REPORT ON THE STANDALONE FINANCIAL STATEMENTS
We have audited the accompanying standalone financial statements of Nelcast Limited (the Company) which comprise the Balance Sheet as at 31st March 2019 the Statement of Profit and Loss (including Other Comprehensive Income) the Statement of Changes in Equity and Cash Flow Statement for the year then ended and notes to the standalone financial statements including a summary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us the aforesaidstandalonefinancial give the information required by the Companies Act 2013 (the Act) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended of the state of affairs of the Company as at 31st March 2019 the profit and total comprehensive income changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor's Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the independent requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI's Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the standalone financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole and in forming our opinion thereon and we do not provide a separate opinion on these matters.
|Key Audit Matter Description||Response to Key Audit Matter|
|A. Revenue Recognition||Principal Audit Procedures|
|Reference may be made to the significant accounting policies and to the notes forming part of standalone financial statements of the Company.||Our audit procedures relating to revenue comprised of test of controls and substantive procedures including the following:|
|During the year on account of adoption of new revenue standard Ind AS 115 - Revenue from contracts with customer there have been changes in revenue recognition policy with regards to timing of recognition and related disclosures.||i. We assessed whether the policy of recognizing revenue was in line with Ind AS - 115.|
|Revenue recognition is inherently an area of audit risk which we have substantially focused on mainly covering the aspects of cut off.||ii. We performed procedures to assess the design and internal controls established by the management and tested the operating effectiveness of relevant controls related to the recognition of revenue.|
|Considering the above impact of Ind AS 115 and cut-off are key audit matters.||iii. 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. We carried out a combination of procedures involving enquiry and observation re performance and inspection of evidence in respect of operation of these controls.|
|iv. We have tested on a sample basis whether specific revenue transactions around the reporting date has been recognised in the appropriate period by comparing the transactions selected with relevant underlying documentation.|
|v. We have also validated subsequent credit notes and sales returns up to the date of this Report to ensure the appropriateness and accuracy of the revenue recognition.|
|vi. We tested journal entries on a sample basis to identify any unusual or irregular items.|
|vii. We also considered the adequacy of the disclosures in Company's financial statements in relation to Ind AS 115 and were satisfied they meet the disclosure requirements.|
|Based on the procedures performed above we did not find any material exceptions with regards to adoption of Ind AS 115 and timing of revenue recognition.|
Information other than the Standalone Financial Statements and Auditor's Report thereon
The Company's Board of Directors is responsible for the other information. The other information comprises the information included in the Annual Report but does not include the standalone financial statements and our auditor's report thereon. Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibility is to read the other information and in doing so consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If based on the work we have performed we conclude that there is a material misstatement of this other information we are required to report that fact. We have nothing to report in this regard.
Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view performance total comprehensive income changes in equity and ofthe financialpositionfinancial cash flows of the Company in accordance with the accounting principles generally accepted in India including the Indian Accounting Standards specified under section 133 of the Act. This also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records relevant to the preparation and presentation of the standalone financial statement that give a true and fair view and are free from material misstatement whether due to fraud or error.
In preparing the standalone financial statements management is responsible for assessing the Company's ability to continue as a going concern disclosing as applicable matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement whether due to fraud or error and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if individually or in the aggregate they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with Standards on Auditing we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalone financial statements whether due to fraud or error design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system in place and the operating controls.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and based on the audit evidence obtained whether a material uncertainty exists related to events or conditions thatmaycastsignificantdoubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists we are required to draw attention in our auditor's report to the related disclosures in the standalone 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's report. However future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of the standalone statements including the disclosures and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding among other matters the planned scope and timing of the significant audit findings includinganysignificantdeficiencies in and internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where applicable related safeguards.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 (the Order) issued by the Central Government of India in terms of Section 143(11) of the Act we give in `Annexure-A' a statement on the matters specified in paragraphs 3 and 4 of the Order.
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 best of knowledge and belief were necessary for the purposes of our audit. (b) In n proper books of account as required by law have been kept by the Company our opinio so far as it appears from our examination of those books.
(c) The Balance Sheet the Statement of Profit and Loss including other comprehensive income Statement of Changes in Equity and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.
(d) In our opinion the aforesaid standalone financial specifiedunder Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014.
(e) On the basis of the written representations received from the directors as on 31st March2019 taken on record by the Board of Directors none of the directors is disqualified as on 31st March 2019 from being appointed as a director in terms of Section 164 (2) of the Act.
(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls refer to our separate Report in Annexure-B.
(g) With respect to the other matters to be included in the Auditor's Report in accordance with the requirements of Section 197(16) of the Act as amended: In our opinion and to the best of our information and according to the explanations given to us the remuneration paid by the Company to its directors during the year is in accordance with the provisions of Section 197 of the Act. (h) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements.
ii. The Company has made provision as required under the applicable law or accounting standards for material foreseeable losses if any on long-term contracts including derivative contracts.
iii. There has been no delay in transferring amounts required to be transferred to the Investor Education and Protection Fund by the Company.
For K NAGARAJU & ASSOCIATES
Firm Regn. No. 002270S
Membership No. 024344
Place : Chennai
Date : 27th May 2019
ANNEXURE A REFERRED TO IN OUR INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF THE COMPANY ON THE STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2019 WE REPORT THAT:
i. (a). The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets;
(b). The Company has a policy of physically verifying its Fixed assets once in a year which in our opinion reasonable having regard to the size of the Company and the nature of its business.
During the year Fixed Assets have been verified by the management at the year end and no discrepancies were noticed on such verification.
