TO THE MEMBERS OF MANGALAM TIMBER PRODUCTS LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of MANGALAM TIMBER PRODUCTSLIMITED which comprise the Balance Sheet as at 31st March 2017 the Statement of Profit& Loss and the Cash Flow Statement for the year ended on that date and a summary ofsignificant accounting policies and other explanatory information.
Management's Responsibility for the 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 financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
Our responsibility is to express an opinion on these financial statements based on ouraudit.
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 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 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 but not for the purpose of expressing anopinion on whether the Company has in place an adequate internal financial controls systemover financial reporting and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating 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 financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31stMarch 2017 and its loss and its cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
As required by Companies (Auditors Report) Order 2016 ("the order") issuedby the Central Government of India in terms of Sub Section (11) of Section 143 of the Acton the matters specified in paragraph 3 and 4 of the said order we further report that-
i) a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of Fixed Assets.
b) The Company has a regular programme of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner over a period of three years. Inaccordance with this programme certain fixed assets were verified during the year and nomaterial discrepancies were noticed on such verification. In our opinion this periodicityof physical verification is reasonable having regard to the size of the Company and thenature of its assets.
c) The title deeds of immovable properties as disclosed in Note 2.10 on Fixed Assetsto the financial statements are held in the name of the company except for
|Total number of cases ||Whether leasehold/ freehold ||Gross Block (Rs. in lacs) ||Net Block (Rs.in lacs) ||Remarks |
|1 ||Freehold ||1.94 ||1.94 ||- |
ii) The management has conducted physical verification of inventory during the year atreasonable intervals. The discrepancies between the physical stock and book records whichwere material in respect of certain items of inventories have been properly dealt in thebooks of account.
iii) a) The company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnership or other parties covered in the register maintained undersection 189 of Companies Act 2013.
b) Clause (iii)(a) (b) (c) of the aforesaid order are not applicable.
iv) In our opinion and according to information and explanations given to us thecompany has not granted any loan or provided any guarantee or security to the partiescovered under section 185 of the Act. In our opinion and according to information andexplanations given to us the Company has complied with provisions of section 186 of theAct in respect of investment made and guarantee or security provided.
v) The Company has not accepted any deposits from the public within the provisions ofsection 73 to 76 or any other relevant provisions of the Act and rules framed there under.
vi) The Central Government of India has not prescribed the maintenance of cost recordsunder sub-section(l) of Section 148 of the Act in respect of any product of the Company.
vii) a) According to the records of the company examined by us and according to theinformation and explanations given to us in our opinion the company has not been regularin depositing undisputed statutory dues including Provident Fund employees stateinsurance income tax sales tax service tax duty of customs duty of excise valueadded tax and any other material statutory dues as may be applicable with theappropriate authorities. The extent of arrears of statutory dues outstanding as at the31st March 2017 for a period of more than six months from the date they become payable isas follows:
|Name of the statute ||Nature of dues ||Amount (Rs. In Lacs) ||Period to which the amount relates ||Due date ||Date of Payment |
|Finance Act 1994 ||Service Tax ||7.61 ||June'16 - September'16 ||5th day of subsequent month ||Not yet paid |
b) According to the records of the company examined by us and according to informationand explanations given to us there are no dues in respect of income tax sales taxservice tax duty of customs duty of excise value added tax which have not beendeposited on account of any dispute except as detailed hereunder:
|Name of the Statute ||Nature of the Dues ||Year ||Amount (Rs.in Lacs) ||Forum where dispute is pending |
|Central Excise Act 1944 ||Central Excise ||1993-94 ||3.49 ||Assistant Commissioner Central Excise Customs 8t Service Tax |
| ||Central Excise ||1988-92 ||126.57 ||Customs Excise & Service Tax Appellate Tribunal |
| ||Central Excise ||2006-07 ||5.76 ||Customs Excise & Service Tax Appellate Tribunal |
|Finance Act 1994 ||Service Tax ||2009-10 ||52.21 ||Customs Excise & Service Tax Appellate Tribunal |
|Bihar & Orissa Excise Act 1915 ||State Excise ||2002-03 ||21.39 ||Odisha High Court |
| ||State Excise ||2003-04 ||135.75 ||Odisha High Court |
| ||State Excise ||2004-05 ||170.90 ||Odisha High Court |
| ||State Excise ||2005-06 ||251.58 ||Odisha High Court |
| ||State Excise ||2006-07 ||267.53 ||Odisha High Court |
