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Jyoti Structures Ltd.

BSE: 513250 Sector: Infrastructure
NSE: JYOTISTRUC ISIN Code: INE197A01024
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OPEN 11.49
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VOLUME 292919
52-Week high 15.30
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Mkt Cap.(Rs cr) 131
Buy Price 0.00
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Sell Price 0.00
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OPEN 11.49
CLOSE 12.09
VOLUME 292919
52-Week high 15.30
52-Week low 6.98
P/E
Mkt Cap.(Rs cr) 131
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Jyoti Structures Ltd. (JYOTISTRUC) - Auditors Report

Company auditors report

TO

THE MEMBERS OF

JYOTI STRUCTURES LIMITED

REPORT ON THE STANDALONE FINANCIAL STATEMENTS

We have audited the accompanying standalone financial statements of Jyoti StructuresLimited ('the Company') which comprise the Balance Sheet as at 31st March2016 the Statement of Profit and Loss the Cash Flow Statement for the year then endedand a summary of significant accounting policies and other explanatory information inwhich are incorporated returns for the year ended on that date audited by the branchauditors of the Company's branches at Bangladesh Bhutan Dubai Egypt Georgia KuwaitKenya Rwanda South Africa Tajikistan Tanzania Tunisia and Uganda.

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 andpresentation of these standalone financial statements that give a true and fair view ofthe financial position financial performance and cash flow 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. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of accounting records relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

AUDITORS’ 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 accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions 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' 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 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 qualified audit opinion on the standalone financial statements.

BASIS FOR QUALIFIED OPINION

a) As on 31st March 2016 the trade receivables of the Company includeamount of ' 7045.80 Lacs outstanding from a Joint Venture (JV) company namely LaurenJyoti Private Limited (LJPL). Further an amount of Rs. 5507.00 Lacs was paid by theCompany on account of bank guarantee encashed by a customer of LJPL which is consideredreceivable from the said JV. The other outstanding from LJPL are Rs. 2534.03 Lacsincluding interest on the outstanding amounts for the current year amounting to Rs.1356.38 Lacs. As informed to us the financial statements of the JV are not availablesince the last three financial years. Considering the fact that the financial statementsof the JV are not available and it is not regular in repayment of the above outstandingwe are not able to comment on the recovery of the debt and impact of the same on thefinancial statements of the Company for the year.

b) The Company has invested Rs. 500 Lacs in 50 Lacs equity shares of LJPL. Thefinancial statements of that company for the last three financial years are not madeavailable to us. As per the last audited financial statements made available for the yearended on 31st March 2013 the net worth of that company is fully eroded. TheCompany has not made any provision for the diminution in the value of this investment. Dueto this non-provision the loss of the Company for the year is understated by Rs. 500 Lacsand reserves of the Company are overstated by the same amount.

c) During the year bank guarantees given by the Company for performance amounting toRs. 1823.01 Lacs were encashed by a customer of the Company. The said amount has not beencharged to the Statement of Profit and Loss of the Company though it has been the practiceof the Company to charge such amounts in earlier years. We are informed that the Companywill be initiating arbitration in respect of encashment of these guarantees and it ishopeful of recovering this money from the customer. We are unable to comment on therecoverability of this amount.

d) As mentioned in clause 29 of note no. 31 to the standalone financial statements theCompany has during the year not provided a part of the interest on the outstanding loansas claimed by certain banks amounting to Rs. 3929.79 Lacs since the management is of theopinion that the banks have charged excessive interest and the excess interest will bewaived by the banks. We are unable to comment on the impact of the same on the financialstatements.

QUALIFIED OPINION

In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matter described in the Basis forQualified Opinion paragraph above the 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 31st March 2016; and its loss and its cash flowsfor the year ended on that date.

