To the Members of Centerac Technologies Limited Report on the Ind AS FinancialStatements
Wc have audited the accompanying Ind AS Financial Statements of CENTERAC TECHNOLOGIESLIMITED ("the Company'') which comprise of the Balance Sheet as at March 31 2018the Statement of Profit and Loss (including Other Comprehensive Income) the Statement ofCash Flows and the Statement of Changes in Equity for the year then ended and a summaryof significant accounting policies and other explanatory information ("the Ind ASFinancial Statements").
Management's Responsibility for the Ind AS 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 Ind AS Financial Statements that give a true and fair view of the financialposition financial performance (including other comprehensive income) statement ofchanges in equity and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including Indian Accounting Standards specifiedunder Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules2015 as amended.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of 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 the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe Ind AS Financial Statements that give a true and fair view and are free from materialmisstatement whether - due to fraud or error.
Our responsibility is to express an opinion on these Ind AS Financial Statements basedon our audit.
We have taken into account the provisions of the Act the Indian Accounting Standardsand Auditing Standards and matters which arc required to be included in the audit reportunder the provisions of the Act and the Rules made thereunder.
We conducted our audit of the Ind AS Financial Statements in accordance with theStandards on Auditing as 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 Ind AS Financial Statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the hid AS Financial Statements. The procedures selected depend on theauditors' judgement including the assessment of the risks of material misstatement of theInd AS Financial Statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of the Ind AS Financial Statements that give a true and fair view in order todesign audit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of the accounting policies used and the reasonableness ofthe accounting estimates made by the Company's Directors as well as evaluating theoverall presentation of the Ind AS Financial Statements.
We believe that the audit evidence that we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the Ind AS Financial Statements.
Basts for Qualified Opinion
a) Section 164(2)(a) provides that a person who was a director of a company which hasfailed to file financial statements or annual returns for a continuous period of threefinancial years shall not be eligible to be re-appointed as a director of that company orappointed in any other company for a period of five years from the date on which the saidcompany fails to do so. Further Section 167(1 )(a) provides for vacation of office of thedirector as soon as he incurs any of the disqualifications specified under Section 164.
As a company in which two directors (including the Managing Director) of the Companywere directors as at the year-end had failed to file its annual returns and financialstatements with the Registrar of Companies ("ROC") for a continuous period ofthree financial years such two directors were disqualified to be appointed/re- appointedas a director. Due to such disqualification they should have vacated the office asrequired by Section 167(2) which they have failed to adhere.
Further for the Financial Year 2017-18 the said two directors (who are sodisqualified) were managing day-to-day affairs of the Company and were also authorisedsignatories to operate bank accounts and sign the required documents etc. for and onbehalf of the Company.
However we have been informed that the said defaulting company has subsequentlycompleted filings of annual returns with ROC.
We have also been informed that since the date of the Balance Sheet the said directorshave vacated the office and three new directors are appointed in the Board Meeting held onMay 23 2018.
b) Without prejudice to
(a) above -
Section 196(2) of Companies Act 2013 ("the Act") inter-alia provides thata company cannot appoint or re-appoint any person as its Managing Director Whole TimeDirector or Manager for a term exceeding five years at a time. Further Section 196(4) ofthe Companies Act 2013 provides that subject to the provisions of section 197 andSchedule V a Managing Director Whole-time Director or Manager is to be appointed and theterms and conditions of such appointment and remuneration payable be approved by the Boardof Directors at a meeting which shall be subject to approval by a resolution at the nextGeneral Meeting of the Company.
Though the term of appointment of the Managing Director of the Company expired in 2015the Company did not consider appointment/re-appointment of Managing Director as requiredby Section 196 of the Act till the date of the Annual General Meeting ("AGM")i.e. September 21 2017. However Managerial Remuneration amounting to Rs.3 lakhs for thequarter ended June 30 2017 and sum of Rs.2 lakhs was provided for the months of July andAugust 2017 for which the approval of shareholders was obtained only at the AGM held onSeptember 21 2017. Out of the said amount Rs.2.16 lakhs was paid till the date of AGM.Thus the remuneration to the extent paid/payable to the Managing Director was not incompliance with the provisions of the Act.
c) In terms of Section 185 of the Companies Act 2013 ("the Act") a companycannot advance any loan to its directors. During the half year ended September 30 2017.the Company advanced interest-free loan of Rs.6.57 Lakhs to its director which is not incompliance with the provisions of Section 185 as also Section 186(7) of the Act. Howeversubsequently the loan has been repaid and no amount is outstanding as on March 31 2018.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion paragraph the Financial Results of the Company:
a. are presented in accordance with the requirements of Regulation 33 of the SEBI(Listing Obligation and Disclosure Requirements Regulations 2015) as modified by SEBICircular No. CIR/CFD/FAC/62/2016 dated July 5 2016; and
b. give a true and fair view in conformity with the aforesaid Ind AS and otheraccounting principles generally accepted in India of the net loss total comprehensiveloss and other financial information of the Company for the year ended March 31 2018.
