Mazagon Dock Shipbuilders Auditors Report


To,

Members of Mazagon Dock Shipbuilders Limited, Mumbai

Report on the Standalone Financial Statements Opinion

We have audited the accompanying Standalone Financial Statements of MAZAGON DOCK SHIPBUILDERS LIMITED

("the Company"), which comprise the Balance Sheet as at 31st March, 2023, the Statement of Profit and Loss Account (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of the significant accounting policies and other explanatory information (hereinafter referred to as "The Standalone Financial Statement").

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 31st March, 2023 and its profit, 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 Standalone Financial Statements in accordance with the Standards on Auditing ("SA"s) specified under section 143(10) of the Companies Act, 2013. 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 Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and 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.

Emphasis of Matter

We draw attention to the following matters in the notes to the standalone Ind AS financial Statements;

  1. Registration formalities and renewals of certain Leased hold properties in name of company are pending. (Refer Note 2 Point No. x)
  2. Balance of advances to vendors and balances outstanding in trade payables are subject to confirmation.
  3. (Refer Note 34 Point No 1)

  4. Balance due from/to Indian Navy (Debtors) is subject to reconciliation and confirmation.

(Refer Note 34 Point No 2 )

Our opinion is not modified in respect of these matters.

Key Audit Matters:

Key audit matters are those matters that, in our professional judgement, 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. We have determined the matters described below to be the key audit matters to be communicated in our report.

Sr. No. Key Audit Matter How our audit addressed the key audit matter
1. Revenue Recognition for Ship/Submarine Construction & repair contracts
  • We have verified the contractual terms with respect to performance obligations and criteria for transfer of control of goods or services to the customer for recognition of revenue.

Referred to in Note No. 1 – 2.2(j) of the Financials Statements

The company recognizes the revenue from Ship/ Submarine Construction/ repair contracts when the company satisfies a performance obligation by

transferring goods or service to a customer.

Sr. No. Key Audit Matter How our audit addressed the key audit matter

The company transfers control of goods or service over time, and, therefore, satisfies a performance obligation and recognizes revenue over time after fulfilling one of

the criteria mentioned in the aforesaid note.

  • Studied the Cost cycle process for allocating the actual expenses incurred on various projects as per contract. In this regard, we have relied on the data provided by

the technical departments.

When the control of the produced goods and rendered services is transferred over time to the customer, revenue is recognized over time under the percentage of completion method (PoC). Penalties if any, are

reduced from the revenue.

  • Verified the Cost sheet determining the Revenue recognition for fixed price contracts and cost plus contracts including the actual cost incurred up to the date and its comparison with overall contract price and

further estimated costs provided by the management.

For the application of the overtime method (PoC method), the measure of the progress towards complete satisfaction of a performance obligation is

based on inputs (i.e. cost incurred)

  • Verified the input cost incurred over the time for satisfaction of performance obligation. Conducted Test check of the System and procedures adopted for recording

the flow of transactions along with the audit trail.

Information other than the Standalone Financial Statement and Auditors Report thereon:

The Companys Board of Directors is responsible for the preparation of other information. The other information comprises the information included in the Directors Report, Overall Business Operations, Management and Corporate Governance but does not include the Standalone Financial Statements and our auditors report thereon.

Our opinion on the Standalone Financial Statements does not cover the other information and we do not express any form of assurance or conclusion thereon. In connection with our audit of the Standalone Financial Statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the Standalone Financial Statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have perform on the other information that we obtained prior to the date of this auditors report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. When we read the Annual report, if we conclude that there is a material misstatement therein, then we will communicate the matters to those charged with governance.

Managements Responsibility for the Standalone Financial Statements

    1. 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 the preparation of these Standalone Financial Statements that give a true and fair view of the financial position, financial performance (including other comprehensive income), change in equity and cash flows of the Company in accordance with the Ind AS and other accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act.
    2. 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.
    3. 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.
    4. The Management are also responsible for overseeing the Companys financial reporting process.
    5. Auditors Responsibility for the Audit of the Standalone Financial Statement:

      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 skepticism 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 controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system with reference to Standalone Financial Statements in place and the operating effectiveness of such controls.
      • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management.
      • 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.

