The Members of SHIVA CEMENT LIMITED
Report on Audit of the Financial Statements Opinion
We have audited the financial statements of Shiva Cement Limited (hereinafter referredto as "the Company") which comprise the Balance Sheet as at March 31 2019 theStatement of Profit and Loss (including other comprehensive income) the Statement ofChanges in Equity and Statement of Cash Flows for the year then ended and Notes to thefinancial statements including a summary of the significant accounting policies and otherexplanatory information.
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 and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at March 312019 and loss total comprehensive income changesin equity and its cash flows for the year ended on that date.
Basis of Opinion
We conducted our audit in accordance with the Standards on Auditing specified undersub-section (10) of section 143 of the Act ('SAs'). Our responsibilities under those SAsare further described in the Auditor's Responsibilities for the Audit of the FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India ('ICAI') togetherwith the ethical requirements that are relevant to our audit of the financial statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 31 (m) to the financial statement which indicates that duringthe year ended March 31 2019 the Company has incurred loss of Rs.2127.37 lakh and as onMarch 31 2019 the Company's accumulated loss is Rs.6961.58 Lakh resulting in erosion ofnet worth of the Company. The financial statements of the Company have been prepared on agoing concern basis for the reason stated in the note no 31(m). The validity of the goingconcern assumption would depend upon the performance of the Company as per its futurebusiness plan. Our opinion is not qualified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that in our professional judgementwere 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.For each matter below our description of how our audit addressed the matter is providedin that context.
|Key Audit Matter ||How the matter was addressed in our audit |
|Provision for Mines Restoration || |
|Refer to the accounting policies in Note2(D) to the financial statements: Provision for mine restoration;Note 27 to the financial statements: use of estimates and judgements - determination of provision for mine restoration to the financial statements || |
|Subjective estimate ||We performed audit procedures set out below |
| ||In evaluating the reasonability of provisions for closure and restoration costs we performed detailed assessment of the Management's assumptions. Our audit procedures included the following: |
|The provision for Mines Restoration relates to mines located at Khaturbahal (Kutra District) The calculation of the provisions requires significant management's judgment because of the inherent complexity in estimating future costs. These costs are provided at the present value of expected costs to settle the obligation using estimated cash flows. The provisions are subject to the effects of any changes in local regulations management's expected approach to decommissioning and discount rates. || As at March 31 2019 we reviewed the assumptions used by management in their calculations and verified the calculations and assessed the assumptions used. |
|The provision for Mines Restoration was identified as a key audit matter due to the significance of the management's judgement involved in the determination of forecasted closure and restoration costs life of mines and discount rate. || We also recalculated the provision based on these assumptions used by management for the discount rates areas to be rehabilitated the nature of expenses to be incurred (i.e. related to asset or expense). |
| || We assessed the competence of the work of management's expert who produced the cost estimates. |
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's management and Board of Directors are responsible for the preparation ofthe other information. The other information comprises the information included in theDirector's report and Management Discussion & Analysis (MD&A) report but does notinclude the financial statements and our auditor's report thereon. The Director's reportand MD&A report is expected to be made available to us after the date of thisauditor's report.
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 identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.
Responsibilities of Management and Those Charged with Governance for the FinancialStatements
The Company's management and Board of Directors are responsible for the matters statedin sub-section (5) of Section 134 of the Act with respect to the preparation of thesefinancial statements that give a true and fair view of the financial position financialperformance total comprehensive income changes in equity and cash flows of the Companyin accordance with the accounting principles generally accepted in India including theaccounting standards specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe 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 financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
In preparing the financial statements management and Board of Directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process
Auditor's Responsibilities 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 auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of thesefinancial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism 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 sub-section(3)(i) of section 143 of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls with reference to financialstatements of in place 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 auditor's 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 auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of thefinancialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
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 ofthefinancial year ended March 31 2019 and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to out weigh the public interest benefits of suchcommunication.
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 sub-section (3) of Section 143 of the Act based on our audit wereport 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 Flow dealt with bythis Report are in agreement with the books of account;
(d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Companies (Indian AccountingStandards) Rules 2015 as amended;
(e) On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 from being appointed as a director in terms of sub-section (2) ofSection 164 of the Act.
(f) The going concern matter described in under material uncertainty related to goingconcern paragraph above in our opinion may have an adverse effect on the functioning ofthe Company.
(g) With respect to the adequacy of the internal financial controls over financialreporting of the Company with reference to these financial statements and the operatingeffectiveness of such controls refer to our separate Report in "Annexure B".
