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Surana Industries Ltd.

BSE: 513597 Sector: Metals & Mining
NSE: SURANAIND ISIN Code: INE659D01019
BSE LIVE 12:21 | 20 Nov 2.90 0.05
(1.75%)
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2.99

HIGH

2.99

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2.90

NSE 12:13 | 20 Nov 2.90 0
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OPEN

3.05

HIGH

3.05

LOW

2.90

OPEN 2.99
PREVIOUS CLOSE 2.85
VOLUME 1227
52-Week high 5.36
52-Week low 2.40
P/E
Mkt Cap.(Rs cr) 15
Buy Price 2.79
Buy Qty 1000.00
Sell Price 2.90
Sell Qty 985.00
OPEN 2.99
CLOSE 2.85
VOLUME 1227
52-Week high 5.36
52-Week low 2.40
P/E
Mkt Cap.(Rs cr) 15
Buy Price 2.79
Buy Qty 1000.00
Sell Price 2.90
Sell Qty 985.00

Surana Industries Ltd. (SURANAIND) - Auditors Report

Company auditors report

To the Members of Surana Industries Limited Report on the Standalone FinancialStatements

We have audited the accompanying standalone financial statements of Surana IndustriesLimited ("the Company") which comprise the Balance Sheet as at March 31 2015the Statement of Profit and Loss and Cash Flow Statement for the year then ended and asummary of 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 Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the preparation of the Act for safeguarding the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial 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

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.

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 of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances but not for the purpose of expressing anopinion on whether the Company has in place an adequate internal financial control systemover financial reporting and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating 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 qualified audit opinion on the standalone financial statements.

Basis for Qualified Opinion

1. Capital work in progress relating to the Pelletisation and Beneficiation("P&B") Project stated in note 12 includes:

(a) Interest on borrowings aggregating to Rs. 407645055 (including Rs. 223386319for the year) relating to the periods during which the project has been stalled which isa departure from Accounting Standard 16 (AS-16) on "Borrowing Costs". Had theinterest capitalized during the period in which the project was stalled been charged tothe Statement of Profit & Loss the loss for the year and the Deficit in theStatement of Profit and Loss will be higher by Rs. 407645055 and Capital Work inProgress will be lower by Rs. 407645055.

(b) Preoperative expenses incurred in relation to the project aggregating toRs.6835660 (including Rs.1982051 for the year) relating to the periods during whichthe project has been stalled which is a departure from Accounting Standard 10 (AS-10) on"Fixed Assets". Had such expenditure capitalized during the period in which theproject was stalled been charged to the Statement of Profit & Loss the loss for theyear and the Deficit in the Statement of Profit and Loss will be higher byRs.6835660and Capital Work in Progress will be lower by Rs. 6835660.

2. Current investments include investments made in:

a. Surana Power Limited ("SPL") a subsidiary amounting to Rs. 4185000000valued at cost in respect of which no operations have been carried out since August 2013and its ongoing 2 X 210 MW power project has been stalled for want of additional funds.

b. Surana Mines and Minerals Limited ("SMML") a wholly owned subsidiarybased in Singapore amounting to Rs. 584826430 valued at cost in respect of which nofinancial statements or other information is available after March 31 2014.

c. Surana Green Power Limited ("SGPL") a wholly owned subsidiary amountingto Rs. 561536000 valued at cost.

As stated in note No. 13 the Company is planning to dispose these investments whichare stated at cost without assessment of their net realizable value. As per AccountingStandard 13 -Accounting for Investments these investments should be valued at the lowerof cost and net realizable value. In the absence of the net realizable value we areunable to comment on the adjustments if any that may be required to the carrying valueof the investments as at March 31 2015.

3. Attention is invited to note 16 relating to inventory aggregating to Rs.2586942410 the quantity quality and realizable value of which were not assessed anddetermined. As per Accounting Standard 2- Inventories these inventories should be valuedat the lower of cost and net realizable value. In the absence of the net realizable valuewe are unable to comment on the adjustments that may be required to the carrying values ofthese inventories as at March 31 2015.

Qualified Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matters described in paragraphs1 (a) and 1 (b)and the possible effects of the matters described paragraphs 2 and 3 in the Basis forQualified Opinion paragraph above 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 March 31 2015 and its loss and its cash flows for the yearended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2015 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in theAnnexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by Section 143 (3) of the Act we report that:

(a) We have sought and except for the matters described in the Basis for QualifiedOpinion paragraph obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit.

