You are here » Home » Companies » Company Overview » Everest Kanto Cylinder Ltd

Everest Kanto Cylinder Ltd.

BSE: 532684 Sector: Industrials
NSE: EKC ISIN Code: INE184H01027
BSE LIVE 15:41 | 21 Aug 37.70 1.70
(4.72%)
OPEN

36.45

HIGH

39.65

LOW

36.45

NSE 15:49 | 21 Aug 37.80 1.80
(5.00%)
OPEN

36.55

HIGH

39.65

LOW

36.05

OPEN 36.45
PREVIOUS CLOSE 36.00
VOLUME 110344
52-Week high 49.35
52-Week low 18.60
P/E
Mkt Cap.(Rs cr) 423
Buy Price 37.70
Buy Qty 488.00
Sell Price 0.00
Sell Qty 0.00
OPEN 36.45
CLOSE 36.00
VOLUME 110344
52-Week high 49.35
52-Week low 18.60
P/E
Mkt Cap.(Rs cr) 423
Buy Price 37.70
Buy Qty 488.00
Sell Price 0.00
Sell Qty 0.00

Everest Kanto Cylinder Ltd. (EKC) - Auditors Report

Company auditors report

To the Members of

Everest Kanto Cylinder Limited

Report on the Standalone Financial Statements

1. We have audited the accompanying standalone financial statements of Everest KantoCylinder Limited ("the Company") which comprise the Balance Sheet as at 31March 2016 the Statement of Profit and Loss and the Cash Flow Statement for the year thenended and a summary of the significant accounting policies and other explanatoryinformation in which are incorporated the returns for the year ended on that date auditedby the branch auditors of the Company’s branch at Dubai.

Management’s Responsibility for the Standalone Financial Statements

2. The Company’s Board of Directors is responsible for the matters stated inSection 134(5) of the Companies Act 2013 ("the Act") with respect to thepreparation of these standalone financial statements that give a true and fair view ofthe financial position financial performance and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014 (as amended). This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act; safeguarding theassets of the Company; preventing and detecting frauds and other irregularities; selectionand application of appropriate accounting policies; making judgments and estimates thatare reasonable and prudent; and design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor’s Responsibility

3. Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.

4. 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.

5. 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 standalone financial statements are free from material misstatement.

6. An audit involves performing procedures to obtain audit evidence about the amountsand the 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 risk assessmentsthe auditor considers internal financial controls relevant to the Company’spreparation of the financial statements that give 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.

7. 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

8. As stated inclause 17 of Note xxviii to the financial statements the Company’scurrent investments as at 31 March 2016 include an investment amounting to Rs 6925.07lakhs (as at 31 March 2015 Rs 6925.07 lakhs) in its wholly owned Subsidiary in China EKCIndustries (Tianjin) Co. Ltd. whose financial statements as at 31 March 2016 indicatesignificant accumulated losses and net worth being fully eroded however as at 31 March2016 a provision of only Rs 3500 Lakhs (as at 31 March 2015 Rs 1500 Lakhs) has beenrecognized in the books for diminution in value of such investment on an adhoc basis. Inthe absence of sufficient appropriate evidence we are unable to comment upon the carryingvalue of this investment and the consequential impact if any on the accompanyingfinancial statements. Our audit opinion for the year ended 31 March 2015 was alsoqualified in respect of this matter.

9. As stated in clause 20 of Note xxviii to the financial statements theCompany’s short-term loans and advances and other current assets includeinter-corporate deposit and accrued interest thereon aggregating Rs 1347.78 lakhs (as at31 March 2015 Rs 1447.78 lakhs) and Rs 376.31 lakhs (as at 31 March 2015 Rs 331.42lakhs) respectively. In the absence of sufficient appropriate evidence we are unable tocomment on the recoverability of the aforesaid amounts and consequential impact if anyon the accompanying financial statements.

Qualified Opinion

10. In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matters described in the Basis forQualified Opinion paragraphthe 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 31 March 2016 and its loss and its cash flows for the yearended on that date.

Report on Other Legal and Regulatory Requirements

11. As required by the Companies (Auditor’s Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of Section 143(11) of theAct we give in the Annexure A a statement on the matters specified in paragraphs 3 and 4of the Order.

