The Members of
ASHAPURA MINECHEM LIMITED
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Ashapura MinechemLimited ("the Company") which comprise the Balance Sheet as at 31stMarch 2017 the Statement of Profit and Loss the Cash Flow Statement for the year thenended and a summary of the significant accounting policies and other explanatoryinformation.
Management's Responsibility for the Standalone 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 financial statements that give a true and fair view of the financialposition and financial performance of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation 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.
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 thereunder.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditors' judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditors consider internal financial control 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.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the standalone financial statements.
Basis for Qualified Opinion
Attention is invited to -
Note No. 25 regarding non provision of the additional liability aggregating to '5216908537 crores towards translation of the liability at the closing exchange rates aswell as interest on the award amounts from the date of the repective awards as specifiedin the arbitration awards. The loss for the year is understated and reserves as at thebalance sheet date are overstated to that extent.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matters described in the Basis for QualifiedOpinion paragraph above the aforesaid standalone financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at 31st March 2017 and of the loss and its cash flowsfor the year ended on that date.
We did not audit the financial statements of two branches included in the standalonefinancial statements of the Company whose financial statements reflect total assets of '102220844 (previous year: 118244827) as at 31st March 2017 and totalrevenues of ' 5852195 (previous year: 13754141) lacs for the year ended on that dateas considered in the standalone financial statements. The financial statements of thesebranches have been audited by the branch auditors whose reports have been furnished to usand our opinion in so far as it relates to the amounts and disclosures included in respectof these branches is based solely on the report of such branch auditors. Our opinion isnot modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
1 As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India terms of sub-section (11) of section 143 of theAct we give in the Annexure - A a statement on the matters specified in clause 3 and 4of the Order to the extent possible.
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 bestof our knowledge and belief were necessary for the purpose 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 reports on the accounts of two branch offices of the Company audited undersection 143 (8) of the Act by the branch auditors have been sent to us and have beenproperly dealt with by us in preparing this report.
d) 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;
e) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014;
f) On the basis of written representations received from the directors as on 31stMarch 2017 and taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2017 from being appointed as a director in termssection 164(2) of the Act;
g) With respect to the adequacy of internal financial controls over financial reportingof the Company and operating effectiveness of such controls our separate report inannexure - B may be referred;
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 in our opinionand to the best of our information and according to the explanation given to us:
i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements. Refer note no. 35;
ii. The Company did not have any long-term contracts including derivatives contractsfor which there were any material foreseeable losses;
iii. There has been no delay in transferring the amounts required to be transferredto the Investor Education and Protection Fund by the Company.
iv. The Company has provided requisite disclosures in the financial statements as toholdings as well as dealings in Specified Bank Notes (SBNs) during the period from 8thNovember 2016 to 30th December 2016. In absence of any external evidencesbased on audit procedures and relying on the management representation we report that thedisclosures are in accordance with books of account maintained by the Company and asproduced to us by the management. Refer note no. 34.
For SANGHAVI & COMPANY
Membership No. 043485
30th May 2017
ANNEXURE - A TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements'section of our report of even date)
On the basis of such checks as we considered appropriate and in terms of informationand explanations given to us we state that:
1 In respect of fixed assets:
a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b. The fixed assets were physically verified by the management at reasonable intervalsin a phased manner in accordance with a programme of physical verification. Nodiscrepancies were noticed on such verification.
c. The title deeds of immovable properties are held in the name of the Company.
2 The inventories were physically verified by the management at reasonable intervalsduring the year. No material discrepancies were noticed on such physical verificationcarried out by the Company.
3 The Company has granted unsecured loans to companies covered in the registermaintained under section 189 of the Act. Since no terms and conditions of these loans arestipulated we cannot offer any comments as to the repayment of principal amount oroverdue amounts if any. The receipts of interest on these loans are regular.
4 The Company has complied with provisions of Section 185 and 186 of the Act in respectof loans investments guarantees and security to the extent applicable.
