|BSE: 503780||Sector: Industrials|
|NSE: NRC||ISIN Code: INE953C01018|
|BSE 00:00 | 23 Feb||NRC Ltd|
|NSE 05:30 | 01 Jan||NRC Ltd|
|BSE: 503780||Sector: Industrials|
|NSE: NRC||ISIN Code: INE953C01018|
|BSE 00:00 | 23 Feb||NRC Ltd|
|NSE 05:30 | 01 Jan||NRC Ltd|
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF NRC LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of NRC Limited ("theCompany") which comprise the Balance Sheet as at 31st March 2018 the Statement ofProfit and Loss (including other comprehensive income) Statement of Changes in Equity andthe Cash Flow Statement for accounting policies and other the year then ended and explanatorysummaryof the significant information for the year then ended.
Managements Responsibility for the Financial Statements
The Companys 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 financial statements that give a true and fair view of the financial positionfinancial performance including other comprehensive income changes in equity and cashflows of the Company in accordance with the accounting principles generally accepted inIndia including the Accounting Standards (Ind AS) specified under Section 133 of the Actread with Rule 7 of the Companies (Accounts) Rules 2014. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding the assets of the Company and for preventing and detecting fraudsand other irregularities; selection and application of appropriate accounting policies;making judgments and estimates that are reasonable and prudent; and design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on ouraudit. We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under. We conducted our audit in accordancewith the Standards on Auditing specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatement. An audit involves performing procedures to obtain audit evidence about theamounts and the disclosures in the financial statements. The procedures selected depend onthe auditors judgment including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error. In making thoserisk assessments the auditor considers internal financial control relevant to theCompanys preparation of the financial statements that give a true and fair view inorder to design audit procedures that are appropriate in the circumstances. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Companys Directors as wellas evaluating the overall presentation of the financial statements. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide a basis for ourqualified audit opinion on the financial statements.
Basis for Qualified Opinion
(a) Material Uncertainty Relating to Going Concern
The Company has incurred loss in the current year as well as in the preceding year andthe accumulated losses has exceeded its entire net worth and the Companys plant areunder lockout since 15th November 2009. Besides certain financial/operational creditorsCode 2016 (IBC 2016) The havefiled financial statements have however been prepared bythe management on a going concern basis as explained in note 28(a). This being a technicalmatter and in view of uncertainty we are unable to express an opinion as to whether theCompany can operate as a going concern and also as to the extent of the effect of theresultant adjustments to the accumulated losses assets and liabilities as at the year-endand losses for the year which is presently not ascertainable.
(b) The Company has not carried out impairment test as required by Indian AccountingStandard (Ind AS) 36 Impairment of Assets particularly in respect of Plantand Equipment as explained in note 28(b).We are unable to express an opinion as to whenand to what extent the carrying value of Plant & Equipment (WDV as on 31st March 2018is Rs. 1398.06 Lakhs) would be recovered particularly because of lock-out at the plantsince 15th November 2009 and continuing theft of certain machinery parts. Theimpact of the same on the loss for the year accumulated losses assets and liabilities asat the year-end is presently not ascertainable.
(c) The accounts of certain Banks Loans & Advances given Other non- currentassets Lenders liability Trade payables and Other liabilities are subject toconfirmations reconciliations and adjustments if any having consequential impact on theloss for the year accumulated losses assets and liabilities as at the year-end theamounts whereof are presently not ascertainable
(Refer note no. 29 (b) of the financial statements).
(d) i) Liability as may arise towards interest/compound interest/penalty ondelayed/non- payment to certain trade payables /statutory dues/ Promoter Contribution/Lenders is presently not ascertainable. so the Company is expecting relief and concessionand therefore not provided for. (Refer note no. 29(c) of the financial statements) ii)Bonus liability as is payable to workers/staff members has not been ascertained andprovided for. (Refer note no. 29(d) of the financial statements)
(e) The remuneration payable to the Managing Director for the period December 2008to January 2011 amounting to Rs. 224.27 Lakhs was subject to Central Government approvalout of which approval for only Rs. 82.15 Lakhs was granted. For the balance amount paidof Rs. 142.10 Lakhs the Company is proposing to apply to Central Government for waiver ofits recovery and is hopeful of receiving the same in due course. (Refer Note no. 29(a) ofthe financial statements)
(f) Non provisioning of Liability towards Mesne profit aggregating to Rs. 529.36Lakhs in respect of premises taken on lease and vacated in terms of the Supreme Courtorder received during the financial year 2013-14. (Refer note no. 25 (a) of the financialstatements)
(g) We further report that without considering the matter referred in para (a) to (d)above the effect of which could not be determined had the observation made by us in para(e) and para (f) above been considered the loss before tax for the current year wouldhave been Rs. 1059.96 Lakhs; previous year ended Rs.1829.31 Lakhs (as against reportedloss of Rs. 672.70 Lakhs; previous year ended Rs. 1442.05 Lakhs) Reserves and Surplus(accumulated losses) would have been Rs. 64874.48 Lakhs; As at 31st March 2017Rs.64471.80;As at 1st April 2016 Rs.63730.99 Lakhs(as against reportedlosses of Rs.64487.22 Lakhs; As at 31st March 2017 Rs.64084.54 Lakhs.; As at 1st April2016 Rs.63343.73 Lakhs) and trade payables would have been Rs. 19308.48 Lakhs; As at31st March 2017 Rs.18858.54 Lakhs; of Rs. As at 18921 st April2016Rs.17892.69 Lakhs(as against reported figure .22 Lakhs; As at 31st March 2017 Rs.18471.28 Lakhs.; As at1st April 2016 Rs.17505.43 Lakhs)
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion paragraph above the aforesaid financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India of the state of affairs of theCompany as at 31st March 2018 and its loss including other comprehensiveincome changes in equity and its cash flows for the year ended on that date.
