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Euro Ceramics Ltd.

BSE: 532823 Sector: Consumer
NSE: EUROCERA ISIN Code: INE649H01011
BSE 00:00 | 22 Jan Euro Ceramics Ltd
NSE 11:39 | 25 Feb 0.45 0
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OPEN 0.61
PREVIOUS CLOSE 0.65
VOLUME 2005
52-Week high 2.10
52-Week low 0.59
P/E
Mkt Cap.(Rs cr) 2
Buy Price 0.65
Buy Qty 1041.00
Sell Price 0.64
Sell Qty 1202.00
OPEN 0.61
CLOSE 0.65
VOLUME 2005
52-Week high 2.10
52-Week low 0.59
P/E
Mkt Cap.(Rs cr) 2
Buy Price 0.65
Buy Qty 1041.00
Sell Price 0.64
Sell Qty 1202.00

Euro Ceramics Ltd. (EUROCERA) - Auditors Report

Company auditors report

TO THE MEMBERS OF EURO CERAMICS LIMITED

Report on the Standalone Indian Accounting Standards (Ind AS) Financial Statements

1. We have audited the accompanying standalone Ind AS financial statements of EuroCeramics Limited ("the Company") which comprise the Balance Sheet as atMarch 31 2018 the Statement of Profit and Loss (including Other Comprehensive Income)the Statement of Cash Flows and the Statement of Changes in Equity for the year then endedand a summary of the significant accounting policies and other explanatory information(herein after referred to as "Standalone Ind AS Financial Statements").

Management's Responsibility for the Standalone Ind AS Financial Statements

2. 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 standalone Ind AS financial statements to give a true and fair view of the financialposition financial performance including other comprehensive income cash flows andchanges in equity of the Company in accordance with the accounting principles generallyaccepted in India including the Indian Accounting Standards ("Ind AS")specified in the Companies (Indian Accounting Standards) Rules 2015 (as amended) underSection 133 of the Act.

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 design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone Ind AS financial statements that give a true and fair view and are freefrom material misstatement whether due to fraud or error.

Auditors' Responsibility

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

4. We have taken into account the provisions of the Act and the Rules made thereunderincluding the accounting and auditing standards and matters which are required to beincluded in the audit report under the provisions of the Act and the Rules madethereunder.

5. We conducted our audit of the standalone Ind AS financial statements in accordancewith the Standards on Auditing specified under Section 143(10) of the Act and otherapplicable authoritative pronouncements issued by the Institute of Chartered Accountantsof India. Those Standards and pronouncements require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe standalone Ind AS financial statements are free from material misstatement.

6. An audit involves performing procedures to obtain audit evidence about the amountsand the disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditors' 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 controlrelevant 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.

7. 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 of Qualified Opinion

Our audit opinion is qualified for the following matters:

(a) The Company's current liabilities exceeds its current assets and net worth of theCompany has been fully eroded these events indicate a material uncertainty that casts asignificant doubt on the Company's ability to continue as a going concern and therefore itmay be unable to realize its assets and discharge its liabilities in the normal course ofbusiness. The financial results do not disclose the fact that the fundamental accountingassumption of going concern has not been followed.

(b) We draw attention towards the fact that the Company's financialfacilities/arrangements including Term Loans Working Capital Facilities and Non FundBased Credit Facilities have expired and the accounts with the Banks have turned into NonPerforming Assets.

Some of the bank lenders have initiated legal proceedings against the Company forrecovery of their respective debts at the Debt Recovery Tribunal and have taken symbolicpossession of the securities u/s. 13(4) of the SARFAESI Act 2002. However the Company hasbeen able to renegotiate with the secured lenders and arrive at an amicable settlement ofits debts. The Company has made the settlement of its total debt outstanding with thesecured lenders. Accordingly some of the lenders have been settled completely on one timesettlement basis and others have agreed for deferred payment along with some upfrontpayment based on their respective terms of settlement. In view of the above settlementthe Company has not provided the interest on the outstanding dues payable as per thesettlement terms on the outstanding agreed amount of settlement amounting to Rs. 1119Lakhs for the year ended March 31 2018 and the interest amount not provided cumulativelyfrom the date of settlement upto March 31 2018 was ` 2172 Lakhs. Had the samebeen accounted for the net loss (after tax) would have decreased and current liabilitiesfor the year ended March 31 2018 would have increased by that amount. In addition tothis the Company has been continuously incurring substantial losses since past few yearsand as on March 31 2018 the Company's current liabilities exceed its current assets by `25082.40 Lakhs. Further the net-worth of the Company has fully eroded and the Companyhad also filed registration u/s. 15(1) of the erstwhile Sick Industrial Companies (SpecialProvisions) Act 1985 before the erstwhile Hon'ble Board for Industrial & FinancialReconstruction.

