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Modern Insulators Ltd.

BSE: 515008 Sector: Engineering
NSE: MODINSULAT ISIN Code: N.A.
BSE 05:30 | 01 Jan Modern Insulators Ltd
NSE 05:30 | 01 Jan Modern Insulators Ltd

Modern Insulators Ltd. (MODINSULAT) - Auditors Report

Company auditors report

INDEPENDENT AUDITORS' REPORT

To the Members of Modern Insulators Limited Report on the Ind AS Financial Statements

We have audited the accompanying Ind AS financial statements of Modern InsulatorsLimited ("the Company") which comprise of the Balance Sheet as at 31st March2018 the Statement of Profit and Loss (including Other Comprehensive Income)theStatement of Cash Flows and the Statement of changes in equity for the year then ended anda summary of significant accounting policies and other explanatory 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 financial statements that give a true and fair view of the financial positionfinancial performance including other comprehensive income cash flows and changes inequity of the Company in accordance with the accounting principles generally accepted inIndia including the Indian Accounting Standards (Ind AS) specified under Section 133 ofthe Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended.

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 judgements 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 of theaccounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatementwhetherdue to fraud or error.

Auditor's Responsibility

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 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 judgement 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 controls relevant to the Company's preparation of the financialstatements that give a true and fair view in order to design audit procedures that areappropriate in the circumstances. An audit also includes evaluating the appropriateness ofthe accounting policies used and the reasonableness of the accounting estimates maade bythe Company's Directors as well as evaluating the overall presentation of the financialstatements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the financial statements.

Basis for Qualified Opinion

(a) Provision for taxation estimated at Rs. 475.71 Lacs (previous year Rs. NIL) has notbeen made in accounts in view of proposed amalgamation under the provisions of CompaniesAct 2013. (Refer Note no. 34 (iv)).

Qualified Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effect of the matters described in "Basis for QualifiedOpinion" paragraph above the aforesaid Ind AS financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the company as at 31st March 2018 and its profit (Including other comprehensiveincome) its cash flows and changes in equity for the year ended on that date.

Other Matters

The comparative financial information of the company for the year ended 31st March2017 and the transition date opening balance sheet as at 1st April 2016 included in theseInd AS financial statements are based on the previously issued statutory financialstatements prepared in accordance with the Companies (Accounting Standards) Rules 2006audited by the predecessor auditors whose report for the year ended 31st March 2017 and31st March 2016 dated 29th May 2017 and 25th June 2016 expressed an unmodified andmodified opinion respectively on those financial statements as adjusted for thedifferences in the accounting principles adopted by the company and for compliance Ind ASon transition to Ind AS which have been audited by us. Our opinion is not modified inrespect of above matter.

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 CompaniesAct 2013 and on the basis of such checks of the books and records of the company as weconsidered appropriate and according to the information and explanations given to us wegive in the Annexure A a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.

2. As required by Section 143(3) of the Act we report that:

i. 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.

ii. 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.

iii. The Balance Sheet Statement of Profit and Loss Statement of cash flows andStatement of changes in equity dealt with by this Report are in agreement with the booksof account.

iv. Except for the effects of the matter described in the Basis for Qualified Opinionparagraph in our opinion the Ind AS financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act.

v. On the basis of written representations received from the directors as on 31stMarch2018 and taken on record by the Board of Directors none of the directors is disqualifiedas on 31stMarch 2018 from being appointed as a director in terms of section 164 (2) ofthe Act.

vi. With respect to the adequacy of the internal financial controls over financialreporting of the company and the operating

effectiveness of such controls refer to our report in Annexure B; and vii. Withrespect to the other matters to be included in the Auditor's Report in accordance withRule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to the bestof our information and according to the explanations given to us: a. The Company hasdisclosed the impact of pending litigations on its financial position in its Ind ASfinancial statements (Refer note no. 40). b. The Company has made provision as requiredunder the applicable law or Ind AS for material foreseeable losses if any on long termcontracts including derivative contracts. (Refer note no 47). c. There were no amountswhich were required to be transferred to the Investor Education and Protection Fund by theCompany.

For R B Verma & Associates
Chartered Accountants
Firm Regn. No.012650C
Rajesh Verma
Place : Abu Road Partner
Date : 29th May 2018 Membership No.404029

ANNEXURE A FORMING PART OF THE INDEPENDENT AUDITORS' REPORT

Referred to in the report of even date of the Auditors to members of Modern InsulatorsLimited

(i) (a) The company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets except furniture & fixtures forwhich detailed records are not maintained.

(b) According to the information and explanations given to us most of the fixed assetshave been physically verified during the year by the management in accordance with aphased programme of verification at reasonable intervals and no material discrepancieswere noticed on such verification. (c) According to the information and explanations givento us the title deeds of immovable properties are held in the name of the Company or itsdivision.