(h) With respect to the other matters to be included in the Auditor's report inaccordance with the requirements of the sub-section 16 of Section 197 of the Act asamended:
In our opinion the managerial remuneration for the year ended March 31 2019 has beenpaid / provided by the Company to its directors in accordance with the provisions ofsection 197 read with Schedule V to the Act.
(i) 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 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 31 (a) of thefinancial statements;
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts. The companyhas not entered into any derivative contracts during the year; and
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
| ||For SHAH GUPTA & CO. |
| ||Chartered Accountants |
| ||Firm Registration No.: 109574W |
| ||Vipul K Choksi |
|Place: Rourkela ||Partner |
|Date: 23rd April 2019 ||M. No.37606 |
ANNEXURE A TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements'section of our report to the Members of Shiva Cement Limited of even date)
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets on the basis of available information.
(b) The Company has a program of verification to cover all the items of fixed assets ina phased manner which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets. Pursuant to the program certain fixed assets werephysically verified by the management during the year. According to the information andexplanations given to us 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 the conveyance deeds provided to us we report thatthe title deeds comprising all the immovable properties of land and buildings which arefreehold are held in the name of the Company as at the balance sheet date. In respect ofimmovable properties of land that have been taken on lease and disclosed as fixed assetsin the financial statements the lease agreements are in the name of the Company.
(ii) The inventory except goods in transit has been physically verified by theCompany at reasonable intervals during the year. In our opinion the frequency of suchverification is reasonable. In respect of inventory lying with third parties these havebeen substantially been confirmed by them. The discrepancies noticed on verificationbetween the physical stocks and the book records were not material.
(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under Section 189 of theAct. Hence reporting under the provisions of clause 3 (iii) (a) (b) and (c) of the Orderare not applicable.
(iv) In our opinion and according to the information and explanations given to usthere are no loans investments guarantees and securities granted in respect of whichprovisions of Section 185 and 186 of the Act are applicable and hence reporting underparagraph 3 (iv) of the Order is not applicable.
(v) According to the information and explanations given to us the Company has notaccepted any deposits from the public and hence reporting under the provisions of clause 3(v) of the Order are not applicable.
(vi) To the best of our knowledge and as explained the Central Government has notprescribed maintenance of cost records under sub-section (1) of section 148 of the Act.
(vii) (a) According to the information and explanations given to us and the records ofthe company examined by us in our opinion the Company is generally regular in depositingwith the appropriate authorities undisputed statutory dues including provident fundemployees' state insurance income tax sales- tax goods and service tax duty ofcustoms duty of excise value added tax cess and other material statutory duesapplicable to it. According to information and explanations given to us the undisputedamounts payable which were outstanding at the year end for a period of more than sixmonths from the date are as below :
|Name of the Statue ||Nature of dues ||Amount (Rs. in lakhs) ||Period to which the amount relates |
|Odisha VAT Act 2004 ||Interest on VAT ||28.75 ||2014-15 |
| ||Interest on VAT ||4.94 ||2015-16 |
|Orissa Entry Tax Act 1999 ||Interest on Entry Tax ||0.59 ||2014-15 |
| ||Interest on Entry Tax ||2.14 ||2015-16 |
| ||Interest on Entry Tax ||0.14 ||2016-17 |
|Employees Provident Fund Act 1952 ||Interest and Penalty on Provident Fund ||0.28 ||2014-15 |
| ||Interest and Penalty on Provident Fund ||5.28 ||2015-16 |
| ||Interest and Penalty on Provident Fund ||1.27 ||2016-17 |
|Orissa Employee State Insurance (ESI) Act 1948 ||Interest on ESI ||0.01 ||2011-12 |
| ||Interest on ESI ||0.02 ||2012-13 |
| ||Interest on ESI ||0.08 ||2013-14 |
| ||Interest on ESI ||0.25 ||2014-15 |
| ||Interest and Penalty on ESI ||2.60 ||2015-16 |
| ||Interest and Penalty on ESI ||1.10 ||2016-17 |
|Income Tax Act 1961 ||Interest on Income Tax ||47.29 ||2013-14 |
| ||Interest on Income Tax ||23.03 ||2014-15 |
| ||Interest on Income Tax ||2.14 ||2015-16 |
(b) According to the information and explanations given to us details of dues ofincome tax duty of customs duty of excise value added tax and cess which have not beendeposited as on March 31 2019 on account of disputes are given below :
|Name of the Statue ||Nature of Dues ||Amount (Rs. in lakhs) ||Period to which the amount elates ||Forum where dispute is pending |
|Orissa Sales Tax Act 1947 ||Denial for incentive under various Industrial Policy Resolutions (IPRs) on the production of expanded unit of SCL's Unit-I Penalty on late payment etc. ||39.25 ||1995-96 ||Hon'ble High Court of Odisha |
