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Everest Kanto Cylinder Ltd.

BSE: 532684 Sector: Industrials
NSE: EKC ISIN Code: INE184H01027
BSE 00:00 | 20 Jul 30.75 0.05
(0.16%)
OPEN

30.25

HIGH

31.25

LOW

30.15

NSE 00:00 | 20 Jul 30.80 0.20
(0.65%)
OPEN

30.95

HIGH

31.15

LOW

30.10

OPEN 30.25
PREVIOUS CLOSE 30.70
VOLUME 42107
52-Week high 77.75
52-Week low 30.15
P/E 17.08
Mkt Cap.(Rs cr) 345
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 30.25
CLOSE 30.70
VOLUME 42107
52-Week high 77.75
52-Week low 30.15
P/E 17.08
Mkt Cap.(Rs cr) 345
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Everest Kanto Cylinder Ltd. (EKC) - Auditors Report

Company auditors report

To the Members of Everest Kanto Cylinder Limited

Report on the Standalone Financial Statements

1. We have audited the accompanying standalone financial statements of Everest KantoCylinder Limited (‘the Company') which comprise the Balance Sheet as at 31 March2017 the Statement of Profit and Loss and the Cash Flow Statement for the year then endedand a summary of the significant accounting policies and other explanatory information inwhich are incorporated the returns for the year ended on that date audited by the branchauditors of the Company's branch at Dubai.

Management's Responsibility for the Standalone 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 financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsprescribed under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014 (as amended). This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the standalone financial statements that give a true and fair view and arefree from material misstatement whether due to fraud or error.

Auditor's Responsibility

3. Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.

4. 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 thereunder.

5. We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthese standalone financial statements are free from material misstatement.

6. An audit involves performing procedures to obtain audit evidence about the amountsand the disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial controls relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.

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

Basis for Qualified Opinion

8. As stated in clause 18 of Note xxvii to the financial statements the Company'scurrent investments as at 31 March 2017 include an investment amounting to Rs. 6925.07Lakhs (as at 31 March 2016: Rs. 6925.07 Lakhs) in its wholly owned Subsidiary in ChinaEKC Industries (Tianjin) Company Ltd. whose financial statements as at 31 March 2017indicate significant accumulated losses and net worth being fully eroded however as at31 March 2017 a provision of only Rs. 5500 Lakh (as at 31 March 2016: Rs. 3500 Lakh)has been recognized in the books for diminution in value of investments on an adhocbasis. In the absence of sufficient appropriate evidence we are unable to comment uponthe carrying value of this investment and the consequential impact if any on theaccompanying financial statements. Our audit opinion for the year ended 31 March 2016 wasalso qualified in respect of this matter.

9. As detailed in clause 24 of Note xxvii to the financial statements the Company'sshort term loans and advances and other current assets include inter-corporate deposit andaccrued interest thereon aggregating Rs. 1347.78 Lakhs (as at 31 March 2016 Rs. 1347.78Lakhs) and Rs. 376.31 Lakhs (as at 31 March 2016 Rs. 376.31 Lakhs) respectively. In theabsence of sufficient appropriate evidence we are unable to comment on the recoverabilityof the aforesaid amounts and consequential impact if any on the financial statements.Our audit opinion for the year ended 31 March 2016 was also qualified in respect of thismatter.

Qualified Opinion

10. In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matters described in the Basis forQualified Opinion paragraphthe aforesaid standalone financial statements give theinformation required by the

Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31 March 2017 and its profit and its cash flows for the year ended on that date.

Emphasis of Matter

11. We draw attention to clause 26 of Note xxvii to the financial statements regardingthe delays in receipt of receivables and payment against the supply of goods amounting toRs. 61.34 Lakhs and Rs. 6351.90 Lakhs respectively that are outstanding for a periodbeyond the timelines stipulated vide FED Master Direction No. 16/2015-16 and FED MasterDirection No. 17/2016-17 under the Foreign Exchange Management Act 1999 due from/to groupcompanies. The Management of the Company has represented that the Company is in theprocess of regularizing these defaults by filing necessary applications with theappropriate authority for condonation of such delays. Pending conclusion of the aforesaidmatter the amount of penalty if any that may be levied is not ascertainable andaccordingly the accompanying financial statements do not include any adjustments that mayarise due to such delay/default. Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

12. As required by the Companies (Auditor's Report) Order 2016 (‘the Order')issued by the Central Government of India in terms of Section 143(11) of the Act we givein the Annexure A a statement on the matters specified in paragraphs 3 and 4 of the Order.

