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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

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 at 31stMarch 2017 the statement of profit and loss the statement of cash flows for the yearthen ended and a summary of the significant accounting policies and other explanatoryinformation.

Management's Responsibility for the Financial Statements

The Company's Board of Dirctors is responsible for the matters stated in Section 134(5)of the Companies Act 2013 ("the Act") with respect to the preparation of thesestandalone financial statements that give a true and fair view of the financial positionfinancial performance cash flows of the Company in accordance with the accountingprinciples generally accpeted in India including the Accounting standards prescribedunder Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014 andCompanies (Accounting Standards) Amendments Rules 2016.

This rsponsibility 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 polities; making juogments 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 he 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 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 judgement 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 of 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. 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 overall presentationof 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 the affairs of theCompany as at 31 March 2017 and its profit and its cash flows for the year ended on thatdate.

Report on Other Legal and Regulatory Requirements

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 A a statement on the matters specified in the paragraph 3 and 4 of theorder.

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 thebest of 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 appear from our examination of those books;

(c) The balance sheet the statement of profit and loss and the statement of cashflows dealt with by this Report are in agreement with the books of account;

(d) In our opinion the aforesald standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014 and the Companies (Accounting Standards) Amendment Rules2016;

(e) On the basis of the written representations received from the directors as on31st March 2017 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 terms of Section164(2) of the Act;

(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 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 our opinionand to the best of our information and according 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) Company did not have any long-term contract including derivative contract forwhich there were any material foreseeable losses.

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

(iv) The Company has provided requisite disclosures in Note 1.5 to these standalonefinancial statements as to the holding of Specified Bank Notes on November 8 2016 andDecember 30 2016 as well as dealings in Specified Bank Notes during the period fromNovember 8 2016 to December 30 2016. Based on our audit procedures and relying on themanagement representation regarding the holding and nature of cash transactions includingSpecified Bank Notes we report that these disclosures are in accordance with the books ofacounts maintained by the Company and as produced to us by the Management.

For S.S. Kothari Mehta & Co.
Chartered Accountants
Firm Registration No.-000756N
(Kamal Kishore)
Place: New Delhi Partner
Date: May 8 2017 Membership No. 078017

Re: Dalmia Refractories Limited (‘the Company') Annexure A to IndependentAuditors' 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 particularsincluding quantitative details and situation of fixed assets.

(b) The fixed assets are physically verified by the management according to aphased programme designed to cover all the items over a period of three years which inour opinion 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 infomation 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 atreasonable intervals during the year except stock in transit which have been verifiedwith reference to confirmations and/or subsequent receipt of material.

In our opinion the frequency of such verification is reasonable.

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

(c) In our opinion and according to the information and explanation given to usthe Company 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 companiesfirms Limited Liability Partnerships or other parties covered in the register maintainedunder section 189 of the Act Accordingly clauses 3(iii) of the Order are notapplicable.

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

(v) The Company has not accepted any deposits during the year as per directivesissued by the Reserve bank of India and the provisions of sections 73 to 76 or any otherrelevant provision of the Companies Act 2013 and the rules framed thereunder. Neither anorder has been passed by Company Law Board or National Company Law Tribunal or ReserveBank of India or any Court or any other Tribunal neither any proceeding is pending beforesuch authority.

(vi) We have broadly reviewed the cost accounting records maintained by the Companypursuant to the ‘The Companies (Cost Records and Audit) Rule 2014' as notified bythe 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 andrecords.

(vii) (a) In our opinion and according to the information and explanations givento us and accoridng to the records of the Company the amount deducted/accrued in thebooks of account in respect of undisputed statutory dues provident fund Employees StateInsurance Income Tax Sales tax Service Tax Customs duty Excise duty Value added TaxCess and other material statutory dues where applicable have been regularly depositedwith the appropriate authorities and there are no undisputed statutory dues payable for aperiod of more than six months from the date they became payable as at 31st March 2017.

(b) According to the information and explanation 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 the dues Amount (Rs. Lacs) Period to which the amount relates Forum where the dispute is pending
1. Central Excise & Salt Act 1944 Exise 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 informations and explanations given to us and as per thebooks and records examined by us the Company has not dfaulted in repayment of loans andborrowings to any financial institution or government or bank or dues to debenture holdersas at the balance sheet date.

(ix) The Company did not raise any money by way of Initial public offer or furtherpublic offer (including debt instruments) and term loans during the year Accoridinglyclause 3 (ix) of the order is not applicable.

(x) During the course of our examinations of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.

(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 requisite approvals mandated by the provisions of section197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to usthe Company 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 sections 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 give 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) of the Order is not applicable.

(xvi) The Company is not required to be registered under sections 45-1A of theReserve Bank of India Act 1934.

For S.S. Kothari Mehta & Co.
Chartered Accountants
Firm Registration No.-000756N
(Kamal Kishore)
Place: New Delhi Partner
Date: May 8 2017 Membership No. 078017

Annexure-8 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 2017 in conjunction with ouraudit 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 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 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 audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated 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 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 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 accuratelyand fairly reflect the transactions and dispositions of the assets of the company;

(b) Provide reasonable assurance that transactions are recorded as necessary topermit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance 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 have amaterial effect on the financial statements.

Inherent Limitations of Internal Financial Control 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 S.S. Kothari Mehta & Co.
Chartered Accountants
Firm Registration No.-000756N
(Kamal Kishore)
Place: New Delhi Partner
Date: May 8 2017 Membership No. 078017