To the Members of
KOTHARI INDUSTRIAL CORPORATION LIMITED
Report on the Financial Statements
We have audited the accompanying standalone financial statements of KOTHARIINDUSTRIAL CORPORATION LIMITED ("the Company") which comprises theBalance Sheet as at March 31 2018 the Statement of Profit and Loss (including OtherComprehensive Income) Cash Flow Statement and the Statement of changes in equity for theyear then ended and a summary of significant accounting policies and other explanatoryinformation.
Managements Responsibility for the standalone Financial Statements
The Companys 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 standalone financial statements that give a true and fair view of the financialposition financial performance including other comprehensive income cash flows andchanges in equity of the company in accordance with the Indian Accounting Standardsprescribed under Section 133 of the Act read with Rule 7 of the Companies (IndianAccounting Standards) Rules 2015 as amended and other accounting principles generallyaccepted in India.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit. In conducting the audit we have taken into account theprovisions of the Act the accounting and auditing standards and matters which arerequired to be included in the audit report under the provisions of the Act and the Rulesmade 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 perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditors judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal financial control relevant to the Companyspreparation of the financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances but not for the purpose ofexpressing an opinion on whether the Company has in place an adequate internal financialcontrols system over financial reporting and the operating effectiveness of such controls.An audit also includes evaluating the appropriateness of the accounting policies used andthe reasonableness of the accounting estimates made by the Companys Directors aswell as evaluating 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 audit opinion on the standalone financial statements
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone 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 of the state of affairs of the Companyas at March 31 2018 its Loss for the year ended on that date total comprehensiveincome the changes in equity and its Cash Flow for the year ended on that date.
Emphasis of Matter
Without qualifying our report we draw attention to the following:
1. For the restated HDFC loan of Rs 3.45 crores no provision of interest andother charges have been made pending decision of the Supreme Court of India. (Refer NoteNo. 5)
2. No provision has been created in the books against loss that may arise due tothe claim raised by the Government against the Coonoor property. (Refer Note No. 6)
3. No provision has been made against the sundry debtors of Rs 59.40 lacsrelating to the sales discontinued areas. (Refer Note No. 7) Report on Other Legal andRegulatory Requirements
1. As required by the Companies (Auditors Report) Order 2016 ("theOrder") 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"a statement on the matters specified in paragraphs 3 and 4 of the Order to the extendapplicable.
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 the Statement of Profit and Loss including Comprehensive IncomeStatement of changes in equity and the Cash Flow Statement dealt with by this Report arein agreement with the books of account
d. in our opinion the aforesaid standalone financial statements comply with the IndianAccounting Standards prescribed under section 133 of the Act.
e. On the basis of written representations received from the directors as on March 312018 taken on record by the Board of Directors none of the directors is disqualified ason March 31 2018 from being appointed as a director in terms of Section 164 (2) of theAct.
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 Auditors Report inaccordance with Rule 11of 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.
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 be transferred to the InvestorEducation and Protection Fund by the Company during the year.
"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 financial statements of theCompany for the year ended March 31 2018:
1. Fixed Assets:
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 phased mannerwhich in our opinion is reasonable having regard to the size of the company and nature ofits business.
c. The title deeds of immovable properties are held in the name of the company
2. The management has conducted the physical verification of inventory at reasonableintervals.
3. The Company has not granted any loans secured or unsecured to companies firmsLimited Liability partnerships or other parties covered in the Register maintained undersection 189 of the Act. Accordingly the provisions of clause 3 (iii) (a) to (C) of theOrder are not applicable to the Company and hence not commented upon.
4. In our opinion and according to the information and explanations given to us thecompany has complied with the provisions of section 185 and I86 of the Companies Act 2013In respect of loans investments guarantees and security.
5. According to the information and explanations given to us the company has notaccepted any Public Deposits during the year.
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. The Company is not regular in depositing undisputed statutory duesincluding provident fund service tax Goods and Service Tax income tax (tax deducted atsource) professional tax and property tax.
(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 not been generallyregular in depositing undisputed statutory dues including Provident Fund Employees StateInsurance Income-Tax Sales tax Service Tax Goods and Service Tax Duty of CustomsDuty of Excise Value added Tax Cess and any other statutory dues with the appropriateauthorities.
According to the information and explanations given to us the extent of arrears ofundisputed amount outstanding as on 31st March 2018 for a period of more than six monthsfrom the date they became payable as certified by the Management is as under
| || |
Rs in lacs
|Income Tax (TDS)* || |
|Professional Tax || |
|Property Tax (factory disputed) || |
*Since remitted Rs 256574/-
(b) According to the information and explanations given to us details of disputedSales Tax Income Tax Customs Duty Wealth Tax Excise Duty Value Added Tax and Cesswhich have not been deposited on account of disputes are given below
|Name of the statue ||Nature of dues || |
Amount (in lacs)
|Period to which the amount relates ||Forum where dispute is pending |
|Tamilnadu Branch Transfer of Fertilisers Non receipt of C forms and disputed tax on sulphur loan ||TNGST & CST || |
|1988-89 1991-92 to ||D.C.C.T appeals STAT and High court stay |
|Karnataka Turnover tax on NPK Mixture ||KST || |
|1996-97 ||STAT Stay |
|Kerala Disputed rate of tax ||KGST || |
|2001-02 ||STAT Stay |
|Total || || |
| || |
|Remanded back to Assessing authorities:Branch transfer of fertilisers non receipt of C forms and disputed taxes ||TNGST & CST || |
|1985-86 to 1997-98 ||D.C.C.T appeals STAT and High court |
8. On the basis of verification of records and according to the information andexplanations given to us the Company has not defaulted in repayment of loans orborrowings to Financial Institutions Government and Banks except the loan from HDFCBank against which litigation is pending. The company has not raised any moniesagainst issue of debentures.
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. To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company or no material fraud on the Company by its officersor 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 company has not paid any managerial remuneration duringthe year.
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 theFinancial Statements as required by the applicable accounting standards.
14. During the year the company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures. Accordingly the provisionsof clause (xiv) of para 3 of the Order are not applicable to the company.
15. Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not entered into any non-cash transactions withdirectors or persons connected with him. Accordingly the provisions of clause 3 (xv) ofthe Order are not applicable to the Company and hence not commented upon.
16. In our opinion the company is not required to be registered under section 45 IA 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.
"Annexure B" to the Independent Auditors Report of even date on theStandalone Financial Statements of Kothari Industrial Corporation Limited Report on theInternal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of theCompanies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of KothariIndustrial Corporation Limited ("the Company") as of March 31 2018 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.
Managements Responsibility for Internal Financial Controls
The Companys 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 controlstated in the Guidance Note of 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 efficientconduct of its business including adherence to companys policies the safeguardingof its 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.
Our responsibility is to express an opinion on the Companys 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 Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively 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 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 auditors judgment including the assessment of the risks ofmaterial misstatement of the financial statements 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 Companys internal financial controlssystem over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A companys internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A companys 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 authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompanys assets that could have a material effect on the financial statements.
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 management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2018 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
| ||For M/s.Arockiasamy & Raj |
| ||Chartered Accountants |
| ||Firm Reg.No.006850S |
| ||(A. Nagarajan) |
|Chennai ||Partner |
|Dated: 30.05.2018 ||Membership No.020680 |