Stewarts & Lloyds of India Ltd.
|BSE: 504960||Sector: Infrastructure|
|NSE: N.A.||ISIN Code: INE356D01012|
|BSE 00:00 | 04 Mar||Stewarts & Lloyds of India Ltd|
|NSE 05:30 | 01 Jan||Stewarts & Lloyds of India Ltd|
|BSE: 504960||Sector: Infrastructure|
|NSE: N.A.||ISIN Code: INE356D01012|
|BSE 00:00 | 04 Mar||Stewarts & Lloyds of India Ltd|
|NSE 05:30 | 01 Jan||Stewarts & Lloyds of India Ltd|
TO THE MEMBERS OF STEWARTS & LLOYDS OF INDIA LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of STEWARTS & LLOYDS OFINDIA LIMITED ("the Company") which comprise the Balance Sheet as at 31stMarch 2016 the Statement of Profit and Loss the Cash Flow Statement for the year thenended and a summary of the significant accounting policies and other explanatoryinformation.
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 the preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the 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 also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation 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.
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 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 financial statements.
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 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 2016 and its loss and its cash flows for the year ended on that date.
Emphasis of Matters
We draw attention to the following matter in the Other Notes to the financialstatements:
Note no 23.14 to the financial statement regarding the same being prepared on a goingconcern basis notwithstanding the fact that the Company has accumulated losses of Rs.78.50 crores as on 31st March 2016 resulting in negative net worth of Rs. 66.52 croreswhich cast significant doubt about the Companys ability to continue as a goingconcern. The appropriateness of the going concern assumption is subject to theCompanys ability to generate positive cash flows infusion of funds discharge ofits liabilities and the outcome of the decisions of BIFR.
Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 20l6 ("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 statement on the matters specified in paragraphs 3 and4 of the said Order to the extent applicable.
2. As required by Section 143 (3) of the 'Act' we report that:
i) We have sought and obtained all the information and explanations which to the bestof knowledge and belief were necessary for the purpose of our audit;
ii) in our opinion proper books of account as required by law have been kept by theCompany so far as appears from our examinations of those books;
iii) The Balance Sheet Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are in agreement with the books of account;
iv) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rule 2014.
v) On the basis of the written representations received from the Directors as on 31stMarch 2016 and taken on record by the Board of Directors none of the Directors isdisqualified as on 31st March 2016 from being appointed as a Director in terms of Section164 (2) of the Act.
vi) With respect to the adequacy of internal financial controls over financialreporting of the company and operating effectiveness of such controls refer to ourseparate report in ANNEXURE-I.
vii) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditor's) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
1. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements Refer Note 23.3(a) 23.3(b) 23.3(c) and23.3.(d) of the Other Notes to the financial statements;
2. The Company does not have any long-term contracts including derivative contract forwhich there are any material foreseeable losses;
3. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
ANNEXURE TO AUDITORS REPORT
Referred to in paragraph 1 of the Auditors' Report on "Other Legal and RegulatoryRequirements" of even date to the members of 'STEWARTS & LLOYDS OF INDIALIMITED' on the financial statements for the year ended 31st March 2016.
i) a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets;
b) The fixed assets have been physically verified by the management at reasonableintervals during the year. The discrepancies noticed on such verifications are stated tobe not material and are yet to adjusted in the books of account.
c) The company does not hold any freehold property in its name. Therefore in ouropinion clause (i) (c) of the aforesaid order in not applicable to the Company.
ii) The inventory has been physically verified and certified by the management at theyear-end. In our opinion the frequency of verification is reasonable. The discrepanciesnoticed on such verification which were not material have been properly dealt with in thebooks of account.
iii) On the basis of examination of books of account and based on information andexplanations given to us 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 Act. Therefore clauses (iii)(a) (b) and (c) of theaforesaid order are not applicable to the Company.
iv) The company has not given loans made investments given guarantees and providedsecurities covered by provisions of section 185 and 186 of the Act. Therefore clause (iv)of the aforesaid order is not applicable to the company.
v) The Company has not accepted any deposits from public during the year within themeaning of the directives issued by the Reserve Bank of India and the provisions ofsections 73 to 76 or any other relevant provisions of the Act and the rules framed thereunder. Moreover no order has been passed by Company Law Board or National Company LawTribunal or Reserve Bank of India or any other court or tribunal.
vi) The Central Government has not specified maintenance of cost records undersub-section (l) of section 148 of the Act for the company. Therefore clause (vi) of theaforesaid order is not applicable for the company.
vii) a) On the basis of checking of records of the Company and according to theinformation and explanations given to us we are of the opinion that the Company is notregular in depositing undisputed statutory dues including provident fund employees' stateinsurance income tax sales-tax service tax value added tax professional tax EmployeeGuarantee Tax or cess and any other statutory dues with the appropriate authorities. Theextent of arrears of outstanding statutory dues as on the last day of the financial yearconcerned for a period of more than six months from the date they became payable arestated below :-
b) On the basis of checking of records of the Company and on the basis of informationand explanations given to us the particulars of dues of income tax or sales tax orservice tax or value added tax as at Balance Sheet date which have not been deposited onaccount of any dispute are given in ANNEXURE-II.
