To the Members of M/s.Refex Industries Limited Report on the Standalone FinancialStatements
We have audited the standalone financial statements of Refex Industries Limited("the Company") which comprise the balance sheet as at 31st March 2019 and thestatement of Profit and Loss and statement of cash flows for the year then ended andnotes to the financial statements including a summary of significant accounting policiesand other explanatory information. To the best of our information and according to theexplanations given to us the Company does not have any branches.
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 Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 312019 and profit and loss and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theStandalone Financial Statements section of our report. We are independent of the Companyin accordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these mattes.
Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate implementation and maintenance ofaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statement that givea true and fair view and are free from material misstatement whether due to fraud orerror.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative 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 Standalone 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.
Report on Other Legal and Regulatory Requirements
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 statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
As required by Section 143(3) of the Act we report that:
a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by 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) Rules2014.In our opinion the aforesaid standalone financialstatements comply with the Ind AS specified under Section 133 of the Act.
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 isdisqualified 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 theinternal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "AnnexureA".
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 tous:
i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements as mentioned in Note No: 28
ii. The Company had made provisions as required under the applicable law or accountingstandards for material foreseeable losses if any long-term contracts includingderivative contracts.
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
B. With respect to the matter to be included in the Auditors' Report under section197(16):
In our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under Section 197(16) which arerequired to be commented upon by us.
| ||For M.Krishnakumar & Associates |
| ||Chartered Accountants |
| ||Firm Regn.No.006853S |
| ||M. Krishna Kumar B.Sc |
|Place: Chennai ||FCA Proprietor |
|Date: 30th May 2019 ||M. No. 203929 |
ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT
The Annexure referred to in Independent Auditors' Report to the members of the Companyon the Standalone Ind
AS financial statements for the year ended 31 March 2019 we report that:
1. (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 fixed assets are verified in a phased manner over a period of three years. Inaccordance with this programme certain fixed assets were verified during the year and nomaterial discrepancies were noticed on such verification. In our opinion this periodicityof physical verification is reasonable having regard to the size of the Company and thenature of its assets.
(c) The title deeds of immovable properties are held in the name of the company.
2. The inventory has been physically verified during the year by the Management. In ouropinion the frequency of verification is reasonable. The discrepancies noticed onverification between the physical stock and book records such were not material.
3. (a) The Company has granted loans to two Body Corporate covered in the registermaintained under section 189 of the Companies Act 2013 (the Act').The amount loanis Rs. 8577.95 lakhs (Rs. 3315.19 lakhs) the year-end balance being Rs. 798.04 lakhs (Rs.3423.36 lakhs) to two companies covered in the register maintained under section 189 ofthe Act. In our opinion the grant of such loan is not prejudicial to the interest of thecompany.
(b) In our opinion and according to the information and explanations given to us theterms of repayment of the loan and payment of interest have not been stipulated; howeverthey are repayable on the mutual agreement of both the parties involved. As there is nostipulation of payment of interest the question of the receipt of interest does not arise.
(c) In our opinion and according to the information and explanations given to us andas stated in Para (ii) above the Company has not complied with the provisions of section185 and 186 of the Act with respect to the loans and investments made. The company hasgranted a loan of Rs. 8577.95lakhs (Rs. 3527.03) lakhs to a company and a corporateguarantee of Rs. 37.48CS.
4. The Company has not accepted any deposits from the public.
5. The Central Government has not prescribed the maintenance of cost records undersection 148(1) of the Act for any of the services rendered by the Company.
6. (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 income-taxGoods and Services Tax value added tax duty of customs service tax cess and othermaterial statutory dues have been regularly deposited during the year by the Company withthe appropriate authorities. As explained to us the Company did not have any dues onaccount of employees' state insurance and duty of excise.
According to the information and explanations given to us no undisputed amountspayable in respect of provident fund income tax Goods and Services tax value added taxduty of customs service tax cess and other material statutory dues were in arrears as at31 March 2019 for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us there are no dues ofduty of customs which have not been deposited with the appropriate authorities on accountof any dispute. However according to information and explanations given to us thefollowing dues of income tax sales tax duty of excise service tax and value added taxhave not been deposited by the Company on account of disputes:
|S. No. Particulars ||Amount (In Rs. ) ||Details |
|1. Maharashtra VAT ||Rs. 4261002 /- ||Maharashtra Sales Tax Dept. |
|2. Income tax ||Rs. 2624382/- ||Income Tax for A.Y. 2008-09 |
(vii) According to the information and explanations given to us the particulars ofdues in respect of income tax service tax sales tax customs duty excise duty VAT andcess which have not been deposited on account of a dispute are as follows:
|S. No Particulars ||Amount (In. Rs. ) ||Details |
|1. A.Y.2009-10 ||17061280/- ||Under Appeal with the Hon'ble Income Tax Appellate Tribunal Chennai |
|2. A.Y.2011-12 ||58145540/- ||Under Appeal with the Hon'ble Commissioner of Income Tax (Appeals) Chennai |
(viii) The Company does not have any loans or borrowings from any financialinstitution banks government or debenture holders during the year. Accordinglyparagraph 3(viii) of the Order is not applicable.
(ix) The Company did 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.
(x) According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.
(xi) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.
(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.
(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the standalone Ind AS financial statements as requiredby the applicable accounting standards.
(xiv) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.
(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.
(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act1934.
| ||For M.Krishnakumar & Associates |
| ||Chartered Accountants |
| ||R.No.006853S |
|Place: Chennai ||M. Krishna Kumar B.Sc. FCA |
|Date: 30th May 2019 ||Proprietor |
| ||M.No.203929 |
ANNEXURE - A TO THE AUDITORS' REPORT
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting ofRefexIndustries Limited ("the Company") as of 31 March 2019 in conjunction withour audit of the standalone Ind AS financial statements of the Company for the year endedon that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the standalone IND AS Financial statements whether due to fraudor error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that
(1) pertain to the maintenance 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 authorizations of management and directors of the company; and
(3) Provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial 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.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2019 based on theinternal control over financial reporting criteria established by the Company consideringtheessentialcomponentsofinternalcontrolstatedintheGuidanceNoteonAuditof Internal FinancialControls over Financial reporting issued by the Institute of Chartered Accountants ofIndia.
| ||For M.Krishnakumar & Associates |
| ||Chartered Accountants |
| ||R.NO: 006853S |
|Place: Chennai ||M.Krishna Kumar B.Sc FCA |
|Date: 30th May 2019 ||Proprietor |
| ||M.No:203929 |