(c) We draw attention towards the fact that the Company has not provided for impairmentor diminishing value of its assets/investment as per 'Ind AS 36 Impairment of Assets' asnotified under Section 133 of the Companies Act 2013. The effect of such Impairment ordiminishing value has not been quantified by the management and hence the same is notascertainable.

(d) We draw attention to the fact that financial statements are subject to receipt ofconfirmation of balances from many of the debtors loans & advances investmentsbanks sundry creditors and other liabilities. Pending receipt of confirmation of thesebalances and consequential reconciliations / adjustments if any the resultant impact onthe financial statements is not ascertainable.

(e) We draw attention to Note No. 34(d) of the Standalone Ind AS financial statementwhich states that the Company had imported various Capital Goods and Spares andConsumables for the Capital Goods under the Export Promotion Capital Goods Scheme (EPCG)of the Government of India through various licenses at concessional rates of Custom Dutyon an undertaking to fulfil quantified exports within a period of eight years from thedate of respective licenses.

The Custom Duties so saved amounted to Rs. 307645374/- and the corresponding Exportobligation to be fulfilled amounted to ` 2461162991/- however as on March 312018 the Export obligation yet to be fulfilled amounted to Rs. 1691904058/-. Thestipulated period of 8 years to fulfill Export obligation has already expired and thecompany is required to pay the said saved Custom Duty together with interest @ 15% p.a.but the same has not been provided in books of accounts by the Company and the finalliability is presently unascertainable.

(f) We draw attention to the fact that as required under Section 203 of the Act theCompany is yet to appoint a Company Secretary and the Company is not in compliance withRegulation 6 of LODR which requires Company Secretary to be appointed as ComplianceOfficer.

(g) We draw attention towards the fact that in respect of deposits accepted by theCompany before the commencement of this Act within the meaning of section 74 & 75 ofthe Act and the Rules framed there under the principal amount of such deposits andinterest due thereon remained unpaid even after expiry of one year from such commencementand the Company has not filed a statement within a period of three months from suchcommencement or from the date on which such payments are due with the Registrar detailsas prescribed u/s.74(1)(a).

(h) We draw attention towards overdue receivables aggregating to Rs. 170 Lakhs as onMarch 31 2018 towards purchase of goods included under "Trade Receivables"owed to the Company by its Foreign Customers due for more than 6 months as on March 312018. These balances have not been settled till March 31 2018. The Company is yet to makean application to the authorized dealer or Reserve Bank of India (RBI) for overduereceivable balances beyond the prescribed time limits in accordance with Foreign ExchangeManagement Act (FEMA). Any penalties that may be levied by RBI are presently not known andnot given effect to in the IND AS financial statements.

(i) The Company has interest free borrowings classified under Non-Current FinancialLiabilities and Current Financial Liabilities which are borrowed from various relatedparties and other lenders the repayment terms of which have not been agreed between theCompany and the lenders. The Company has considered the amount borrowed to be the fairvalue and disclosed the same in the financial statements. However in the absence of anyrepayment terms and interest rate the amount disclosed may not be the fair value inaccordance with the provisions of 'Ind AS 109 Financial Instrument' and 'Ind AS 113 FairValue Measurement'. The effect of such treatment has not been quantified by the managementand hence the same is not ascertainable.

(j) We draw attention to the facts that the non-ascertainment of complete particularsof dues to Micro Small and Medium enterprises if any under MSMED Act 2006 andprovisions towards interest if any is not ascertained at this stage which is not inconformity with 'Ind AS 37-Provision Contingent Liabilities and Contingent Assets'.

