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TO THE MEMBERS OF
IFGL REFRACTORIES LIMITED
Report on the Standalone Financial Statements
We have audited the accompanying Standalone Financial Statements of IFGL RefractoriesLimited ("the Company") which comprise the Balance Sheet as at 31st March 2016the Statement of Profit and Loss and the Cash Flow Statement for the year then ended anda summary of the significant accounting policies and other explanatory information.
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 Standardsprescribed under Section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate Internal Financial Controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the Financial Statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
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 and the Order under Section 143(11) ofthe Act.
We conducted our audit of the Standalone Financial Statements in accordance with theStandards on Auditing specified under Section 143(10) of the Act. Those Standards requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the Financial Statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the Financial Statements. The procedures selected depend on theauditors' 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. 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 Standalone Financial Statements.
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
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 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 Financial Statements comply with the AccountingStandards specified under Section 133 of the Act.
e) On the basis of the 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 the operating effectiveness of such controls refer to ourseparate Report in "Annexure A". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's Internal Financial Controls overfinancial reporting.
g) With respect to the other matters to be included in the Auditors' 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 Notes 11.2 and 32(a) to the FinancialStatements.
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.
2. As required by the Companies (Auditors' Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a Statement on the matters specified in paragraphs 3 and 4 of theOrder.
Annexure 'A' to the Independent Auditor's Report
(Referred to in Paragraph 1(f) under 'Report on Other Legal and RegulatoryRequirements' of our report of even date)
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofsub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the Internal Financial Controls over Financial Reporting of IFGLRefractories Limited ("the Company") as of 31st 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 Reporting (the"Guidance Note") issued by The Institute of Chartered Accountants of India.These responsibilities include the design implementation and maintenance of adequateInternal Financial Controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to Company's Policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable Financial information as required under the Companies Act 2013.
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 and the Standards on Auditing prescribed under Section 143(10) ofthe Companies Act 2013 to the extent applicable to an audit of Internal FinancialControls. 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 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 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.
In our opinion and to the best of our information and according to the explanationsgiven to us the Company has in all material respects an adequate Internal FinancialControls system over Financial Reporting and such Internal Financial Controls overFinancial
Reporting were operating effectively as at 31st March 2016 based on the InternalControl over Financial Reporting criteria established by the Company considering theessential components of Internal Control stated in the Guidance Note.
Annexure 'B' to the Independent Auditor's Report
(Referred to in Paragraph 2 under 'Report on Other Legal and Regulatory Requirements'Section 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 Company has a program of verification of Fixed Assets to cover all the items ina phased manner over a period of 3 years which in our opinion is reasonable havingregard to the size of the Company and the nature of its assets. Pursuant to the programcertain Fixed Assets were physically verified by the Management during the year. Accordingto the information and explanations given to us no material discrepancies were noticed onsuch verification.
c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered conveyance deed provided to us wereport that with respect to immovable properties of acquired Land that are Freehold thetitle deeds of such immovable properties are held in the name of the Company as at theBalance Sheet date. In respect of immovable properties of Land that have been taken onlease and disclosed as Fixed Asset in the Financial Statements the lease agreements arein the name of the Company where the Company is the lessee in the agreement.
ii) As explained to us the Inventories other than material lying with third parties(which have substantially been confirmed) were physically verified during the year by theManagement at reasonable intervals and no material discrepancies were noticed on physicalverification.
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 Companies Act 2013.
iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Companies Act2013 in respect of grant of loans making investments and providing guarantees andsecurities as applicable.
v) According to the information and explanations given to us the Company has notaccepted any deposit during the year and had no unclaimed deposits at the beginning of theyear as per the provisions of Sections 73 to 76 or any other relevant provisions of theCompanies Act 2013.
vi) The maintenance of cost records has been specified by the Central Government underSection 148(1) of the Companies Act 2013 (for manufacture and sale of certain castablematerials).We have broadly reviewed the cost records maintained by the Company pursuant tothe Companies (Cost Records and Audit) Rules 2014 as amended and prescribed by theCentral Government under sub-section (1) of Section 148 of the Companies Act 2013 andare of the opinion that prima facie the prescribed cost records have been made andmaintained. We have however not made a detailed examination of the cost records with aview to determine whether they are accurate or complete.
vii) According to the information and explanations given to us in respect of StatutoryDues :
a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income Tax Sales Tax Service TaxCustoms Duty Excise Duty Value Added Tax Cess and other material statutory duesapplicable to it to the appropriate authorities.
b) There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income Tax Sales Tax Service Tax Customs Duty Excise Duty ValueAdded Tax Cess and other material statutory dues in arrears as at 31st March 2016 for aperiod of more than six months from the date they became payable.
c) Details of dues of Income Tax Sales Tax Service Tax Customs Duty Excise DutyValue Added Tax and Cess which have not been deposited as on 31st March 2016 on account ofdisputes are given below :
viii) In our opinion and according to the information and explanations given to us theCompany has not defaulted in the repayment of loans and borrowings to any banks. TheCompany has not taken any loans or borrowings from any financial institutions orGovernment. The Company has not taken any loans or borrowings from Government or hasissued any debentures.
ix) The Company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments). In our opinion and according to the information andexplanations given to us the Term Loans were applied for the purposes for which they wereraised.
x) To the best of our knowledge and according to the information and explanations givento us no fraud by the Company and no fraud on the Company by its officers or employeeshas been noticed or reported during the year.
xi) In our opinion and according to the information and explanations given to us theCompany has paid/provided Managerial Remuneration in accordance with the requisiteapprovals mandated by the provisions of Section 197 read with Schedule V to the CompaniesAct 2013 to the Chairman of the Company. In respect of the Managing Director of theCompany the Company has paid/provided Managerial Remuneration in excess of the limits andapprovals prescribed under Section 197 read with Schedule V to the Companies Act 2013 :
xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of theOrder is not applicable.
xiii) In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 188 and Section 177 of the Companies Act 2013where applicable for all transactions with the related parties and the details of relatedparty transactions have been disclosed in the Financial Statements etc. as required by theapplicable accounting standards.
xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underclause (xiv) of the order is not applicable to the Company.
xv) In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non cash transactions with itsdirectors or persons connected with them and hence provisions of Section 192 of theCompanies Act 2013 are not applicable.
xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.