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Sika Interplant Systems Ltd.

BSE: 523606 Sector: Engineering
NSE: N.A. ISIN Code: INE438E01016
BSE 00:00 | 08 Apr 154.70 4.00
(2.65%)
OPEN

159.00

HIGH

159.00

LOW

153.00

NSE 05:30 | 01 Jan Sika Interplant Systems Ltd
OPEN 159.00
PREVIOUS CLOSE 150.70
VOLUME 82
52-Week high 248.00
52-Week low 104.95
P/E 7.51
Mkt Cap.(Rs cr) 66
Buy Price 150.00
Buy Qty 1.00
Sell Price 160.00
Sell Qty 25.00
OPEN 159.00
CLOSE 150.70
VOLUME 82
52-Week high 248.00
52-Week low 104.95
P/E 7.51
Mkt Cap.(Rs cr) 66
Buy Price 150.00
Buy Qty 1.00
Sell Price 160.00
Sell Qty 25.00

Sika Interplant Systems Ltd. (SIKAINTERPLANT) - Auditors Report

Company auditors report

To the members of Sika Interplant Systems Limited

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the standalone financial statements of M/s. SIKA INTERPLANT SYSTEMSLIMITED ("the Company") which comprise the standalone balance sheet as at 31stMarch 2019 and the standalone statement of profit and loss (including other comprehensiveincome) standalone statement of changes in equity and standalone statement of cash flowsfor the year then ended and notes to the standalone financial statements including asummary of the significant accounting policies and other explanatory information.

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 Companies Act 2013 ("Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at 31 March 2019 and profit and other comprehensiveincome changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone 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 together with theethical requirements that are relevant to our audit of the standalone 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 Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.

REVENUE RECOGNITION
The key audit matter How the matter was addressed in our audit Our audit procedures include:
Revenue from sale of goods is recognised when control of the products being sold is transferred to the customer and when there are no longer any unfulfilled obligations. The performance obligations in the contracts are fulfilled at the time of dispatch delivery or upon formal customer acceptance depending on customer terms. We assessed the appropriateness of the revenue recognition accounting policies by comparing with applicable accounting standards.
Revenue from sale of services is recognised upon completion of service. We tested the design implementation and operating effectiveness of management's general IT controls and key application controls over the Company's IT systems which govern revenue recognition including access controls controls over program changes interfaces between different systems and key manual internal controls over revenue recognition to assess the completeness of the revenue entries being recorded in the general ledger accounting system.
Revenue is measured at fair value of the consideration received or receivable after deduction of any trade discounts volume rebates and any taxes or duties collected on behalf of the government such as goods and services tax etc. Accumulated experience is used to estimate the provision for discounts and rebates. Revenue is only recognised to the extent that it is highly probable a significant reversal will not occur. We tested the design implementation and operating effectiveness of Internal Financial Controls.
PROVISIONS FOR TAXATION LITIGATION AND OTHER SIGNIFICANT PROVISIONS
There is a risk of revenue being overstated due to fraud including through manipulation of rebates and discounts resulting from pressure the management may feel to achieve performance targets at the reporting period end. We performed substantive testing by selecting samples of revenue transactions recorded during the year by verifying the underlying documents which included goods dispatch notes shipping documents and details with respect to percentage of completion of service projects.
We inspected on a sample basis key customer contracts to identify terms and conditions relating to goods acceptance and rebates and assessing the Company's revenue recognition policies with reference to the requirements of the applicable accounting standards.
We performed cut-off testing for samples of revenue transactions recorded before and after the financial year end date by comparing with relevant underlying documentation which included goods dispatch notes shipping documents and details with respect to percentage of completion of service projects to assess whether the revenue was recognized in the correct period.
Our audit procedures included:
Accrual for tax and other contingencies requires the Management to make judgements and estimates in relation to the issues and exposures arising from a range of matters relating to direct taxand other eventualities arising in the regular course of business. • We tested the effectiveness of controls around the recognition of provisions.
We used other subject matter experts to assess the value of material provisions in light of the nature of the exposures applicable regulations and related correspondence with the authorities.
The key judgement lies in the estimation of provisions where they may differ from the future obligations. By nature provision is difficult to estimate and includes many variables. Additionally depending on timing there is a risk that costs We examined the assumptions and critical judgements made by management which impacted their estimate of the provisions required considering judgements previously made by the authorities in the relevant jurisdictions or any relevant opinions given by the Company's advisors and assessing whether there was an indication of management bias.
could be provided inappropriately that are not yet committed. We discussed the status in respect of significant provisions with the Company's Management and legal advisors.
We performed retrospective review of management judgements relating to accounting estimate included in the financial statement of prior year and compared with the outcome.

