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Murudeshwar Ceramics Ltd.

BSE: 515037 Sector: Consumer
NSE: MURUDCERA ISIN Code: INE692B01014
BSE 00:00 | 03 Apr 9.52 0.25
(2.70%)
OPEN

9.20

HIGH

9.99

LOW

9.02

NSE 00:00 | 03 Apr 9.45 0.10
(1.07%)
OPEN

9.90

HIGH

10.10

LOW

9.00

OPEN 9.20
PREVIOUS CLOSE 9.27
VOLUME 1834
52-Week high 25.80
52-Week low 8.26
P/E 5.35
Mkt Cap.(Rs cr) 45
Buy Price 9.29
Buy Qty 200.00
Sell Price 9.97
Sell Qty 139.00
OPEN 9.20
CLOSE 9.27
VOLUME 1834
52-Week high 25.80
52-Week low 8.26
P/E 5.35
Mkt Cap.(Rs cr) 45
Buy Price 9.29
Buy Qty 200.00
Sell Price 9.97
Sell Qty 139.00

Murudeshwar Ceramics Ltd. (MURUDCERA) - Auditors Report

Company auditors report

To the Members of MURUDESHWAR CERAMICS LIMITED

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the standalone financial statements of MURUDESHWAR CERAMICS LIMITED("the Company") which comprise the balance sheet as at 31st March 2019 and thestatement of Profit and Loss (including Other Comprehensive Income) statement of changesin equity and statement of cash flows for the year then ended and a summary ofsignificant accounting policies and other explanatory information (herein referred to as"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 Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the act read with the Companies (Indian Accounting Standard) Rules 2015 asamended ("Ind AS") and other accounting policies generally accepted in India ofthe state of affairs of the Company as at March 31 2019 and its profit totalcomprehensive income changes in equity and its cash flows for the year ended onthat date.

Basis for Audit Opinion

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) specified under section 143(10) of the Companies Act 2013.Our responsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issuedby the Institute of Chartered Accountants of India (ICAI) together with the ethicalrequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Companies Act 2013 and the Rules made thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theICAIs Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the Standalone FinancialStatements.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the standalone financial statements as awholeand in forming our opinion thereon and we do not provide a separate opinion onthese matters.

We have determined the matters described below to be the Key Audit Matters to becommunicated in our report.

Key Audit matter How our Audit addressed the Key Audit Matter
Inventory (Refer Note 6 of Standalone Financial Statements)
The value of inventory as at 31.03.2019 is 10101.57 lakhs which is 21.3% of total asset value. Given the size of the inventory balance relative to the total asset size of the company the valuation of inventory required significant audit attention. We have performed the following procedures w.r.t valuation of linventory and assessment of procedure of physical verification of inventory during the period to ensure the accuracy of inventory reporting.
As disclosed in Note no. 6 inventories are held at the lower of cost or net realizable value determined using weighted average cost. For a sample of Outsourced Finished Goods we performed the weighted average cost calculation and compared the weighted average cost to the last purchased invoices.
The determination of valuation of inventory requires management to exercise qualitative judgments and apply assumptions. At the year end the valuation of inventory is reviewed by management and the cost of inventory is revalued where inventory is forecast to be sold below cost.
On a sample basis we tested the net realisable value of inventory to recent selling prices. We have also considered the Stock audit report by Stock Auditors engaged by the bank to ensure that there are no inconsistencies in inventory reporting.
In the view of the management basic raw material used is clay for manufacture of tiles and the same being a natural resource does not have any depletion in value/utility over passage of time.
We have also considered the expert opinion on valuation of primary raw materials by Mr. Vijaykumar V Dandin vide report dated 10th of April 2019.
Property Plant and Equipment - Refer Note 3
Additions to Fixed Assets during the year were `871 lakhs (including CWIP of the previous year). Inappropriate timing of capitalization of project/ inappropriate classification of categories of items of PPE could result in material misstatement of CWIP/ PPE with consequent impact on depreciation charge and results for the year. Our audit procedures included testing the design implementation and operating effectiveness of controls in respect of review of capitalization of assets particularly in respect of timing of the capitalization and recording of additions to items of various categories of PPE with source documentation substantive testing of appropriateness of cut-off date considered for project capitalization.
We tested the source documentation to determine whether the expenditure is of capital nature and has been approved and segregated into appropriate categories. We reviewed operating expenses to determine the appropriateness of accounting.

