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Kapston Facilities Management Ltd.

BSE: 535064 Sector: Others
NSE: KAPSTON ISIN Code: INE542Z01010
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Kapston Facilities Management Ltd. (KAPSTON) - Auditors Report

Company auditors report

To

The Members of

M/s. Kapston Facilities Management Limited

Report on the Financial Statements

We have audited the accompanying financial statements of M/s. KapstonFacilities Management Limited (“the Company”) which comprise the Balance Sheetas at March 31 2018 the Statement of Pro t and Loss Cash Flow Statement for the yearthen ended and a summary of significant accounting policies and other explanatoryinformation.

Management's responsibility for the financial statements

The Company's Board of Directors is responsible for the matters statedin Section 134(5) of the Companies Act 2013 (“the Act”) with respect to thepreparation of these 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 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 provisions of the Act for safeguarding the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor's responsibility

Our responsibility is to express an opinion on these financialstatements based on our audit. We have taken into account the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the Rules made there under. We conductedour audit in accordance with the Standards on Auditing specified under Section 143(10) ofthe Act. Those Standards require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether the financial statementsare free from material misstatement.

An audit involves performing procedures to obtain audit evidence aboutthe amounts and the disclosures in the financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error. In making thoserisk assessments the auditor considers internal financial control relevant to theCompany's preparation of the financial statements that give a true and fair view in orderto design audit procedures that are appropriate in the circumstances but not for thepurpose of expressing an opinion on whether the Company has in place an adequate internalfinancial controls system over financial reporting and the operating effectiveness of suchcontrols. An audit also includes evaluating the appropriateness of the accounting policiesused and the reasonableness of the accounting estimates made by the Company's Directorsas well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the

nancial statements

Opinion

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting

principles generally accepted in India:

(a) in the case of the Balance Sheet of the state of a airs of theCompany as at March 31 2018; (b) in the case of the Pro t and Loss the Pro t for theperiod ended on that date; and (c) in the case of the cash flow statement of the Companyas at March 31 2018

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016(“the Order”) as amended issued by the Central Government of India in terms ofsub-section (11) of section 143 of the Act we give in the “Annexure-A” astatement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by section 143 (3) of the Act we report that: a. wehave sought 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 opinion properbooks of account as required by law have been kept by the company so far as it appearsfrom our examination of those books; c. the Balance Sheet the Statement of Pro t and Lossand the Cash Flow Statement dealt with by this Report are in agreement with the books ofaccount d. In our opinion the aforesaid financial statements comply with the AccountingStandards specified under section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014. e. On the basis of written representations received from thedirectors as on March 31 2018 taken on record by the Board of Directors none of thedirectors is disquali ed as on March 31 2018 from being appointed as a director in termsof Section 164 (2) of the Companies Act. f. With respect to the adequacy of the internalfinancial controls over financial reporting of the Company and the operating effectivenessof such controls refer to our separate Report in “Annexure B”. g. Withrespect to the other matters to be included in the Auditor's Report in accordance withRule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to the bestof our information and according to the explanations given to us:

i. The Company does not have any pending litigations which would impactits financial position. ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses. iii. There wereno amounts which were required to be transferred to the Investor Education and ProtectionFund by the Company.

“Annexure A” to the Independent Auditors' Report

Referred to in paragraph 1 under the heading 'Report on Other Legal& Regulatory Requirement' of our report of even date to the

nancial statements of the Company for the year ended March 31 2018:

1) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets;

(b) The Fixed Assets have been physically veri ed by the management ina phased manner designed to cover all the items

over a period of three years which in our opinion is reasonablehaving regard to the size of the company and nature of its business. Pursuant to theprogram a portion of the fixed asset has been physically veri ed by the management duringthe year and no material discrepancies between the books records and the physical fixedassets have been noticed.

(c) According to the information and explanations given to us and onthe basis of our examination of the records of the

company the title deeds of immovable properties are held in the nameof the company.

2) (a) The management has conducted the physical veri cation ofinventory at reasonable intervals.

b) The discrepancies noticed on physical veri cation of the inventoryas compared to books records which has been

properly dealt with in the books of account were not material.

3) The Company has not granted any loans secured or unsecured tocompanies rms Limited Liability partnerships or other parties covered in the Registermaintained under section 189 of the Act. Accordingly the provisions of clause 3 (iii) (a)to (c) of the Order are not applicable to the Company and hence not commented upon.

4) In our opinion and according to the information and explanationsgiven to us the company has complied with the provisions of section 185 and 186 of theCompanies Act 2013 In respect of loans investments guarantees and security.

5) The Company has not accepted any deposits from the public and hencethe direffectives issued by the Reserve Bank of India and the provisions of Sections 73 to76 or any other relevant provisions of the Act and the Companies (Acceptance of Deposit)Rules 2015 with regard to the deposits accepted from the public are not applicable.

6) As informed to us the maintenance of Cost Records has not beenspecified by the Central Government under sub-section (1) of Section 148 of the Act inrespect of the activities carried on by the company.

