Stone India Ltd.
|BSE: 522085||Sector: Engineering|
|NSE: N.A.||ISIN Code: INE290C01015|
|BSE 00:00 | 10 Sep||Stone India Ltd|
|NSE 05:30 | 01 Jan||Stone India Ltd|
|BSE: 522085||Sector: Engineering|
|NSE: N.A.||ISIN Code: INE290C01015|
|BSE 00:00 | 10 Sep||Stone India Ltd|
|NSE 05:30 | 01 Jan||Stone India Ltd|
TO THE MEMBERS OF STONE INDIA LIMITED
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Stone India Limited("the Company") which comprise the Balance Sheet as at March 31 2016Statement of Profit and Loss and the Cash Flow Statement for the year then ended and asummary of the significant accounting policies and 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 financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting frauds and otherirregularities; 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 these standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.
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 thereunder.
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 standalone financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone financial statements. The procedures selected depend onthe auditor's judgment including the assessment of the risks of material misstatement ofthe standalone financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of the standalone financial statements that give a true and fair view in orderto design audit procedures that are appropriate in the circumstances. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified opinion on the standalone financial statements.
Basis for Qualified Opinion
i) Attention is drawn to the following notes to the financial statement:
(a) Note 6(b) regarding non-provision of rental on leasehold land demanded by KolkataPort Trust pending final decision of the matter by Hon'ble High Court at Kolkata;
(b) Note 26(a) regarding managerial remuneration amounting to Rs. 268.54 Lakhs beingsubject to approval of the Central Government;
(c) Note 13 (a) & 15((b) & (c)) regarding non-ascertainment of shortfall invalue of investments in subsidiaries amounting to Rs. 22 Lakhs and Company's otherexposures of Rs. 1215.13 Lakhs (including advances of Rs. 1006.99 Lakhs) against projectundertaken by one of it's subsidiary and provision required there against;
(d) Note 19(b) regarding defalcation pending conclusion of the matter impact thereofas such cannot be commented upon;
(e) Regarding Stock lying with third parties (Note 16 (c)) and certain debit/creditbalances including capital advances as per Note 15(a) and certain overdue balance of tradereceivables as given in Note 17(b) and certain bank balances which are subject toconfirmation/reconciliation and the consequential adjustments thereof not being determined(Note 30);
(f) Note 12(g) regarding non-classification of fixed assets and non- provision andnon-ascertainment of depreciation as required in terms of Schedule II to the CompaniesAct 2013;
(g) Note 9(b) regarding information about Micro and Small enterprise being notavailable and as such required disclosures as stated therein and recognition of interestliability if any in this respect could not be given/made;
ii). Impact with respect to above cannot be ascertained and commented upon by us.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matters described in the Basis forQualified Opinion paragraph the aforesaid standalone financial statements give theinformation required by 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 31st March 2016 and its Loss and its Cash Flows for theyear ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act and according to information and explanations given to us and also on such checksas we considered appropriate we give in the 'Annexure A' a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
2. As required by Section 143 (3) of the Act we report that:
a) We have sought and except for matters mentioned in para (e) (f) and (g) under BasisFor Qualified Opinion paragraph have obtained all the information and explanations whichto the best of 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) Except for the matters described in para (c) and (f) in the Basis For QualifiedOpinion paragraph in our opinion the Balance Sheet Statement of Profit and loss andCash Flow Statement comply with the Accounting Standards specified under section 133 ofthe Act;
e) The matters described in the Basis for Qualified opinion paragraph above especiallythose given in Para (a) (c) and
(e) therein in our opinion may have an adverse effect on the functioning of theCompany.
f) On the basis of the written representations received from the directors as on March31 2016 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2016 from being appointed as a director in terms of section 164(2) of theAct.
g) The qualifications relating to the maintenance of accounts and other mattersconnected therewith are as stated in the Basis for Qualified Opinion paragraph.
h) 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".