5 The Company has not accepted any deposits within the meaning of the provisions ofsection 73 to 76 or any other relevant provisions of the Act and the rules framedthereunder with regard to the deposits accepted from the public. No order has been passedby the Company Law Board or National Company Law Tribunal or Reserve Bank of India or anycourt or any other tribunal.
6 We have broadly reviewed the cost records maintained by the Company pursuant toSection 148(1) of the Companies Act 2013 and are of the opinion that prima facie theprescribed cost records have been maintained. We have however not made a detailedexamination of the cost records with a view to determine whether they are accurate orcomplete.
7 In respect of statutory and other dues:
a. The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees State Insurance Income Tax Sales Tax Service TaxCustom Duty Excise Duty Value Added Tax Cess and other statutory dues to the extentapplicable with the appropriate authorities during the year. There are no undisputedstatutory dues outstanding for a period of more than six months from the date they becamepayable.
b. There are no statutory dues which have not been deposited on account of disputeexcept for the followings:
|Nature of Dues ||Statute ||' in lacs ||Relevant Year ||Forum where dispute is pending |
|Value Added Tax ||Kerala VAT Act ||8.23 ||2007-08 ||Appellate Tribunal |
|Value Added Tax ||Andhra Pradesh Value Added Tax Act ||16.12 ||2006-07 to 2009-10 ||The Commercial Tax Officer |
|Value Added Tax ||Gujarat Value Added Tax Act ||30.57 ||2009-10 to 2013-14 ||The Assistant Commissioner of VAT |
|Service Tax ||Service Tax Rules ||6.05 ||2008- 09 2009- 10 ||CESTAT - Ahmedabad |
|Income Tax ||Income Tax Act ||141.79 ||2007- 08 2008- 09 ||Gujarat High Court |
| || ||1403.32 ||2010-11 ||Income Tax Appellate Tribunal |
8 The Company has not defaulted in repayment of loans or borrowing to banks except forthe dues of certain banks in respect of losses and liabilities for foreign currencyderivative transactions which are disputed by the Company as stated in note no. 24 and tothe extent the amounts stated under note no. 6. The Company has not obtained anyborrowings from any financial institutions or government or by way of debentures.
Lender wise details of the defaults are as under:
|Bank ||Balance as on 31st March 2017 |
|HDFC Bank ||254000000 |
* excluding interest
9 Term loans obtained by the Company have been applied for the purpose for which theywere obtained. The Company has not raised any money during the year by way of publicoffer (including debt instruments).
10 To the best of our knowledge and belief and according to the information andexplanations given to us no fraud on or by the Company or on the Company by its officersor employees was noticed or reported during the year.
11 Managerial remuneration paid or provided by the Company during the year is inaccordance with the requisite approvals mandated by the provisions of Section 197 readwith Schedule V to the Act.
12 Since the Company is not a Nidhi Company the provisions of clause 3 (xii) of theOrder are not applicable to the Company.
13 All transactions with the related parties are in compliance with Section 177 and 188of the Act and the details have been disclosed in the financial statements as required bythe applicable accounting standards.
14 The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review.
15 The Company has not entered into any non-cash transactions during the year withdirectors or persons concerned with him.
16 The Company is not required to be registered under Section 45-IA of the Reserve Bankof India Act 1934.
For SANGHAVI & COMPANY
Membership No. 043485
30th May 2017
ANNEXURE - B TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 2 (f) under 'Report on Other Legal and RegulatoryRequirements' section of our report of even date)
We have audited the internal financial controls over financial reporting of AshapuraMinechem Limited ("the Company") as of 31st March 2017 inconjunction with our audit of the financial statements of the Company for the year endedon that date.
Management's Responsibility for the Internal Financial Statements
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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.
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 on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls 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 auditors' judgement 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 financialreporting includes those policies and 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.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2017 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
For SANGHAVI & COMPANY
Membership No. 043485
30th May 2017