To the Members of KEERTHI INDUSTRIESLIMITED
Report on theFinancial Statements
1. We have audited the accompanying financial statements of KEERTHI INDUSTRIES LIMITEDHYDERABAD TELANGANA ("The Company") which comprise the Balance Sheet as at31st March 2017 the Statement of Profit and Loss and Cash Flow Statement for the yearthen ended and a summary of Significant Accounting Policies and Other ExplanatoryInformation.
Management's Responsibility for theFinancial Statements
2. The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act2013("the Act")with respect to the preparation andpresentation of thesefinancial 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)Rules2014. 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.
3. Our responsibility is to express an opinion on these financial statements based onour audit. We have taken into account the provisions of the Act the accounting andauditing standards and Matters which are required to be included in the audit report underthe provisions of the Act and the Rules made there under.
4. 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.
5. An audit involves performing procedures to obtain audit evidence about the amountsand the 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 a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.
6. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.
7. In our opinion and to the best of our information and according to the explanationsgiven to us the financial statements give the information required by the Act in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in Indiain the case of the Balance Sheet of the state ofaffairs of the Company as at 31 March 2017;in the case of the Statement of Profit andLoss of the profit for the year ended on that date; and in the case of Cash FlowStatement of the cash flows for the year ended on that date.
Report on other Legal and Regulatory Requirements
8. 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 paragraphs 3and 4 of the Order to the extent applicable.
9. 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 purpose 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 Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are in agreement with the books of account.
(d) in our opinion 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 Rule 7 of the Companies(Accounts) Rules2014 ;
(e) 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 ;
(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) 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 does not have any pending litigations which would impact itsfinancialposition;
ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. there were no amounts which were required to betransferred to the InvestorEducation and 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 8thNovemberto 30thDecember 2016 and these are in accordance with the books of accountsmaintained by the Company - refer explanatory Note No. 25.11 to the Financial Statements.
For K.S. RAO & CO.
ANNEXURE-A REFERRED TO PARAGRAPH 8 OF OUR REPORT OF EVEN DATE
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 maintains proper records showing full particulars includingquantitative details and situation of fixed assets;
(b) the fixed assets have been physically verified by the management at reasonableintervals and no material discrepancies were noticed on such verification;
(c) title deeds of immovable properties are held in the name of the Company;
(ii) management had physically verified the inventory at reasonable intervals and nomaterial discrepancieswere noticed on physical verification;
(iii) (a) the Company has not granted any loans secured or unsecured to companiesfirms Limited Liability Partnerships or other parties covered in the register maintainedunder Section 189 of the Companies Act 2013;
(b) in view of our comment in para iii (a) above paras 3(iii) (b) and (c) of theaforesaid Order are not applicable to the Company;
iv) the Company has not advanced any loan not made investments not given guaranteesand not provided any security. Hence para 3(iv) of theaforesaid 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 been prescribed by the Central Government undersection 148(1) of the Act and we are of the opinion that prima facie the prescribedaccounts and records have been made and maintained
(vii) (a) according to the records the Company is regular in depositing withappropriate authorities undisputed statutory dues including Provident Fund InvestorEducation Fund Employees State's Insurance Income Tax Sales-tax Service Tax Customsduty Excise duty Cess and other material statutory dues applicable to the Company. Andthere are no statutory dues which were in arrears as at 31st March 2017 for a period ofmore than six months from the date they became payable.
(b) there are no dues of Sales Tax/Income Tax/Customs Duty/Cess which have not beendeposited on account of any dispute except Excise Duty the details of which are givenbelow:
|Name of the Statue ||Nature of Dues ||Amount ||Period to which amount related ||Forum where dispute is pending |
|Erstwhile A P General Sales Tax Act ||Tax on packing material ||1877197 ||FY1990-91 and FY1991-92 ||SalesTax Appellate Authority |
|Central Sales Tax Act ||Central Sales Tax ||3925213# ||FY 2000-01the Order was passed during FY2007-08 ||AP Sales Tax Tribunal# |
|Commercial tax Deptkarnataka ||Central sales Tax ||620112 ||FY 1993-94 ||Hon'ble High Court of Karnataka |
|Central Excise Act ||Central Excise ||19002358* ||Feb 2006-August 2010 Show cause Notice was received on 10.11.2010 ||CESTAT Hyderabad |
# against the demand of ' 3925213 the Company paid ' 1908835. However during theyear under report the Tribunal set aside the demand and remanded the matter to assessingauthorities.
* against the demand ' 200000 paid under protest
(viii) the Company has not defaulted in repayment of dues to banks. The company has notissued any debentures;
(ix) on the basis of review of utilization of funds on overall basis the term loanstaken by the company were applied for the purposes for which the loans were obtained.
(x) we report that no fraud on or by the Company has been noticed or reported duringthe year.
(xi) the Company has paid or provided managerial remuneration in accordance with therequisite approvals mandated by the provisions of section 197 read with Schedule V to theCompanies Act 2013;
xii) the Company is not a Nidhi Company .
xiii) based on the audit procedures performed and according to the information andexplanations given to us all transactions with the related parties are in compliance withsection 177 and section 188 of the Companies Act 2013 and the details have been disclosedin the Financial Statements etc. as required by the applicable accounting standards;
xiv) the Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review;
xv) the Company has not entered into non-cash transactions with directors or personsconnected with him;
xvi) the Company is not required to be registered u/s 45IA of the Reserve Bank of India
For K.S. RAO & CO.
ANNEXURE - B REFERRED TO IN PARAGRAPH 9 (f) OF OUR REPORT OF EVEN DATE
Re: KEERTHI INDUSTRIESLIMITED
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
1. We have audited the internal financial controls over financial reporting ofKeerthiindustriesLimited ("the Company") as of March 31 2017 in conjunctionwith our audit of thefinancial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
2. 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". These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operatingeffectively 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.
3. 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 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.
4. Our audit involves performing procedures to obtain audit evidence about the adequacyofthe 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 auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
5. 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 systemoverfinancial reporting.
Meaning of Internal Financial Controls over Financial Reporting
6. A company's internal financial control over financial reporting is a processdesigned to providereasonable assurance regarding the reliability of financial reportingand the preparation offinancial statements for external purposes in accordance withgenerally accepted accountingprinciples. A company's internal financial control overfinancial reporting includes those policiesand procedures that (1) pertain to themaintenance of records that in reasonable detailaccurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparationof 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 reasonableassurance regardingprevention or timely detection of unauthorized acquisition use ordisposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
7. Because of the inherent limitations of internal financial controls over financialreporting includingthe possibility of collusion or improper management override ofcontrols material misstatementsdue to error or fraud may occur and not be detected. Alsoprojections of any evaluation of theinternal financial controls over financial reportingto future periods are subject to the risk that theinternal financial control overfinancial reporting may become inadequate because of changes inconditions or that thedegree of compliance with the policies or procedures may deteriorate.
8. 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 March 31 2017 based on"the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of InternalFinancial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India".
For K.S. RAO & CO.