To The Members of
The Supreme Industries Limited
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of The SupremeIndustries Limited (the "Company") which comprise the Balance Sheet as at March31 2018 the Statement of Profit and Loss (including other comprehensive income)Statement of Changes in Equity and the Cash Flow Statement for the year then ended and asummary of significant accounting policies and other explanatory information in which areincorporated the financial statements of various branches located in India audited by thebranch auditors .
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 including other comprehensive income changes in equityand cash flows of the Company in accordance with the accounting principles generallyaccepted in India including the Accounting Standards (Ind AS) specified under section 133of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. 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.
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 standalone financial statements. The procedures selected depend onthe auditor's judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal financial control relevant to the Company's preparation ofthe financial statements that give a true and fair view in order to design auditprocedures that are appropriate in the circumstances. An audit also includes evaluatingthe appropriateness of the accounting policies used and the reasonableness of theaccounting estimates made by the Company's Directors as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our audit opinion on thestandalone financial statements.
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 of the state of affairs of the Companyas at 31st March 2018 its profit including other comprehensive income changes in equityand its cash flows for the year ended on that date.
Emphasis of Matter
Without qualifying we draw attention regarding the under utilization of capacity ofthe Company's composite cylinder unit situated at Halol (Gujarat) having carrying value offixed assets (excluding freehold land) R 7309 lacs as on March 31 2018. It was explainedby the management: Composite cylinders being a very technical product getting variousapprovals is a long drawn process; recently BIS standards have also been published whichwill facilitate introduction of these cylinders in the domestic market; the Company isgetting good enquiries from the export market and hopeful of significant breakthrough innear future; the cylinder product has also been procured by an oil marketing company forcarrying out test marketing and it is confident of getting favourable response and in viewof the above no impairment provisioning is considered necessary. (Refer Note 43).
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 exercise of powers conferred by sub-section11 of section 143 of the Act we give in the Annexure A attached hereto our comments onthe matters specified in the paragraphs 3 and 4 of the said 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 ouropinion proper books of account as required by law have been kept by the Company so faras it appears from our examination of those books.
(c) The reports on the accounts of branches audited under section 143(8) of the Act bynine firms of independent auditors have been sent to us and properly dealt with by us inpreparing this report. Our opinion on the financial statements is not modified in respectof our reliance on the work done and the reports of the other auditors.
(d) The Balance Sheet the Statement of Profit and Loss Statement of Changes in Equityand the Cash Flow Statement dealt with by this Report are in agreement with the books ofaccount.
(e) 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 (Account) Rules 2014.
(f) On the basis of the written representations received from the directors as on 31stMarch 2018 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2018 from being appointed as a director in terms of section164 (2) of the Act.
(g) 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".
(h) With respect to the matters to be included in the Auditor's Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to thebest of our information and according to the explanations given to us: (i) The Company hasdisclosed the impact of pending litigations on its financial position in its standalonefinancial statements (Refer Note 36) (ii) The Company did not have any long-term contractsincluding derivative contracts for which there were any material foreseeable losses. (iii)There has been no delay in transferring amounts required to be transferred to the InvestorEducation and Protection Fund by the Company.
For LODHA & COMPANY
R. P. Baradiya
Membership No. 44101 Place: Mumbai Date: 26th April 2018
Annexure A to the Independent Auditors' Report
ANNEXURE A REFERRED TO IN INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF THE COMPANY ONTHE STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018 WE REPORT THAT:
1. a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets. b. As explained to us the Company hasa phased program for physical verification of the fixed assets to cover all locations overa period of three years. In our opinion the frequency of verification is reasonableconsidering the size of the Company and nature of its fixed assets. Pursuant to theprogram of the physical verification of fixed assets physical verification of the assetshas been carried out during the year and no material discrepancies were noticed on suchverification. c. According to the information and explanations given to us and on thebasis of our examination of the records of the Company the title deeds of immovableproperties are held in the name of the Company except certain freehold land havingcarrying value of R43 lacs as at March 31 2018 (R 43 lacs as at March 31 2017) is heldin the name of the directors on Company's behalf and two flats having carrying value of R4 lacs as at March 31 2018 (R 4 lacs as at March 31 2017) which as explained necessarysteps are being taken fore transfer in the Company's name.
2. The inventories have been physically verified by the management at reasonableintervals during the year. The procedures of physical verification of the inventoriesfollowed by the management are reasonable and adequate in relation to the size of theCompany and nature of it's business. As per the information and explanations given to usno material discrepancies were noticed on physical verification of inventories as comparedto book records.
