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.

For Sarath & Associates
Chartered Accountants
Firm Regn. 05120S
Sd/-
CA S Srinivas
Partner
Date : 24.06.2022 M.No. 202471
Place : Hyderabad UDIN : 22202471ALOPUV5983

Annexure - "D"

ANNEXURE TO THE INDEPENDENT AUDITORS REPORT ON THE STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2022 OF MISHRA DHATU NIGAM LIMITED

(Referred to in paragraph 2(g) under "Report on Other Legal and Regulatory Requirements" of our report to Members of Mishra Dhatu Nigam Limited of even date)

Report on the directions under sub-section 5 of Section 143 of the Act, issued by the Comptroller and Auditor General of India:

Sl Directions u/s. 143(5) of the No. Companies Act, 2013 Auditors Reply on action taken on the directions Impact
1. Whether the company has system in place to process all the accounting transactions through IT system? If yes, the implications of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications, if any, may be stated Company is using Oracle ERP software to record all business and financial transactions including Purchase Accounting, Sales Accounting, Inventory transactions, Production transactions, Accounts Payable, Accounts Receivable, Fixed Assets, Payroll, Oracle Process Manufacturing and General Ledger and all the modules are integrated with one another. The software itself has built in checks and validations between inter related modules. Accordingly, the data accuracy and integrity is maintained. All payment approvals are processed using the approval hierarchy defined in Oracle Module. All the accounting transactions are processed and the Trial Balance is generated from Oracle based ERP System. In view of the above, we confirm that no financial transactions are carried out outside IT systems and hence there is no financial implication on the integrity of the accounts during the Financial Year 2021-22. NIL
2. Whether there is any restructuring of an existing loan or cases of waiver/ write-o_ of debts/loans/ interest etc. made by a lender to the company due to the companys inability to repay the loan? If yes, the financial impact may be stated According to the information and explanation furnished to us and based on our examination of books, there is no restructuring of an existing loan or cases of waiver / write-o_ of debts / loans/ interest etc made by a lender to the company during the financial year 2021-22 NIL
3. Whether funds received / receivable for specific schemes from central/state agencies were properly accounted for/ utilized as per its term and conditions? List the cases of deviation Based on the examination of the books and records of the company, during the Financial Year 2021-22, no funds were received by the Company for any specific schemes. NIL

 

For Sarath & Associates
Chartered Accountants
Firm Regn. 05120S
Sd/-
CA S Srinivas
Partner
Date : 24.06.2022 M.No. 202471
Place : Hyderabad UDIN : 22202471ALOPUV5983

C&AG Comments and MIDHANIs Reply

C&AG Comments u/s 143(6)(B) of Companies Act, 2013 MIDHANIs Reply
A. Comments on Profitability: MIDHANI had entered into the contract (HSDO 2019 0000540101 dated 13.06.2019) with HSFC to supply G type rings worth crore within months Rs 197.07 18 of the contract date in 5 lots. As per Liquidated Damage (LD) clause in the contract, if delivery made beyond scheduled delivery time, LD at the rate of 0.50% per week of the basic cost of the delayed delivery is liveable subject to maximum of 10%.
1. Statement of profit and Loss Account Revenue from Operations – J 859.49 crore Sale of Manufacturing Products (Note 28) – 742.54 crore
As per accounting policy (2.3) of the Company, Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts, liquidated damages, performance bonuses and incentives, if any, as specified in the Contract with customer. However, due to COVID-19 pandemic and related disruption/ restrictions, there was a severe interruption of manufacturing activities and logistics which lead to delayed supply. After considering the situation, customer accepted the request of MIDHANI to extend the scheduled delivery date without levying any LD upto September 2021.
An amount of Rs 6.67 crore pertaining to the provision for liquidated damages due to delay in supplies of materials by MIDHANI in two Sale Orders (SO Nos 360320119 and 360320219) in a contract (HSDO 2019 0000540101 dated 13.06.2019) to supply G-type rings to Human Space Flight Centre, Bengaluru was however, not adjusted from the revenue. The products were not delivered on scheduled time, despite extension of delivery dates five times. MIDHANI, however, booked the total revenue in these two Sale Orders instead of deducting an amount of Rs 6.67 crore for provision of liquidated damage from the total value of these sale orders. After September 2021 also, there was disruption in production at customer identified Job Worker Place because of COVID-19, Omicron and unexpected breakdown maintenance work. These incidences were beyond control of MIDHANI and resulted into further delay in supplies.
This is not in the line with Ind AS 37 (Paragraph 14) - Provisions, Contingent Liabilities and Contingent Assets, which states that – Therefore, M/s VSSC and M/s HSFC was requested to waive off the LD in this regard. M/s VSSC issued a letter of assurance dated 30.03.2022 mentioning that VSSC is reviewing the request of MIDHANI for waiving of LD due to situation arisen due to COVID in following contract(s).
A provision shall be recognised when: 1. VSSC Contract No. 6022 2018E108580101 Dated
a) An entity has a present obligation (legal or constructive) as a result of a past event; 11.01.19
2. VSSC Contract no. 6022 2018E113740101 dated
b) It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and 28.02.19
c) A reliable estimate can be made of the amount of the obligation. 3. HSFC Contract no. HSDO20190000540101 dated 13.06.2019
This has resulted in overstatement of Revenue of the Company by Rs 6.67 crore with consequent overstatement of Profit to the same extent. 4. HSFC PO No. HSDO 2019 000354 0101
LO dated 20.12.2019
In HSFC PO No. HSDO 2019 000354 0101
LO dated 20.12.2019 also, HSFC vide purchase order amendment dated 03.01.2022 extended the delivery date and refunded Rs 2,11,62,891 on 10.01.2022 which was earlier deducted by them on account of LD. Considering the long-term association with MIDHANI and taking into account the global pandemic situation, customer had already extended support by way of refund of LD which was levied earlier and assurance was also given to review in the present instance.
Taking the above into cognizance LD provision was not made in accounts by MIDHANI and accordingly there is no overstatement of Trade Receivables and Profit for the period under consideration.
In view of the above facts there is no overstatement of Revenue and Profit.