Emphasis of matter:
We draw attention regarding Managerial Remuneration of Rs.214.55 Lakhs provided basedon recommendation by Nomination and Remuneration Committee and approved by Board ofdirectors for the period January 25 2017 to March 31 2018 and subject to secured lendersapproval. Our report on the statement is not modified in respect of this matter.
Opening Balances have been considered based on the audited financial statementsprepared under previous Generally Accepted Accounting Practices(Previous GAAP) as perCompanies (Accounting Standards) Rules 2006 issued by the other auditor whose qualifiedaudit report dated 30th May 2017 have been furnished to us. The Differences arises fromtransition from previous GAAP to Ind AS have been derived from such audited financialstatement.
Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditors Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in the "Annexure A" attached hereto our commentson the matters specified in paragraphs 3 and 4 of the said Order to the extentapplicable.
As required by Section 143 (3) of the Act we report that:
(a) Subject to what is stated in the Basis of Qualified Opinion para (c) and (d)above we have sought and obtained all the information and explanations which to thebest of our knowledge and belief were necessary for the purposes of our audit.
(b) Subject to what is stated in the Basis of Qualified Opinion para (b) to (f)above and para 1 (a) and 2 and 6 of the Order in our opinion proper books of accountas required by law have been kept by the Company so far as it appears from our examinationof those books.
(c) The Balance Sheet the Statement of Profit and Loss Statement of Changes in Equityand the Cash Flow Statement dealt with by this Report are in agreement with the books ofaccount.
(d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014 except for the effects of the matter described in the Basis forQualified Opinion paragraph (b) (d) and (f) above;
(e) The matter described in the Basis for Qualified Opinion paragraph above in ouropinion may have an adverse effect on the functioning of the Company.
(f) Considering the re-schedulement of redemption of Zero Percent Secured Redeemablenon- convertible Debentures approved in CDR package in January 2008 and on the basis ofthe written representations received from the Directors as on 31st March 2018taken on record by the Board of Directors. We report that none of the directors isdisqualified as on 31st March 2018 from being appointed as a director in termsof Section 164 (2) of the Act.
(g) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B".
(h) With respect to other matter to be included in the Auditors Report inaccordance with the Rule 11 of the Companies (Audit and Auditors) Rules 2014 in ouropinion 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 financialposition inits financial statements- Refer Note 23(a) to the financial statements. ii) The Companydid not have any long-term contracts including derivative contracts for which there wereany material foreseeable losses. iii) There is has been no delay in transferring amountrequired to be transferred to the Investor Education and Protection Fund by the Company.
Annexure A ANNEXURE REFERRED TO IN PARAGRAPH "REPORT ON OTHER LEGAL AND REGUALTORYREQUIREMENTS" OF OUR REPORT TO THE MEMBERS OF "THE COMPANY"FOR THE YEARENDED 31ST MARCH 2018
On the basis of such checks as we considered appropriate and according to theinformation and explanations given to us during the course of our audit we state that:
1. a) The Companys fixed assets records need to be updated to show fullparticulars including quantitative details and situation of fixed assets.
b) The Company has not carried out physical verification of its fixed assets during theyear. As explained discrepancies as may be noticed on physical verification will bedealt with in the books of account as and when the assets will be physically verified .
c) Updated title deeds of immovable properties have not been made available for us forverification. Accordingly we are unable to comment whether the same held in the name ofCompany. Also refer Note No. 26(b)(c)(d) of the financial statements.
2. No physical verification of the inventory has been carried out during the year or inthe recent past. As explained discrepancies as may be noticed on physical verificationwill be dealt with in the books of account as and when the inventory will be physicallyverified.
3. The Company has not granted any loans secured or unsecured to companies firmslimited liability partnerships or other parties covered in the register maintained undersection 189 of the Act. Accordingly the provisions of clause (iii) of the Order are notapplicable to the Company.
4. The Company has not granted any loans or made investments or given security/guarantees during the year. Accordingly the provisions of clause (iv) of the Order arenot applicable to the Company.
5. No deposits within the meaning of directives issued by RBI (Reserve Bank of India)and Sections 73 to 76 or any other relevant provisions of the Act and rules framed thereunder have been accepted by the Company.