viii) On the basis of records of the Company examined by us there is no loanoutstanding to financial institution bank government or debenture holders. Hence theclause (viii) of the aforesaid order is not applicable to the Company.
ix) On the basis of records of the Company examined by us the Company has not raisedmoney by way of initial public offer or further public offer including debt instrumentsand term loan during the year. Hence the clause (ix) of the aforesaid order is notapplicable to the Company.
x) During the course of our examination of the records of the Company and according tothe information and explanations given to us we have neither come across any instances offraud by the Company or any fraud on the Company by its officers or employees noticed orreported during the year nor we have been informed of any such case by the management.
(xi) On the basis of examination of the records of the Company the managerialremuneration has been paid / provided in accordance with the requisite approvals mandatedby the provision of Section 197 read with Schedule V to the Companies Act.
(xii) The Company is not an Nidhi Company. Hence the clause (xii) of the aforesaidorder is not applicable to the Company.
(xiii) On the basis of examination of the books of the account of the Company and onthe basis of information and explanations given to us the Company has entered into alltransactions with related parties in compliance with Section 177 and 188 of the CompaniesAct 2013 and the same is disclosed in the financial statement as required by theapplicable Accounting Standards.
(xiv) The Company has not made any preferential allotment or private placement ofshares fully paid or fully or partly convertible debentures during the year under review.Therefore clause (xiv) of the aforesaid order is not applicable to the Company.
(xv) On the basis of examination of records of the Company and according to theinformation and explanations given to us we are of the opinion that the Company has notentered into any non-cash transactions with directors or persons connected with him.
(xvi) The Company is not required to be registered under Section 45 -IA of the ReserveBank of India Act 1934. Hence the clause (xvi) of the aforesaid order is not applicableto the Company.
We have audited the internal financial controls over financial reporting of STEWARTS& LLOYDS OF INDIA LIMITED ("the Company") as of March 31 2016 inconjunction with our audit of the financial statements of the Company for the year endedon 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 Control over Financial Reportingissued by the Institute of Chartered Accountants of India ("ICAI"). 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 the Company's policies the safeguardingof its 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 Act2013.
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 deemed tobe prescribed under section 143(10) of the Companies Act 2013 to the extent applicableto an audit of internal financial controls both applicable to an audit of InternalFinancial Controls and both issued by the Institute of Chartered Accountants of India.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects. Our audit involves performingprocedure to obtain audit evidence about the adequacy of the internal financial controlssystem over financial reporting and their operating effectiveness. Our audit of internalfinancial controls over financial reporting included obtaining an understanding ofinternal financial controls over financial reporting assessing the risk that a materialweakness exists and testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk. The procedures selected depend on theauditor's judgments including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our qualified auditopinion on the Company's internal financial controls system over 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 andpreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedure 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 that thegenerally accepted accounting principles and that receipts and expenditure of the Companyare being made only in accordance with authorizations of management and directors of theCompany; 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 misstatement due to error or fraud may occur and not be detected. Alsoprojections of any evaluation of the internal financial controls over financial reportingto future periods are subject to the risk that the internal financial controls overfinancial reporting may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedures may deteriorate.
According to the information and explanations given to us and based on our audit thefollowing material weaknesses have been identified as at March 31st 2016.
a) The Company did not have an appropriate internal control system for review of itsperformance pertaining to execution of contracts resulting in customer dissatisfaction anddispute leading to recognition of revenue without establishing reasonable certainty ofultimate collection in earlier years from sundry debtors affecting cash flows adversely.
b) The Internal auditor of the Company has also pointed out in their report materialweakness in internal financial controls stating that the Company is not having any ERPsystem to manage the different operational activities. Due to its present condition it isalso functioning with some minimum staff strength. Accordingly many of the operationswhich would have been taken care of by a computer system and controls and are beingmanaged manually. Hence there is some limitation in control system and processes whichhave been mentioned in a separate annexure.
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 or interim financial statement willnot be prevented or detected on a timely basis. In our opinion except for the possibleeffects of the material weaknesses described above on the achievement of the objectives ofthe control criteria the Company has maintained in all material respects adequateinternal financial controls over financial reporting and such internal financial controlsover financial reporting were operating effectively as of March 31 st 2016 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal financial control stated in the Guidance Notes onaudit of internal financial controls over financial reporting issued by the Institute ofChartered Accountants of India.
We have considered material weakness as identified and reported above in determiningthe nature timing and extent of audit test applied in our audit of March 31 2016financial statements of the Company and these material weaknesses do not affect ouropinion on the financial statements of the Company.
ANNEXURE II TO THE AUDITORS REPORT