To the Members of
KGN INDUSTRIES LIMITED
Report on the Ind AS Financial Statements
We have audited the accompanying Ind AS financial statements of KGN INDUSTRIES LIMITED("the Company") which comprise the Balance Sheet as at March 312018 theStatement ofProfit and Loss the Cash Flow Statement and the Statement of Changes inEquity for the year then ended and a summary of significant accounting policies and otherexplanatory information.
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 ("the Act") with respect to the preparation ofthese Ind AS financial statementsthat give a true and fair view of the financial positionfinancial performance including cash flows and changes in equity of the Company inaccordance with accounting principles generally accepted in India including the IndianAccounting Standards (Ind AS) specified under section 133 of the Act. read with Rule 7 ofthe Companies (Accounts) Rules 2014 and the Companies (Indian Accounting Standards)Rules 2015 as amended. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and the design implementation and maintenanceof adequate internal financial control that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the Ind AS financial statements that give a true and fair view and arefree 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 Act the accounting andauditing standards andmatters which are required to be included in the audit report underthe provisions of the Act and theRules made thereunder. We conducted our audit of the IndAS financial statements in accordance withthe Standards on Auditing issued by theInstitute of Chartered Accountants of India as specifiedunder Section 143(10) of the Act.Those Standards require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether the IND AS financial statementsare freefrom material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosuresin the IND AS financial statements. The procedures selected depend on theauditor's judgment including theassessment of the risks of material misstatement of theInd AS financial statements whether due tofraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of the Ind AS financial statements that give a true and fair viewin order todesign audit procedures that are appropriate in the circumstances. An audit alsoincludesevaluating the appropriateness of accounting policies used and the reasonablenessof the accountingestimates made by the Company's Directors as well as evaluating theoverall presentation of the IndAS financial statements. We believe that the audit evidencewe have obtained is sufficient andappropriate to provide a basis for our audit opinion onthe Ind AS financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us theInd AS financial statements give the information required by the Act inthe manner so required andgive a true and fair view in conformity with the accountingprinciples generally accepted in India ofthe state of affairs of the Company as at March312018 its loss including other comprehensiveincome its cash flows and the changes inequity for the year ended on that date.
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 sub-section (11) of section 143 ofthe Act we give in the Annexure 1 a statement on the matters specified in paragraphs 3and 4 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 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 including the Statement of OtherComprehensive Income the Cash Flow Statement and Statement of Changes in Equity dealtwith by this Report are in agreement with the books of account;
(d) In our opinion the aforesaid Ind AS financial statements comply with theAccounting Standards specified under section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014 Companies (Indian Accounting Standards) Rules 2015 asamended;
(e) On the basis of written representations received from the directors as on March 312018 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2018 from being appointed as a director in terms of section 164 (2) ofthe Act;
(f) 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 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on its financialposition in its Ind AS financial statements - Refer Note 4 27 and 43(ii) to the Ind ASfinancial statements;
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts;
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company
The comparative financial information of the Company for the year ended March 312017and the transition date opening balance sheet as at April 1 2016 prepared in accordancewith Ind AS included in these Ind AS financial statements have been audited by thepredecessor auditor who had audited the financial statements for the relevant periods.
For kamlesh Bhojani & Associates
Membership Number: 119808
Firm Registration Number: 127505W
Place of Signature : Ahmedabad
Date : 26.05.2018
Annexure 1 referred to in paragraph 1 of the section on "Report on other legal andregulatory requirements" of our report of even date
TO THE MEMBERS OF KGN INDUSTRIES LIMITED
1. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The Fixed Assets have been physically verified by the management in a phasedmanner designed to cover all the items over a period of three years which in ouropinion is reasonable having regard to the size of the company and nature of itsbusiness. Pursuant to the program a portion of the fixed asset has been physicallyverified by the management during the year and no material discrepancies between the booksrecords and the physical fixed as sets have been noticed.
