To the Members of Arcotech Limited
Report on the Audit of the Ind AS Financial Statements
We have audited the accompanying Ind AS financial statements of Arcotech Limited("the Company") which comprise the Balance sheet as at March 31 2019 theStatement of Profit and Loss including the statement of Other Comprehensive Income theCash Flow Statement and the Statement of Changes in Equity for the year then ended andnotes to the financial statements including a summary of significant accounting policiesand other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Ind AS financial statements give the information required bythe Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the Company as at March 31 2019 its loss including othercomprehensive income its cash flows and the changes in equity for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the Ind AS financial statements in accordance with theStandards on Auditing (SAs) as specified undersection143(10)ofthe Act. Ourresponsibilities under those Standards are further described in the AuditorsResponsibilities for the Audit of the Ind AS financial statements section of ourreport. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the financial statements under theprovisions of the Act and the under and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion on the Ind AS financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matters described below to be the key audit matters to be communicatedin our report:
The Companys Board of Directors is responsible for the other information. Theother information comprises the Directors Report but does not include the Ind ASfinancial statements and our auditors report thereon.
Our opinion on the Ind AS financial statements does not cover the other information andwe do not express any form of assurance conclusion thereon. In connection with our auditof the Ind AS financial statements our responsibility is to read the other informationand in doing so consider whether the other information is materially inconsistent withthe financial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated. If based on the work we have performed we conclude that there is amaterial misstatement of this other information we are required to report that fact.Whenwe will read the directors report if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance and if the other information is not corrected after communicating with thosecharged with governance seek to have the uncorrected material misstatement appropriatelybrought to the attention of users for whom the audit report is prepared.
Responsibilities of Management for the Ind AS Financial Statements
The Companys Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these Ind AS financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income cash flows and changes in equity of the Company in accordancewith the accounting principles generally accepted in India including the IndianAccounting Standards (Ind AS) specified under section 133 of the Act read with [theCompanies (Indian Accounting Standards) Rules 2015 as amended in 2019. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of 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; andthe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the Ind AS financial statementsthat give a true and fair view and are free from material misstatement whether due tofraud or error. In preparing the Ind AS financial statements management is responsiblefor assessing the Companys ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Companys financialreporting process.
Auditors Responsibilities for the Audit of the Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the Ind AS financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditors report that includes our opinion. Reasonable assurance is ahigh level of assurance but is not a guarantee that an audit conducted in accordance withSAs will always detect a material misstatement when it exists. Misstatements can arisefrom fraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these Ind AS financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the Ind AS financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system in place and the effectiveness of suchcontrols.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of managements use of the going concernbasis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may doubt on the Companysability to continue as a going concern. If we conclude that a material castsignificantuncertainty exists we are required to draw attention in our auditors report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditors report. However future events or conditions may cause theCompany to cease to continue as a going concern.
Evaluate the overall presentation structure and content of the Ind ASfinancialstatements including the disclosures and whether the Ind AS financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation. We communicate with those charged with governance regarding among othermatters the planned scope and timing of audit findings including any significantdeficiencies in internal control that we identify during our theauditandsignificant audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financialstatements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditors report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in "Annexure A" a statement on the mattersspecified 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 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 the Statement ofOther Comprehensive Income the Cash Flow Statement and Statement of Changes in Equitydealt with by this Report are in agreement with the books of account.
(d) In our opinion the aforesaid Ind AS financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Companies (IndianAccounting Standards) Rules 2015 as amended in 2019.
(e) On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 from being appointed as a director in terms of Section 164 (2) of theAct;
(f) With respect to the adequacy of the internalfinancialcontrols over financialreporting of the Company with reference to these Ind AS financial statements and theoperating effectiveness of such controls refer to our separate Report in "AnnexureB" to this report;
(g) In our opinion the managerial remuneration for the year ended March 31 2019 hasbeen paid / provided by the Company to its directors in accordance with the provisions ofsection 197 read with Schedule V to the Act;
(h) With respect to the other matters to be included in the Auditors 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 statements- Refer Note 33 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 Amit Joshi & Associates
FRN No. 004898N
M. No. 084687
Place : New Delhi
Date : 29.05.2019
Annexure Ato the Auditors Report on the accounts of Arcotech Limitedfor the year ended March 31 2019 as required by the Companies (Auditors Report)Order 2016 ("the Order") issued by the Central Government of India in terms ofsub-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 physicallyverified by the management at reasonable intervals during the year and there is aprogramme of verification which in our opinion is reasonable having regard to the sizeof the company and the nature of its assets. The discrepancies noticed on suchverification were not material. c. According to the information and explanations given bythe management the title deeds of the immovable properties are held in the name of thecompany.
