To the members of Nitco Limited
Report on the Audit of the Standalone Ind AS Financial StatementsOpinion
We have audited the accompanying standalone Ind AS financial statementsof Nitco Limited ("the Company") which comprise the Balance sheet as at March31 2020 the Statement of Profit and Loss including the statement of Other ComprehensiveIncome the Cash Flow Statement and the Statement of Changes in Equity for the year thenended and notes to the standalone Ind AS financial statements including a summary ofsignificant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone Ind AS financial statements give theinformation required by the Companies Act 2013 as amended ("the Act") in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2020 its profit including other comprehensive income its cash flows and the changesin equity for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone Ind AS financial statements inaccordance with the Standards on Auditing (SAs) as specified under section 143(10) of theAct. Our responsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Ind AS Financial Statements' section ofour report. We are independent of the Company in accordance with the 'Code of Ethics'issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion on the standalone Ind AS financial statements.
Emphasis of Matter
1 We draw attention to following Points due to which materialuncertainty exist that may cast significant doubt on the company's ability to continue asa going concern. However the accounts of the company have been prepared as a goingconcern:
i. The standalone fin ancial results which describes the extent towhich the COVID -19 Pandemic will impact the Company's results which depend on the futuredevelopments that are highly uncertain.
ii. There is a default in repayment of term loan from JMFARC of Rs6961.70 lakhs.
iii. Company is continuously making operating cash losses.
2 Lock out was declared in one of the main Tile Manufacturing unit ofCompany situated in Alibag in January 2020.
However our opinion is not modified in respect of the above matter.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone Ind AS financial statements forthe financial year ended March 31 2020. These matters were addressed in the context ofour audit of the standalone Ind AS financial statements as a whole and in forming ouropinion thereon and we do not provide a separate opinion on these matters. For eachmatter below our description of how our audit addressed the matter is provided in thatcontext.
We have determined the matters described below to be the key auditmatters to be communicated in our report. We have fulfilled the responsibilities describedin the Auditor's responsibilities for the audit of the standalone Ind AS financialstatements section of our report including in relation to these matters. Accordingly ouraudit included the performance of procedures designed to respond to our assessment of therisks of material misstatement of the standalone Ind AS financial statements.
The results of our audit procedures including the procedures performedto address the matters below provide the basis for our audit opinion on the accompanyingstandalone Ind AS financial statements.
|Key audit matters ||How our audit addressed the key audit matter |
|Assessment of impairment of investments in subsidiaries (as described in note 5 of the standalone Ind AS financial statements) || |
|The carrying values of the Company's investments in subsidiaries are assessed annually by management for potential indicators of impairment. ||Our audit procedures included among others the following: We have evaluated the key judgements / assumptions underlying management's assessment of potential indicators of impairment; |
|For the above impairment testing management has determined the value in use and the fair value less cost to sell as applicable || |
| ||We have studied available financial information including considerations of the economic conditions and audited financial statements of the subsidiaries; |
|We have identified the assessment of potential impairment of investments including corporate guarantees as a key audit matter because impairment assessment involves significant degree of management judgement in determining the key assumptions andforecasting future cash flows. || |
| ||We have evaluated the current approximate market price of the land real estate properties where the subsidiaries have invested for computing the recoverable amount; |
| ||We read and assessed the relevant disclosures made within the standalone Ind AS financial statements. |
The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the Annualreport but does not include the standalone Ind AS financial statements and our auditor'sreport thereon.
Our opinion on the standalone Ind AS financial statements does notcover the other information and we do not express any form of assurance conclusionthereon. In connection with our audit of the standalone Ind AS financial statements ourresponsibility is to read the other information and in doing so consider whether suchother information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is a material misstatement of thisother information we are required to report that fact. We have nothing to report in thisregard.
