INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF LANCOR HOLDINGS LIMITED
Report on the StandaloneFinancial Statements
We have audited the accompanying standalone financial statements of Lancor HoldingsLimited ("the Company") which comprise the Balance Sheet as at March 312017 the Statement of Profit and Loss the Cash Flow Statement for the year then endedand a summary of the signi cant accounting policies and other explanatory information.
Management's Responsibility for the Standalone 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 standalone financial statements that give a true and fair view of the financialposition financial performance and cash ows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspeci ed under Section 133 of the Act read with relevant rule 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.
Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.
We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing speci ed 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 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.
We believe that the audit evidence we have obtained is suf cient 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 2017 and its profit and its cash ows for the year ended on that date.
Emphasis of Matter
a) We draw your attention to note no.4.04 (b) to the audited standalone financialstatement relating to circumstances which have been considered for determining the periodfor capitalization of borrowing cost.
b) We draw attention to note no. 4.12 (a) regarding pending litigation to one of theCommercial Property accounted as property plant and equipment having carrying value ofRs.356360987/-
Our report is not quali ed in respect of the above 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 speci ed in paragraph 3 and 4 of the saidOrder to the extent applicable.
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 purposes 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 and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.
(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards speci ed under Section 133 of the Act read with relevant rule of theCompanies (Accounts) Rules 2014.
(e) On the basis of the written representations received from the directors as on March31 2017 and taken on record by the Board of Directors none of the directors is disqualied as on March 31 2017 from being appointed as a director in terms of Section 164(2) ofthe Act.
(f) With respect to adequacy of internal financial controls over financial reporting ofthe Company and operating effectiveness of such controls refer to the separate report in"Annexure B".
(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 has disclosed the impact of pending litigation on its financial positionin its financial statement. Refer note number 4.12to the financial statement.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There has been no delay in transferring the amounts required to be transferredto the Investor education and Protection Fund by the Company.
iv. The Company has provided requisite disclosures in the standalone financialstatements as to
holdings as well as dealings in Speci ed Bank Notes during the period from 8 November2016 to
30 December 2016. Based on audit procedures performed and relying on the management'srepresentation we report that the disclosures are in accordance with the books of accountmaintained by the Company and as produced to us by the Management. Refer note no 2.17 inthe financial statements.
For G. M. Kapadia & Co.
(Firm Registration No.104767W)
Satya Ranjan Dhall
Dated : May 29 2017 (Membership No. 214046)
ANNEXURE 'A' TO THE AUDITOR'S RPEORT
Referred to in Paragraph 3 of our report of even date
I. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of xed assets.
(b) As per the plan and programme of the management xed assets have been physicallyveri ed. The programme of physical veri cation of xed assets in our opinion is consideredreasonable having regard to the size of the Company and nature of its assets. No materialdiscrepancies were noticed on such veri cation. As regards capital work-in-progress thesame will be veri ed by the management on completion of assets.
(c) The title deeds of the Immovable Properties classi ed under the head Fixed assetsare held in the name of the Company. However in one case with respect to a commercialproperty having gross block value Rs.484155745/- & net block value Rs.356360987/- as on March 31 2017 the dispute with the landowner relating to the landon which the property is situated the single bench of the Hon'ble High Court of Madrashas set aside the invalidation of the sale deed. Subsequently the landowners have led anappeal before the division bench of Hon'ble High court of Madras and the matter ispending. We refer to the note no. 4.12 (a) regarding this matter.
ii. The inventories have been physically veri ed during the year by the management. Inour opinion the frequency of veri cation is reasonable and adequate in relation to thesize of the company and to nature of its business. We have been informed that no materialdiscrepancies were noticed on veri cation between the physical stocks and the book ofaccounts.
iii. The Company has granted unsecured loans to One rm covered in the registermaintained under Section 189 of the Companies Act 2013.
a) In our opinion and according to the information and explanation provided to us theterms and conditions of on which the loan has been granted are not prima facie prejudicialto the interest of the Company.
b) In the case of the rm as per the information and explanation given to us norepayment schedule has been speci ed and accordingly the regularity in repayment ofprincipal and interest amount wherever applicable does not arise.
c) As stated in sub clause (b) as no repayment schedule has been speci ed thequestion of total amount over due for more than 90 days and reasonable step taken forrecovery in this regard does not arise.
iv. In our opinion and according to the information and explanation provided to us inrespect to loans investments guarantees and securities provisions of section 185 and186 of the Companies Act 2013 has been complied with.
v. In our opinion and according to the information and explanation given to us theCompany has not accepted deposits from the public and therefore the provisions containedin sections 73 to 76 or any other relevant provisions of the Act and Rules framed thereunder are not applicable to the Company. We have been informed that no order has beenpassed by Company Law Board or National Company Law Tribunal or Reserve Bank of India orany Court or any other Tribunal.
