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Shree Renuka Sugars Ltd.

BSE: 532670 Sector: Agri and agri inputs
NSE: RENUKA ISIN Code: INE087H01022
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OPEN 17.15
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VOLUME 449136
52-Week high 22.40
52-Week low 11.47
P/E
Mkt Cap.(Rs cr) 1,597
Buy Price 16.90
Buy Qty 6408.00
Sell Price 0.00
Sell Qty 0.00
OPEN 17.15
CLOSE 17.20
VOLUME 449136
52-Week high 22.40
52-Week low 11.47
P/E
Mkt Cap.(Rs cr) 1,597
Buy Price 16.90
Buy Qty 6408.00
Sell Price 0.00
Sell Qty 0.00

Shree Renuka Sugars Ltd. (RENUKA) - Auditors Report

Company auditors report

To the Members of

SHREE RENUKA SUGARS LIMITED

Report on the Financial Statements

We have audited the accompanying financial statements of SHREE RENUKA SUGARS LIMITED("the Company") which comprise the Balance Sheet as at March 31 2016 and theStatement of Profit and Loss the Cash Flow Statement for the year then ended and asummary of significant accounting policies and other explanatory information.

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. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of 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.

Auditors’ 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 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 theauditor’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’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 wehave obtained is sufficient and appropriate to provide a basis for our audit opinion onthe financial statements.

Opinion

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 31stMarch 2016 and its loss and its cash flows for the year ended on that date.

Emphasis of Matter

1) We draw attention to Note 5 to the financial statements in respect of the provisionof Deferred Tax Asset on unabsorbed business losses wherein the Company represents thatthere is virtual certainty of future taxable profits that will be available for settingoff such unabsorbed business losses. We have relied on such representation and our Opinionis not qualified in respect of this matter.

2) Without qualifying our opinion we draw attention to the recoverable amount of theInvestment made by the Company in its subsidiary company Shree Renuka Global VenturesLtd. Mauritius. This investment is stated at its carrying amount of Rs. 18245.25 Mn.made by this subsidiary company in the step down subsidiary company Shree Renuka do BrasilParticipacoes Ltda. (SRDBPL). SRDBPL together with all its subsidiaries have filed for

Report on the Consolidated Financial Statements

We have audited the accompanying consolidated financial statements of SHREE RENUKASUGARS LIMITED (hereinafter referred to as "the Holding Company") and itssubsidiaries (the Holding Company and its subsidiaries together referred to as "theGroup") comprising of the Consolidated Balance Sheet as at 31st March 2016 theConsolidated Statement of Profit and Loss the Consolidated Cash Flow Statement for theyear then ended and a summary of the significant accounting policies and otherexplanatory information (hereinafter referred to as "the consolidated financialstatements").

Management’s Responsibility for the Consolidated Financial Statements

The Holding Company’s Board of Directors is responsible for the preparation ofthese consolidated financial statements in terms of the requirements of the Companies Act2013 (hereinafter referred to as "the Act") that give a true and fair view ofthe consolidated financial position consolidated financial performance and consolidatedcash flows of the Group in accordance with the accounting principles generally accepted inIndia including the Accounting Standards specified under Section 133 of the Act readwith Rule 7 of the Companies (Accounts) Rules 2014. The respective Board of Directors ofthe companies included in the Group are responsible for maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theGroup and for preventing and detecting frauds and other irregularities; the selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error which have been used for the purpose ofpreparation of the consolidated financial statements by the Directors of the HoldingCompany as aforesaid.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statementsbased on our audit. While conducting the audit we have taken into account the provisionsof the Act the accounting and auditing standards and matters which are required to beincluded in the audit report under the provisions of the Act and the Rules madethereunder. We conducted our audit in accordance with the Standards on Auditing specifiedunder Section 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 consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the consolidated financial statements. The procedures selected dependon the auditor’s judgment including the assessment of the risks of materialmisstatement of the consolidated financial statements whether due to fraud or error. Inmaking those risk assessments the auditor considers internal financial control relevantto the Holding Company’s preparation of the consolidated financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances but not for the purpose of expressing an opinion on whether the HoldingCompany has an adequate internal financial controls system over financial reporting inplace and the operating effectiveness of such controls. An audit also includes evaluatingthe appropriateness of the accounting policies used and the reasonableness of theaccounting estimates made by the Holding Company’s Board of Directors as well asevaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence obtained by us and the audit evidence obtained bythe other auditors in terms of their reports referred to in sub-paragraph (a) of the OtherMatters paragraph below is sufficient and appropriate to provide a basis for our auditopinion on the consolidated financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid consolidated 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 of the consolidated state of affairs ofthe Group as at 31st March 2016 and their consolidated loss and their consolidated cashflows for the year ended on that date.

