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Supreme Infrastructure India Ltd.

BSE: 532904 Sector: Engineering
NSE: SUPREMEINF ISIN Code: INE550H01011
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VOLUME 23958
52-Week high 118.50
52-Week low 68.00
P/E
Mkt Cap.(Rs cr) 196
Buy Price 76.15
Buy Qty 556.00
Sell Price 0.00
Sell Qty 0.00
OPEN 76.25
CLOSE 75.75
VOLUME 23958
52-Week high 118.50
52-Week low 68.00
P/E
Mkt Cap.(Rs cr) 196
Buy Price 76.15
Buy Qty 556.00
Sell Price 0.00
Sell Qty 0.00

Supreme Infrastructure India Ltd. (SUPREMEINF) - Auditors Report

Company auditors report

To the Members of Supreme Infrastructure India Limited

Report on the Standalone Financial Statements

1. We have audited the accompanying standalone financial statements of SupremeInfrastructure India Limited ("the Company") which comprise the BalanceSheet as at 31 March 2016 the Statement of Profit and Loss and the Cash Flow Statementfor the year then ended and a summary of the significant accounting policies and otherexplanatory information.

Management’s Responsibility for the Standalone Financial Statements

2. The Company’s Board of Directors is responsible for the matters stated inSection 134(5) of the Companies Act 2013 ("the Act") with respect to thepreparation of these standalone financial statements that give a true and fair view ofthe financial position financial performance and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014 (as amended). This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act; safeguarding theassets of the Company; preventing and detecting frauds and other irregularities; selectionand application of appropriate accounting policies; making judgments and estimates thatare reasonable and prudent; and 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.

Auditor’s Responsibility

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

4. 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.

5. 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 standalone financial statements are free from material misstatement.

6. An audit involves performing procedures to obtain audit evidence about the amountsand the 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 controls 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.

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

Basis for Qualified Opinion

8. As stated in Note 39(a) to the standalone financial statements the Company’strade receivables and unbilled work as at 31 March 2016 include amounts aggregating Rs.313940395 (31 March 2015 Rs. 313940395) and Rs. 100335880 (31 March 2015 Rs.100335880) respectively in respect of projects which were closed/ terminated by theclients and where the matters are currently under negotiations/ litigation beingconsidered good and recoverable by the management. However in view of the ongoingnegotiations/litigations and in absence of sufficient appropriate evidence to corroboratethe management’s assessment of recoverability of thesebalancesweareunabletocommentupontherecoverability of the aforesaid amounts and theconsequential impact if any on the standalone financial statements that may arise onsettlement of the aforesaid matters. Our opinion on the standalone financial statementsfor the year ended 31 March 2015 was also qualified in respect of these matters.

9. As stated in Note 39(b) to the standalone financial statements the Company’strade receivables as at 31 March 2016 include amounts aggregating Rs. 924696662 (31March 2015 Rs. 975191826) in respect of projects which were closed and where thereceivables remain outstanding for substantial period being considered good andrecoverable by the management. However in absence of sufficient appropriate evidence tocorroborate the management’s assessment of recoverability of these balances we areunable to comment upon the recoverability of the aforesaid amounts and the consequentialimpact if any on the standalone financial statements that may arise on settlement of theaforesaid matters. Our opinion on the standalone financial statements for the year ended31 March 2015 was also qualified in respect of these matters.

Qualified Opinion

10. In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matters described in the Basis forQualified Opinion paragraph the aforesaid standalone financial statements give theinformation required 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 31 March 2016 and its loss and its cash flows for the yearended on that date.

Report on Other Legal and Regulatory Requirements

11. As required by the Companies (Auditor’s Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of Section 143(11) of theAct we give in the Annexure 1 a statement on the matters specified in paragraphs 3 and 4of the Order.

