To the Members of CHENNAI FERROUS INDUSTRIES LIMITED
Report on the audit of the Ind As financial statements
We have audited the accompanying Ind As financial statements of Chennai FerrousIndustries Limited ("the Company") which comprise the balance sheet as at March31 2019 and the Statement of Profit and Loss including statement of other comprehensiveof cash flows and the statement of changes in financial statements including a summary ofsignificant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Ind As financialstatements give the information required by theCompanies Act 2013 (Act') in the manner so required and give a true and fair viewin conformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at March 31 2019 its profit (or 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 in accordance with thestandardsonauditingspecifiedunder section143 (10) of the Companies Act 2013. Our responsibilities under those Standards arefurther described in the auditor's responsibilities for the audit of the financialstatements section of our report. We are independent of the Company in accordance with thecode of ethics 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 rules thereunder 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 opinion.
Key audit matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Ind As financial statements of the current period. Thesematters were addressed in the context of our audit of the Ind As financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.
Information other than the financial statements and auditors' report thereon
The Company's board of directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the Board'sReport including Annexures to Board's Report Business Responsibility Report but does notinclude the Ind As financial statements and our auditor's 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 audit of the Ind As financial statements our responsibility isto read the other information and in doing so consider whether the other information ismaterially inconsistent with the standalone financial statements or otherwise appears tobe materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
Management's responsibility for the financial statements
The Company's board of directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these Ind As financial statements thatgive a true and fair view of the financial position financial cash flows and changes inequity of the generally accepted in India including the Indian accounting standards(Ind-As) specified under section 133 of the Act read with the Companies (Indian AccountingStandard) Rules 2015 as amended. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the Ind As financial statement that give a true and fairview and are free from material misstatement whether due to fraud or error.
In preparing the Ind As financial statements management is responsible for assessingthe Company's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so. The board of directors are also responsible for overseeing theCompany's financial reporting process.
Auditor's 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 auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken onthebasisoftheseIndAsfinancial . statements
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism 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 Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness of such controls
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe Ind As financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the Ind As financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the Ind AS financialstatements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the Ind As financial statements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit. We alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards. From the matters communicated withthose charged with governance we determine those matters that were of most significancein the audit of the Ind As financial statements of the current period and are thereforethe key audit matters. We describe these matters in our auditor's report unless law orregulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.
Report on other legal and regulatory requirements
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 the Annexure "A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
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 ofcomprehensive income the cash flow statement and statement of changes in equity dealtwith by this report are in agreement with the books of account;
(d) In our opinion the aforesaid Ind AS financial statements comply with the Indianaccounting standards (Ind-As) specified under section 133 of the Act read with rule 7 ofthe Companies (Accounts) Rules 2014;
(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 internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure B". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting;
(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 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;
a The Company has disclosed the impact of pending litigations on its financial positionin its financial statements Refer Note to the financial statements;
b The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses; and
c There were no accounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company
Annexure "A" to the independent Auditor's Report*
(Referred to in paragraph 1 under Report on other legal and regulatoryrequirements' section of our report to the members of Chennai Ferrous Industries Limitedof even date)
|1. ||In respect of the Company's fixed assets: |
| ||(a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. assets in a phased |
| ||(b) The Company has a program of verification to cover all the items of fixed manner over a period of three years which in our opinion is reasonable having regard to the size of the Company and the nature of its assets. However no physical verification has been carried on by the management during the year. Accordingly we were unable to comment on whether any material discrepancies were noticed on such verification and whether they are properly dealt with in the financial statements. |
| ||(c) According to the information and explanations given to us the records examined by us and based on the examination of the conveyance deeds provided to us we report that the title deeds comprising all the immovable properties of land and buildings which are freehold are held in the name of the Company as at the balance sheet date. |
|2. ||The inventory has been physically verified by the management during the year. In our opinion the frequency of such verification is reasonable. According to the information and explanations given to us and as examined by us no material discrepancies were noticed on such verification. |
