THE MEMBERS OF
TANFAC INDUSTRIES Limited
Report on the Financial Statements
1 We have audited the accompanying financial statements of TANFAC IndustriesLimited("the Company") which comprise the Balance Sheet as at March 31 2017the 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 Financial
2 The management and Board of Directors of the Company are responsible for the mattersstated in Section 134(5) of the Companies Act 201 3 ('the Act') with respect to thepreparation of these 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 Companies (Accounts) Rules2014. 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; design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the accuracy and completeness of theaccounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error
3 Our responsibility is to express an opinion on these financial statements based onour audit. We have taken into account the provisions of the Act the accounting andauditing standards and matters which are required to be included in the audit report underthe provisions of the Act and the Rules made thereunder. We conducted our audit inaccordance with the Standards on Auditing specified under Section 143(10) of the Act.Those Standards require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether the financial statements are free frommaterial misstatement
4 An audit involves performing procedures to obtain audit evidence about the amountsand 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 statement that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of the accountingestimates made by the Company's management and Board of Directors as well as evaluatingthe overall presentation of the financial statements
5 We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion
6 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 2017 its Profit and its cash flows for the year ended on that date
Emphasis of Matter Paragraph
7. In forming our opinion which is not qualified we have considered Note No 26.12 ofthe financial statements stating that despite losses in the past the financial statementsof the Company have been prepared under 'Going concern' assumption basis having regard tothe business plans of the Company and continued financial support from a promoter
8. Attention is invited to Note No 26.1(e) of the financial results describingCompany's contention in the matter of Renewable Power Obligation (RPO) which is contestedand the Company is anticipating a favorable verdict based on legal advice received by it.Our report is not qualified on the matter
Report on Other Legal and Regulatory
9. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of Sub-section (11) of Section143 ofthe Act we give in the "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order
1 0. As required by Section 1 43(3) of the Act we further 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. i n 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. f he Balance Sheet Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are in agreement with the books of account;
d. i n our opinion the aforesaid financial statements comply with the applicableAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014
e. on the basis of written representations received from the directors as on March
31 2017 and taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2017 from being appointed as a director in terms of Section164(2) of the Act
f. With respect to the adequacy of the internal financial control over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure B"
g. In our opinion and to the best of our information and according to the explanationsgiven to us we report as under with respect to other matters to be included in theAuditor's Report in accordance with Rule 1 1 of the Companies (Audit and Auditors) Rules2014:
(i) The impact of pending litigations has been duly disclosed in the financialstatements in note no. 26.1 and 26.3 to the financial statements.
(ii) The Company did not have any long-term contracts including derivative contractsfor which 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.
(iv) The Company has provided requisite disclosure in Note No 26.13 to the financialstatements as to holding as well as dealings in Specified Bank Notes during the periodfrom 8th November 201 6 to 30th December 201 6. Based on audit procedures and relying onthe management representation the said disclosures are in accordance with the books ofaccounts and records maintained by the Company and as produced to us by the management
For Khimji Kunverji & Co
Firm Registration No 105146W
Hasmukh B Dedhia
Partner (F - 33494)
Date: May 23 2017
Annexure A referred to in Paragraph 9 of Our Report of even date to the members ofTANFAC Industries Limited on the Financial Statements of the Company for the year ended31st March 2017
On the basis of such checks as we considered appropriate and according to theinformation and explanations given to us during the course of our audit we report that:
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets;
(b) According to the information and explanations given to us and based on the recordsof the Company examined by us fixed assets have been physically verified by themanagement at regular intervals; and no material discrepancies were noticed on suchverification;
(c) According to the information and explanations given to us and based on the recordsof the Company examined by us title deeds of an immovable property are held in the nameof the Company.
(ii) (a) The management has conducted physical verification of inventory at reasonableintervals during the year;
(b) The Company is maintaining proper records of inventory and no materialdiscrepancies were noticed on physical verification;
(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 Act.
Hence the requirement of clause 3 (iii) of the order is not applicable.
(iv) According to the records of the Company examined by us and as per the informationand explanations given to us the Company has not granted any loans covered under Section185 and 186 of the Act.
(v) The Company has not accepted any deposits from the public covered under Section 73to 76 of the Companies Act 2013.
