Everest Kanto Cylinder Ltd.
|BSE: 532684||Sector: Industrials|
|NSE: EKC||ISIN Code: INE184H01027|
|BSE 00:00 | 26 Nov||160.45||
|NSE 00:00 | 26 Nov||160.45||
|Mkt Cap.(Rs cr)||1,800|
|Mkt Cap.(Rs cr)||1800.25|
Everest Kanto Cylinder Ltd. (EKC) - Auditors Report
Company auditors report
To the Members of
Everest Kanto Cylinder Limited
Report on the Audit of the Standalone Financial Statements
1. We have audited the accompanying standalone financial statements of EverestKanto Cylinder Limited (the Company') which comprise the Balance Sheet asat 31 March 2020 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 thenended and a summary of the significant accounting policies and other explanatoryinformation in which is included the return for the year ended on that date audited bythe branch auditor of the Company's branch located at United Arab Emirates.
2. In our opinion and to the best of our information and according tothe explanations given to us and based on the consideration of the report of the branchauditor as referred to in paragraph 16 below the aforesaid standalone financialstatements give the information required by the Companies Act 2013 (the Act')in the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India including Indian Accounting Standards (IndAS') specified under Section 133 of the Act of the state of affairs of the Companyas at 31 March 2020 and its profit (including other comprehensive income) its cash flowsand the changes in equity for the year ended on that date.
Basis for Opinion
3. We conducted our audit in accordance with the Standards on Auditingspecified under Section 143(10) of the Act. 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(ICAI') together with the ethical requirements that are relevant to our auditof the financial statements under the provisions of the Act and the rules thereunder andwe have fulfilled our other ethical responsibilities in accordance with these requirementsand the Code of Ethics. We believe that the audit evidence we have obtained and thatobtained by the branch auditor in terms of their report referred to in paragraph 16 ofthe Other Matter section below is sufficient and appropriate to provide a basis for ouropinion.
Emphasis of Matter
4. We draw attention to Note 52 to the accompanying standalonefinancial statements regarding delays in payment of foreign currency trade payablesagainst the supply of goods delay in repayment of foreign currency advance received fromcustomer against the supply of goods receipt in foreign currency trade receivables andinterest receivable on foreign currency loans aggregating Rs. 8942.27 lakhs Rs. 1355.41lakhs Rs. 42.28 lakhs and Rs. 2297.23 lakhs respectively that are outstanding as at 31March 2020 for a period beyond the timelines stipulated in FED Master Direction No.17/2016-17 Notification No. FEMA 23(R)/2015-RB FED Master Direction No. 16/2015-16 andNotification No. FEMA 120/RB-2004 respectively under the Foreign Exchange ManagementAct 1999. The management of the Company is in the process of regularising these defaultsby filing necessary applications with the appropriate authority for condonation of suchdelays. The management is of the view that the penalties if any which may be levied forthese contraventions are currently unascertainable but not expected to be material to theaccompanying standalone financial statements. Accordingly the accompanying standalonefinancial statements do not include any consequential adjustments with respect to suchdelays/defaults. Our report is not modified in respect of this matter.
Key Audit Matters
5. Key audit matters are those matters that in our professionaljudgment and based on the consideration of the report of the branch auditor as referredto in paragraph 16 below were of most significance in our audit of the standalonefinancial statements of the current period. These matters were addressed in the context ofour audit of the financial statements as a whole and in forming our opinion thereon andwe do not provide a separate opinion on these matters.
6. We have determined the matter described below to be a key auditmatter to be communicated in our report.
Information other than the Financial Statements and Auditor'sReport thereon
7. The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the AnnualReport but does not include the standalone financial statements and our auditor'sreport thereon. The Annual Report is expected to be made available to us after the date ofthis auditor's report. Our opinion on the standalone financial statements does not coverthe other information and we will not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statementsour responsibility is to read the other information identified above when it becomesavailable and in doing so consider whether the other information is materiallyinconsistent with the standalone financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated.
