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SRF Ltd.

BSE: 503806 Sector: Industrials
NSE: SRF ISIN Code: INE647A01010
BSE LIVE 15:40 | 22 Sep 1540.10 -63.35
(-3.95%)
OPEN

1589.10

HIGH

1589.10

LOW

1533.45

NSE 15:56 | 22 Sep 1537.15 -64.05
(-4.00%)
OPEN

1593.00

HIGH

1593.45

LOW

1531.00

OPEN 1589.10
PREVIOUS CLOSE 1603.45
VOLUME 4629
52-Week high 1969.50
52-Week low 1352.15
P/E 23.61
Mkt Cap.(Rs cr) 8,843
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1589.10
CLOSE 1603.45
VOLUME 4629
52-Week high 1969.50
52-Week low 1352.15
P/E 23.61
Mkt Cap.(Rs cr) 8,843
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 Ind AS Financial

Statements

We have audited the accompanying standalone Ind AS financial statements of SRF Limited("the Company") which comprise the Balance Sheet as at March 31 2017 and theStatement of Profit and Loss (including Other Comprehensive Income) the Cash FlowStatement and the Statement of Changes in Equity for the year then ended and a summary ofthe significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone Ind AS 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 Ind AS financial statements that give a true and fair view of thefinancial position financial performance including other comprehensive income cash flowsand changes in equity of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) prescribedunder section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalone IndAS financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit.

In conducting our audit we have taken into account the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit of the standalone Ind AS financial statements in accordance withthe 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 standalone Ind AS financial statements are freefrom material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the standalone Ind AS financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the standalone Ind ASfinancial statements.

We believe that the audit evidence obtained by us is sufficient and appropriate toprovide a basis for our audit opinion on the standalone Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS 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 March 31 2017 and its profit total comprehensive income its cash flowsand the changes in equity for the year ended on that date.

Emphasis of Matter

Attention is invited to Note 31(b) to the accompanying financial statement which setsout the position of the demand of Central Sales Tax Value Added Tax and Entry Taxaggregating to Rs. 123.11 crores including interest and penalty of Rs. 34.38 crores forthe period from 2004 to 2013. The Company has filed writ petitions against such demand onwhich the Hon'ble High Court of Madhya Pradesh ("Court") has granted stay onpayment of 10% of the total demand in cash and remaining 90% as bank guarantee. TheManagement is of the view which is also confirmed by legal opinion that Company has a goodcase on merits and is confident of getting relief from the Court and accordingly noprovision has been created.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act based on our audit we report to theextent applicable that:

a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books

c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Cash Flow Statement and Statement of Changes in Equity dealt with by thisReport are in agreement with the books of account.

d) In our opinion the aforesaid standalone Ind AS financial statements comply with theIndian Accounting Standards prescribed under section 133 of the Act.

e) On the basis of the written representations received from the directors as on March31 2017 taken on record by the Board of Directors none of the directors are disqualifiedas on March 31 2017 from being appointed as a director in terms of Section 164(2) of theAct.

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 controls overfinancial 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 as amended inour opinion and to the best of our information and according to the explanations given tous:

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone Ind AS financial statements - Refer Note 31(a) to the financialstatements;

ii. The Company did not have any longterm contracts including derivative contracts forwhich there were any material foreseeable losses- Refer Note 31(i)(iii) to the financialstatements;

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

iv. The Company has provided requisite disclosures in the standalone Ind AS financialstatements as regards its holding and dealings in Specified Bank Notes as defined in theNotification S.O. 3407(E) dated the November 8 2016 of the Ministry of Finance duringthe period from November 8 2016 to December 30 2016. Based on audit procedures performedand the representations provided to us by the management we report that the disclosuresare in accordance with the books of account maintained by the Company - Refer Note 40(g)to the financial statements.

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

For DELOITTE HASKINS & SELLS

Chartered Accountants

(Firm's Registration No. 015125N)

Vijay Agarwal
Partner
Gurgaon May 22 2017 (Membership No. 094468)

Annexure "A" to the Independent Auditor's Report

(Referred to in paragraph 1(f) under ‘Report on Other Legal and RegulatoryRequirements' section 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 March 31 2017 in conjunction with our audit of thestandalone Ind AS 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 statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to Company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies 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 controls systemover financial 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. A Company'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.

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 March 312017 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.

For DELOITTE HASKINS & SELLS

Chartered Accountants

(Firm's Registration No. 015125N)

Vijay Agarwal
Partner
Gurgaon May 22 2017 (Membership No. 094468)

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 situation of 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 that have been taken on lease and disclosedas other assets - non-current/current in the financial statements and buildings the leaseagreements are in the name of the Company where the Company is the lessee in theagreement except the following:

Particulars of the immovable properties Gross Block (' Crores) 31.03.2017 Net Block (' Crores) 31.03.2017 Remarks
Leasehold land located at Dahej Gujarat measuring 911336 square meters 69.25 67.77 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 8)
Leasehold land measuring 272109.50 square meters and building located at Malanpur Madhya Pradesh 35.54 32.19 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 31(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 the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Companies Act2013 in respect of grant of loans making investments and providing guarantees andsecurities 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 the prescribed costrecords have been made and maintained. We have however not made a detailed examinationof the cost records with a view to determine whether they are accurate or complete.

(vii) According 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 Service TaxCustoms Duty Excise Duty Value Added Tax Works Contract Tax Cess and other materialstatutory dues applicable to it to the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income-tax Sales Tax Wealth Tax Service Tax Customs Duty ExciseDuty Value Added Tax Works Contract Tax Cess and other material statutory dues inarrears as at March 312017 for a period of more than six months from the date they becamepayable.

(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 March 312017 on accountof 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* (' In Crores)
Central Excise Laws Excise Duty Customs Excise & Service Tax Appellate Tribunal (CESTAT) 1994-2015 71.17
Upto Commissioner (Appeals) 1993-2016 3.73
Service Tax Laws Service Tax Customs Excise & Service Tax Appellate Tribunal (CESTAT) 2005-2008 0.13
Upto Commissioner (Appeals) 2006-2015 1.70
Customs Laws Customs Duty Customs Excise & Service Tax Appellate Tribunal (CESTAT) 2005-2013 1.50
Upto Commissioner (Appeals) 2002 0.17
Sales Tax Laws Sales Tax High Court 2004-2013 94.82
Sales Tax Appellate Tribunal 1987-2008 1.02
Upto Commissioner (Appeals) 1988-2015 0.75
Income Tax Income Tax Supreme Court 1988-1989 1.13
Laws Income Tax Appellate Tribunal (ITAT) 2009-2011 1.69
Others Electricity Cess High Court 2007-2014 0.13

* 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 period) Amount (' in Crores)
Central Excise Excise Duty High Court 1994-2002 1.67
Laws Customs Excise & Service Tax Appellate Tribunal (CESTAT) 1989-1995 2.24

(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. The Company has not raised any money by way of initial publicoffer/further public offer (including debt instruments) during the year.

(x) To 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 information and explanations given to us theCompany is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the financial statements etc. as required by theapplicable accounting standards.

(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underclause (xiv) of CARO 2016 is not applicable 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 noncash 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-IA of the ReserveBank of India Act 1934.

For DELOITTE HASKINS & SELLS

Chartered Accountants

(Firm's Registration No. 015125N)

Vijay Agarwal
Partner
Gurgaon May 22 2017 (Membership No. 094468)