TO THE MEMBERS OF ARCOTECH LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of Arcotech Limited ("theCompany") which comprise the Balance Sheet as at March 31 2017 the Statement ofProfit and Loss and Cash Flow Statement for the year then ended and a summary ofsignificant accounting policies and other explanatory information.
Management's Responsibility for the 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 financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that areoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
Our responsibility is to express an opinion on these financial statements based on ouraudit.
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 there under. We conducted our audit in accordancewith the 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 financial statements are free from materialmisstatement. An audit involves performing procedures to obtain audit evidence about theamounts and the disclosures in the financial statements. The procedures selected depend onthe auditor'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 control relevant to the Company's preparation ofthe financial statements that give a true and fair view in order to design auditprocedures that are appropriate in the circumstances. An audit also includes evaluatingthe appropriateness of the accounting policies used and the reasonableness of theaccounting estimates made by the Company's Directors as well as evaluating the overallpresentation 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 financial statements.
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 March31 2017 and its profit and its cash flow for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. 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 section 143 ofthe Companies Act 2013 we give in Annexure 'A' a statement on the matters specified inparagraphs 3 and 4 of the Order.
2. As required by section 143(3) of the Act we 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. in 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. 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 financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.
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 is 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 'B'.
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. The Company had disclosed the impact of pending litigations on its financialposition in its financial statements. [Refer Note No 25.2(ii)]
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 to theInvestor Education and Protection Fund by the Company.
iv. The Company has provided requisite disclosures in the financial statements as toholdings as well as dealings in Specified Bank Notes during the period from 8th November2016 to 30th December 2016. Based on audit procedures and relying on the managementrepresentation we report that the disclosures are in accordance with books of accountmaintained by the Company and as produced to us by the Management. [Refer Note No 25.4]
For Amit Joshi & Associates
FRN No. 004898N
M. No. 084687
Place: New Delhi
Date: 29th May 2017
Annexure 'A' to the Auditor's Report on the accounts of Arcotech Limited for the yearended March 31 2017 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 section 143 of the Companies Act 2013
(i) a. The company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.
b. Fixed assets have been physically verified by the management at reasonable intervalsduring the year and there is a programme of verification which in our opinion isreasonable having regard to the size of the company and the nature of its assets. Thediscrepancies noticed on such verification were not material.
c. According to the information and explanations given by the management the titledeeds of the immovable properties are held in the name of the company.
(ii) Physical verification of inventory has been conducted at reasonable intervals bythe management and no material discrepancies have been noticed on such physicalverification.
(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. Consequently clauses (iii)(a) (iii)(b) and(iii)(c) of paragraph 3 of the order are not applicable.
(iv) In respect of loans investments guarantees and security wherever applicablethe provisions of section 185 and 186 of the Companies Act 2013 have been complied with.
(v) The Company has not accepted deposits during the year within the meaning ofsections 73 to 76 or any other relevant provisions of the Companies Act 2013 and therules framed there under. Consequently clause 3(v) of paragraph 3 of the order is notapplicable.
(vi) We have broadly reviewed the cost records maintained by the company pursuant tothe Companies (Cost Records and Audit) Rules 2014 prescribed by the Central Governmentunder section 148(1) of the Companies Act 2013 and are of the opinion that prima faciethe prescribed cost records have been maintained. We have however not made a detailedexamination of the cost records with a view to determine whether they are accurate orcomplete.
(vii) a. According to the records the company has been generally regular in depositingundisputed statutory dues including provident fund employee's state insurance incometax sale tax service tax duty of customs duty of excise value added tax cess andother material statutory dues with the appropriate authorities. There are no arrears ofundisputed statutory dues as at March 31 2017 which were outstanding for a period of morethan six months from the date they became payable except Income Tax amounting to Rs 30.25crores.
b. According to the information and explanations given to us the dues outstanding ofincome tax value added tax sales tax wealth tax service tax custom duty excise dutyand cess as at March 31 2017 on account of any dispute are as follows:
|Name of the Statute ||Nature of Dues ||Amount (Rs in Lacs) ||Period to which the amount relates ||Forum where disputeis pending |
|Income Tax Act 1961 ||Income Tax Demand ||152.03 ||AY 2013-14 ||CIT (Appeals) New Delhi |
|Income Tax Act 1961 ||Income Tax Demand ||1151.97 ||AY 2014-15 ||CIT (Appeals) New Delhi |
(viii) According to the records of the company and the information and explanationsgiven to us we are of the opinion that the company has not defaulted in repayment of duesto any bank or financial institution.
Further the company does not have any debentures and loan from government.
(ix) a. According to the records of the company and the information and explanationsgiven to us the company has not raised moneys by way of initial public offer or furtherpublic offer including debt instruments during the year. Consequently this clause ofparagraph 3 of the order is not applicable.
b. According to the information and explanations given to us term loans raised duringthe year were applied for the purpose for which those are raised.
(x) During the course of our examination of the books and records of the companycarried out in accordance with the generally accepted auditing practices in India we haveneither come across any instance of fraud on or by the company by its officers oremployees noticed or reported during the year nor have we been informed of any such caseby the management.
(xi) According to the information and explanation given to us we report that themanagerial remuneration has been paid/provided in accordance with requisite approvalsmandated by the provisions of the section 197 read with Schedule V to the Companies Act2013.
(xii) The company is not a Nidhi Company. Consequently clause 3(xii) of paragraph 3 ofthe order is not applicable.
(xiii) According to the records of the company and the information and explanationsgiven to us all transactions with related parties during the year are in compliance withthe provisions of section 177 and 188 of the Companies Act 2013 where applicable and thedetails have been disclosed in the financial statements as required by the applicableaccounting standards.
(xiv) According to the records of the company and the information and explanationsgiven to us the company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the period under review.Consequently clause 3(xiv) of paragraph 3 of the order is not applicable.
(xv) According to the records of the company and the information and explanations givento us the company has not entered into any non cash transactions with directors orpersons connected with him. Consequently clause 3(xv) of paragraph 3 of the order is notapplicable.
(xvi) According to the records of the company and the information and explanationsgiven to us the company is not required to be registered under section 45-IA of theReserve Bank of India Act 1934.
|For Amit Joshi & Associates |
|Chartered Accountants |
|FRN No. 004898N |
|(Sanjay Joshi) |
|M. No. 084687 |
|Place: New Delhi |
|Date: 29th May 2017 |
ANNEXURE 'B' TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE FINANCIALSTATEMENTS OF ARCOTECH LIMITED
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 ArcotechLimited. ("the Company") as of March 31 2017 in conjunction with our audit ofthe 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.
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") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143 (10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofinternal financial controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operate 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 includeobtaining 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 judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the Company's internal financial controls system overfinancial 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 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.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.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2017 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 Amit Joshi & Associates
FRN No. 004898N
M. No. 084687
Place: New Delhi
Date: 29th May 2017