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Nitco Ltd.

BSE: 532722 Sector: Consumer
NSE: NITCO ISIN Code: INE858F01012
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VOLUME 39984
52-Week high 109.50
52-Week low 44.65
P/E
Mkt Cap.(Rs cr) 465
Buy Price 85.05
Buy Qty 425.00
Sell Price 0.00
Sell Qty 0.00
OPEN 83.05
CLOSE 82.95
VOLUME 39984
52-Week high 109.50
52-Week low 44.65
P/E
Mkt Cap.(Rs cr) 465
Buy Price 85.05
Buy Qty 425.00
Sell Price 0.00
Sell Qty 0.00

Nitco Ltd. (NITCO) - Auditors Report

Company auditors report

TO

THE MEMBERS OF

NITCO LIMITED

Report on the Standalone Financial Statement

1. We have audited the accompanying standalone financial statements of NITCO Limited("the Company") which comprise the Balance Sheet as at March 312016 theStatement of Profit and Loss the Cash Flow Statement for the year then ended and asummary of the significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone Financial Statements

2. 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 to 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 Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014 and Accounting Standard 30 Financial Instruments: Recognition andMeasurements issued by the Institute of Chartered Accountants of India to the extent itdoes not contradict any other accounting standard referred to in Section 133 of the Actread with Rule 7 of Companies (Accounts) Rules 2014. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; 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.

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 and the Rules made thereunderincluding the accounting standards and matters which are required to be included in theaudit report.

5. We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act and other applicable authoritative pronouncements issued by theInstitute of Chartered Accountants of India. Those Standards and pronouncements requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatement.

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 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.

7. 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.

Qualified Opinion

8. In our opinion and to the best of our information and according to the explanationsgiven to us except for the matters illustrated and described in the Basis forQualified Opinion herein below the 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:

i. in the case of the balance sheet of the state of affairs of the Company as at March312016

ii. in the case of the statement of profit and loss of the Loss for the year ended onthat date; and

iii. in the case of the cash flow statement of the cash flows for the year ended onthat date.

Basis for Qualified Opinion

9. The Company on the basis of the registration of reference filed u/s 15(1) of theSick Industrial Companies (Special Provision) Act 1985 before the Hon'ble Board forIndustrial & Financial Reconstructions has not provided for interest on financingfacilities amount to Rs. 19694.75 Lacs (previous year Rs. 10739.55 Lacs) for the yearended March 31 2016. Had the same been provided the loss for the year ended March 312016 would have increased by Rs. 19694.75 Lacs (previous year Rs. 10739.55 Lacs) andcorresponding bank liabilities would have increased by Rs. 19694.75 Lacs (previous yearRs. 10739.55 Lacs) as at March 31 2016 and net worth of the Company would have beenlower by Rs. 19694.75 Lacs (previous year Rs. 10739.55 Lacs).

Emphasis of matter

10. a) Financial Statements have been prepared on a going concern basis. The Companyhas incurred a net loss of Rs. 6276.64 Lacs (previous year Rs. 12722.21 Lacs) during theyear ended March 312016 and the Company's net worth has been fully eroded as at thebalance sheet date. The appropriateness of the going concern basis is inter alia dependenton the Company's ability to turnaround the operations of the Company and ability ofinfusing requisite funds for meeting its obligations and rescheduling of debts.

b) Note no. 37 to the financial statements relating to Corporate Debt Restructuring(CDR) package approved by the CDR Empowered Group.

c) The dues to banks/lenders are subject to reconciliation.

Report on other Legal and Regulatory Requirements

11. (1) As required by the Companies (Auditor's Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofSection 143 of the Act (hereinafter referred to as the "Order") and on the basisof such checks of the books and records of the Company as we considered appropriate andaccording to the information and explanations given to us 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 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 standalone financial statements except for nonprovision of interest (refer point 9 above) comply with the Accounting Standards specifiedunder Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014 andAccounting Standard 30 Financial Instruments: Recognition and Measurement issued by theInstitute of Chartered Accountants of India to the extent it does not contradict any otheraccounting standard referred to in Section 133 of the Act read with Rule 7 of Companies(Accounts) Rules 2014;

e) On the basis of the 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) ofthe 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 B;

g) 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 knowledge and belief and according to the information andexplanations given to us:

(i) The Company has disclosed the impact of pending litigations as at March 312016 onits financial position in its standalone statements-Refer Note 36.