Emphasis of Matter

1) We draw attention to Note 5 to the Consolidated financial statements in respect ofthe provision of Deferred Tax Asset on unabsorbed business losses wherein the Grouprepresents that there is virtual certainty of future taxable profits that will beavailable for setting off Unabsorbed Business Losses. We have relied on suchrepresentation and our Opinion is not qualified in respect of this matter.

2) Without qualifying our opinion we draw attention on the recoverable amount of theinvestments made by Shree Renuka Global Ventures Limited in Shree Renuka do BrasilParticipacoes Ltda. These investments are stated at their carrying amounts of USD476348019 (Equivalent to Rs. 22726.07 Mn). SRDBPL together with all its subsidiarieshave filed for Protection on 28th September 2015 under Judicial Recovery (Law11.101/2005-Recuperacao Judicial) in the designated court in the capital of the State ofSao Paulo Brazil. SRDBPL along with its subsidiaries has filed the proposal forReorganization Plan before the designated court. Impairment in the value of investmentsif any will be considered after the receipt of the Judgement of the court.

Other Matters

We did not audit the financial statements / financial information of Six subsidiarieswhose financial statements / financial information reflect total assets of Rs. 96716.19Mn as at 31st March 2016 total revenues of Rs. 40183.70 Mn and net cash flows amountingto Rs. (1898.64) Mn for the year ended on that date as considered in the consolidatedfinancial statements. These financial statements / financial information have been auditedby other auditors whose reports have been furnished to us by the Management and ouropinion on the consolidated financial statements in so far as it relates to the amountsand disclosures included in respect of these subsidiaries and our report in terms ofsub-sections (3) and (11) of Section 143 of the Act in so far as it relates to theaforesaid subsidiaries is based solely on the reports of the other auditors.

Our opinion on the consolidated financial statements and our report on Other Legal andRegulatory Requirements below is not modified in respect of the above matters withrespect to our reliance on the work done and the reports of the other auditors.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act we report to the extent applicable that:a. We have sought and obtained all the information and explanations which to the best ofour knowledge and belief were necessary for the purposes of our audit of the aforesaidconsolidated financial statements.

b. In our opinion proper books of account as required by law relating to preparationof the aforesaid consolidated financial statements have been kept so far as it appearsfrom our examination of those books and the reports of the other auditors.

c. The Consolidated Balance Sheet the Consolidated Statement of Profit and Loss andthe Consolidated Cash Flow Statement dealt with by this report is in agreement with therelevant books of account maintained for the purpose of preparation of the consolidatedfinancial statements.

d. In our opinion the aforesaid consolidated financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

e. On the basis of the written representations received from the directors of theHolding Company as on 31st March 2016 taken on record by the Board of Directors of theHolding Company and the reports of the statutory auditors of its subsidiary companiesincorporated in India none of the directors of the Group companies incorporated in Indiais disqualified as on 31st March 2016 from being appointed as a Director in terms ofSection 164 (2) of the 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 A"; and

g. With respect to the other matters to be included in the Auditor’s Report inaccordance with Rule 11 of the Companies (Audit and Auditor’s) Rules 2014 in ouropinion and to the best of our information and according to the explanations given to us:

i. The Group have disclosed the impact of pending litigations on its financial positionin its Consolidated financial statements – Refer Note No. 33(iii) to the consolidatedfinancial statements.

ii. The Group did not have any material foreseeable losses on long-term contractsincluding derivative contracts.

