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NCL Industries Ltd.

BSE: 502168 Sector: Industrials
NSE: NCLIND ISIN Code: INE732C01016
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OPEN 84.00
PREVIOUS CLOSE 85.10
VOLUME 1901
52-Week high 162.00
52-Week low 74.15
P/E 5.42
Mkt Cap.(Rs cr) 377
Buy Price 81.00
Buy Qty 1.00
Sell Price 88.00
Sell Qty 1.00
OPEN 84.00
CLOSE 85.10
VOLUME 1901
52-Week high 162.00
52-Week low 74.15
P/E 5.42
Mkt Cap.(Rs cr) 377
Buy Price 81.00
Buy Qty 1.00
Sell Price 88.00
Sell Qty 1.00

NCL Industries Ltd. (NCLIND) - Auditors Report

Company auditors report

To

The Members

NCL Industries Limited

Hyderabad.

Opinion

We have audited the accompanying standalone Ind AS financial statements of NCLIndustries Limited (‘the Company') which comprise the balance sheet as at 31stMarch 2019 the statement of profit and loss (including other comprehensive income)statement of changes in Equity and the statement of cash flows for the year the ended on31st March 2019 and notes to the financial statements including a summary ofthe significant accounting policies and other explanatory information (herein afterreferred to as "standalone Ind AS 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 accounting principles generally accepted in India ofthe state of affairs of the Company as at 31 March 2019 its profit (including othercomprehensive income) changes in equity and its cash flows for the year ended on thatdate.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our opinion.

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 financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.

Key Audit Matters Auditor's response
Accuracy of recognition measurement presentation and disclosures of revenues and other related balances in view of adoption of Ind AS 115 "Revenue from Contracts with Customers" (new revenue accounting standard) Principal Audit Procedures We assessed the Company's process to identify the impact of adoption of the new revenue accounting standard. Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows: The application of the new revenue accounting standard involves certain key judgments relating to identification of distinct performance obligations determination of transaction price of the identified performance obligations the appropriateness of the basis used to measure revenue recognised over a period. Additionally new revenue accounting standard contains disclosures which involves collation of information in respect of disaggregated revenue and periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date Principal Audit Procedures: We assessed the Company's process to identify the impact of adoption of the new revenue accounting standard. Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows: The application of the new revenue accounting standard involves certain key judgments relating to identification of distinct performance obligations determination of transaction price of the identified performance obligations the appropriateness of the basis used to measure revenue recognised over a period. Additionally Evaluated the design of internal controls relating to implementation of the new revenue accounting standard. Selected a sample of continuing and new contracts and tested the operating effectiveness of the internal control relating to identification of the distinct performance obligations and determination of transaction price. Performed analytical procedures for reasonableness of revenues disclosed by type and service offerings. We reviewed the collation of information and the logic of the report generated from the budgeting system used to prepare the disclosure relating to the periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date.

Other Information:

The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the standalone financial statements and our auditors'report thereon.

Our opinion on the standalone financial statements does not cover the other informationand we do not 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 in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation; we are required to report that fact. We have nothing to report in thisregard.

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 Standalone Ind AS financial statements that give a true and fair view of thefinancial position financial performance including other comprehensive income cash flowsand changes in equity of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) prescribedunder Section 133 of the Act read with relevant rules issued there under. 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 Standalone Ind AS financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone financial statements management and Board of Directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibility for the Audit of the Financial statements.

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under Section 143(3)0)of the Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls with reference to standalone financial statements inplace and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by 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 standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditors' report. However future events or conditions may cause the Company to cease tocontinue as a 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 is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.

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 standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditors' report unless law or regulation precludes public disclosure about thematter or when 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

1. 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 Act we give in the Annexure A to this report a statement on the matters specified inthe paragraph 3 and 4 of the Order 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 the statement of cash flows andthe statement of changes in equity dealt with by this Report are in agreement with thebooks of account;

d) In our opinion the aforesaid Standalone Ind AS financial statements comply with theAccounting Standards (Ind AS) specified under Section 133 of the Act read with relevantrules issued there under;

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

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 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 pending litigations of the company that might impact the financial position ofthe company are disclosed in the standalone financial statements - Refer note no.34 to thefinancial statements.

ii. The company did not have any long term contracts including derivative contracts forwhich there were any material foreseeable losses;

iii. The Company transferred an amount of Rs.17.77 lakhs being the unpaid dividend forthe financial year 2010-11 to the Investor Education and Protection Fund during the year.

h) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended.

The managerial remuneration for the year ended March 31 2019 has been paid / providedby the Company to its directors in accordance with the provisions of section 197 read withSchedule V to the Act;

For VENUGOPAL & CHENOY
CHARTERED ACCOUNTANTS
FRN: 004671S
(P.V.SRI HARI)
Place : Hyderabad Partner
Date : 30.05.2019 Membership No.021961

Annexure A to the Independent Auditors' Report

The Annexure A referred to in our Independent Auditor's Report to the members of theCompany on the Standalone financial statements for the year ended 31 March 2019 we reportthat:

(i) In respect of its fixed assets:

a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets on the basis of available information.

b. As explained to us the fixed assets have been physically verified by the managementat reasonable intervals. No material discrepancies were noticed on such physicalverification.

c. According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.

(ii) In respect of Inventories:

a. The Inventory has been physically verified by the management during the year.

b. In our opinion and according to the information and explanation given to us theprocedures of physical verification of inventory followed by the management are reasonableand adequate in relation to the size of the company and the nature of its business.

c. According to the information and explanation given to us the company is maintainingproper records of inventory. The discrepancies noticed on physical verification ofinventory as compared to book records were not material.

