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RKEC Projects Ltd.

BSE: 535017 Sector: Infrastructure
NSE: RKEC ISIN Code: INE786W01010
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RKEC Projects Ltd. (RKEC) - Auditors Report

Company auditors report

To the members of RKEC Projects Limited

Report on Standalone Ind AS Financial Statements

We have audited the accompanying Standalone Ind AS Financial Statements of M/s. RKECProjects Limited ("the Company") which comprise the Balance Sheet as at 31stMarch 2021 and the Statement of Profit and Loss (including Other Comprehensive Income)the Cash Flow Statement and the Statement of Changes in Equity for the year ended 31stMarch 2021 and a summary of the significant accounting policies and other explanatoryinformation.

Management’s Responsibility for the Standalone Ind AS 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 performance including other comprehensive income cash flowsand changes in equity of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) prescribedunder Section 133 of the Act. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the Standalone Ind AS Financial Statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these Standalone Ind AS FinancialStatements based on our audit. In conducting our audit we have taken into account theprovisions of the Act the accounting and auditing standards and matters which arerequired to be included in the audit report under the provisions of the Act and the Rulesmade thereunder.

We conducted our audit of the Standalone Ind AS Financial Statements in accordance withthe 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 Standalone Ind AS Financial Statements are freefrom material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the Standalone Ind AS Financial Statements. The procedures selecteddepend on the auditors’ judgment including the assessment of the risks of materialmisstatement of the Standalone Ind AS Financial Statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlsrelevant to the Company’s preparation of the Standalone Ind AS Financial Statementsthat give a true and fair view in order to design audit procedures that are appropriate inthe circumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by theCompany’s Directors as well as evaluating the overall presentation of the StandaloneInd AS Financial Statements.

We believe that the audit evidence obtained by us 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 Statementsgive 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 2021 and it’s profit total comprehensive incomeit’s cash flows and the changes in equity for the year ended on that date.

Other Matters

The comparative financial information of the Company for the year ended 31st March2020 and the transition date opening Balance Sheet as at 1st April 2019 included in theseStandalone Ind AS Financial Statements are based on the statutory financial statementsprepared in accordance with the Companies (Accounting Standards) Rules 2006 duly auditedwhose report for the year ended 31st March 2019 audited by other auditors vide reportdated 29th May 2019 and for the year ended 31st March 2020 audited by Other auditor videreport dated 27th Jun 2020 expressed an unmodified opinion on those standalone financialstatements as adjusted for the differences in the accounting principles adopted by theCompany on transition to the Ind AS which have been audited by us. Our opinion on theStandalone Ind AS Financial Statements and our report on Other Legal and RegulatoryRequirements below is not modified in respect of these matters.

Report on Legal and other Regulatory Framework

1. As required by the Companies (Auditors’ Report) Order 2016 ("theOrder") issued by the Central Government in terms of Section 143(11) of the Act wegive in "Annexure A" a statement on the matters specified in paragraphs 3 and 4of the Order.

2. As required by Section 143(3) of the Act based on our audit we report to theextent applicable 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 including OtherComprehensive Income the Cash Flow Statement and Statement of Changes in Equity dealtwith by this Report are in agreement with the relevant books of account.

d. In our opinion the aforesaid Standalone Ind AS Financial Statements comply withthe Indian Accounting Standards prescribed under Section 133 of the Act.

e. On the basis of the written representations received from the directors as onJune 12tht 2021 and taken on record by the Board of Directors none of the directors aredisqualified as on 31st March 2021 from being reappointed as a Director in terms ofSection 164(2) of the Act except the one director retiring by rotation at the ensuingAnnual General Meeting of the Company render themselves ineligible for reappointment interms of Section 164(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 B". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company’s internal financial controlsover financial reporting.

g. With respect to the other matters to be included in the Auditors’ Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and 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 financial statements (Refer Note 06 Additional Information to theStandalone Ind AS Financial Statements);

ii. The Company did not have any long-term contracts including derivative contractsas at 31st March 2021 for which there were any material foreseeable losses;

iii. There has been no delay in transferring amounts required to be transferredto the Investor Education and Protection Fund.

For SARC and Associates

Chartered Accountants

Firm Registration No.: 006085N

UDIN:21206704AAAADU1811

(Chandra Sekhar Akula)

Partner

M. No.: 206704

Place: Visakhapatnam

Date:29 June 2021

ANNEXURE A TO THE INDEPENDENT AUDITORS REPORT

(Referred to in paragraph 1 under ‘Report on Legal and RegulatoryRequirements’ section of our report of even date)

i. a. The Company has maintained proper records showing full particulars includingquantitative details and situation of the fixed assets

b. According to the information and explanations given to us physical verification ofmajor portion of fixed assets was conducted by the management during the year which inour opinion is reasonable having regard to the size of the Company and nature of itsbusiness and no material discrepancies were noticed on such verification.

c. According to the information and explanations given to us the records examined byus and based on the examination of mortgage deeds provided to us we report that thetitle deeds of all immovable properties of land and buildings which are freehold are heldin the name of the Company as at balance sheet date.