12. Further to our comments in Annexure A as required by Section 143(3) of the Act wereport that:

a. we have sought and except for the possible effects of the matters described in theBasis for Qualified Opinion paragraph obtained all the information and explanations whichto the best of our knowledge and belief were necessary for the purpose of our audit;

b. except for the possible effects of the matters described in the Basis for QualifiedOpinion paragraph in our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books and properreturns adequate for the purposes of our audit have been received from the branches notvisited by us;

c. the report on the accounts of the branch office of the Company audited under Section143(8) of the Act by the branch auditors have been sent to us and have been properly dealtwith by us in preparing this report;

d. the standalone financial statements dealt with by this report are in agreement withthe books of account and with the returns received from the branch not visited by us;

e. except for the possible effects of the matters described in the Basis for QualifiedOpinion paragraph in our opinion the aforesaid standalone financial statements complywith the Accounting Standards specified under Section 133 of the Act read with Rule 7 ofthe Companies (Accounts) Rules 2014 (as amended); f. the two matters described inparagraph 8 and 9 under Basis for Qualified Opinion paragraph in our opinion may have anadverse effect on the functioning of the Company.

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

h. the qualification relating to the maintenance of accounts and other mattersconnected therewith are as stated in the Basis for Qualified Opinion paragraph;

i. we have also audited the internal financial controls over financial reporting(IFCoFR) of the Company as of

31 March 2016 in conjunction with our audit of the standalone financial statements ofthe Company for the year ended on that date and our report dated 30 May 2016 as perAnnexure B expressed Qualified Opinion.

j. 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. as detailed in clause 2 of Note xxviii to the standalone financial statements theCompany has disclosed the impact of pending litigations on its standalone financialposition;

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.

For Walker Chandiok & Co LLP
(formerly Walker Chandiok & Co)
Chartered Accountants
Firm Registration No.: 001076N/N500013
per Khushroo B. Panthaky
Partner Mumbai
Membership No.: 42423 30 May 2016

Annexure A to the Independent Auditor’s Report of even date to the members ofEverest Kanto Cylinder Limited on the financial statements for the year ended 31 March2016

Annexure A

Based on the audit procedures performed for the purpose of reporting a true and fairview on the financial statements of the Company and taking into consideration theinformation and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit and to the best of our knowledge and beliefwe report that:

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

(b) The fixed assets have been physically verified by the management during the yearand no material discrepancies were noticed on such verification. In our opinion thefrequency of verification of the fixed assets is reasonable having regard to the size ofthe Company and the nature of its assets.

(c) The title deeds of all the immovable properties (which are included under the head‘Fixed Assets’) are held in the name of the Company except for the followingproperty: Rs (in in Lakh)

Nature of property Total Number of Cases Whether leasehold / freehold Gross block as on 31 March 2016 Net block on 31 March 2016
Land One Leasehold 111.42 111.42

(ii) In our opinion the management has conducted physical verification of inventory atreasonable intervals during the year and no material discrepancies between physicalinventory and book records were noticed on physical verification.

(iii) The Company has granted unsecured loans to two companies covered in the registermaintained under Section 189 of the Act; and with respect to the same:

(a) In our opinion the terms and conditions of loans granted by the Company to oneparty and amounting to

Rs 2168.68 Lakhs (year-end balance Rs 2168.68 Lakhs) is prejudicial to theCompany’s interest on account of the fact that the loans have been granted at aninterest rate of 5% per annum which is significantly lower than the cost of funds to theCompany and also lower than the prevailing yield of government security close to thetenor of the loan.

(b) the schedule of repayment of principal and interest has been stipulated whereinthe principal and interest amounts are repayable on demand and since the repayment of suchloans and interest has not been demanded in our opinion repayment of the principal andinterest amount is regular.

(c) there is no overdue amount in respect of loans granted to such company.

(iv) In our opinion the Company has not entered into any transaction covered underSections 185 of the Act. However the Company has not complied with the provisions ofSection 186 of the Act. The details of the non-compliance is given below:

(v) In our opinion the Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable.

(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the Rules made by the Central Government for the maintenance of cost records undersubsection (1) of Section 148 of the Act in respect of Company’s products and are ofthe opinion that prima facie the prescribed accounts and records have been madeand maintained. However we have not made a detailed examination of the cost records witha view to determine whether they are accurate or complete.

(vii) (a) Undisputed statutory dues including provident fund employees’ stateinsurance income-tax sales-tax service tax duty of customs duty of excise valueadded tax cess and other material statutory dues as applicable have generally beenregularly deposited to the appropriate authorities though there has been a slight delayin a few cases. Further no undisputed amounts payable in respect thereof were outstandingat the year-end for a period of more than six months from the date they became payable.