(b) Except for the effects of the matters described in paragraphs1 (a) and 1 (b) andthe possible effects of the matters described in paragraphs 2 and 3 in the Basis forQualified Opinion paragraph above in our opinion proper books of account as required bylaw have been kept by the Company so far as it appears from our examination of thosebooks.

(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) Except for the effects of the matters described in paragraphs1 (a) and 1 (b) andthe possible effects of the matters described in paragraphs 2 and 3 in the Basis forQualified Opinion paragraph above in our opinion the aforesaid standalone financialstatements comply with the Accounting Standards specified under Section 133 of the Actread with Rule 7 of the Companies (Accounts) Rules 2014.

(e) The matters described in the Basis for Qualified Opinion paragraph above read withthe matters stated in clauses (i) (ii) (iv) and (ix)of the Annexure to the Auditor'sReport referred to in paragraph 1 under 'Report on Other Legal and RegulatoryRequirements' section of our report in our opinion may have an adverse effect on thefunctioning of the Company.

(f) On the basis of the written representations received from the directors as on March31 2015 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2015 from being appointed as a director in terms of Section 164 (2) of theAct.

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

(h) 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. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements(Refer to Note 27B 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 DELOITTE HASKINS & SELLS LLP

Chartered Accountants

(Firm's Registration No. 117366W/W-100018)

Sd/-

Geetha Suryanarayanan

Partner

(Membership No. 29519)

Date: May 30 2015

Place: Chennai

ANNEXURE TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements'section of our report of even date)

(i) In respect of its fixed assets:

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

b) During the year the Company has not carried out a physical verification of itsfixed assets. The Company does not have a regular programme for verification of its fixedassets.

(ii) In respect of its inventories:

a) As explained to us and read with our observations in paragraph 3 of the Basis forQualified Opinion paragraph the inventories were not physically verified / weighed duringthe year by the Management.

b) In our opinion and according to the information and explanations given to us andread with our observations in paragraph 3 of the Basis for Qualified Opinion paragraphthe procedures of physical verification of inventories followed by the Management were notreasonable and adequate and needs to be improved further taking into account the size ofthe Company and the nature of its business.

c) In our opinion and according to the information and explanations given to us theCompany has maintained records of its inventories. For the reasons stated in paragraphs(ii) (a) and (ii) (b)above and read with our observation in paragraph 3 of the Basis forQualified Opinion paragraph we are unable to comment on the discrepancies noticed onphysical verification of inventories and updation of inventory records.

(iii) The Company has not granted any loans secured or unsecured to companies firmsor other parties covered in the Register maintained under Section 189 of the CompaniesAct 2013.

(iv) In our opinion and according to the information and explanations given to us theinternal control systems need to be strengthened to make it commensurate with the size ofthe Company and the nature of its business for the purchase of inventory and fixed assetsand for the sale of goods and services and during the course of the audit we have notobserved any continuing failure to correct majorweaknesses in such internal controlsystem.

(v) In our opinion and according to the information and explanations given to us theCompany has not accepted deposits from public during the year.

(vi) We have broadly reviewed the cost records maintained by the Company pursuant tothe Companies (Cost Records and Audit) Rules 2014 as amended and prescribed by theCentral Government under sub-section (1) of Section 148 of the Companies Act 2013 and areof the opinion that prima facie the prescribed cost records have been made andmaintained. We have however not made a detailed examination of the cost records with aview to determine whether they are accurate or complete.

(vii)According to the information and explanations given to us in respect of statutorydues:

(a) The Company has not been generally regular in depositing undisputed dues includingProvident Fund Employees' State Insurance Income Tax Sales Tax Service Tax CustomsDuty Value Added Tax Excise Duty Cess and other material statutory dues applicable toit with the appropriate authorities and there were inordinate delays in a number of casesin respect of Provident Fund Tax Deducted at Source Service Tax and Value Added Tax.

(b) There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income Tax Sales Tax Service Tax Customs Duty Value Added Tax ExciseDuty Cess and other material statutory dues in arrears as at March 31 2015 for a periodof more than six months from the date they became payable other than those disclosedbelow:

Name of Statute Nature of Dues Amount Involved (Rs.) Period to which the Amount Relates Due Date
Provident Fund Provident Fund 1445879 Before March 31 2014 Before March 31 2014
Income Tax Act 1961 Tax deducted at Source 1276094 Before March 31 2014 Before March 31 2014
Income Tax Act 1961 Tax deducted at Source 54499 April 2014 to August 2014 May 2014 to September 2014
Income Tax Act 1961 Tax collected at Source 211466 Before March 31 2014 Before March 31 2014
Finance Act 1994 Service Tax 1787824 Before March 31 2014 Before March 31 2014
Finance Act 1994 Service Tax 1792951 April 2014 to August 2014 May 2014 to September 2014
Total 6568713

