To the Members of NITCO Limited
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of NITCO Limited ("theCompany") which comprise the Balance Sheet as at 31st March 2019 and the Statementof Profit and Loss (Other comprehensive income) the standalone statement of changes inEquity and the Statement of Cash Flows for the year ended and notes to the standalonefinancial statements including a summary of significant accounting policies and otherexplanatory information.
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 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 March 31 2019 and the total comprehensive income(comprising of profit and other comprehensive income) changes in equity and its cashflows for the year then ended.
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.
Emphasis of Matter
We draw your attention to Note 19 of the Standalone financial statements regardingborrowing. "Restructuring of company's debt was approved by JMFARC on January 232018. The company is negotiating with LIC for restructuring of its facility (outstanding '19.05 crs.) on terms similar to restructuring done by JMFARC. Pending negotiations withLIC no further adjustments in respect of LIC facility has been made.
Pending realisation from sale of non core assets of the Company there was default inrepayment of installments of loans amounting to ' 1101.71 lakhs. which were repayable byMarch 312019. As such the Company has classified these dues as Current Liabilitiesduring the year.
Our opinion is not modified in respect of the above matter."
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.
|The Key Audit matter ||How the matter was addressed in our audit |
|The Company has adopted Ind AS 115 Revenue from Contracts with Customers ('Ind AS 115') which is the new revenue accounting standard. The application and transition to this accounting standard is complex and is an area of focus in the audit. ||Our audit procedures on adoption of Ind AS 115 Revenue from contracts with Customers ('Ind AS 115') which is the new revenue accounting standard include - |
|The revenue standard establishes a comprehensive framework for determining whether how much and when revenue is recognized. || Evaluated the design and implementation of the processes and internal controls relating to implementation of the new revenue accounting standard; |
|This involves certain key judgments relating to identification of distinct performance obligations determination of transaction price of identified performance obligation the appropriateness of the basis used to measure revenue recognized over a period. Additionally the standard mandates robust disclosures in respect of revenue and periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date. || Evaluated the detailed analysis performed by management on revenue streams by selecting samples for the existing contracts with customers and considered revenue recognition policy in the current period in respect of those revenue streams; |
| || Evaluated the changes made to IT systems to reflect the changes required in revenue recognition as per the new accounting standard; |
|The Company adopted Ind AS 115 and applied the available exemption provided therein to not restate the comparative periods. || Evaluated the cumulative effect adjustments as at 1 April 2018 for compliance with the new revenue standard; and |
| || Evaluated the appropriateness of the disclosures provided under the new revenue standard and assessed the completeness and mathematical accuracy of the relevant disclosures. |
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 auditor'sreport 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.
Managements Responsibility for the Standalone Financial Statements
The Company's Board of Directors are 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 state ofaffairs profits/loss and other comprehensive income changes in equity and cash flows ofthe Company in accordance with the accounting principles generally accepted in Indiaincluding the accounting Standards (Ind AS) specified under section 133 of the Act. 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; andthe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statement that givea true and fair view and are free from material misstatement whether due to fraud orerror.
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. Those Board of Directors are also responsible foroverseeing the Company's financial reporting process.
Auditors Responsibilities 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 risk 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 ofinternal controls.
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)(i)of the Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls.
Evaluate the appropriateness of managements use of the going concern basis ofaccounting 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 auditors report to the related disclosures in thestandalone 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.
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 regulations 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 Companies Act 2013 we give in the "Annexure A" a statement on the mattersspecified in paragraphs 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. I n 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 standalone Balance Sheet the standalone Statement of Profit and Loss (including other comprehensive income) and the standalone Cash Flow Statement dealt withby this Report are in agreement with the books of account.
d. 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.
e. 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 aredisqualified as on 31st 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".
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 Company has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer Note 39 (c) to the financial statements;
ii. The Company do not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
For Nayak & Rane
F. R. No: 1 17249W
Suraj Nayak Partner
Membership No : 049645
Place : Mumbai
Date : May 312019
Annexure A to the Independent Auditors Report
Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements section of our report of even date to in the Independent AuditorsReport to the members of the Company on the standalone Ind AS financial statements for theyear ended March 31 2019 we report the following:
i. a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets ;
b. The Company has a regular programme of physical verification of its fixed assets bywhich all fixed assets are verified in a phased manner over a period of three years. Inour opinion this periodicity of physical verification is reasonable having regard to thesize of the Company and the nature of its assets. Pursuant to the programme certain fixedassets were physically verified during the year and no material discrepancies were noticedon such verification.