(b) The dues outstanding in respect of income-tax sales-tax service tax duty ofcustoms duty of excise and value added tax on account of any dispute are as follows:

Statement of Disputed Dues

Name of the statute Nature of dues Amount Amount paid under Protest Period to which the amount relates Forum where dispute is pending
(Rs in Lakh) (Rs in Lakh)
12.82 - F.Y. 2000-01 Sales Tax Tribunal
141.54 43.08 F.Y. 2005-06
134.76 35.26 F.Y. 2006-07 Joint Commissioner
Central Sales
91.31 10.00 F.Y. 2007-08 of Sales Tax
Tax
99.52 17.18 F.Y. 2008-09 (Appeals)
Central Sales
89.34 26.90 F.Y. 2009-10
Tax Act 1956
122.13 55.00 F.Y. 2010-11
F.Y. 1993-94
F.Y. 1994-95
Sales Tax Maharashtra
21.05 7.36 F.Y. 1995-96
(Lease Tax) Sales Tax

F.Y. 1996-97

Tribunal

F.Y. 1997-98
Bombay F.Y. 2000-01
Bombay
Sales Tax Act 26.11 - Sales Tax Tribunal
Sales tax
1959
714.65 572.51 A.Y. 2010-11 Income Tax Appellate
The Income 237.87 - A.Y. 2011-12 Tribunal
Income Tax
Tax Act 1961 572.64 - A.Y. 2009-10 High Court
21.56 - A.Y 2008-09 High Court
The Gujarat F.Y. 2009-10 Joint Commissioner
Commercial
Value Added 14.99 7.84 of Commercial
Tax
Tax Act 2003 Tax(Appeals)
18.95 - F.Y. 2005-06
29.75 - F.Y. 2006-07
Maharashtra 81.42 - F.Y. 2007-08 Joint Commissioner of
Value Added
Value Added 147.43 - F.Y. 2008-09 Sales Tax (Appeals)
Tax
Tax Act 2002 96.98 - F.Y. 2009-10
60.80 - F.Y. 2010-11

(viii) There are no loans or borrowings payable to financial institutions and no duespayable to debenture-holders. The Company has not defaulted in repayment of loans togovernment. However the Company has defaulted in repayment of loans/borrowings to thefollowing banks:

Name of the bank Amount of default as on 31 March 2016 Period of default Due Date Delays in days Remarks
(Rs in Lakh)
Yes Bank 68.13 Apr-15 09-Apr-15 34 Principal amount of
300.38 Oct-15 09-Apr-15 34 Term Loan
258.58 Apr-15 01-May-15 10
Yes Bank Interest on Term Loan
264.08 May-15 01-Jun-15 60
259.64 Jun-15 01-Jul-15 36
62.90 Jun-15 01-Jul-15 55
14.00 Jun-15 01-Jul-15 55
278.93 Jul-15 01-Aug-15 24
96.79 Aug-15 01-Sep-15 31
145.52 Aug-15 01-Sep-15 59
22.25 Aug-15 01-Sep-15 60
8.66 Aug-15 01-Sep-15 60
5.60 Aug-15 01-Sep-15 60
169.26 Sep-15 01-Oct-15 58
83.82 Sep-15 01-Oct-15 58
8.38 Sep-15 01-Oct-15 61
5.42 Sep-15 01-Oct-15 61
254.69 Oct-15 01-Nov-15 59
8.52 Oct-15 01-Nov-15 59
5.51 Oct-15 01-Nov-15 59
245.03 Nov-15 01-Dec-15 35
8.22 Nov-15 01-Dec-15 35
5.32 Nov-15 01-Dec-15 35

(ix) The Company did not raise moneys by way of initial public offer or further publicoffer (including debt instruments). In our opinion the term loans were applied for thepurpose for which the loans were obtained.

(x) In our opinion no fraud by the Company or on the Company by its officers oremployees has been noticed or reported during the period covered by our audit.

(xi) The Company has not paid or provided for any managerial remuneration. Accordinglythe provisions of Clause 3(xi) of the Order are not applicable.

(xii) In our opinion the Company is not a Nidhi Company.

Accordingly provisions of clause 3(xii) of the Order are not applicable.

(xiii) In our opinion all transactions with the related parties are in compliance withSections 177 and 188 of Act where applicable and the requisite details have beendisclosed in the financial statements etc. as required by the applicable accountingstandards.

(xiv) During the year the Company has made preferential allotment of shares. Inrespect of the same in our opinion the Company has complied with the requirement ofSection

42 of the Act and the Rules framed thereunder. Further the amounts raised throughpreferential allotment have not been utilized by the Company. During the year the Companydid not make preferential allotment/ private placement of fully/ partly convertibledebentures.