(ii) According to the information and explanations given to us the inventories havebeen physically verified during the year by the management. In our opinion the frequencyof verification is reasonable and no material discrepancies were noticed on physicalverification during the year.

(iii) (a) The Company had granted interest free unsecured loan to a Company coveredunder section 189 of the Companies Act 2013 in view of proposed amalgamation under theprovisions of Companies Act 2013. According to the information and explanations given tous since the amount paid is in connection to proposed amalgamation no terms have beenspecified for repayment of loan and interest. In view of likely advantage to the Companyon such amalgamation granting of such loan is not prejudicial to the interest of theCompany (Refer Note No. 46).

(b) The Company has also granted unsecured loan to another Company covered undersection 189 of the Companies Act 2013 which is payable on demand. We are informed thatthe Company has received the amount demanded from the party and thus there is no defaultduring the year. Interest on such loan has been provided during the year. In our opinionthe terms and conditions of grant of such loan are not prima facie prejudicial to theinterest of the Company. (Refer Note No. 11.1).

(iv) According to the information and explanations given to us the Company hascomplied with the provisions of section 185 and 186 of the Companies Act 2013 in respectof loans investments guarantees and security.

(v) According to the information and explanations given to us the Company has notaccepted any deposits from the public during the year and therefore this clause is notapplicable.

(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the Rules made by the central government for the maintenance of cost records undersection 148 (1) of the

Companies Act 2013 for the products of the company and are of the opinion that primafacie the prescribed accounts and records have been made and maintained. We had nothowever carried out detailed examination of the same to determine whether they areaccurate and complete.

(vii) (a) According to the information and explanations given to us and based on ourexamination of the records the company is generally regular in depositing withappropriate authorities undisputed statutory dues including provident fund employees'state insurance sales tax service tax duty of customs duty of excise value added taxcess and other statutory dues applicable to it and no undisputed statutory dues as notedabove is outstanding for a period of more than six months from the date it became payable.

(b) According to the information and explanations given to us and based on ourexamination of the records the particulars of dues of sales tax value added tax duty ofexcise and Service Tax etc. as applicable as at 31st March 2018 which have not beendeposited on account of dispute are as follows:

Name of the Statute Nature of dues Amount (Rs. in lacs) Period to which the amount relates Forum where the dispute is pending
Central Excise Act 1944 Excise Duty & Service Tax 117.85 Various years from 2005-06 to 2010-11 Central Excise and Service Tax Appellate Tribunal Delhi
91.63 2012-13 & 2016-17 Commissioner Central Excise (Appeals) Jaipur
161.74 2004-05 to 2017-18 Departmental authorities at various places

(viii) According to the information and explanations given to us and based on ourexamination of the records the company has not defaulted in repayment of dues to bankduring the year. The company does not have any dues to debenture holders and loans fromfinancial institutions/government.

(ix) The Company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments) and term loans during the year and therefore thisclause is not applicable. (x) According to the information and explanations given to usand based on our examination of the records we have neither come across any instance ofmaterial fraud by the Company or any fraud on the company by the officers or employeesnoticed or reported during the year nor we have been informed of any such fraud by theManagement.

(xi) The managerial remuneration has been paid or provided 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 and therefore this clause is not applicable.

(xiii) According to the information and explanations given to us all transactions withthe related parties are incompliance with sections 177 and 188 of Companies Act 2013where applicable and the details of such transactions have been disclosed in the FinancialStatements as required by the applicable Indian Accounting Standards.

(xiv) According to the information and explanations given to us the company has notmade any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year and therefore this clause is not applicable.

(xv) According to the information and explanations given to us the company has notentered into any non-cash transactions with directors or persons connected with them andtherefore this clause is not applicable.

(xvi) The company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934 and therefore this clause is not applicable.

For R B Verma & Associates
Chartered Accountants
Firm Regn. No.012650C
Rajesh Verma
Place : Abu Road Partner
Date : 29th May 2018 Membership No.404029

ANNEXURE B FORMING PART OF THE INDEPENDENT AUDITORS' REPORT

Referred to in the report of even date of the Auditors to members of Modern InsulatorsLimited

Report on the Internal Financial Controls under Clause (i) of Subsection 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of ModernInsulators Limited ("the Company") as of March 31 2018 in conjunction with ouraudit of the Ind AS financial statements of the Company for the year ended on that date.

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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding 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.

Auditors' Responsibility

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 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 were 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 auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the Company's internal financial controls system overfinancial 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 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 unauthorised 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 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.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the Company has in all material respects an adequate internal financialcontrols system over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at March 31 2018 based on the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls over Financial Reporting issued by the Institute of CharteredAccountants of India.

For R B Verma & Associates
Chartered Accountants
Firm Regn. No.012650C
Rajesh Verma
Place : Abu Road Partner
Date : 29th May 2018 Membership No.404029