13. Further to our comments in Annexure A as required by Section143(3) of the Act wereport that:

a. we have sought and except for the possible effects of the matters described in theBasis for Qualified Opinion paragraph obtained all the information and explanations whichto the best of our knowledge and belief were necessary for the purpose of our audit;

b. except for the possible effects of the matters described in the Basis for QualifiedOpinion paragraphin 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 branches notvisited by us;

c. the report on the accounts of the branch office of the Company audited under Section143(8) of the Act by the branch auditor has been sent to us and have been properly dealtwith by us in preparing this report;

d. the standalone financial statements dealt with by this report are in agreement withthe books of account and with the return received from the branch not visited by us;

e. except for the possible effects of the matters described in the Basis for QualifiedOpinion paragraphin our opinion the aforesaid standalone financial statements complywith the Accounting Standards prescribed underSection 133 of the Act read with Rule 7 ofthe Companies (Accounts) Rules 2014 (as amended);

f. the three matters described in paragraph 8 9 and 11 under the Emphasis of Matterparagraph and Basis for Qualified Opinion paragraph in our opinion may have an adverseeffect on the functioning of the Company;

g. on the basis of the written representations received from the directors and taken onrecord by the Board of Directors none of the directors is disqualified as on 31 March2017 from being appointed as a director in terms of Section 164(2) of the Act;

h. the qualification relating to the maintenance of accounts and other mattersconnected therewith are as stated in the Basis for Qualified Opinion paragraph;

i. we have also audited the internal financial controls over financial reporting(IFCoFR) of the Company as on 31 March 2017 in conjunction with our audit of thestandalone financial statements of the Company for the year ended on that date and ourreport dated 30 May 2017 as per Annexure B expressed Qualified Opinion;

j. 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 (as amended) inour opinion and to the best of our information and according to the explanations given tous:

i. the Companyas detailed in clause 2 of Note xxvii to the standalone financialstatements has disclosed the impact of pending litigations on its financial position;

ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;

iii. there has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company;

iv. the Company as detailed in clause 28 of Note xxvii to the standalone financialstatements has made requisite disclosures in these standalone financial statements as toholdings as well as dealings in Specified Bank Notes during the period from 8 November2016 to 30 December 2016.

Based on the audit procedures performed and taking into consideration the informationand explanations given to us in our opinion these are in accordance with the books ofaccount maintained by the Company.

For Walker Chandiok & Co LLP
(formerly Walker Chandiok & Co)
Chartered Accountants
Firms Registration No.: 001076N/N500013
per Khushroo B. Panthaky
Partner Mumbai
Membership No.: 42423 30 May 2017

Annexure A to the Independent Auditor's Report of even date to the members of EverestKanto Cylinder Limited on the financial statements for the year ended 31 March 2017

Annexure A

Based on the audit procedures performed for the purpose of reporting a true and fairview on the financial statements of the Company and taking into consideration theinformation and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit and to the best of our knowledge and beliefwe report that:

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

(b) The fixed assets have been physically verified by the management during the yearand no material discrepancies were noticed on such verification. In our opinion thefrequency of verification of the fixed assets is reasonable having regard to the size ofthe Company and the nature of its assets.

(c) The title deeds of all the immovable properties (which are included under the head‘Fixed Assets') are held in the name of the Company except for the followingproperty:

(in ` in Lakh)
Nature of property Total Number of Cases Whether leasehold / freehold Gross block as on 31 March 2017 Net block on 31 March 2017
Land One Leasehold 111.42 111.42

(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) The Company has granted unsecured loans to companies covered in the registermaintained under Section 189 of the Act; and with respect to the same:

(a) in our opinion the terms and conditions of grant of such loans are not primafacie prejudicial to the Company's interest.

(b) the schedule of repayment of principal has been stipulated wherein the principalamounts are repayable on demand and since the repayment of such loans has not beendemanded in our opinion repayment of the principal amount is regular;

(c) there is no overdue amount in respect of loans granted to such companies.

