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Diamond Power Infrastructure Ltd.

BSE: 522163 Sector: Engineering
NSE: DIAPOWER ISIN Code: INE989C01012
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OPEN 2.30
PREVIOUS CLOSE 2.32
VOLUME 3238
52-Week high 32.40
52-Week low 2.17
P/E
Mkt Cap.(Rs cr) 60
Buy Price 0.00
Buy Qty 0.00
Sell Price 2.21
Sell Qty 10192.00
OPEN 2.30
CLOSE 2.32
VOLUME 3238
52-Week high 32.40
52-Week low 2.17
P/E
Mkt Cap.(Rs cr) 60
Buy Price 0.00
Buy Qty 0.00
Sell Price 2.21
Sell Qty 10192.00

Diamond Power Infrastructure Ltd. (DIAPOWER) - Auditors Report

Company auditors report

For the Year ended March 31st 2017.

To

The Members of

Diamond Power Infrastructure Limited

Vadodara

REPORT ON THE STANDALONE FINANCIAL STATEMENTS

We have audited the accompanying standalone audited Financial Statement of DiamondPower Infrastructure Limited (‘the Company') which comprise the Balance Sheet asat March 31 2017 the Statement of Profit and Loss (Including other comprehensiveincome) the Statement of Cash Flows and the Statement of Change in Equity for the yearended on that date and a summary of the significant accounting policies and otherexplanatory information (herein after referred to as "Standalone Ind AS financialstatements").

MANAGEMENT'S RESPONSIBILITY FOR THE STANDALONE IND AS FINANCIAL STATEMENTS

The Company's Board of Directors is responsible for the matters stated in sub-section 5of Section 134 of the Companies Act 2013 ("the Act") with respect to thepreparation of these standalone Ind AS financial statements that give a true and fair viewof the financial position financial performance including other comprehensive incomecash flows and changes in equity of the Company in accordance with the accountingprinciples generally accepted in India including the Indian Accounting Standards (Ind AS)prescribed under section 133 of the Act read with relevant rules issued there under.

This responsibility also 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; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalone IndAS financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

AUDITOR'S RESPONSIBILITY

Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit.

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 accordance with the Standards on Auditing specified undersub-section 10 of Section 143 of the Act. Those Standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the standalone Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlsrelevant to the Company's preparation of the standalone Ind AS financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the standalone Ind ASfinancial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone Ind AS financial statements.

BASIS FOR QUALIFIED OPINION

1) As stated in note 26 to the standalone financial statements the Company does nothave system of maintaining material wise details of sales purchase and consumption.Accordingly breakup of amount of major sales purchases and major raw materials consumedunder broad heads is not disclosed in the standalone financial statements as required bySchedule III of the Act. Further as stated in note 39 to the standalone financialstatement the company does not have system of maintaining listing of purchase order forcapital goods. Accordingly the details of capital commitment is not disclosed in thestandalone financial statements and the impact of which is not ascertainable at thisstage.

2) "the company" does not have a cost of each if the assets its significantcomponent and capital work in progress capitalized during the year and in earlier years.Further the company has adopted fair market value based on the Chartered Engineer reportsin line with requirements of Ind -AS and provided depreciation accordingly. As the companyhas provided the depreciation on the fair market value of the Block of assets it couldhave been different if the company would have provided it on the fair market value of eachindividual asset with its corresponding impact on value of reserves and surplus andProperty Plant and Equipment carried forward in the standalone financialstatements."

QUALIFIED OPINION

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 which is unascertainable at this stage the aforesaid standalone Ind ASfinancial statements give the information required by the Act in the manner so requiredand give a true and fair view in conformity with the accounting principles generallyaccepted in India of the state of affairs of the Company as at March 31 2017 and itsloss total comprehensive income its cash flows and the changes in equity for the yearended on that date.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by the Companies (Auditor's Report) Order 2016 (‘the Order')issued by the Central Government of India in exercise of powers conferred by sub-section11 of section 143 of the Act we enclose in "Annexure A" a statement on thematters specified in paragraphs 3 and 4 of the Order.

2. As required by sub-section 3 of Section 143 of the Act we report that:

a) except for the possible effects of the matter described in paragraph 1 and 2 ofBasis for Qualified Opinion we have sought and obtained all the information andexplanations which to the best of our knowledge and belief were necessary for the purposesof our audit;

b) except for the possible effects of the matter described in paragraph 1 and 2 ofBasis for Qualified Opinion In our opinion proper books of account as required by lawhave been kept by the Company so far as it appears from our examination of those books;

c) except for the possible effects of the matter described in paragraph 1 and 2 ofBasis for Qualified Opinion The Balance Sheet the Statement of Profit and Loss(including other comprehensive income) the Statement of Cash Flows and the Statement ofChanges in Equity dealt with by this Report are in agreement with the books of account;

d) In our opinion the aforesaid standalone Ind AS financial statements comply with theIndian Accounting Standards prescribed under Section 133 of the Act read with relevantrules issued thereunder;

e) the matter described in the Basis for Qualified Opinion paragraph above in ouropinion may have an adverse impact on the functioning of the Company;

f) On the basis of the written representations received from the Directors as on 31March 2017 and taken on record by the Board of Directors none of the Directors aredisqualified as on 31 March 2017 from being appointed as a Director in terms of subsection2 of Section 164 of the Act;

g) 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" and

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:

1. The Company has disclosed the impact of pending litigations on its financialposition in its standalone Ind AS financial statements Refer Note 35 to the standalone IndAS financial statements;

2. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts;

3. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company during the year ended 31 March 2017.

