THE MEMBERS OF
RESTILE CERAMICS LIMITED
Report on the Financial Statements
1. We have audited the accompanying financial statements of RESTILE CERAMICSLIMITED ("the Company") which comprise the Balance Sheet as at March31 2017 the Statement of Profit and Loss the Cash Flow Statement and a summary of thesignificant accounting policies and other explanatory information for the year then ended.
Management's Responsibility for the Financial Statements
2. 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 financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards prescribedunder section 133 of the Act as applicable.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
3. Our responsibility is to express an opinion on these financial statements based onour audit.
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 thereunder and the Order under Section 143(11) ofthe Act.
4. We conducted our audit of the financial statements in accordance with the Standardson Auditing specified under Section 143(10) of the Act. Those Standards require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether the financial statements are free from material misstatement.
5. An audit involves performing procedures to obtain audit evidence about the amountsand the disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.
6. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.
Basis for Qualified Opinion
7. The Company has generated negative operating cash flows incurred substantialoperating losses and significant deterioration in value of assets used to generate cashflows all of which indicate existence of material uncertainty in the Company's ability tocontinue as a going concern for a reasonable period of time. The attached financialstatements do not include any adjustments that might result had the above uncertaintiesbeen known.
8. The Company's building and plant and equipment are carried in the Balance Sheetat Rs.849.21 lakhs and Rs.3948.89 lakhs respectively. Independent valuation of the assetsof the company in financial year 2010-11 had indicated impairment of Building (Rs.522.17lakhs) and Plant and Machinery (Rs.119.87 lakhs). However considering the lapse of timeand the depreciation being charged on the basis of estimated useful life of assets theaforesaid impairment in value of assets need to be recomputed. As such the possibleimpairment on assets and its effect on statement of Profit & Loss is to be taken asunascertained as on March 312017.
9. In our opinion and to the best of our information and according to theexplanations given to us except for the effect of the matters described in the Basis forqualified opinion paragraph the aforesaid financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at March 312017 and its loss and its cash flows for the yearended on that date.
Report on Other Legal and Regulatory Requirements
10. 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 thebest of 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 except for the effect of the matters described in the Basis forqualified opinion in paragraph 8 the aforesaid financial statements comply withthe Accounting Standards prescribed under section 133 of the Act as applicable.
e) On the basis of the written representations received from the directors as onMarch 31 2017 taken on record by the Board of Directors none of the directors isdisqualified as on March 312017 from being appointed as a director in terms of Section164(2) of the Act.
f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure A". Our report expresses a modified opinion on theadequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i. The company has in accordance with the generally accepted accounting practicedisclosed the impact of pending litigations on its financial position in its financialstatements - Also Refer Note 27.01 to the financial statements.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses under the applicable law or accountingstandards.
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
iv. The Company has provided requisite disclosures in its financial statements as toholdings as well as dealings in Specified Bank Notes during the period from 8 November2016 to 30 December 2016 Based on audit procedures and relying on Managementrepresentation we report that the disclosures are in accordance with the books ofaccounts maintained by the Company and as produced by the Management. Refer Note 14 to theFinancial Statements.
11. As required by the Companies (Auditor's Report) Order 2017 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.
For M.S. Krishnaswami & Rajan
Registration No. 01554S
Membership No. 26453
ANNEXURE "A"TO THE INDEPENDENT AUDITORS'REPORT
(Referred to in paragraph 10(f) under Report on Other Legal and RegulatoryRequirements' section of our report of even date)
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
1. We have audited the internal financial controls over financial reporting of RestileCeramics Limited ("the Company") as of March 312017 in conjunction with ouraudit of the financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
2. 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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.
3. 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") issued by the Institute of Chartered Accountants of Indiaand the Standards on Auditing prescribed under Section 143(10) of the Companies Act 2013to the extent applicable to an audit of internal financial controls. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the 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 judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
5. 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
6. A company's 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 company's 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 thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
7. 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.
8. According to the information and explanations given to us and based on our auditthe following material weakness has been identified as at March 312017:
The Company does not have an appropriate internal control system for assessing andrecognising impairment to the Fixed Assets of the Company and this could potentiallyresult in the Company recognising Fixed Assets at erroneous values.
9. 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 company's annual or interim financialstatements will not be prevented or detected on a timely basis.