(iv) In our opinion the Company has complied with the provisions of Sections 185 and186 of the Act in respect of loans investments guarantees and security.

(v) In our opinion the Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable.

(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the Rules made by the Central Government for the maintenance of cost records undersubsection (1) of Section 148 of the Act in respect of Company's products and are of theopinion that prima facie the prescribed accounts and records have been made andmaintained. However we have not made a detailed examination of the cost records with aview to determine whether they are accurate or complete.

(vii) (a) Undisputed statutory dues including provident fund employees' stateinsurance income-tax sales-tax service tax duty of customs duty of excise valueadded tax cess and other material statutory dues as applicable have generally beenregularly deposited to the appropriate authorities though there has been a slight delayin a few cases. Further no undisputed amounts payable in respect thereof were outstandingat the year-end for a period of more than six months from the date they became payable.

(b) The dues outstanding in respect of income-tax sales-tax service tax duty ofcustoms duty of excise and value added tax on account of any dispute are as follows:

Statement of Disputed Dues

Name of the statute Nature of dues Amount Amount paid /adjusted under Protest Period to which the amount relates Forum where dispute is pending
(Rs. in Lakh) (Rs. in Lakh)
12.82 - F.Y. 2000-01 Sales Tax Tribunal
141.54 43.08 F.Y. 2005-06
39.82 - F.Y. 2006-07
Central Sales Tax 6.42 - F.Y. 2007-08 Joint Commissioner of Sales Tax (Appeals)
99.52 17.18 F.Y. 2008-09
Central Sales Tax Act 1956 14.16 - F.Y. 2009-10
24.14 - F.Y. 2010-11
54.15 6.44 F.Y. 2011-12
21.05 7.36 F.Y. 1993-94
Sales Tax (Lease Tax) F.Y. 1994-95
F.Y. 1995-96 Maharashtra Sales Tax Tribunal
F.Y. 1996-97
F.Y. 1997-98
The Finance Act1994 Service Tax 5.38 0.20 F.Y 2011-12 Assistant Commissioner Central Excise and Service Tax
Bombay Sales Tax Act 1959 Bombay Sales tax 26.11 - F.Y. 2000-01 Sales Tax Tribunal
716.09 29.48 A.Y. 2010-11 High Court
237.87 - A.Y. 2011-12 Income Tax Appellate Tribunal
The Income Tax Act 1961 Income Tax 787.49 605.33 A.Y. 2009-10 High Court
112.39 98.11 A.Y 2008-09 High Court
The Gujarat Value Added Tax Act 2003 Commercial Tax 14.99 7.84 F.Y. 2009-10 Joint Commissioner of Commercial Tax(Appeals)
18.95 - F.Y. 2005-06
6.37 - F.Y. 2006-07
Maharashtra Value Added Tax Act2002 Value Added 147.43 - F.Y. 2008-09 Joint Commissioner of Sales Tax (Appeals)
Tax 96.98 5.00 F.Y. 2009-10
60.80 14.00 F.Y. 2010-11
102.90 5.00 F.Y. 2011-12

(viii) After receiving the approvals for rescheduling its loan from a bank the Companyhas not defaulted in repayment of its loans or borrowings to any bank or financialinstitution during the year. The Company has no dues payable to debenture-holders duringthe year. The Company has defaulted in repayment of loans to the following governments:

Name of the Bank/ Government Amount of default as on 31 March 2017 Period of default Due Date Remarks
(` in Lakhs)
Gujarat-State Government 286.41 April 2016 to September 2016 01-April-16 Delays of 43 to 155 days
Maharashtra-State Government 13.22 April 2016 to August 2016 26-April-16 Delay of 107 days

(ix) The Company did not raise moneys by way of initial public offer or further publicoffer (including debt instruments). In our opinion the term loans were applied for thepurpose for which the loans were obtained.

(x) No fraud by the Company or on the Company by its officers or employees has beennoticed or reported during the period covered by our audit.

(xi) The Company has not paid or provided for any managerial remuneration. Accordinglythe provisions of Clause 3(xi) of the Order are not applicable.

(xii) In our opinion the Company is not a Nidhi Company.