Assessment of contingent liabilities relating to litigations warranty claims and Bankguarantees' issued.

The key audit matter How the matter was addressed in our audit
The Company is periodically subject to challenges/scrutiny on the matters relating to direct tax. Further potential exposures may also arise from general legal proceedings in course of business. Our audit procedures included:
We tested the effectiveness of controls around the recording and re-assessment of contingent liabilities.
Assessment of contingent liabilities disclosure requires We discussed the status and potential exposures in respect of significant litigation and claims with the Company's management including their views on the likely outcome of each litigation and claim and the magnitude of potential exposure and sighted any relevant opinions given by the Company's advisors.
Management to make judgements and estimates in relation to the issues and exposures. Whether the liability is inherently uncertain the amounts involved are potentially significant and application of accounting standards to determine the amount if any to be provided as liability is inherently subjective. We assessed the adequacy of disclosures made.
We performed retrospective review of management judgements relating to accounting estimate included in the financial statement of prior year and compared with the outcome.

Information other than the Financial Statements and Auditor's Report thereon

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report but does not includethe financial statements and our auditor's 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 in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of theAct with respect to the preparation of these standalone financial statementsthat give a true and fair view of the state of affairs (financial position) profit orloss (financial performance including other comprehensive income) changes in equity andcash flows of the Company in accordance with the accounting principles generally acceptedin India including the Ind AS specified under Section 133 of the Act. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the 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 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.

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 these financial statements.

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

a. Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.

b. Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theCompanies Act 2013 we are also responsible for expressing our opinion on whether thecompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

c. Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

d. Conclude on the appropriateness of management's use of the going concern basis ofaccounting 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.

e. 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.

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 ourauditor's 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 to the extent applicable.

2. As required by section 143(3) of theAct 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 it appears from our examination of those books;

c. The standalone balance sheet the standalone statement of profit and loss (includingother comprehensive income) the standalone statement of changes in equity and thestandalone statement of cash flows dealt with by this Report are in agreement with thebooks of account.

d. In our opinion the aforesaid financial statements comply with the AccountingStandards specified under section 133 of the Companies Act 2013 read with the Rule 7 ofthe Companies (Accounts) Rules 2014;

e. On the basis of written representations received from the directors as on March 31st2019 taken on record by the Board of Directors none of the directors is disqualified ason March 31 st 2019 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 B";

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 litigation 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 InvestorEducation and Protection Fund by the Company;

3. As required by Section 197(16) of the Act we report that the Company has paidremuneration to its directors during the year in accordance with the provisions of andlimits laid down under Section 197 read with Schedule V to theAct.

For B.N.SUBRAMANYA & CO.
Chartered Accountants
Firm Registration No. 004142S
DEVENDRA NAYAK
Place : Bengaluru Partner
Date : 30/05/2019 Membership No. 027449

Annexure A to the Independent Auditors' Report

The Annexure referred to in our Independent Auditors' Report to the members of theCompany on the standalone financial statements for the year ended 31st March 2019 wereport that:

i) Fixed Assets

a) The Company has maintained proper records of fixed assets showing full particularsincluding quantitative details and situation of the assets.

b) The Management has conducted a physical verification of the fixed assets during theyear and no material discrepancies were noticed on such verification.

c) The title deeds of immovable properties are held in the name of the company.

ii) Inventory

The inventory has been physically verified during the year by the management atreasonable intervals and there are no material discrepancies noticed. iii) Loans andAdvances

The Company has granted unsecured loans to Companies covered in the register maintainedunder section 189 of Companies Act 2013 and the amount involved are as below:

Number of parties Maximum Amount Involved during the year Amount as at 31.03.2019
2 ` 26 59 619/- ` 26 59 619/-

a) The terms and conditions of the grant of such loan is not prejudicial to thecompany's interest; b) There are no stipulated terms in respect of repayment of principaland interest. c) We are also unable to ascertain the overdue amount for the periodexceeding 90 days as there has been no stipulation with respect to the repayment of suchloans or the payment of Interest.