Section 149 (1) (a) of the Act requires a public company to have a minimum of threedirectors. As two of its directors are disqualified under Section 164 (2) the Companywould said to have not complied with the aforesaid statutory requirement. However in theBoard Meeting held on May 23 2018 the Company has complied with the aforesaidrequirement by appointing three new directors.
Our opinion is not qualified in respect of this matter.
The Comparative financial information of the Company for the year ended March 312017and the transition date opening Balance Sheet as at April 1 2016 included in theseInd AS Financial Statements are based on the previously issued financial statementsprepared in accordance with the Companies (Accounting Standards) Rules 2006 and otheraccounting principles generally accepted in India and audited by us (vide their modifiedaudit report on May 24 2017and unmodified audit report on May 30 2016 respectively) asadjusted for the differences in the accounting principles adopted by the Company ontransition to Ind AS which have been audited by us.
Our opinion above on the Ind AS Financial Statements and our report on Other Legal andRegulatory Requirements below is not modified in respect of the above matter.
Report on Other Legal and Regulatory Requirements
1. 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 hooks 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 Other ComprehensiveIncome) the Statement of Cash Flows and Statement of Changes in Equity dealt with by thisReport are in agreement with the books of account;
d. In our opinion the aforesaid Ind AS Financial Statements comply with the Ind ASspecified under Section 133 of the Act read with relevant rules issued thereunder;
e. According to the information and explanations given to us and on the basis of ourexamination of the records of the Company one of the companies in which two of thedirectors of the Company were directors failed to file its annual returns and financialstatements with the Registrar of Companies ("ROC") for a continuous period ofthree financial years and accordingly in our opinion the said two directors of theCompany were disqualified from being appointed as directors under Section 164(2). Furtheron the basis of written representations received from the remaining two directors as onMarch 31 2018 taken on record by the Board of Directors the remaining two directors arenot disqualified as on March 312018;
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";
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 has disclosed the impact if any of pending litigations on itsfinancial position in its financial statements of the Financial Statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses as required under the applicable law oraccounting standards;
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company during the year ended March 312018.
2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of Section 143(11) of the Act weenclosed in "Annexure B" a statement on the matters specified in the paragraphs3 and 4 of the Order.
ANNEXURE A TO THE INDEPENDENT AUDITORS' REPORT
Referred to in paragraph (l) under the heading of "Report on Other Legal andRegulatory Requirements" of our Independent Auditors' Report of even date to themembers on the Ind AS Financial Statements for the year ended March 31 2018.
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 interna!financial controls with reference to financial statements of CENTERAC TECHNOLOGIES LIMITED("the Company") as of March 31 2018 in conjunction with our audit of the IndAS 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 with reference to financial statementscriteria established by the Company considering the essential components of internalcontrol stated in the Guidance 'Note on Audit of Internal Financial Controls overFinancial Reporting (the "Guidance Note") issued by the Institute of CharteredAccountants of India ("ICAI"). These responsibilities include the designimplementation and maintenance of adequate Internal Financial Controls that were operatingeffectively for ensuring the orderly and efficient conduct of its business includingadherence to Company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under the Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing issued by ICAI anddeemed to be prescribed under Section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate Internal Financial Controls withreference to financial statements was 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 with reference to financials statements and theiroperating effectiveness. Our audit of Internal Financial Controls with reference tofinancial statements included obtaining an understanding of Internal Financial Controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgement including the assessment of the risks of material misstatement of the Ind ASFinancial 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 systemwith reference to financial statements.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial control with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control withreference to financial statements includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditure of the Company are being made only inaccordance with authorizations of Management and Directors of the Company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls with reference to financialstatements
Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial control with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
In our opinion the Company has in ail material respects an adequate internalfinancial controls system with reference to financial statements and such internalfinancial controls with reference to financial statements were operating effectively as atMarch 31 2018 based on the internal control with reference to financial statementscriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note.
ANNEXURE B TO THE INDEPENDENT AUDITORS' REPORT
Referred to in paragraph 2 under the heading of "Report on Other Legal andRegulatory Requirements" of our Independent Auditors' Report of even date on the IndAS Financial Statements for the year ended March 31 2018 Report on the Companies(Auditors' Report) Order 2016 issued in terms of Section 143(11) of the Companies Act2013("the Act") of CENTERAC TECHNOLOGIES LIMITED ("the Company")
i. a. The Company has maintained proper records showing full particulars includingquantitative details and situation of Property Plant and Equipment (PPE).
b. The PPE of the Company are physically verified by the management according to aphased programme designed to cover all the PPE twice during the year which in ouropinion is at reasonable intervals having regard to the size of the Company and thenature of its assets. As informed to us no material discrepancies were noticed on suchverification.
