Cals Refineries Ltd.
|BSE: 526652||Sector: Oil & Gas|
|NSE: N.A.||ISIN Code: INE040C01022|
|BSE 00:00 | 06 May||Cals Refineries Ltd|
|NSE 05:30 | 01 Jan||Cals Refineries Ltd|
|BSE: 526652||Sector: Oil & Gas|
|NSE: N.A.||ISIN Code: INE040C01022|
|BSE 00:00 | 06 May||Cals Refineries Ltd|
|NSE 05:30 | 01 Jan||Cals Refineries Ltd|
To The Members of CALS REFINERIES LIMITED Report on the Financial Statements
We have audited the accompanying financial statements of CALS REFINERIES 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 management and Board of Directors of the Company are responsible for the mattersstated in Section 134(5) of the Companies Act 2013 ('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 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 are 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.
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 the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders 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 controls systemover financial reporting and the operating effectiveness of such controls An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by the Company's management and Board of Directors aswell as evaluating 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 audit opinion.
Basis of Qualified Opinion
Attention of the matters is invited to note no.28(d) of the notes to accounts regardingthe financial statements of the company having been prepared on a Going Concern basis notwithstanding that due to continuous losses incurred by the company during the past yearsand current year the accumulated losses of the Company have far exceeded its Net Worthresulting in negative net worth on Balance Sheet date. The company has written-off asubstantial part of its Fixed Asset during earlier years. This situation indicates theexistence of a material uncertainty that may cast a significant doubt on the company'sability to continue as going concern.
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 the basis of QualifiedOpinion paragraph the aforesaid financial statements give the information required bythe Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India:-
a) in the case of the Balance Sheet of the state of affairs of the Company as at 31stMarch 2017;
b) in the case of the statement of Profit and Loss of the loss for the period ended onthat date; and
c) in the case of the Cash Flow Statement of the cash flows for the period ended onthat date.
Emphasis of matter
Without qualifying our opinion we draw attention to:
(a) The Securities and Exchange Board of India (SEBI) has initially put restriction onany further issue of equity shares or any other instruments convertible into equity sharesor any other security by the Company for a period of ten years vide its interim orderdated 21st September 2011. In its final order dated 23rd October2013 the same order was upheld. The Company as on date of the final order has undergonesuch prohibition for approximately two years thus the restriction will be reducedeffectively to eight years from the date of the final order. The Company is in appealagainst the order of SEBI Dated 23rd October 2013 alleging siphoning of fundsin Securities Appellate Tribunal (SAT). The matter is sub-judice and the impact if anyof the outcome of the same cannot be ascertained at this stage.
(b) The company has share application money pending allotment for a period of more thantwo years and cannot issue shares in view of the Order of SEBI as aforesaid.
(c) Trade payables appearing in the books of accounts are subject to confirmation andreconciliation if any. One of the creditors Karan Nirman Udyog Private Limited to whichRs. 5 million payable has filed an winding up petition in the Hon'ble High Court of Delhifor the recovery of the said amount the proceeding in the matter in undergoing thecompany has challenged the payment of the said amount.
(d) The amount of Rs. 5862.11 million under Disputed Duties/Tax Demands pertains tothe Income Tax orders issued for the A.Y. 2008-09 and 201415 for Rs. 5860.28 million andRs. 1.83 million respectively. The assessment order for the assessment year 2008-09related to the assessment u/s 148 relating to the issuance of GDRs however assessmentproceedings for A.Y. 2014-15 pertains to the normal assessment i.e. assessment u/s 143(3) of the Income Tax Act1961. The Appeal is filed by the company.
Report on Other Legal and Regulatory Requirements
1. As required by section 143(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. 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 financial statements comply with the applicable AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014;
e. on the basis of written representations received from the directors as on March312017 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 controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure A". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting; and
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 11 of the Companies (Audit and Auditors) Rules2014:
(i) The Company has disclosed the impact of pending litigations on its financialpositions in its standalone financial statements- Refer Note 22 to the financialstatements;
(ii) The Company did not have any long-term contracts including derivative contracts;as such the question of commenting on any material foreseeable losses thereon does notarise
(iii) There has not been an occasion in case of the Company during the year underreport to transfer any sums to the Investor Education and Protection Fund. The question ofdelay in transferring such sums does not arise
(iv) The Company had provided requisite disclosures in its financial statements as toholdings as well as dealings in Specified Bank Notes during the period from 8thNovember to 30th December 2016 and these are in accordance with the books ofaccounts maintained by the Company.