4. The Company has provided requisite disclosures in the standalone Ind AS financialstatements as to holdings as well as dealings in Specified Bank Notes during the periodfrom 8 November 2016 to 30 December 2016. Based on audit procedures and relying on themanagement representation we report that the disclosures are in accordance with books ofaccount maintained by the Company and as produced to us by the Management Refer Note 41 tothe standalone Ind AS financial statements.

3. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

For :A Yadav & Associates

Chartered Accountants

Firm's Registration No: 129725W

CA Arvind Yadav

Partner

Membership No: 047422

Vadodara

20th April 2017

"Annexure A" to the Independent Auditor's Report 31 March 2017 on StandaloneInd AS Financial Statements

(Referred to our report of even date)

i) (a) The Company is in the process of updating the fixed assets register showing fullparticulars of its fixed assets.

(b) As explained to us the Company has a regular programme of physical verification ofits fixed assets by which all fixed assets are verified annually in a phased manner. Inaccordance with this programme land building and significant plant and machinery hasbeen physically verified by the management along with an independent valuer during theyear and no material discrepancies have been noticed on such verification. In our opinionthis periodicity of physical verification is reasonable having regard to the size of theCompany and the nature of its assets. The discrepancy between the physical verificationand book record if any would be dealt with on updation of fixed assets register.

(c) As informed to us the title deeds of all lands owned by the company are depositedwith debentures trustee. We have received confirmations from the debenture trusteeconfirming of holding of title deeds. With respect to building we have verified the samewith the property tax payment challans. The company would reconcile the title deeds of allimmovable properties which are lying with debenture trustee with the fixed asset register.

ii) The inventory except goods-in-transit has been physically verified by themanagement at reasonable intervals during the year. In our opinion the frequency of suchverification is reasonable. In respect of inventory lying with third parties at some ofthe location the management has performed joint physical verification with such thirdparties as at the year end and these have substantially been confirmed by them. Thediscrepancies noticed on verification between the physical stocks and the book recordswere not material and the same have been properly dealt with in books of account.

iii) The company has granted unsecured interest free loans and advances to associatecompanies covered in the register maintained under section 189 of the Act.

(a) In our opinion the terms and conditions of such loans considering the purpose forwhich it was given except not recovering the interest till the transaction fructifies isnot prejudicial to the interest of the company.

(b) The terms and conditions of these loans are without any stipulation for repaymentas such loans are given for specific purpose.

(c) According to the information and explanation given to us the company has notdemanded any amount for repayment of principal or interest for loans granted. Hence thereare no overdue amounts.

iv) In our opinion and according to the information and explanation given to us thecompany has not granted any loan made any investment or provided any guarantees orsecurity to the parties covered under section 185 and 186 of the Act. Accordinglyparagraph 3(iv) of the Order is not applicable to the Company.

v) In our opinion and according to the information and explanation given to us thecompany has not accepted deposits as per the directives issued by the Reserve Bank ofIndia and provisions of Section 73 to 76 or any other relevant provisions of the Act andrules framed thereunder. Accordingly paragraph 3(v) of the Order is not applicable to theCompany.

vi) We have broadly reviewed the records maintained by the Company pursuant to therules prescribed by Central Government for maintenance of cost records under sub section 1of Section 148 of the Act and are of the opinion that prima facie the prescribed accountsand records have been made and maintained. However we have not made a detailedexamination of the records.

vii) (a) According to the information and explanation given to us and on the basis ofour examination of the records of the Company amounts deducted/accrued in the books ofaccount in respect of undisputed statutory dues including Provident Fund Employee's'State Insurance Income-tax Sales-tax Service-tax duty of customs duty of excisevalue added tax cess and other material statutory dues have been generally regularlydeposited during the year with the appropriate authorities though there have been fewdelays in case of tax deducted at source professional tax employee state insurancecorporation provident fund.

According to the information and explanation given to us no undisputed amounts payablein respect of Provident fund Employees' State Insurance Income-tax Sales-taxService-tax duty of customs duty of excise value added tax cess and other materialstatutory dues were in arrears as at 31 March 2017 for a period of more than six monthsfrom the date they became payable.