(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 2013and the rulesframed there under. Consequently this clause 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 information and explanations given to us and the records ofthe company examined by us in our opinion the company has not been irregular indepositing undisputed statutory dues including provident fund employees stateinsurance income tax sale tax goods & service tax duty of customs duty of excisevalue added tax cess and other material statutory dues with the appropriate authoritiesand there were no arrears of such dues at the end of the year which have remainedoutstanding for a period of more than six months from the date they became payable exceptincome tax and other dues amounting to Rs. 2701.49 and 59.01 lacs respectively.
b. The dues outstanding in respect of income tax sales tax service tax duty ofcustoms duty of excise and value added tax on account of any dispute are as follows :
|Name of the Statue ||Nature of dues ||Amount ||Period to which ||Forum where dispute |
| || ||(Rs. in Lacs) ||amount relates ||is pending |
|Income Tax Act 1961 ||Income Tax Demand ||521.41 ||AY 2013-14 ||CIT (Appeals) New Delhi |
|Income Tax Act 1961 ||Income Tax Demand ||535.78 ||AY 2014-15 ||CIT (Appeals) New Delhi |
|Income Tax Act 1961 ||Income Tax Demand ||590.91 ||AY 2015-16 ||CIT (Appeals) New Delhi |
|Income Tax Act 1961 ||Income Tax Demand ||304.95 ||AY 2016-17 ||CIT (Appeals) New Delhi |
(viii) According to the records of the company and the information and explanationsgiven to us there was delay in repayment of term loans amounting to Rs 3006.78 lacs andinterest of Rs 860.44 lacs up to 410 days as on March 31 2019.The company does not haveany 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 andexplanations given to us term loans raised during the year were applied for the purposefor which those are raised. (x) During the course of our examination of the books andrecords of the company carried out in accordance with the generally accepted auditingpractices in India we have neither come across any instance of fraud on or by the companyby its officers or employees noticed or reported during the year nor have we beeninformed of any such case by the management. (xi) According to the information andexplanation given to us we report that the managerial remuneration has been paid/providedin accordance with requisite approvals mandated by the provisions of the section197 readwith Schedule V to the Companies Act 2013.
(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 theinformation and explanations given to us all transactions with related parties during theyear are in compliance with the provisions of section 177 and 188 of the
Companies Act 2013 where applicable and the detailshavebeendisclosedfinancialstatements as the required by the applicable accounting standards.
(xiv) According to the records of the company and the information and explanationsgiven to us the company has complied with provisions of section 42 of the Companies Act2013 in respect of the preferential allotment of non convertible non cumulative reedemablepreference shares during the period under review. According to the information andexplanations given by the management we report that the amount raised have been used forthe purposes for which the funds were raised..
(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 45IA of theReserve Bank of India Act 1934.
For Amit Joshi & Associates
FRN No. 004898N
M. No. 084687
Place : New Delhi
Date : 29.05.2019
ANNEXURE B TO THE INDEPENDENT AUDITORS REPORT OF EVEN DATE ON THEFINANCIAL STATEMENTS 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 2019 in conjunction with our audit ofthe Ind AS financial statements of the Company for the year ended on that date.
Managements Responsibility for Internal Financial Controls
The Companys 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 companys policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.
Our responsibility is to express an opinion on the Companys 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 financialcontrols 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 if such controls operateeffectively 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 reporting include obtaining anunderstandingofinternal financialreporting assessing the risk that a controlsovermaterial weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditors judgment including the assessment of the risks of materialmisstatement 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 Companysinternalfinancial .reportingcontrols system over financial
Meaning of Internal Financial Controls Over Financial Reporting
A companys internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of Ind AS financial statements for external purposes in accordancewith generally accepted accounting principles. A companys internal financial controlover financial 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 Ind ASfinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorizations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the companys assets that could have a material effect on the Ind ASfinancial 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 2019 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 : 29.05.2019