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RTS Power Corporation Ltd.

BSE: 531215 Sector: Engineering
NSE: N.A. ISIN Code: INE005C01017
BSE 00:00 | 14 Aug 30.45 2.75
(9.93%)
OPEN

29.10

HIGH

30.45

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26.00

NSE 05:30 | 01 Jan RTS Power Corporation Ltd
OPEN 29.10
PREVIOUS CLOSE 27.70
VOLUME 58466
52-Week high 40.20
52-Week low 18.35
P/E 2.35
Mkt Cap.(Rs cr) 28
Buy Price 30.45
Buy Qty 2791.00
Sell Price 30.20
Sell Qty 100.00
OPEN 29.10
CLOSE 27.70
VOLUME 58466
52-Week high 40.20
52-Week low 18.35
P/E 2.35
Mkt Cap.(Rs cr) 28
Buy Price 30.45
Buy Qty 2791.00
Sell Price 30.20
Sell Qty 100.00

RTS Power Corporation Ltd. (RTSPOWERCORPN) - Auditors Report

Company auditors report

To the Members of

RTS Power Corporation Limited

Report on the Audit of the Financial Statements

Opinion

We have audited the accompanying Financial Statements of RTS Power Corporation Limited("the Company") which comprise the Balance Sheet as at March 31 2019 and theStatement of Profit and Loss (Including Other Comprehensive Income) Statement of Changesin Equity and Statement of Cash Flows for the year then ended and Notes to the FinancialStatements including a summary of significant accounting policies and Other ExplanatoryNotes for the year ended on that date (hereinafter referred to as "FinancialStatements").

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Financial Statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and the accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2019 and profit changes in equity andits cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) as specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditors' Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the Financial Statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Financial Statements of the current period. These matterswere addressed in the context of our audit of the Financial Statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave considered the matters described below to be the Key Audit Matters for incorporationin our Report.

Key audit Matters Addressing the Key Audit Matters
Trade Receivables
Our audit procedures based on which we arrived at the conclusion regarding the carrying amount of Trade Receivables include the following:
Gross Trade Receivable of the Company is Rs. 7405.98 Lakhs as on 31st March 2019. This includes significant amounts which have fallen due for payment and are lying outstanding for a considerable period of fime. (Note No. 14 of the Standalone Financial Statements) • We obtained an understanding from the Management assessed and tested the design and operafing effecfiveness of the Company's key controls over the recoveries against the outstanding amounts and resultant impairment assessment of material Trade Receivables;
The Company evaluates whether there is any objecfive evidence that trade receivables are impaired and determines the amount of impairment allowance as a result of the inability of the customers to make required payments. The Company bases the estimates on the ageing of the trade receivables balance creditworthiness of the trade receivables and historical write-off experience.
• We reviewed Management's assessment and evaluafion on the credit worthiness of the major trade receivables and historical trends and current dealing with the customers;
We further discussed with the Management the adequacy of the impairment as recognised and reviewed the supporting documents provided in relation to such assessment.
Provisions and Contingencies
Recognition of provision and/or disclosure for contingencies are based on estimates requiring application of judgement with respect to existing facts and circumstances which are subject to variation on actual crystallization. Our audit procedures based on which we arrived at the conclusion regarding reasonableness of the Contingent Liabilities include the following:
• We tested the effectiveness of controls for estimating the possible effect of matters keeping in view the provisions of the relevant laws and regulations;
The Company has certain outstanding matters involving direct and indirect taxes which are pending before appropriate authorities. (Note 43 of Financial Statements) • We discussed with management the recent developments and the status of the matters having significant application;
Management judgment for estimating the possible outflow of resources if any in respect of contingencies/claim/litigations/ against the Company is essential as it is not possible to predict the outcome of pending matters with accuracy. • We reviewed Management's judgements relating to the estimates keeping in view the expected outcome thereof;
• Due consideration has been given to experts' view and opinion on the matters of significance;
• Reviewed the appropriateness and adequacy of amounts involved as required in terms of the requirement of IND AS 37 "Provisions Contingent Liabilities and Contingent Assets".

Information other than the Financial Statements and Auditors' Report Thereon

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Board's Report including Annexuresto Directors' Report Management Discussion and Analysis Report Business ResponsibilityReport and Report on Corporate Governance but does not include the Financial Statementsand our auditors' report thereon.

Our opinion on the Financial Statements does not cover the other information and we donot express any form of assurance conclusion thereon.

In connection with our audit of the Financial Statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the Financial Statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated.

If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact.