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 propertiesincluded in fixed assets are held in the name of the Company except for one immoveableproperty which amounts to gross block of ' 145.66 Lakh and net block of ' 130.62 Lakhwhose title deed is not held in the name of the Company. In respect of immovableproperties been taken on lease and disclosed as property plant and equipment in thestandalone Ind AS financial statements the lease agreements are in the name of theCompany.
ii. The inventory (excluding stock with third parties) has been physically verified bythe management during the year. In our opinion the frequency of such verification isreasonable. In respect with the inventory lying with third parties these have beensubstantially confirmed by them. The Company has maintained proper records of inventory.The discrepancies noticed on verification between the physical stock and the book recordswere not material.
iii. (a) The Company has granted unsecured interest free loans to six subsidiarycompanies covered in the register maintained under section 189 of the Companies Act 2013.In our opinion and according to the information and explanations given to us the termsand conditions of the grant of such loans are not prejudicial to the company's interest.
(b) The Company has granted loans that are re-payable on demand to the parties coveredin the register maintained under section 189 of the Companies Act 2013. We are informedthat the Company has not demanded repayment of any such loan during the year and thusthere has been no default on the part of the parties to whom the money has been lent.There is no stipulation as to the date of payment of interest.
(c) There is no amount of loans granted to companies firm or other parties listed inthe register maintained under section 189 of the Companies Act 2013 which are overdue formore than ninety days.
iv. According to the information and explanations given to us the Company has compliedwith the provisions of section 185 and 186 of the Companies Act 2013 in respect of grantof loans making investments and providing guarantees and securities as applicable.
v. According to information and explanations given to us The Company has not acceptedany deposits from the public and hence the directives issued by the Reserve Bank of Indiaand the provisions of Sections 73 to 76 or any other relevant provisions of the Act andthe Companies (Acceptance of Deposit) Rules 2015 with regard to the deposits acceptedfrom the public are not applicable.
vi. Pursuant to rules made by the Central Government of India the Company is requiredto maintain cost records as specified under Section 148(1) of the Act in respect of itsproducts. We have broadly reviewed the same and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. We have not however madea detailed examination of the records with a view to determine whether they are accurateor complete.
vii. (a) According to the information and explanations given to us and on the basis ofour examination 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 Goods and Services tax Duty of Customs Cess and other materialstatutory dues have generally been regularly deposited during the year by the Company withthe appropriate authorities.
(b) According to the information and explanations given to us there are no dues ofIncome-tax or Sales tax or Service tax or Goods and Services tax or duty of Customs orduty of Excise or Value added taxes which have not been deposited by the Company onaccount of disputes except for the following:
|Name of the Statute ||Nature of the Dues ||Total ||Period ||Forum where dispute is pending |
|Central Sales ||Pending "C" ||3512644 ||Various periods ||Sales Tax Tribunal Maharashtra |
|Tax ||forms ||3307590 |
|Various periods 2012-13 ||Jt. Comm of Sales Tax Appeal Maharashtra Dy. Commissioner of Sales tax Maharashtra |
|Excise Duty ||Input Tax Credit ||1446188 ||Various periods ||CESTAT - Mumbai |
|Income Tax ||Income Tax ||3372786 ||Various periods ||Commissioners of Income Tax (appeals) |
| ||Income Tax ||3063678 ||Various periods ||High court |
|Service Tax ||Input Tax Credit ||3434904 ||Various periods ||Asst. Commissioner of CGST |
| || ||3029734 ||Various periods ||Asst. Commissioner- Silvassa |
|Service Tax ||Input Tax Credit ||61449278 ||Various periods ||CESTAT - Mumbai |
| || ||2426847 ||Various periods ||CESTAT - Ahmadabad |
| || ||3419954 ||Various periods ||COMMISIONER (APPEAL) - Baroda |
| || ||1961078 ||Various periods ||COMMISIONER (APPEAL) - SURAT |
| || ||3274183 ||Various periods ||Commissioner (Appeals) |
| || ||1662436 ||Various periods ||Commissioner of CGST |
|VAT ||Input Tax Credit ||14633085 ||2008 to 10 ||Sales Tax Tribunal Maharashtra |
| || ||48274003 ||Various periods ||Jt. Commissioner of Sales Tax Appeal Maharashtra |
| || ||6994726 ||Various periods ||Sr. Joint Commissioner- Revision Board West Bengal |
| || ||133534 ||2013-14 ||Tribunal ORISSA |
| || ||12605581 ||2013 to 15 ||Dy. Commissioner of Commercial Tax Gujarat |
| || ||59045864 ||2013 to 15 ||Tribunal UP |
| || ||885000 ||Various periods ||Addl. Commissioner UP |
| || ||844608 ||Various periods ||Asst. Commissioner Tamil Nadu |
| || ||58000 ||2014-15 ||Jt. Commissioner of Commercial Tax (Appeal) KARNATAKA |
| || ||101656 ||Various periods ||Dy. Commissioner of Commercial Tax (Appeal) KERALA |
viii. According to the explanations and information given to us the Company hasdefaulted in repayment of dues the amount of default to a financial institutions was '1904.63 Lakh (period of default- 49 months) to a bank was ' 101.71 Lakh (Period ofdefault - 18 months) and to ARC ' 1000.00 Lakh (Period of default - 1 day).