When we read the Annual Report if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance.
Responsibilities of Management and Those Charged with Governance forthe Standalone Financial Statements
8. The accompanying standalone financial statements have been approvedby the Company's Board of Directors. The Company's Board of Directors isresponsible for the matters stated in Section 134(5) of the Act with respect to thepreparation of these standalone financial statements that give a true and fair view of thefinancial position financial performance including other comprehensive income changes inequity and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Ind AS specified under Section 133 of the Act.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forpreventing 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 financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
9. In preparing the financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
10. Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements
11. Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with Standards on Auditing will always detect a materialmisstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if individually or in the aggregate they could reasonably beexpected to influence the economic decisions of users taken on the basis of thesestandalone financial statements. 12. As part of an audit in accordance with Standards onAuditing we exercise professional judgment and maintain professional skepticismthroughout the audit. We also:
Identify and assess the risks of material misstatement of thefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol;
Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. UnderSection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls with reference to financialstatements in place and the operating effectiveness of such controls;
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management;
Conclude on the appropriateness of management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditionsmay cause the Company to cease to continue as a going concern;
Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation; and
Obtain sufficient appropriate audit evidence regarding thefinancial information of the Company to express an opinion on the standalone financialstatements. We are responsible for the direction supervision and performance of the auditof financial information of the Company and such branches included in the Statement ofwhich we are the independent auditors. For the other branches included in the standalonefinancial statements which have been audited by the branch auditors such branch auditorsremain responsible for the direction supervision and performance of the audits carriedout by them. We remain solely responsible for our audit opinion.
13. We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
14. We also provide those charged with governance with a statement thatwe have complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
15. From the matters communicated with those charged with governancewe determine those matters that were of most significance in the audit of the financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.
16. We did not audit the financial information of one branch includedin the standalone financial statements of the Company whose financial information (beforeeliminating inter company balances / transactions) reflects total assets and net assets ofRs. 422 lakhs and Rs. 94 lakhs respectively as at 31 March 2020 and the total revenuesof Rs. Nil total net profit after tax of Rs. 2 lakhs total comprehensive income of Rs. 2lakhs and cash flows (net) of Rs. 1 lakh for the year ended on that date as consideredin the standalone financial statements. This financial information has been audited by thebranch auditor whose report has been furnished to us by the management and our opinion onthe standalone financial statements in so far as it relates to the amounts anddisclosures included in respect of the branch is based solely on the report of suchbranch auditor.
Our opinion on the standalone financial statements and our report onother Legal and Regulatory Requirements below are not modified in respect of the abovematter with respect to our reliance on the work done by and the report of the branchauditor.
Report on Other Legal and Regulatory Requirements
17. As required by Section 197(16) of the Act based on our audit andon the consideration of the report of the branch auditor as referred to in paragraph 16above we report that the Company has paid remuneration to its directors during the yearin accordance with the provisions of and limits laid down under Section 197 read withSchedule V to the Act. 18. As required by the Companies (Auditor's Report) Order2016 (the Order') issued by the Central Government of India in terms of Section143(11) of the Act we give in Annexure A a statement on the matters specified inparagraphs 3 and 4 of the Order.
