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Mishra Dhatu Nigam Ltd.

BSE: 541195 | NSE: MIDHANI |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE099Z01011 | SECTOR: Miscellaneous

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Annual Report

For Year :
2018

Auditor's Report

INDEPENDENT AUDITOR''S REPORT

To

The Members,

MISHRA DHATU NIGAM LIMITED,

Hyderabad.

Report on the Ind AS Financial Statements

1) We have audited the accompanying Ind AS Financial Statements of MISHRA DHATU NIGAM LIMITED, (the Company), which comprise the Balance Sheet as at March 31 2018, 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.

2) We have issued an Audit Report dated 30.05.2018 (the original report) on the Ind AS Financial Statements as adopted by Board of Directors on even date. Pursuant to observations of Comptroller and Auditor General of India under section 143(6)(b) of Companies Act, 2013, the original report has been amended at Sl.No.i(c) of Annexure A and Sl.No.1 of Annexure D of this Report, to comply with the above observations.

Management''s Responsibility for the Financial Statements

The Company''s 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 Ind AS 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 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 the 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 Ind AS Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these Ind AS Financial Statements based on our audit. In conducting our Audit, we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the Audit Report under the provisions of the Act and the Rules made thereunder and the Order issued under section 143(11) of the Act.

We conducted our audit of the Ind AS Financial Statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Ind AS Financial Statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the Ind AS Financial Statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the Ind AS Financial Statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the Ind AS Financial Statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by Company''s Directors, as well as evaluating the overall presentation of the Ind AS Financial Statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Ind AS Financial Statements.

Opinion

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 Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31st 2018 and its profit, total comprehensive income, the changes in equity and its cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to the following matter in the Notes to the Ind AS Financial Statements:

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

Our opinion is not modified in respect of the above matter.

Report on other Legal and Regulatory Requirement

1) As required by the Companies (Auditor''s Report) Order, 2016 (the Order) issued by the Central Government of India in terms of Section 143(11) of the Companies Act, 2013, we give in the Annexure A, a Statement on the Matters specified in the Paragraph 3 and 4 of the Order.

2) As required by the Sub-section (5) of Section 143 of the Act, we give in the Annexure D, a Statement on the matters contained in directions issued by the Comptroller & Auditor General of India in terms of aforesaid section.

3) As required by Section 143(3) of the Act, based on our audit we report that:

a) we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

c) the Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows 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 Indian Accounting Standards prescribed under Section 133 of the Act, read with the of the Companies (Indian Accounting Standards) Rules, 2015, as amended;

e) in terms of Ministry of Corporate Affairs GSR No. 463 (E) dated 05.06.2015, Government companies are exempt from the applicability of the provisions of section 164(2) of the Companies Act, 2013. Hence no comments offered.

f) with respect to the adequacy of the internal financial controls over financial reporting 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 Company''s internal financial controls over financial reporting.

g) with respect to the other matters to be included in the Auditor''s 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 has disclosed the impact of pending litigations in its financial position in its Ind AS Financial Statements. Refer to Note No. 43 of the Notes on Accounts to the 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.

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

(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 Company''s fixed assets:

(a) The company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) The Company has a program of verification to cover all the items of fixed assets, in our opinion, it is reasonable having regard to the size of the Company and the nature of its assets. As informed to us, all the fixed assets 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 of land and buildings which are mentioned here under are not held in the name of the Company.

Sl.

No.

Particulars

Land Details

1.

Total Number of Cases

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.

Whether Freehold/ Lease hold

Free hold

3.

Gross/ Net Block as on 31-03-2018 of the above.

'' 12.88 millions

4.

Remarks

Conveyance Deed for 275 Acres and 35 Guntas of land acquired are yet to be executed in the name of the Company. Out of this 1.5 Acres land is under dispute on account of unauthorized occupancy by third party.

ii. According to the information and explanations given to us and based on our examination of records, Physical verification of inventory has been conducted by the management at reasonable intervals and the discrepancies noticed on such physical verification by the management have been properly dealt with in the books of account.

iii. According to the information and explanations given to us and based on our examination of records, the company has not granted any loans, secured or unsecured to companies, firms, limited liability partnerships or other parties covered under section 189 of the Companies Act 2013. Accordingly the clause 3(iii)(a), 3(iii)(b) and 3(iii)(c) of the Order are not applicable to the Company.

