To the members of KABSONS INDUSTIRES LIMITED Hyderabad
Report on Ind-AS Financial Statements:
We have audited the accompanying Ind AS financial statements of KABSONS INDUSTIRESLIMITED which comprise the Balance sheet as at 31 March 2018 the Statement of Profitand Loss (including other comprehensive income) the Cash Flows and the statement ofchanges in equity for the year then ended and a summary of significant accountingpolicies and other explanatory information (herein after referred to as " Ind ASfinancial statements") .
Management's Responsibility for the Ind AS Financial Statements:
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 with respect to the preparation of these Ind ASfinancial statements that give a true and fair view of the financial position financialperformance including other comprehensive income cash flows and changes in equity of theCompany in accordance with the Indian Accounting Standards(Ind AS) prescribed undersection 133 of Companies Act 2013 read with relevant rules issued there under and otheraccounting principles generally accepted in India. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of the assets of the company and for preventing and detecting the fraudsand other irregularities; selection and application of appropriate accounting policies;making judgments and estimates that are reasonable and prudent; and design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of Ind AS financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
Our responsibility is to express an opinion on these Ind AS financial statements basedon our audit. We have taken into account the provisions of the Companies Act 2013 theaccounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Companies Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Companies Act 2013.Those standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the Ind AS financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the Ind AS financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of theInd AS financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of Ind AS financial statements that give a true and fair view in order todesign audit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of the accounting policies used and there as on ableness ofthe account ingestimates made by the Company's Directors as well as evaluating theoverall presentation of the Ind AS financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the Ind AS financial statements.
Basis for qualified opinion:
The Company has not adopted and complied with the requirements of Ind AS-19 'EmployeeBenefits' in respect of the Gratuity liability which constitute a departure from theAccounting standards mentioned in the Companies (Indian Accounting Standards ) Rules 2015referred in section 133 of the Act. In view of this the liability of the company in thisregard could not be ascertained. Consequently we are unable to comment about the impactof the same on the profit for the year income tax and shareholder's funds.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the basis for QualifiedOpinion Paragraph the Ind AS financial statements give the information required by theAct 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 March 31 2018;of total comprehensive Income (comprising profit and othercomprehensive Income ) its cash flows and changes in equity for the year ended on thatdate
Emphasis of matter
We draw attention to Note 34.2 in the Ind AS financial statements which states that theCompany has not provided for the interest expense amounting to Rs. 613849 for the yearand Rs.10341570 for earlier years against the Trade Deposits received from the Dealers/Distributors. Consequently the same has resulted in overstatement of profit for the yearby Rs. 613849 understatement of the balance in the statement of profit and loss by Rs.10955419 and understatement of Current Liabilities by Rs.10955419
Report on Other Legal and Regulatory Requirements
1) As required by the Companies (Auditor's Report) Order2016("the Order")issued by the Central Government of India in terms of subsection (11) of section 143 ofthe Act we give in the "Annexure A" a statement on the matters specified inthe paragraph 3 and 4 of the Order to the extent applicable.
2) As required by Section 143(3) of the Companies Act we report that: a) we havesought and obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purpose of our audit; b) in our opinionproper books of account as required by law have been kept by the Company so far as itappears from our examination of those books. c) the Balance Sheet the Statement of Profitand Loss and the Cash Flow Statement and changes in equity dealt with by this Report arein agreement with the books of account; d) in our opinion the aforesaid Ind AS financialstatements comply with the Indian Accounting Standards (Ind AS) prescribed under Section133 of the Companies Act read with relevant rules issued there under and other accountingprinciples generally accepted in India;
e) on the basis of written representations received from the directors as on 31 March2018 taken on record by the Board of Directors none of the directors is disqualified ason 31 March 2018 from being appointed as a director in terms of Section 164(2) of theCompanies Act; f) with respect to the adequacy of internal financial controls withreference to financial statements of the company and the operating effectiveness of suchcontrols refer to our separate report in "Annexure B"and g) with respect tothe other matters to be included in the Auditor's report in accordance with Rule11 of theCompanies (Audit and Auditors) Rules2014 in our opinion and to the best of ourinformation and according to the explanations given to us: I) the Company does not haveany pending litigations which would impact its financial position ii) the Company did nothave any long-term contracts including derivative contracts for which there were anymaterial foreseeable losses. iii) the instance of delay in transferring amounts requiredto be transferred to the Investor Education and Protection Fund by the Company is asgiven below.
|Amount (Rs.) ||Period to which the amount relates ||Due date |
|22550 ||1994-95 ||19.10.2001 |
ANNEXURE 'A' TO THE INDEPENDENT AUDITORS' REPORT
The Annexure referred to in Paragraph1undertheheading "Report on other Legal andRegulatory Requirements" of our report of even date to the members of KABSONSINDUSTIRES LIMITED for the year ended 31st March2018.