c. According to the information and explanations given to us and on the basis of ourexamination of the records of the Company for an immovable property as included in Note 3on Property plant and equipment and Others' to the financial statements though theagreement to purchase the same was entered into and was in the name of the Company (inerstwhile name of the Company) the said agreement has not yet been registered in the nameof the Company with the appropriate authority; the said immovable property was transferredon January 31 2018 as a result of which there is no balance as on the Balance Sheet Date.
ii. The Company did not carry out any manufacturing and trading activity and did nothold any inventory at any time during the year. Accordingly paragraph 3(ii) of the Orderis not applicable.
iii. The Company has not granted any loans secured or unsecured to companies firmslimited liabilities partnerships or other parties covered in the register maintained underSection 189 of the Act. Accordingly paragraph 3(iii) of the Order is not applicable.
iv. In our opinion and according to the information and explanations given to us theCompany has advanced loan to its Managing Director which is not in compliance with theprovisions of Section 1 85 of the Act. In respect of the said loan to the ManagingDirector the maximum amount outstanding during the year is Rs. 1427500 and the ' amountoutstanding as at March 31 2018 is NIL.
Further the Company has not complied with the provisions of Section 186 of the Act inrespect of a loan given though the Company is in compliance with Section 186 with respectto investments made. The details of non-compliance under Section 186 of the Act are asunder:
|Nature of non-compliance ||Name of Party ||Amount |
|Balance as at Balance Sheet Rs ||Remarks if any |
|Interest-free loan given and hence it is below the prescribed rate of interest under Section 186 (7) of the Act ||Mr.Sanjiv Khandelwal (Managing Director) ||1427500 ||NIL ||The loan is interest-free loan |
The Company has not granted any other loan or given guarantee or provided security inconnection with a loan to any person or other body corporate requiring compliance with theprovisions of Sections 1 85 and 186 of the Act.
v. In our opinion and according to the information and explanations given to us theCompany has not accepted any deposit from the public. Accordingly paragraph 3 (v) of theOrder to comment on whether the Company has complied with the directives issued by theReserve Bank of India and the provisions of Sections 73 to 76 or any other relevantprovisions of the Act and rules framed thereunder is not applicable
vi. As the Company is not engaged in manufacturing activities the question ofmaintaining cost records pursuant to the Companies (Cost Records and Audit) Rules 2014as specified by the Central Government under Section 148 (1) of the Act does not ariseand accordingly paragraph 3(vi) of the Order is not applicable.
vii. a. According to the information and explanations given to us and on the basis ofthebooks and records examined by us the Company has been regular in depositing undisputedstatutory dues including Provident Fund Income-tax Goods and Services Tax Service TaxDuty of Customs Duty of Excise Value Added Tax Cess and other statutory dues asapplicable to it with the appropriate authorities except in few cases there were delaysin payment of service tax excise duty customs duty and tax deduction at source.Flowever there are no arrears of outstanding statutory dues on the last day of thefinancial year for a period of more than six months from the date they become payable. Asinformed to us the provisions of the Employees' State Insurance Act are not applicable tothe Company.
b. According to the information and explanations given to us and on the basis of thebooks and records examined by us there arc no dues outstanding in respect of Income-taxSales-tax Service Tax Duty of Customs Duty of Excise Value Added Tax and Cess as onMarch 31 2018 as applicable to it which have not been deposited on account of anydispute.
viii. The Company does not have any loan or borrowing from any financial institutionbank government or dues to debenture holders. Accordingly paragraph 3(viii) of the Orderis not applicable.
ix. According to the information and explanations given to us and on the basis of thebooks and records examined by us the Company has not raised any money by way of initialpublic offer or further public offer (including debt instruments) during the year.Accordingly paragraph 3 (ix) of the Order in respect thereof is not applicable.
x. According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe year in the course of our audit.
xi. According to the information and explanations give to us and based on ourexamination of the records of the Company subject to the fact that appointment/reappointment of the Managing Director was not done after its earlier term expired andalso the remuneration of Rs. 5 lakhs was provided (and of which Rs. 2.16 lakhs was paid)during the year for which approval of the Shareholders was obtained only at the AnnualGeneral Meeting ("AGM") held on September 21 2017 the Company haspaid/provided for managerial remuneration in accordance with the limits prescribed underSection 197 read with the limits prescribed under Section 197 read with Schedule V to theAct.
xii. The Company is not a Nidhi company. Accordingly paragraph 3(xii) of the Order isnot applicable to the Company.
xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with Sections 177 and 188 of the Act where applicable and the details of suchtransactions have been disclosed in the Ind AS financial statements as required by theapplicable accounting standards.
xiv. According to the information and explanations given to us and on the basis of thebooks and records examined by us the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review. Accordingly reporting under paragraph 3(xiv) of the Order is notapplicable
xv. According to the information and explanations given to us and based on ourexamination of the records the Company has not entered into non-cash transactions withdirectors or persons connected with him. Accordingly paragraph 3(xv) of the Order is notapplicable.
xvl. The Company is not required to be registered under Section 45-1A of the ReserveBank of India Act 1934. Accordingly paragraph 3(xvi) of the Order is not applicable tothe Company.