|BSE: 503780||Sector: Industrials|
|NSE: NRC||ISIN Code: INE953C01018|
|BSE 00:00 | 23 Feb||NRC Ltd|
|NSE 05:30 | 01 Jan||NRC Ltd|
|BSE: 503780||Sector: Industrials|
|NSE: NRC||ISIN Code: INE953C01018|
|BSE 00:00 | 23 Feb||NRC Ltd|
|NSE 05:30 | 01 Jan||NRC Ltd|
TO THE MEMBERS OF NRC LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of NRC Limited ("theCompany") which comprise the Balance Sheet as at 31st March 2017 the Statement ofProfit and Loss the Cash Flow Statement for the year then ended and a summary of thesignificant accounting policies and other explanatory information for the year then ended.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese financial statements that give a true and fair view of the financial position-financial 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 read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
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 under theprovisions of the Act and the Rules made thereunder. We conducted our audit in accordancewith the Standards on Auditing specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements arid plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatement. An audit involves performing procedures to obtain audit evidence about theamounts and the disclosures in the financial statements. The procedures selected depend onthe auditor's judgment including the assessment of the risks of material misstatement of the financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation 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 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 qualified audit opinion on the financial statements.
Basis for Qualified Opinion
(a) The Company has incurred loss in the current year as well as in the preceding yearand the accumulated losses has exceeded its entire net worth and the Company's plant areunder lockout since 15th November 2009. The financial statements have however beenprepared by the management on a going concern basis as explained in note 19.4(a). Thisbeing a technical matter and in view of uncertainty we are unable to express an opinionas to whether the Company can operate as a going concern and also as to the extent of theeffect of the resultant adjustments to the accumulated losses assets and liabilities asat the year-end and losses for the year which is presently not ascertainable.
(b) The Company has not carried out impairment test as required by Accounting Standard(AS) 28 Impairment of Assets' particularly in respect of Plant and Equipment asexplained in note 19.4(b). We are unable to express an opinion as to when and to whatextent the carrying value of Plant & Equipment (WDV as on 31st March 2017 is Rs.1778.97 lacs) would be recovered particularly because of lock-out at the plant since 15thNovember 2009 and continuing theft of certain machinery parts. The impact of the same onthe loss for the year accumulated losses assets and liabilities as at the year-end ispresently not ascertainable.
(c) The accounts of certain Banks Loans & Advances given Other non- currentassets Lenders' liability Trade payables and Other liabilities are subject toconfirmations reconciliations and adjustments if any having consequential impact on theloss for the year accumulated losses assets and liabilities as at the year-end theamounts whereof are presently not ascertainable (Refer note no. 19.6 (b) of the financialstatements).
(d) i) Liability as may arise towards interest/compound interest/penalty on delayed/nonpayment to certain trade payables /statutory dues/ Promoter Contribution/ Lenders ispresently not ascertainable so the Company is expecting relief and concession andtherefore not provided for. (Refer note no. 19.6(c) of the financial statements)
ii) Bonus liability as is payable to workers/staff members has not been ascertained andprovided for. (Refer note no. 19.6(d) of the financial statements)
(e) We draw attention to Note No. 19.5ofthe financial statements regarding invocationof pledgeshares and disposal of investment in equity shares of Andhra Cement Limited bysecured lender. The Impact of the same on the loss for the year accumulated lossesassets and liabilities as at year end is presently not ascertainable.
(f) The remuneration payable to the Managing Director for the period December 2008 toJanuary 2011 amounting to Rs. 224.27 lacs was subject to Central Government approval outof which approval for only Rs. 82.15 lacs was granted. For the balance amount paid of Rs.142.10 lacs the Company is proposing to apply to Central Government for Waiver of itsrecovery and is hopeful of receiving the same in due course. (Refer Note no. 19(6)(a) ofthe financial statements)
(g) Non provisioning of Liability towards Mesne profit aggregating to Rs. 529.36 lacsin respect of premises taken on lease and vacated in terms of the Supreme Court orderreceived during the financial year 2013-14. (Refer note no. 19(1) (III) (a) of thefinancial statements)
(h) We further report that without considering the matter referred in para (a) to (e)above the effect of which could not be determined had the observation made by us in para
(f) and para (g) above been considered the loss before tax for the current year wouldhave been Rs. 1128.06 lacs; previous year ended Rs. 1293.18 lacs (as against reportedloss of Rs. 740.80 lacs; previous year ended Rs. 905.92 lacs) Reserves and Surplus(accumulated losses) would have been Rs. 64471.80 lacs; previous year ended Rs 63730.98lacs (as against reported losses of Rs.64084.54 lacs; previous year ended Rs. 63343.72lacs) and trade payables would have been Rs. 18499.90 lacs; previous year ended Rs.17892.69 lacs (as against reported figure ofRs. 18112.64 lacs; previous year ended Rs.17505.43 lacs).
