THE MEMBERS OF
GANGOTRI CEMENT LTD.
Report on the Financial Statements
We have audited the accompanying financial statements of GANGOTRI CEMENT LTD.(The Company) which comprise Balance Sheet as at March'31st 2017 Statementof Profit & Loss & Cash flow statement for the year ended then and a summary ofSignificant Accounting Policies and other Explanatory Information which we have signedunder reference to this report.
Management's Responsibility for the Financial Statements
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 preparationand presentation of these financial statements that give a true and fair view of thefinancial position financial performance and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provision 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 financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
Our responsibility is to express an opinion on these financial statements based on ouraudit. 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 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 whetherthe financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe 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 control relevant to the Company's preparation of thefinancial statements that give true and fair view in order to design audit proceduresthat are appropriate in the circumstances an audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of the accountingestimates made by Company's Directors as well as evaluating the overall presentation ofthe financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.
Basis of Qualified Opinion
The Company has not complied with in respect of the following Accounting Standardspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014:
The accounting policy as referred to in note 31 to the financial statements withrespect to the liability on account of Gratuity Liability is recognized on owncalculations instead of recognizing the liability for the same as the present value of thedefined benefit obligation at the balance sheet date calculated on the basis of actuarialvaluation in accordance with the notified Accounting Standard 15 on Employee Benefits. Theconsequential impact of adjustment if any owing to this non compliance on the financialstatements is presently not ascertainable.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects/possible effects of the matters described in the Basisfor Qualified Opinion paragraph the aforesaid financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India of the state of affairs of theCompany as at 31 March 2017 and its loss and its cash flows for the year ended on thatdate.
Emphasis of Matters
We draw attention to the following matters in the notes to the financial statements:-
(a) Note No.29 to the financial statements which describes regarding certain disclosurerelating to Micro /Small /Medium Enterprises.
(b) Note No. 26 to the financial statements which describes regarding confirmations ofdebtors creditors loans & advances subject to reconciliation if any.
(c) Note No. 38 to the financial statements which describes regarding Company'sfinancing arrangements expire and amounts outstanding are payable on March 31 2017. TheCompany has been able to conclude renegotiations financing arrangements from bank. Furtherduring the year company had also suspended its manufacturing facilities. This situationindicates that a material uncertainty exists that may cast significant doubt on theCompany's ability to continue as a going concern and therefore the Company may be unableto realize its assets and discharge its liabilities in the normal course of business. Thefinancial statements do not adequately disclose this matter.
Our opinion is not qualified / modified in respect of other matter.
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 terms of sub-section (11) of section 143 ofthe Act we give in the Annexure A a statement on the matters specified in the paragraph3 and 4 of the Order to the extent applicable.
2. As required by Section 143 (3) of the Act we report that:
(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;
(c) The balance sheet the statement of profit and loss and the cash flow statementdealt with by this Report are in agreement with the books of account;
(d) Except for the effects/ possible effects of the matters described in the para ofBasis of Qualified Opinion paragraph in our opinion the aforesaid standalone financialstatements comply with the Accounting Standards specified under Section 133 of the Actread with Rule 7 of the Companies (Accounts) Rules 2014;
(e) On the basis of the written representations received from the directors as on 31March 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2017 from being appointed as a director in terms of Section164 (2) of the Act; and
(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in Annexure B and
(g) In our opinion and to the best of our information and according to the explanationsgiven to us we report as under with respect to other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules2014:-
i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements refer Note No. 32 to the financial statements.
ii. The Company did not have any long-term contracts including derivatives contractsfor which there were any material foreseeable losses.
iii. There were no amounts which required to be transferred to the Investor Educationand Protection Fund by the Company and
iv. The company had provided requisite disclosures in its financial statements as toholdings as well as dealings in specified Bank Notes during the period from 8 November2016 to 30 December 2016 and these are in accordance with the books of accountsmaintained by the company. Refer Note 39 to the financial statement.
For Sunil Johri & Associates
Membership No.: 411114
30th May 2017
ANNEXURE A TO THE AUDITORS' REPORT
[Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements of our Report of even date to the members of GANGOTRI CEMENT LTD. onthe accounts of the company for the year ended 31st March 2017]
On the basis of such checks as we considered appropriate and according to theinformation and Explanations given to us during the course of our audit we report that:
(i) In respect of its fixed assets:
a) The Company has maintained proper records showing full particulars includingquantitative details and situation of the fixed assets.
b) The major assets have been physically verified by the management on a sample basisduring the year and in our opinion the frequency of verification is reasonable havingregard to the size of the company and the nature of its assets. As informed to us nomaterial discrepancies noticed on such verification.
c) We have inspected the original title deeds of immovable properties of the companyheld as fixed assets which are in the custody of the company. We have obtained third partyconfirmations in respect of immovable properties of the company held as fixed assets whichare in the custody of third parties such as mortgages. Based on our audit procedures andthe information and explanation received by us we report that all title deeds ofimmovable properties of the company held as fixed assets are held in the name of thecompany. However we express no opinion on the validity of the title of the company tothese properties.
(ii) As explained to us and according to the information provided by the managementthe inventory has been physically verified at reasonable interval during the year by themanagement. The discrepancies noticed on verification between physical stock and bookstocks wherever ascertained were not significant and have been properly dealt in thebooks of the accounts.