(xv) In our opinion the Company has not entered into any non-cash transactions withthe directors or persons connected with them covered under Section 192 of the Act.

(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.

For Walker Chandiok & Co LLP
(formerly Walker Chandiok & Co)
Chartered Accountants
Firm Registration No.: 001076N/N500013
per Khushroo B. Panthaky
Partner Mumbai
Membership No.: 42423 30 May 2016

Annexure B to the Independent Auditor’s Report of even date to the members ofEverest Kanto Cylinder Limited on the standalone financial statements for the year ended31 March 2016

1. In conjunction with our audit of the standalone financial statements of EverestKanto Cylinder Limited ("the Company") as of and for the year ended 31 March2016 we have audited the internal financial controls over financial reporting (IFCoFR) ofthe Company of as of that date.

Management’s Responsibility for Internal Financial Controls

2. The Company’s Board of Directors is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting (‘the Guidance Note’) issued by the Institute of CharteredAccountants of India (‘the ICAI’).These responsibilities include thedesignimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the orderly and efficient conduct of the Company’sbusiness including adherence to Company’s policies the safeguarding of its assetsthe prevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.

Auditors’ Responsibility

3. Our responsibility is to express an opinion on the Company's IFCoFR based on ouraudit. We conducted our audit in accordance with the Standards on Auditing issued by theICAI and deemed to be prescribed under section 143(10) of the Act to the extentapplicable to an audit of IFCoFR and the Guidance Note issued by the ICAI. Those Standardsand the Guidance Note require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether adequate IFCoFR wereestablished and maintained and if such controls operated effectively in all materialrespects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyofthe IFCoFR and their operating effectiveness.Our audit of IFCoFR included obtaining anunderstanding of IFCoFR assessing the risk that a material weakness exists and testingand evaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor’s judgement includingthe assessment of the risks of material misstatement of the financial statements whetherdue to fraud or error.

5. We believe that the audit evidence we have obtained is sufficient and appropriate toprovidea basis for our qualified opinion on the Company’s IFCoFR.

Meaning of Internal Financial Controls over Financial Reporting

6. A Company's IFCoFR is a process designed to provide reasonable assurance regardingthe reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. A Company'sIFCoFR 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

7. Because of the inherent limitations of IFCoFR including the possibility ofcollusion or improper management override of controls material misstatements due to erroror fraud may occur and not be detected. Also projections of any evaluation of the IFCoFRto future periods are subject to the risk that IFCoFR may become inadequate because ofchanges inconditions or that the degree of compliance with the policies or procedures maydeteriorate.

Basis for Qualified Opinion

8. According to the information and explanations given to us and based on our auditprocedures performed the following material weakness has been identified in the adequacyand operating effectiveness of the Company’s internal financial controls overfinancial reporting as at 31 March 2016:

The Company did not have appropriate internal financial controls over financialreporting in respect of its assessment of (a) ‘other-than-temporary’ diminutionin the value of the Company’s investments in its subsidiaries and (b) recoverabilityof its inter-corporate deposit included in short term loans and advances. The inadequatesupervisory and review controls over Company’s process to determine the‘other-than-temporary’ diminution in the value of the aforesaid investments andrecoverability of its inter-corporate deposit in accordance with the accounting principlesgenerally accepted in India could potentially result in a material misstatement in thevalue of investment in such subsidiaries and value of inter-corporate deposit included inshort term loans and advances and consequently also impact the Loss after tax.

A ‘material weakness’ is a deficiency or a combination of deficiencies ininternal financial control over financial reporting such that there is a reasonablepossibility that a material misstatement of the company's annual financial statements willnot be prevented or detected on a timely basis.

Qualified Opinion

9. In our opinion except for the possible effects of the material weakness describedabove in the Basis for Qualified Opinion paragraph the Company has in all materialrespects internal financial controls over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at 31 March 2016 based oninternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance note.

We have considered the material weakness identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the 31 March 2016standalone financial statements of the Company and the material weakness has affected ouropinion on the standalone financial statements of the Company and we have issued aqualified opinion on the standalone financial statements.

For Walker Chandiok & Co LLP
(formerly Walker Chandiok & Co)
Chartered Accountants
Firm Registration No.: 001076N/N500013
per Khushroo B. Panthaky
Partner Mumbai
Membership No.: 42423 30 May 2016