In our opinion and to the best of our information and according to the explanationsgiven to us exceptforthe effects of the matter described in the Basis for QualifiedOpinion paragraph above the aforesaid financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India of the state of affairs of theCompany as at 31st March 2017and its loss and its cash flows for the year ended on thatdate.
Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the "Annexure A'' a statement on the matters specified inparagraphs 3 of the Order to the extent applicable.
As required by Section 143 (3) of the Act we report that:
(a) Subject to what is stated in the Basis of Qualified Opinion para (c) and (d)above 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) Subject to what is stated in the Basis of Qualified Opinion para (b) to (g)above and para 1 (a) and 2 (b) and 6 of the Order in our opinion proper books ofaccount as required by law have been kept by the Company so far as it appears from ourexamination 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 (except for the effects of the matter described in the Basis forQualified Opinion paragraph (b) (d) and (g) above;)
(e) The matter described in the Basis for Qualified Opinion paragraph above in ouropinion may have an adverse effect on the functioning of the Company.
(f) Considering the re-schedulement of redemption of Zero Percent Secured Redeemablenon-convertible Debentures approved in CDR package in January 2008 and on the basis ofthe written representations received from the Directors as on 31st March 2017 taken onrecord by the Board of Directorswe report that none of the directors is disqualified ason 31st March 2017from being appointed as a director in terms of Section 164 (2) of theAct.
(g) 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".
(h) With respect to other matter to be included in the Auditor's Report in accordancewith the Rule 11 of the Companies (Audit and Auditors ) Rules 2014 in our opinion andto 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 19(1) (I) 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 is no amount required to be transferred to the Investor Education andProtection Fund by the Company.
iv) The Company has provided requisite disclosure in its financial statements as toholdings as well as dealings in Specified Bank Note during the period from 8 November2016 to 30 December 2016 and these are in accordance with the books of account maintainedby the Company. Refer Note 19.13 to the financial statement
Annexure A ;
ANNEXURE REFERRED TO IN PARAGRAPH "REPORT ON OTHER LEGAL AND REGUALTORYREQUIREMENTS" OF OUR REPORT TO THE MEMBERS OF "THE COMPANY"FOR THE YEARENDED 31ST MARCH 2017
On the basis of such checks as we considered appropriate and according to theinformation and explanations given to us during the course of our audit we state that:
1. a) The Company's Fixed assets records need to be updated to show full particularsincluding quantitative details and situation of fixed assets.
b) The Company has not carried out physical verification of its fixed assets during theyear. As explained discrepancies as may be noticed on physical verification willbe dealt with in the books of account as and when the assets will be physically verified.
c) Updated title deeds of immovable properties have not been made available for us forverification. Accordingly we are unable to comment whether the same held in the name ofCompany. Also refer Note No. 19.2(b) of the financial statements.
2. No physical verification of the inventory has been carried out during the yearor in the recent past. As explained discrepancies as may be noticed on physicalverification will be dealt with in the books of account as and when the inventory will bephysically verified.
3. The Company has not granted any loans secured or unsecured to companies firmslimited liability partnerships or other parties covered in the register maintained undersection 189 of the Act. Accordingly the provisions of clause (iii) of the Order are notapplicable to the Company.
4. The Company has not granted any loans or made investments or given security/guaranteesduring the year. Accordingly the provisions of clause (iv) of the Order arenot applicable to the Company.
5. No deposits within the meaning of directives issued by RBI (Reserve Bank of India)and Sections 73 to 76 or any other relevant provisions of the Act and rules framed thereunder have been accepted by the Company.
