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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

M/s RKEC Projects Limited

Report on the Standalone Financial Statements

We have audited the accompanying financial statements of M/s RKEC Projects Limited('the Company') which comprise the Balance Sheet as at 31st March 2018 the Statement ofProfit and Loss and the Cash Flow Statement for the year then ended and a summary ofsignificant accounting policies and other explanatory information.

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 preparationand presentation of these Standalone financial statements that give a true and fair viewof the financial position financial performance and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the 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 financial statementsbased 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 financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe 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 presentation of thefinancial statements.

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

Opinion

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 31st March 2018 its Profit and its cash flows for the year ended on that date.

Emphasis of Matter Paragraph

We draw your attention to -

Note no. 15 of the standalone financial statements for considering the tradereceivables as good for the period more than 6 months includes amounts due from M/s. IVRCLLimited undergoing insolvency proceedings since February 2018 and M/s. SEW InfrastructureLimited which the company was under process of legal action for recovery.

Report on Other Legal and Regulatory Requirements

1) 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 Act we give in the "Annexure-A" a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.

2) 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) Rules 2014.

e) On the basis of the written representations received from the directors as on 31stMarch 2018 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2018 from being appointed as a director in terms ofSection 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"; 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 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 financialposition in its financial statements - Refer Note 17 to the standalone financialstatements.

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

iii. There are no amounts required to be transferred to the Investor Education andProtection Fund by the Company.

for Brahmananda Reddy & Associates

Chartered Accountants

Firm Registration Number: 016662S

Sd/-

(M.R. Brahmananda Reddy)

Partner

Membership Number: 023958

ANNEXURE 'A' TO THE INDEPENDENT AUDITORS REPORT

(Referred to in paragraph (1) under 'Report on other Legal and Regulatory requirements'of our report of even date)

i) . In respect of the Company's fixed assets:

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

(b) As per the explanations given to us and based on our examination of the recordsthe management has physically verified the fixed assets during the year and in our opinionfrequency of verification is reasonable having regard to the size of the Company and thenature of its assets. There were no discrepancies noticed on such physical verification offixed assets as compared to the books of account.

(c) Based on the examination of the records and according to the information andexplanations given to us all the title deeds of immovable properties are held in the nameof the company.

ii) . According to the information and explanations given to us the inventories havebeen physically verified by the management during the year. In our opinion the frequencyof verification is reasonable. The discrepancies noticed on physical verification ofinventory as compared to the books of account were not material and have been properlydealt with in the books of accounts.

iii) . According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms or other parties covered inthe register maintained under section 189 of the Act. Accordingly the provisions ofclause 3(iii) (a) to (c) of the Order are not applicable to the Company and hence notcommented upon.

iv) .The Company has not grated any loans or made investments or given a security toDirectors or related parties during the year to comply the provisions of section 185 and186 of the Act hence not commented upon.

v) . According to the information and explanations given to us the Company has notaccepted deposits from the public within the meaning of Section 73 and 76 or any otherrelevant provisions of the Act and the rules framed there under.

vi) .We have broadly reviewed the books of account and records maintained by theCompany pursuant to the Rules made by the Central Government of India for the maintenanceof cost records prescribed under sub-section (1) of section 148 of the Act in respect ofconstruction activities of the Company and are of the opinion that prima-facie theprescribed accounts and records have been maintained. We have however not made a detailed examination of the records with a view to determine whether they are accurate orcomplete.

vii) . In respect of Statutory dues:

a) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including provident fund income taxsales tax wealth tax duty of excise service tax duty of customs employees' stateinsurance value added tax cess and other material statutory dues have been regularlydeposited with few delay in some cases during the year by the Company with the appropriateauthorities.

b) According to the information and explanations given to us no undisputed amountspayable in respect of provident fund income tax sales tax wealth tax service tax dutyof excise duty of customs value added tax cess and other material statutory dues werein arrears as at 31 March 2018 for a period of more than six months from the date theybecame payable except the following:

Sl.no Particulars Amount(Rs.)
1 Central Sales Tax (Tamil Nadu) 340000
2 Value Added Tax (Uttar Pradesh) 21456103

c) Details of dues of Income-tax Sales Tax Service Tax Customs Duty Excise DutyValue Added Tax and Cess which have not been deposited as on March 312018 on account ofdisputes are given below:

Statute Nature of Dues Forum where dispute is pending Period to which the amount relates Amount involved (Rs. in Lakhs)
Finance Act 1994 Service Tax CESTAT - Bangalore FY 2004-2009 592.04
Finance Act 1994 Service Tax CESTAT - Hyderabad FY 2013 -16 1874.86
Andhra Pradesh VAT Act VAT High Court Andhra Pradesh FY 2009-10 FY 2010-11 160.38
Income Tax Act Income tax CIT (A) Visakhapatnam FY 2014-15 59.41
Labour Cess High Court Andhra Pradesh FY 2008-09 69.99

viii) . Based on our audit procedures and as per the information and explanations givenby the management we are of the opinion that the Company has not defaulted in therepayment of dues to financial institutions or bank. The Company did not have anydebentures outstanding as at the year end.

ix) .The Company has raised an amount of Rs.210510000/- By fresh issue of 4678000at Rs.45(Face Value Rs.10/-) In our Opinion and according to the information andexplanations given to us by the management the company has utilized the money for thepurpose for which they were raised.

x) . According to the information and explanations given to us based on the auditprocedures performed by us no fraud by the Company or on the Company by its officers oremployees has been noticed or reported during the period covered by 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 usthe Company 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 financial statements as required by the applicableaccounting 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 Act 1934.

for Brahmananda Reddy & Associates

Chartered Accountants

Firm Registration Number: 016662S

Sd/-

(M.R. Brahmananda Reddy)

Partner

Membership Number: 023958

Visakhapatnam 30th May 2018.