Regency Ceramics Ltd.
|BSE: 515018||Sector: Consumer|
|NSE: REGENCERAM||ISIN Code: INE277C01012|
|BSE 00:00 | 27 Feb||Regency Ceramics Ltd|
|NSE 05:30 | 01 Jan||Regency Ceramics Ltd|
|BSE: 515018||Sector: Consumer|
|NSE: REGENCERAM||ISIN Code: INE277C01012|
|BSE 00:00 | 27 Feb||Regency Ceramics Ltd|
|NSE 05:30 | 01 Jan||Regency Ceramics Ltd|
To the Members of
REGENCY CERAMICS LIMITED HYDERABAD.
Report on the Audit of the Financial Statements
We have audited the financial statements of REGENCY CERAMICS LIMITED(the company) which comprise the Balance Sheet as at March 312019 the Statement of Profit and Loss (including other comprehensive income) the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date and a summary of the significant accounting policies and other explanatory information (herein after referred to as the financial statements)
In our opinion and to the best of our information and according to the explanations given to us except for the possible effects of our observations stated in Basis for Qualified Opinion section below the accompanying financial statements give the information required by the Companies Act 2013 (the Act) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standard) Rules 2015 as amended (Ind AS) and other accounting principles generally accepted in India of the state of affairs of the Company as at March 31 2019 its loss (including other comprehensive income) changes in equity and its cash flows for the year ended on that date.
Basis for Qualified Opinion
1. Manufacturing operations of the company were stopped due to riots strike and malicious damage at factory since 27.01.2012. The company declared lock out of the plant on 31.01.2012 and the condition of the fixed assets and its realizable value could not be estimated. The machinery and building were not insured during the year and disclosed at book value after providing depreciation on account of efflux of time.
2. The condition of the raw materials stores and spares and its realizable value could not be estimated by the company. The stocks were not insured during the year and disclosed at book value.
3. During the year the company has not provided the provisional liability towards salary wages and other benefits to its factory employees pending orders/judgment of the industrial Tribunal. Further the company has not provided for its liability towards Gratuity and leave encashment in accordance to Ind AS-19 Employee Benefits. Since the company could not compute the liability in the absence of complete records we are unable to comment upon the impact of non-provision of additional loss of the company for the year and on the current liabilities as at 31.03.2019.
4. Confirmation of balances was not obtained from Debtors Creditors loan and advances and other current assets.
5. The company requested the lenders for sanction of revised OTS and paid entire OTS amount in respect of four lenders where sanctions were received. Satisfaction of charges were filed with ROC in respect of Phoenix ARC Private Limited (Trustee of Phoenix Trust-FY15-5) and the remaining term loans outstanding against them were written back as income during the previous year. While the company is awaiting revised OTS sanction from another Bank based on the decision taken by consortium the bank filed the petition before the Hon'ble NCLT Hyderabad bench under section 7 of the Insolvency and Bankruptcy code2016 and the company is contesting the same. Earlier the lenders initiated recovery action against the company and took symbolic Possession under Rule 8(1) of Security Interest (Enforcement) Rules 2002 in exercise of powers conferred on them under section 13(4) of the SARFAESI Act. The lenders also filed an application under section 19 of the Recovery of Debts due to Banks and Financial Institutions Act 1993 in the Debts Recovery Tribunal Hyderabad for recovery of their dues. In view of the above the Long Term Borrowings are considered as current maturities of long term borrowings and shown under Other Financial Liabilities. Hypothecation / Hire purchase loans are repayable within one year and shown under Other Financial Liabilities.
6. The company did not provide the interest on secured loans in respect of four lenders where the accounts were settled under OTS. An amount of Rs.345.45 Lakhs for the year and Rs.1972.89. lakhs up to 31st March 2019 debited by one bank was not provided in the books as the company is disputing the same.
7. The company has not provided the liability towards interest and penalties payable on account of statutory dues. The Company is of opinion that the statutory authorities shall waive the same in view of the unprecedented incident.
Consequent to the above the Net loss would increase and Shareholders funds would reduce to this extent.
We conducted our audit of the financial statements in accordance with the Standards on Auditing (SAs) specified under Section 143(10) of the Act. Our responsibilities under those standards are further described in the Auditors responsibility for the Audit of Financial Statements section of our report. We are independent of the company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of financial statements under the provisions of the Act and the Rules made thereunder and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.
Material Uncertainty Related to Going Concern
We draw attention to note no. 1 to the financial statements regarding the preparation of the financial statements on a going concern basis despite erosion of the net worth no cash inflows from the existing business activities and continuous default in payment of dues to banks / financial institutions and the legal proceedings initiated by the Bankers of the Company for the recovery of the debts.Our opinion is not modified in respect of this matter.
Key Audit Matters
Except for the matters described in the Basis for Qualified Opinion section and Material Uncertainty Related to Going Concern section we have determined that there are no other key audit matters to communicate in our report.
The Company's Board of Directors is responsible for the other information. The other information comprises the information included in the Annual Report but does not include the financial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to read the other information identified above and in doing so consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a material misstatement of this other information we are required to report that fact. We have nothing to report in this regard.
Management's Responsibility for the Financial Statements:
The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act 2013 (the Act) with respect to the preparation of these financial statements that give a true and fair view of the financial position financial performance including other comprehensive income cash flows and changes in equity of the Company in accordance with the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Companies Act 2013 read with relevant rules issued there under and other accounting principles generally accepted in India.