6. As explained to us due to lock out and stoppage of production in the plant thecost records have not been maintained.
7. a) The Company is not regular in depositing the undisputed statutory duesincluding provident fund employees' state insurance income-tax sales- tax service taxduty of customs duty of excise value added tax cess and other statutory dues applicableto it with the appropriate authorities. According to the information and explanationsgiven to us following are the undisputed statutory dues outstanding as at 31st March2017 fora period of more than six months from the date they became payable:
Also refer point (d) of Basis of Qualified opinion reported above
b) According to the records of the Company and information andexplanations given to us by the management the details of disputed duty of excise dutyof customs Service Tax Income Tax Wealth Tax and Cess which have not been deposited areas under:
8. After considering what was approved in the Corporate Debt Restructuringpackage in the year January 2008 and considering that loans from banks have already beenassigned to body corporate the Company has defaulted in repayment of dues to banks andthe details are as under:
9. The Company has not raised any money by way of public issue or further public offer(including debt instruments)during the year. Based on the information and explanationsgiven to us by the management term loans were applied for the purpose for which the loanswere obtained.
10. 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 no material fraud on or by theCompany by its officers or employees has been noticed or reported during the course of ouraudit except continuing theft of certain parts of Plant & Machinery in the factorythe amount whereof has not been ascertained for which the Company has lodged FIRs withrelevant authorities and also filed the claims with insurance company.
11. Managerial Remuneration of Rs. 181.73 lacs has been provided for the year out ofwhich Rs.35.81 lacs is subject to shareholder's / lenders approval and is not inaccordance with the provisions of Section 197 read with Schedule V of the Act. Also referpara (f) of Basis for Qualified Opinion paragraph and Note no.19 (6) of the financialstatements in respect of remuneration paid in respect of an earlier period.
12. In our opinion the Company is not a Nidhi Company. Therefore the provisions ofclause 4(xii) of the Order are not applicable to the Company.
13. 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 all transactions with therelated party are in compliance with section 177 and 188 of the Act and the details havebeen disclosed as required by the applicable Accounting Standard in Note no. 19(10) to theFinancial Statements.
14. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year. Therefore the provisions ofclause 4(xiv) of the Order are not applicable to the Company.
15. Based on the information and explanations given to us Company has not entered intoany non-cash transactions with directors or persons connected with them during the yearTherefore the provisions of clause 4(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- IAof the Reserve Bank of India Act 1934. Therefore the provisions of clause 4(xvi) of theOrder are not applicable to the Company.
ANNEXURE TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTSOF NRC 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 NRC Limited("the Company") as of March 312017 in conjunction with our audit of thefinancial 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 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 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 to the extent applicable toan audit of internal financial controls both issued by the Institute of CharteredAccountants of India. 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 auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls system over financial reporting and their operating effectiveness. Ouraudit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a 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 judgement including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error. We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis forour qualified audit opinion on the Company's internal financial controls system overfinancial 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. Acompany's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
According to the information and explanations given to us and based on our audit thefollowing material weaknesses have been identified as at March 31 2017:
a) The Company did not have an appropriate internal control system for fixed assets and
inventories with regard to updating of records impairment and physical verification.These could potentially result in material misstatements in the Company's fixed assetsinventory and expense account balances. '
b) The Company did not have an appropriate internal control system for Banks Loans& Advances Other non-current assets Trade payables Other liabilities and lenderswith regard to confirmation of balances. These could potentially result in materialmisstatements in the Company's assets liabilities & expense account balances.
c) The Company did not have an appropriate internal control system for customeracceptance credit evaluation and establishing customer credit limits for scrap saleswhich could potentially result in the Company recognising revenue without establishingreasonable certainty of ultimate collection.
d) The Company did not have an appropriate internal control system for borrowings withregard to interest provisioning. These could potentially result in material misstatementsin the Company's accrued interest (liability) and expense account balances. 4
e) The Company did not have an appropriate internal control for execution of maker/checker process segregation of duties statutory compliance. These could potentiallyresult in material misstatements in the Company's financial position.
A material weakness' is a deficiency or a combination of deficiencies ininternal financial control over financial reporting such that there is a reasonablepossibility that a material misstatement of the company's annual or interim financialstatements will not be prevented or detected on a timely basis.
In our opinion considering what is stated above the Company has not maintained inall material respects adequate internal financial controls over financial reporting andsuch internal financial controls over financial reporting were not operating effectivelyas of March 31 2017 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.