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Rites Ltd.

BSE: 541556 Sector: Engineering
NSE: RITES ISIN Code: INE320J01015
BSE 00:00 | 24 May 265.80 12.25
(4.83%)
OPEN

259.50

HIGH

267.90

LOW

257.15

NSE 00:00 | 24 May 266.40 12.45
(4.90%)
OPEN

260.05

HIGH

268.95

LOW

257.15

OPEN 259.50
PREVIOUS CLOSE 253.55
VOLUME 48048
52-Week high 326.55
52-Week low 190.00
P/E 13.42
Mkt Cap.(Rs cr) 5,316
Buy Price 267.55
Buy Qty 500.00
Sell Price 267.90
Sell Qty 396.00
OPEN 259.50
CLOSE 253.55
VOLUME 48048
52-Week high 326.55
52-Week low 190.00
P/E 13.42
Mkt Cap.(Rs cr) 5,316
Buy Price 267.55
Buy Qty 500.00
Sell Price 267.90
Sell Qty 396.00

Rites Ltd. (RITES) - Auditors Report

Company auditors report

TO THE MEMBERS OF RITES LIMITED

REPORT ON STANDALONE IND AS FINANCIAL STATEMENTS

We have audited the accompanying standalone ind As financial statements of RITESLIMITED (“the Company”) which comprise the balance sheet as at 31st March2018 the Statement of Profit and Loss (including other comprehensive income) theStatement of Cash Flows and the Statement of Changes in Equity for the year ended 31stMarch 2018 and a summary of the significant accounting policies and other explanatoryinformation (hereinafter referred to as “standalone Ind AS financialstatements”) in which are incorporated accounts of two Branch/ Regional Inspectionoffices) audited Office(consisting by us and three Branch / Regional Offices (consistingof Project and Inspection Offices) audited by Branch Auditors appointed by the Comptrollerand Auditor General of ndia New delhi and we have relied on the same. The head

Office accounts include transactions relating to overseas assignments which have beenincorporated on the basis of periodical statement of expenditure supported by billsreceived from there. In respect of joint operations in India the company has incorporatedtheir proportionate shares of income and expenditure in the said joint operations.

The gross income and gross expenditure so incorporated amounts to Rs. 2.63 crore andRs. 2.46 crore respectively which have resulted into a net profit Rs. 0.39 crore and anet profit after tax of Rs. 0.17 crore related to joint operations. We cannot comment onsuch figures as the same are audited by other auditors.

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 Ind AS financial statements that give a true and fair view of thefinancial position financial including other comprehensive income cash flows and changesin equity of the Company in accordance with the accounting principles generally acceptedin india including the indian Accounting standards (ind As) prescribed under Section 133of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation 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 Standalone Ind AS financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

AUDITOR'S RESPONSIBILITY

Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our 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 there under.

We conducted our audit in accordance with the standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe standalone

Ind AS financial statements are free from material misstatements.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the standalone Ind AS financial statements. The procedures selected dependon the auditor's judgment including the assessment of the risks of material misstatementof the Standalone Ind AS financial statements whether due to fraud or error. In makingthose risk assessments the auditor considers internal financial control relevant to theCompany's preparation of the Standalone Ind AS financial statements that give a true andfair view in beforetaxof order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sdirectors as well as evaluating the overall presentation of the Standalone Ind ASfinancial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Standalone Ind AS financial statements.

OPINION

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Standalone Ind AS 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 (including the ind AS) of thefinancial position of the company as at 31st March 2018 and its financialperformance including other comprehensive income its cash flows and the changes in theequity for the year ended on that date.

EMPHASIS OF MATTER

Refer Note No. 2.50 of notes to accounts of standalone financial statement consequentupon the decision of Government of India to disinvest 2.52 Crores Shares of the CompanyShares of the Company were listed on NSE and bse on 2nd July 2018 and theproceeds have been realized by Government of India.

Our opinion is not modified in respect of this matter.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by the Companies (Auditor's Report) Order 2016 issued by the CentralGovernment of India in terms of sub section (11) of section 143 of the Act (hereinafterreferred to as the “the Order”) we give in the Annexure‘i' a statement onthe matters specified in paragraphs 3 and 4 of the order to the extent applicable.

2. In terms of sub section (5) of section 143 of the Act we give in the Annexure‘ii' a statement on the directions issued under the aforesaid section by theComptroller and Auditor General of India.

3. 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 the Statement of Cash Flows andthe Statement of changes in equity dealt with by this report are in agreement with thebooks of account;

d. In our opinion aforesaid standalone Ind AS financial statements comply with theaccounting standards referred to in section 133 of the Act read with rule 7 of theCompanies (Accounts) rules 2014;

e. In view of exemption given vide notification no. G.S.R. 463(e) dated 5thJune 2015 issued by Ministry of Corporate Affairs provisions of Section 164(2) of theAct regarding disqualifications of directors are not applicable to the Company;

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 the Annexure ‘iii'; and

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 best of our information and according to the explanation given to us:

i. The company has disclosed the impact of pending litigation as at 31st March2018 on its financial position in its standalone Ind AS financial statements Refer parano. 2.44.2 of notes to accounts of standalone Ind AS financial statements.

ii. The company did not have any long term contracts including derivative contracts forwhich there were any material foreseeable losses.

