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SRF Ltd.

BSE: 503806 Sector: Industrials
NSE: SRF ISIN Code: INE647A01010
BSE LIVE 15:40 | 18 Aug 1491.20 -1.30
(-0.09%)
OPEN

1485.50

HIGH

1518.10

LOW

1468.60

NSE 15:53 | 18 Aug 1488.90 -1.75
(-0.12%)
OPEN

1480.10

HIGH

1521.00

LOW

1467.50

OPEN 1485.50
PREVIOUS CLOSE 1492.50
VOLUME 3491
52-Week high 1969.50
52-Week low 1352.15
P/E 22.86
Mkt Cap.(Rs cr) 8,562
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1485.50
CLOSE 1492.50
VOLUME 3491
52-Week high 1969.50
52-Week low 1352.15
P/E 22.86
Mkt Cap.(Rs cr) 8,562
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

SRF Ltd. (SRF) - Auditors Report

Company auditors report

TO THE MEMBERS OF SRF LIMITED

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of SRF LIMITED ("theCompany") which comprise the Balance Sheet as at 31st March 2016 theStatement of Profit and Loss and 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

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 that 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 Standardsprescribed under Section 133 of the Act as applicable. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgements 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

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.

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 and the Order under section 143 (11)of the Act.

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under

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 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 judgement including the assessment of the risks of material misstatementof the financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to theCompany’s preparation of the financial statements that give a true and fair view inorder to design audit procedures that are appropriate in the circumstances. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company’s Directors as wellas evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone 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 state of affairs of the Companyas at 31st March 2016 and its profit and its cash flows for the year ended onthat date.

Emphasis of Matter

Attention is invited to Note 30(b) to the accompanying statement which sets out theposition of the demand for Central Sales Tax (CST) VAT and Entry Tax aggregating to Rs.121.06 crores including interest and penalty of Rs. 34.38 crores for the period from 2005to 2013. The Company had filed writ petitions against such demand on which Hon’bleHigh Court of Madhya Pradesh ("Court") has granted stay. The Management is ofthe view which is also confirmed by legal opinion that Company has a good case on meritsand is confident of getting relief from the Court and accordingly no provision has beencreated.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As r equired by Section 143(3) of the Act we report that: (a) We have sought andobtained all the information and explanations which to the best of our knowledge andbelief 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 comply with theAccounting Standards prescribed under Section 133 of the Act as applicable. (e) On thebasis of the written representations received from the directors as on 31stMarch 2016 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2016 from being appointed as a director in termsof Section 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". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company’s internal financial controlsover financial reporting.

(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 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 30 (a) to the financial statements; ii. The Companydid not have any long-term contracts including derivative contracts for which there wereany material foreseeable losses – Refer Note 32 (c) to the financial statements; iii.There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.

2. As required by the Companies (Auditor’s Report) Order 2016 ("theOrder") issued by the Central Government in terms of Section 143(11) of the Act wegive in "Annexure B" a statement on the matters specified in paragraphs 3 and 4of the Order.

For DELOITTE HASKINS & SELLS

Chartered Accountants (Registration No. 015125N)

Vijay Agarwal

Partner (Membership No. 094468)

Gurgaon May 10 2016

Annexure "A" to the Independent Auditors’ Report

(Referred to in paragraph 1(f) under ‘Report on Other Legal and RegulatoryRequirements’ of our report of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of SRF Limited("the Company") as of 31st March 2016 in conjunction with our auditof the standalone financial 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 stated in the GuidanceNote on Audit of Internal Financial Controls over Financial Reporting issued by theInstitute of Chartered Accountants of India. These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of its business includingadherence to company’s policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under theCompanies Act 2013.

Auditor’s 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 the Institute of Chartered Accountants of Indiaand the Standards on Auditing prescribed under Section 143(10) of the Companies Act 2013to the extent applicable to an audit of internal financial controls. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated 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 judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the 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 reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and (3) providereasonable assurance regarding prevention or timely detection of unauthorised acquisitionuse or disposition of the company’s assets that could have a material effect on thefinancial 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 to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting 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 DELOITTE HASKINS & SELLS

Chartered Accountants (Registration No. 015125N)

Vijay Agarwal

Partner (Membership No. 094468)

Gurgaon May 10 2016

Annexure "B" to the Independent Auditor’s Report

(Referred to in paragraph 2 under ‘Report on Other Legal and RegulatoryRequirements’ section of our report of even date)

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

(b) The Company has a programme of verification of fixed assets to cover all the itemsin a phased manner over a period of three years which in our opinion is reasonablehaving regard to the size of the Company and the nature of its assets. Pursuant to theprogramme certain fixed assets were physically verified by the Management during theyear. According to the information and explanations given to us no material discrepancieswere noticed on such verification.

(c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered sale deed / transfer deed /conveyance deed provided to us we report that the title deeds comprising all theimmovable properties of land and buildings which are freehold are held in the name of theCompany as at the balance sheet date.

In respect of immovable properties of land and buildings that have been taken on leaseand disclosed as fixed asset in the financial statements the lease agreements are in thename of the Company where the Company is the lessee in the agreement except thefollowing:

Particulars of the Immovable Properties Gross Block Net Block
( Rs. in crores) Rs. ( in crores) Remarks
31.03.2016 31.03.2016
Leasehold land located at Dahej Gujarat admeasuring 911336 square meters 71.80 71.80 Execution of lease deed in respect of leasehold land allotted to the Company by Gujarat Industrial Development Corporation at Dahej Gujarat is pending (Refer Note 11 (v))
Leasehold land admeasuring 272109.50 square meters and building located at Malanpur Madhya Pradesh 59.67 34.05 Conveyancing of buildings and other superstructures located at Company’s plant at Malanpur in the state of Madhya Pradesh including immovable machinery is linked to the Stamp Duty matter(Refer Note 30(a))

(ii) As explained to us the inventories were physically verified during the year bythe Management at reasonable intervals other than for stock lying with third partiesand/or goods in transit for which confirmations have been obtained / subsequent receiptshave been verified in most of the cases.