(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 underSection 148(1) of the Act pertaining to Cost accounting records in respect of Company'sproducts to which said rules are made applicable and are of the opinion that prima faciethe prescribed accounts and records have been made and maintained
(vii) (a) According to the information and explanations given to us and based on therecords of the Company examined by us the Company is regular in depositing the undisputedstatutory dues including Provident Fund Employees' State Insurance Income Tax SalesTax Wealth Tax Service Tax Value Added Tax Excise Duty and other material statutorydues as applicable with the appropriate authorities in India
(b) According to the information and explanations given to us and based on the recordsof the Company examined by us following dues of Sales Tax Service Tax Customs DutyExcise Duty& Income Tax which have not been deposited on account of any disputes
|Name of Statute ||Nature of the Dues ||Disputed amount (Rs. in Lacs) ||Period to which the amount relates ||Forum where dispute is pending || |
| ||TNGST Act 1959 ||Levy of sales tax from sales affected through Pondicherry ||52.77 ||1989-90 & 1990-91 ||Appeal before Tamil Nadu Sales Tax Appellate Tribunal |
|Custom Act 1962 ||Duty on fluorspar shipment shortage ||10.79 ||1998-99 ||Customs Officer || |
|Central Excise Act 1944 ||Interest Accrued to be added ||0.27 ||2001-02 ||SB CEGAT Chennai || |
| ||Excise duty on freight collected on outward freight ||9.85 ||April'04- December'08 ||Joint Commissioner Cuddalore || |
| ||Excise duty on freight collected on outward freight ||0.90 ||January'09- September'09 ||Asst.Commissioner Cuddalore || |
| ||Excise duty on freight collected on outward freight ||0.41 ||October'09-March'10 ||Deputy Commissioner Cuddalore || |
| ||Excise duty on freight collected on outward freight ||0.58 ||April'10- December'10 ||Asst.Commissioner Cuddalore || |
| ||Excise duty on freight collected on outward freight ||3.55 ||January'11- October'11 ||Asst.Commissioner Cuddalore || |
| ||Excise duty on freight collected on outward freight ||0.74 ||January'14- November'14 ||Asst.Commissioner Cuddalore || |
| ||Excise duty on freight collected on outward freight ||0.46 ||December'14- June'15 ||Asst.Commissioner Cuddalore || |
| ||Excise duty on freight collected on outward freight ||2.56 ||July'15-February'16 ||Asst.Commissioner Cuddalore || |
| ||Excise duty on Job Work to Shasun Chemicals ||10.75 ||2012-13 & 2013-14 ||Commisioner AppealsChennai || |
| ||Excise duty on Job Work to Shasun Chemicals ||8.18 ||2014-15 ||.Commisioner AppealsChennai || |
| ||Excise duty on Job Work to Shasun Chemicals ||34.66 ||2015-16 & 2016-17 ||Asst.Commissioner Cuddalore || |
| ||Total ||72.92 || || || |
|Finance Act 1994 (Service Tax) ||Service Tax on Lease Rent ||12.30 ||July'01 - March'05 ||The Commissioner Pondicherry || |
| ||Service Tax on Consulting Engineers - Penalty ||0.23 ||May'02 - Feb'04 ||CESTAT Chennai || |
| ||Service Tax on Freight Outward ||20.39 ||April'06-March'08 ||Commissioner Pondicherry || |
|Name of Statute ||Nature of the Dues ||Disputed amount ||Period to which the amount relates ||Forum where dispute is pending |
| || ||(Rs. in Lacs) || || |
| ||Service Tax on Medical Subscription ||0.72 ||July'15-Mar'16 ||CESTAT Chennai |
| ||Total ||33.64 || || |
|Income Tax Act 1961 ||Replacement of equipment claimed as revenue expenditure reclassified by Dept. as capital expenditure [tax demanded] (Including Interest) ||85.39 ||2002-03 ||Income Tax Appellate Tribunal |
| ||Disallowance of various expenses (Including Interest) ||75.79 ||2007-08 ||Assistant Commissioner of Income Tax Company Circle III (1) Chennai |
| ||Total ||161.18 || || |
(viii) According to the information and explanations given to us and based on therecords of the Company examined by us the Company has not defaulted in repayment of loansor borrowings to any financial institution bank and Government.
(ix) The Company has not raised any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Hence theprovision of clause 3(ix) of the Order is not applicable to it.
(x) During the course of our examination of the books and records of the Companycarried in accordance with the auditing standards generally accepted in India we haveneither come across any instance of fraud by the Company or on the Company by its officersor employees noticed or reported during the course of our audit nor have we been informedof any such instance by the Management.
(xi) According to the information and explanations given to us and based on the recordsof the Company examined by us the Company has not paid or provided managerialremuneration.
(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Hence clause 3(xii) of the Order is not applicable.
(xiii) According to the information and explanations given to us and based on therecords of the
Company examined by us the Company has complied with the provisions of Section 177read with Rule 6 of Companies (Meetings of Board and its Powers) Rules 2014. Thetransactions with related parties entered into by the Company disclosures whereof aremade as per applicable Accounting Standards do not attract the provisions of Section 188of the Act.
(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review. Henceclause 3(xiv) of the Order is not applicable.
(xv) According to the records of the Company examined in course of our audit and as perthe information and explanations given to us the Company has not entered in any noncashtransactions with directors or persons connected with them. Hence provisions of Section192 are not applicable to the Company
(xvi) The Company is not required to register under Section 45-IA of the Reserve Bankof India Act 1934.
|For Khimji Kunverji & Co || |
|Chartered Accountants || |
|Firm Registration No 105146W || |
|Camp: Chennai ||Hasmukh B Dedhia |
|Date: May23 2017 ||Partner (F - 33494) |
Annexure B referred to in paragraph 10(f) of Our Report of even date to the members ofTANFAC Industries Limited on the Financial Statements of the company for the year ended31st March 2017
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 TANFACINDUSTRIES LIMITED ("the Company") as at 31 March 2017 in conjunction with ouraudit of 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 statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reporting('the Guidance Note') issued by the Institute of Chartered Accountants of India ('ICAI').These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively including adherence tocompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.
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 and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting areestablished and maintained and whether such controls operated effectively in all materialrespects. Our audit involves performing procedures to obtain audit evidence about theadequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement in 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
Internal financial control over financial reporting is a process designed by theCompany 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 authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized 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.Further 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 owing to changes in conditions or that thedegree of compliance with the policies or procedures may deteriorate or for other reasons
In our opinion the Company has an internal financial controls system over financialreporting design whereof is observed to be comprehensive. Based on selective verificationof process controls matrixes made available to us in our opinion and considering theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note the operatingeffectiveness of such process controls and appropriate documentation thereof needs to bestrengthened to make the same commensurate with the size of the Company and nature of itsbusiness.
For Khimji Kunverji & Co
Firm Registration No 105146W
|Camp: Chennai ||Hasmukh B Dedhia |
|Date: May23 2017 ||Partner (F - 33494) |