19. Further to our comments in Annexure A as required by Section143(3) of the Act based on our audit and on the consideration of the report of thebranch auditor as referred to in paragraph 16 above we report to the extent applicablethat:
a) we have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purpose of our auditof the accompanying standalone financial statements;
b) in our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books and properreturns adequate for the purposes of our audit have been received from the branch notvisited by us;
c) the report on the accounts of the branch office of the Companyaudited under Section 143(8) of the Act by the branch auditor has been sent to us and havebeen properly dealt with by us in preparing this report; d) the standalone financialstatements dealt with by this report are in agreement with the books of account and withthe returns received from the branch not visited by us;
f) on the basis of the written representations received from thedirectors and taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2020 from being appointed as a director in terms of Section164(2) of the Act;
g) we have also audited the internal financial controls with referenceto financial statements of the Company as on 31 March 2020 in conjunction with our auditof the standalone financial statements of the Company for the year ended on that date andour report as per Annexure B expressed an unmodified opinion; and
h) with respect to the other matters to be included in theAuditor's Report in accordance with rule 11 of the Companies (Audit and Auditors)Rules 2014 (as amended) in our opinion and to the best of our information and accordingto the explanations given to us and based on the consideration of the report of the branchauditor as referred to in paragraph 16 above:
i. the Company as detailed in Note 44 to the standalone financialstatements has disclosed the impact of pending litigations on its financial position asat 31 March 2020;
ii. the Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses as at 31 March2020;
iii. following are the instances of delays in transferring amountsrequired to be transferred to the Investor Education and Protection Fund by the Company;
iv. the disclosure requirements relating to holdings as well asdealings in specified bank notes were applicable for the period from 8 November 2016 to 30December 2016 which are not relevant to these standalone financial statements. Hencereporting under this clause is not applicable.
Annexure A to the Independent Auditor's Report of even date to themembers of Everest Kanto Cylinder Limited on the standalone financial statements for theyear ended 31 March 2020
Based on the audit procedures performed for the purpose of reporting atrue and fair view on the standalone financial statements of the Company and taking intoconsideration the information and explanations given to us and the books of account andother records examined by us in the normal course of audit and to the best of ourknowledge and belief
we report that:
i) a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed asset (propertyplant and equipment').
b) The property plant and equipment have been physically verified bythe management during the year and no material discrepancies were noticed on suchverification. In our opinion the frequency of verification of the property plant andequipment is reasonable having regard to the size of the Company and the nature of itsassets.
c) The title deeds of all the immovable properties (which are includedunder Note 2 Property plant and equipment') are held in the name of theCompany except for the following properties:
ii) In our opinion the management has conducted physical verificationof inventory at reasonable intervals during the year except for goods-in-transit. Nomaterial discrepancies were noticed on the aforesaid verification.
iii) The Company has granted unsecured loans to two subsidiarycompanies covered in the register maintained under Section 189 of the Act and withrespect to the same:
a) in our opinion the terms and conditions of grant of such loans arenot prima facie prejudicial to the Company's interest;
b) with respect to a loan given to a subsidiary the schedule ofrepayment of principal and payment of interest has been stipulated wherein the principaland interest amounts are repayable on demand and since the repayment of such loan andpayment of interest has not been demanded in our opinion repayment of the principal andpayment of interest is regular; and with respect to a loan given to another subsidiarythe schedule of repayment of principal and payment of interest has been stipulated andrepayment of the principal amount is regular except for interest wherein the receipt isnot regular;
c) there is no amount which is overdue for more than 90 days in respectof the principal amount of the loan granted. In our opinion reasonable steps have beentaken by the Company for the recovery of the interest amounting to Rs. 2297.23 lakhswhich is overdue for more than 90 days. iv) In our opinion the Company has complied withthe provisions of Sections 185 and 186 of the Act in respect of loans investmentsguarantees and security.
v) In our opinion the Company has not accepted any deposits within themeaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules2014 (as amended). Accordingly the provisions of clause 3(v) of the Order are notapplicable.
vi) We have broadly reviewed the books of account maintained by theCompany pursuant to the Rules made by the Central Government for the maintenance of costrecords under subsection (1) of Section 148 of the Act in respect of Company'sproducts and are of the opinion that prima facie the prescribed accounts and recordshave been made and maintained. However we have not made a detailed examination of thecost records with a view to determine whether they are accurate or complete.
vii) a) Undisputed statutory dues including provident fundemployees' state insurance income-tax sales-tax goods and services tax servicetax duty of customs duty of excise value added tax cess and other material statutorydues as applicable have generally been regularly deposited to the appropriateauthorities though there has been a slight delay in a few cases.