ii. The inventory except goods-in-transit and stocks lying with third parties havebeen physically verified by the management during the year. In our opinion the frequencyof such verification is reasonable. For stocks lying with the third parties at the yearend written confirmations were subsequently available. The discrepancies noticed onverification between the physical stocks and the book records were not material and havebeen dealt with in books of account.

iii. According to the information and explanations given to us the Company has notgranted unsecured loans to its subsidiaries covered under Section 189 of the Act.

iv. In our opinion and according to information and explanations given to us theCompany has complied with provisions of Section 185 and 186 of the Act in respect ofloans investments guarantees and securities.

v. In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public in accordance with the provisions ofSections 73 to 76 or any other relevant provisions of the Act and the rules framedthereunder. Accordingly the provisions of Clause 3(v) of the Order is not applicable tothe Company. According to the information and explanations given to us no order has beenpassed by the Company Law Board or the National Company Law Tribunal or the Reserve Bankof India or any Court or any other Tribunal.

vi. According to the information and explanations given to us the Company hasmaintained books of account and other records pursuant to the rules prescribed by theCentral Government for the maintenance of cost records under Section 148(1) of the Actrelating to manufacture of Woven graige fabric woven processed fabric spinning andpolyester. We have broadly reviewed the cost records maintained by the Company and are ofthe opinion that prima facie the specified accounts and records have been made andmaintained. We have not however made a detailed examination of the same.

vii. a. According to the information and explanations given to us and on the basis ofour examination of the records of the Company there have been several delays during theyear in depositing undisputed statutory dues including Provident Fund Employees’State Insurance Income-tax Sales Tax Service Tax duty of customs duty of excise andValue Added tax and other statutory dues with the appropriate authorities.

b. According to the information and explanations given to us the undisputed amountspayable in respect of Income-tax and other statutory dues in arrears as at March 31 2021for a period of more than six months from the date they became payable are as under:

Name of Statute Nature of dues Amount Involved Period to which amount relates Due Date
Under ESI Act 717955 Jul-20 to Mar 21 15th of following month
Under PF Act 7314552 Jul-20 to Mar 21 15th of following month
Under Gratutity Gratuity 3243439 FY 2020-21 31-03-2020
GST Payable GST 77385222 FY 2020-21 20-10-2021

c. According to the records of the Company there are no dues in respect of Income TaxSales Tax Service Tax duty of customs duty of excise and Value Added Tax that have notbeen deposited as on March 31 2021 on account of disputes other than as follows:

Name of Statute Nature of dues Amount Involved Period to which Forum where dispute amount is pending relates
NIL
NIL

viii. According to the information and explanations given to us and based on recordsexamined by us we are of the opinion that the moneys raised by way of term loans by theCompany during the year were applied for the purpose for which it was raised. The Companyhas not raised money by way of initial public offer or further public offer (includingdebt instruments) during the year.

ix. 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.

x. According to the information and explanations given to us and based on ourexamination of the records we report that the Company has paid/provided managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.

xi. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly the provisions of Clause 3(xii) of the Orderis not applicable to the Company.

xii. According to the information and explanations given to us and based on ourexaminations of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable. The details of suchrelated party transactions have been disclosed in the financial statements as requiredunder Indian Accounting Standard (Ind AS) 24 ‘Related Party Disclosures’specified under Section 133 of the Act.

xiii. According to the information and explanations give to us and based on ourexamination of the records the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year.Accordingly the provisions of Clause 3(xiv) of the Order is not applicable to theCompany.

xiv. According to the information and explanations given to us and based on ourexamination of the records the Company has not entered into non-cash transactions withdirectors or persons connected with them as prescribed under section 192 of the Act.Accordingly the provisions of Clause 3(xv) of the Order is not applicable to the Company

xv. According to the information and explanations given to us the Company is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 1934.Accordingly the provisions of Clause 3(xvi) of the Order are not applicable to theCompany.

For SARC Associates

Chartered Accountants

Firm Registration No.: 006085N

UDIN:21206704AAAADU1811

(Chandra Sekhar Akula)

Partner

M No.: 206704

Place: Visakhapatnam

Date:29 June 2021

ANNEXURE B TO THE INDEPENDENT AUDITOR’S REPORT ON THE STANDALONE

IND AS FINANCIAL STATEMENTS OF RKEC PROJECTS LIMITED

(Referred to in paragraph 2(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 SEC 143 OF THE COMPANIES ACT 2013 (THE "ACT")

We have audited the internal financial controls over financial reporting of RKECProjects Limited ("the Company") as of 31st March 2021 in conjunction with ouraudit of the Standalone Ind AS Financial Statements of the Company for the year ended onthat 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. 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 theprevention 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.

Auditors’ Responsibility

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 and the Standards on Auditing prescribed under section 143(10) ofthe Companies Act 2013 to the extent applicable to an audit of internal financialcontrols. 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 auditors’ judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or 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 controlssystem over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

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 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 havea 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.

Opinion

In our opinion and to the best of our information and according to explanation given tous the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at 31st March 2021 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.

For SARC Associates

Chartered Accountants

FRN :006085N

UDIN:21206704AAAADU1811

Chandra Sekhar Akula

Partner

M No.: 206704

Place: Visakhapatnam

Date:29 June 2021

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