(k) We draw attention to Note No. 52 of the Standalone Ind AS financial statement whichstates that the Company's non-current investments as at March 31 2018 includeinvestments aggregating Rs. 143 Lakhs in two of its subsidiaries (of which Rs. 142.50Lakhs has been provided); and loans as at that date include dues from such subsidiariesaggregating ` 7608.46 Lakhs (of which Rs. 3410 Lakhs has been provided) netamount being considered good and recoverable by the management considering the factorsstated in the aforesaid note. Also attention is drawn toward Note 34(b) which statesthat the Company has given guarantee for loans taken by Subsidiary Company from bank andthe terms and conditions of the same are not prejudicial to the interest of the Companyas per the management. However these subsidiaries either have accumulated losses andtheir consolidated net worth is fully eroded or have no transactions. Further thesesubsidiaries are facing liquidity constraints due to which they may not be able to realizeprojections made as per their respective business plans. In the absence of sufficientappropriate evidence we are unable to comment upon the carrying value of thesenon-current investments and recoverability of the aforesaid dues and the consequentialimpact if any on the accompanying standalone financial statements.

Opinion

8. In our opinion and to the best of our information and according to the explanationsgiven to us except for the matters illustrated and described in the Basis ofQualified Opinion the aforesaid standalone Ind AS financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India including the IndAS of the state of affairs of the Company as at March 31 2018 and its totalcomprehensive income (comprising of loss and other comprehensive income) its cash flowsand the changes in equity for the year ended on that date.

Other Matter

9. The comparative financial information of the Company for the year ended March 312017 and the transition date opening balance sheet as at April 1 2016 included in thesestandalone Ind AS financial statements are based on the previously issued statutoryfinancial statements for the years ended March 31 2017 and March 31 2016 prepared inaccordance with the Companies (Accounting Standards) Rules 2006 (as amended) which wereaudited by the predecessor auditor who expressed a modified opinion vide reports dated May30 2017 and May 30 2016 respectively. The adjustments to those financial statements forthe differences in accounting principles adopted by the Company on transition to the IndAS have been audited by us.

Report on Other Legal and Regulatory Requirements

10. As required by the Companies (Auditor's Report) Order 2016 issued by the CentralGovernment of India in terms of sub-section (11) of Section 143 of the Act ("theOrder") and on the basis of such checks of the books and records of the Company aswe considered appropriate and according to the information and explanations given to uswe give in the "Annexure A" a statement on the matters specified in paragraphs 3and 4 of the Order.

11. As required by Section 143 (3) of the Act we report that:

(a) We have sought and except for the possible effect of the matter described in theBasis of Qualified Opinion paragraph above 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 effect of the matter described in the Basis of QualifiedOpinion paragraph above in our opinion proper books of account as required by law havebeen kept by the Company so far as 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 the Statement of Changes in Equity dealt with bythis Report are in agreement with the books of account;

(d) Except for the possible effect of the matter described in the Basis of QualifiedOpinion paragraph above in our opinion the aforesaid standalone Ind AS financialstatements comply with the Indian Accounting Standards specified under section 133 of theAct read with Rules issued thereunder;

(e) The matters described in the 'Basis of Qualified Opinion' paragraph above in ouropinion may have an adverse effect on the functioning of the Company;

(f) On the basis of the written representations received from the directors as on March31 2018 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2018 from being appointed as a director in terms of Section 164 (2) of theAct;

(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 Auditors' Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our knowledge and belief and according to the information andexplanations given to us:

i. The Company has disclosed the impact of pending litigations as at March 31 2018 onits financial position in its standalone Ind AS financial statements Refer Note 34;

ii. The Company did not have any long-term contracts including derivative contracts asat March 31 2018; and

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company during the year ended March 312018; and

iv. The disclosure requirements relating to holdings as well as dealings in specifiedbank notes were applicable for the period from November 8 2016 to December 30 2016 whichis not relevant to these standalone financial statements. Hence reporting under thisclause is not applicable.

For Rasesh Shah & Associates
Chartered Accountants
Firm Registration Number: 108671W
CA Mehul Shah
Partner
Membership Number: 137148
Place : Mumbai
Date : May 29 2018

"Annexure A" to the Independent Auditors' Report

The Annexure 'A' referred to in our Independent Auditors' Report to the members of theCompany on the standalone Ind AS financial statements of Euro Ceramics Limited forthe year ended March 31 2018 we report that:

I. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of its fixed assets.