EMPHASIS OF MATTER

a) We draw attention to clause 10 of note no. 31 to the standalone financial statementsregarding investment of Rs. 6000.65 Lacs in the equity shares of its wholly ownedsubsidiary company namely Jyoti International Inc. (JII). As on 31st March2016 the Company has also advanced loan of ' 7647.53 Lacs to JII. Due to the lossesincurred the net worth of that company is fully eroded on that date. However noprovision for diminution in the value of the said investment or no provision for otheroutstanding amounts is made as the management is optimistic of turning around the businessof that company.

b) The Company has also advanced loan of Rs. 802.43 Lacs to its step down subsidiaryJyoti Americas LLC and the other outstanding from it is Rs. 4739.27 Lacs. Due to thelosses incurred the net worth of that company is fully eroded as on 31st March2016. However no provision for the loan or the other outstanding amounts is made as themanagement is optimistic of turning around the business of that company.

c) We draw attention to clause 12 of note no. 31 to the standalone financialstatements. The Company has made investment of Rs. 419/- in the equity shares of itssubsidiary company namely Jyoti Structures Africa (Pty) limited (JSAPL). As on 31stMarch 2016 the Company has also advanced loan of Rs. 2819.71 Lacs to JSAPL and theoutstanding credit to that company is Rs. 3026.60 Lacs. Due to the losses incurred thenet worth of that company is fully eroded on that date. However no provision fordiminution in the value of the said investment or no provision for other outstandingamounts is made as the management is optimistic of turning around the business of thatcompany.

d) We draw attention to clause 13 of note no. 31 to the standalone financial statementsstating that the Company has paid managerial remuneration which is in excess of theprovisions of the section 197 read with Part II of Schedule V to the Act. by Rs. 61.07Lacs for the current year for which approval of shareholders and the permission of theCentral Government is to be obtained and Rs. 43.04 Lacs for the previous year for whichthe permission of the Central Government is to be obtained.

e) As mentioned in clause 25 of note no. 31 to the standalone financial statements theCompany is facing financial crunch due to inadequate liquidity which has resulted intodelays in implementing contracted projects during the year. Such delay can result intofuture liability for the Company. The Company has made a provision of Rs. 1300 Lacs forany such liability which in the view of the Company would be adequate. The matter beingtechnical in nature we are not able to comment on the same.

f) We draw attention to clause 30 of note no. 31 to the standalone financialstatements the Company has incurred substantial losses from its operations for the lastfew years which have eroded its networth substantially. This raises doubt about itsability to continue as a going concern. However the management is of the opinion that onapproval of Master Restructuring Agreement by the banks the Company will be able toreturn to profitability over the next few years. Hence the standalone financialstatements have been prepared assuming that the Company and its subsidiaries will continueas a going concern. No adjustments are hence made in the standalone financial statementthat might result from the outcome of this uncertainty.

Our opinion is not modified in respect of these matters.

Other Matters

We did not audit the financial statements/ information of fourteen branchesincorporated in the standalone financial statements of the Company whose financialstatements/ financial information reflect total assets of Rs. 47133.30 Lacs as at 31stMarch

2016 and the total revenues of Rs. 88144.41 Lacs for the year ended on that date asconsidered in the standalone financial statements. The financial statements/ informationof these branches have been audited by the branch auditors whose reports have beenfurnished to use and our opinion in so far as it relates to amounts and disclosuresincluded in respect of these branches is based solely on the reports of such branchauditors.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by the Companies (Auditor's Report) Order 2016 ('the Order') issued bythe Central Government of India in terms of sub-section (11) of section 143 of the Act wegive in the Annexure 'A' a statement on the matters specified in paragraphs 3 and 4 of theOrder.

2. As required by section 143(3) of the Act we report that:

a) Except for the possible effects of the matters stated in clause (a) and (b) of Basisfor Qualified Opinion we have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purpose of our audit;

b) In our opinion except for the possible effects of the matters stated in clause (a)and (b) of Basis for Qualified Opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books andproper returns adequate for the purpose of our audit have been received from the branchesnot visited by us;

c) The reports on the accounts of the branch offices of the Company audited undersection 143(8) of the Act by the branch auditors have been sent to us and have beenproperly dealt with by us in preparing this report;

d) 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 and with the returnsreceived from branches not visited by us;

