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Carnation Industries Ltd.

BSE: 530609 Sector: Engineering
NSE: N.A. ISIN Code: INE081B01010
BSE LIVE 11:33 | 15 Dec 42.05 -0.35
(-0.83%)
OPEN

45.00

HIGH

45.00

LOW

42.00

NSE 05:30 | 01 Jan Stock Is Not Traded.
OPEN 45.00
PREVIOUS CLOSE 42.40
VOLUME 671
52-Week high 78.00
52-Week low 36.80
P/E
Mkt Cap.(Rs cr) 15
Buy Price 42.05
Buy Qty 50.00
Sell Price 42.85
Sell Qty 100.00
OPEN 45.00
CLOSE 42.40
VOLUME 671
52-Week high 78.00
52-Week low 36.80
P/E
Mkt Cap.(Rs cr) 15
Buy Price 42.05
Buy Qty 50.00
Sell Price 42.85
Sell Qty 100.00

Carnation Industries Ltd. (CARNATIONINDS) - Auditors Report

Company auditors report

TO THE MEMBERS OF CARNATION INDUSTRIES LIMITED

Report on the financial statement

We have audit the accompanying financial statements of CARNATION INDUSTRIES LIMITED("the Company") which comprise the balance sheet as at 31st March 2017 theStatement of Profit and Loss the Cash Flow Statement for the year then ended and asummary of significant accounting policies and other explanatory information.

Management’s responsibility for the financial statements

The Company’s Board of Director is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparationand presentation of these financial statements that gives a true and fair view of thefinancial position financial performance and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rule2014. This responsibility also includes maintenance of adequate accounting records inaccordance with the provision of the act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these financial statements based on ouraudit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in audit report under theprovision of the Act and the Rules made there under.

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 theauditor’s judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those risksassessments the auditor considers internal financial

control relevant to the Company’s preparation of the financial statements thatgives a true and fair view in order to design Audit procedures that are appropriate in thecircumstances but not for the purpose of expressing an opinion on whether the Company hasin place an adequate internal financial controls system over financial reporting and theoperating effectiveness of such controls. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company’s Directors as well as evaluating the overallpresentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31stMarch 2017 and its Profit and its cash flows 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 16(a) to the financial statements which describes the overdue receivables froma related party and others.

(ii) Note 8(a) to the financial statements which describes the classification of billdiscounting finance in foreign currency from a body corporate.

Our opinion is not modified in respect of these matters.

Report on other legal and regulatory requirements

1) As required by the Companies (Auditor’s Report) order 2016 ("theorder") issued by the Central Government of India in terms of sub-section (11) ofSection 143 of the Act we give in the annexure "A" a statement on the mattersspecified in Paragraphs 3 and 4 of the Order.

2) As required by Section 143(3) of the Act we report that:

(a) We have sought and obtained all the information and explanation 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 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 with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.

(e) On the basis of the written representations received from the directors as on 31stMarch 2017 taken on records by the Board of Directors none of the directors isdisqualified as on 31st March 2017 from being appointed as a director in terms of Section164 (2) of the Act;

(f) With respect to the adequacy of the internal financial control over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in Annexure "B"; and

(g) With respect to the other matters to be included in the Auditor’s Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in opinion andto the best of our information and according to the explanations given to us;

i. The Company has disclose the impact of pending litigations on its financial positionin its Standalone financial statement - Refer Note 28(ii) & 28 (vi) to the financialstatements;

ii. The Company has made provisions as require under the applicable law or accountingstandards for material foreseeable losses if any as required on long-term contractsincluding derivative contracts-Refer Note 28(xvii) to the financial statements;

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

iv. The Company has provided requisite disclosures in its financial statements as toholdings as well as dealings in Specified Bank Notes during the period from 8 November2016 to 30 December 2016 and these are in accordance with the books of accountsmaintained by the Company. Refer Note 28 (xv) to the financial statements.

For JAIN & BAGARIA
Chartered Accountants
B. K. Agarwal
27/8A Waterloo Street (Partner)
Kolkata - 700 069 Membership No.065361
Dated : 26th May 2017 FRN : 310045E

Annexure "A" to the Independent Auditor’s Report

The Annexure referred to in our Independent Auditor’s Report to the members of theCompany on the financial statements for the year ended 31st March 2017

1. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) As informed to us all fixed assets (except lying with outside parties) have beenphysically verified by the management at reasonable intervals and no materialdiscrepancies were noticed on such verification.

(c) We have examined the original title deed and xerox copies of title deeds in case ofmortgaged properties. Based on our audit procedures and according to the information andexplanations given to us we report that all title deeds of immovable proprieties are heldin the name of the Company.