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

For Agiwal & Associates
Chartered Accountants
Firm's registration number: 000181N
P. C. AGIWAL
Place: New Delhi Partner
Date: 30 July 2018 Membership number: 080475

ANNEXURES TO INDEPENDENT AUDITOR'S REPORTS

Annexure: I

Referred to in paragraph 1 of report on other legal and regulatory requirement'sparagraph of our report on even date on the standalone Ind AS financialstatement as of andfor the year ended 31st March 2018 we report that: i. In respect of fixed assets:

(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of its fixed assets. (b) The fixed assets of theCompany have been physically verified by the Management during the year and no materialdiscrepancies have been noticed on such verification. In our opinion the frequency ofverification is reasonable having regard to the size of the company and nature of itsassets.

(c) According to the information and explanations given to us and on the basisof our examination of the records of the Company the title deeds/ lease deeds ofimmovable properties are held in the name of the Company except 4 nos. of leaseholdbuildings where lease deeds are pending for execution (Refer para no. 2.59 of Notes toAccounts of the standalone Ind AS financial statements). Gross block and net block ofabove said properties are as under:

S. No. Particulars Gross block as on 31.03.2018 Net block as on 31.03.2018
(Rs. in crore) (Rs. in crore)
1 Office building at Central Metro railway building 56 C.r. Avenue Kolkata 3.46 1.43
2 Physical testing laboratory at 52 A&b C.r. Avenue Kolkata 1.24 0.50
3 Office building at DLF Cybercity bhubaneshwar 5.64 5.54
4 Wazirpur Northern railway Colony delhi * 5.91 Nil

* The lease period was expired in the month of March-2015. The extension of lease hasbeen sought from Northern Railway and the same is under consideration.

ii. In respect of inventory:

(a) The inventory has been physically verified by the Management during theyear. in our opinion the frequency of verification is reasonable.

(b) In our opinion the procedures of physical verification of inventoryfollowed by the Management are reasonable and adequate in relation to the size of theCompany and the nature of its business.

(c) On the basis of our examination of the inventory records in our opinionthe Company is maintaining proper records of inventory. No discrepancy has been noticed onphysical verification of inventory as compared to records.

iii. In respect of loans :-

The Company had granted unsecured loan to SAIL-RITES Bengal Wagon Industry Pvt. Ltd.(SRBWIPL) a joint venture company during 2016-17. Such loan is listed in the registermaintained under Section 189 of the Act.

(a) In the opinion of Management the terms and conditions of such loans are notprejudicial to the company's interest.

(b) The Company has granted a moratorium period of 30 Months with respect toPrincipal and Interest for loan granted to SAIL-RITES Bengal Wagon Industry Pvt. Ltd.(SRBWIPL).

(c) Since the Company has granted a moratorium period of 30 Months with respect toPrincipal and Interest for loan granted to SAIL-RITES Bengal Wagon Industry Pvt. Ltd.(SRBWIPL) no amount was overdue for more than 90 days. iv. In our opinion and accordingto the information and explanations given to us Company has complied with the provisionsof section 185 and 186 of the Act with respect to the loans investment guarantees andsecurity and a loan of Rs. 4.75 crores (including interest of Rs. 1.06 crores) was givento REMCL a subsidiary company which has been squared off during the year the said loan isexempted as company is engaged in providing services related to infrastructural activitiesas covered in Schedule-VI of Companies Act 2013 and the same is confirmed by themanagement.

v. According to the information and explanations given to us Company has not acceptedany deposits in terms of directives issued by Reserve Bank of India and the provisions ofSections 73 to 76 or any other relevant provisions of the Companies Act and the rulesframed there under.

vi. Cost Records under section 148(1) of the Companies Act 2013 are not required to bemaintained by the Company.

vii. According to information and explanations given to us and on the basis of theexamination of the records of the company:

(a) The Company has generally been regular in depositing the amountdeducted/accrued in the books of account in respect of undisputed statutory dues includingProvident Fund Income Tax Sales Tax Value Added Tax duty of customs service Tax GSTcess and other material statutory dues wherever applicable during the year with theappropriate authorities. As explained to us the company did not have any dues on accountof employees' state insurance and duty of excise.

(b) The company has no undisputed arrears of statutory dues outstanding as at31st March 2018 for a period of more than six months from the date they become payable.