(b) The property plant and equipment covering significant value were physicallyverified during the year by the management at such intervals which in our opinionprovides for the physical verification of all the property plant and equipment atreasonable intervals having regard to the size of the Company and nature of its business.According to the information and explanations given to us no material discrepancies werenoticed on such verification;

(c) According to the information and explanations given to us the title deeds ofimmovable properties as disclosed in Note 3 to the standalone Ind AS financialstatements are held in the name of the Company except for the following:

Sr. No. Particulars Gross Block as at March 31 2018 Net Block as at March 31 2018 Remark
(Amount in Rs.) (Amount in Rs.)
(1) 2.17 Acres 0.95 Lakhs 0.95 Lakhs Registration with Government Authorities pending
(2) 48.24 Acres 34.89 Lakhs 34.89 Lakhs Yet to be converted into Non- Agricultural from Agricultural purpose or there are discrepancies in respect of measurement as compared to Government Records

ii. In our opinion the management has conducted physical verification of inventory atreasonable intervals during the year and no material discrepancies between physicalinventory and book records were noticed on physical verification.

iii. According to the information and explanation given to us the Company has grantedunsecured loans to party covered in the register maintained under Section 189 of theCompanies Act.

(a) In our opinion and according to the information and explanations given to us theterms and conditions of the grant of such loan have not been specifically defined andhence we are unable to comment as to whether the same are prejudicial to the interest ofthe Company or not.

(b) In our opinion and according to the information and explanations given to us thereare no stipulations made regarding repayment of principal amount and interest in respectof loans granted by the Company to parties covered in the register maintained underSection 189 of the Companies Act 2013. Hence we are unable to comment as to regularity ofrepayments of principal and interest amount. In absence of specific stipulations forrepayment of principal and interest we are unable to comment on the overdue amounts inrespect thereof and steps taken for their recovery.

iv. In our opinion and according to the information and explanations given to us theCompany has generally complied with the provisions of Section 185 and 186 of CompaniesAct 2013 with respect to the loans investments guarantees and security.

v. In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits during the year from the public within the meaningof Section 73 & Section 76 of the Companies Act 2013 and the Rules framed there underto the extent notified. Further in respect of deposits accepted by the company before thecommencement of this Act within the meaning of Section 74 & Section 75 of theCompanies Act 2013 and the Rules framed there under to the extent notified the principalamount of such deposits and interest due thereon remained unpaid even till date. TheCompany had filed an application within the meaning of Section 74(2) with the NationalCompany Law Tribunal requesting to allow further time for compliance however the NationalCompany Law Tribunal has dismissed the extension request.

vi. The Central Government has not specified maintenance of cost records undersub-Section (1) of Section 148 of the Act in respect of Company's products. Accordinglythe provisions of clause 3(vi) of the Order are not applicable.

vii. (a) According to the information and explanation given to us and the records ofthe Company examined by us in our opinion the Company has been facing liquidity stresssince past few years due to which there were delays in depositing various undisputedstatutory dues with appropriate authorities including provident fund employee's stateinsurance income tax sales tax service tax duty of customs duty of excise valueadded tax cess and other material statutory dues as applicable and there are no arrearsof outstanding statutory dues as at the year-end for a period of more than six months fromthe date they became payable.

(b) According to the information and explanation given to us and the records of theCompany examined by us there are no dues of income tax sales tax service tax duty ofexcise value added tax as at March 31 2018 which have not been deposited on account ofany dispute. However there are dues of duty of customs which have not been deposited onaccount of a dispute which are as under:

Name of the Statute Nature of Dues Amount Period to which the amount relates Forum where the dispute is pending
Customs Act 1962 Custom Duty 1185.11 F.Y. 2005- 2013 High Court of Mumbai
Customs Act 1962 Custom Duty 1782.77 F.Y. 2006- 2014 High Court of Mumbai
Customs Act 1962 Custom Duty 28.65 CESTAT Ahmedabad
Central Excise Act 1961 Excise Duty 171.88 High Court of Gujarat
The Gujarat Value Added Tax Act 2003 Sales Tax / VAT 13.96 F.Y. 2012- 2013 Joint Commissioner Of Sales Tax (Appeal)( Rajkot)
The Gujarat Value Added Tax Act 2003 Sales Tax / VAT F.Y. 2013- 2014 Joint Commissioner Of Sales Tax (Appeal)( Rajkot)

(c) There were no amounts required to be transferred to the Investor Education andProtection Fund by the Company during the year ended March 31 2018.

viii. In our opinion and according to the information and explanations given to us theCompany had defaulted in repayment of loans and interests dues to the banks. Some of thebank lenders have initiated legal proceedings against the Company for recovery of theirrespective debts at the Debt Recovery Tribunal and have taken symbolic possession of thesecurities u/s. 13(4) of the SARFAESI Act 2002. However the Company has been able torenegotiate with the secured lenders and arrive at an amicable settlement of its debts.The Company has made the settlement of its total debt outstanding with the securedlenders. Accordingly some of the lenders have been settled completely on one timesettlement basis and others have agreed for deferred payment along with some up-frontpayment based on their respective terms of settlement. In view of the above settlementthe Company has not provided the interest on the outstanding dues payable as per thesettlement terms on the outstanding agreed amount of settlement amounting to Rs. 1119Lakhs for the year ended March 31 2018 as given under:

Name of the Bank Principal Outstanding as on the date of turning NPA Agreed Settlement Amount Amount Paid upto March 31 2018 as per settlement terms Interest Outstanding as per agreed terms of settlement as on March 31 2018
(In ` Lakhs) (In ` Lakhs) (In ` Lakhs) (In ` Lakhs)
State Bank of India 25598.96 14500.00 6405.10 1557.95
The Cosmos Co-Op Bank Ltd 5805.03 4000.00 1482.00 613.25
Total 31403.99 18500.00 7887.10 2171.20

ix. In our opinion the Company has applied the term loans for the purposes for whichthese were raised. The Company did not raised money by way of initial public offer/further public offer (including debt instruments) during the year.

x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.

xi. The Company has paid/provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct.

xii. In our opinion the Company is not a Nidhi Company. Accordingly provisions ofclause 3(xii) of the Order are not applicable.

xiii. In our opinion and according to the information and explanations given to us theCompany is incompliance with Section 177 and 188 of the Act where applicable for alltransactions with the related parties and the details of related party transactions havebeen disclosed in the standalone financial statements as required by the applicable IndAS.

xiv. The company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review. Accordingly theprovisions of clause 3 (xiv) of the Order are not applicable to the Company.

xv. In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsDirectors or persons connected to its Directors and hence provisions of Section 192 of theAct are not applicable.

xvi. The company is not required to be registered under Section 45 IA of the ReserveBank of India Act 1934 and hence reporting under clause 3 (xvi) of the Order are notapplicable to the Company.

For Rasesh Shah & Associates
Chartered Accountants
Firm Registration Number: 108671W
CA Mehul Shah
Partner
Membership Number: 137148
Place : Mumbai
Date : May 29 2018

"Annexure B" to the Independent Auditor's Report

Referred to in paragraph 11 (g) of the Independent Auditor's Report of even date to theMembers of Euro Ceramics Limited on standalone financial statement for the year endedMarch 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 internal financial controls over financial reporting of EuroCeramics Limited ("the Company") as of March 31 2018 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.

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 Reporting("the Guidance Note') issued by the Institute of Chartered Accountants of India("ICAI"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013("the Act").

Auditors' 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 Companies Act 2013 to the extent applicable toan audit of internal financial controls both applicable to an audit of Internal FinancialControls and both issued by the Institute of Chartered Accountants of India. 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 was 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 judgment including the assessment of 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 authorisations ofmanagement and directors of the company; and (3) 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.

Inherent Limitations of Internal Financial Controls over Financial Reporting

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

Basis of Qualified Opinion

In our opinion according to the information and explanations given to us and based onour audit procedure performed the following material weakness has been identified in theoperating effectiveness of the Company's internal financial controls over financialreporting as at March 31 2018:

The Company's internal financial controls in respect of supervisory and review controlsover process of determining of (a) carrying value of the Company's non-current investmentsin its subsidiaries; and (b) recoverability of loans due from such subsidiaries were notoperating effectively. Absence of aforesaid assessment in accordance with the accountingprinciples generally accepted in India could potentially result in a material misstatementin the carrying value of investments in such subsidiaries and the aforesaid dues from suchsubsidiaries and consequently could also impact the profit (financial performanceincluding other comprehensive income) after tax.

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

Opinion

In our opinion except for the possible effects of the material weakness describedabove in the Basis for Qualified Opinion paragraph the Company has in all materialrespects an adequate internal financial controls system over financial reporting and suchinternal financial controls over financial reporting were operating effectively as atMarch 31 2018 based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note issued by the ICAI.

We have considered the material weakness identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the standalonefinancial statements of the Company as at and for the year ended March 31 2018 and thematerial weakness has affected our opinion on the standalone financial statements of theCompany and we have issued a qualified opinion on the standalone financial statements.

For Rasesh Shah & Associates
Chartered Accountants
Firm Registration Number: 108671W
CA Mehul Shah
Partner
Membership Number: 137148
Place : Mumbai
Date : May 29 2018