12. Further to our comments in Annexure 1 as required by Section 143(3) of the Act wereport that:

a. we have sought and except for the possible effects of the matters described in theBasis for Qualified opinion paragraph obtained all the information and explanations whichto the best of our knowledge and belief were necessary for the purpose of our audit;

b. except for the possible effects of the matters described in the Basis for Qualifiedopinion paragraph in our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books;

c. the standalone financial statements dealt with by this report are in agreement withthe books of account;

d. except for the possible effects of the matters described in the Basis for Qualifiedopinion paragraph in our opinion the aforesaid standalone financial statements complywith the Accounting Standards specified under Section 133 of the Act read with Rule 7 ofthe Companies (Accounts) Rules 2014 (as amended);

e. the matters described in the Basis for Qualified Opinion paragraph in our opinionmay have an adverse effect on the functioning of the Company;

f. on the basis of the written representations received from the directors as on 31March 2016 and taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2016 from being appointed as a director in terms of Section164(2) of the Act;

g. the qualification relating to the maintenance of accounts and other mattersconnected therewith are as stated in the Basis for Qualified Opinion paragraph;

h. we have also audited the internal financial controls over financial reporting(IFCoFR) of the Company as of 31 March 2016 in conjunction with our audit of thestandalone financial statements of the Company for the year ended on that date and ourreport dated 30 May 2016 as per Annexure 2 expressed a qualified opinion.

i. 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. as detailed in Notes 4.8 4.9 6.3 6.4 27(i) 27(iii) and 39 to the standalonefinancial statements the Company has disclosed the impact of pending litigations on itsstandalone financial position;

ii. except for the possible effects of the matters described in the Basis for QualifiedOpinion paragraph the Company has made provisions as detailed in Note 1.10 (ii) to thestandalone financial statements as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts; and

iii. following is the instance of delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.

Amount (Rs.) Due date Date of payment
152430 3 September 2015 18 September 2015

 

For Walker Chandiok & Co LLP For Shah & Kathariya
(formerly Walker Chandiok & Co) Chartered Accountants
Chartered Accountants Firm Registration No: 115171W
Firm Registration No: 001076N/N500013
per Adi. P. Sethna per P.M. Kathariya
Partner Partner
Membership No: 108840 Membership No: 31315
Mumbai Mumbai
30 May 2016 30 May 2016

ANNEXURE 1 TO THE INDEPENDENT AUDITOR’S REPORT

of even date to the members of Supreme Infrastructure India Limited on the standalonefinancial statements for the year ended 31 March 2016

Annexure 1

Based on the audit procedures performed for the purpose of reporting a true and fairview on the standalone financial statements of the Company and taking into considerationthe information and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit we report that:

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

(b) The Company has a regular program of physical verification of its fixed assetsunder which fixed assets are verified in a phased manner over a period of three yearswhich in our opinion is reasonable having regard to the size of the Company and thenature of its assets. In accordance with this program certain fixed assets were verifiedduring the year and no material discrepancies were noticed on such verification.

(c) The title deeds of all the immovable properties (which are included under the head‘fixed assets’) are held in the name of the Company.

(ii) In our opinion the management has conducted physical verification of inventory atreasonable intervals during the year and no material discrepancies between physicalinventory and book records were noticed on physical verification.

(iii) The Company has granted unsecured loan to four companies covered in the registermaintained under Section 189 of the Act; and with respect to the same:

(a) in our opinion the terms and conditions of grant of such loans are not primafacie prejudicial to the company’s interest.

(b) the schedule of repayment of the principal and the payment of the interest has notbeen stipulated and hence we are unable to comment as to whether repayments/receipts ofthe principal amount and the interest are regular;

(c) in the absence of stipulated schedule of repayment of principal and payment ofinterest we are unable to comment as to whether there is any amount which is overdue formore than 90 days and whether reasonable steps have been taken by the Company for recoveryof the principal amount and interest.

(iv) In our opinion the Company has complied with the provisions of sections 185 and186 of the Act to the extent applicable in respect of loans investments guarantees andsecurity.

(v) In our opinion the Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable tothe Company.

(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the Rules made by the Central Government for the maintenance of cost records undersub-section (1) of Section 148 of the Act in respect of Company’s products/servicesand are of the opinion that prima facie the prescribed accounts and records have beenmade and maintained. However we have not made a detailed examination of the cost recordswith a view to determine whether they are accurate or complete.

