Mishra Dhatu Nigam Limited
Hyderabad.
Report on the Audit of the Standalone Financial Statements
We have issued an Independent Audit Report dated 25.05.2023 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 ‘Key Audit Matter’ and ‘Report on Other Legal and Regulatory Requirements’ para. This report supersedes our earlier report issued on 25.05.2023.
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, 2023, 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, 2023, 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 Auditor’s 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 ICAI’s 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:
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Key Audit matter
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How the matter was addressed in our audit
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Revenue Recognition
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Refer Accounting Policy Note No.2.3 and Note No. 28 to the
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Following audit procedures were applied, considering the
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standalone financial statements.
Revenue Recognition was identified as a key audit matter as the
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significance of the matter, amongst others to obtain sufficient appropriate audit evidence:
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Company as well as its external stakeholders focus on Revenue
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1. Assessed the appropriateness of the revenue recognition
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as a key performance indicator. This could create an incentive for
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accounting policies whether they are in line with applicable
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revenue to be overstated or recognised before control has been transferred.
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accounting standards.
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Key Audit matter
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How the matter was addressed in our audit
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The standard on Revenue establishes a comprehensive framework
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2.
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Evaluated the design of key controls and operating
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for determining when, how much & whether, revenue could be
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effectiveness of the relevant key controls with respect to
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recognized. Accordingly, this involves certain key judgements
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revenue recognition on selected transactions.
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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.
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3.
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Performed substantive testing by sample selection of revenue transactions recorded during the year by testing the underlying documents.
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4.
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Carried out analytical procedures on revenue recognised during the year to identify unusual variances, if any.
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5.
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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.
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6.
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Checked the underlying documentation to verify that the control and ownership has been transferred to the customer.
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Disclosure relating to Scrap which is re-usable as Raw Material
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Refer Note No.31 in the Standalone Financial Statements
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Company is engaged in production and supply of various Super
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Following audit procedures were applied, considering the
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Alloys, Special Steels/materials to Defence and other strategic
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significance of the matter, amongst others to obtain sufficient
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sectors for Nuclear, aeronautical and space applications. In each
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appropriate audit evidence:
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manufacturing process involving Melting, Forging and Machining, Scrap is generated in the process which again will be re-usable almost to the extent of 90% as Raw Material in production process. Company is holding substantial amounts of scrap generated over
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1.
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Checked the existing disclosure till the last financial year ending, where the Company consistently disclosed for Scrap Accounting under ‘Cost of Material consumed’.
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the past few years which is again re-usable as Raw Material. This
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2.
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Reviewed the details of the clarification sought from the
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was earlier shown under ‘Cost of Material Consumed’ (Note No.30)
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Expert Committee of ICAI by the Company, duly disclosing
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Since there was no specific Ind AS or Guidance Note on the matter relating to disclosure of scrap accounting and due to the peculiar nature of the scrap re-usage, Company had sought Expert Opinion
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the present mode of accounting, specific query regarding the exact nature of disclosure to be made along with underlying facts.
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from ICAI regarding the disclosure in this regard.
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3.
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Reviewed the Expert Opinion given by the ICAI regarding the
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As per the Expert Opinion received from ICAI, the Company had
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disclosures in the Financials relating to Scrap Accounting.
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regrouped the disclosure of the Scrap Accounting from earlier Note
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4.
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Checked the implementation of the said recommendation
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30 - Cost of Material Consumed to Note 31 - Changes in Inventories
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given by the Expert Committee of the ICAI by way of re-
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of Finished Goods, Work in Progress and Stock-in-Trade.
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grouping in this regard.
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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.
Our opinion on the Standalone Financial Statements is not modified in respect of the above matters.
Other Information
The Company’s 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.
Management’s Responsibilities for the Standalone Financial Statements
The Company’s 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 Company’s 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 Company’s financial reporting process.
Auditor’s 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 auditor’s 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 management’s 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 Company’s ability to continue as a going concern.
• If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s 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 auditor’s 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 auditor’s 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 (Auditor’s 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 Company’s 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) 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 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 Investor Education and Protection Fund by the Company.
iv. Proviso to Rule 3(1) of the Companies (Accounts) Rules 2014 for maintaining books of accounts using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from 1st April 2023 and accordingly, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules 2014 is not applicable for the Financial Year ended 31st March, 2023
For Sarath & Associates Chartered Accountants
Firm Regn. 05120S
Sd/-
CA V S Roop Kumar
Partner
Date : 27.6.2023 M No. 213734
Place : Hyderabad UDIN : 23213734BGWPBD2729
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