(c). The title deeds of immovable properties are held in the name of the Company.
ii. According to information and explanations given to us the management has conducted physical verification of inventory at reasonable intervals and no material discrepancies were noticed on physical verification during the year.
iii. The Company has not granted any loans secured or unsecured to companies firms or other parties covered in the register maintained under section 189 of the Act.
iv. According to information and explanations given to us the Company has complied with the provisions of Section 185 and 186 of the Act in respect of loans investments guarantees and security.
v. The Company has not accepted any deposits during the year and does not have any unclaimed deposits as at 31st March 2019 and therefore the provisions of the clause 3 (v) of the Order is not applicable to the Company.
vi. We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Central Government under Section 148(1) of the Act and are opinion that prima facie the prescribed accounts and cost records have been made and maintained.
vii. (a) According to the information and explanations given to us and on the basis of examination of the records of the Company the Company is regular in depositing undisputed statutory dues including provident fund employees' state insurance income-tax sales-tax service tax duty of customs duty of excise value added tax goods and services tax cess and any other statutory dues as applicable with the appropriate authorities and no dues were in arrears as at 31st March 2019 for a period of more than six months form the date they became payable.
(b). According to the records of the Company and on the basis of information and explanations given to us there are no dues of income-tax sales-tax service tax duty of customs goods and services tax and which have not been deposited on account of any disputes. However according to information and explanations given to us the following dues of value added tax and duty of excise have not been deposited by the Company on account of disputes:
|Name of Statute||Nature of Dues||Amount Involved (Rs. in Lakhs)||Period to which the Amount Relates||Forum where Dispute is pending|
|Central Excise Act 1944||CENVAT-INPUT SERVICES||223.11||2009-10 to 2012-13||CESTAT|
|Central Excise Act 1944||CENVAT-INPUT SERVICES||12.13||2014-15||Commissioner Appeals Guntur|
|Central Excise Act 1944||CENVAT-INPUT SERVICES||33.53||2014-15 & 2015-16||Commissioner Appeals Vizag|
|Central Excise Act 1944||CENVAT-INPUTS||1.25||2014-15 & 2015-16||Commissioner Appeals Vizag|
|Central Excise Act 1944||CENVAT-INPUTS||0.45||2014-15||Commissioner Appeals Vizag|
|Central Excise Act 1944||CENVAT-INPUT SERVICES||72.49||2015-16 & 2016-17||Commissioner Appeals Guntur|
|Central Sales Tax||CST||15.34||2009-10||Commissioner Appeals Vizag|
|Value Added Tax||VAT||1.77||2016-17||Commissioner (Appeals) (CT)|
|Central Excise Act 1944||CENVAT-INPUT SERVICES||28.57||Apr 10 to Jun13||CESTAT|
viii. The Company has not defaulted in repayment of loans or borrowing to a financial institution bank government or dues to debenture holders.
ix. The Company has not raised moneys by way of initial public offer or further public offer (including debt instruments) but the Company has availed a term loan from Bank during the year. The moneys' raised by way of term loans were applied for the purpose for which those were raised.
x. We have not noticed or reported any fraud by the Company or any fraud on the Company by its officers/ employees during the year.
xi. The managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.
xii. Clause 3 (xii) of the Order is not applicable as the Company is not a Nidhi Company.
xiii. According to information and explanations given to us all transactions with the related parties are in compliance with the provisions of sections 177 and 188 of the Act where ever applicable and the details have been disclosed in the Standalone financial Statements etc. as required by the applicable accounting standards. xiv. The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review accordingly the provisions of clause 3 (xiv) of the Order is not applicable to the Company. xv. According to information and explanations given to us the Company has not entered in to any non-cash transactions with directors or persons connected with him accordingly the provisions of clause 3 (xv) of the Order is not applicable to the Company.
xvi. Clause 3 (xvi) of the Order is not applicable as the Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act 1934.
For K NAGARAJU & ASSOCIATES
Firm Regn. No. 002270S
Membership No. 024344
Place : Chennai
Date : 27th May 2019
ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE STANDALONE FINANCIAL STATEMENTS OF NELCAST LIMITED
REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER CLAUSE (I) OF SUB-SECTION 3 OF SECTION 143 OF THE COMPANIES ACT 2013 (THE ACT)
We have audited the internal financial controls over financial reporting of Nelcast Limited (the Company) as of 31st March 2019 in conjunction with our audit of the standalone 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 internal financial controls based on the internal control over fi nancial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business including adherence to Company's policies the safeguarding of its assets the prevention and detection of frauds and errors the accuracy and completeness of the accounting records and the timely preparation of reliable financial information as required under theAct.
Our responsibility is to express an opinion on the Company's internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the Guidance Note) and the Standards on Auditing issued by the ICAI and deemed to be prescribed under section 143(10) of the Act to the extent applicable to an audit of internal financial controls. Those standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financialreporting was established and maintained and if such controls operated effectively in all material respects. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor's judgment including the assessment of the risks of material misstatement of the standalone financial statements whether due to fraud or error. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company's internal financial controls system over financial reporting.
MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING
A Company's internal financial control over financial reporting is a process designed reasonable assurance regarding the reliability of financial reporting and the preparation of standalone financial statements for external purposes in accordance with generally accepted accounting principles. A Company's internal financial control over financial reporting includes those policies and procedures that
1. Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
2. Provide reasonable assurance that transactions are recorded as necessary to permit preparation of standalone financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the Company are being made only in accordance with authorisations of management and directors of the Company; and
3. Provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition use or disposition of the Company's assets that could have a material effect on the standalone financial statements.
INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING
Because of the inherent limitations of internal financial controls over financial reporting including the possibility of collusion or improper management override of controls material misstatements due to error or fraud may occur and not be detected. Also projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March 2019 based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India.
For K NAGARAJU & ASSOCIATES
Chartered Accountants Firm Regn. No. 002270S
Membership No. 024344
Place : Chennai
Date : 27th May 2019