3. 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. Accordingly the provisions of clause 3(iii) of the Order are not applicable to theCompany.
4. 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 to the extentapplicable with respect to the loans and investments made.
5. No deposits have been accepted by the Company within the meaning of directivesissued by RBI (Reserve Bank of India) and Section 73 to 76 or any other relevantprovisions of the Act and rules framed thereunder.
6. According to the information and explanations given to us cost records weremaintained by the Company pursuant to the Order of the Central Government under Section148(1) of the Act. 7. a. According to the information and explanations given to us and onthe basis of our examination of the records the Company is regular in depositingundisputed statutory dues including provident fund employees' state insurance incometax sales tax custom duty cess excise duty service tax value added tax and othermaterial statutory dues during the year with the appropriate authorities. No undisputedamounts payable in respect of the aforesaid statutory dues were outstanding as at the lastday of the financial year for a period of more than six months from the date they becamepayable. b. According to the information and explanations given to us there are no duesof income tax goods and service tax sales tax service tax duty of customs duty ofexcise value added tax cess which have been not deposited on account of any disputeexcept the following :
|Name of the statute ||Nature of dues ||Amount R in lacs ||Period to which the amount relates ||Forum where dispute is pending |
|The Central Excise Act ||Excise Duty ||331 ||2002 to 2015 ||Commissioner (Appeals) Large |
|1944 ||and Penalty || || ||Tax Payer Unit |
| || ||963 ||1994 to 2010 ||Custom Excise & Service Tax |
| || || || ||Appellate tribunal (CESTAT) |
|The Central Sales Tax Act ||Sales Tax / ||104.32 ||Various years from 2007-2008 ||Joint / Deputy Commissioner / |
|1956 and Sales Tax / VAT ||VAT and Entry || ||to 2014-2015 ||Commissioner (Appeals) |
|/ Entry Tax- Acts of various ||Tax || || || |
| || ||148.51 ||Various Years from 2002-2003 ||Sales tax Appellate Tribunal |
|states || || || || |
| || || ||to 2012-2013 || |
| || ||173.72 ||Various Years from 2000-2001 ||High Courts |
| || || ||to 2013-2014 || |
| || ||188.27 ||2002-2003 to 2012-13 ||Hon'ble Supreme Court of India |
|Gram Panchayat ||Cess ||81.31 ||2016-17 and 2017-18 ||Gram Panchayat |
8. Based on our audit procedures and on the basis of information and explanations givento us we are of the opinion that the Company has not defaulted in the repayment of duesto banks and government. The Company did not have any outstanding dues to debentureholders during the year.
9. In our opinion and according to the information and explanations given to us theterm loans have been applied for the purpose for which they were raised. The Company hasnot raised any money by way of Initial public offer or further public offer (Includingdebt instrument) during the year or in the recent past.
10. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of fraud by or on the Company by its officers or employees noticed or reportedduring the year nor have we been informed of such case by the management.
11. According to the information and explanations given to us and based on ourexamination of the books and records of the Company the Company has paid / provided forthe managerial remuneration in accordance with the requisite approvals mandated by theprovisions of Section 197 read with Schedule V to the Act.
12. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Therefore the provisions of clause 3(xii) of the Orderare not applicable to the Company.
13. According to the information and explanations given to us and based on ourexamination of the records of the Company all the transactions with related parties arein compliance with section 177 and 188 of the Act and all the details have been disclosedin the financial statements as required by the applicable Accounting Standard (Refer Note38).
14. According to the information and explanations given to us and based on 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 or in the recent past. Therefore the provisions of clause 3(xiv) of the Orderare not applicable to the Company.
15. According to the information and explanations given to us the Company has notentered into any non-cash transactions prescribed under Section 192 of the Act withdirectors or persons connected with them during the year.
16. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
For LODHA & COMPANY
R. P. Baradiya
Membership No. 44101 Place: Mumbai Date: 26th April 2018
Annexure B to the Independent Auditor's Report
ANNEXURE B REFERRED TO IN INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF THE COMPANY ONTHE STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Act
We have audited the internal financial controls over financial reporting of The SupremeIndustries Limited ("the Company") as of March 31 2018 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.
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"). 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 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 and deemedto be prescribed 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 judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the Company's 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 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 2018 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 ICAI.
For LODHA & COMPANY
R. P. Baradiya
Membership No. 44101
Date: 26th April 2018