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Southern Magnesium & Chemicals Ltd.

BSE: 513498 Sector: Metals & Mining
NSE: N.A. ISIN Code: INE308N01012
BSE 00:00 | 19 Jun 20.80 0
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NSE 05:30 | 01 Jan Southern Magnesium & Chemicals Ltd
OPEN 20.80
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VOLUME 500
52-Week high 38.90
52-Week low 19.80
P/E
Mkt Cap.(Rs cr) 6
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 20.80
CLOSE 20.80
VOLUME 500
52-Week high 38.90
52-Week low 19.80
P/E
Mkt Cap.(Rs cr) 6
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Southern Magnesium & Chemicals Ltd. (SOUTHMAGNESIUM) - Auditors Report

Company auditors report

To the Members of SOUTHERN MAGNESIUM AND CHEMICALS LIMITED

Report on the Financial Statements

We have audited the accompanying standalone financial statements of SOUTHERN MAGNESIUMAND CHEMICALS LIMITED HYDERABAD TELANGANA ("The Company")which comprise theBalance Sheet as at 31stMarch 2017 the Statement of Profit and Loss the Cash FlowStatement for the year then ended and a summary of the significant accounting policiesand other explanatory information.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial Statements that give a true and fair view of the financialposition of the Company in accordance with the accounting principles generally accepted inIndia including the Accounting Standards specified under Section 133 of the Act readwith Rule 7 of the Companies (Accounts) Rules 2014. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.

We have taken into account the provisions of the Act the accounting and auditingstandards and Matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe Disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India

(a) In the case of the Balance Sheet of the state of affairs of the company as atMarch 31 2017;

(b) In the case of the Statement of Profit and Loss of the profit for the year endedon the date.

And

(c) In the case of the Cash flow statements of the cash flow for the year ended onthat 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 section 143 ofthe Companies Act 2013 we give in the "Annexure A" a statement on the mattersspecified in paragraphs 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 and the Cash Flow Statementdealt with by this report are in agreement with the books of account;

(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014

(e) On the basis of the written representations received from the directors as on 31stMarch 2017 taken on record by the Board of Directors none of the directors isdisqualified as on31st March 2017 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 over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure B"; and

(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company does not have any pending litigations which would impact its financialposition

ii. The Company did not have any long-term contracts including derivative contracts forwhich 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.

iv. The company has provided requisite disclosures in the financial statements as toholdings as well as dealings in Specified Bank Notes during the period from 8th November2016 to 30Th December 2016.

Based on audit procedures and relying on the management representation we report thatthe disclosures are in accordance with books of accounts maintained by the Company and asproduced to us by the Management (Refer to Note No 27 to the audited Financial Statements)

For K.S.RAO & Co

Chartered Accountants Firm's Regn. No.003109S

Sd/-

(NAGA PRASADU)

Partner

Membership No. 231388

Place : HYDERABAD Date : 12.05.2017

ANNEXURE REFERRED TO PARAGRAPH 9 OF OUR REPORT OF EVEN DATE

The Annexure referred to in Para 1 under the heading of "Report on Other Legal andRegulatory Requirements" of our report of even date to the members of SOUTHERNMAGNESIUM AND CHEMICALS LIMITED HYDERABAD for the year ended March 312017.

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

b. As explained to us the management has physically verified the fixed assets duringthe year and there is a regular programme of physical verification which in our opinionis reasonable having regard to the size of the Company and the nature of the assets. Nodiscrepancies were noticed on such verification.

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

2. The inventory has been physically verified by the management at reasonable intervalsand in our opinion the frequency of verification is reasonable. No material discrepancieswere noticed on physical verification between the physical stocks and the book stocks.

3. a. During the year the Company has not granted any loans secured or unsecured toCompanies firms limited liability partnerships or other parties covered in the registermaintained under Section 189 of the Companies Act 2013.

b. In view of our comment in para (a) above Clause (III) (a) (b) and (c) of paragraph3 of the Companies (Auditor's Report) Order 2016 are not applicable to the Company.