10. In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects/possible effects of the material weakness described inparagraph 8 above on the achievement of the objectives of the control criteria theCompany has maintained in all material respects adequate internal financial controlsover financial reporting and such internal financial controls over financial reportingwere operating effectively as of March 312017 based on the internal control overfinancial reporting criteria established by the Company considering the essentialcomponents of internal control stated in Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
11. We have considered the material weakness identified and reported above indetermining the nature timing and extent of audit tests applied in our audit of thefinancial statements of the Company for the year ended March 312017 and the saidmaterial weakness has affected our opinion on the financial statements of the Company andwe have accordingly issued a qualified opinion on the financial statements of the Companyfor the year ended March 312017.
For M.S. Krishnaswami & Rajan
Registration No. 01554S
Membership No. 26453
May 27 2017
ANNEXURE "B"TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 11 under Report on Other Legal and RegulatoryRequirements' section of our report of even date on the accounts of RESTILE CERAMICSLIMITED ("the Company") for the year ended March 312017)
(i) In respect of its fixed assets:
(a) The company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets. The same however needs to beupdated.
(b) The fixed assets are being physically verified which in our opinion isreasonable having regard to the nature and value of its assets and no materialdiscrepancies have been noticed on such verification carried out during the year.
(c) On the basis of documents of title produced to us and the information andexplanations produced to us we are of the opinion that the title deeds of immovableproperties of the Company are held in its name.
(ii) The inventories have been physically verified at the year-end and no materialdiscrepancies have been reported that needs to be dealt with in books of accounts.
(iii) The Company has not granted any loans secured or unsecured to companiesfirms Limited Liability Partnerships or other parties covered in the Register maintainedunder Section 189 of the Companies Act 2013
(iv) The Company has not granted any loans made investments provided guaranteesand security covered under provisions of section 185 and 186 of the Companies Act 2013.
(v) According to information and explanations given to us the Company has notaccepted any deposits from the public during the year and accordingly the provisions ofClause 5 of paragraph 3 of the Order are not applicable to the Company.
(vi) In our opinion and according to the information and explanations given to usthe requirement for maintenance of cost records pursuant to the Companies (Cost Recordsand Audit) Rules 2014 specified by the Central Government of India under section 148 ofthe Companies Act 2013 are not applicable to the Company.
(vii) According to the information and explanations given to us and the books ofaccount examined by us in respect of statutory dues:
(a) Delays were noticed in depositing undisputed statutory dues including providentfund employee's state insurance income tax sales tax service tax excise value addedtax and other statutory dues with the appropriate authorities during the year. The arrearsof such dues outstanding for more than six months as at March 312017 are:
|Nature of Dues ||Amount (Rs. Lakhs) |
|Sales Tax ||16.35 |
|Cess ||1.25 |
We are informed that the delays were caused due to financial constraints.
(b) There are no dues of income tax service tax excise duty cess and customsduty which have not been deposited on account of any dispute.
(viii) There are no loans or borrowings from financial institution governmentbanks or in the form of debentures.
(ix) There are no monies raised during the year by way of public offer or furtherpublic offer (including debt instruments) and term loans.
(x) To the best of our knowledge and belief and according to the information andexplanations given to us and considering the size and nature of the Company's operationsno fraud by the Company and no fraud of material significance on the Company by itsofficers or employees has been noticed or reported during the year.
(xi) In our opinion and according to the information and explanations given to usthe Company has paid/ provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of Section 197 read with Schedule V to the CompaniesAct 2013.
(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) ofParagraph 3 of the Order is not applicable to the Company.
(xiii) In our opinion and according to the information and explanations given to usthe Company has complied with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
(xiv) During the year the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures and hence reportingunder clause (xiv) of paragraph 3 of the Order is not applicable to the Company.
(xv) In our opinion and according to the information and explanations given to usthe Company has not entered into any non-cash transactions during the year with itsdirectors or persons connected with him and hence provisions of section 192 of theCompanies Act 2013 are not applicable.
(xvi) The Company is not required to be registered under section 45-IA of theReserve Bank of India Act 1934.
For M.S. Krishnaswami & Rajan
Firm Regn No: 01554S
M.S. Murali- Partner
Membership No: 26453
Place : Chennai
Date : May 27 2017.