(iii) 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 Companies Act 2013. (iv) In our opinion and according to theinformation and explanations given to us the Company has complied with the provisions ofSections 185 and 186 of the Companies Act 2013 in respect of grant of loans makinginvestments and providing guarantees and securities as applicable.

(v) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 73 to 76 or any other relevantprovisions of the Companies Act 2013 and the Companies (Acceptance of Deposits) Rules2014 as amended with regard to the deposits accepted from the public which have maturedand are being reflected under "Unclaimed fixed deposits (including interest)".According to the information and explanations given to us no order has been passed by theCompany Law Board or the National Company Law Tribunal or the Reserve Bank of India or anyCourt or any other Tribunal.

(vi) The maintenance of cost records has been specified by the Central Government undersection 148(1) of the Companies Act 2013. We have broadly reviewed the cost recordsmaintained by the Company pursuant to the Companies (Cost Records and Audit) Rules 2014as amended and prescribed by the Central Government under sub-section (1) of Section 148of the Companies Act 2013 and are of the opinion that prima facie theprescribed cost records have been made and maintained. We have however not made adetailed examination of the cost records with a view to determine whether they areaccurate or complete.

(vii) Accor ding to the information and explanations given to us in respect ofstatutory dues:

(a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees’ State Insurance Income-tax Sales Tax ServiceTax Customs Duty Excise Duty Value Added Tax Works Contract Tax Cess and othermaterial statutory dues applicable to it to the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Provident FundEmployees’ State Insurance Income-tax Sales Tax Wealth Tax Service Tax CustomsDuty Excise Duty Value Added Tax Works Contract Tax Cess and other material statutorydues in arrears as at 31st March 2016 for a period of more than six monthsfrom the date they became payable.

(c) Details of dues of Income-tax Sales Tax Value Added Tax Service Tax ExciseDuty Customs Duty and Cess which have not been deposited as on 31st March2016 on account of disputes are given below:

Name of the Statute Nature of the Dues Forum where Dispute is pending Period to which the amount relates (various years covering the period) Amount* (Rs. in crores)
Central Excise Laws Excise Duty High Court 1996-1997 2.14
Customs Excise & Service Tax Appellate Tribunal (CESTAT) 1992-2013 58.88
Upto Commissioner (Appeals) 1993-2010 4.98
Service Tax Laws Service Tax Customs Excise & Service Tax Appellate Tribunal (CESTAT) 2005-2010 0.54
Upto Commissioner (Appeals) 2006-2015 1.45
Customs Laws Customs Duty Customs Excise & Service Tax Appellate Tribunal (CESTAT) 2004-2013 1.75
Upto Commissioner (Appeals) 2002 0.17
Sales Tax Laws Sales Tax High Court 2005-2013 103.30
Sales Tax Appellate Tribunal 1987-2014 2.82
Upto Commissioner (Appeals) 1988-2015 0.28
Income Tax Laws Income Tax Supreme Court 1988-1989 1.13
Income Tax Appellate Tribunal (ITAT) 2009-2011 1.69
Others Electricity Cess High Court 2007-2014 0.09

* amount as per demand orders including interest and penalty wherever quantified in theOrder.

The following matters which have been excluded from the above table have been decidedin favour of the Company but the department has preferred appeals at higher levels. Thedetails are given below:

Name of the Statute Nature of the dues Forum where Dispute is pending Period to which the amount relates (various years covering the Amount (Rs. in crores)
period)
Central Excise Laws Excise Duty Supreme Court 1994-1996 0.21
High Court 1994-2002 1.22
Customs Excise & Service Tax Appellate Tribunal (CESTAT) 1989-1995 2.24
Income Tax Laws Income Tax Income Tax Appellate Tribunal (ITAT) 1994-1995 3.44

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in the repayment of loans or borrowings to financialinstitutions banks and government and dues to debenture holders.

(ix) In our opinion and according to the information and explanations given to us theterm loans have been applied by the Company during the year for the purposes for whichthey were raised other than temporary deployment pending application of proceeds. TheCompany has not raised any money by way of initial public offer/further public offer(including debt instruments) during the year.

(x) T o the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no material fraud on the Company by its officersor employees has been noticed or reported during the year.

(xi) In our opinion and according to the information and explanations given to us theCompany has paid / provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the CompaniesAct 2013.

(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of theCARO 2016 Order is not applicable. (xiii) In our opinion and according to the informationand explanations given to us the Company is in compliance with Section 177 and 188 of theCompanies Act 2013 where applicable for all transactions with the related parties andthe details of related party transactions have been disclosed in the financial statementsetc. as required by the applicable accounting standards. (xiv) During the year the Companyhas not made any preferential allotment or private placement of shares or fully or partlyconvertible debentures and hence reporting under clause (xiv) of CARO 2016 is notapplicable to the Company.

(xv) In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsdirectors or directors of its holding subsidiary or associate company or personsconnected with them and hence provisions of section 192 of the Companies Act 2013 are notapplicable.

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

For DELOITTE HASKINS & SELLS

Chartered Accountants (Registration No. 015125N)

Vijay Agarwal

Partner (Membership No. 094468)

Gurgaon May 10 2016