Further no undisputed amounts payable in respect thereof wereoutstanding at the year-end for a period of more than six months from the date they becamepayable.
b) The dues outstanding in respect of income-tax sales-tax and valueadded tax on account of any dispute are as follows:
Statement of Disputed dues
(viii) The Company has not defaulted in repayment of loans orborrowings to any bank or financial institution or government during the year. The Companydid not have any outstanding debentures during the year.
(ix) The Company did not raise moneys by way of initial public offer orfurther public offer (including debt instruments).
In our opinion the term loans were applied for the purpose for whichthe loans were obtained.
(x) No fraud by the Company or on the Company by its officers oremployees has been noticed or reported during the period covered by our audit.
(xi) Managerial remuneration has been paid and provided by the Companyin accordance with the requisite approvals mandated by the provisions of Section 197 ofthe Act read with Schedule V to the Act.
(xii) In our opinion the Company is not a Nidhi Company. Accordinglyprovisions of clause 3(xii) of the Order are not applicable.
(xiii) In our opinion all transactions with the related parties are incompliance with Sections 177 and 188 of Act where applicable and the requisite detailshave been disclosed in the financial statements etc. as required by the applicable IndAS.
(xiv) During the year the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures.
(xv) In our opinion the Company has not entered into any non-cashtransactions with the directors or persons connected with them covered under Section 192of the Act.
(xvi) The Company is not required to be registered under Section 45-IAof the Reserve Bank of India Act 1934.
Annexure B to the Independent Auditor's Report of even date to themembers of Everest Kanto Cylinder Limited on the standalone financial statements for theyear ended 31 March 2020
Independent Auditor's Report on the Internal Financial Controlswith reference to the standalone financial statements under Clause (i) of sub-section 3 ofSection 143 of the Companies Act 2013 (the Act')
1. In conjunction with our audit of the standalone financial statementsof Everest Kanto Cylinder Limited (the Company') as at and for the yearended 31 March 2020 we have audited the internal financial controls with reference tostandalone financial statements of the Company as at that date.
Responsibilities of Management and Those Charged with Governance forInternal Financial Controls
2. The Company's Board of Directors is responsible forestablishing and maintaining internal financial controls based on the internal financialcontrols with reference to standalone financial statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls over Financial Reporting (the GuidanceNote') issued by the Institute of Chartered Accountants of India (ICAI). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of the Company's business including adherence to the Company'spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.
Auditor's Responsibility for the Audit of the Internal FinancialControls with Reference to Standalone Financial Statements
3. Our responsibility is to express an opinion on the Company'sinternal financial controls with reference to standalone financial statements based on ouraudit. We conducted our audit in accordance with the Standards on Auditing issued by theICAI and deemed to be prescribed under Section 143(10) of the Act to the extentapplicable to an audit of internal financial controls with reference to standalonefinancial statements and the Guidance Note issued by the ICAI. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlswith reference to standalone financial statements were established and maintained and ifsuch controls operated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidenceabout the adequacy of the internal financial controls with reference to standalonefinancial statements and their operating effectiveness. Our audit of internal financialcontrols with reference to standalone financial statements includes obtaining anunderstanding of such internal financial controls assessing the risk that a materialweakness exists and testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk. The procedures selected depend on theauditor's judgement including the assessment of the risks of material misstatementof the financial statements whether due to fraud or error.
5. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the Company's internalfinancial controls with reference to standalone financial statements.
Meaning of Internal Financial Controls with Reference to StandaloneFinancial Statements
6. A company's internal financial controls with reference to financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. A company's internalfinancial controls with reference to financial statements include those policies andprocedures that
(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;
(2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; and
(3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the company's assets thatcould have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls with Reference toStandalone Financial Statements
7. Because of the inherent limitations of internal financial controlswith reference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to financial statements to future periods are subject to the riskthat the internal financial controls with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.
8. In our opinion the Company has in all material respects adequateinternal financial controls with reference to standalone financial statements and suchcontrols were operating effectively as at 31 March 2020 based on the internal financialcontrols with reference to standalone financial statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote issued by the ICAI.