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K A Wires Ltd.

BSE: 532581 Sector: Metals & Mining
NSE: KAWIRES ISIN Code: INE372S01017
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K A Wires Ltd. (KAWIRES) - Auditors Report

Company auditors report

TO THE MEMBERS OF K A WIRES LIMITED.

We have audited the accompanying financial statements of K A WIRES LTD. ("theCompany") which comprise the Balance Sheet as at March 312016 the Statement ofProfit and Loss for the year then ended cash flow statement of the Cash Flow for theyear ended on that date and a summary of significant accounting policies and otherexplanatory 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 Act2013 ("the Act") with respect to the preparation ofthese standalone financial statement that give a true and fair view of the financialposition financial performance of the company in accordance with the accountingprinciples generally accepted in India including Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014.Thisresponsibility also includes maintenance of adequate accounting records in accordance ofwith the provisions of the Act for safeguarding the assets of the company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue 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 accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under.

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 misstatements.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders 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 but not for the purpose of expressing anopinion on whether the Company has in place an adequate internal financial controls systemover financial reporting and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by the Company's directors as well as evaluating theoverall presentation of the financial statements

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.

Basis for Qualified Opinion

The Company's inventories are carried in the Balance Sheet at Rs. 54418893/- (As at31st March 2015: Rs. 64396632/-). The Management has not stated the inventories at thelower of cost and net realisable value but has stated them solely at estimated marketprice which constitutes a departure from the Accounting Standard - 2 "Valuation ofInventories". The Company's records indicate that had the Management stated theinventories at the lower of cost and net realisable value an amount of Rs. 24875076/-and Rs. 33742729/- would have been required to write down the opening inventories andclosing inventories respectively to their net realisable value. Accordingly cost of saleswould have been increased by Rs. 8867653/- and income tax profit for the year andshareholders' funds would have been reduced by Rs. 943136/- Rs. 8867653/- and Rs.8867653/- respectively. This matter was also mentioned in our report on the financialstatements for the year ended 31st March 2015.

Qualified Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion 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:

(a) In the case of the Balance Sheet of the state of affairs of the Company as atMarch 312016;

(b) In the case of the Statement of Profit and Loss of the profit for the year endedon that date.

(c) In the case of cash flow statement of the Cash Flow for the year ended on thatdate Report on Other Legal and Regulatory Requirements

1 As required by Companies (Auditor's Report) order 2016 issued by the centralgovernment of India in terms of Section 143(11) of the Companies Act2013 we give in theannexure a statement on the matters specified in paragraphs 3 and 4 of the said order.

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

a) We have obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purpose of our audit.

b) In our opinion proper books of account as required by law have been kept by thecompany as far as appears from our examination of the books of the company.

c) The Balance Sheet and the Profit & Loss Account dealt with by this report are inagreement with the books of account submitted to us.

d) In our opinion the Profit & Loss Account and the Balance Sheet comply with theaccounting standards referred to Sub-Section 133 of the Companies Act 2013 read with rule7 of the Companies (Accounts) Rules 2014.

e) Based on the written representations received from the directors and taken on recordby the board we are of the opinion that none of the directors are disqualified forappointment under section 164(2 ) of the Companies Act 2013.

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 included in the Auditor's Report and to our bestof our information and according to the explanations given to us :

i. The Company does not have any pending litigations which would impact its financialposition

ii. The Company did not have any long-term contracts including derivatives contractsfor which there were any material foreseeable losses.

iii. There were no amounts required to be transferred to the Investor Education andProtection Fund by the Company.

46 B. B. Ganguly Street For S. N. Kedia & Associates
4th Floor Room No. 11 Chartered Accountants
Kolkata - 700012. FRN No. 319025E
(S. N. KEDIA)
Partner
Dated the 23rd day of May 2016 Membership No. 054075

RE : K A WIRES LIMITED

Referred to in para 1 in 'Report on Other Legal and Regulatory Requirements' of ourreport 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 regular programme of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner over a period of three years. Inaccordance with this programme certain fixed assets were verified during the year and nomaterial discrepencies were noticed on such verification. In our opinion this periodicityof physical verification is reasonable having regard to the size of company and nature ofits assets.

c) According to the information and explanation given to us and on the basis of ourexamination of the records of the company the title deeds of immovable properties areheld in the name of company.