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 Companies Act, 2013 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 March 31, 2018 and therefore, the provisions of the clause 3(v) 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 Companies Act, 2013 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, Custom 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, Custom Duty, Excise Duty, Value Added Tax, Cess and other material statutory dues in arrears as at 31 March 2018 for a period of more than six months from the date they became payable.

c) Details of disputed Statutory Dues of Income Tax, Sales Tax, Value Added Tax, Custom Duty, Excise Duty, Entry Tax, Cess (as applicable) amounting to '' 47.63 millions as at 31st March 2018, have not been deposited on account of disputes pending before appropriate authorities as given in Annexure-B

viii. 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.

ix. In our opinion and according to the information and explanations given to us and on the basis of examination of the records of the Company, even though during the Financial Year the Company has gone for initial public offer by way of dis-investment of 26% of its Equity Shares held in the name of the President of India, there is no inflow of money into the Company, instead of that the same was credited to Government of India from the above offer. Therefore, the provisions of the clause 3(ix) are not applicable.

x. According to the information and explanations given to us and on the basis of examination of the records of the Company, no material fraud by the company or on the Company by its officers or employees has been noticed or reported during the year or informed any such case by the management.

xi. In our Opinion and according to the information and explanations given to us, Provision of Section 197 are not applicable to Government companies vide notification no. G.S.R. 463(E) F.No.1/2/2014-CL.V dated 05.06.2015 issued by the Central Government, therefore the provisions of clause 3 (xi) of the order are not applicable to the Company.

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 Companies Act, 2013 where applicable and the details have been disclosed in the Ind AS Financial Statements etc., as required by the applicable accounting standards.

xiv. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence reporting under clause 3(xiv) of the Order is not applicable to the Company.

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 and hence reporting under clause 3(xvi) of the Order is not applicable.

(Referred to in paragraph vii (c) of Annexure A, a statement on the matters specified in the Companies (Auditor''s Report) Order, 2016 (as amended) of the Company for the year ended on 31st March, 2018.

According to the records of the company dues of Income Tax, Sales Tax, Value Added Tax, Custom Duty, Excise Duty, Entry Tax and Cess which have not been deposited on account of any dispute are stated below: -

Sl.

No.

Name of the Statute

Nature of the Dues

Amount

('' in Millions)

Period to which the amount relates

Forum where dispute is pending

1

Income Tax Act, 1961

Income tax Demand

4.04

A.Y. 2015-16

CPC, Bangalore

2

CST Act, 1956

Demand of CST

8.28

A.Y. 2010-11

VAT Tribunal, Telangana

3

VAT Act 2005/ CST Act, 1956

Demand of CST (C Forms)

0.23

A.Y. 2011-12

Appellate Deputy Commissioner

4

Customs Act, 1962

Custom Duty and Penalty

10.62

A.Y. 2011-12

CESTAT, Bangalore

5

Central Excise Tariff Act, 1985

Excise Duty Penalty

22.60

A.Y. 2006-07 to A.Y. 2008-09

Commissioner of Customs, Central Excise and Service Tax

6

Central Excise Tariff Act, 1985

Demand of Excise Duty

0.02

A.Y. 2018-19

Commissioner of Customs, Central Excise and Service Tax

7

Andhra Pradesh tax on Entry of goods into Local areas Act, 2001

Demand of Entry Tax

1.84

A.Y. 2013-14 & A.Y. 2014-15

Appellate Deputy Commissioner, Panjagutta Division, Hyd

Total

47.63

Total amount paid under protest pending final orders '' 15.38 millions

(Referred to in paragraph 3(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 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 Mishra Dhatu Nigam Limited, (the Company), as of 31st March 2018 in conjunction with our audit of the Ind AS Financial Statements of the Company for the year ended on that date.

Management''s 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 (''ICAI''). 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 company''s 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 Company''s 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) and the Standards on Auditing, issued by ICAI and 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 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 including 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 auditor''s judgment, including the 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 Company''s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Ind AS Financial Statements for external purposes in accordance with generally accepted accounting principles.

A company''s 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 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 company''s assets that could have a material effect on the Ind AS Financial Statements.

Inherent 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 explanation given to us, the Company has, in all material respects, an adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as on March 31, 2018, 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.

Place: Hyderabad,

Date: 25th June, 2018.

for BASHA & NARASIMHAN

Chartered Accountants

Firm''s Registration No.: 006031S

Sd/-

K. Narasimha Sah,

Partner

Membership No.201777