      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 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 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 consolidated 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 in terms of Section 143(11) of the Act, we give in "Annexure I" a statement on the matters specified in paragraph 3 and 4 of the Order.
      2. As required by the directions issued by the office of the Comptroller & Auditor General of India under Section 143(5) of the Act, we give in "Annexure II", a statement on the matters referred to in those directions.
      3. As required by Section 143(3) of the Act, based on our audit we report that:
        1. 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.
        2. In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.
        3. The Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.
        4. In our opinion, the aforesaid Standalone Financial Statements comply with the Ind AS specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rule, 2014.
        5. In view of exemption given vide notification no. G.S.R 463(E) dated June 05, 2015 issued by Ministry of Corporate Affairs, the provision of section 164(2) of the Companies Act, 2013 regarding disqualification of the directors are not applicable to the Government Company.
        6. With respect to the adequacy of the internal financial controls with reference to Standalone Financial Statements of the Company and operating effectiveness of such controls, refer to our separate Report in "Annexure III". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the companys internal financial control over financial reporting with reference to Standalone Financial Statements.
        7. With respect to the other matters to be included in the Auditors Report in accordance with the requirements of section 197(16) of the Act, the exemption has been given for the said section vide notification no. G.S.R 463(E) dated June 05, 2015 issued by Ministry of Corporate Affairs.
        8. 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:
            1. The Company has disclosed the impact of pending litigations on its financial position in its Standalone Financial Statements; (Reference of Note No.33 to the Standalone Financial Statements)
            2. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long term contracts including derivative contracts. (Reference of Note No 37 to the Standalone Financial Statements)
            3. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
            4. a. The Management has represented that, to the best of its knowledge and belief, other than as disclosed in the Note No. 51 to the Standalone Financial Statements, no funds (which are material either individually or in the aggregate) 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 entity(ies) ("Intermediaries"), with the understanding, whether recorded in

      writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

        1. The Management has represented, that, to the best of its knowledge and belief, as disclosed in the Note No. 51 to the accounts, no funds (which are material either individually or in the aggregate) have been received by the Company from any person(s) or entity(ies), including foreign entity(ies) ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, 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;
        2. Based on the audit procedures 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 (iv) (a) and (iv)

      (b) contain any material misstatement.

          1. The dividend declared or paid during the year by the Company is in compliance with Section 123 of the Act.
          2. The reporting responsibility on the accounting software for maintaining the books of accounts which has the feature of recording audit trail (edit log) facility is deferred to financial years commencing on or after April 1, 2023 vide MCA notification G.S.R. 235E dated 31st March, 2022. Therefore, reporting under Rule 11(g) of Companies (Audit & Auditor) Rules, 2014 is not applicable for financial year ended on March 31, 2023.
          3. For C. R. Sagdeo & Co, Chartered Accountants F.R.N: 108959W

            CA. Sachin V. Luthra

            Partner

            Date: 30th May, 2023 Membership No.: 109127 Place: Mumbai UDIN - 23109127BGQVHZ6233

            Annexure ‘I to the Independent Auditors Report

            (Referred to in paragraph 3 under ‘Report on Other Legal and Regulatory Requirements section of our report to the Members of Mazagon Dock Shipbuilders Limited of even date)

            1. In respect of the Companys Property, Plant & Equipment and Intangible assets:
              1. (A) The Company has maintained proper records showing full particulars, including quantitative details and situation of Property, Plant & Equipment;
              2. (B) The Company has maintained proper records showing full particulars of Intangible assets;

              3. The Company has a program of verification to cover all the items of Property, Plant & Equipment in a phased manner which, in our opinion, is reasonable having regard to the size of the Company and the
              4. nature of its assets. Pursuant to the program, certain Property, Plant & Equipment were physically verified by the management through an External Auditor during the year. According to the information and explanations given to us, no material discrepancies were noticed on such verification;

              5. The Title deeds of the immovable properties (other than properties where the company is the lessee and the lease agreement is duly executed in favor of the lessee) are held in the name of the Company except for the list of immovable properties and the lease agreements expired but yet to be renewed disclosed as follows:
              6. (Rs. in lakhs)

                Description of Property

                Gross Carrying Value Held in name of Whether promoter, director or their relative or employee Period held indicate range, where appropriate

                Reason for not being held in name of

                company* Indicate if in dispute

                Lease hold Land

                North Yard, Near Mazdock House, Mumbai

                Peninsular & Oriental Steam Navigation Company (P&O S. N. Co)

                NO

                1966

                In Year 1960, Mazagon Dock private Limited (MDPL)was acquired by Govt. of India (GoI). An Agreement dated 19th April 1960, was executed between the president of India and M/s British Steam Navigation company Ltd (B.I.S.N.CO. Ltd) & M/s Peninsular & Oriental steam Navigation Company (P & O S. N.Co.) to acquire the shares of MDPL held by them. Later, the companys name was changed to ‘Mazagon Dock Limited" (MDL) and thereafter to Mazagon Dock Shipbuilders limited. The updation with respect to the name of the company in the land records/lease agreement and the renewal of lease agreement for south yard land are under process.

