TO THE MEMBERS OF KAMAR CHEMICALS AND INDUSTRIES LIMITED
Report onthe FinancialStatements . .
We have audited the accompanying Financial Statements of KAMAR CHEMICALS ANDINDUSTRIES LIMITED ("the Company") which comprises the Balance Sheet as at31st March 2017 the Statement of Profit and Loss the Cash Flow Statement for the yearthen ended and a summary of the significant accounting polieies and other explanatoryinformation.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of theCompanies Act 2013 ("the Act") with respect to the preparation ofthese financial statementsthat give a true and fair view of the financial positionfinancial performanceand cash flows of the Company in accordancewith the accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Companyand for preventingand detecting fraudsand other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatemsnt whether due to fraud orerror.
Our responsibility is to express an opinion on thesefinancial statements based on ouraudit. We have taken into account the provisions of the Act the Accountingand AuditingStandards and matterswhichare required to be included in the Audit Report under theprovisions of the Act and the Rules made thereunder.
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 performthe audit o t obtain reasonable assurance about whetherthe financialstatements arefree frommaterial 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 orerror. I n making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit procedures'that are appropriate in the circumstances but not for the purpose of expressing anopinion on whether the company has in place adequate internal control system overfinancial reporting and the operative effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of the-accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our adverse audit opinion.
Basis for Adverse Opinion
In our opinion the concept of "GOING CONCERN" is no more valid as far asthis company is concernedhaving regards to the following:
1. The Company has Incurred a cash loss of Rs.131163/- in the currentyear.
2. The net worth has been fully eroded and the accumulated losses as at31.03.2017 stand at Rs. 24.19 Crores as against the net owned shareholders funds ofRs.7.57 crores.
3. As the company-was unable to repay the loan outstanding to theSIPCOTthe SIPCOThad taken over all the assetsof the Company during the financial year2007-2008Further the viability of the Company appears to be doubtful as the company is not In aposition to recommence Its production.
4. In view of the above we are of the opinion that the Company'sAccounts should NOT have beencomplied on "GOING CONCERN" basis. Had the Companynot followed 'GOING CONCERN ACCOUNTING" there would have beenslgnlflcant Adjustmentsto the assets and liabilities as on 31st March 2017.The Impact of above on the accounts isnot ascertalnable at this stage.
I n our opinion based onthe information mentioned in the "Basis for AdverseOpinion" paragraph the financial statements do not give the information required bythe Companies Act 2013 in the manner so required and also do not give a true and fairview in conformity with the accounting principles generally accepted in India of the stateof affairs of the Company as at 31st March 2017 and its loss and its cash flows for theyear ended on that date.
The Company has not appointed a woman director as required under Section 149 (1) oftheCompanies Act 2013.Also The Company has not appointed an internal auditor as requiredunder Section 138 (1) of the Companies Act 2013. The Company has not appointed a CompanySecretary as required under Section 203.
Our opinion is not qualified or modified in respect of these 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 statement on the matters specified in paragraph 3 and 4 of the Orderto the extent applicable.
2. As required by Section 143 (3) of the Act we report that:
a. We have sought and except for the possible effects of the matter described in theBasis for Adverse Opinion paragraph above obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.
b. Except for the possible effectsof the matter described in the Basis forAdverseOpinion paragraph above in our opinion proper books of account as required by lawhave been kept bytheCompany 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 withby this Report are in agreement with the books of account.
d. Except for the possible effectsof the matter described in the Basis for Adverseopinion paragraph above the Balance sheet Statement of Profit and Loss and Cash flowstatement comply with the Accounting Standards specified under Section 133 of the Actread with Rule 7 of the Companies (Accounts) Rules 2014.
e. The matter described In the "Basis for Adverse opinion" paragraph abovein our opinion may have adverse effect on the functioning of the company.
f . On the basis of the written representations received from the directors as on 31stMarch 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2017 from being appointed as a director in terms of Section164 (2) of the Act.
g. 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".
h. 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 financial statements as referred to in Note -20 to the financialstatements;
ii. The Company does not have any material foreseeable losses on long-term contractsincluding derivative contracts.
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
iv. The Company has provided requisite disclosures in its financial statements as toholdings as well as dealings in Specified Bank Notes during the period from 08th November2016 t o 30th December 2016 and they are in accordance with the books of accountsmaintained by the Company.