2. 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 "Annexure B" a statement on the matters specified inparagraphs 3 and 4 of the Order.
TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 1 (f) under 'Report on Other Legal and RegulatoryRequirements' of our Report of even date)
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 CALSREFINERIES LIMITED ("the Company") as of March 31 2017 in conjunction withour audit of the 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 or 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 or 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") issued by the Institute of Chartered Accountants of Indiaand the Standards on Auditing prescribed under section 143(10) of the Companies Act 2013to the extent applicable to an audit of internal financial controls. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting were established and maintained and if such controlsoperated 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 includedobtaining 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 or the risks ofmaterial misstatement 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 Company's internal financial controls systemover financial 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 arc 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 to the best our information and according to the explanation given tous the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 312017 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
TO THE INDEPENDENT AUDITORS' REPORT
The Annexure referred to in our Independent Auditors' Report of even date to themembers of CALS REFINERIES LIMITED on the accounts of the company for the yearended 31st March 2017
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets ;
(b) As explained to us fixed assets have been physically verified by the management atregular intervals; as informed to us no material discrepancies were noticed on suchverification;
(c) In our opinion and according to the information and explanations given to us thetitle deeds of immovable property are held in the name of the company;
(ii) The nature of business of the Company does not require it to have any inventory.Hence the requirement of clause (ii) of paragraph 3 of the said Order is not applicableto the Company;
(iii) As informed to us the Company has not granted loans secured or unsecured tocompanies firms or other parties covered in the register maintained under section 189 ofthe Companies Act2013. Hence clauses 3(iii) (a) to (c) of the order are not applicable tothe Company.
(iv) In our opinion and according to the information and explanations given to us thecompany has complied with the provisions of section 185 and 186 of the Companies Act2013in respect of loans investments guarantees and security.
(v) The Company has not accepted any deposits from the public and hence the directivesissued by the Reserve Bank of India and the provisions of Section 73 to 76 or any otherrelevant provisions of the Act and the Companies(Acceptance of Deposit) Rules2015 withregard to the deposits accepted from the public are not applicable.
(vi) As informed to us the maintenance of cost records has not been specified by theCentral Government under sub-section (1) of Section 148 of the Act in respect of theactivities carried on by the company.
(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-taxSales-tax Wealth Tax Service Tax Custom Duty Excise Duty Value added Tax Cess andany other statutory dues applicable to it. According to the information and explanationsgiven to us no undisputed amounts payable in respect of the above were in arrears as atMarch 312017 for a period of more than six months from the date on when they becomepayable;
(b) According to the information and explanations given to us and based on the recordsof the company examined by us there are no dues of Income Tax Wealth Tax Service TaxSales Tax Customs Duty and Excise Duty which have not been deposited on account of anydisputes.
(viii) According to the records of the company examined by us and as per theinformation and explanations given to us the company has not taken any loans from anyfinancial institutions banks or debenture holder and hence the question of defaulting inrepayment of dues does not arise.
(ix) According to the records of the company examined by us and as per the informationand explanations given to us the company has not raised moneys by way of initial publicoffer or further public offer including debt instruments and term Loans. Accordingly theprovisions of clause 3 (ix) of the Order are not applicable to the Company and hence notcommented upon.
(x) According to the records of the company examined by us and as per the informationand explanations given to us we report that no fraud by the Company or on the company byits officers or employees has been noticed or reported during the year.
(xi) In our opinion the Company has not paid any managerial remuneration. Thereforethe provisions of clause 4 (xi) of the Order are not applicable to the Company.
(xii) In our opinion the Company is not a Nidhi Company. Therefore the provisions ofclause 4 (xii) of the Order are not applicable to the Company.
(xiii) According to the records of the company examined by us and as per theinformation and explanations given to us all transactions with the related parties are incompliance with section 177 and 188 of Companies Act 2013 and the details have beendisclosed in the Financial Statements as required by the applicable accounting standards.
(xiv) According to the records of the company examined by us and as per the informationand explanations given to us the company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review. Accordingly the provisions of clause 3 (xiv) of the Order are notapplicable to the Company and hence not commented upon.
(xv) According to the records of the company examined by us and as per the informationand explanations given to us the company has not entered into any non-cash transactionswith directors or persons connected with him. Accordingly the provisions of clause 3 (xv)of the Order are not applicable to the Company and hence not commented upon.
(xvi) In our opinion the company is not required to be registered under section 45 IAof the Reserve Bank of India Act 1934 and accordingly the provisions of clause 3 (xvi)of the Order are not applicable to the Company and hence not commented upon.