                North Yard, Near Residential Colony, MDL, Mumbai 1975
                South Yard, Near Module shop, MDL, Mumbai British India Steam Navigation Company Limited (B.I.S.N Co Ltd) 1959
                South Yard, Near Mogul House, MDL, Mumbai 1947
                355 Phase North yard 9,699 Mumbai Port Trust (MBPT) 1976

                Land at Mumbai taken from MBPT, Mumbai on lease. Renewal of lease agreements is under process. MDL is regularly paying lease rent according to the terms and condition of the old lease agreement.

                Extension of Phase II 3,051 1979
                Extension of Slipway in SY 5,136 1995
                Additional water area for Extension of Slipway 2,539 2003
                Part of Nhava yard land City and Industrial Development Corporation of Maharashtra Ltd (CIDCO) 1984

                The company is in possession of approx. 10-acre land belonging to CIDCO which ONGC ceded to MDL during the year 1984. MDL is having permanent tenancy rights co-terminus with the leasehold rights of ONGC with the CIDCO land in their possession.

                (Rs. in lakhs)

                Description of Property

                Gross Carrying Value Held in name of Whether promoter, director or their relative or employee Period held indicate range, where appropriate

                Reason for not being held in name of

                company* Indicate if in dispute

                Building
                Flats at Vashi 14 City and Industrial development Corporation of Maharashtra Ltd (CIDCO)

                1985

                Registration of Deed of apartments is pending.

                However, the share certificates and other documents are in the name of the Company.

              7. The Company has not revalued its Property, Plant & Equipment (including Right of Use assets) or intangible assets or both during the year;
              8. According to the information and explanations given to us, there are no proceedings initiated or pending against the company for holding any Benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder;
            2. In respect of the Companys Inventory:
              1. As per the information and explanations given to us, the Inventory (except those held with third parties) has been physically verified by the management and the external auditor during the year at reasonable intervals. The coverage and procedures of the
              2. verification carried out by the management are appropriate. The discrepancies between the physical inventory and the book records noticed on physical verification were not material and have been properly dealt with in the books of accounts. No discrepancies of 10% or more in the aggregate for each class of inventory were noticed.

              3. As per the information, explanations and supporting given to us, the company has been sanctioned working capital limits in excess of five crore rupees, in aggregate, from banks on the basis of security of current assets. The quarterly statements filed by the company with banks are not in agreement with the books of account of the Company, the details with reasons are as follows;
              Month Drawing Power (DP) calculation as per DP statement submitted to bank In Lakhs Drawing Power (DP) calculation as per Books of accounts In Lakhs Difference in Amounts In Lakhs Variance (%)
              Jun-22 (6,76,370) (6,55,732) (20,638) (3.05%)
              Sep-22 (7,78,025) (7,55,241) (22,784) (2.93%)
              Dec-22 (7,09,730) (6,89,092) (20,638) (2.91%)
              Mar-23 (8,78,713) (8,27,369) (51,344) (5.84%)

              Our observations with regards to variance are as follows:

              The stock statement is required to be submitted to the bank by the prescribed due date. As per the explanation given by the company, a provisional statement is submitted to the bank by the due date and the actual figures vary in certain cases after finalization of accounts. The Company has not availed any fund-based facility during the year and has availed only non-fund-based facility from the bank during the year.

            3. According to the information and explanation given to us and on the basis of our examination of the records of
            4. the Company, the Company has not made investment in, provided any guarantee or security or granted any loans or advances in the nature of loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or any other parties during the year. Accordingly, the provisions of clause 3(iii)(a) to 3(iii)(f) of the order are not applicable to the Company;