e) 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;

f) The matters described in the Basis for Qualified Opinion paragraph above in ouropinion may have an adverse effect on the functioning of the Company;

g) 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 interms of section 164(2) of the Act;

h) With respect to the adequacy of internal financial controls over financial reportingof the Company and the operating effectiveness of such controls refer to our separatereport in 'Annexure B' and

i) With respect to the other matters to be included in the Auditors' Report inaccordance with Rule 11 of the Companies (Audit and Auditor's) 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 as referred to in clause 2 of note no. 31 to thestandalone financial statements;

ii) Subject to our comments in clause (e) of Emphasis of Matter the Company has madeprovisions as required under the applicable law or accounting standards for materialforeseeable losses if any on long term contracts including derivative contracts. Referto clause nos. 24 and 25 of note no. 31 to the standalone financial statements;

iii) there has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.

For R. M. AJGAONKAR & ASSOCIATES

Chartered Accountants

Firm's Registration Number: 117247W

KOMAL SEVAK

Partner

Membership Number: 143685

Place: Mumbai

Date: 30th May 2016

ANNEXURE A TO AUDITORS’ REPORT

Re: Jyoti Structures Ltd.

The Annexure referred to in our Independent Auditors' Report to the members of theCompany on the standalone financial statements for the year ended 31st March2016;

1) a) The Company has maintained proper records showing full particulars including thequantitative details and situation of fixed assets on the basis of available information.

b) As explained to us the fixed assets have been physically verified by the managementin a phased periodic manner during the year which in our opinion is reasonable havingregards to the size of the Company and the nature of the assets. No material discrepancieshave been noticed on such verification.

c) According to the information and explanations given to us and on the basis of ourexamination of the relevant records of the Company we report that the title deeds ofimmovable properties are held in the name of the Company.

2) The inventories have been physically verified during the year by the management atreasonable intervals. In our opinion the frequency of verification is reasonable. Asexplained to us the discrepancies noticed on verification of inventories have beenproperly dealt with in the books of accounts.

3) As per the information and explanations given to us the Company has not granted anyloans secured or unsecured to Companies Firms Limited Liability Partnerships or otherparties covered in the register maintained under section 189 of the Companies the Act2013.('the Act') Therefore the provisions of paragraph 3(iii) of the Order are notapplicable to the Company.

4) As per the information and explanations given to us and on the basis of recordsexamined by us we are of the opinion that the Company has complied with the provisions ofsection 185 and 186 of the Act with respect to the loans given and investments made.

5) The Company has accepted deposits from public in the year immediately preceding theprevious year. As per the information and explanation given to us and based on the recordsexamined by us we are of the opinion that the directives issued by Reserve Bank of Indiaand provisions of section 73 to 76 and other relevant provisions of the Act and the rulesframed there under as applicable have been complied with except as stated hereunder:

a) The deposits required to be maintained during the year as per section 73(2)(c) ofthe Act read with proviso to Rule 13 of the Companies (Acceptance of Deposits) Rules2014 which have been utilised by the Company for repayment to the deposit holders; and

b) The payments of interest and repayments of deposits have been made with some delaysin some cases. However all such payments have been made on or before 31stMarch 2016.

As per the information and explanation given to us no order has been passed by theCompany Law Board or National Company Law Tribunal or Reserve Bank of India or any courtor other tribunal against the Company in respect of the deposits.

6) We have broadly reviewed the books of accounts maintained by the Company pursuant tothe Rules made by the Central Government for the maintenance of cost records under section148 of the Act and are of the opinion that prima facie the prescribed accounts andrecords have been made and maintained.

7) a) According to the records of the Company and as per the information given to usthe Company is regular in depositing undisputed statutory dues of Sales Tax Duty ofCustom Duty of Excise Cess and other statutory dues with the appropriate authoritieswherever applicable during the year. However deposits of Provident Fund Employees' StateInsurance Income Tax Service Tax Value Added Tax and Octroi are not regular.