2. The management has conducted physical verification of inventory at the end of theyear (except stock lying with outside parties). The discrepancies noticed on verificationbetween the physical stocks and book records which in our opinion were not material havebeen property dealt with in the books of account.

3. According to the Information and explanation given to us and on the basis of ourexamination of the books of account the Company has not granted any loans secured orunsecured to companies firm Limited Liability Partnerships or other parties covered inregister maintained under Section 189 of the Act. Accordingly the paragraphs 3 (iii)(a)3(iii)(b) and 3(iii)(c) of the Order are not applicable to the Company.

4. In our opinion and according to the information and explanation given to us theCompany has not given any loan made investment given guarantees or security during theyear which is covered under provisions of section 185 and 186 of the Act. Accordingly theparagraph 3(iv) of the Order is not applicable to the Company.

5. According to the information and explanations provided by the management we are ofthe opinion that the Company has not accepted any deposits from public covered undersection 73 to 76 or any other relevant provision of the Companies Act and rules framedthere under. Accordingly the paragraph 3(v) of the order is not applicable to thecompany.

6. The Central Government has prescribed the maintenance of cost records under section148(1) of the Companies Act 2013 for the products of the company. We have broadlyreviewed such records maintained by the company and are of the opinion that prima faciethe prescribed records have been made and maintained. We have however not made a detailedexamination of the said records with a view to determine whether they are accurate orcomplete.

7.A) According to the information and explanations given to us and on the basis of ourexamination of the books of account the Company has been generally regular in depositingundisputed statutory dues including provident fund employees’ state insuranceincome-tax sales-tax service tax duty of custom duty of excise value added tax andcess and other material statutory dues with the appropriate authorities.

According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees’ state insurance income-taxsales-tax service tax duty of custom duty of excise value added tax and cess and othermaterial statutory dues were outstanding as on 31st March 2017 for a period of more thansix months from the date they became payable.

B) According to the information and explanations given to us and on the basis of ourexamination of the books of account there are no dues of sales tax duty of custom andvalue added tax which have not been deposited on account of any dispute. According to theinformation and explanations given to us the following dues of income-tax service taxand duty of excise have not been deposited by the Company on account of disputes:

Name of Statute Nature of Dues Amount (Rs. In Lacs) Forum where Dispute is Pending
West Bengal Value Added Tax Act 2003 Value Added Tax for the Financial Year 2007 - 2008 100.13 lacs Before the West Bengal Commercial Taxes Appellate & Revisional Board.
Central Excise Act 1944 Duty and Penalty 136.56 lacs Before (Appeal Excise. the Commissioner - 1 & II) of Central

8. Based on our audit procedures and on the information and explanation given to usthe Company has not defaulted in repayment of loans or borrowings to financialinstitutions or to any banks. The Company did not have any outstanding debentures orloans or borrowings from Government during the year.

9. The Company did not raise any money by way of initial public offer or further publicoffer (including debt instruments) and term loans during the year.

10. According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.

11. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration

in accordance with the requisite approvals mandated by the provisions of section 197read with Schedule V to the Companies Act.

12. In our opinion and according to the information and explanation given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.

13. According to the information and explanations given to us and based on ourexamination of the records of the Company transaction with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransaction have been disclosed in the financial statements as required by the applicableaccounting standards.

14. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly paragraph 3(xiv) of the Order is not applicable.

15. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.

16. The Company is not required to be registered under section 45-1A of the ReserveBank of India Act 1934. Accordingly paragraph 3(xvi) of the Order is not applicable.

For JAIN & BAGARIA
L Chartered Accountants
B. K. Agarwal
27/8A Waterloo Street (Partner)
Kolkata - 700 069 Membership No.065361
Dated : 26th May 2017 FRN : 310045E

Annexure "B" to the Independent Auditor’s Report

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of CARNATIONINDUSTRIES LIMITED ("the Company") as of 31st March 2017 in conjunction withour audit of the financial statements of the Company for the year ended 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". These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

Auditors' Responsibility

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 Institute ofChartered Accountants of India and deemed to be prescribed under section 143(10) of theCompanies Act. 2013 to the extent applicable to an audit of internal financial controlsboth applicable to an audit of Internal Financial Controls and both issued by theInstitute of Chartered Accountants of India. Those Standards and the Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting was established and maintained and if such controls operated effectively in allmaterial 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 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 ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material 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.

Opinion

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 31st March 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 JAIN & BAGARIA
Chartered Accountants
B. K. Agarwal
27/8A Waterloo Street (Partner)
Kolkata - 700 069 Membership No.065361
Dated : 26th May 2017 FRN : 310045E