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Dalmia Refractories Ltd.

BSE: 500481 Sector: Engineering
NSE: DALMIAREF ISIN Code: INE200F01017
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Dalmia Refractories Ltd. (DALMIAREF) - Auditors Report

Company auditors report

TO THE MEMBERS OF

DALMIA REFRACTORIES LIMITED

(Formerly known as Shri Nataraj Ceramic and Chemical Industries Limited)

Report On the Standalone Financial Statements

We have audited the accompanying standalone financial statements of DalmiaRefractories Limited ("the Company") which comprise the Balance Sheet as at31st March 2016 and the Statement of Profit and Loss the Cash Flow Statement for theyear then ended and a summary of 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 financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions 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 controls thatwere operating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.

Auditor’s Responsibility

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 the 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 anddisclosures 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 risk assessmentsthe auditor considers internal financial control relevant to the Company’spreparation of financial statement that gives a true and fair view in order to designaudit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of the accounting policies used and the reasonableness ofthe accounting estimates made by the Company’s Directors as well as evaluating theoverall presentation 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 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 31st March 2016 and its profit and its cash flows for the year ended on that date.

Report On Other Legal and Regulatory Requirements

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" statement on the mattersspecified in clauses 3 and 4 of the Order;

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 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 standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014;

(e) On the basis of written representations received from the directors as on 31stMarch 2016 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2016 from being appointed as a director in terms of Section164(2) of the Act.

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

(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 accordingly to the explanations given to us;

i) The Company has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer Note 1.2 to the financial statements;

ii) The company did not have any long term contracts including derivative contracts forwhich 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 by the Company.

Re: Dalmia Refractories Limited (Formerly known as Shri Nataraj Ceramic and ChemicalIndustries Limited) Annexure A to Independent Auditors’ Report

Referred to in Clause 1 under the heading of "Report on Other Legal and RegulatoryRequirements" of our Report of even date.

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

(b) The fixed assets are physically verified by the management according to a phasedprogramme designed to cover all the items over a period of three years which in ouropinion is reasonable having regard to the size of the Company and the nature of itsassets. Pursuant to the programme a portion of the fixed assets has been physicallyverified by the management during the year and no material discrepancies were noticed onsuch verification.

(c) According to information and explanation given to us and on the basis of ourexamination of records of the Company the title deeds of immovable properties are held inthe name of the Company.

(ii) (a) The Management has conducted physical verification of inventory at reasonableintervals during the year except stock in transit which have been verified with referenceto confirmations and / or subsequent receipt of material. In our opinion the frequency ofsuch verification is reasonable.

(b) In our opinion and according to the information and explanation given to us theprocedures of physical verification of inventories followed by the management arereasonable and adequate in relation to the size of the Company and the nature of itsbusiness.

(c) In our opinion and according to the information and explanations given to us theCompany is maintaining proper records of inventories. As explained to us thediscrepancies noticed on verification between the physical stocks and the book recordswere not material and have been properly dealt with in the books of accounts.

(iii) The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained undersection 189 of the Act. Accordingly clauses 3 (iii) of the Order are not applicable.

(iv) In our opinion and according to the information and explanation given to us theCompany has complied with the provisions of Section 185 and 186 of the Act with respectto the loans and investments made.

(v) The Company has not accepted any deposits during the year as per directives issuedby the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevantprovision of the Companies Act 2013 and the rules framed thereunder. Neither an order hasbeen passed by Company Law Board or National Company Law Tribunal or Reserve Bank of Indiaor any Court or any other Tribunal neither any proceeding is pending before suchauthority.

(vi) We have broadly reviewed the cost accounting records maintained by the Companypursuant to the ‘The Companies (Cost Records and Audit) Rules 2014’ as notifiedby notification no. 425(E) dated 30th June 2014 of Ministry of Corporate AffairsGovernment of India under section 148 of the Companies Act 2013. We are of the opinionthat prima facie the prescribed accounts and records have been maintained by theCompany.

We are however not required to make a detailed examination of such books and records.

(vii) (a) In our opinion and according to the information and explanations given to usand according to the records of the Company the amount deducted/accrued in the books ofaccount in respect of undisputed statutory dues provident fund Employees State InsuranceIncome Tax Sales tax Service tax Customs duty Excise duty Value added Tax Cess andother material statutory dues where applicable have been regularly deposited with theappropriate authorities and there are no undisputed statutory dues payable for a period ofmore than six months from the date they became payable as at 31st March 2016.

(b) According to the information and explanations given to us and the records of theCompany examined by us there are no dues of Income-Tax Custom duty Wealth tax and cesswhich have not been deposited on account of any dispute except the following in respectof disputed Excise duty Service tax Value added tax and Sales tax.

S. No. Name of the Statute Nature of Dues Amount (Rs. Lacs) Period to which the amount relates Forum where the dispute is pending
1. Central Excise & Salt Act 1944 Excise Duty 2.85 May’ 2008 to August’ 2010 Commissioner (Appeals) Trichy
2. Central Excise & Salt Act 1944 Excise Duty 1.15 September’ 2010 to June’ 2011 CESTAT Chennai
3. Finance Act 1994 Service Tax 25.47 2004-05 to 2011-12 CESTAT Ahmedabad
4. Finance Act 1994 Service Tax 32.92 2008-09 to 2014-15 Commissioner Appeals (Rajkot)
5. The Gujarat VAT Tax Act 2003 Sales Tax 35.07 2001-02 Gujarat High Court
6. Central Excise & Salt Act 1944 Cenvat Credit 10.44 May’2004 to September’ 2005 CESTAT Chennai

(viii) According to the records of the Company examined by us and the information andexplanations given to us in our opinion the Company has not defaulted in repayment ofits dues to any financial institutions banks Government & debenture holders.

(ix) The Company did not raise any money by the way of initial public offer or furtherpublic offer (including debt instrument) and term loans during the year. Accordinglyclause 3 (ix) of the Order 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 course of audit.

(xi) 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 ofSection 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly clause 3(xii) of the Order is not applicable.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with section 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

(xiv) 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.

(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 persons connected with him. Accordingly clause 3(xv) ofthe Order is not applicable

(xvi) According to the information and explanations given to us the Company is notrequired to be registered under Section 45-1A of the Reserve Bank of India Act 1934.

Annexure B to the Auditors’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 DalmiaRefractories Limited ("the Company") as at 31 March 2016 in conjunction withour audit of the standalone financial statements of the Company for the year ended on thatdate.

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 safeguardingof its 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 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 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 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 controlssystem over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A Company internal financial control over financial reporting is a process designed toprovide 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:

a. Pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

b. 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 authorisations of management and directors of the company; and

c. Provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company’s assets that could havea 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 31 March 2016 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 S.S. KOTHARI MEHTA & CO.
Chartered Accountants
Firm Registration No.000756N
KAMAL KISHORE
Place: New Delhi PARTNER
Date: May 23 2016 Membership No.078017

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