ix. In our opinion and according to the information and explanations given to us theCompany has not raised any money by way of initial public offer or further public offer(including debt instruments) and term loans during the year. Accordingly paragraph 3(ix)of the Order is not applicable to the Company.
x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.
xi. In our opinion and according to the information and explanations given to us andbased on our examination of the records of the Company the Company has not paid/providedfor managerial remuneration during the year. Hence reporting under clause 3(xi) of theorder is not applicable to the company.
xii. In our opinion the Company is not a nidhi company. Therefore the provisions ofclause 3(xii) of the order are not applicable to the Company and hence not commented upon.
xiii. According to the information and explanations given by the managementtransactions with the related parties are in compliance with section 177 and 188 ofCompanies Act 2013 where applicable and the details have been disclosed in the notes tothe financial statements as required by the applicable accounting standards.
xiv. According to the information and explanations given to us and on an overallexamination of the balance sheet the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review and hence reporting requirements under clause 3(xiv) are not applicable tothe Company and not commented upon.
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 non-cashtransactions with directors or persons connected with him. Accordingly provisions ofsection 192 of the Act are not applicable to the Company.
xvi. According to the information and explanation given to us the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act.
For Nayak & Rane
F. R. No.: 1 17249W
Membership No.: 049645
Place : Mumbai
Date : May 312019
Annexure B to the Independent Auditors Report
Referred to in paragraph (f) under Report on The Internal Financial Controlsunder Clause (i) of sub-section 3 of Section 143 of the Companies Act 2013 ("theAct")
In conjunction with our audit of the consolidated financial statements of NITCO LIMITED("the Holding Company") as of 31 March 2019 we have audited the internalfinancial controls with reference to the financial statements of the Holding Company andits subsidiaries which are incorporated in India as of that date.
Managements Responsibility for Internal Financial Controls
The respective Board of Directors of the Holding company and its subsidiaries which areincorporated in India are responsible for establishing and maintaining internal financialcontrols based on the internal control with reference to financial statements criteriaestablished by the Holding company and its subsidiaries which are incorporated in Indiaconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting ("the GuidanceNote") issued by the Institute of Chartered Accountants of India ("ICAI").These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to the Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the internal financial controls withreference to financial statements of the Holding Company and its subsidiaries which areincorporated in India based on our audit. We conducted our audit in accordance with theGuidance Note and the Standards on Auditing issued by the ICAI and deemed to beprescribed under Section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls with reference to financial statementswas established and maintained and if such controls operated effectively in all materialrespects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgement including the assessment of the risks of material misstatement of the financialstatements 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 internal financial control system withreference to financial statements of the Holding Company and its subsidiaries which areincorporated in India. Meaning of Internal Financial Controls with reference to FinancialStatements
A company's internal financial control with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control withreference to financial statements includes those policies and procedures that:
1. pertain to the 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 authorisations of management and directors of the company and
3. provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls with reference to FinancialStatements
Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial control with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
In our opinion the Holding Company and its subsidiaries which are incorporated inIndia have in all material respects an adequate internal financial controls system withreference to financial statements and such internal financial controls with reference tofinancial statements were operating effectively as at 31 March 2019 based on the internalcontrol with reference to financial statements criteria established by the Holding Companyand its subsidiaries which are incorporated in India considering the essential componentsof internal control stated in the Guidance Note issued by the ICAI.
For Nayak & Rane Chartered Accountants
F. R. No.: 1 17249W
Membership No.: 049645
Place : Mumbai
Date : May 312019