|3. ||According to information and explanation given to us the company has not granted any loan secured or unsecured to companies firms limited liability partnerships or other parties covered in the register required under section 189 of the Companies Act 2013. Accordingly paragraph 3 (iii) of the order is not applicable. |
|4. ||In our opinion and according to information and explanation given to us in respect of loans investments guarantees and security the Company has complied with the provisions of sections 185 and section 186 of the Companies Act 2013 except applicability of interest on the loans and advances given. The company has not charged any interest on the advances given under the proviso of Section 186. |
|5. ||In our opinion and according to the information and explanations given to us the company has not accepted any deposits and accordingly paragraph 3 (v) of the order is not applicable. |
|6. ||We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148 of the Act and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However we have not carried out a detailed examination of the same. |
|7. ||In respect of statutory dues: |
| ||(a) According to the information and explanations given to us and on the basis of our examination of the records of the Company amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including provident fund employees' state insurance income-tax sales- tax service tax goods and service tax duty of customs duty of excise value added tax cess and other material statutory dues have been generally regularly deposited during the year by the company with the appropriate authorities. |
| ||According to the information and explanations given to us no undisputed amounts payable in respect of provident fund employees' state insurance income-tax sales- tax service tax goods and service tax duty of customs duty of excise value added tax cess and other material statutory dues were in arrears as at March 31 2019 for a period of more than six months from the date they became payable |
| ||(b) According to the information and explanations given to us and the records of the company examined by us there are no dues of income-tax sales- tax service tax goods and service tax duty of customs duty of excise and value added tax which have not been deposited on account of any dispute except as per details below: |
|Statute ||Nature of dues ||Amount (Rs.in lakhs) ||Period to which the amount relates ||Forum where the dispute is pending |
|8 ||In our opinion and according to the information and explanations given to us the company has not defaulted in repayment of dues to any financial institutions or banks or any government. or any debenture holders during the year. The Company does not have any dues to debenture holders during the year. |
|9. ||The term loans taken during the year have been applied for the purposes for which those are raised. The Company has not raised any money by way of initial public offer or further public offer (including debt instruments). |
|10. ||To the best of our knowledge and according to the information and explanations given to us no fraud by the Company or no material fraud on the Company by its officers or employees has been noticed or reported during the year. |
|11. ||According to the information and explanations given by the management the managerial remuneration has been paid/provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V of the Companies Act 2013 |
|12. ||The Company is not a Nidhi Company and accordingly paragraph 3 (xii) of the order is not applicable to the Company. |
|13. ||According to the information and explanations given to us and based on our examination of the records of the company transactions with the related parties are in compliance with section 177 and 188 of the Act. Where applicable the details of such transactionshavebeendisclosed financialstatements as the required by the applicable accounting standards. |
|14 ||According to the information and explanations given to us and based on our examination of the records of the company the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly paragraph 3(xiv) of the order is not applicable. |
|15 ||According to the information and explanations given to us and based on our examination of the records of the company the company has not entered into non-cash transactions with directors or persons connected with them. Accordingly paragraph 3(xv) of the order is not applicable. |
|16 ||According to the information and explanations given to us and based on our examination of the records of the company the company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934. |
Annexure "B" to the independent Auditor's Report (Referred to inparagraph 2 (f) under Report on other legal and regulatory requirements' section ofour report to the Members of Chennai Ferrous Industries Limited of even date)
Report on the internal financial controls over financial reporting under clause (i) ofsub - section 3 of section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of ChennaiFerrous Industries Limited ("the Company") as at March 31 2019 in conjunctionwith our audit of the financial statements of the Company for the year ended on that date.
Management's responsibility for internal financial controls
The board of directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013
Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the standards on auditing prescribed under Section 143 (10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. Thosestandards and the guidance note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting were established and maintained and if suchcontrols operated 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 judgement including the assessment of the risks ofmaterial 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 control 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 overfinancialreporting includes those policies and procedures that (i) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (ii) 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 authorisations ofmanagement and directors of the company; and (iii) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
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 of 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 and according to the information and explanations given to us theCompany has in all material respects an adequate internal financial control system overfinancial reporting and such internal financial controls over financial reporting wereoperating effectively as at March 31 2019 based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India
|Place: Chennai ||FOR S.K GULECHA & ASSOCIATES |
|Date: May 28 2019 ||Chartered Accountants |
| ||FRN: 013340S |
| ||SANDEEP KUMAR GULECHA |
| ||Proprietor |
| ||Membership No. 226263 |