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 in our opinionand to the best of our information and according to the explanations given to us:
i. Pending litigations (other than those already recognised in the accounts) havingmaterial impact on the financial position of the Company have been disclosed in thestandalone financial statement as required in terms of the accounting standards andprovisions of the Act (Note 29 & 6(b) of the financial statements)
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. There was no amount due which is required to be transferred to the InvestorsEducation Protection Fund by the Company.
Annexure 'A' to the Independent Auditors' Report
Referred to in paragraph 1 under the heading of "Report on Other Legal andRegulatory Requirements" of our Report of even date
i) a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) The fixed assets of the Company are physically verified by the management over aphased manner which we consider reasonable considering the size of the Company and natureof its assets. However during the year fixed assets have not been physically verified bythe management. Discrepancies if any in this respect pending such verification andreconciliation with records are not ascertainable.
c) Based on verification of the title deeds /confirmations etc as the case may beproduced to us for our verification
and according to the information explanations and representations given to us exceptin case of building referred to in Note 12 (a) where as stated in the said note titledeeds are yet to be executed and flat as referred to in Note 12(b) where title deeds couldnot be produced to us for verification in our opinion the title deeds of immovableproperties are held in the name of the Company. For the above purpose deeds and/or otherrelevant documents have been taken as basis for verification in respect of land (includingleasehold land) as well as self constructed building thereupon.
ii. The inventory except those lying with third parties (Note 16(c) of the financialstatements) has been physically verified by the management during the year. In our opinionand according to the information and explanations given to us the frequency ofverification wherever carried out is reasonable. Pursuant to an exercise forverification and reconciliation thereof initiated in the previous years even thoughcarried out to a substantial extent the reconciliation and required adjustment withrespect to stock lying with third parties and those at certain locations were in progressat year end. Pending completion of the entire exercise inventories to the extent ofRs.69.77 Lakhs has been adjusted during the year against provisions made in earlier yearsand Rs. 397.23 Lakhs being balance amount of the said provisions as given in the Note16(c) of the financial statements has been continued in these accounts. Consequentialadjustment against respective inventory items as explained will be given effect to ondetermination thereof.
iii. Except for the advances on account of various costs incurred for undertaking RailRunner and Bio-toilet project by two subsidiaries as per the records of the company ithas not granted any loans secured or unsecured to companies firms limited liabilitypartnerships or other parties covered in the Register maintained under Section 189 of theAct. Advances given to subsidiaries for undertaking the said projects are in the nature ofcontribution towards the project and is therefore long term and strategic in nature andthere being no terms of repayment etc. in this respect we are unable to comment in thisregard.
iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Act with respectto loans and investments made.
v. According to the information and explanations given to us the Company has notaccepted any deposit. Therefore paragraph 3 (v) of the Order is not applicable to theCompany.
vi. On the basis of the records produced we are of the opinion that prima facie thecost records and accounts specified by the Central Government under section 148(1) of theAct have been maintained for Rail Products. As explained by the management the same isnot required to be maintained for Bio-toilets. However we have not carried out anydetailed examination of such records with a view to determine whether they are accurate orcomplete.
vii. In respect of statutory dues:
a) According to the information and explanations given to us and as per the recordsverified by us there were delays in depositing undisputed statutory dues including inrespect of Provident Fund Employees' State Insurance (as mentioned in the Note 10(b) ofthe financial statements) Income tax Sales tax Service Tax Duty of Excise and
Value Added Tax and Cess with appropriate authorities. According to the information andexplanations given to us except those given below there were no undisputed amountspayable in respect of above dues which were outstanding as at 31st March 2016 for a periodof more than six months from the date of those becoming payable:
b) According to the information and explanations given to us there are no dues ofSales tax Income tax Duty of Customs Service Tax Duty of Excise Value Added Tax andCess which have not been deposited on account of any dispute except the dues as givenbelow:
viii. According to the information and explanations given to us during the year theCompany has not defaulted in the repayment of loans or borrowings to financialinstitutions banks and Government. The Company has not issued any debentures.
