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NRC Ltd.

BSE: 503780 Sector: Industrials
NSE: NRC ISIN Code: INE953C01018
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NRC Ltd. (NRC) - Auditors Report

Company auditors report

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 2016 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 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 read with Rule 7 of the Companies (Accounts) Rules 2014. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding the assets of the Company and for preventing and detecting fraudsand other irregularities; selection and application of appropriate accounting policies;making judgments and estimates that are reasonable and prudent; and design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring 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

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 and 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 ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal financial control relevant to the Company's preparation ofthe financial statements that give a true and fair view in order to design auditprocedures that are appropriate in the circumstances. An audit also includes evaluatingthe appropriateness of the accounting policies used and the reasonableness of theaccounting estimates made by the Company's Directors as well as evaluating the overallpresentation 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 on reference to the Boardfor Industrial and Financial Reconstruction it has been declared a sick industrialCompany on 16th July 2009. The financial statements have however been prepared by themanagement on a going concern basis as explained in note 19.4(a).

This being a technical matter and in view of uncertainty we are unable to express anopinion as to whether the Company can operate as a going concern and also as to the extentof the effect of the resultant adjustments to the accumulated losses assets andliabilities as at the year-end and losses for the year which is presently notascertainable.

(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 2016 is Rs.2152.19 lacs) would be recovered particularly because of lock-out at the plant since15th November 2009 and continuing theft of certain machinery parts. The impact of thesame on the loss for the year accumulated losses assets and liabilities as at theyear-end is presently 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 (a) of the financialstatements.

(d) i) Liability as may arise towards interest/compound interest/penalty on delayed/non-payment to certain trade payables /statutory dues/ Promoter Contribution/

Lenders is presently not ascertainable in view of the Company having been declared as aSick Company and as explained expecting relief and concession from BIFR and thereforenot provided for. (Refer note no. 19.6(b) 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(b) of the financial statements)

(e) 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 seek waiver to recovery in the DraftRehabilitation Scheme to be submitted to BIFR. (Refer Note no. 19(5) of the financialstatements) (f) Non provisioning of Liability towards Mesne profit aggregating to Rs.529.36 lacs in respect of premises taken on lease and vacated in terms of the SupremeCourt order received during the financial year 2013-14. (Refer note no. 19(1) (III) (a) ofthe financial statements)

(g) 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) above been considered the loss before tax for the current year would have been Rs.1435.28 lacs; previous year ended Rs.1663.24 lacs (as against reported loss of Rs.905.92 lacs; previous year ended Rs. 1158.58 lacs) Reserves and Surplus (accumulatedlosses) would have been Rs. 63873.08 lacs; previous year ended Rs. 62967.17 lacs (asagainst reported losses of Rs.63343.72 lacs; previous year ended Rs. 62437.81 lacs) andtrade payables would have been Rs. 18034.79 lacs; previous year ended Rs. 17338.00 lacs(as against reported figure of Rs. 17505.43 lacs; previous year ended Rs. 16808.64lacs).

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 financial statements give the informationrequired 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 flows for the yearended on that date.

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 of the Act wegive in the "Annexure A" a statement on the matters specified in paragraphs 3 ofthe 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) abovewe have sought and obtained all the information and explanations which to the best of ourknowledge 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 (f) aboveand para 1 (a) and 2 (b) of the Order in our opinion proper books of account asrequired by law have been kept by the Company so far as it appears from our examination ofthose 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 for

Qualified Opinion paragraph (b) (d) and (f) 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 2016 taken onrecord by the Board of Directors. We report that none of the directors is disqualified ason 31st March 2016 from being appointed as a director in terms of

Section 164 (2) of the Act.

(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) TheCompany has disclosed the impact of pending litigations on its financial position in itsfinancial statements- Refer Note 19(1) (I) to the financial statements. ii) The Companydid not have any long-term contracts including derivative contracts for which there wereany material foreseeable losses. iii) There is no amount required to be transferred to theInvestor Education and Protection Fund by the Company.

For LODHA & CO.
Chartered Accountants
Firm Registration No: 301051E
A.M. Hariharan
Place: Mumbai Partner
Date: April 11 2016 Membership No. 38323