(iii) In our opinion and according to the information and explanations given to us theCompany has not granted any loan secured or unsecured to companies firms LimitedLiability Partnerships or other parties covered in the register maintained under section189 of the Companies Act 2013. Accordingly the provisions of clause 3(iii) (a) (b) and(c) of the Order are not applicable and hence not commented upon.
(iv) In our opinion and according to the information and explanation given to us thecompany has complied with the provisions of section 185 and 186 of the act with respectto the loans and investments made .The company has neither issued any guarantee nor hasprovided any security on behalf of any party.
(v) In our opinion and according to the information and explanation given to us theCompany did not receive any deposits covered under section 73 to 76 of the company Act andrules framed there under with regards to deposits accepted from the public during theyear.
(vi) We have broadly reviewed the cost records maintained by the Company pursuant tothe Rules made by the Central Government under Section 148(1) of the Companies Act 2013and are of the opinion that prima facie the prescribed cost records have been made andmaintained. We have however not made a detailed examination of these accounts &records with a view to determining whether they are accurate or complete.
(vii) In respect of statutory dues:
a) According to the information and explanations given to us and on the basis of ourexamination of the records of the company amounts deducted / accrued in the books ofaccounts in respect of undisputed statutory dues including provident fund Employee StateInsurance income tax sales tax service tax duty of Excise duty of customs valueadded tax cess and other material statutory dues have been regularly deposited during theyear by the company with the appropriate authorities. According to the information andexplanations given to us no undisputed amounts payable in respect of provident fundincome tax sales tax service tax duty of customs value added tax cess and othermaterial statutory dues were in arrears as at 31st March 2017 for a period of more thansix months from the date they became payable except Listing fees Rs 2.24 Lacs.
b) According to the records of the company there are no dues of income-tax Sales TaxService Tax custom duty wealth tax excise duty / cess which have not been deposited onaccount of any dispute.
(viii) The company has defaulted in repayment of Rs 29.26 Lacs (Principal amount) inrespect of Term Loan availed from Allahabad Bank. The default occurred in April March 2017out of which Rs 11.96 Lacs was not cleared until 31st March and was thus due for 3 Monthsas at that date. Further the Company had approached to bank for re schedulement ofInstallments of Term Loan which duly accepted by the bank.
(ix) Based on the information and explanations given to us and records of the companyexamined by us the company has not raise money by way of further public offer (includingdebt instruments) and term loans during the year.
(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 of the company the company has paid / provided for themanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of Section 197 read with schedule V of the act.
(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly clause 3 (xii) of the Order are notapplicable to the Company and hence not commented upon.
(xiii) According to the information and explanations given to us and based on ourexamination of the records of the company the transactions with the related parties arein compliance with Section 177 & 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statement as required by applicableaccounting standards wherever required.
(xiv) According to the information and explanations given to us and based on ourexamination of the records of the company company has not made any preferential allotmentor any private placement of the shares or fully or partly convertible debentures duringthe year.
(xv) According to the information and explanations given to us and based on ourexamination of the records of the company the Company has not entered into any non-cashtransactions with directors or persons connected with him as referred to in Section 192 ofthe Companies Act 2013. Accordingly clause 3 (xv) of the order is not applicable to theCompany and hence not commented upon.
(xvi) According to the information and explanations given to us the Company is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 1934.
For Sunil Johri & Associates
30th May 2017
ANNEXURE B TO THE AUDITORS' REPORT
[Referred to in paragraph 2 (F) under Report on Other Legal and RegulatoryRequirements of our Report of even date to the members.
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 GANGOTRICEMENT LTD. (`the Company') as of 31 March 2017 in conjunction with our audit of thefinancial 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 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 Reportingissued by the Institute of Chartered Accountants of India ('ICAI'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to the Company's policies the safeguarding of its assetsthe prevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asRequired under the Companies Act 2013.
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 on Audit of Internal Financial Controls over Financial Reporting(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 were established and maintained and if suchcontrols operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditors' 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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the Company are being made only inaccordance with authorizations of the Management and directors of the Company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the Company's assets that could have amaterial 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.
According to the information and explanations given to us and based on our audit thefollowing material weakness has been identified as at March 2017:-
a. The Company did not have an appropriate internal control system for theidentification of Micro / Small / Medium Enterprises Development and SSI Units as per therequirements of the MSMED Act. These could potentially result in the Company's accountbalances and Interest expenses not charged on account of non compliance of the above Act.
b. The Company did not have an appropriate internal control system for the accountconfirmations of debtors creditors loans & advances. These could potentially resultin the Company's account balances may be unable to realize its assets and discharge itsliabilities in the normal course of business.
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.
In our opinion except for the effects/possible effects of the material weaknessdescribed above on the achievements of the objectives of the control criteria the Companyhas maintained in all material respects an adequate internal financial controls systemover financial reporting and such internal financial controls over financial reportingwere operating effectively as at March 31 2017 based on the internal control overfinancial 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 weakness identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the March 31 2017financial statements of the Company and the material weakness does not affect our opinionon the financial statements of the Company.
For Sunil Johri & Associates
30th May 2017