(vii) (a) Undisputed statutory dues including provident fund employees’ stateinsurance income-tax sales-tax service tax duty of customs duty of excise valueadded tax cess and other material statutory dues as applicable have not been regularlydeposited with the appropriate authorities and there have been significant delays in alarge number of cases. Undisputed amounts payable in respect thereof which wereoutstanding at the year-end for a period of more than six months from the date they becamepayable are as follows:

Name of the statute Nature of the dues Amount (Rs.) Period to which the amount relates Due Date Date of Payment
Income Tax Act 1961 Tax Deducted at Source 50117706 April to August 2015 Various Date Not yet Paid
The Employees' Provident Funds and Miscellaneous Provisions Act 1952 Provident Fund 6835874 April to August 2015 Various Date Not yet Paid
Profession Tax Act1975 Profession Tax 44930 April 2015 to August 2015 Various Dates Not Yet Paid
Employees’ State Insurance Act 1948 Employees’ State Insurance Corporation 1389864 April 2015 to August 2015 Various Dates Not yet Paid

(b) There are no dues in respect of income-tax sales tax duty of customs duty ofexcise and value added tax that have not been deposited with the appropriate authoritieson account of any dispute. The dues outstanding in respect of service tax on account ofany dispute are as follows:

Name of the statute Nature of the dues Amount (Rs.) Amount paid under Protest (Rs.) Period to which the amount relates Forum where dispute is pending
The Finance Act 1994 Service tax including interest and penalty 727025897 - FY 2008-09 to 2011-12 Custom Excise and Service Tax Appellate Tribunal

(viii) There are no loans or borrowings payable to government and debenture holders.The Company has defaulted in repayment of following dues to the financial institutions andbanks during the year which were paid on or before the Balance Sheet date.

(Amount in Rs.)

Day’s 0 - 30 days 31 - 90 days 91 - 180 days 181 - 365 days 365 - 730 days
Bank
Axis Bank 57792000 22296241 83911360 22764938 -
Bank of India 564946 - - - -
ICICI Bank 1012173 1052524 - - -
Indian Overseas Bank - - - - 18959800
The Saraswat Co-operative Bank Limited - - - 2444093 -
Financial Institution
SREI Equipment Finance Limited - - - 272820077 150000000
SREI Infrastructure Finance Limited - - 4482550 53750000 -

The Company has defaulted in repayment of following dues to the financial institutionsand banks during the year which were not paid as at the Balance Sheet date.

(Amount in Rs.)

Day’s 0 - 30 days 31 - 90 days 91 - 180 days 181 - 365 days 365 - 730 days
Name of Bank
Axis Bank 361020 361020 180510 - -
HDFC Bank - - 41562952 - -
ICICI Bank 114332 114332 - - -
Indian Overseas Bank - - - 246014257
Name of Financial Institution
L&T Infrastructure Finance Company Limited 8831132 - - - -
L&T Finance Limited 394939 - - - -
SREI Equipment Finance Limited - - 263946290 179582463 -
SREI Infrastructure Finance Limited - - - 36717450 -

ix) The Company did not raise moneys by way of initial public offer or further publicoffer (including debt instruments). In our opinion the term loans availed during the yearwere applied for the purposes for which the loans were obtained.

(x) No fraud by the Company or on the Company by its officers or employees has beennoticed or reported during the period covered by our audit.

(xi) The Company has not paid or provided for any managerial remuneration. Accordinglythe provisions of Clause 3(xi) of the Order are not applicable to the Company.

(xii) In our opinion the Company is not a Nidhi Company. Accordingly the provisionsof clause 3 (xii) of the Order are not applicable to the Company.

(xiii) In our opinion all transactions with the related parties are in compliance withsections 177 and 188 of Act where applicable and the requisite details have beendisclosed in the financial statements etc. as required by the applicable accountingstandards.

(xiv) During the year the Company has not made any preferential allotment/privateplacement of shares/fully/ partly convertible debentures.

(xv) In our opinion the Company has not entered into any non-cash transactions withdirectors or persons connected with them covered under Section 192 of the Act.