(c) The company has no statutory dues in respect of Income tax/Sales Tax/ServiceTax/Custom Duty/ Excise Duty/Value Added Tax/GST outstanding as on 31st March 2018 whichhave not been deposited with the appropriate authorities on account of any dispute exceptthe followings:

Name of the statute Nature of dues Amount (in Rs.) Period to which the amount relates Forum where dispute is pending
APVAT Arrears of Sales Tax 4759839 01.04.2014 to 30.11.2015 Commissioner of Commercial Tax Hyderabad
West Bengal VAT Demand of VAT 13200000 01.04.2015 to 30.06.2016 Jt. Commissioner of Commercial Tax CAU-1 beliaghat
Service Tax Service Tax on railway siding undertaken for DVC/NTPC under deposit work 8227850 01.09.2012 to 31.12.2016 CGsT (A)
Income Tax Departmental Default in 27Q of Q4 for FY 2016-17 152060 01.01.2017 to 31.03.2018 ACiT(Tds) Laxmi Nagar
Income Tax Departmental Default in 27Q of Q4 for FY 2017-18 57700 01.04.2018 to 30.06.2018 ACiT(Tds) Laxmi Nagar
Income Tax Interest on Late Deposit of TDS in Chennai 23610 2008-09 to 2016-17 TDS CPC Ghaziabad
ESIC Act ESI Contribution 269035* 2012-13 & 2013-14 ESIC- Appellate Authority

* Amount paid on 12th July 2018 in compliance with the directions given byappellate authority.

viii. The Company does not have any loans or borrowings from any financial institutionbanks government or debenture holders during the year.

ix. The Company did not raise any money by way of initial offer or further public offer(including debt instruments) and term loans during the year. However consequent upon thedecision of Government of India to disinvest 2.52 Crores Shares of the Company Shares ofthe Company were listed on NSE and BSE on 2nd July 2018 and the proceeds havebeen realized by Government of India.

x. According to the information and explanations given to us no fraud by theCompany or on the Company by its officers or employees has been reported during the courseof our audit.

xi. In view of exemption given vide G.S.R. 463(e) dated 5th June 2015issued by Ministry of Corporate Affairs provisions of Section 197 read with Schedule V ofthe Act regarding managerial remuneration are not applicable to the Company.

xii. In our opinion and according to the information and explanations given to usCompany is not a Nidhi company.

xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with 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 given to us and based on ourexamination of the records of the Company Company has not made any preferential allotmentor private placement of shares or fully or partly convertible debentures during the year.

xv. According to the information and explanations given to us and based on ourexamination of the records of the Company Company has not entered into non-cashtransactions with directors or persons connected with him.

xvi. Company is not required to be registered under section 45-IA of the Reserve Bankof India Act 1934.

For Agiwal & Associates
Chartered Accountants
Firm's registration number: 000181N
P. C. Agiwal
Place: New Delhi Partner
Date: 30 July 2018 Membership number: 080475

Annexures to Independent AudItor's reports Annexure: II report on the directions issuedby the comptroller and Auditor general of India under sub-section 5 of section 143 of thecompanies Act 2013 (“the Act”)

Referred to in our Independent Auditors' Report on the Standalone Ind AS financialstatements for the year ended 31st March 2018 we report that:

Based on the verification of Records of the Company and information and explanationsgiven to us we report that:

a) The title deeds/lease deeds of immovable properties are held in the name ofthe Company except 4 nos. of leasehold building where lease deeds are pending forexecution (Refer para no. 2.59 of notes to accounts of the standalone Ind AS financial andArea of above said properties are as under:

S. No. Location Area
1 Office building at Central Metro railway building 56 C.r. Avenue Kolkata 1200 sqm no.
2 Physical testing laboratory at 52 A&b C.r. Avenue Kolkata 314 sqm
3 Office building at DLF Cybercity bhubaneshwar 1290.48 sqm
4 Wazirpur Northern railway Colony delhi* 12075.84 sqm

* The lease period was expired in the month of March-2015. The extension of lease hasbeen sought from Northern railway and the same is under consideration.

b) There are no cases of waiver/write off of debts loans/ interest etc. other than BadDebts of Rs. 1.77 crore written off during the year which have arisen on account ofnormal business practice.

c) Company has maintained adequate records in respect of inventories lying with thirdparties. No assets have been received by the Company as gift from Government or otherauthorities.

For Agiwal & Associates
Chartered Accountants
Firm's registration number: 000181N
P. C. Agiwal
Place: New Delhi Partner
Date: 30 July 2018 Membership number: 080475

Annexures to Independent AudItor's reports Annexure: III report on the InternalFinancial controls under clause (i) of sub-section 3 of section 143 of the companies Act2013 (“the Act”)

Referred to in our Independent Auditors' Report on the Standalone Ind AS financialstatements for the year ended 31st March 2018 we report that:

We have audited the internal financial controls over financial reporting of RITESLimited (“the Company”) as of 31 March 2018 in conjunction with our audit of thestandalone financial statements of the Company for the year ended on 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'). Thesestatements). Location responsibilities include the design implementation and maintenanceof adequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.

Auditors' responsibility our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal financial Controls overfinancial reporting (the “Guidance Note”) and the standards on Auditing issuedby CA i i and deemed to be prescribed under section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial controls both applicable to anaudit of Internal Financial Controls and 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 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 ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures 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.

Financial reporting inherent limitations of Internal Financial controls over

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.

Opinion

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 2018 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls over financial reporting issued by the institute of CharteredAccountants of India.

For Agiwal & Associates
Chartered Accountants
Firm's registration number: 000181N
P. C. Agiwal
Place: New Delhi Partner
Date: 30 July 2018 Membership number: 080475