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Holding Company and its subsidiarycompanies incorporated in India.

For Ashok Kumar Prabhashankar & Co.
Chartered Accountants
Firm Regn No. 004982S
K. N. Prabhashankar
Place: Mumbai Partner
Date: May 30 2016 Membership No. 019575

ANNEXURE A TO THE AUDITORS’ REPORT

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

In conjunction with our audit of the consolidated financial statements of the Companyas of and for the year ended 31st March 2016 we have audited the internal financialcontrols over financial reporting of Shree Renuka Sugars Limited ("the HoldingCompany") and its subsidiary companies which are companies incorporated in India asof that date.

Management’s Responsibility for Internal Financial Controls

The Respective Board of Directors of the Holding Company and its subsidiary companieswhich are companies incorporated in India are responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India("ICAI’). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany’s policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the 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") issued by ICAI and the Standards on Auditing issued byICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls both issued by the Instituteof Chartered Accountants of India. Those Standards and the Guidance Note require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.

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 judgment 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 controlssystem over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

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 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 eflect 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.

Opinion

In our opinion the Holding Company and its subsidiary companies which are companiesincorporated in India have in all material respects an adequate internal financialcontrols system over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at 31st March 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 ICAI.

For Ashok Kumar Prabhashankar & Co.
Chartered Accountants
Firm Regn No. 004982S
K. N. Prabhashankar
Place: Mumbai Partner
Date: May 30 2016 Membership No. 019575

Protection on 28th September 2015 under Judicial Recovery (Law 11.101/2005-RecuperacaoJudicial) in the designated court in the capital of the State of Sao Paulo Brazil. SRDBPLalong with its subsidiaries has filed the proposal for Reorganization Plan before thedesignated court. Impairment in the value of investments if any will be considered afterthe receipt of the Judgement of the court.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order 2016 ("theOrder") issued by the Central Government in terms of sub-section (11) of section 143of the Act we give in the Annexure A a statement on the matters specified in paragraphs3 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 our audit;

b. In our opinion proper books of account as required by law have been kept by theCompany so far as 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 the written representations received from the directors as on 31stMarch

2016 taken on record by the Board of Directors none of the directors is disqualifiedas on 31st March 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"; and

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 have disclosed the impact of pending litigations on its financialposition in its financial statements - Refer Note 32(v) 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 Ashok Kumar Prabhashankar & Co.
Chartered Accountants
Firm Regn No. 004982S
K. N. Prabhashankar
Place: Mumbai Partner
Date: May 30 2016 Membership No. 019575

ANNEXURE A TO THE AUDITORS’ REPORT

The Annexure referred to in our report to the members of Shree Renuka Sugars Limitedfor the year ended March 31 2016. We report that:

i) a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

b) As explained to us all fixed assets have been physically verified by the managementduring the year periodically which in our opinion is reasonable having regard to the sizeof the Company and nature of its assets. No material discrepancies were noticed on suchphysical verification.

c) According to the information and explanations 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 the Company.

ii) With regard to inventory physical verification has been conducted by themanagement at reasonable intervals and no significant material discrepancies were noticedon the physical verification of stocks and the differences between the book stocks and thephysical stocks have been properly dealt with in the books of account.

iii) In respect of the loans secured or unsecured granted by the Company to companiesfirms Limited Liability Partnerships or other parties covered in the register maintainedunder section 189 of the Companies Act 2013:

a) The Company has given loans to Eight Subsidiary companies.

b) In our opinion and according to the information and explanations given to us therate of interest and other terms and conditions are not prima facie prejudicial to theinterest of the company.

c) The principal amount is repayable on demand and there is no repayment schedule. Thecompany is regular in receipt of interest from these subsidiaries except from Four whollyowned Subsidiaries.