Information Other than the Financial Statements and Auditor's Report thereon

The Company's Board of Directors is responsible for the other information. The otherinformation comprises Board's Report Report on Corporate Governance but does not includeStandalone Financial Statements and our Auditor's Report thereon.

Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.

Based on the work we have performed if we conclude that there is material misstatementof this other information we are required to report that fact. We have nothing to reportin this regard.

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 including other comprehensive income changes in equityand cash flows of the Company in accordance with the Ind AS and other accountingprinciples generally accepted 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 standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

This Board of Directors is also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also: l Identify and assess therisks of material misstatement of the financial statements whether due to fraud or errordesign and perform audit procedures responsive to those risks and obtain audit evidencethat is sufficient and appropriate to provide a basis for our opinion. The risk of notdetecting a material misstatement resulting from fraud is higher than for one resultingfrom error as fraud may involve collusion forgery intentional omissionsmisrepresentations or the override of internal controls.

• Obtain an understanding of internal financial control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Companies Act 2013 we are also responsible for expressing our opinionon whether the company has adequate internal financial controls system in place and theoperating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

Materiality

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone financial statements.

Communication with those charged with governance

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

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 Companies Act 2013 we give in the Annexure a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.

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 including Other ComprehensiveIncome the Statement of changes in Equity and the statement of Cash Flow dealt with bythis Report are in agreement with the books of account.

(e) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

(f) On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in terms of Section164 (2) of the Act.

(g) 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".

(h) 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:

1. The Company does not have any pending litigations which would impact its financialposition apart from those mentioned in Annexure B to the Independent Auditor's Report.

2. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.

3. There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.

As required by Companies (Auditors' Report ) Order 2016 ("The Order") issuedby the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" as statement on matters specified in paragraph 3 and 4 of theorder.

For K.A.RAGHUPATHY & CO.
Chartered Accountants
ICAI FIRM REGN. No. : 011573S
( K.A.RAGHUPATHY)
Place : Bengaluru Partner
Date : May 29 2019 Membership No:218041

ANNEXURE "A" TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 1(g) under ‘Report on Other Legal and RegulatoryRequirements' section of our report to the Members of M/s MURUDESHWAR CERAMICS LTD. ofeven date)

Report on the Internal Financial Controls Over Financial Reporting under Clause(i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of M/sMURUDESHWAR CERAMICS LTD. ("the Company") as of March 312019 in conjunctionwith our audit of the standalone Ind AS financial statements of the Company for the yearended on that date.

Management's Responsibility for Internal Financial Controls

The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on 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 the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. 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 them maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

(2) Provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and

(3) Provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial 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 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 2019 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 K.A.RAGHUPATHY & CO.
Chartered Accountants
ICAI FIRM REGN. No. : 011573S
( K.A.RAGHUPATHY)
Place : Bengaluru Partner
Date : May 29 2019 Membership No : 218041

(Referred to in paragraph 2 under ‘Report on Other Legal and RegulatoryRequirements' section of our report to the Members of M/s MURUDESHWAR CERAMICS LTD. ofeven date)

i. In respect of the Company's Property Plant and Equipment:

a. The Company has maintained proper records showing full particulars includingquantitative details and situation of Property Plant and Equipment.

b. The Company has a program of physical verification to cover all the items ofProperty Plant and Equipment in a phased manner over a period of three years which inour opinion is reasonable having regard to the size of the Company and the nature of itsProperty Plant and Equipment. Pursuant to the program certain Property Plant andEquipment were physically verified by the management during the year. According to theinformation and explanations given to us no material discrepancies were noticed on suchverification.