| || ||0.89 ||1998-99 ||Asst. Commissioner of commercial Tax Rourkela |
| || ||30.34 ||2003-04 ||Hon'ble High Court of Odisha |
| || ||57.96 ||2004-05 ||Hon'ble High Court of Odisha |
| || ||1.03 ||2003-04 ||Asst. Commissioner of commercial Tax Rourkela |
|Central Sales Tax Act 1956 ||Denial for incentive under various IPRs on the production of expanded unit of SCL's Unit- I Pending Form filings. ||0.19 ||1988-99 ||Asst. Commissioner of Commercial Tax Rourkela |
| || ||1.71 ||2003-04 ||Commissioner of Commercial Tax Cuttack |
|Orissa Entry Tax Act 1999 ||Tax-Credit levy of tax on certain raw materials procured. ||0.38 ||1999-20 ||Asst. Commissioner of commercial Tax Rourkela |
| || ||1.60 ||2001-02 ||Commissioner of commercial Tax Cuttack |
| || ||0.40 ||2003-04 ||Commissioner of commercial Tax Cuttack |
| || ||1.95 ||2008-11 ||Addl. Commissioner of commercial Tax Cuttack |
|Finance Act 1994 ||Service Tax ||7.11 ||2005-06 ||CESTAT Kolkata |
|Income Tax Act 1961 ||Interest and Penalty ||466.32 ||2015-16 ||Asst. Commissioner of Income Tax Sambalpur |
(viii) Based on our examination of documents and records the Company has not taken anyloan from a financial institution a bank the government or issued debentures and hencereporting under paragraph 3 (viii) of the Order is not applicable.
(ix) In our opinion and according to the information and explanations given to us theCompany has not raised any money by way of initial public offer or further public offer(including debt instruments) and term loans hence reporting under paragraph 3 (ix) ofthe Order is not applicable.
(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no material fraud on the Company by its officeror employees has been noticed or reported during the year.
(xi) In our opinion and according to the information and explanations given to us theCompany has paid/provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of Section 197 read with Schedule V to the Act.
(xii) In our opinion the Company is not a Nidhi Company and hence reporting underparagraph 3 (xii) of the Order is not applicable to the Company.
(xiii) Based on our audit procedures performed for the purpose of reporting the trueand fair view of the financial statements and according to the information andexplanations given by the management transactions with the related parties are incompliance with Sections 177 and 188 of the Act where applicable and the details havebeen disclosed in the notes to the financial statements as required by the applicableaccounting standards.
(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underparagraph 3 (xiv) of the Order is not applicable to the Company.
(xv) Based on our audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management the Company has not entered into any non-cash transactions withdirectors or persons connected with the directors. Hence reporting under paragraph 3 (xv)of the Order is not applicable.
(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934 and hence reporting under paragraph 3(xvi) of the Order is notapplicable to the Company.
For SHAH GUPTA & CO.
Firm Registration No.: 109574W
| ||Vipul K Choksi |
|Place: Rourkela ||Partner |
|Date: 23rd April 2019 ||M. No.37606 |
ANNEXURE B TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 2(f) under 'Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Shiva Cement Limited of even date)
Report on the internal financial controls with reference to the aforesaid financialstatements under Clause (i) of sub-section (3) of Section 143 of the Companies Act 2013(the 'Act')
We have audited the internal financial controls over financial reporting of SHIVACEMENT LIMITED(hereinafter referred to as "the Company") as of 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 and Board of Directors are responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting 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 Chartered Accountantsof India. These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business 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 Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting of the Company based on our audit. We conducted ouraudit in accordance with the Guidance Note issued by the Institute of CharteredAccountants of India and the Standards on Auditing prescribed under sub-section (10) ofSection 143 of the Act to the extent applicable to an audit of internal financialcontrols both applicable to an audit of Internal Financial Controls and both issued bythe Institute of Chartered Accountants of India. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting was established and maintained and if such controls operated effectively in allmaterial 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 judgement 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 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 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.
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 to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlswithreference to financial statements and such internal financial controls were operatingeffectively as at March 312019 based on the internal financial controls with referenceto financial statements 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 SHAH GUPTA & CO. |
| ||Chartered Accountants |
| ||Firm Registration No.: 109574W |
| ||Vipul K Choksi |
|Place: Rourkela ||Partner |
|Date: 23rd April 2019 ||M. No.37606 |