(c) Details of dues of Employees' State Insurance Excise Duty Customs Duty ValueAdded Tax and Central Sales Tax which have not been deposited as on March 31 2015 onaccount of disputes are given below:

Name of Statute Nature of Dues Forum where Dispute is Pending Period to which the amount relates to Amount Involved (Rs.)
Employees' State Insurance Act 1948 Employee State Insurance Honourable High Court of Chennai 2010-11 6111988
Central Excise Act 1944 Central Excise Commissioner of Central Excise Com- missioner II Chennai 2006 13832710
Central Excise Act 1944 Central Excise Honourable High Court of Chennai 1999-2000 2868511
Central Excise Act 1944 Central Excise Appeal will be filed before CESTAT Bangalore 2013 2800000
Central Excise Act 1944 Central Excise Honourable High Court of Chennai 1997-2000 9388727
Central Excise Act 1944 Central Excise Commissioner of Central Excise Com- missioner II Chennai 2010 50359737
Central Excise Act 1944 Central Excise Commissioner of Central Excise Com- missioner I Chennai 2010 15000000
Central Excise Act 1944 Central Excise CESTAT Bangalore 2011 235265808
Central Excise Act 1944 Central Excise Commissioner (Appeals) 2012-13 56756116
Customs Act 1962 Customs Duty Honourable High Court of Chennai 1999-2000 2086066
Customs Act 1962 Customs Duty Honourable High Court of Chennai 1998-1999 782445
Customs Act 1962 Customs Duty Honourable High Court of Chennai 2000-03 10000000
Customs Act 1962 Customs Duty Honourable Supreme Court 2005-06 13829000
Various states (Sales Tax Acts) Value Added Tax Honourable High Court of Chennai 2008-09 192742
Various states (Sales Tax Acts) Value Added Tax Honourable High Court of Chennai 2009-10 234547
Various states (Sales Tax Acts) and Central Sales Tax 1956 Value Added Tax Writ filed before Honourable High Court of Chennai 2006-07 to 2010-11 181785401
Various states (Sales Tax Acts) Value Added Tax Pending before Sales Tax Tribunal Gulbarga 2007-08 & 2008-09 10867454
Various states (Sales Tax Acts) Value Added Tax Pending before Sales Tax Tribunal Gulbarga 2010-11 858052
Various states (Sales Tax Acts) Value Added Tax Honourable High Court of Chennai 2010-11 28454281
Various states (Sales Tax Acts) Value Added Tax Honourable High Court of Chennai 2011-12 5950109
Various states (Sales Tax Acts) Value Added Tax Honourable High Court of Chennai 2012-13 7535500
Various states (Sales Tax Acts) Value Added Tax Honourable High Court of Chennai 2013-14 4597143
Total 659556337

(d) The Company has been regular in transferring amounts to the Investor Education andProtection Fund in accordance with the relevant provisions of the Companies Act 1956 (1 of1956) and Rules made thereunder within time.

(viii) After considering the effect of our audit qualifications reported in paragraphs(1)(a) and (1)(b) of the Basis for Qualified Opinion of our Audit Report and withoutconsidering the possible effects of our audit qualifications reported in paragraphs (2)and (3) of the Basis for Qualified Opinion of our Audit Report which is not quantifiablethe accumulated losses of the Company at the end of the financial year are less than fiftyper cent of its net worth and the Company has incurred cash losses during the financialyear covered by our audit and in the immediately preceding financial year.

(ix) In our opinion and according to the information and explanations given to us theCompany has not defaulted in repayment of dues to banks and financial institutions asstipulated in the Master Restructuring Agreement (MRA) (refer to note 5(i) of thefinancial statements) except that there has been a default in repayment of interestamounting to Rs.48700000 outstanding as at March 31 2015 payable to a financialinstitution (refer to note 5 (iv) of the financial statements). The Company has not issuedany debentures.

(x) In our opinion and according to the information and explanations given to us theterms and conditions of the guarantees given by the Company for loans taken by others frombanks and financial institutions are not prima facie prejudicial to the interest of theCompany.

(xi) 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 obtained other than temporary deployment pending application.

(xii)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 has been noticedor reported during the year.

For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Registration No. 117366W/W-100018)
Sd/-
Geetha Suryanarayanan
Partner
Date: May 30 2015 (Membership No. 29519)
Place: Chennai