To The Members of The India Cements Limited
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements of THE INDIACEMENTS LIMITED ("the Company") which comprise the Balance Sheet as at March31 2017 and the Statement of Profit and Loss (including other comprehensive income) theCash Flow Statement and the Statement of Changes in Equity for the year then ended and asummary of the significant accounting policies and other explanatory information (hereinafter referred to as "Standalone Ind AS Financial Statements").
Management's Responsibility for the Standalone Ind AS 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 preparation ofthese standalone Ind AS financial statements that give a true and fair view of thefinancial position financial performance including other comprehensive income cash flowsand changes in equity of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) prescribedunder Section 133 of the Act read with relevant rules issued thereunder.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalone IndAS financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit.
We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.
We conducted our audit of the standalone Ind AS financial statements in accordance withthe Standards on Auditing specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the standalone Ind AS financial statements are freefrom material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial 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.
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.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS 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 including the Ind AS of thefinancial position of the Company as at 31 March 2017 and its financial performanceincluding other comprehensive income its cash flows and the changes in equity for theyear ended on that date.
Emphasis of Matter
We draw attention to
a. Note 40.2(g) to the standalone Ind AS financial statements relating to the order ofthe Competition Commission of India (CCI) concerning alleged contravention of theprovisions of Competition Act 2002 and consequent imposition of penalty of Rs.187.48crores on the Company. The company filed an appeal against the order before theCompetition Appellate Tribunal New Delhi. Based on the legal advise the company believesthat it has a good case in regard to the matter agitated by the company before theCompetition Appellate Tribunal seeking a setting aside of the order passed by CCI andaccordingly no provision has been considered necessary by the Company in this regard.
b. Note 40.5 to the standalone Ind AS financial statements regarding the order ofattachment issued under Prevention of Money laundering Act through which certain assets ofthe company amounting to Rs.120.34 crores have been attached vide provisional attachmentOrder dated 25th February 2015 which the company is disputing before legalforums. The company has been legally advised that it has strong grounds to defend itsposition pending the outcome of the proceedings the impact if any arising on account ofinclusion of these attached assets at their carrying values is not ascertainable at thisstage. The assets of the company attached includes certain investments held by the companyin Trinetra Cements Limited (TCL) (since amalgamated with the company) amounting toRs.96.67 crores have not been cancelled upon merger of TCL as per the order of High courtof Madras consequently the assets and liabilities are stated in excess to this extent.
c. Note 40.21 to the standalone Ind AS financial statements regarding the accountingfor scheme of amalgamation between the company and its subsidiaries Trinetra cementlimited (TCL) and Trishul concrete Products Limited (TCPL) (Transferor companies) undersection 391 to 394 and other provisions of the Companies Act 1956 and the relevantprovisions of Companies Act 2013 which has been approved by the Hon'ble High court ofMadras and National company Law tribunal Chennai with appointed date as 01/01/2014. Inaccordance with the scheme the company had fair valued the assets and liabilities of thetransferor companies and the net excess of such fair values over the previously carriedbook values resulting in Goodwill has been debited to General reserve as per the approvedscheme which is not in accordance with Accounting Standard 14.
Our opinion is not modified in respect of the above matters.
The standalone Ind AS financial statements (after giving effect to amalgamation of TCLand TCPL) includes total assets of Rs.1250.99 crores and total revenue of Rs.599.95crores and total loss of Rs.1.30 crores and other financial information of TCL (one of thetransferor company) which have been audited by other auditor whose reports have beenfurnished to us by the Management and our audit opinion on these financial statements tothe extent they pertain to the financial statements of TCL is solely based on the reportsof the other auditor.
Our opinion is not modified in respect of the above matters.
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 section 143(11) of the Act we givein the "Annexure A" a statement on the matters specified in the paragraph 3 and4 of the order.