As per the information and explanations given to us and the records examined by us thedetails of undisputed statutory dues which are outstanding as on the last day of theconcerned financial year for more than six months from the date they become payable are asunder:-

(Rs. in Lacs)

Particulars Amount due
i) Provident Fund and Employee's State Insurance 184.36
ii) Octroi 25.96
iii) Income Tax - Self Assessment Tax 3715.00
iv) Income Tax - Dividend Distribution Tax 5.09
v) Income Tax - Tax Deducted at Source 855.94

b) As explained to us and according to the records of the Company the outstandingdisputed statutory dues on account of Income Tax Sales tax Service Tax Duty of CustomsDuty of Excise or Value Added Tax are as follows: -

Type of the Statute Nature of Dues Amount (Rs. in Lacs) Financial year to which the amount relates Forum where dispute is pending
i) Sales Tax Tax and Interest 32.68 Various years between 1995-96 to 1998-99 Appellate Tribunal
ii) Entry Tax Tax and Interest 18.86 2004-05 and 2005-06 Appellate Tribunal
iii) Commercial Tax Tax and Interest 70.34 2006-07 Revision Board
iv) Income Tax Tax and Interest 75.48 2005-06 Income Tax Appellate Tribunal
v) Income Tax Tax and Interest 229.11 2006-07 Commissioner of Income Tax (Appeals)
vi) Income Tax Tax and Interest 3.21 2009-10 Income Tax Appellate Tribunal
vii) Income Tax Tax and Interest 30.30 2010-11 Income Tax Appellate Tribunal
viii) Income Tax Tax and Interest 4418.44 2011-12 Income Tax Appellate Tribunal

8) According to the information and explanations given to us and based on the documentsand records examined by us in our opinion the Company has defaulted in repayment ofloans to Banks Financial Institutions and dues to Debenture Holders. The details of thesame are as follows: -

(Rs. in Lacs)

Sr No Particulars Period of Default Amount of Default as on 31st March 2016
a) Banks - Repayment of Principal:
i) Allahabad Bank Various Dates from June'2015 to March'2016 3394.57
ii) Bank Of India Various Dates from June'2015 to March'2016 17820.00
iii) Bank Of Maharastra Various Dates from June'2015 to March'2016 5515.80
iv) Central Bank of India Various Dates from June'2015 to March'2016 8077.00
v) Canara Bank Various Dates from June'2015 to March'2016 8773.09
vi) Corporation Bank Various Dates from June'2015 to March'2016 11615.48
vii) Dena Bank Various Dates from May'2015 to March'2016 9845.76
viii) ICICI Bank Various Dates from June'2015 to March'2016 10634.00
ix) IDBI Bank Various Dates from June'2015 to March'2016 16110.21
x) Indian Bank Various Dates from June'2015 to March'2016 11534.32
xi) State Bank of Hyderabad Various Dates from June'2015 to March'2016 14414.21
xii) State Bank of India Various Dates from June'2015 to March'2016 39341.19
xiii) South Indian Bank Various Dates from June'2015 to March'2016 6105.64
xiv) Syndicate Bank Various Dates from June'2015 to March'2016 3130.01
xv) Union Bank of India Various Dates from June'2015 to March'2016 8188.79
xvi) UCO Bank Various Dates from June'2015 to March'2016 11335.88
xvii) Vijaya Bank Various Dates from June'2015 to March'2016 4862.94
xviii) Standard Chartered Bank Various Dates from April'2014 to March'2016 13541.00
xix) DBS Bank Various Dates from April'2014 to March'2016 6345.00
xx) DBS Bank (ECB Loan) Various Dates from September'2014 to March'2016 4772.56
xxi) EXIM Bank Various Dates from June'2015 to March'2016 2884.90
b) Financial Institutions - Repayment of Principal:
i) Tata Capital Financial Services Limited Various Dates from June'2015 to March'2016 318.28

Sr No Particulars Period of Default Amount of Default as

on 31st March 2016

ii) Mahindra & Mahindra Various Dates from June'2015 to March'2016 105.70

Financial Services Limited

iii) Reliance Capital Limited Various Dates from June'2015 to March'2016 60.92

c) Debenture holders - Various dates from October'15 to March'16 1489.53

Payment of Principal and Interest

9) According to the information and explanations given to us and on the basis ofexamination of the relevant records prima facie it appears that the term loans areapplied for the purpose for which they are obtained.