c. According to the information and explanations given to us the records examined byus and based on the examination of the sale/transfer/conveyance deeds provided to us wereport that the title deeds comprising all the immovable properties of land andbuildings which are freehold are held in the name of the Company.

ii. The inventory except goods-in-transit and stocks lying with third parties havebeen physically verified by the management during the year. In our opinion the frequencyof such verification is reasonable. The discrepancies noticed on verification between thephysical stocks and the book records were not material and have been dealt with in thebooks of accounts.

iii. According to the information and explanations given to us the Company has notgranted unsecured loans to any bodies corporate covered in the register maintained undersection 189 of the Companies Act2013 and accordingly Clause 3(III) (a) to (c) are notapplicable to company and hence cannot be commented upon.

iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Act in respect ofgrant of loans making investments and providing guarantees and securities as applicable.

v. In our opinion and according to the information and explanations given to us theCompany has not accepted any deposit from the public in accordance with the provisions ofSection 73 to 76 or any other relevant provisions of the act and the rules framedthereunder. Accordingly paragraph 3(v) of the order is not applicable to the Company.

vi. The maintenance of cost records has not been specified by the Central Governmentunder section 148(1) of the Companies Act 2013 for the business activities carried out bythe Company. Thus reporting under clause 3(vi) of the order is not applicable to theCompany.

vii. According to the information and explanations given to us in respect of statutorydues:

a. The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income Tax Sales Tax Service TaxGoods and Service Tax Value Added Tax Customs Duty Excise Duty Cess and other materialstatutory dues applicable to it with the appropriate authorities.

b. There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income Tax Sales Tax Service Tax Value Added Tax Goods and ServiceTax Customs Duty Excise Duty Cess and other material statutory dues in arrears as atMarch 31 2019 for a period of more than six months from the date they became payable.

viii. In our opinion and according to explanations given to us the company has notdefaulted in the repayment of dues to banks financial institutions or government. Thecompany has not issued any debentures.

ix. (a) Based on audit procedures performed and information and explanations given tous by the management the company has not raised moneys by way of Initial public offer orFurther Public offer including debt instruments but has raised moneys by allotting2370000 Equity shares pursuant to conversion of first tranche of convertible Sharewarrants to promoter/Promoter Group company M/s Murudeshwar Power Corporation Limited onpreferential allotment basis. The funds raised during the year are applied for thepurposes for which they are raised.

(b) According to the information and explanation provided to us the company has notraised any new term loans during the year. The term loans outstanding at the beginning ofthe year and those raised during the year have been applied for the purposed for whichthey were raised.

x. According to the information provided to us and to the best of our knowledge nofraud by the Company or no material fraud on the Company by its officers or employees hasbeen noticed or reported during the year.

xi. In our opinion and according to the information and explanations given to us theCompany has paid/provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act.

xii. The Company is not a Nidhi Company and hence reporting under clause 3 (xii) of theOrder is not applicable to the Company.

xiii. In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the standalone financial statements as required by theapplicable accounting standards.

xiv. (a) Based on audit procedures performed and information and explanations given tous by the management the company has made preferential allotment of shares/convertibleshare warrants during the year by allotting 2370000 Equity shares pursuant to conversionof convertible Share warrants to promoter/Promoter Group company M/s Murudeshwar PowerCorporation Limited on preferential allotment basis during the year under review.Accordingly the relevant provision of the order has been complied with.

(b) Based upon audit procedures performed and the explanation and information given tous by the management the company has not made any fully/partly convertible debenturesduring the year under review. Accordingly the provisions of Clause 3(xiv) of the orderare not applicable to the company and hence cannot be commented upon.

xv. In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsDirectors or persons connected to its directors and hence provisions of section 192 of theCompanies Act 2013 are not applicable to the Company.

xvi. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

For K.A.RAGHUPATHY & CO.
Chartered Accountants
ICAI FIRM REGN. No. : 011573S
( K.A.RAGHUPATHY)
Place : Bengaluru Partner
Date : May 29 2019 Membership No:218041