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Centerac Technologies Ltd.

BSE: 531621 Sector: IT
NSE: N.A. ISIN Code: INE157B01026
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NSE 05:30 | 01 Jan Centerac Technologies Ltd
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Mkt Cap.(Rs cr) 2
Buy Price 1.66
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OPEN 1.66
CLOSE 1.66
VOLUME 10000
52-Week high 1.66
52-Week low 0.83
P/E
Mkt Cap.(Rs cr) 2
Buy Price 1.66
Buy Qty 181000.00
Sell Price 0.00
Sell Qty 0.00

Centerac Technologies Ltd. (CENTERACTECH) - Auditors Report

Company auditors report

To the Members of Centerac Technologies Limited

Report on the Financial Statements

We have audited the accompanying financial statements of Centerac TechnologiesLimited ("the Company") which comprise the Balance Sheet as at March 312017 the Statement of Profit and Loss and the Cash Flow Statement for the year thenended and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(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 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.

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 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 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 control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances but not for the purpose of expressing anopinion on whether the Company has in place an adequate internal financial controls systemover financial reporting and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the financial statements

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

Basis for Qualified Opinion

a. Section 196(2) of Companies Act 2013("the Act") inter-aliaprovides that a company cannot appoint or re-appoint any person as its Managing DirectorWhole Time Director or Manager for a term exceeding five years at a time. Further Section196(4) of the Companies Act 2013 provides that subject to the provisions of section 197and Schedule V a Managing Director Whole-time Director or Manager is to be appointed andthe terms and conditions of such appointment and remuneration payable be approved by theBoard of Directors at a meeting which shall be subject to approval by a resolution at thenext General Meeting of the Company.

Though the term of appointment of the Managing Director of the Company expired in2015 the Company did not consider appointment/re-appointment of Managing Director asrequired by Section 196 of the Act. Further the Company has paid Managerial Remunerationof Rs. 2902087 for the Financial Year 2016-17 without any approval of the Board and thatof shareholders at the General Meeting. Thus the appointment and remuneration paid /payable to the Managing Director is not in compliance with the provisions of the Act.Accordingly for FY 2016-17 if this remuneration was not considered the Company's profitwould have been increased by the said amount of remuneration thereby leading to a NetProfit of Rs. 492129.

b. In terms of Section 185 of the Companies Act 2013 a company cannot advance anyloan to its directors. During the year the Company has advanced a loan of Rs.977000 toits director which is not in compliance with the provisions of Section 185 of the Act.

c. One of the companies in which two of the directors of the Company are directors hasfailed to file its annual returns and financial statements with the Registrar of Companies("ROC") for a continuous period of three financial years and accordingly thesaid two directors of the Company are disqualified from being appointed as directors underSection 164(2). The two directors who are so disqualified one of them being the ManagingDirector are managing day-to-day affairs of the Company and are also authorisedsignatories to operate bank accounts and sign the required documents etc. for and onbehalf of the Company as also authorised to sign the financial statements of the Company.

Qualified Opinion

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 the aforesaid financial statements give the information required bythe 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 its loss and its cash flows for the year ended on that date.

Emphasis of matter

As regards the Financial Statements we draw attention to :

a. Note 9 on "Non-current Investments" to the financial statements. Aslegally advised since there is no existence of significant influence by the Company inthe investee investments of Rs. 7878511 in a company signifying more than 20% of thevoting power of the investee have now been reflected as "In Equity Shares of OtherCompanies" and not as "In Equity Shares of Associate". In respect of suchinvestments the Company has made provision for the diminution in its value upto the costof investments of Rs. 7878511.

b. Note 21 on "Contingent Liabilities". Due to the effect of Letter No.LIST/COMP/531621/Reg. 27(2) Sep-16/574/2016-17 dated November 2 2016 from the BombayStock Exchange for Non-Submission of Corporate Governance Report for the Quarter endedSeptember 2016 pursuant to Regulation 27(2) of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the trading of shares of the Company has beensuspended and is made liable for financial penalties of Rs. 1638911 which have beenpaid since the date of the Balance Sheet. As informed the Company is pursuing with theStock Exchange to resolve the matter.

Our opinion is not qualified in respect of above matters.

