We have audited the accompanying standalone financial statements of Mishra Dhatu Nigam Limited (“the Company”), which comprise the Balance Sheet as at 31st March, 2024, 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 notes to the financial statements, including 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 31st March, 2024, and
its profit, total comprehensive income, changes of 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 (“ICAI”) of India 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 is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the 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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i) Revenue Recognition:
Refer Accounting Policy Note No.2.3 and Note No. 28 to the standalone financial statements.
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 recognized before control has been transferred. The standard on Revenue establishes a comprehensive framework for determining when, how and under what conditions Revenue could be recognized.
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Following audit procedures were performed, considering the significance of the matter, amongst others to obtain sufficient audit evidence:
1. Evaluated the design of key controls and the operating effectiveness of the relevant key controls with respect to revenue recognition on selected transactions.
2. Examined whether the basis of recognition of revenue is in accordance with the applicable 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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Accordingly, this involves certain key judgements relating to
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3. Checked the underlying documentation to verify that the
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identification of distinct performance obligations, determination
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control and ownership has been transferred to the customer
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of transaction price of identified performance obligation,
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on sale.
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the appropriateness of the basis used to measure revenue
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recognition.
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4. Verified whether the company has instituted adequate cut off
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procedures in relation to sales.
5. Carried out analytical procedures on revenue recognized during the year to identify unusual variances, if any.
Our audit approach did not reveal any non-compliance with the company’s declared accounting policies, GAAP and Ind AS.
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ii) Inventory:
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Refer Accounting Policy No.2.8, Note No. 10 and 31 to the
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Following audit procedures were performed, considering the
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standalone financial statements.
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significance of the matter, amongst others to obtain sufficient audit evidence:
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Inventory was identified as a key audit matter as the Company
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as well as its external stakeholders focus on Inventory as a
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1. Evaluated the design of key controls and the operating
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key financial and operational indicator. This could create an
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effectiveness of the relevant key controls with
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incentive for inventory to be overstated. Inventory valuation
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respect to Inventory.
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involves certain key managerial judgements including
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2. Review of physical verification of inventory with the company
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accounting estimates that have been identified as having high
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and held by Job workers.
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estimation uncertainty in measuring inventory valuation.
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3. For inventory held with Job Workers, wherever physical verification was not conducted, verified confirmations received by management at the year end.
4. Ensured that appropriate adjustments are made to inventory wherever variances were observed in physical verification and in the review of external confirmations.
5. Examined the inventory valuation policies and methods used for its appropriateness and compliance with the applicable accounting standards.
6. Substantive checking of inventory records to ensure compliance with the relevant accounting policies adopted.
7. Examined whether the company has instituted appropriate cut off procedures for recognition of inventory.
8. Performed analytical review procedures in relation to inventory.
Our audit approach did not reveal any non-compliance with the
company’s declared accounting policies, GAAP and Ind AS.
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iii) Consumption of Raw Material
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Refer Note No. 30 to standalone financial statements.
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Following audit procedures were performed, considering the significance of the matter, amongst others to obtain sufficient
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Cost of material consumed is identified as a key audit matter
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audit evidence:
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as the Company as well as its external stakeholders focus
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on Inventory as a key operational indicator. Cost of material
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1. Evaluated the design of key controls and the operating
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consumed is a substantial portion of the total production
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effectiveness of the relevant key controls with respect to
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costs, and the same is a significant part of total expense
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procurement, issues, consumption, allocation, recording
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for the Company.
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and recognition of Inventory in respect of Ram Material, reusable scrap and WIP.
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Key Audit matter
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How the matter was addressed in our audit
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Given the complexity involved in production processes, gap between input and output, there is a risk of costs may not be accurately ascertained, allocated or recorded that could lead to potential misstatements.
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2. Substantive checking of material procurement and its recording to ensure compliance with the relevant accounting policies adopted and the applicable accounting standards.
3. Substantive checking of recording consumption and allocation to WIP to ensure compliance with the relevant accounting policies adopted.
4. Substantive checking of inventory records to ensure compliance with the relevant accounting policies adopted.
5. Performed analytical review procedures in relation to inventory consumption.
Our audit approach did not reveal any non-compliance with the
company’s declared accounting policies, GAAP and Ind AS.
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Emphasis of Matter
We draw attention to the following matters in the notes to the standalone financial statements:
1. 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.
Information other than the standalone financial statements and auditors’ report thereon
The Company’s board of directors is responsible for the preparation of the other information. The other information comprises the information included in the 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 auditor’s 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 responsibility for the standalone financial statements
The Company’s board of directors are 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 cash flows, other comprehensive income, changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the accounting standards 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 of 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 financial statement 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 also 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 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 Standards on Auditing, 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 Companies Act, 2013, 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 management.
• 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 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 sub-section (11) of section 143 of the Companies Act, 2013, we give in the Annexure “A”, a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
2. As required by Section 143(3) of the Act, we report that:
a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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 standalone balance sheet, the standalone statement of profit and loss including other comprehensive income, standalone statement of changes in equity and the standalone of cash flows dealt with by this report are in agreement with the books of account 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 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, in our opinion and to the best of our information and according to the explanations given to us;
a. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 41 to the financial statements;
b. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;
c. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company;
d. (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, 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;
(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 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; and
(iii) Based on such audit procedures as were 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) contain any material mis-statement.
h) Based on our examination, the company has used an accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) and the same has operated throughout the year. Further,
during the course of our audit we did not come across any instance of audit trail feature being tampered with.
3. 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;
Gandhi & Gandhi Chartered Accountants
Sd/-
Rama Mohan Giri
Partner Mem No. 29478 Firm Reg No. 000849S 29th May, 2024 UDIN: 24029478BKBEMB6909
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