Annexure referred to in our reportof evendateon the Accounts of Kamar Chemicals andIndustries Limited for the year ended 31 "March 2017
1. In respectof FixedAssets:
a. The Company hasmaintained proper recordsshowing full particulars includingquantitative details and situation of fixedassets.
b. All the assets have not been physically verified by the management during the yearbut there is a regular program of physical verification which in our opinion isreasonable having regard to the size of the Company and the nature of fixedassets.
c. As per the information and explanations given to us the company does not own anyimmovable property.
2. The Company does not hold any Inventory.
3. The Company has not granted any loan secured or unsecured to companies firms orother parties covered in the register maintained under section 189 of the Companies Act2013.
4. The Company has not granted any loans investments guarantees and security to anyperson as prescribed in section 185 and 186 of the Companies Act 2013.
5. The Company has not accepted any deposit from the public. Therefore the provisionsof Clause (v)of paragraph 3 of the CARO 2016 are not applicable to the Company.
6. The Company is not required to maintain cost records as specified by the CentralGovernment under Sub Section (1) of Section 148 of The Companies Act 2013.
7. (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of income tax has been regularly deposited during the year by theCompanywith the appropriate authorities. As explained to us the Company did not have anydues on accountof any other tax cess or duty.
According to the information and explanations given to us no undisputed amountspayable in respect of provident fund income tax sales tax wealth tax service tax dutyof customsvalue addedtax cess and other material statutory dueswere in arrears as at 31March 2017 for a period of more than six months from the date they became payable exceptsales tax payable of Rs.115375/-
(b)According to the information and explanationsgivento us no disputed amountspayablein respect of provident fund income tax sales tax wealth tax service tax duty ofcustomsvalue added tax cess and other material statutory dues were in arrears as at 31March 2017.
8. The Company has defaulted in repaymentof dues to financial institutions or banks.The details of the same is provided as under
|S.No ||Particulars ||Amount payable ||Pending from the year |
|1. ||Loan taken from SIPCOT ||51552443 ||1992 |
|2. ||IFSTLoan ||2447557 ||1992 |
9. During the year the Company has not raised moneys by way of initial public offer orfurther public offer (including debt instruments) and term loans.
10. In our opinion according to the information provided to us based on our auditchecks and on an overall examination of the books and records of the Companyno fraud onor by the Companyhas been noticed or reported during the year.
11. No managerial remuneration was paid during the year and hence the provisions ofsection 197 read with Schedule V to the Act arenot applicable to theCompany.
12. The said Company is not a Nidhi company.Therefore the provisions of clause (xii)of paragraph 3 of CARO 2016 are not applicable to theCompany.
13. As per the information and explanations given to us there were no transactionswith the related parties during the year and hence compliance under section 177 and 188 ofthe Companies act 2013 does not arise.
14. The Company has not madeany preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review.
15. The Company during the year has not enteredinto any non-cashtransactionswithdirectors orpersons connected with him as prescribed under the provisions of section192 of Companies Act2013.
16. The Company is not a Non-Banking Finance Company.Therefore the provisions ofClause (xvi) of paragraph 3 of the CARO 2016 are not applicable to theCompany.
Annexure to the Independent Auditor's Report of even date on the Financial Statementsof Kamar Chemicals and Industries Limited.
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 KamarChemicals and Industries Limited("the Company") as of March 31 2017 inconjunction with our audit of the financial statements of the Company for the year endedon 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 implementatibn 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 errorsthe 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 ICAI. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls overfinancial reporting 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 over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internafflnancial 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 auditor's judgments including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the Company's internal financial controls system overfinancial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial controlover financial reporting is a processdesigned toprovide 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 thecompany;
2) Provide reasonable assurance that transactions are recorded as necessaryto permitpreparation of financial statementsin accordance with generally acceptedaccountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and
3) Providereasonable assurance regarding prevention or timely detection of unauthorizedacquisition use or disposition ofthecompany'sassets that could have amaterial effectonthefinancialstatements.
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 managementoverride ofcontrols material misstatementsdue to error or fraudmayoccur and not bedetected.Alsoprojections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
I n our opinion the Companyhas in all material respects an adequate internalfinancial controls system over financial reporting andsuchinternal financial controlsoverfinancial reportingwere operating effectively as at March 31 2017 based on the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control statedin the Guidance Note onAudit of InternalFinancial Controls Over Financial Reporting issued by the ICAI.
| ||For S.VENKATRAI CO. |
| ||Chartered Accountants |
| ||(FRN :004656S) |
|Place : Chennai ||GOWTHAMAN |
|Date : 24"1August2017 ||Partne r |
| ||(M.No.201737 ) |