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 the statement of cash flowsand the statement of changes in equity dealt with by this Report are in agreement with thebooks of account;
(d) In our opinion the aforesaid standalone Ind AS financial statements comply withthe Accounting Standards specified under Section 133 of the Act read with relevant ruleissued thereunder;
(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; (f) With respect to the adequacy of the internal financial controlsover financial reporting of the Company and the operating effectiveness of such controlsrefer to our separate report in "Annexure B"; and
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i) The Company has disclosed the impact of pending litigations on its financialposition in its standalone Ind AS financial statements - Refer Note 40.2 to the standaloneInd AS financial statements;
ii) The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses
iii) Currently there are no amounts held by the company that are required to betransferred to Investor education and protection fund hence we do not comment on the same;and
iv) The Company has provided requisite disclosures in its standalone Ind AS financialstatements as to holdings as well as dealings in Specified Bank Notes during the periodfrom 8 November 2016 to 30 December 2016 based on audit procedures and relying onmanagement's representation we report that the disclosures are in accordance with thebooks of accounts maintained by the Company - Refer Note 40.18 to the standalone Ind ASfinancial statements.
Annexure - A to the Auditors' Report
The Annexure referred to in paragraph 1 under the heading of "Report on OtherLegal and Regulatory Requirements" of our Report of even date to the members of THEINDIA CEMENTS LIMITED on the accounts of the company for the year ended 31stMarch 2017 we report that:
i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The Company has a regular programme of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner over a period of three years. Inaccordance with this programme certain fixed assets were verified during the year and nomaterial discrepancies were noticed on such verification. In our opinion this periodicityof physical verification is reasonable having regard to the size of the Company and thenature of its assets.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company except for the following which are not held in the name ofthe company. In regard to Immovable properties of land and buildings wherever title deedshave been pledged as securities towards loans guarantees etc availed by the company thesame are stated to have been held in the name of the company (the lenders have alsoaccepted the assets as security for creating mortgages) and are confirmed by the lendersas on the reporting date.
(Amount in INR)
|Particulars of ||Value as at 31.03.2017 ||No. of ||Remarks |
|Land & Building ||Gross Block ||Net Block ||Cases || |
|Building -Apartment at Delhi ||1193454 ||530132 ||1 ||Title is not in the name of the company |
|Freehold Land ||3833613267 ||3833613267 ||242 ||The title deeds are in the names of erstwhile companies that merged with the company under Sec 391 to 394 of the Companies Act 1956 pursuant to schemes of amalgamation and arrangement approved by Honourable High Courts |
|Leasehold Land ||211756833 ||211756833 || ||The title deeds are in the names of erstwhile companies that merged with the company under Sec 391 to 394 of the Companies Act 1956 pursuant to schemes of amalgamation and arrangement approved by Honourable High Courts |
ii) As explained to us and according to information and explanations given to us theinventories were physically verified during the year by the management at reasonableintervals and no material discrepancies were noticed on physical verification
iii) According to the information and explanations given to us and on the basis of ourexamination of the books of account the Company has not granted any loans secured orunsecured to companies firms or other parties listed in the register maintained underSection 189 of the Companies Act 2013.
iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act in respect ofgrant of loans making investments and providing guarantees as applicable and the companyhas not granted any security in terms of section 185 and 186 of the companies act 2013.
v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public during the year.
However in regard to the unclaimed deposits the company has complied with theprovisions of Section 73 to 76 or any other relevant provisions of the Companies Act andthe rules framed there under.
vi) The maintenance of cost records has been specified by the central government undersection 148(1) of Companies act 2013. We have broadly reviewed the cost records maintainedby the company pursuant to companies cost records and audit rules 2014 as amendedprescribed by the central government under sub-section (1) of section 148 of companies act2013 and are of opinion that prima facie the prescribed cost records have been made andmaintained. We have however not made a detailed examination of the said records with aview to determine whether they are accurate or complete and we have relied on the reportsof cost auditors in this regard.
vii) According to the information and explanations given to us and on the basis of ourexamination of the books of account in respect of statutory dues
a) The company has generally been regular in depositing undisputed statutory duesbarring few instances of considerable delays in making payment towards Provident FundEmployees' State Insurance Income-tax Service Tax sales tax duty of customs duty ofexcise value added tax cess and any other statutory dues to the appropriate authorities.There were no undisputed amounts payable towards Provident Fund Employees' StateInsurance Income-tax Service Tax sales tax duty of customs duty of excise valueadded tax cess and any other statutory dues as on 31st of March 2017 for a period ofmore than six months from the date they became payable.