d) In respect of the said loans the same is repayable on demand and therefore thequestion of overdue amount for more than ninety days does not arise. In respect ofinterest there is no overdue amount except in case of Four wholly owned Subsidiarieswhose Overdue Interest is Rs. 176.14 Millions.

iv) In respect of the loans investments guarantees and security the Company hascomplied with the provisions of section 185 and 186 of the Companies Act 2013.

v) According to the information and explanations given to us the company has notaccepted any deposits hence reporting on clause (v) of the order is not applicable.

vi) The Central Government has prescribed maintenance of cost records u/s. 148(1) ofthe Companies Act 2013 for some products of the Company. We have broadly reviewed theserecords of the company and are of the opinion that prima facie the prescribed accountsand records have been made and maintained. However we have not carried out a detailedexamination of such records.

vii) a) According to the information and explanations given to us and as per books andrecords examined by us there are no undisputed amounts payable in respect of ProvidentFund Employees’ State Insurance Income tax Sales tax Service Tax Duty ofCustoms Duty of Excise Value Added Tax Cess and any other statutory dues withappropriate authorities outstanding as at 31st March 2016 for a period exceeding sixmonths from the date they became payable.

b) According to the information and explanations given to us and as per the recordsexamined by us the disputed statutory dues aggregating to Rs. 847.51 Million that havenot been deposited on account of disputed matters pending before appropriate authoritiesare as under:

Sl No Name of the Statute Nature of Dues Amount (Rs. in Mn) Period Forum where Dispute is pending
1 Maharashtra Value Added Tax/CST VAT Credit/CST 82.59 2008-09 2010-11 & 2011-12 Maharashtra Value added tax appeal Kolhapur
2 Central Excise Act 1944 Excise Duty 6.48 2008-09 and 2011-12 Commissioner of Central Excise Appeal
335.18 2004 to 2014 CESTAT
3.65 2003-04 Supreme Court of India
3 Finance Act 1994 Service Tax 4.03 2005 to 2014 Commissioner of Central Excise Appeal
32.78 2009 to 2011 CESTAT
4 Custom Act 1962 Custom Duty 249.03 2004 Supreme Court of India
5 Income Tax Act 1961 Income Tax 133.77 2008-09 & 2009-10 Commission of Income Tax
Grand Total 847.51

viii) The Company has borrowed funds from banks financial institutions and also hasraised funds by way of debentures. There is no default in repayment of dues to banksfinancial institutions and debenture holders.

ix) The Company has not raised money by way of initial public offer or further publicoffer (including debt instruments) during the year. The term loans borrowed during theyear have been utilised for the purposes for which they were raised.

x) As per information and explanations given to us and on the basis of our examinationsof books and records there were no frauds on or by the company has been noticed orreported during the year.

xi) The Company has paid/provided the managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V of theCompanies Act 2013.

xii) This is not a Nidhi Company hence reporting under clause (xii) does not apply.

xiii) As per information and explanations given to us and on the basis of ourexaminations of books and records all the transactions with the related parties are incompliance with Section 177 and 188 of Companies Act 2013 wherever applicable and thedetails have been disclosed in the Financial Statements as required by the applicableaccounting standards.

xiv) The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review.

xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into any non-cashtransactions with directors or persons connected with them and hence reporting on thisclause is not applicable.

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

For Ashok Kumar Prabhashankar & Co.
Chartered Accountants
Firm Regn No. 004982S
K. N. Prabhashankar
Place: Mumbai Partner
Date: May 30 2016 Membership No. 019575

ANNEXURE B TO THE AUDITORS’ REPORT

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 ShreeRenuka Sugars Limited ("the Company") as of 31st March 2016 in conjunction withour audit of the standalone financial statements of the Company for the year ended on thatdate.

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 (‘ICAI’). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company’s policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the 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 judgment 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 controlssystem over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

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 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 eflect 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.

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 31st March 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 Ashok Kumar Prabhashankar & Co.
Chartered Accountants
Firm Regn No. 004982S
K. N. Prabhashankar
Place: Mumbai Partner
Date: May 30 2016 Membership No. 019575