We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the FinancialStatements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these Financial Statements that givea true and fair view of the state of affairs (financial position) Profit or Loss(financial performance including other comprehensive income) changes in equity and cashflows of the Company in accordance with the accounting principles generally accepted inIndia including the Indian accounting Standards specified under section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe Financial Statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the Financial Statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

Those Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditors' Responsibility for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the FinancialStatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditors' report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance withStandard on Auditing (SAs) will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these Financial Statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the FinancialStatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control;

• Obtain an understanding of internal control relevant to the audit in order todesign 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 hasadequate internal financial controls system with reference to Financial Statements inplace and the operating effectiveness of such controls;

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management;

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditors' report to the related disclosures inthe 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 auditors'report. However future events or conditions may cause the Company to cease to continue asa going concern; and

• Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditors' report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe 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) 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.

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 (including Other ComprehensiveIncome) the Statement of Changes in Equity and the Statement of Cash Flows dealt with bythis Report are in agreement with the books of account;

d) In our opinion the aforesaid financial statements comply with the Indian AccountingStandards specified under Section 133 of the Act read with the Companies (IndianAccounting Standards) Rules 2015 as amended;

e) On the basis of the written representations received from the directors as on March31 2019 and taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2019 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 with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internal control withreference to financial statements; and

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 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 no. 43 of the financial statements;

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

iii. There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.

3. With respect to the reporting under Section 197 (16) of the Act to be included inthe Auditors' Report in our opinion and according to the information and explanationsgiven to us the Remuneration (including Sitting fees) paid by the Company to itsDirectors during the current year is in accordance with the provisions of Section 197 ofthe Act and is not in excess of the limit laid down therein.

For Lodha & Co
Chartered Accountants
Firm's ICAI Registration No.:301051E
H. K.Verma
Place: Kolkata Partner
Date: 30th May 2019 Membership No: 055104

Annexure "A" to the Independent Auditors' Report of Even Date

The Statement referred to in paragraph 1 with the heading ‘Report on other legaland regulatory requirements' of our Report of even date to the members of RTS PowerCorporation Limited on the financial statements of the Company for the year ended 31stMarch 2019 we report that:

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

b. There is a phased programme of verification of such assets based on which physicalverification of fixed assets is being carried out by the management. Discrepancies inrespect of fixed assets verified during the year were not material.

c. Based on verification of title deeds/lease deeds produced to us by the managementand according to the information and explanations given to us in our opinion the titledeeds/ lease deeds of immovable properties are held in the name of the company.

ii) As explained to us inventories have been physically verified during the year atreasonable interval by the management. As far as ascertained discrepancies noticed onverification between the physical stocks and the book records were not material and thesame has been properly dealt with in the books of account

iii) The Company has not granted any loans secured or unsecured to companies firmslimited liability partnership or other parties listed in the register maintained underSection 189 of the Act. Hence clause 3(iii) of the Order are not applicable to thecompany.

iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 186 of the Act with respect to theinvestments made. The Company has neither issued any guarantee given any loan nor hasprovided any security on behalf of any party. Further according to the information andexplanations given to us the company has not entered into any transactions as referred toin section 185 of the Act.

v) The Company has not accepted any deposits. Consequently the directives issued bythe Reserve Bank of India and the provisions of sections 73 to 76 or any other relevantprovisions of the Companies Act and the rules framed there under are not applicable tothe Company.

vi) We have broadly reviewed the books of account maintained by the company pursuant tothe Rules made by the Central Government for the maintenance of cost records under Section148 (1) of the Act in respect of the Company's products to which the said rules are madeapplicable and are of the opinion that prima facie the prescribed records have beenmaintained. We have however not made a detailed examination of the said records with aview to determine whether they are accurate or complete.

vii) a. According to the information and explanations given to us during the year theCompany has generally been regular in depositing with appropriate authorities undisputedstatutory dues including Provident Fund Employees' State Insurance Income Tax SalesTax Goods and Service Tax Service tax Duty of Custom Duty of Excise Value Added TaxCess and other material statutory dues as applicable to it. According to the informationand explanations given to us there is no undisputed amounts payable in respect of thesewhich were in arrears as on March 31 2019 for a period of more than six months from thedate they became payable.

b. According to the information and explanations given to us the details of disputeddues of income tax sales tax service tax custom duty excise duty and Value added Taxif any as at March 31 2019 not deposited on account of any dispute are as follows:

