To the Members
Alicon Castalloy Limited.
Report on the Standalone Financial Statements
1. We have audited the accompanying standalone financial statements of AliconCastalloy Limited (the Company') which comprise the
Balance Sheet as at March 31 2017 the Statement of Profit and Loss the Cash FlowStatement for the year then ended and a summary of significant accounting policies andother explanatory information.
Management's Responsibility for the Financial Statements.
1. The Company's Board of Directors are responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified undersection 133 of the Act read with relevant rules issued thereunder. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other regularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
2. Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.
We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under. We conducted our audit in accordancewith the Standards on
Auditing specified under section 143(10) of the Act. Those standards require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether the financial statements are free from material misstatement.
3. An audit involves performing procedures to obtain audit evidence about the amountsand disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial controls relevant to the Company's preparation of thefinancial statements that give true and fair view in order to design audit procedures thatare appropriate in the circumstances. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.
4. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the standalone financial statements.
5. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 31 2017 and its profit and its cash flows for the year ended on that date.
6. Emphasis of Matter
a) We draw attention to note 2.8 & 2.9 of the statement of significant accountingpolicies to these standalone financial statements prepared by the Company in respect of"Depreciation and Amortisation" and "Impairment of Assets" : "Theuseful lives of some of its Property Plant and Equipment followed by the Company aredifferent than the lives specified under part C of schedule II to the Companies Act 2013and which have remained to be reviewed by the Company. The Company has also not determineduseful lives of significant components of its Property Plant and Equipment separately asrequired under amended Accounting Standard (AS) -10 Property Plant and Equipment'notified and duly amended under the Companies (Accounting Standard) Amendment Rules2016.
The Company's management believes and is of the view that the useful lives estimated bythem in respect of its Property Plant and Equipment (including components) best representthe period over which it expects to use these assets based on technical evaluation. Themanagement has also represented that there is no indication of potential impairment lossas of the March 31 2017 and impairment testing if done would not result in anyadditional amount of provision either on account of depreciation impairment or otherwise.
(b) We draw attention to footnote**under Note16-Trade Receivables' of theattached standalone financial statements:
"The Company's management has confirmed that all trade receivables are good andrealisable in the ordinary course of the Company's business and no further provision isrequired over and above the amount already provided for in the books of account.''
We have relied upon management confirmation for recoverability or otherwise of debts incases where customer confirmations and /or reconciliations were not made available to us.
(c) We draw attention to footnote under Note 8-Trade Payables' of the attachedstandalone financial statements: 'The Company has no over dues to the supplierscovered under MSMED Act 2006.''
We have relied upon management confirmation for the list of suppliers covered under theAct dues (including overdue balances if any) payable to them etc in the absence of thirdparty confirmations and other necessary evidence.
(d) The provisions of the Company's Act 2013 as amended require the Company to complywith the various requirements under the Acts and the rules made and notifications issuedthere under from time to time. We are informed by the Company's management that theprovisions of the Acts have been complied by the Company.
We are also informed that the secretarial auditor has been appointed by the Company toaudit the secretarial records and compliances made by the Company. We therefore have notextensively reviewed the secretarial & related compliances which the secretarialauditor would have covered in his report.
7. Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of sub-section (11) of Section 143 of the Actwe enclose in "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order.
As required by Section 143(3) of the Act we report that:
(a) Except and to the extent for the matters described under para - Emphasis ofMatter' above and in the annexures enclosed hereto we have sought and obtained all theinformation and explanations which to the best of our knowledge and belief were necessaryfor the purposes of our audit.
(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
(c) The balance sheet the statement of profit and loss and the cash flow statementdealt with by this report are in agreement with the books of account.
(d) In our opinion the aforesaid financial statements comply in all materialrespects with the Accounting Standards specified under section 133 of the Act read withRule 7 Companies (Accounts) Rules 2014 except and to the extent referred in sub para (a)of para Emphasis of Matter' above.
(e) On the basis of written representations received from the Directors as on March312017 and taken on record by the Board of Directors none of the directors is as onMarch 31 2017 from being appointed as a Director in terms of section 164 (2) of the Act.