4. In our opinion and according to the information and explanations given to us theCompany has not advanced any loan to any Director and no investments were made during theyear as referred to in sections 185 and 186 of the Act. Therefore the provisions ofParagraph 3(iv) of the of the Companies (Auditor's Report) Order 2016 are not applicableto the Company.

5. The Company has not accepted any deposits from the public. Hence the provisions ofSections 73 to 76 or any other relevant provisions of the Companies Act 2013 and therules framed there under; do not apply to this Company.

6. In view of the present activity carried on by the company the para 3(vi) of the saidorder with respect to cost records is not applicable.

7. a. According to the records the company is regular in depositing undisputedstatutory dues including Provident fund and ESi income-tax sales-tax service tax dutyof customs duty of excise value added tax cess and all other material statutory dueswith the appropriate authorities and there were no arrears of statutory dues as at March31 2017 for a period of more than six months from the date they became payable.

b. According to the records of the Company and the information and explanations givento us there were no dues of income tax or sales tax or service tax or duty of customs orduty of excise or value added tax have not been deposited on account of any dispute.

8. The Company has availed Over draft facility from a nationalized bank and notdefaulted in repayment;

9. The Company did not raise any money by way of initial public offer or further publicoffer (including debt instruments) and term loans during the year under review;

10. Based upon the audit procedures performed and according to the information andexplanations given to us we report that no fraud by the Company or on the Company by itsofficers or employees has been noticed or reported during the year.

11. Managerial remuneration has been paid in compliance with provisions of Sec 197 readwith Schedule V to the Companies Act 2013

12. The Company is not a Nidhi Company. Accordingly paragraph 3(xii) of the Order isnot applicable;

13. 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;

14. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year;

15. The Company has not entered into non-cash transactions with directors or personsconnected with him;

16. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

For K.S.RAO & Co

Chartered Accountants Firm's Regn. No.003109S

Sd/-

(NAGA PRASADU)

Partner

Membership No. 231388

Place : HYDERABAD Date : 12.05.2017

ANNEXURE-B REFERRED TO IN PARAGRAPH 10 (f) OF OUR REPORT OF EVEN DATE

1. We have audited the internal financial controls over financial reporting of SOUTHERNMAGNESIUM AND CHEMICALS LIMITED ("the Company") as of March 31 2017 inconjunction with our audit of the financial statements of the Company for the year endedon that date.

Management's Responsibility for Internal Financial Controls

2. 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". 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.

Auditors' Responsibility

3. 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.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the 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.

5. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the Company's internal financialcontrols system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

6. A company's internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that:

a. pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

b. 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 c. Providereasonable assurance regarding prevention or timely detection of unauthorized acquisitionuse or disposition of the company's assets that could have a material effect on thefinancial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

7. 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.

Qualified Opinion

8. According to the information and explanations given to us and based on our auditthe following material weakness have been identified as at March 31 2017;

9. The Company did not have an appropriate internal control system for customeracceptance credit evaluation and establishing customer credit limits for sales whichcould potentially result in the Company recognizing revenue without establishingreasonable certainty of ultimate collection.

A 'material weakness' is a deficiency or a combination of deficiencies in internalfinancial control over financial reporting such that there is a reasonable possibilitythat a material misstatement of the company's annual financial statements will not beprevented or detected on a timely basis.

In our opinion except for the possible effects of the material weakness describedabove on the achievement of the objectives of the control criteria the Company hasmaintained in all material respects an adequate internal financial controls system overfinancial reporting and such internal financial controls over financial reporting wereoperating effectively as at March 31 2017 based on "the internal control overfinancial reporting 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".

We have considered the material weakness identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the March 31 2017financial statements of the Company and the material weakness does not affect our opinionon the financial statements of the Company.

For K.S.RAO & Co

Chartered Accountants Firm's Regn. No.003109S

Sd/-

(NAGA PRASADU)

Partner

Membership No. 231388

Place : HYDERABAD Date : 12.05.2017