I) Loans/Investments/Guarantees

In our opinion and according to the information and explanations given to usprovisions of section 185 and 186 of the Companies Act 2013 have been complied with inrespect of loans investments guarantees and security given by the company.

ii) Deposits

According to the information and explanation given to us the company has not acceptedany deposits consequently directives of the RBI and the provision of Section 73 and 76 orany other relevant provision of the Companies Act2013 and the rules framed there underare not applicable to the company.

iii) Cost records

According to information and explanation given to us the company is not required tomaintain cost records as per sub section (1) of section 148 of the Act hence no commentis required on the same.

iv) Statutory Dues

a) According to the records of the Company the Company is regular in depositing withappropriate authorities undisputed statutory dues including provident fund Employee StateInsurance Income tax sales tax service tax duty of customs value added tax duty ofexcise cess and other statutory dues applicable to it.

b) According to the records of the Company there are no dues of Income tax or Salestax or service tax or duty of customs or duty of excise or value added tax which have notbeen deposited on account of any dispute except for the following:

Name of Statute Nature of the Dues Amount Period to which the amount related to Forum where dispute is pending
Income Tax Act 1961 Income Tax ` 68705/- Assessment year 2016-17 Commissioner of Income Tax Appeals

viii) Repayment of Loans

According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the company has not defaulted in repayment ofloans or borrowings to a financial institution bank Government or dues to debentureholders.

ix) Diversion of Funds

According to the information and explanations given to us and on the basis of ourexamination of the records of the Company there were no further public offer during theyear and moneys raised by way of term loans were applied for the purposes for which thoseare raised.

x) Frauds noticed / Detected

According to the information and explanations given to us and on the basis of ourexamination of the records of the Company no material fraud by the company or any fraudon the company by its officers or employees has been noticed or reported during the year.

xi) Managerial Remuneration

According to the information and explanations given to us and based on our examinationof the records of the company managerial remuneration has been paid in accordance withthe requisite approvals mandated by the provisions of section 197 read with Schedule V tothe CompaniesAct.

xii) Nidhi Company

The company is not a Nidhi Company as mentioned in section 406 of the Companies Act2013 and hence no comment is required on the same.

xiii) Related Party Transactions

According to the information and explanations given to us and on the basis of ourexamination of the records of the Company all transactions with the related parties arein compliance with sections 177 and 188 of Companies Act 2013 where applicable and thedetails of the transactions have been disclosed in the Financial Statements as required bythe accounting standards and The CompaniesAct 2013.

xiv) Preferential allotment

According to the information and explanations given to us and on the basis of 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 under review and hence no comment is required on the same.

xv) Non-cash transactions

According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the company has not entered into any non-cashtransactions with directors or persons connected with him and hence no comment is requiredon the same.

xvi) Certification for Non-Banking Financial Institution

The company is not a Non-Banking Financial Institution hence registration undersection 45-IA of the Reserve Bank of IndiaAct 1934 is not required.

For B N Subramanya & Co.
Chartered Accountants
FRN. 004142S
Devendra Nayak
Place : Bengaluru Partner
Date : 30/05/2019 M. No. 027449

Annexure B to 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 M/s. SIKAINTERPLANT SYSTEMS LIMITED("the Company") as of March 31st 2019 in conjunctionwith our audit of the financial statements of the Company for the year ended 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 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 FinancialReporting" issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required 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 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.

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 systemover financial 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.

Opinion

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 March 31 2019 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 ofChartered Accountants of India.

For B N Subramanya & Co.
Chartered Accountants
FRN. 004142S
Devendra Nayak
Place : Bengaluru Partner
Date : 30/05/2019 M. No. 027449