Name of the Statute Nature of Dues Period to which the Amount relates Amount (Rupees in Lakhs) Forum Where dispute is Pending
Value Added Tax and Central Sales Tax Act 1956 VAT CST including interest thereon on Freight and Insurance 2007-08 14.99 Revision pending before Tax Board Rajasthan
2008-09 20.84
2009-10 19.44
2010-11 24.13
2011-12 49.73
The Central Excise Act 1944 Duty on Commission on sale Apr-15 to Jan-16 1.67 Revision pending before Commissioner Appeals
The Central Excise Act 1944 Duty on Freight Charges Feb-16 to 32.02 Revision pending before Commissioner Appeals
June-17
The Central Excise Act 1944 Duty on Freight Charges Apr-14 to Sept-16 20.90 Revision pending before Commissioner Appeals
The Central Excise Act 1944 Duty on Freight Charges Oct-16 to June-17 5.01 Revision pending before Deputy Commissioner
West Bengal Value Added tax Act 2003 Value Added tax 2009-10 40.46 Revision pending before Appellate Authority of Sales Tax
The Central Excise Act 1944 Service tax 2010-11 to 2013-14 51.83 Revision pending before Customs Excise and Service Tax Appellate Tribunal (CESTAT)
West Bengal Value Added Tax Act 2003 Central Sales Tax 2016 - 17 1.88 Revision pending before Appellate Authority of Sales Tax
The Central Excise Act 1944 Service tax 2014 - 15 & 2015 - 16 7.20 Assistant Commissioner Circle - V Central tax Audit
The Central Excise Act 1944 Excise Duty 2014 - 15 & 2015 - 16 18.63 Assistant Commissioner Circle - V Central tax Audit
West Bengal Value Added Tax Act 2003 VAT 2016 - 17 0.62 West Bengal Taxation Tribunal

viii) In our opinion and on the basis of information and explanations given to us bythe management we are of the opinion that the Company has not defaulted in repayment ofdues to banks and governments. As explained the company does not have any loan orborrowings from any financial institution or any dues to debenture holders.

ix) In our opinion and according to the information and explanations given to us theCompany did not raise any money by way of initial public offer or further public offer(including debt instruments). In our opinion and according to the information andexplanations given to us the term loans have been applied for the purpose for which theywere raised.

x) During the course of our examination of books of account carried out in accordancewith generally accepted auditing practices in India we have neither come across anyincidence of fraud by the Company or on the Company by its officers or employees nor wehave been informed of any such cases by the management.

xi) According to the information and explanations given 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 of the Act.

xii) In our opinion and according to the information and explanations given to us theCompany 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 given to us and based on ourexamination of the records of the Company the Company has raised by way of preferentialallotment of Equity Shares by raising Rupees 340 Lakhs by allotting 1000000 EquityShares at a price of Rupees 34 per share. The above issue is in compliance with theprovisions of the Companies Act 2013. Further the Company has disclosed the end use ofmoney received in Note No. 52 of the financial statements and the same has been veri!ed byus. Other than this the company not made any preferential allotment or private placementof 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 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 Lodha & Co
Chartered Accountants
Firm's ICAI Registration No.:301051E
H. K.Verma
Place: Kolkata Partner
Date: 30th May 2019 Membership No: 055104

Annexure "B" to the Independent Auditors' Report

(Referred to in paragraph 2 (f) under ‘Report on Other Legal and RegulatoryRequirements' of our report of even date)

Report on the Internal Financial Controls with reference to financial statements underClause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("theAct").

We have audited the internal financial controls with reference to the financialstatements of RTS Power Corporation Limited ("the Company") as at March 31 2019in conjunction with our audit of the financial statements of the Company for the yearended 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 financial controls with reference to financialstatements criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting (the "Guidance Note") issued by the Institute of CharteredAccountants of India. These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence toCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note issued by the Institute of Chartered Accountants ofIndia and the Standards on Auditing prescribed under Section 143(10) of the Act to theextent applicable to an audit of internal financial controls with reference to thefinancial statements. 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 control with reference to financial statements wereestablished and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of such internal financial controls withreference to financial statements assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control based onthe assessed risk. The procedures selected depend on the auditors' judgement includingthe assessment of the risks of material misstatement of the financial statements whetherdue 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 controls withreference to financial statements.

Meaning of Internal Financial Controls with reference to financial statements

A Company's internal financial control with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A Company's internal financial control withreference to financial statements includes those policies and procedures that (1) pertainto the maintenance of records that in reasonable detail accurately and fairly reflectthe transactions 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 with reference to financialstatements

Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial control with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

Opinion

In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlswith reference to financial statements and such internal financial controls with referenceto financial statements were operating effectively as at March 31 2019 based on theinternal financial controls with reference to financial statements criteria established bythe Company considering the essential components of internal control stated in theGuidance Note issued by the Institute of Chartered Accountants of India.

For Lodha & Co
Chartered Accountants
Firm's ICAI Registration No.:301051E
H. K.Verma
Place: Kolkata Partner
Date: 30th May 2019 Membership No: 055104