Statement on the Companies (Auditor's Report) Order 2016
On the basis of such checks as we considered appropriate and according to theinformation and explanation given to us during the course of our audit we report that: I)(a) the Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets;
(b) all the assets have not been physically verified by the management during the yearbut there is a regular program of verification which in our opinion is reasonable havingregard to the size of the company and the nature of its assets. No material discrepancieswere noticed on such verification;
(c) the title deeds of the immovable properties are held in the name of the Company;
ii) the inventory has been physically verified during the year by the management. Inour opinion the frequency of verification is reasonable. The discrepancies noticed onverification between the physical stocks and the book stocks were not material and havebeen properly dealt with in the books of account;
iii) the company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained u/s.189of the Act;
iv) the Company has not advanced any loan not made investments not given guaranteesand not provided any security. Hence para 3(iv) of the aforesaid Order is not applicable;
v) the Company has not accepted deposits from the public. Hence the provisions ofSections 73 to 76 and other relevant provisions of the Companies Act 2013 and theCompanies (Acceptance of Deposits) Rules 2014 are not applicable to the Company.
vi) maintenance of cost records has not been specified by the Central Government u/s148(1) of the Act. Hence para 3(vi) of the aforesaid Order is not applicable;
vii) (a) the Company is not regular in depositing with appropriate authoritiesundisputed statutory dues including investor education protection fund sales tax. Theextent of the arrears of outstanding statutory dues as at the last day of the financialyear for a period of more than six months from the date they became payable are as givenbelow:
|S.no ||Name of the Statue ||Nature of the dues ||Amount (Rs.) ||Period to which the amount relates ||Due date |
|1 ||Maharashtra Sales Tax Act ||Sales Tax ||5817 ||2005-06 ||15.05.2005 |
|2 ||Maharashtra Sales Tax Act ||Sales Tax ||9538 ||2004-05 ||15.04.2005 |
|3 ||Maharashtra Sales Tax Act ||Sales Tax ||800 ||2003-04 ||15.01.2004 |
|4 ||BST Act ||Sales Tax and Penalty ||73735 ||1997-98 ||15.08.2004 |
|5 ||BST Act ||Sales Tax and Penalty ||134780 ||1998-99 ||15.08.2004 |
|6 ||CST Act ||Sales Tax and Penalty ||131000 ||1997-98 ||15.08.2004 |
|7 ||CST Act ||Sales Tax and Penalty ||517000 ||1998-99 ||15.08.2004 |
(b) according to the information and explanations given to us there are no dues ofsales tax income tax customs duty excise duty service tax and cess which have not beendeposited on account of any dispute; viii) during the financial year covered by our auditthe Company had not borrowed from financial institutions. Hence clause 3(viii) of theabove referred Order is not applicable; ix) the Company has not raised moneys by way ofInitial Public Offer or Further Public Offer(including debt instruments) and term loans.Hence clause 3(ix) of the above referred Order is not applicable; x) no fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe year; xi) no managerial remuneration has been paid or provided during the year underreport. Hence clause 3(xi) of the above referred Order is not applicable; xii) the Companyis not a Nidhi Company. xiii) the Company is in compliance with Section 188 and Section177 of the Act wherever applicable for all transactions with related parties and thedetails of related party transactions have been disclosed in the financial statements asrequired by the applicable accounting standards; xiv) the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures .Hence clause 3(xiv) of the above referred Order is not applicable; xv) theCompany has not entered into any non-cash transactions with its directors or personsconnected with him and hence provisions of Section 192 of the Act are not applicable; xvi)the Company is not required to be registered under Section 45-IA of the Reserve Bank ofIndia Act1934.
ANNEXURE - 'B' TO THE INDEPENDENT AUDITORS' REPORT
Report on the Internal Financial Controls under Clause
(i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls with reference to financial statementsof KABSONS INDUSTIRES LIMITED ("the Company") as of 31st March 2018 inconjunction with our audit of the Ind AS financial statements of the Company for the yearended on that date.
Management's Responsibility for Internal Financial Controls with reference to financialstatements
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal financial control with reference to financialstatements criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls withreference to financial statements issued by the Institute of Chartered Accountants ofIndia('ICAI').These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company's policiesthe safeguarding o fits assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting(the"GuidanceNote") and the Standards on Auditing issued byICAI and deemed to be prescribed under section143(10)oftheCompaniesAct2013totheextentapplicableto an audit of internal financialcontrols both applicable to an audit of Internal Financial Controls and both issued bythe Institute of Chartered Accountants of India. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference tofinancial statements was established and maintained and if such controls operatedeffectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements 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 systemwith reference to financial statements
Meaning of Internal Financial Controls with reference to financial statements
A company's internal financial control with reference to financial statements is aprocess designed to provide reasonable assurance regarding there liability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control withreference to financial statements includes those policies and proceduresthat(1)pertaintothemaintenanceofrecordsthatin reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company;(2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effecton the financialstatements.
Inherent Limitations of Internal Financial Controls with reference to financialstatements
Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial control with reference to financial statements may become in adequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls with reference to financial statements and such internal financialcontrols with reference to financial statementswereoperatingeffectivelyasat31stMarch2018basedonthe internal control with reference tofinancial statements criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls with reference to financial statements issued by the Institute of CharteredAccountants of India.
| ||for K.S. RAO & CO |
| ||Chartered accountants |
| ||Firm Registration No. 003109S |
|Place: Hyderabad ||P.GOVARDHANA REDDY |
|Date:30 May 2018 ||Partner |
| ||(ICAIMemb. No.029193) |