(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure B" enclosed herewith and
(g) With respect to other matters to be included in the Auditor's Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to thebest of our information and according to the explanations given to us :
i. The Company has in accordance with the generally accepted accounting practicedisclosed the impact of pending litigations on its financial position in its standalonefinancial statements. Refer sub-note 8 of Part A of Note 28 in respect of OtherDisclosures to the standalone financial statements;
ii. The Company did not have any longterm contracts including derivativecontracts for which there were any material foreseeable losses under the applicable law oraccounting standards.
iii. There has been no delay in transferring the principal amounts of unpaid dividendrequired to be transferred to the Investor Education and Protection Fund by the Company.
iv. The Company has provided requisite disclosures in its standalone financialstatement as regards to its holding and dealings in Specified Bank Notes (SBN) as definedin the Notification S.O. 3407 (E) dated the November 08 2016 of the Ministry of Financeduring the period from November 08 2016 to December 30 2016. On the basis of auditprocedures carried out and management representations we report that the said disclosuresare in accordance with the books of account maintained by the Company and as producedbefore us for our verification. Refer sub-note 16 of Part A of Note 28 in respect of OtherDisclosures to the standalone financial statements;
For Asit Mehta & Associates
Sanjay S. Rane
Membership No. 100374
Pune April 29 2017
Annexure A to the Independent Auditors' Report
(Referred to in Paragraph 1 under the heading Report on Other Legal andRegulatory Requirements of our report of even date on the financial statements of AliconCastalloy Limited (the Company') for the year ended March 31 2017)
Report on Companies (Auditor's Report) Order 2016 ("the Order") issued bythe Central Government in terms of Section 143 (11) of the Companies Act 2013 (theAct)
On the basis of such checks as we considered appropriate and according to theinformation and explanations given to us during the course of our audit we state that:
(i) (a) The Company has generally maintained records showing particulars includingquantitative details and situation of its fixed assets. However it needs to be furtherimproved as inter alia determination of useful lives of asset(s) and its component(s)impairment particulars etc. have remained to be completed reviewed and recorded as thecase may be by the Company.
(b) According to the information and explanations given to us some of its fixed assetshave been physically verified by the Company's management during the year. We are informedthat discrepancies noticed during physical verifications have been properly dealt with inthe books of account. However we have relied upon management representations for thesame.
(c) According to the information and explanations given to us and as per records of theCompany the title deeds of immovable properties as appearing in "Note 11 (a) "Property Plant & Equipment" of the financial statements are held in thename of the Company.
(ii) The inventories comprising semi-finished goods raw materials stores and sparesetc. have been physically verified by the Company's management during the year. In ouropinion the frequency of verification is reasonable. As informed to us the discrepanciesnoticed on physical verification of inventory as compared to book records maintained onlythat for raw materials and stores and spares were not material and have been properlydealt with in the account. Rather the closing inventory is established only on physicalverification by the Company's management.
(iii) In our opinion and according to the information and explanations given to us theCompany has not granted any loan secured or unsecured to companies firms or otherparties covered in the register maintained under section 189 of the Companies Act 2013.Accordingly the provisions of clause (iii) (a) (b) & (c) of paragraph 3 of the Orderare not applicable to the Company.
(iv) In our opinion and according to the information and explanations given to us theCompany does not have any transactions to which the provisions of section 185 of the Actapply. There are investments by the Company in its wholly owned subsidiaries outsideIndia appropriately disclosed under note 13 of the attached standalone financialstatements which along with guarantees provided by the Company in connection with loans bythe subsidiaries are within the limits prescribed under section 186 of the Companies Act2013 and accordingly the provisions of section 186 of the Companies Act 2013 have beencomplied with by the Company.
(v) The Company has not accepted any deposits from the public and does not haveunclaimed deposits within the meaning of the provisions of section 73 to 76 of theCompanies Act 2013 Act and rules framed there under. Accordingly the provisions ofclause (v) of paragraph 3 of the Order are not applicable to the Company.
(vi) According to the information and explanations given to us and in our opinionmaintenance of cost records has not been specified by the Central Government under subsection (1) of section 148 (1) of the Companies Act 2013 and the Companies (Cost Recordsand Audit) Rules 2014. Accordingly the provisions of clause (vi) paragraph 3 of theOrder are not applicable to the Company.
(vii) (a) According to the information and explanations given to us and on the basisthe records of the Company produced before us and examined by us the Company is generallyregular in depositing the amounts deducted / accrued in its books of account in respect ofundisputed statutory dues including provident fund income-tax service tax duty ofcustoms duty of excise sales-tax value added tax cess and other material statutorydues as applicable to it to the appropriate authorities.
According to the records of the Company and according to the information andexplanations given to us no undisputed amounts payable in respect of statutory duesreferred above were in arrears as at March 31 2017 for a period of more than six monthsfrom the date those became payable.