            5. The Company has not granted any loan, given any guarantee or provided any security covered under Section 185 of the Act. Section 186 of the Act relating to investments, loans granted, guarantees given and security provided is not applicable to the Company being a Government Company engaged in Defence equipment production;
            6. According to the explanation and information given to us, the Company has not accepted deposits or amounts which are deemed to be deposits during the year and does not have any unclaimed deposits as at March 31, 2023 and therefore, the provisions of the clause 3 (v) of the Order are not applicable to the Company;
            7. We have broadly reviewed the cost records maintained by the Company, as prescribed by the Central Government under Section 148(1) 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;
            8. According to the information and explanations given to us, in respect of statutory dues:
              1. The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees State Insurance, Income Tax, Goods and Service Tax, Customs Duty, Cess and other material statutory dues applicable to it with the appropriate authorities. There were no undisputed arrears of statutory dues outstanding as at 31st March, 2023 for a period of more than six months from the date they became payable.
                1. Details of dues of Income Tax, Sales Tax, Service Tax, Excise Duty and Value Added Tax which have not been fully deposited as at March 31, 2023 on account of dispute are given below:

              Name of the Statute

              Period

              Amount (In Lakhs)

              Forum where dispute is pending

              Part-payment made under protest (In Lakhs)
              Central Excise Act, 1944 FY 2001-02 to FY 2003-04 and FY 2007-08 249.74 CESTAT, Mumbai Nil
              FY 2000-01 15.00 Commissioner, Mumbai Nil
              BST Act, 1959 CST Act, FY 1980-81 to FY 2004-05 FY 2011-12 99,642 Maharashtra Sales Tax Tribunal, Mumbai 261
              MVAT Act, 2002 FY 2005-06 to FY 2013-14, FY 2016-17, FY 2017-18 16,125 Jt. Commissioner of Sales Tax & MSTT 404.00
              Karnataka Sales Tax Act FY 1989-90, FY 1990-91, FY 1992-93, FY 1995-96 to FY 1996-97 316.40 Karnataka Sales Tax Appellate Tribunal 12.60
              Service Tax FY 2001-02 to FY 2003-04 4,522 Bombay High Court Nil
              Custom Duty FY 2007-08 59.00 Assistant Commissioner of Customs Nil
            9. According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not surrendered or disclosed any transactions, previously unrecorded as income in the books of account, in the tax assessments under the Income Tax Act, 1961 as income during the year.
            10. According to the information and explanation given to us,
              1. The Company has not taken any loans or borrowings from any lender. Accordingly, the provisions of clause 3(ix)(a) of the order is not applicable to the Company;
              2. The Company has not been declared a willful defaulter by any bank or financial institution or government or government authority;
              3. The Company has not obtained any term loans during the year. Accordingly, the provision of clause 3(ix)(c) of the Order is not applicable.
              4. No funds have been raised on short term basis by the Company. Accordingly, clause 3(ix)(d) of the Order is not applicable.
              5. The Company has not taken any funds from the entity or person on account of or to meet the obligations of its associate. The company does not hold any investment in any subsidiary or joint venture.
              6. The Company has not raised loans during the year on the pledge of securities held in its associates. The company does not hold any investment in any subsidiary or joint venture. Accordingly, clause 3(ix)

              (f) of the Order is not applicable.

            11. (a) The Company has not raised any money by way of initial public offer or further public offer (including debt instruments) during the year. Accordingly, clause 3(x)(a) of the Order is not applicable.
            12. (b) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not made

              any preferential allotment or private placement of shares or convertible debentures (fully, partially or optionally convertible) during the year. Hence, clause 3(x)(b) of the order is not applicable to the company;

            13. To the best of our knowledge and according to the information and explanations given to us:
                1. No fraud by the Company or no material fraud on the Company by its officers or employees has been noticed or reported during the year;
                2. No report under sub-section (12) of section 143 of the Companies Act has been filed by the auditors in Form ADT-4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules, 2014 with the Central Government;
                3. No whistle-blower complaints were received during the year by the company;
            14. According to the information and explanation given to us, the Company is not a Nidhi Company. Accordingly, clause 3(xii)(a) of the Order is not applicable to the company.
            15. In our opinion and according to the information and explanations given to us, the Company is in compliance with Section 177 and 188 of the Companies Act, 2013 where applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the standalone financial statements as required by the applicable Indian Accounting Standards;
            16. (a) According to the information and explanations given and based on our examination, the company has an Internal Audit system commensurate with the size and nature of its business;
            17. (b) We have considered the reports of the internal Auditors for the period under audit;

            18. In our opinion and according to the information and explanations given to us, the Company has not entered into any non-cash transactions during the year with its Directors or persons connected to its directors and hence provisions of section 192 of the Companies Act, 2013 are not applicable to the Company;
            19. According to the information & explanation given to us and as per the records examined by us, the company is not required to be registered under section 45-IA of the
            20. Reserve Bank of India Act, 1934. Accordingly, clause 3 xvi (a), (b), (c) & (d) of the Order are not applicable to the company;

