TO THE MEMBERS OF SHARIKA ENTERPRISES LIMITED
Report on the Financial Statements
We have audited the accompanying standalone financial statements of SHARIKAENTERPRISES LIMITED ('the Company') which comprise the balance sheet as at 31stMarch 2018the statement of profit and loss and Cash Flow Statement for the year thenended and a summary of significant accounting policies and other explanatory information.
Management's Responsibility for the 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 preparation of thesestandalone financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with AccountingPrinciples generally accepted in India including the accounting standards specified undersection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility includes maintenance of adequate accounting records in accordance with theprovisions of the Act for safeguarding of the Assets of the Company and for preventing anddetecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; andthe design implementation and maintenance of adequate internal financial control that areoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
Our responsibility is to express an opinion on these financial statements based on ouraudit. 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 dieprovisions of the Act and the Rules made thereunder. We conducted our audit in accordancewith the Standards on Auditing issued by the Institute of Chartered Accountants of Indiaas specified under Section 143(10) of the Act. Those Standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhetherthe financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the .financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders 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 the appropriateness of accounting policies used andthe reasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the financial statements. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion on the standalone financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the standalone financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31stMarch 2018 its Profit and its cash flows for the year ended on that date.
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 the Section 143of the Act we give in the Annexure 1 a statement on the matters specified in paragraphs3 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 purpose of our audit;
b. In our opinion proper books of account as required by law have been kept by theCompany so far as appears from our examination of those books;
c. The Balance Sheet Statement of Profit and Loss and the Cash Flow Statement dealtwith 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 (Account) Rules 2014;
e. On the basis of written representations received from the directors as on 31 March2018 and taken on record by the Board of Directors none of the directors is disqualifiedas on 31 March 2018 from being appointed as a director in terms of section 164 (2) of theAct;
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 2" to this report;
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 does not have any pending litigations which would impact its financialposition;
ii. The Company did not have any long term contracts including derivative contractsfor which there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the InvestorsEducation and Protection Fund by the Company.
For WDK & Associates
Membership Number: 091143
Annexure-1 to the Auditors' Report
Annexure referred to in paragraph 1 under 'Report on Other Legal and RegulatoryRequirements' section of our Independent Auditors Report of even date
i) a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) Some of the fixed assets were physically verified by the management during the yearand no material discrepancies were noticed on such verification.
c) According to the information and explanations to us and on the basis of ourexamination of the records of the company the title deed of the immovable property isheld in the name of the company.
ii) a) The Management has physically verified the inventory during the year. In ouropinion frequency of the verification is reasonable.
b) The procedures of physical verification of inventories followed by the managementare reasonable and adequate in relation to the size of the company and the nature of itsbusiness.
c) The company is maintaining proper records of inventories. The discrepancies noticedon physical verification of inventories as compared to book records needs to bereconciled.
iii) a) According to the information and explanations to us the company has grantedloans to bodies corporate covered in the register maintained under section 189 of theCompanies Act 2013 ('the Act').
(b) The terms of arrangements do not stipulate any repayment schedule and the loans arerepayable on demand.
Accordingly paragraph 3(iii) (b) of the Order is not commented upon in respect ofrepayment of the principal amount.
(c) In the absence of any stipulated repayment schedule we cannot comment on theoverdue amounts of more than rupees one lakh in respect of the loans granted to the bodiescorporate listed in the register maintained under section 189 of the Act.
iv) In our opinion and according to the information and explanations given to us thecompany has complied with the provisions of section 185 and 186 of the Act with respectto the loans and investments made. The loans given are to the associate company and whollyowned Subsidiary Company. However no interest has been provided/ recovered during theyear. A fresh investment has been made to newly incorporated subsidiary company M/ s.Sunruf Energy Pvt. Ltd. by subscribing equity shares during the year.
v) The Company has not accepted any deposits from the public.
vi) To the best of our knowledge and as explained the Central Government has notspecified the maintenance of cost records under section 148 (1) of the Companies Act 2013for the products and services of the Company.
vii) a) The Company is depositing though with delays in few instances withappropriate authorities undisputed statutory dues including provident fund income taxsales tax wealth tax service tax duty of customs value added tax cess and othermaterial statutory dues applicable to it.
b) According to the information and explanations given to us no undisputed amountspayable in respect of provident fund income tax (except amount payable on account of latefiling fees for TDS returns) sales tax wealth tax service tax duty of customs valueadded tax cess and other material statutory dues were outstanding at the end of theyear for a period of more than six months from the date they became payable.
(c) According to the information and explanations given to us there are no materialdues of income tax sales tax wealth tax duty of customs and cess which have not beendeposited with the appropriate authorities on account of any dispute. However the Companyis of the opinion that the losses on account of diminution of value of the Investments(Equity Shares held) in subsidiary company M/s. Sharika Lightec Pvt. Ltd. and associatecompany M/s. Elettromeccanica India Pvt. Ltd. has been adjusted while calculating IncomeTax Payable for FY 2016-17. In the absence of any communication from the Income Taxdepartment the matter is still pending.
Annexure - B to the Auditors' Report
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of SHARIKAENTERPRISES LIMITED ("the Company") as of 31 March 2018 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.
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'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including 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.
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") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. 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 auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the Company's internal financial controls system overfinancial 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 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 have amaterial 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.
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 2017 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 WDK & Associates
viii) In our opinion and according to the information and explanations given by themanagement the Company has not defaulted in repayment of dues to a financial institutionor bank taken in the form of Term Loan or Cash Credit/ Over Draft Facilities. The Companydid not have any debentures but has outstanding balance of Rs. 19535670.00 Against RawMaterial Assistance (RMA) Loan taken from the National Small Industries Corporation Ltd.(NSIC). The Company has regularized the account within the extended time granted under theRMA Scheme of NSIC.
ix) According to the information and explanations given by the given by the managementthe Company has raised money by way of initial public offer through issuing 3225000fully paid Up Equity Share of Rs 10 each at a premium of Rs.33. The Term Loans or CashCredit/ Over Draft facilities taken from Bank or financial institutions were applied forthe purpose they were raised.
x) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven to us no material fraud by the company or no fraud/ material fraud on the companyby the officers and employees of the Company has been noticed or reported during the year.
xi) According to the information and explanations given by the management and based onour examination of the records of the Company the Company has paid/provided formanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of section 197 read with Schedule V to the Act.
xii) In our opinion the Company is not a Nidhi company. Therefore the provisions ofthe clause (xii) of the order are not applicable to the company and hence not commentedupon.
xiii) According to the information and explanations given by the managementtransactions with the related parties are in compliance with section 177 and 188 of theCompanies Act 2013 where applicable and the details have been disclosed in the financialstatements as required by the applicable accounting standards.
xjv^ According to the information and explanations given tous and on an overall examination of the balance sheet the company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year.
According to the information and explanations given by the management the Companyhas not entered into any non- cash transactions with directors or persons connected withhim.
XV^ According to the information and explanations given to us theprovisions of section 45-IA of the Reserve Bank of India Act 1934 are not applicable tothe Company.
For WDK & ASSOCIATES
Place: New Delhi