Accordingly provisions of clause 3(xii) of the Order are not applicable.

(xiii) In our opinion all transactions with the related parties are in compliance withSections 177 and 188 of Act where applicable and the requisite details have beendisclosed in the financial statements etc. as required by the applicable accountingstandards.

(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures.

(xv) In our opinionthe Company has not entered into any non-cash transactions with thedirectors or persons connected with them covered under Section 192 of the Act.

(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.

For Walker Chandiok & Co LLP
(formerly Walker Chandiok & Co)
Chartered Accountants
Firms Registration No.: 001076N/N500013
per Khushroo B. Panthaky
Partner Mumbai
Membership No.: 42423 30 May 2017

Annexure B to the Independent Auditor's Report of even date to the members of EverestKanto Cylinder Limited on the standalone financial statements for the year ended 31 March2017

Independent Auditor's report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

1. In conjunction with our audit of the standalone financial statements of EverestKanto Cylinder Limited ("the Company") as of and for the year ended 31 March2017 we have audited the internal financial controls over financial reporting("IFCoFR") of the Company as at that date.

Management's Responsibility for Internal Financial Controls

2. The Company's Board of Directors 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 (‘the Guidance Note') issued by the Institute of Chartered Accountants ofIndia (‘the ICAI'). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of the Company's business including adherenceto Company's policies 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 Act.

Auditors' Responsibility

3. Our responsibility is to express an opinion on the Company's IFCoFR 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 IFCoFR and the Guidance Note issued by the ICAI. Those Standardsand the Guidance Note require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether adequate IFCoFR wereestablished and maintained and if such controls operated effectively in all materialrespects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the IFCoFR and their operating effectiveness. Our audit of IFCoFR included obtaining anunderstanding of IFCoFR assessing the risk that a material weakness exists and testingand evaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgement including theassessment of the risks of material misstatement of the financial statements whether dueto fraud or error.

5. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the Company's IFCoFR.

Meaning of Internal Financial Controls over Financial Reporting

6. A Company's IFCoFR is a process designed to provide reasonable assurance regardingthe reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. A Company'sIFCoFR include 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

7. Because of the inherent limitations of IFCoFR including the possibility ofcollusion or improper management override of controls material misstatements due to erroror fraud may occur and not be detected. Also projections of any evaluation of the IFCoFRto future periods are subject to the risk that IFCoFR may become inadequate because ofchanges in conditions or that the degree of compliance with the policies or proceduresmay deteriorate.

Basis of Qualified opinion

8. According to the information and explanations given to us and based on our auditprocedures performed the following material weakness has been identified in the adequacyand operating effectiveness of the Company's internal financial controls over financialreporting as at 31 March 2017;

The Company did not have appropriate internal financial controls over financialreporting in respect of its assessment of (a) ‘other-than-temporary' diminution inthe value of the Company's investments in its subsidiaries and (b) recoverability of itsinter-corporate deposit and accrued interest theron included in short term loans andadvances and other current assets respectively. The inadequate supervisory and reviewcontrols over Company's process to determine the ‘other-than-temporary' diminution inthe value of the aforesaid investments and recoverability of its inter-corporate depositand accrued interest theron in accordance with the accounting principles generallyaccepted in India could potentially result in a material misstatement in the value ofinvestment in such subsidiaries and value of inter-corporate deposit and accrued interesttheron included in short term loans and advances and other current assets respectively& consequently also impact the Profit after tax.

A ‘material weakness' is a deficiency or a combination of deficiencies ininternal financial control over financial reporting such that there is a reasonablepossibility that a material misstatement of the Company's annual financial statements willnot be prevented or detected on a timely basis.

Qualified opinion

9. 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 adequate internal financial controls over financial reporting and such internalfinancial controls over financial reporting were operating effectively as at 31 March2017 based on internal control over financial reporting criteria established by theCompany considering the essential components of internal control stated in the Guidancenote.

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 31 March 2017and 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 Walker Chandiok & Co LLP
(formerly Walker Chandiok & Co)
Chartered Accountants
Firms Registration No.: 001076N/N500013
per Khushroo B. Panthaky
Partner Mumbai
Membership No.: 42423 30 May 2017