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

For Walker Chandiok & Co LLP For Shah & Kathariya
(formerly Walker Chandiok & Co) Chartered Accountants
Chartered Accountants Firm Registration No: 115171W
Firm Registration No: 001076N/N500013
per Adi. P. Sethna per P.M. Kathariya
Partner Partner
Membership No: 108840 Membership No: 31315
Mumbai Mumbai
30 May 2016 30 May 2016

ANNEXURE 2 TO THE INDEPENDENT AUDITOR’S REPORT

of even date to the members of Supreme Infrastructure India Limited on the standalonefinancial statements for the year ended 31 March 2016

Independent Auditor’s report on the Internal Financial Controls under Clause (i)of Sub-section (3) of Section 143 of the Companies Act 2013 (‘the Act’)

In conjunction with our audit of the standalone financial statements of SupremeInfrastructure India Limited (‘the Company’) as at and for the year ended 31March 2016 we have audited the internal financial controls over financial reporting(IFCoFR) of the Company as at that date.

Management’s Responsibility for Internal Financial Controls

The Company’s Board of Directors is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting (‘the Guidance Note’) issued by the Institute of Chartered Accountantsof India (‘the ICAI’). These responsibilities include the design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the orderly and efficient conduct of the company’s 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 the Act.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company's IFCoFR based on our audit.We conducted our audit in accordance with the Standards on Auditing issued by the ICAI anddeemed to be prescribed under section 143(10) of the Act to the extent applicable to anaudit of IFCoFR and the Guidance Note issued by the ICAI. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate IFCoFR were established and maintainedand if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe IFCoFR and their operating effectiveness. Our audit of IFCoFR included obtaining anunderstanding of IFCoFR assessing the risk that a material weakness exists and testingand evaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor’s judgement includingthe assessment of the risks of material misstatement of the financial statements whetherdue to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified opinion on the Company’s IFCoFR.

Meaning of Internal Financial Controls over Financial Reporting

A company's IFCoFR is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. A company'sIFCoFR 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 IFCoFR including the possibility of collusionor improper management override of controls material misstatements due to error or fraudmay occur and not be detected. Also projections of any evaluation of the IFCoFR to futureperiods are subject to the risk that IFCoFR may become inadequate because of changes inconditions or that the degree of compliance with the policies or procedures maydeteriorate.

Basis for Qualified Opinion

In our opinion according to the information and explanations given to us and based onour audit procedures performed the following material weakness has been identified in theoperating effectiveness of the Company’s IFCoFR as at 31 March 2016: TheCompany’s internal financial controls in respect of supervisory and review controlsover process of determining provision for trade receivables which are doubtful of recoveryand assessment of recoverability of unbilled work were not operating effectively. Absenceof detailed assessment conducted by the management for determining the recoverability oftrade receivables and unbilled work that remain long outstanding in our opinion couldresult in a potential material misstatement to the carrying value of trade receivables andunbilled work and related income statement account balances. A ‘materialweakness’ is a defficiency or a combination of defficiencies in internal financialcontrol over financial reporting such that there is a reasonable possibility that amaterial misstatement of the company's annual financial statements will not be preventedor detected on a timely basis.

Qualified Opinion

In our opinion the Company has in all material respects maintained adequate IFCoFRas at 31 March 2016 based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance note issued by the ICAI and except for the effects of the materialweakness described above in the Basis for Qualified Opinion paragraph the Company’sIFCoFR were operating effectively as at 31 March 2016.

We have considered the material weakness identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the 31 March 2016standalone financial statements of the Company and the material weakness has affected ouropinion on the standalone financial statements of the Company and we have issued aqualified opinion on the standalone financial statements.

For Walker Chandiok & Co LLP For Shah & Kathariya
(formerly Walker Chandiok & Co) Chartered Accountants
Chartered Accountants Firm Registration No: 115171W
Firm Registration No: 001076N/N500013
per Adi. P. Sethna per P.M. Kathariya
Partner Partner
Membership No: 108840 Membership No: 31315
Mumbai Mumbai
30 May 2016 30 May 2016