To The Members of Alok Industries Limited
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements of AlokIndustries Limited ("the Company") which comprise the Balance Sheet as at 31stMarch 2017 and the Statement of Profit and Loss (including Other Comprehensive Income)the Cash Flow Statement and the Statement of Changes in Equity for the year then endedand a summary of the significant accounting policies and other explanatory information.
Management's Responsibility for the Standalone Ind AS Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone Ind AS financial statements that give a true and fair view of thefinancial position financial performance including other comprehensive income cash flowsand changes in equity of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) prescribedunder Section 133 of the Act. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the standalone Ind AS financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit. In conducting our audit we have taken into account theprovisions of the Act the accounting and auditing standards and matters which arerequired to be included in the audit report under the provisions of the Act and the Rulesmade thereunder.
We conducted our audit of the standalone Ind AS financial statements in accordance withthe Standards on Auditing specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the standalone Ind AS financial statements are freefrom material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditors' judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlsrelevant to the Company's preparation of the standalone Ind AS financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the standalone Ind ASfinancial statements.
We believe that the audit evidence obtained by us is sufficient and appropriate toprovide a basis for our audit opinion on the standalone Ind AS financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India of the state of affairs of theCompany as at 31st March 2017 and its loss total comprehensive loss itscash flows and the changes in equity for the year ended on that date.
Emphasis of Matters
We draw attention to the following matters in the Notes to the Financial Statements:
i. Note No. 33 of the Standalone Ind AS Financial Statements regarding preparation ofaccounts by the Company on 'Going Concern' basis due to revival plan being considered bythe Lenders of the Company involving restructuring of debts of the Company.
ii. Note No. 34 of the Standalone Ind AS Financial Statements regarding recognition ofnet deferred tax asset of Rs. 1423.11 crores on the basis of concrete measures taken bythe Company for ramping up operations and enhancing operating efficiency. The Company isreasonably certain that there would be sufficient taxable income in future to offset thedeferred tax asset considering timely infusion of working capital running order bookposition reliability of raw material supply and the technical viability report preparedby recognized industry experts.
iii. Note No. 35 of the Standalone Ind AS Financial Statements regarding realisablevalue of current assets and noncurrent assets after necessary provisions/write offs. Inabsence of technical and costing evaluation of these assets impact of impairment if anyon their economic value could not be ascertained.
iv. Note No. 36(D)(i)(a) of the Standalone Ind AS Financial Statements regarding asubsequent rectification in the fair valuation of fixed assets by the approved valuer asat the date of transition (April 1 2015) resulting in increase in fair value of fixedassets by Rs. 2535 crores and retained earnings on the date of transition by Rs. 1952crores (Net of deferred tax).
Our Report is not qualified in respect of the above matters.
The comparative financial information of the Company for the year ended 31stMarch 2016 and the transition date opening Balance Sheet as at 1st April 2015 includedin these standalone Ind AS financial statements are based on the statutory financialstatements prepared in accordance with the Companies (Accounting Standards) Rules 2006audited by us whose report for the year ended 31st March 2016 audited by usvide report dated 30th May 2016 and for the year ended 31st March2015 audited by Other auditor vide report dated 28th May 2015 expressed anunmodified opinion on those standalone financial statements as adjusted for thedifferences in the accounting principles adopted by the Company on transition to the IndAS which have been audited by us. Our opinion on the standalone Ind AS financialstatements and our report on Other Legal and Regulatory Requirements below is not modifiedin respect of these matters.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors' Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder.
2. As required by Section 143(3) of the Act based on our audit we report to theextent applicable that:
a. We have sought and obtained all the information and explanations which to the bestof 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 theCompany so far as it appears from our examination of those books.
c. The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Cash Flow Statement and Statement of Changes in Equity dealt with by thisReport are in agreement with the relevant books of account.
d. In our opinion the aforesaid standalone Ind AS financial statements comply with theIndian Accounting Standards prescribed under Section 133 of the Act.
e. The matter described under the Emphasis of Matter paragraph above in our opinionmay have an adverse effect on functioning of the Company and on the amounts disclosed infinancial statement of the Company.
f. On the basis of the written representations received from the directors as on March31 2017 and taken on record by the Board of Directors none of the directors aredisqualified as on 31st March 2017 from being reappointed as a director interms of Section 164(2) of the Act except the two directors retiring by rotation at theensuing Annual
General Meeting of the Company render themselves ineligible for reappointment in termsof Section 164(2) of the Act. We also draw attention to Note No. 49 of the StandaloneFinancial Statements regarding legal advice on the issue according to which otherdirectors can continue to function in that capacity.
g. 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". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
h. With respect to the other matters to be included in the Auditors' Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements (Refer Note 31 to the standalone Ind AS FinancialStatements);
ii. The Company did not have any long-term contracts including derivative contracts asat 31st March 2017 for which there were any material foreseeable losses;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund; and
iv. The Company has provided requisite disclosures in the standalone Ind AS financialstatements as regards its holding and dealings in Specified Bank Notes as defined in theNotification S.O. 3407(E) dated the 8th November 2016 of the Ministry ofFinance during the period from 8th November 2016 to 30th December
2016. Based on audit procedures performed and the representations provided to us by themanagement we report that the disclosures are in accordance with the books of accountmaintained by the Company and as produced to us by the Management.
|For SHAH GUPTA & CO. ||For NBS & Co. |
|Chartered Accountants ||Chartered Accountants |
|Firm Registration No.: 109574W ||Firm Registration No. 110100W |
|D. V. Ballal ||N. B. Shetty |
|Partner ||Partner |
|M. No.13107 ||M. No.16718 |
|Place : Mumbai ||Place : Mumbai |
|Date : May 30 2017 ||Date : May 30 2017 |