Responsibilities oF Management For the Standalone Ind AS FinancialStatements
The Company's Board of Directors is responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone Ind ASfinancial statements that give a true and fair view of the financial position financialperformance including other comprehensive income cash flows and changes in equity of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) specified under section 133 of the Actread with the Companies (Indian Accounting Standards) Rules 2015 as amended. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of 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 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 Ind AS financial statements management isresponsible 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 theCompany's financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether thestandalone Ind AS financial statements as a whole are free from material misstatementwhether 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 aguarantee that an audit conducted in accordance with SAs will always detect a materialmisstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if individually or in the aggregate they could reasonably beexpected to influence the economic decisions of users taken on the basis of thesestandalone Ind AS financial statements.As part of an audit in accordance with SAs weexercise professional judgment and maintain professional skepticism throughout the audit.We also:
Identify and assess the risks of material misstatement of thestandalone Ind AS financial statements whether due to fraud or error design and performaudit procedures responsive to those risks and obtain audit evidence that is sufficientand appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3X0 of the Act we are also responsible for expressing our opinion on whetherthe Company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.
Evaluate the overall presentation structure and content of thestandalone Ind AS financial statements including the disclosures and whether thestandalone Ind AS financial statements represent the underlying transactions and events ina manner that achieves fair presentation.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalone IndAS financial statements for the financial year ended March 31 2020 and are therefore thekey audit matters. We describe these matters in our auditor's report unless law orregulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest 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 of the Act we give in the "Annexure 1" a statement on thematters 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 explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit;
(b) In our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books;
(c) The Standalone Balance Sheet the Standalone Statement of Profitand Loss including the Statement of Other Comprehensive Income the Cash Flow Statementand 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 financialstatements comply with the Accounting Standards specified under Section 133 of the Actread with Companies (Indian Accounting Standards) Rules 2015 as amended;
(e) On the basis of the written representations received from thedirectors as on March 31 2020 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2020 from being appointed as a director in termsof Section 164 (2) of the Act;
(f) With respect to the adequacy of the internal financial controlsover financial reporting of the Company with reference to these standalone Ind ASfinancial statements and the operating effectiveness of such controls refer to ourseparate Report in "Annexure 2" to this report;
(g) In our opinion the managerial remuneration for the year endedMarch 31 2020 has been paid / provided by the Company to its directors in accordance withthe provisions of section 197 read with Schedule V to the Act;
(h) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 asamended in our opinion and to the best of our information and according to theexplanations given to us:
(i) The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone Ind AS financial statements - Refer Note 40 (b) tothe standalone Ind AS financial statements;
(ii) The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses;
(iii) There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.
For Nayak & Rane
ICAI Firm Registration Number: 1 17249W
Membership Number: 100788 Place of Signature: Mumbai Date: 26thJune 2020
Annexure A to the Independent Auditor's Report
Referred to in paragraph 1 under 'Report on Other Legal and RegulatoryRequirements' section of our report of even date to in the Independent Auditor's Report tothe members of the Company on the standalone Ind AS financial statements for the yearended 31 March 2020 we report the following:
i. (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of
(b) The Company has a regular programme of physical verification of itsfixed assets by which all fixed assets are verified in a phased manner over a period ofthree years. In our opinion this periodicity of physical verification is reasonablehaving regard to the size of the Company and the nature of its assets. Pursuant to theprogramme certain fixed assets were physically verified during the year and no materialdiscrepancies were noticed on such verification.
(c) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the title deeds of immovableproperties included in fixed assets are held in the name of the Company except for oneimmoveable property which amounts to gross block of Rs. 145.66 Lakh and net block of Rs.127.61 Lakh whose title deed is not held in the name of the Company. In respect ofimmovable properties been taken on lease nd disclosed as property plant and equipment inthe standalone Ind AS financial statements the lease agreements are in the name of theCompany.
ii. The inventory (excluding stock with third parties) has beenphysically verified by the management during the year. In our opinion the frequency ofsuch verification is reasonable. In respect with the inventory lying with third partiesthese have been substantially confirmed by them. The Company has maintained proper recordsof inventory. The discrepancies noticed on verification between the physical stock and thebook records were not material.
iii. (a) The Company has granted unsecured interest free loans to sixsubsidiary companies covered in the register maintained
under section 189 of the Companies Act 2013. In our opinion andaccording to the information and explanations given to us the terms and conditions of thegrant of such loans are not prejudicial to the company's interest.