This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the company and for preventing and detecting the frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records relevant to the preparation and presentation of financial statements that give a true and fair view and are free from material misstatement whether due to fraud or error.
In preparing the financial statements the Board of Directors is responsible for assessing the company's ability to continue as a going concern disclosing as applicable matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the company or to cease operations or has no realistic alternative but to do so.The Board of Directors are responsible for overseeing the Company's financial reporting process.
Auditor's Responsibility for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement whether due to fraud or error and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if individually or in the aggregate they could reasonably be expected to influence the economic decisions of users taken on the basis of these Standalone financial statements. As part of an audit in accordance with SAs we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements whether due to fraud or error design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and based on the audit evidence obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists we are required to draw attention in our auditor's report to the related disclosures in the financial statements or if such disclosures are inadequate to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of the financial statements including the disclosures and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding among other matters the planned scope and timing of the audit and significant audit findings including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where applicable related safeguards.
e=634801>From the matters communicated with those charged with governance we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when in extremely rare circumstances we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be 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) Order2016(the Order) issued by the Central Government of India in terms of sub-section (1l) of section 143 of the Act we give in the Annexure A a statement on the matters specified in the paragraph 3 and 4 of the Order to the extent applicable.
2) As required by Section 143(3) of the Companies Act2013 we report that:
a) We have sought and except for the matters described in the Basis for qualified opinion paragraph obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit
b) Except for the effects of the matters described in the Basis for qualified opinion paragraph above in our opinion proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss including Other Comprehensive Income Statement of Changes in Equity and the Cash Flow Statement dealt with by this Report are in agreement with the books of account
d) Except for the effects of the matters described in the basis for qualified opinion paragraph in our opinion the aforesaid Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act.
e) The matters described in Basis for Qualified Opinion and Material Uncertainty Relation to Going Concern above in our opinion may have an adverse effect on the functioning of the Company
f) On the basis of written representations received from the directors as on 31st March 2019 taken on record by the Board of Directors none of the directors is disqualified as on 31st March 2019 from being appointed as a director in terms of Section 164(2) of the Act
g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls we couldn't evaluate as Company didn't have any manufacturing and business operations during the year under review
h) No Managerial remuneration was paid during the year under review so reporting under requirements of section 197 doesn't apply.
i) With respect to the other matters to be included in the Auditor's report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 272829 30 and 31 to the financial statements
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
ANNEXURE TO THE AUDITOR'S REPORT
The Annexure referred to in Para 1 under the heading of Report on Other Legal and Regulatory Requirements of our report of even date to the members of REGENCY CERAMICS LIMITED HYDERABAD for the year ended March 31 2019.
1. a. The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.
b. As explained to us the management could not verify physically the fixed assets situated at Yanam due to riots strike and malicious damage.
c. According to the information and explanations given to us and on the basis of our examination of the records of the Company the title deeds of immovable properties are held in the name of the Company.
2. No Physical verification of inventory has been conducted during the year.
3. a. During the year the Company has not granted any loans secured or unsecured to Companies firms limited liability partnerships or other parties covered in the register maintained under Section 189 of the Companies Act 2013.
b. In view of our comment in para (a) above Clause (III) (a) (b) and (c) of paragraph 3 of the Companies (Auditor's Report) Order 2016 are not applicable to the Company.
4. In our opinion and according to the information and explanations given to us the Company has not advanced any loan to any Director and no investments were made during the year as referred to in sections 185 and 186 of the Act. Therefore the provisions of Paragraph 3(iv) of the Companies (Auditor's Report) Order 2016 are not applicable to the Company.
5. The Company has not accepted any deposits from the public. Hence the provisions of Sections 73 to 76 or any other relevant provisions of the Companies Act 2013 and the rules framed there under do not apply to this Company.
6. During the year there is no production and its related activity in the factory and as such cost records pursuant to sub-section (1) of section 148 of the Companies Act 2013 have not been maintained.
7. a. According to the records the company is not regular in depositing undisputed statutory dues including provident fund employees' state insurance income-tax sales-tax service tax duty of customs duty of excise value added tax Cess and all other material statutory dues with the appropriate authorities. However the extent of the arrears of outstanding statutory dues as at March 312019 for a period of more than six months from the date they became payable are as follows.
b. According to the records of the Company and the information and explanations given to us there were no dues of income tax or sales tax or service tax or duty of customs or duty of excise or value added tax have not been deposited on account of any dispute except the following.
8. In our opinion and according to the information and explanations given to us the Company has defaulted in repayment of loans to financial institutions and Banks.
Below are the details of defaults as on Balance Sheet date:
9. The Company did not raise 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 Companies (Auditor's Report) Order 2016 is not applicable.
10. According to the information and explanations given to us no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.
11. No managerial remuneration has been paid or provided during the year under report; Hence paragraph 3(xi) of the Companies (Auditor's Report) Order 2016 is not applicable.
12. In our opinion and according to the information and explanations given to us the Company is not a Nidhi Company. Accordingly paragraph 3(xii) of the Companies (Auditor's Report) Order 2016 is not applicable.
13. According to the information and explanations given to us and based on our examination of the records of the Company transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.
14. According to the information and explanations give to us and based on our examination of the records of the Company the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.
15. According to the information and explanations given to us and based on our examination of the records of the Company the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly paragraph 3(xv) of the Companies (Auditor's Report) Order 2016 is not applicable.
16. The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.