6. As explained to us due to lock out and stoppage of production in the plant thecost records have not been maintained.
7. a) The Company is not regular in depositing the undisputedstatutory dues including provident fund employees state insurance income-taxsales-tax service tax duty of customs duty of excise value added tax cess and otherstatutory dues applicable to it with the appropriate authorities. According to theinformation and explanations given to us following are the undisputed statutory duesoutstanding as at 31st March 2018 for a period of more than six months fromthe date they became payable:
Also refer point (d) of Basis of Qualified opinion reported above b) According tothe records of the Company and information and explanations given to us by the managementthe details of disputed duty of excise duty of customs Service Tax Income Tax WealthTax and Cess which have not been deposited are as under:
8. After considering what was approved in the Corporate Debt Restructuring packagein the year January 2008 and considering that loans from banks have already been assignedto body corporate the Company has defaulted in repayment of dues to banks and the detailsare as under :
9. The Company has not raised any money by way of public issue or further public offer(including debt instruments) during the year. Based on the information and explanationsgiven to us by the management term loans were applied for the purpose for which the loanswere obtained.
10. 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 no material fraud on or by theCompany by its officers or employees has been noticed or reported during the course of ouraudit except continuing theft of certain parts of Plant & Machinery in the factorythe amount whereof has not been ascertained for which the Company has lodged FIRs withrelevant authorities and also filed the claims with insurance company.
11. Managerial Remuneration of Rs. 181.73 Lakhs has been provided for the year andsubject to shareholders/lenders approval and is not in accordance with theprovisions of Section 197 read with Schedule V of the Act. Also refer para (e) of Basisfor Qualified Opinion paragraph and Note no.29(a) of the financial statements in respectof remuneration paid in respect of an earlier period.
12. In our opinion the Company is not a Nidhi Company. Therefore the provisions ofclause 4(xii) of the Order are not applicable to the Company.
13. 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 all transactions with therelated party are in compliance with section 177 and 188 of the Act and the details havebeen disclosed as required by the applicable Indian Accounting Standard in Note no. 33 tothe Financial Statements.
14. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year. Therefore the provisions ofclause 4(xiv) of the Order are not applicable to the Company.
15. Based on the information and explanations given to us Company has not entered intoany non-cash transactions with directors or persons connected with them during the yearTherefore the provisions of clause 4(xv) of the Order are not applicable to the Company.
16. In our opinion the Company is not required to be registered under Section 45-IA ofthe Reserve Bank of India Act 1934. Therefore the provisions of clause 4(xvi) of theOrder are not applicable to the Company.
Annexure B ANNEXURE TO THE INDEPENDENT AUDITORS REPORT OF EVEN DATE ON THEFINANCIAL STATEMENTS OF NRC LIMITED
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 internalfinancial controls over financial reporting of NRC Limited ("the Company") as ofMarch 31 2018 in conjunction with our audit of the financial statements of the Companyfor the year ended on that date.
Managements Responsibility for Internal Financial Controls.
The Companys 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". 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 companys policies the safeguarding of its assetsthe prevention 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.
Our responsibility is to express an opinion on the Companys 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 to the extent applicable toan audit of internal financial controls both issued by the Institute of CharteredAccountants of India. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects. Our auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls system over financial reporting and their operating effectiveness. Ouraudit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditors judgement including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error. We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis forour qualified audit opinion on the Companys internal financial controls system overfinancial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A companys internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A companys internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures 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 thecompanys 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.
According to the information and explanations given to us and based on our audit thefollowing material weaknesses have been identified as at March 31 2018:
a) The Company did not have an appropriate internal control system for fixed assetsand inventories with regard to updating of records impairment and physical verification.These could potentially result in material misstatements in the Companys fixedassets and expense account balances.
b) The Company did not have an appropriate internal control system for Banks Loans& Advances Other non- current assets Trade payables Other liabilities and lenderswith regard to confirmation of balances. These could potentially result in materialmisstatements in the Companys assets liabilities & expense account balances.
c) The Company did not have an appropriate internal control system for customeracceptance credit evaluation and establishing customer credit limits for scrap saleswhich could potentially result in the Company recognising revenue without establishingreasonable certainty of ultimate collection.
d) The Company did not have an appropriate internal control system for borrowingswith regard to interest provisioning. These could potentially result in materialmisstatements in the Companys accrued interest (liability) and expense accountbalances.
e) The Company did not have an appropriate internal control for execution of maker/checker process segregation of duties statutory compliance. These could potentiallyresult in material misstatements in the Companys financial position.
A material weakness is a deficiency or a combination of deficiencies ininternal financial control over financial reporting such that there is a reasonablepossibility that a material misstatement of the companys annual or interim financialstatements will not be prevented or detected on a timely basis.
In our opinion considering what is stated above the Company has not maintained inall material respects adequate internal financial controls over financial reporting andsuch internal financial controls over financial reporting were not operating effectivelyas of March 31 2018 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.