ix. The Company has not raised monies by way of Initial Public Offer or further publicoffer (including debt instruments) and term loans and as such paragraph 3(ix) of the Orderis not applicable to the Company.
x. Attention is invited to the Note 19(b) of the financial statements regardingdefalcation of company's fund in earlier years for which administrative and other courseof action including recovery of amount involved is under process. Excepting this duringthe course of our examination of books of account carried out in accordance with generallyaccepted auditing practices in India we have neither come across any incidence of fraudby the company or on the Company by its officers or employees nor have we been informed ofany such case by the management.
xi. As stated in Note 26(a) of the financial statements managerial remuneration hasbeen paid or provided pending approval of the Central Government. This includes the amountcovered as per erstwhile provisions of the Companies Act 1956 and those covered as perthe provisions of Section 197 read with Schedule V to the Act.
xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly paragraph 3(xii) of the Order is notapplicable to the Company.
xiii. According to the information and explanations given to us the Company'stransactions with its related parties are in compliance with Sections 177 and 188 of theAct where applicable and details of such have been disclosed in the financial statementsas required by the applicable Accounting Standard.
xiv. During the year the Company has made preferential allotment of equity shares to apromoter group company pursuant to warrants issued in earlier years (under erstwhileSection 81 (1A) of the Companies Act 1956) entitling the holders thereof to obtain suchallotment (as referred to in Note 4(a) of the financial statements). As represented to usthe amount so raised has been used for the purposes for which the funds were raised.
xv. According to the information and explanations given to us during the year theCompany has not entered into any non-cash transactions specified u/s 192 of the Act withits directors or persons connected with him and therefore provisions of Section 192 of theAct are not applicable to the Company.
xvi. According to the information and explanations given to us the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.
'Annexure B' referred to in our report of even date on the Standalone FinancialStatements of Stone India Limited
Report on the Internal Financial Controls under Clause (i) of Subsection 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of Stone IndiaLimited ("the Company") as at March 31 2016 in conjunction with our audit ofthe standalone 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 Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.
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 andprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.
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 standalone financial statements whether due to fraud orerror.
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
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 authorization ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized 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.
According to the information and explanations given to us and based on our audit thefollowing material weaknesses have been identified as at March 31 2016:
i. The Company did not have adequate confirmation/ reconciliation procedures in respectof certain debit and credit balances including inventories capital advances tradereceivables trade payables and certain bank balances (Note 9(b) 15(a) & (b) 16 (c)17(b) and 30 of the financial statements).
ii. Evaluation of the useful life of the fixed assets initiated has not been completedand thereby classification of the fixed assets and depreciation thereon have beencontinued to be provided as per policies followed in earlier year in this respect. (Note12(g) of the financial statements).
iii. Non determination of the state of the project undertaken by one of the subsidiaryand consequential adjustments arising vis-avis the Company's exposure in the saidsubsidiary (Note 15(b) and 15(c) of the financial statements).
iv. During the year fixed assets of the Company have not been physically verified bythe management and reconciliation/ ascertainment of discrepancies with respect to bookrecords in this respect were not carried out.
v. The framework of Risk Management and its controls are yet to be defined by theCompany.
vi. Impact with respect to above cannot be ascertained and commented upon by us.
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 statements willnot be prevented or detected on a timely basis.
In our opinion except for the possible effects of the material weaknesses describedabove on the achievement of the objectives of the control criteria the Company hasmaintained in all material respects adequate internal financial controls over financialreporting and such internal financial controls over financial reporting were operatingeffectively as of March 31 2016 based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the ICAI
We have considered the material weaknesses identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the March 31 2016standalone financial statements of the Company and these material weaknesses has affectedour opinion on the standalone financial statements of the company and therefore we whererelevant and applicable have issued qualified opinion on Standalone Financial Statementsof the Company.