b) Details of dues of Sales tax Income tax Service tax Customs Duty Excise dutyVAT and cess which have not been deposited as on 31st March 2017 on account of anydispute and the forum where disputes are pending is given in Annexure - I.
viii) Based on the audit procedure and according to the information given to us we areof the opinion that the company has not defaulted in repayment of loans from financialinstitutions banks government or dues to debenture holders.
ix) In our opinion and according to the information and explanations given to us andbased on the records produced for our perusal during the year the term loans have beenapplied by the company for purposes for which they were raised and the company has notraised monies by way of initial public offer or further public offer (including debtinstruments).
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) In our opinion and according to the information and explanations given to us weare of the opinion that the Company has paid/provided for managerial remuneration inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Act.
xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.
xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the standalone Ind AS financial statements as requiredby the applicable accounting standards.
xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of 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 non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.
xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
Annexure B to the Auditors' Report
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 The IndiaCements limited ("the Company") as of 31 March 2017 in conjunction with ouraudit of the standalone Ind AS financial statements of the Company for the year ended onthat 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 company's policies the safeguarding of its assets theprevention 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 deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls 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 standalone Ind AS financial statements whether due to fraudor error. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols system over 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.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2017 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
Annexure - I to the Independent Auditors Report as mentioned in Paragraph 3(vii)(b) ofCARO 2017
|Sl. No. ||Name of Statute ||Nature of Dues ||Amount (Rs. in lakhs) ||Period to which amount relates ||Forum where disputes pending |
|1 ||Central Excise Act 1944 ||Excise duty and Service Tax ||2224286420 ||Various pendings from 1988-89 to 2016-17 ||CESTAT |
| || || ||253429714 ||Various pendings from 1995-96 to 2016-17 ||Commissioner (Appeals) |
| || || ||164498477 ||Various pendings from 1994-95 to 2009-10 ||High Court |
| || || ||29292075 ||Various pendings from 1995-96 to 2008-09 ||Supreme Court |
| ||Sub Total || ||2671506685 || || |
|2 ||Central Sales Tax Act 1956 and sales tax of various states ||Sales tax/ VAT ||25977554 ||2008-09 and 2013-14 ||Additional Commissioner (Rev. Petition) |
| || || ||2471603 ||2012-13 & 2013-14 ||Commissioner (Appeals) |
| || || ||174577376 ||Various pendings from 1969-70 to 2012-13 ||Appeal to High Court |
| || || ||5716659 ||2013-14 ||Assessing Authority |
| || || ||520792 ||1997-98 2005-06 and 2007-08 ||D.C.Appeals |
| || || ||1482443 ||2014-15 ||Joint Commissioner [Rev. Petition] |
| || || ||10021198 ||Various pendings from 1989-90 to 2008-09 ||Sales Tax Appellate Tribunal |
| ||Sub Total || ||220767625 || || |
|3 ||Customs act 1962 ||Customs Duty ||636969657 ||2013-14 & 2014-15 ||CESTAT |
| ||Sub Total || ||636969657 || || |
|4 ||Income Tax Act 1961 ||Income Tax ||1098776140 ||2012-13 and 2013-14 ||CIT (Appeals) |
| || || ||81064938 ||1996-97 ||Supreme Court |
| || || ||36383000 ||Various periods from 1982-83 to 1986-87 ||High Court |
| || || ||531000 ||1991-1992 ||Income Tax Appellate Tribunal |
| ||Sub Total || ||1216755078 || || |
| ||Grand Total || ||4745999045 || || |
|For P. S. SUBRAMANIA IYER & Co. ||For BRAHMAYYA & Co. |
|Chartered Accountants ||Chartered Accountants |
|Firm Registration No: 004104S ||Firm Registration No. 000511S |
|V.SWAMINATHAN ||N.SRI KRISHNA |
|Partner ||Partner |
|Membership No. 22276 ||Membership No. 26575 |
|Place : Sankarnagar Tirunelveli || |
|Date : 27th May 2017 || |