vi. We have broadly reviewed the books of account and records maintained by the Companyrelating to construction and development activity pursuant to the order made by theCentral Government for the maintenance of cost record under section 148(1) of theCompanies Act 2013 and are of the opinion that prima facie the prescribed accounts andrecords have been made and maintained. We have however not made a detailed examinationof the records with a view to determining whether they are accurate or complete.
vii. a) Based on the record produced to us the Company has generally been regular indepositing with the appropriate authorities undisputed dues including provident fundemployees' state insurance income- tax sales tax service tax duty of customs duty ofexcise value added tax cess and other material statutory dues applicable to it.According to the information and explanations given to us no undisputed amount payable inrespect of outstanding statutory dues were in arrears as at March 31 2017 for a period ofmore than six months from the date they became payable.
b) According to the information and explanation given to us there are no dues ofincome tax sales tax duty of customs duty of excise value added tax or cess except forservice tax interest on service tax and penalty as on March 31 2017.
|Name of the Statute 1 Finance Act 1994 ||Nature of Dues Penalty and Interest on Service Tax ||Period to which the amount relates February 2009 to June 2009 ||Forum where the dispute is pending Customs Excise and Service tax Appellate Tribunal ||Amount (Rs.) Not Yet Determined |
|2 Finance Act 1994 ||Service Tax ||October 2007 to August 2009 ||Customs Excise and Service tax Appellate Tribunal ||15610334 (Note -1) |
Note 1: The amount is excluding interest and penalty
viii. According to the information and explanations given to us and on the basis of ourexamination of the books of account the Company has not defaulted in repayment of dues toany financial institution or bank. The Company has not received any loan from Governmentand also has not issued any debenture. Accordingly reporting relating to default inrepayment of dues to Government and debenture holders does not arise.
ix. In our opinion and according to the information and explanations given to us theCompany has not raised any money by way of initial public offer or further public offer(including debt instruments). The term loans obtained have been applied for the purposefor which the loans were obtained.
x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us no fraud by the Company or anyfraud on the Company by its Officers or employees has been noticed or reported during theyear nor have we been informed of such case by the management.
xi. According to the information and explanations given to us and on the basis of ourexamination of the books of account the Company has not paid any managerial remuneration.Accordingly the reporting regarding compliance with the provision of section 197 read withschedule V of the Companies Act 2013 does not arise.
xii. The Company is not a Nidhi Company. Therefore the provisions of paragraph 3 (xii)of the Order are not applicable to the
xiii. According to the information and explanation provided to us and in our opinionthe related party transactions are entered in to by the Company are in compliance withsection 177 and section 188 of the Companies Act 2013 and the same has been disclosed inthe financial statements as required by the applicable accounting standards.
xiv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly paid convertible debenturesduring the year. Accordingly the paragraph 3 (xiv) of the Order are not applicable to theCompany.
xv. According to the information and explanation provided to us and based on theexamination of the books of account the Company has not entered in to any non- cashtransaction with the director or person connected with him. Accordingly the paragraph 3(xv) of the Order is not applicable to the Company.
xvi. As per the information and explanation provided to us the Company is not requiredto register u/s 45-IA of the Reserve Bank of India Act 1934.
| ||For G.M.Kapadia & Co. |
| ||Chartered Accountants |
| ||(Firm Registration No.104767W) |
| ||Satya Ranjan Dhall |
|Chennai ||Partner |
|Dated : May 29 2017 ||(Membership No. 214046) |
Annexure 'B' to the Independent Auditor's Report
Referred to paragraph 2(f) under the heading 'Report on other Legal and RegulatoryRequirements' of our report on even date to the financial statements of the Company forthe year ended March 31 2017
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 LancorHoldings Limited (the "Company") as of March 31 2017 in conjunction with ouraudit of the standalone financial statements of the company for the year ended on thatdate.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on internal control over financial reporting criteria establishedby the company considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls over Financial Reporting issued bythe Institute of Chartered Accountants of India (ICAI). These responsibilities include thedesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the orderly and ef cient conduct of its businessincluding adherence to company's policies the safe guarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe 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("Guidance Note") and the Standards on auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Companies Act 2013 to the extent applicable toan audit of internal financial controls. Those standards and guidance note require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.
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 auditor's judgement 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 obtained is suf cient and appropriate to providea basis for our opinion on the company's internal financial control over financialreporting.
Meaning of Internal Financial Controls over Financial Reporting
A Company's internal financial control over financial reporting is a process designedto provide 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 ofrecords that in reasonable detail accurately and fairly re ect the transactions anddispositions of the assets of the Company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures 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 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 control 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 policies or procedures may deteriorate.
In our opinion the Company has in all material aspects 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 theinternal control over financial reporting criteria established by the Company consideringthe essential components of the internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
| ||For G. M. Kapadia & Co. |
| ||Chartered Accountants |
| ||(Firm Registration No.104767W) |
| ||Satya Ranjan Dhall |
|Chennai ||Partner |
|Dated: May 29 2017 ||(Membership No. 214046) |