Report on Other Legal and Regulatory Requirements

1. 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 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 theCompanies^Accounts) Rules 2014.

e. According to the information and explanations given to us and on the basis of ourexamination of the records of the Company one of the companies in which two of thedirectors of the Company are directors has failed to file its annual returns andfinancial statements with the Registrar of Companies ("ROC") for a continuousperiod of three financial years and accordingly in our opinion the said two directors ofthe Company are disqualified from being appointed as directors under Section 164(2).However we have been informed that since the date of the Balance Sheet the saiddefaulting company has completed filings of annual returns with ROC. Further on the basisof written representations received from the remaining two directors as on March 31 2017taken on record by the Board of Directors the remaining two directors are notdisqualified as on March 31 2017 from being appointed as a director in terms of Section164(2).

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 A.

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 our opinionand to the best of our information and according to the explanations given to us:

i. the Company has disclosed the impact if any of pending litigations on itsfinancial position in its financial statements - Refer Note 21 of the financialstatements;

ii. the Company did not have any long-term contract including derivative contract forwhich there was any material foreseeable loss as required under the applicable law oraccounting standards;

iii. there were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company;

iv. the Company has provided requisite disclosure in the financial statements as toholding as well as dealings in Specified Bank Notes during the period from November 82016 to December 30 2016. Based on audit procedure and relying on the managementrepresentation we report that the disclosures are in accordance with books of accountmaintained by the Company and as produced to us by the Management - Refer Note 13.1 of thefinancial statements.

2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of Section 143(11) of the Act we givein the Annexure B a statement on the matters specified in the paragraphs 3 and 4 of theOrder to the extent applicable.

For BANSI S. MEHTA & CO.

Chartered Accountants

Firm Registration No. 100991W

PARESH H. CLERK

Partner

Membership No. 36148

Place : Mumbai

Dated : May 19 2017

ANNEXURE A TO THE INDEPENDENT AUDITORS' REPORT

Referred to in paragraph 1(f) under the heading of "Report on Other Legal andRegulatory Requirements" of our Independent Auditors' Report of even date on thefinancial statements for the year ended March 31 2017.

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 CenteracTechnologies Limited ("the Company") as of March 31 2017 in conjunctionwith our 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 ("ICAI"). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Act.

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 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 ICAI. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls overfinancial reporting was established and maintained and if such controls operatedeffectively 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 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 authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised 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.

Qualified Opinion

According to the information and explanations given to us and on our audit thefollowing material weaknesses have been identified as at March 31 2017.

At present the Company is functioning with minimum staff strength in accounting andfinancial reporting functions. Further the Company does not have any internal audit asrequired by Section 138 of the Act. Hence there is no maker-checker concept resulting insome limitation in control system and processes in accounting and financial reportingfunctions.

A material weakness is a deficiency or a combination of deficiencies in internalfinancial control over financial reporting such that there is reasonable possibility thata material misstatement of the Companies' annual financial statements will not beprevented or detected on timely basis.

In our opinion except for the possible effects of the material weaknesses describedabove on the achievement of the objectives of the control criteria the Company hasmaintained in all material aspects adequate internal financial controls over financialreporting and such internal financial controls over financial reporting were operatingeffectively as of March 31 2017 based on the internal financial controls over financialreporting criteria established by the Company considering the essential components ofinternal financial controls over financial reporting issued by the Institute of CharteredAccountants of India.

We have considered material weaknesses as identified extent of audit test applied inour audit of March 31/ 2017 financial statements of the Company and these materialweaknesses do not affect our opinion on the financial statements of the Company.

For BANSI S. MEHTA & CO.

Chartered Accountants

Firm Registration No. 100991W

PARESH H. CLERK

Partner

Membership No. 36148

Place : Mumbai Dated : May 19 2017

ANNEXURE B TO INDEPENDENT AUDITORS' REPORT

Referred to in paragraph 2 under the heading of "Report on Other Legal andRegulatory Requirements" of our Independent Auditors' Report of even date on thefinancial statements for the year ended March 31 2017.

Report on the Companies (Auditor's Report) Order 2016 issued in terms of Section143(11) of the Companies Act 2013 ("the Act") of Centerac Technologies Limited("the Company")

i. a. The Company has maintained proper records showing full particulars includingquantitative details and situation of Property plant and equipment ("PPE")(earlier referred to as fixed assets).

b. The PPE of the Company are physically verified by the management according to aphased programme designed to cover all the PPE twice during the year which in ouropinion is at reasonable intervals having regard to the size of the Company and thenature of its assets. As informed to us no material discrepancies were noticed on suchverification.

c. According to the information and explanations given to us and on the basis of ourexamination of the records of the Company for an immovable property as included in Note 8on 'Property plant and equipment and Others' to the financial statements though theagreement to purchase the same is entered into and is in the name of the Company (inerstwhile name of the Company) the said agreement has not yet been registered in the nameof the Company with the appropriate authority details of which are as under :