(b) The Company has granted loans that are re-payable on demand to theparties covered in the register maintained under section 189 of the Companies Act 2013.We are informed that the Company has not demanded repayment of any such loan during theyear and thus there has been no default on the part of the parties to whom the money hasbeen 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 otherparties listed in the register maintained under section189 of the Companies Act 2013which are overdue for more than ninety days.
iv. According to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Companies Act 2013in respect of grant of loans making investments and providing guarantees and securitiesas applicable.
v. According to information and explanations given to us The Companyhas not accepted any deposits from the public and hence the directives issued by theReserve Bank of India and the provisions of Sections 73 to 76 or any other relevantprovisions of the Act and the Companies (Acceptance of Deposit) Rules 2015 with regard tothe deposits accepted from the public are not applicable.
vi. Pursuant to rules made by the Central Government of India theCompany is required to maintain cost records as specified under Section 148(1) of the Actin respect of its products. We have broadly reviewed the same and are of the opinionthat prima facie the prescribed accounts and records have been made and maintained. Wehave not however made a detailed examination of the records with a view to determinewhether they are accurate or complete.
vii. (a) According to the information and explanations given to us andon the basis of our examination of the records of the
Company amounts deducted/ accrued in the books of account in respectof undisputed statutory dues including Provident fund Employees' State InsuranceIncome-tax Goods and Services tax Duty of Customs Cess and other material statutorydues have generally been regularly deposited during the year by the Company with theappropriate authorities.
(b) According to the information and explanations given to us thereare no dues of Income-tax or Sales tax or Service tax or Goods and Services tax or duty ofCustoms or duty of Excise or Value added taxes which have not been deposited by theCompany on account of disputes except for the following:
|Name of the Statute ||Nature ofthe Dues ||Amount (Rs. Lakhs) ||Period ||Forum where dispute is pending |
|Service Tax ||Input Tax ||2534.35 ||Various periods ||CESTAT |
| ||Credit ||288.03 ||Various periods ||CESTAT- Ahemdabad |
| || ||162.70 ||Various periods ||Jt. Comm of Sales Tax Appeal |
| || ||332.88 ||Various periods ||The Mumbai Sales Tax Tribunal Maharashtra |
| || ||593.99 ||Various periods ||Jt. Comm of Sales Tax Appeal Maharashtra |
| || ||1.38 ||2013-14 ||Tribunal Orissa |
| ||Input Tax Credit / "C" ||237.21 ||Various periods ||DCCT Gujrat |
|VAT / Central Sales Tax || ||595.65 ||Various periods ||Tribunal UP |
| ||forms ||16.89 ||Various periods ||Addl. Com.-Grade-2 UP |
| || ||8.45 ||Various periods ||Remanded to AO Tamil Nadu |
| || ||0.83 ||2014-15 ||JCCT- Appeal -1 Karnataka |
| || ||13.21 ||2009-10 ||KVAT TRIBUNAL Kerala |
| || ||1.72 ||Various periods ||DC - Appeal Kerala |
| || ||6.69 ||Various periods ||Sr. Joint Commissioner- Revision Board West Bengal |
|Custom Duty ||Redumption Fine ||300.00 ||Various periods ||CESTAT Mumbai |
|Income Tax ||Income Tax ||191.00 ||Various periods ||Assessing Officer Mumbai |
|GST || ||5.45 ||2018-19 ||Jurisdictional Assessing Officer Banglore |
|GST || ||4.48 ||2019-20 ||Jurisdictional Assessing Officer Agra |
viii. According to the explanations and information given to us theCompany has defaulted in repayment of dues the amount of default to a financialinstitution was Rs 1891.52 Lakh (period of default- 61 months) to a bank was Rs. 126.61Lakh (Period of default - 30 months) and to ARC Rs. 6961.70 Lakh (Period of default - 1day).
ix. In our opinion and according to the information and explanationsgiven to us the Company has not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Accordinglyparagraph 3(ix) of the Order is not applicable to the Company.