(b) According to the information and explanations given to us there are no dues ofincome tax sales tax value added tax service tax duty of customs duty of excise as at31 March 2017 which have not been deposited with the appropriate authorities on accountof any dispute except as stated below:

(Rs. In Lakh)

Name of Statute Nature of Dues Amount Demanded Amount unpaid Period to which amount relates Forum where dispute is pending
Central Excise Act 1944 Excise Duty 10.08 10.08 2015-16 Commissioner of Excise and Customs
Central Excise Act 1944 Excise Duty 12.82 11.41 2014-15 Custom Excise & Service Tax Appellate Tribunal
Finance Act 1994 Service Tax 8.80 8.14 2014-15 Commissioner of Excise and Customs
Central Excise Act 1944 Excise Duty 86.25 78.82 2013-14 Custom Excise & Service Tax Appellate Tribunal
Finance Act 1994 Service Tax 8.33 8.33 2012-13 Commissioner of Excise and Customs
Central Excise Act 1944 Excise Duty 11.21 11.21 2012-13 Custom Excise & Service Tax Appellate Tribunal
Central Excise Act 1944 Excise Duty 39.29 21.88 2011-12 Custom Excise & Service Tax Appellate Tribunal
Finance Act 1994 Service Tax 45.04 45.04 2008-09 Custom Excise & Service Tax Appellate Tribunal
Central Excise Act 1944 Excise Duty 11.85 0 2008-09 Custom Excise & Service Tax Appellate Tribunal

viii) In our opinion and according to the information and explanation given to uspursuant to approval of restructuring with respective banks as per master re-structuringagreement the Company has not defaulted in repayment of dues of any banks or financialinstitutions or its debenture holders. The company does not have any loans or borrowingsfrom government.

ix) According to the information and explanations given to us and based on ourexamination of the records of the company the Company has not raised any moneys by way ofinitial public offer or further public offer (including debt instruments) during the year.As the Company has not provided the information correlating the funds raised to the enduse of term loan we are unable to comment whether the money raised through term loanshave been applied for the purpose for which they were raised.

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 course of our audit.

xi) According to the information and explanations given to us and based on ourexamination of the records the Company has paid/provided for managerial remuneration inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Act.

xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable. xiii) In our opinion and according to the information and explanations givento us the Company has entered into transactions with related parties and the details ofsuch related party transactions have been disclosed in the standalone Ind AS financialstatement as required by applicable accounting standards. However in absence of adequatedocumentations we are unable to comment whether transactions with related parties are incompliance with the provisions of section 177 and 188 of the Act where applicable.

xiv) According to the information and explanations given to us and based on ourexamination of the records the Company has Converted Warrants into Equity Shares toPromoter and Promoters Group and also made allotment on preferential Basis to the Lendersunder SDR Scheme approved by the lender as on 29th June 2016.

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 to the Company.

xvi) In our opinion and according to the information and explanations given to us theCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934. Accordingly the provisions of Clause 3(xvi) of the Order are not applicable tothe Company.

For : A Yadav & Associates

Chartered Accountants

Firm's Registration No: 129725W

CA Arvind Yadav

Partner

Membership No: 047422

Vadodara

20th April 2017

"Annexure B" to the Independent Auditor's Report 31st March 2017on Standalone Ind AS Financial Statements

(Referred to our report of even date)

REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER CLAUSE (i) OF SUB-SECTION 3 OF SECTION143 OF THE ACT

We have audited the internal financial controls over financial reporting of the Companyas of 31st March 2017 in conjunction with our audit of the standalone Ind ASfinancial 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 controls over financial reporting criteriaestablished by the Company considering the essential components of internal controlsstated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India ("ICAI").

These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013 ("theAct").

AUDITOR'S RESPONSIBILITY

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 and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.

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 controls based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the standalone Ind AS financial statements whether dueto 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 controls 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 controls 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 authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlsover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

QUALIFIED OPINION

According to the information and explanation given to us and based on our audit thefollowing material weaknesses have been identified as at 31 March 2017:

a.) The Company has not updated fixed asset register giving breakup of cost of eachclass of assets and its component and Capital Work in Progress so as to enablereconciliation of physical verification with financial records and ascertainment ofdepreciation/impairment. This may have an effect on incorrect reporting of profit/lossnet fixed assets including Capital Work in Progress and the reserves at the end of theyear.

b.) The Company needs to maintain records of movement of inventories at third partysite to ensure control over the same. This may have an effect of incorrect reporting tobanks and internal MIS to the management.

c.) The Company needs to strengthen its documentation over purchase and sales of boughtout components to ensure adequate internal checks and correct accounting of thetransaction.

d.) The Company needs to maintain material wise details of sales purchase andconsumption. Further the Company needs to maintain listing of purchase order for capitalgoods to determine capital commitment. This will ensure compliance with the disclosurerequirement of the Act.

A material weaknesses is a deficiency or a combination of deficiencies in internalfinancial control over financial reporting such that there is a reasonable possibilitythat a material misstatement of the company's annual or interim financial statement willnot be prevented or detected on a timely basis.

In our opinion except for the possible effects of the material weaknesses describedabove the Company has maintained in all material respects adequate internal financialcontrols over financial reporting and such internal financial controls over financialreporting were operating effectively as of 31 March 2017 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. We have considered the material weaknesses identified and reported above indetermining the nature timing and extent of audit tests applied in our report of the 31March 2017 financial statements of the Company and these material weaknesses except tothe extent as reported in our opinion of even date not affect our opinion on the financialstatements of the Company.

For :A Yadav & Associates

Chartered Accountants

Firm's Registration No: 129725W

CA Arvind Yadav

Partner

Membership No: 047422

Vadodara

April 20th 2017