(b) According to the information and explanations given to us there are no dues ofincome-tax service tax duty of customs duty of excise sales-tax value added tax cesswhich have not been deposited on account of any dispute other than those mentioned below.
|Name of the statue / nature of dues ||Period to which the amount relates ||Amount involved (Rs. in Lakhs) ||Forum where dispute is pending |
|Sales Tax/ MVAT ||2007-08 ||80.95 ||The Joint Commissioner of Sales Tax (Appeals-F-002) Pune |
|Sales Tax/ MVAT ||2007-08 ||818.84 ||The Joint Commissioner of Sales Tax (Appeals-F-002) Pune |
|Sales Tax/ MVAT ||2008-09 ||8.22 ||Commissioner of Sales Tax (Appeals) Pune |
|Sales Tax/ MVAT ||2009-10 ||57.65 ||Dy. Commissioner of Sales Tax Pune |
|Sales Tax/CST ||2009-10 ||156.93 ||Dy. Commissioner of Sales Tax Pune |
|Central Excise Duty ||2008-09 ||55.40 ||C.Ex. Commissioner Pune (Call Book) |
|Income Tax ||2009-10 ||18.74 ||Commissioner of Income Tax (Appeals) Mumbai. |
(viii) According to the information and explanations given to us and on the basis ofour examination of the records of the Company the Company has not defaulted in repaymentof loans or borrowing to banks. There are no loans or borrowings from financialinstitutions or government and has not issued any debentures.
(ix) In our opinion and according to the information and explanations given to usmoneys raised by way of term loans by the Company have prima-facie been applied for thepurposes for which those were raised. The Company has not raised moneys raised by way ofinitial public offer or further public offer.
x) According to the information and explanations given to us and to the best of ourknowledge and belief no fraud by the Company or on the Company by its officers oremployees has been noticed or reported during the course of our audit.
(xi) According to the information and explanations given to us the managerialremuneration paid or provided in the Company's books is within the maximum ceilingprovided under Section 197 of the Act.
(xii) The Company is not the Nidhi Company and therefore the provisions of clause (xii)of paragraph 3 of the Order are not applicable to the Company.
(xiii) According to the information and explanations given to us and as per the recordsof the Company all transactions with the related parties are in compliance of withsection 177 and 188 of the Act where applicable and the details of which have beendisclosed in the financial statements etc as required by the applicable accountingstandards.
(xiv) In our opinion and according to the information and explanations given to us andas per the records of the Company the Company has not made preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder audit.
Accordingly the provisions of clause (xiv) paragraph 3 of the Order are not applicableto the Company.
(xv) According to the information and explanations given to us the Company has notentered into any non-cash transactions with the directors or persons connected with himand therefore the provisions of section 192 of the Companies Act 2013 are not applicableto the Company.
(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934. Accordingly the provisions of clause (xvi) of paragraph 3 of theOrder are not applicable to the Company.
For Asit Mehta & Associates
Registration No. 100733W
Sanjay S. Rane
Pune April 29 2017
Annexure B to the Independent Auditors' Report
(Referred to in Paragraph 2 (f) under the heading Report on Other Legal andRegulatory Requirements of our report of even date on the financial statements of AliconCastalloy Limited (the Company') for the year ended March 31 2017)
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of AliconCastalloy Limited (the Company') as of March 31 2017 in conjunction with our auditof the financial statements of the Company for the year ended and as on that date.
Management's Responsibility for Internal Financial Controls
The Company's Management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (the Guidance Note'').
These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note and the Standards on Auditing prescribed under section 143(10) ofthe Act both issued by the Institute of Chartered Accountants of India to the extentapplicable to an audit of internal financial controls over financial reporting. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles.
A company's internal financial control over financial reporting includes those policiesand procedures that
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
According to the information and explanations given to us and based on our audit thefollowing deficiencies & weaknesses have been identified in internal financialcontrols over financial reporting as at March 31 2017.
a) Some of the existing rules policies in its business processes (includingsub-processes) of the Company have remained to be documented updated and strengthened tocover all components and facets of internal financial control reporting and all risks ofoperating the business.
b) Some of its processes (sub-processes) are manually driven and controlled barring afew which are automatically controlled with the use of system software. The scope existsfor an adequate and effective design of information technology (IT) general andapplication controls to provide the complete and accurate information consistent withfinancial reporting objectives and current needs of the organization.
c) The Company needs to improve upon the extent and frequency of physical verificationof its properties plants equipments and assets identification of components review /determination of useful lives of all its assets timely reconciliation of the results withits book records so as to safeguard the Company's properties plants equipments andassets from loss damage and misappropriation if any and potential misstatement in thefinancial statements.
d) The existing system for identification of suppliers covered under the MSMED Act2006 has remained to be improved by the Company so as to cover all such suppliers andtimely reconciliation and payment of their dues.
e) The Company needs to work upon strengthening the existing controls in respect ofsegregation of duties among its personnel working across of the various departments in theorganization.
We are informed that the Company has taken effective steps in improving its internalfinancial and operating controls by going for more sophisticated and advanced ERP andrelated IT systems. We are further informed that the new and advanced ERP has becomefunctional in the current financial year.
In our opinion and to the best of our information and according to the explanationgiven to us the Company has except for the matters the stated above in all materialrespects an adequate internal financial controls system over financial reporting and suchinternal financial controls over financial reporting were operating effectively as atMarch 31 2017 based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note.
For Asit Mehta & Associates
Registration No. 100733W
Sanjay S. Rane
Pune April 29 2017