x. During the course of our examination of the books and records of theCompany carried out in accordance with the generally accepted auditing practices inIndia and according to the information and explanations given to us we have neither comeacross any instance of material fraud by the Company or on the Company by its officers oremployees noticed or reported during the year nor have we been informed of any such caseby the Management.
xi. In our opinion and according to the information and explanationsgiven to us and based on our examination of the records of the Company the Company hasnot paid/provided for managerial remuneration during the year. Hence reporting underclause 3(xi) of the order is not applicable to the company.
xii. In our opinion the Company is not a nidhi company. Therefore theprovisions of clause 3(xii) of the order are not applicable to the Company and hence notcommented upon.
xiii. According to the information and explanations given by themanagement transactions with the related parties are in compliance with section 177 and188 of Companies Act 2013 where applicable and the details have been disclosed in thenotes to the financial statements as required by the applicable accounting standards.
xiv. According to the information and explanations given to us and onan overall examination of the balance sheet the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year under review and hence reporting requirements under clause 3(xiv) are notapplicable to the Company and not commented upon.
xv. According to the information and explanations given to us and basedon our examination of the records of the Company the Company has not entered intonon-cash transactions with directors or persons connected with him. Accordinglyprovisions of section 192 of the Act are not applicable to the Company.
xvi. According to the information and explanation given to us theCompany is not required to be registered under section 45-IA of the Reserve Bank of IndiaAct.
For Nayak & Rane
Chartered Accountants F.R.No:117249W
Partner M.No : 100788 Place : Mumbai Date : 26th June 2020
Annexure B to the Independent Auditor's Report
Referred to in paragraph (f) under 'Report on The Internal FinancialControls under Clause (i) of sub-section 3 of Section 143 of the Companies Act 2013("the Act")
In conjunction with our audit of the consolidated financial statementsof NITCO LIMITED ("the Holding Company") as of 31 March 2020 we have auditedthe internal financial controls with reference to the financial statements of the HoldingCompany and its subsidiaries which are incorporated in India as of that date.
Management's Responsibility for Internal Financial Controls
The respective Board of Directors of the Holding company and itssubsidiaries which are incorporated in India are responsible for establishing andmaintaining internal financial controls based on the internal control with reference tofinancial statements criteria established by the Holding company and its subsidiarieswhich are incorporated in India considering the essential components of internal controlstated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting ("the Guidance Note") issued by the Institute of Chartered Accountantsof India ("ICAI"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence to theCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the internal financialcontrols with reference to financial statements of the Holding Company and itssubsidiaries which are incorporated in India based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing issued by the ICAI anddeemed to be prescribed under Section 143(10) of the Act to the extent applicable to anaudit of internal financial controls both applicable to an audit of Internal FinancialControls and both issued by the ICAI. Those Standards and the Guidance Note require thatwe comply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls with reference to financialstatements was established and maintained and if such controls operated effectively in allmaterial respects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system with reference to financialstatements and their operating effectiveness. Our audit of internal financial controlswith reference to financial statements included obtaining an understanding of internalfinancial controls with reference to financial statements assessing the risk
that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the internal financial controlsystem with reference to financial statements of the Holding Company and its subsidiarieswhich are incorporated in India.
Meaning of Internal Financial Controls with reference to FinancialStatements
A company's internal financial control with reference to financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. A company's internalfinancial control with reference to financial statements includes those policies andprocedures that:
1. pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;
2. provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany and
3. provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the company's assets thatcould have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls with reference toFinancial Statements
Because of the inherent limitations of internal financial controls withreference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to financial statements to future periods are subject to the riskthat the internal financial control with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.
In our opinion the Holding Company and its subsidiaries which areincorporated in India have in all material respects an adequate internal financialcontrols system with reference to financial statements and such internal financialcontrols with reference to financial statements were operating effectively as at 31 March2020 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 Noteissued by the ICAI.
For Nayak & Rane
Chartered Accountants F.R.No:117249W
Partner M No:100788
Place : Mumbai
Date : 26th June 2020