            21. According the information and records examined by us the Company has not incurred cash losses in the financial year and in the immediately preceding financial year. Accordingly, clause 3 xvii of the Order is not applicable to the company;
            22. There has been no resignation of the Statutory Auditors during the year, Accordingly, clause 3 xviii of the Order is not applicable to the company;
            23. In our opinion and according to the information and explanations given to us, there is no material uncertainty exists as on the date of the audit report that company is not capable of meeting its liabilities at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date;
            24. (a) CSR activities and expenses are pertaining to Ongoing projects only. Accordingly, clause 3 xx (a) of the Order is not applicable to the company;
            25. (b) Yes, an amount of Rs. 5.14 Crores which is unspent under sub-section (5) of section 135 of the Companies Act, pursuant to ongoing projects, has been transferred to special account which is in compliance with the provision of sub-section (6) of section 135 of the said Act;

            26. There is no qualifications or adverse remarks in the CARO Report of the Associate Company namely, Goa Shipyard Limited, which is included in the Consolidated Financial Statements.

      For C. R. Sagdeo & Co, Chartered Accountants F.R.N: 108959W

      CA. Sachin V. Luthra

      Partner

      Place: Mumbai Membership No.: 109127 Date: 30.05.2023 UDIN - 23109127BGQVHZ6233

      Annexure II to Independent Auditors Report

      To,

      The Members of Mazagon Dock Shipbuilders Limited,

      Mumbai

      As referred to in Paragraph 2 under ‘Report on Other Legal and Regulatory Requirements in our Auditors Report of even date and as required by the directions issued by the Office of the Comptroller & Auditor General of India under Section 143(5) of the Companies Act, 2013, we give below our comments on the matters referred therein:

        1. Whether the Company has system in place to process all the accounting transactions through IT system? If yes, the implication of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications, if any, may be stated.
          • According to the information and explanations given to us and based on our verifications of the records of the Company, the Company has an ERP system in place to process all the transactions through the IT System. All the processing of accounting transactions are mapped through ERP. Therefore, any implications of processing accounting transactions outside IT system on the integrity of the accounts alongwith financial implications does not arise.
        2. Whether there is any restructuring of an existing loan or cases of waiver/write off of debts/loans/interests 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. Whether such cases are properly accounted for? (In case, lender is a Government company, then this direction is also applicable for Statutory Auditor of Lender Company)
      • According to the information and explanations given to us and based on our verifications of the records of the Company, there were no cases of waiver/ write off of debts/loans/ interest etc. made by a lender to the Company due to the Companys inability to repay the loans in FY 2022-23.
      1. Whether funds (grants/subsidy etc.) received / receivable for specific schemes from Central/ State Government or its Agencies were properly accounted for / utilized as per its terms and conditions? List the case of deviation.
        • According to the information and explanations given to us and based on our verifications of the records of the Company, there were no such cases of any funds received by the Company during FY 2022-23 from Central/State governments or its agencies under any schemes.

        For C. R. Sagdeo & Co, Chartered Accountants F.R.N: 108959W

        CA. Sachin V. Luthra

        Partner

        Place: Mumbai Membership No.: 109127 Date: 30.05.2023 UDIN - 23109127BGQVHZ6233

        Annexure III to the Independent Auditors Report

        (Referred to in paragraph 3(f)under Report on Other Legal and Regulatory Requirements section of our report to the Members of Mazagon Dock Shipbuilders Limited of even date)

        Report on the Internal Financial Controls Over Financial Reporting under Clause (i) Of Sub - section 3 of Section 143 of the Companies Act, 2013 ("the Act")

        We have audited the internal financial controls over financial reporting of MAZAGON DOCK SHIPBUILDERS LIMITED ("the Company") as of March 31, 2023 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 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 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 Companies Act, 2013.

        Auditors Responsibility:

        Our responsibility is to express an opinion on the internal financial controls over financial reporting of the Company 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 Section143(10) of the Companies Act,2013, to the extent applicable to the 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 controls operated effectively in all material respects.

        Our audit involves performing procedures to obtain audit evidence about the 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 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 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 internal financial controls system over financial reporting of the Company.

        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 the reliability of financial reporting and the preparation of 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 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 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 financial statements.

        Limitations of Internal Financial Controls Over Financial Reporting:

        Because of the inherent limitations of internal financial controls over financial reporting, 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 over financial reporting to future periods are subject to the risk that the internal financial control

        over financial reporting 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 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