| ||State Excise ||2007-08 ||120.37 ||District Magistrate & Collector Nabarangpur |
| ||State Excise ||2008-09 ||103.20 ||District Magistrate & Collector Nabarangpur |
| ||State Excise ||2009-10 ||96.60 ||District Magistrate & Collector Nabarangpur |
| ||State Excise ||2010-11 ||57.60 ||District Magistrate & Collector Nabarangpur |
|Central Sales Tax Act 1956 ||Sales Tax ||1994-95 ||0.72 ||Deputy Commissioner Commercial Taxes |
| ||Sales Tax ||2000-01 ||93.56 ||Sales Tax Tribunal Odisha |
| ||Sales Tax ||2001-02 ||110.00 ||Sales Tax Tribunal Odisha |
| ||Sales Tax ||2002-03 ||70.12 ||Sales Tax Tribunal Odisha |
| ||Sales Tax ||2003-04 ||135.66 ||Sales Tax Tribunal Odisha |
| ||Sales Tax ||2004-05 ||30.22 ||Sales Tax Tribunal Odisha |
|Odisha Entry Tax Act 1999 ||Entry Tax ||2000-01 ||8.11 ||Sales Tax Tribunal. Odisha |
| ||EntrvTax ||2002-03 ||28.35 ||Sales Tax Tribunal Odisha |
|Odisha Sales Tax Act 1947 ||Sales Tax ||2002-03 ||1.85 ||Sales Tax Tribunal Odisha |
|Odisha VAT Act 2004 ||VAT ||2005-06 ||17.20 ||Sales Tax Tribunal Odisha |
| ||VAT ||2007-09 ||14.96 ||Sales Tax Tribunal Odisha |
viii) According to the information and explanations given to us the company has notdefaulted in repayment of any dues to financial institutions banks Government anddebentureholders as at the Balance Sheet date.
ix) The Company has not raised any moneys by way of initial public offer furtherpublic offer (Including debt instruments) and term loans. Accordingly the provisions ofClause 3(ix) of the Order are not applicable to the Company.
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 we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.
xi) The Company has paid/provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of section 197 read with Schedule V to theAct.
xii) As the Company is not a Nidhi Company and the Nidhi Rules 2014 are not applicableto it the provisions of Clause 3(xii) of the Order are not applicable to the Company.
xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has entered into transactions withrelated parties in compliance with the provisions of Sections 177 and 188 of the Act. Thedetails of such related party transactions have been disclosed in the financial statementsas required under Accounting Standard (AS) 18 Related Party Disclosures specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014.
xiv) According to the information and explanations give 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 convertible debentures duringthe year under review. Accordingly the provisions of Clause 3(xiv) of the Order are notapplicable to the Company.
xv) The Company has not entered into any non-cash transactions with its directors orpersons connected with him. Accordingly the provisions of Clause 3(xv) of the Order arenot applicable to the Company.
xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934. Accordingly the provisions of Clause 3(xvi) of the Order are notapplicable to the Company.
Report on Other Legal and Regulatory Requirements
As required by Section 143 (3) of the Act we report that:
1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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 "A"; and
7. 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:
a) The Company has disclosed the impact of pending litigations on its financialposition in its financial statements (Refer Note 2.26.1 to the Financial Statements).
b) The Company did not have any long term contracts including derivative contracts forwhich there were any material foreseeable losses.
c) There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company during the year ended 31st March2017.
For S M DAGA & CO.
Firm Registration Number: 303119E
Dated: 21st August 2017
Annexure - A to the Auditors' Report
Referred to in the Independent Auditor's Report of even date to the member of MangalamTimber Products Limited on the financial statements for the year ended 31st March 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 MangalamTimber Products Limited ("the Company") as at 31 March 2017 in conjunction withour audit 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 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 ('ICAI'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively 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.
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 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 of Internal FinancialControls and both issued by the Institute of Chartered Accountants of India. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand 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 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 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 Company's internal financial controls systemover financial reporting.
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 reflect the
transactions and dispositions of the assets of the company; (2) provide reasonableassurance that the transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.
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 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 31 March 2017 based on theinternal control over financial reporting criteria 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 S M DAGA & CO. |
| ||Chartered Accountants |
| ||Firm Registration Number: 303119E |
|Dated: 21st August 2017 ||Deepak Daga Partner |
|Place: Kolkata ||Membership No.059205 |