Particulars Gross and Net Block as at March 31 2017
Land Rs.2161384

ii. The Company did not carry out any manufacturing and trading activity and did nothold any inventory at any time during the year. Accordingly paragraph 3(ii) of the Orderis not applicable.

iii. The Company has not granted any loan secured or unsecured to companies firmslimited liability partnerships or other parties covered in the register maintained underSection 189 of the Act. Accordingly paragraph 3(iii) of the Order is not applicable.

iv. In our opinion and according to the information and explanations given to us theCompany has advanced loan to its Managing Director which is not in compliance with theprovisions of Section 185 of the Act. In respect of the said loan to the ManagingDirector the maximum amount outstanding during the year is Rs. 977000 and the amountoutstanding as at March 31 2017 is Rs.770500.

Further the Company has not complied with the provisions of Section 186 of the Act inrespect of loan given though the Company is in compliance with Section 186 with respectto investments made. The details of non-compliance under Section 186 of the Act are asunder :

Nature of non- compliance Name of Party Amount involved (Rs.) Balance as at Balance Sheet (Rs.) Remarks if any
Interest-free loan given and hence it is below the prescribed rate Mr. Sanjiv Khandelwal (Managing Director) 977000 770500 The loan is interest- free loan

The Company has not granted any other loan or given guarantee or provided security inconnection with a loan to any person or other body corporate requiring compliance with theprovisions of Sections 185 and 186 of the Act.

v. In our opinion and according to the information and explanations given to us as theCompany has not accepted any deposit from the public paragraph 3(v) of the Order tocomment on whether the Company has complied with the directives issued by the Reserve Bankof India and the provisions of Sections 73 to 76 or any other relevant provisions of theAct and rules framed thereunder is not applicable.

vi. As the Company is not engaged in manufacturing activities the question ofmaintaining cost records pursuant to the Companies (Cost Records and Audit) Rules 2014as specified by the Central Government under Section 148 (1) of the Act does not ariseand accordingly paragraph 3(vi) of the Order is not applicable.

vii. a. According to the information and explanations given to us and on the basis ofthe books and records examined by us except delays in payment in a few cases the Companyhas been regular in depositing undisputed statutory dues including Provident FundEmployees' State Insurance Income-tax Sales-tax Service Tax Duty of Customs Duty ofExcise Value Added Tax Cess and other statutory dues as applicable to it with theappropriate authorities. There are no arrears of outstanding statutory dues on the lastday of the financial year for a period of more than six months from the date they becamepayable.

b. According to the information and explanations given to us and on the basis of thebooks and records examined by us there are no dues outstanding in respect of Income-taxSales-tax Service Tax Duty of Customs Duty of Excise Value Added Tax and Cess as onMarch 31 2017 as applicable to it which have not been deposited on account of anydispute.

viii. The Company does not have any loan or borrowing from any financial institutionbank government or dues to debenture holders. Accordingly paragraph 3(viii) of the Orderis not applicable.

ix. The Company has not raised any money by way of initial public offer or furtherpublic offer (including debt instruments) during the year. Accordingly paragraph 3 (ix)of the Order in respect thereof is not applicable.

x. 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 year in the course of our audit.

xi. According to the information and explanations given to us and on the basis of booksand records examined by us subject to the fact that appointment/ reappointment of theManaging Director was not done after its earlier term expired and also the remunerationwas paid without approval of the Board and that of the Shareholders as required by Section196 of the Act the Company has paid/provided for managerial remuneration in accordancewith the limits prescribed under Section 197 read with Schedule V to the Act.

xii. The Company is not a Nidhi company. Accordingly paragraph 3(xii) of the Order isnot applicable to the Company.

xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related party are incompliance with Sections 177 and 188 of the Act wherever applicable and the details ofsuch transactions have been disclosed in the financial statements as required by theapplicable accounting standards.

xiv. The Company has not made a preferential allotment or private placement of sharesfully paid or fully or partly convertible debentures during the year under review.Accordingly reporting under paragraph 3(xiv) of the Order is not applicable.

xv. 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 person connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.

xvi. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934. Accordingly paragraph 3(xvi) of the Order is not applicable tothe Company.

For BANSI S. MEHTA & CO.

Chartered Accountants

Firm Registration No. 100991W

PARESH H. CLERK

Partner

Membership No. 36148

Place : Mumbai Dated : May 19 2017