(c) The title deeds of immovable properties are held in the name of the company.
2. (a) The Inventory has been physically verified by the management during the year. Inour opinion the frequency of verification is reasonable.
(b) The discrepancies noticed on physical verification of the inventory as compared tobooks records which has been properly dealt with in the books of account were notmaterial.
3. (a) The Company has granted unsecured loan to its Subsidiary Companies and partiesin the register maintained under Section 189 of the Companies Act 2013. The Maximumamount granted during the year and year end balances of loan to such subsidiaries were asper details given below. The terms and conditions of such loans are not primafacieprejudicial to the interest of the Company.
|Sr. No. Name of the Party ||Relation with the Company ||Maximum Outstanding (in Rs.) ||Closing Balance As on 31/03/2018 (in Rs.) |
|1. KGN Projects Limited ||Subsidiary Company ||1611135/- ||1611135/- |
|2. KGN Enterprises Limited ||Associates ||138066175/- ||137567699/- |
(b) The Company has not taken loans secured or unsecured from the companies or otherparties covered in the register maintained u/s 189 of the Companies Act 2013
4. 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 Companies Act 2013In respect of loans investments guarantees and security.
5. The Company has not accepted any depos its from the public and hence the directivesissued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any otherrelevant provisions of the Act and the Companies (Acceptance of Deposit) Rules 2015 withregard to the deposits accepted from the public are not applicable.
6. As informed to us the maintenance of Cost Records has not been specified by theCentral Government under sub-section(1) of Section 148 of the Act in respect of theactivities carried on by the company.
7. (a) According to information and explanations given to us and on the basis of ourexamination of the books of account and records the Company has been generally regularin depositing undisputed statutory dues including Provident Fund Employees StateInsurance Income-Tax Sales tax Service Tax Duty of Customs Duty of Excise Valueadded Tax Cess and any other statutory dues with the appropriate authorities. Accordingto the information and explanations given to us no undisputed amounts payable in respectof the above were in arrears as at March312017 for a period of more than six months fromthe date on when they be comepayable.
(b) According to the information and explanation given to us there are no dues ofincome tax sales tax service tax duty of customs duty of excise value added taxoutstanding on account of any dispute.
8. In our opinion and according to the information and explanations given to us theCompany has not defaulted in the repayment of dues to banks. The Company has not taken anyloan either from financial institutions or from the government and has not issued anydebentures.
9. Based upon the audit procedures performed and the information and explanations givenby the management the company has not raised moneys by way of initial public offer orfurther public offer including debt instruments and term Loans. Accordingly theprovisions of clause 3(ix) of the Order are not applicable to the Company and hence notcommented upon.
10. Based upon the audit procedures performed and the information and explanationsgiven by the management we report that no fraud by the Company or on the company by itsofficers or employees has been noticed or reported during the year.
11. Based upon the audit procedures performed and the information and explanationsgiven by the management the managerial remuneration has been paid or provided inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Companies Act;
12. In our opinion the Company is not a Nidhi Company. Therefore the provisions ofclause 4 (xii) of the Order are not applicable to the Company.
13. In our opinion all transactions with the related parties are in compliance withsection 177 and 188 of Companies Act 2013 and the details have been disclosed in the INDAS Financial Statements as required by the applicable accounting standards.
14. In our opinion all transactions with the related parties are in compliance withsection 177 and 188 of Companies Act 2013 and the details have been disclosed in the INDAS Financial Statements as required by the applicable accounting standards.
15. Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year underreview. Accordingly the provisions of clause 3 (xiv) of the Order are not applicable tothe Company and hence not commented upon.
16. In our opinion the company is not required to be registered under section 45IA ofthe Reserve Bank of India Act 1934 and accordingly the provisions of clause 3 (xvi) ofthe Order are not applicable to the Company and hence not commented upon.
For Kamlesh Bhojani & Associates
Place : Ahmedabad
Date : 26.05.2018