7) (a) According to information and explanations given to us and on thebasis of our examination of the books of account and records the Company has beengenerally regular in depositing undisputed statutory dues including Provident FundEmployees State Insurance Income-Tax Sales tax Service Tax Duty of Customs Duty ofExcise Value added Tax Cess and any other statutory dues with the appropriateauthorities. According to the information and explanations given to us no undisputedamounts payable in respect of the above were in arrears as at March 31 2018 for a periodof more than six months from the date on when they become payable.

b) According to the information and explanation given to us there areno dues of income tax sales tax service tax

duty of customs duty of excise value added tax outstanding on accountof any dispute.

8) In our opinion and according to the information and explanationsgiven to us the Company has not defaulted in the repayment of dues to banks. The Companyhas taken any Term loan and Cash credit from financial institutions or from the governmentand has not issued any debentures.

9) Based upon the audit procedures performed and the information andexplanations given by the management the company has raised moneys by way of initialpublic o er by way of equity instruments Accordingly the details of the utilization asfollows.

Amt in Lakhs

Particulars

Projected utilization of funds as per Prospectus

Actual utilization of funds till 31.03.2018

Un-utilized amount*

1 Part finance Working

660.75

Nil

660.75

Capital Requirement
2. Part Repayment of unsecured Loans

200.00

Nil

200.00

3. General Corporate Purpose

99.09

Nil

99.09

4. Issue Related Expenses

100.00

Nil

100.00

- Company Portion
Total

1059.84

0.00

1059.84

*Shares offered in IPO were allotted on 28 March 2018 and listed on 4April 2018 hence the amount was lying in the Escrow Account as on 31 March 2018.

10) Based upon the audit procedures performed and the information andexplanations given by the management we report

that no fraud by the Company or on the company by its officers oremployees has been noticed or reported during the year.

11) Based upon the audit procedures performed and the information andexplanations given by the management the managerial remuneration has been paid orprovided in accordance with the requisite approvals mandated by the provisions of section197 read with Schedule V to the Companies Act;

12) In our opinion the Company is not a Nidhi Company. Therefore theprovisions of clause 4 (xii) of the Order are not applicable

to the Company.

13) In our opinion all transactions with the related parties are incompliance with section 177 and 188 of Companies Act 2013

and the details have been disclosed in the Financial Statements asrequired by the applicable accounting standards.

14) Based upon the audit procedures performed and the information andexplanations given by the management the company has not made any preferential allotmentor private placement of shares or fully or partly convertible debentures during the yearunder review. Accordingly the provisions of clause 3 (xiv) of the Order are notapplicable to the Company and hence not commented upon.

15) Based upon the audit procedures performed and the information andexplanations given by the management the company has not entered into any non-cashtransactions with directors or persons connected with him. Accordingly the provisions ofclause 3 (xv) of the Order are not applicable to the Company and hence not commented upon.

16) In our opinion the company is not required to be registered undersection 45 IA of the Reserve Bank of India Act 1934 and

accordingly the provisions of clause 3 (xvi) of the Order are notapplicable to the Company and hence not commented upon.

For NSVR & Associates LLP.

Chartered Accountants

Firm Reg. No. 008801S/S200060

R. Srinivasu

Partner M. No. 224033

Place:

Hyderabad

Date:.

30.05.2018.

“Annexure B” to the Independent Auditor's Report of even dateon the Financial Statements of M/s. KAPSTON

FACILITIES MANAGEMENT LIMITED

Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013

(“the Act”)

We have audited the internal financial controls over financialreporting of M/s. KAPSTON FACILITIES MANAGEMENT LIMITED (“the Company”)as of March 31 2018 in conjunction with our audit of the financial statements of theCompany for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing andmaintaining internal financial controls based on ''the internal control over financialreporting established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India''. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and cientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

Auditors' responsibility

Our Responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting based on our audit. We conducted our audit inaccordance with 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 tobe prescribed under section 143(10) of the Companies Act 2013 to the extent applicableto an audit of internal financial controls both applicable to an audit of InternalFinancial Controls and both issued by the Institute of Chartered Accountants of India.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks of material misstatement of the financial statements whether due to fraud or 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 financial controls system over financial reporting.

Meaning of internal financial controls over financial reporting

A company's internal financial control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized 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 financialreporting

Because of the inherent limitations of internal financial controls overfinancial reporting 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 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.

Opinion

In our opinion the Company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at March 31 2018 basedon ''the internal control over financial reporting 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''.

For NSVR & Associates LLP.

Chartered Accountants

Firm Reg. No.008801S/S200060

(R. Srinivasu)

Partner

M. No. 224033

Place: Hyderabad

Date: 30-05-2018.

M/S.KAPSTON FACILITIES MANAGEMENT LIMITED

CIN:L15400TG2009PLC062658

NO.287 MIG-2 IX PHASE KPHB KUKATPALLY HYDERABAD - 500072