Independent Auditors Report To the Members of Kingfa Science & Technology(India) Limited (Formerly Hydro S &S Industries Limited)
Report on the Financial Statements
We have audited the accompanying financial statements of KINGFA SCIENCE &TECHNOLOGY (INDIA) LIMITED (FORMERLY HYDRO S&S INDUSTRIES LIMITED ("theCompany") which comprise the Balance Sheet as at March 31 2016 the Statement ofProfit and Loss Cash Flow Statement for the year then ended and a summary of significantaccounting policies and other explanatory information.
Managements Responsibility for the Financial Statements
The Companys 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 financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act 2013 read with Rule 7 of the Companies (Accounts) Rules 2014.This responsibility also includes maintenance of adequate accounting records in accordancewith 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.
Our responsibility is to express an opinion on these financial statements based on ouraudit. 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 undertheprovisions 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 ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal financial control relevant to the Companyspreparation 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 Companys 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
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March312016 and its Profit and its Cash Flow for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order 2016 ("theOrder") as amended issued by the Central Government of India in terms ofsub-section (11) of section 143 of the Act we give in the "Annexure A" astatement on the matters specified in paragraphs 3 and 4 of the Order.
2. 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 purpose of ouraudit;
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 read with Rule 7 of the Companies(Accounts) Rules 2014.
e. On the basis of written representations received from the directors as on March312016 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2016 from being appointed as a director in terms of Section 164 (2) of theAct.
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 "AnnexureB".
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 Note No. 25 to the financial statements.
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 and on behalf of |
| ||P. Srinivasan & Co. |
| ||Chartered Accountants |
| ||FRM: 004054S |
|Place: Chennai ||P. Srinivasan |
|Date : 30.05.2016 ||Partner |
| ||M. No: 02090 |
"ANNEXURE A" TO THE INDEPENDENT AUDITORS REPORT
Referred to in paragraph 8 under the heading Report on Other Legal &Regulatory Requirement of our report of even date to the financial statements of theCompany for the year ended March 312016.
i) a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) These fixed assets have been physically verified by the management at the end of thefinancial year which in our opinion is reasonable having regard to the size of the Companyand the nature of its assets. According to the information and explanations given to usno material discrepancies were noticed on such verification.
c) According to the information and explanations given and on the basis of examinationof the records of the Company the title deeds of immovable properties are held in thename of the company.
ii) (a) As explained to us inventories held by the Company were physically verifiedduring the year at reasonable intervals by the management.
(b) In our opinion and according to the information and explanations given to us thediscrepancies noticed on physical verification of the inventory as compared to booksrecords has been properly dealt with in the books of account and were not material.
iii) In our opinion and according to the information and explanations given to us theCompany has not granted any loans secured or unsecured to companies firms limitedliability partnerships or other parties covered in the Register maintained under section189 of the Act.
iv) In our opinion and according to the information and explanations given to us thecompany has complied with the provisions of section 185 and 186 of the Companies Act 2013In respect of loans investments guarantees and security.
v) The Company has not accepted any deposits from the public during the year to whichthe directives issued by the Reserve Bank of India and the provisions of sections 73 to 76or any other relevant provisions of the Companies Act and the rules framed there under areapplicable.
vi) According to the records produced and the information and explanations given to usthe cost records prescribed by the Central Government under subsection 1 of section 148 ofthe Companies Act are being prima facie maintained by the Company. We have broadlyreviewed the cost records maintained by the company.
vii) (a) According to the records of the Company the Company is regular in depositingundisputed statutory dues including provident fund employees state insuranceincome tax sales tax service tax duty of customs duty of excise value added tax andany other statutory dues applicable to it with the appropriate authorities during theyear. According to the information and explanations given to us no undisputed amountspayable in respect of the above which are outstanding as at March 312016 for a period ofmore than six months from the date they become payable.
(b) On the basis of audit procedures and on the information and explanations given tous there are no dues of income tax or sales tax or wealth tax or service tax or duty ofcustoms or duty of excise or value added tax which have not been deposited on account ofany dispute except the following pending in appeals:
(i) Income tax of Rs.37.82 lakhs before the first appellate authority
(ii) Customs duty of Rs.26.78 lakhs before the first appellate authority
(iii) Sales tax of Rs.56.87 before the first appellate authority and
(iv) Central Excise and Service tax before the first appellate authority Rs. 19.85lakhs.
viii) On the basis of records produced and in our opinion and according to theinformation and explanations given to us the Company has not defaulted in repayment ofthe dues to bank. The Company has not availed borrowing facilities from financialinstitution Government or issued any debentures.
ix) The company has not raised moneys by way of initial public offer or further publicoffer including debt instruments and term Loans. However the Company made rights issueduring the year under audit. In our opinion and on the basis of the audit proceduresperformed and the information and explanations given by the management the moneys raisedby the Company through its rights offer were applied for the purposes for which they wereraised.
x) On the basis of the audit procedures carried out by us and information andexplanations given by the management we state that no material fraud on or by the Companyby its officers or employees has been noticed or reported during the course of our audit.
xi) On the basis of the audit procedures performed and the information and explanationsgiven by the management the managerial remuneration has been paid or provided inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Companies Act;
xii) In our opinion the Company is not a Nidhi Company and therefore the provisions ofclause 4 (xii) of the Order are not applicable to the Company.
xiii) In our opinion and according to the information and explanations given by themanagement all transactions with the related parties are in compliance with section 177and 188 of Companies Act 2013 where applicable and the details have been disclosed in theFinancial Statements as required by the applicable accounting standards.
xiv) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year under audit.
xv) In our opinion on the basis of the audit procedures performed and the informationand explanations given by the management the company has not entered into any non-cashtransactions with directors or persons connected with him.
xvi) In our opinion the company is not required to be registered under section 45 IAof the Reserve Bank of India Act 1934.
| ||For P. SRINIVASAN & CO. |
| ||Chartered Accountants |
|Place: Chennai ||Firm No. 004054S |
|Date :30th May 2016 ||(P. Srinivasan) |
| ||Partner |
| ||Membership No.: 02090 |
"Annexure B" to the Independent Auditors Report of even date on theFinancial Statements of Kingfa Science & Technology (India) Limited (Formerly HydroS&S Industries Limited) Report on the Internal Financial Controls 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 KingfaScience & Technology (India) Limited (Formerly Hydro S &S Industries Limited)("the Company") as of March 31 2016 in conjunction with our audit of thefinancial statements of the Company for the year ended on that date.
Managements Responsibility for Internal Financial Controls
The Companys 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 companys policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired 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 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 overfinancial 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 Companys internal financial controlssystem overfinancial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial control overfinancial reporting is a process designed toprovide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control overfinancialreporting 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 in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; 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 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 controloverfinancial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
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 31 2016 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
| ||For and on behalf of |
| ||P. Srinivasan & Co. |
| ||Chartered Accountants |
|Place: Chennai ||FRN: 004054S |
|Date : 30.05.2016 ||P. Srinivasan |
| ||Partner |