ii) In respect of its inventories:

a) The inventories have been physically verified during the year by the management. Inour opinion the frequency of verification is reasonable.

b) In our opinion and according to the information and explanations given to us theprocedures of physical verification of inventories followed by the management arereasonable and adequate to the size of the Company and nature of its business.

c) The Company has maintained proper records of the inventories. As per the informationand explanation given to us no material discrepancies were noticed on physicalverification.

iii) According to the information and explanation given to us and on the basis of ourexamination of the books of account the company has not granted any loans secured orunsecured to companies firms 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 section 185 & 186 of the Act with respectto loans and investment made.

v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposit from the Public. Therefore the provisions of clause(v) of paragraph 3 of CARO 2016 are not applicable to the company.

vi) According to the information and explanations given to us the Central governmenthas not prescribed maintenance of cost records under sub-section (1) of section 148 of theCompanies Act 2013. Therefore the provisions of clause (vi) of paragraph 3 of CARO 2016are not applicable to the company.

vii) a) According to the information and explanation given to us and on basis of ourexamination of the records of the

Company amounts deducted/accrued in books of account in respect of undisputedstatutory dues including provident fund ESI income tax sales tax vaule added tax dutyof customs Excise service tax cess and material statutory dues have been regularlydeposited during the year by the Company with the appropriate authorities.

According to the information and explanation given to us no undisputed amounts payablein respect of provident fund income tax value added tax duty of customs service taxcess and other material statutory dues were in arrears as at 31st March 2016 for a periodof more than six months from the date they become payable.

b) According to information and explanations given to us there are no material dues ofduty of customs sales tax duty of excise service tax and value added tax which has notbeen deposited with appropriate authorities on account of any dispute. However accordingto information and explanation to given to us the following dues of income tax have notbeen deposited by the Company on account of disputes:

Name of the Statute Nature of Dues Amount (in Rupees) Period to which the amount relates Forum where dispute is pending
Income Tax Demand u/s 143(3) 4414910/- A. Y 2012-13 CIT (Appeals)-3

viii) In our opinion and according to the information and explanation given to us thecompany has not defaulted in the repayment of dues to Banks. The company has not taken anyloans from any financial institution or from the government and has not issued anydebentures.

ix) Based upon the audit procedure performed and the information and explanation givenby the management the Company did not raise any money by way of initial public offer orfurther public offer (including debt instruments during the year. The company has raisedterm loans from bank during the year and were utilized for the purpose said loans wereraised.

x) According to information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.

xi) According to information and explanations given to us and based on our examinationof the records of the Company the company has paid/provided for managerial remunerationin accordance with the requisite approvals mandated by the provisions of section 197 readwith schedule V of the Act.

xii) In our opinion and according to the information and explanation given to us theCompany is not a Nidhi Company. Accordingly paragraph 3(xii) of the order is notapplicable.

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

xiv) According to information and explanations given to us and based on our examinationof the records of the Company the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the year.

xv) According to information and explanations given to us and based on our examinationof the records of the Company the Company has not entered into non-cash transactions withdirectors or persons connected with him. Accordingly paragraph 3(xv) of the order is notapplicable.

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

46 B. B. Ganguly Street For S. N. Kedia & Associates
4th Floor Room No. 11 Chartered Accountants
Kolkata - 700012. FRN No. 319025E
(S. N. KEDIA)
Partner
Dated the 23rd day of May 2016 Membership No. 054075

"Annexure B"

To the Independent Auditor's Report of even date on the Standalone Financial Statementsof K A Wires 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 K A WIRESLimited ("the Company") as of March 312016 in conjunction with our audit of thestandalone financial statements of the Company for the year ended on that date.

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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's 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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and

(3) 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 Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or

improper management override of controls material misstatements due to error or fraudmay occur and not be detected. Also projections of any evaluation of the internalfinancial controls over financial reporting to future periods are subject to the risk thatthe internal financial control over financial reporting may become inadequate because ofchanges in conditions or that the degree of compliance with the policies or proceduresmay 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 March 312016 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.

46 B. B. Ganguly Street For S. N. Kedia & Associates
4th Floor Room No. 11 Chartered Accountants
Kolkata - 700012. FRN No. 319025E
(S. N. KEDIA)
Partner
Dated the 23rd day of May 2016 Membership No. 054075