(ii) The Company has not entered into any long-term contracts including derivativecontracts as at March 31 2016 for which 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 during the year ended March312016.

For A. Husein Noumanali & Co.

Chartered Accountants

Firm Registration No. 107173W

(A. Husein Noumanali)

Proprietor

M. No. 14757

Mumbai May 30 2016

Annexure A to Independent Auditor's Report

Referred to in Paragraph 11 of the Independent Auditor's Report of even date to themembers of NITCO Limited on the standalone financial statements as of and for the yearended March 312016.

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

(b) The fixed assets are physically verified by the Management according to a phasedprogramme designed to cover all the items over a period of 3 years which in our opinionis reasonable having regard to the size of the Company and the nature of its assets.Pursuant to the programme a portion of the fixed assets has been physically verified bythe Management during the year and no material discrepancies have been noticed on suchverification.

(c) In our opinion and according to the information and explanation given to us and onthe basis of an examination of records of the Company the tittle deeds of immovableproperties are held in the name of the Company except for one immoveable property whichamounts to gross block of Rs. 145.66 Lacs and net block of Rs. 139.64 Lacs whose tittledeed is not held in the name of the Company.

(ii) The inventory (excluding stock with third parties) has been verified during theyear by the Management. In respect with the inventory lying with third parties these havesubstantially been confirmed by them. The discrepancies noticed on physical verificationof inventory as compared to book records were not material.

(iii) According to the information and explanation given to us the Company has notgranted any loan to Companies firms or other parties covered under section 189 of theCompanies Act 2013 except interest free loans and advances to its subsidiaries company.The maximum amount outstanding at any time during the year is Rs. 17227.80 Lacs and thebalance as on the Balance Sheet date is also the same.

(a) In our opinion since the advance has given to its subsidiaries it is notprejudicial to the interest of the Company.

(b) There is no repayment schedule and loans and advances are repayable on demand.

(c) In respect of the loans granted by the Company the same are repayable on demandand therefore the question of overdue amount does not arise.

(iv) The Company has not granted any loans or made any investments or provided anyguarantees or security to the parties covered under Section 185 and 186.

(v) The Company has not accepted any deposits from the public within the meaning ofSections 73 74 75 and 76 of the Act and the Rules framed there under to the extentnotified. Therefore the provisions of Clause 3(iv) of the said Order are not applicableto the Company.

(vi) Pursuant to the rules made by the Central Government of India the Company isrequired to maintain cost records as specified under Section 148(1) of the Act in respectof its products. We have broadly reviewed the same and are of the opinion that primafacie the prescribed accounts and records have been made and maintained. We have nothowever made a detailed examination of the records with a view to determine whether theyare accurate or complete.

(vii) (a) According to the information and explanations given to us and the records ofthe Company examined by us in our opinion the Company is generally regular in depositingundisputed statutory dues in respect of Income Tax and Service Tax and is regular indepositing the undisputed statutory dues including provident fund employees Rs. stateinsurance sales tax duty of customs duty of excise value added tax cess and othermaterial statutory dues as applicable with the appropriate authorities.

(b) According to the information and explanations given to us and the records of theCompany examined by us the particulars of dues of income tax sales tax service taxduty of customs and duty of excise valued added tax as at March 312016 which have notbeen deposited on account of a dispute are as follows:

Rs. in Lacs
Name of the Statute Nature of the dues Forum Amount Financial Year to which amount relates
Central Excise Act 1944 Commissioner Central Excise & Customs. 45.30 FY 2006-07 to 2008-09
Excise Duty Customs Excise & Service Tax 1961.35 FY 2007 to 2012
Appellate Tribunal (CESTAT) Mumbai
Commissioner Central Excise & Customs. 731.20 FY 2008-2009
Customs Act 1962 Customs Duty Customs Excise & Service Tax 20.37 FY 2004-05 to 2013-14
Appellate Tribunal (CESTAT) Mumbai
Jt Commissioner of Sales Tax Maharashtra 1101.23 FY 1997-98 to 2011
Tribunal Uttar Pradesh 11.23 FY 2009-10
Special Taxes officer - Rajasthan 0.50 FY 2010-11
Sales Tax/VAT VAT
Revision Board West Bengal 66.12 FY 2007-2011
Dy. Commissioner of Sales tax Tamil Nadu 10.64 FY 2006-2009
Tribunal Karnataka 6.74 FY 2009-10
High Court Mumbai 33.73 Block 1987-1997
Income Tax Act 1961 Income Tax Commissioner of Income Tax (Appeal) 30.64 Penalty for block 1987- 1997

(viii) According to the records of the Company examined by us and the information andexplanation given to us the Company has defaulted in repayment of loans or borrowings toany financial institution or bank or Government or dues to debenture holders as at thebalance sheet date as under: The period of default ranges around 12-24 months.