10) According to information and explanations given by the management we report thatno fraud by the Company or no material fraud on the Company by its officers or employeeshas been noticed or reported during the year.

11) According to the information and explanations given to us and on the basis of ourexamination of relevant records the Company has paid or provided managerial remunerationin accordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Act except:

(Rs. in Lacs)

Payment to Amount paid/ provided in excess of the limits prescribed Amount due for recovery as at the balance sheet date Steps taken to secure the recovery of the amount Remarks
Whole Time Director- K. R. Thakur 61.07 Nil N.A Permission of the Central Government is to be obtained for such excess payment which pertains to the financial year 2015-16.

12) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Therefore the provisions of paragraph 3(xii) of the Orderare not applicable to the Company.

13) According to the information and explanations given to us and on the basis of ourexamination of relevant records of the Company we report that all transactions with therelated parties are in compliance with section 177 and 188 of the Act and the detailshave been disclosed in the financial statements etc. as required by the applicableaccounting standard.

14) As per the information and explanations given to us and based on our examination ofrelevant records of the Company the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review. Therefore the provisions of paragraph 3(xiv) of the Order are notapplicable to the Company.

15) As per the information and explanations given to us and based on our examination ofrelevant records of the Company the Company has not entered into any non-cashtransactions with directors or persons connected with him. Therefore the provisions ofparagraph 3(xv) of the Order are not applicable to the Company.

16) In our opinion the Company is not required to be registered under section 45-IA ofthe Reserve Bank of India Act 1934.

For R. M. AJGAONKAR & ASSOCIATES

Chartered Accountants

Firm's Registration Number: 117247W

KOMAL SEVAK

Partner

Membership Number: 143685

Place: Mumbai

Date: 30th May 2016

ANNEXURE B

TO THE INDEPENDENT AUDITORS' REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTS OF JYOTISTRUCTURES LIMITED

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 JyotiStructures 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 ('ICAI').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 the 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 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 and the Standard on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by ICAI. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate 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 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 of themanagement 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 misstatement due to error or fraud may occur and not be detected. Alsoprojections of any evaluation of the internal financial controls over financial reportingto future periods are subject to the risk that the internal financial controls overfinancial reporting may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedures may deteriorate.

QUALIFIED OPINION

According to the information and explanations given to us and based on our audit thefollowing material weaknesses have been identified as at 31st March 2016:

a) The Company is not having a full-fledged ERP system to manage different operationalactivities. Accordingly many of the operations which would have been taken care bysystem require manual intervention and to that extent there are limitations in controlsystem and processes.

b) The Company needs to strengthen controls to ensure correct and complete accountingby conducting reconciliations between SAP postings and physical documents as well asentries posted vis-a-vis trackers maintained.

The discrepancies noticed due to the above weaknesses were however rectified by theyear end with manual intervention.

A 'material weakness' is a deficiency or a combination of deficiencies in internalfinancial control over financial reporting such that there is a reasonable possibilitythat a material misstatement of the Company's annual or interim financial statements willnot be prevented or detected on a timely basis.

In our opinion except for the effects/ possible effects of material weaknessesdescribed above on the achievement of the objectives of the control criteria the Companyhas maintained in all material respects adequate internal financial controls system overfinancial reporting and such internal financial controls over financial reporting wereoperating effectively as of 31st March 2016 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note issued by ICAI.

We have considered the material weaknesses identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the 31stMarch 2016 standalone financial statements of the Company and these material weaknessesdo not affect our opinion on the standalone financial statements of the Company.

For R. M. AJGAONKAR & ASSOCIATES

Chartered Accountants

Firm's Registration Number: 117247W

KOMAL SEVAK

Partner

Membership Number: 143685

Place: Mumbai

Date: 30th May 2016