(iii) The Company has not granted any Inter Corporate Deposits during the year tocompanies covered in the register maintained under section 189 of the Companies Act 2013.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act with respectto the loans investments guarantees and securities.

(v) In our opinion and according to the information and explanations given to us theCompany has complied with the directives issued by the Reserve Bank of India and theprovisions of Section 73 to 76 or any other relevant provisions of the Act and the rulesframed thereunder in respect of deposits accepted. We are informed that no order waspassed by the Company Law Board or National Company Law Tribunal or Reserve Bank of Indiaor any Court or Tribunal.

(vi) We have broadly reviewed the books of account relating to materials labour andother items of cost maintained by the Company pursuant to the Rules made by the CentralGovernment for the maintenance of cost records under sub-section (1) of Section 148 of theAct in respect of the activities carried on by the Company wherever applicable and we areof the opinion that prima facie the prescribed accounts and records have been made andmaintained. However we have not made a detailed examination of the records.

(vii) In respect of statutory dues:

a. According to the information and explanations given to us and on the basis ofexamination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including provident fund employees' stateinsurance income-tax GST sales-tax service tax duty of customs duty of excise valueadded tax cess and other material statutory dues the Company has generally been regularin depositing with the appropriate authorities during the year.

According to the information and explanations given to us no undisputed amounts arepayable in respect of income tax sales tax service tax duty of customs duty of excisevalue added tax or cess and other material statutory dues which were in arrears as atMarch 312019 for a period of more than six months from the date they became payable

b. According to the information given to us and records of the Company examined by usthe particulars of Income Tax Sales Tax Value added Tax Wealth Tax Service TaxCustoms Duty Excise Duty or Cess as at 31st March 2019 which have not beendeposited on account of any disputes pending are as under:

Name of the statute Nature of dues Amount (Rs in Lakhs) Forum where dispute is pending
A.P. General Sales Tax Act Tax on cost recovery from usage of HSD oil on Hired tippers 4.26 Sales Tax Appellate Tribunal
A.P. General Sales Tax Act Penalty on delayed payment 16.88 Sales Tax Appellate Tribunal
A.P. General Sales Tax Act Penalty on delayed payment 37.26 Sales Tax Appellate Tribunal
Central Excise Department Denying benefit of Cenvat Credit 163.18 CESTAT
Central Excise Department Denying benefit of Cenvat Credit 80.85 CESTAT
Central Excise Department Denying benefit of Cenvat Credit 3 CESTAT
Central Excise Department Denying benefit of Cenvat Credit 63.85 Commissioner of Appeals
A.P. General Sales Tax Act Declaring lesser turnover 8.97 Sales Tax Appellate Tribunal
Central Excise Department Denying benefit of Cenvat Credit 977.68 CESTAT
Central Excise Department Denying benefit of Cenvat Credit 14.81 CESTAT
Central Excise Department Denying benefit of Cenvat Credit 22.46 CESTAT
Central Excise Department Denying benefit of Cenvat Credit 24.92 CESTAT
A.P. General Sales Tax Act Entry Tax on Notified Goods purchases 0.58 Sales Tax Appellate Tribunal
A.P. General Sales Tax Act Entry Tax on Notified Goods purchases 2.22 Sales Tax Appellate Tribunal
A.P. General Sales Tax Act Entry Tax on Notified Goods purchases 1.68 Sales Tax Appellate Tribunal
A.P. General Sales Tax Act Entry Tax on Notified Goods purchases 78.99 Sales Tax Appellate Tribunal
A.P. General Sales Tax Act Entry Tax on Notified Goods purchases 192.60 Sales Tax Appellate Tribunal
Sales Tax demand on additional
A.P. General Sales Tax Act turnover and denying ITC on Capital goods 77.01 Sales Tax Appellate Tribunal
A.P. General Sales Tax Act Entry Tax on Notified Goods purchases 333.29 Sales Tax Appellate Tribunal
Central Excise Department Miscellaneous issues 6.15 CESTAT
Customs Department Demand due to wrong classification of imported coal 42.19 Appellate Commissioner of Customs & Central Excise (Appeals)
Service Tax Demand raised denying the Cenvat Credit of Service tax against outward Transport to Godowns dealers and consumers 18.09 CESTAT
Central Tax Demand of denying CENVAT credit on Capital goods(Steel items) 31.86 Central Tax(Appeals) Hyderabad.
Customs Department Demand due to wrong classification of imported coal 87.79 CESTAT

(viii) According to the information and explanations given to us and on the basis ofexamination of the records the company has not defaulted in the repayment of loans alongwith interest to the Banks.

(ix) In our opinion and according to the information and explanations given to us theCompany did not raise any money by way of public issue. Accordingly paragraph 3(ix) ofthe Order is not applicable.

(x) In our opinion and according to the information and explanations given to us nofraud on or by the Company has been noticed or reported during the year that causes thefinancial statements to be materially misstated.

(xi) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration is in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

(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 private placement ofEquity Shares during the Year.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into noncashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.

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

For VENUGOPAL & CHENOY
CHARTERED ACCOUNTANTS
FRN: 004671S
(PV.SRI HARI)
Place: Hyderabad Partner
Date: 30.05.2019 Membership No.021961

Annexure - B to the Auditors' Report

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 NCLIndustries Limited ("the Company") as of 31 March 2019 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 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.

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 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 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 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 authorisations 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 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 2019 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 VENUGOPAL & CHENOY
CHARTERED ACCOUNTANTS
FRN: 004671S
(P.V.SRI HARI)
Place: Hyderabad Partner
Date: 30.05.2019 Membership No.021961