Rs. in Lacs
Name of the Banks

Overdue

Overdue Interest as on 31.03.2016 Overdue Principal as on 31.03.2016 Total overdue as on 31.03.2016
State Bank of India (Assigned to JMFARC *) 6051.96 11147.72 17199.68
State Bank of Hyderabad (Assigned to JMFARC*) 2199.17 2141.84 4341.01
IDBI Bank (Assigned to JMFARC*) 1998.98 2361.55 4360.53
Corporation Bank (Assigned to JMFARC*) 1681.76 1938.83 3620.59
Indian Overseas Bank 1021.06 1060.19 2081.25
Lakshmi Vilas Bank (Assigned to JMFARC*) 913.84 1120.75 2034.59
Dena Bank (Assigned to JMFARC*) 676.87 666.28 1343.15
EXIM (Assigned to JMFARC*) 620.55 695.21 1315.76
LIC of India 417.44 612.34 1029.78
Vijaya Bank (Assigned to JMFARC*) 950.88 838.30 1789.18
State Bank of Mysore (Assigned to JMFARC*) 522.80 444.02 966.82
State Bank of Patiala (Assigned to JMFARC*) 428.09 469.82 897.91
Catholic Syrian Bank (Assigned to JMFARC*) 1301.38 1139.89 2441.27
State Bank of Travancore (Assigned to JMFARC*) 773.89 877.96 1651.85
Punjab National Bank (Assigned to JMFARC*) 9297.53 22061.16 31358.69
Syndicate Bank 3113.67 4947.06 8060.73
DBS Bank 5.08 76.73 81.81
Tata Capital Ltd - 45.00 45.00
TOTAL 31974.95 52644.65 84619.60

*JMFARC refers to JM Financial Assets Reconstruction Company Private Limited

(ix) The Company has not raised any moneys by way of initial public offer furtherpublic offer (including debt instruments) and term loans. Accordingly the provisions ofClause 3(ix) of the Order are not applicable to the Company.

(x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.

(xi) The Company has paid/provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct.

(xii) As the Company is not a Nidhi Company and the Nidhi Rules 2014 are notapplicable to it the provisions of Clause 3(xii) of the Order are not applicable to theCompany.

(xiii) The Company has entered into transactions with related parties in compliancewith the provisions of Sections 177 and 188 of the Act. The details of such related partytransactions have been disclosed in the financial statements as required under AccountingStandard (AS) 18 Related Party Disclosures specified under Section 133 of the Act readwith Rule 7 of the Companies (Accounts) Rules 2014.

(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review.Accordingly the provisions of Clause 3(xiv) of the Order are not applicable to theCompany.

(xv) The Company has not entered into any non cash transactions with its directors orpersons connected with him. Accordingly the provisions of Clause 3(xv) of the Order arenot applicable to the Company.

(xvi) The Company is not required to be registered under Section 45-1A of the ReserveBank of India Act 1934. Accordingly the provisions of Clause 3(xvi) of the Order are notapplicable to the Company.

For A. Husein Noumanali & Co.

Chartered Accountants

Firm Registration No. 107173W

(A. Husein Noumanali)

Proprietor

M. No. 14757

Mumbai May 30 2016

Annexure B to Independent Auditor's Report

Referred to in paragraph 11(f) of the Independent Auditor's Report of even date to themembers of NITCO Limited on the standalone financial statements for the year ended March312016

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Act

1. We have audited the internal financial controls over financial reporting of NITCOLimited ("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

2. 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 (ICAI). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's 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 Act.

Auditor's Responsibility

3. 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 deemed to be prescribedunder Section 143(10) of the Act to the extent applicable to an audit of internalfinancial controls both applicable to an audit of internal financial controls and bothissued by The 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.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls system over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error.

5. 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 systemsover financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

6. A company's internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements For external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized 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 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.

Opinion

8. 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.

For A. Husein Noumanali & Co.

Chartered Accountants

Firm Registration No. 107173W

(A. Husein Noumanali)

Proprietor

M. No. 14757

Mumbai May 30 2016.