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TGV Sraac Ltd.

BSE: 507753 Sector: Industrials
NSE: SREERAYALK ISIN Code: INE284B01028
BSE 00:00 | 20 Feb 21.40 0.75
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NSE 05:30 | 01 Jan TGV Sraac Ltd
OPEN 20.40
PREVIOUS CLOSE 20.65
VOLUME 50182
52-Week high 44.70
52-Week low 19.10
P/E 2.55
Mkt Cap.(Rs cr) 207
Buy Price 21.05
Buy Qty 100.00
Sell Price 21.55
Sell Qty 500.00
OPEN 20.40
CLOSE 20.65
VOLUME 50182
52-Week high 44.70
52-Week low 19.10
P/E 2.55
Mkt Cap.(Rs cr) 207
Buy Price 21.05
Buy Qty 100.00
Sell Price 21.55
Sell Qty 500.00

TGV Sraac Ltd. (SREERAYALK) - Auditors Report

Company auditors report

To

The Members of

TGV SRAAC LIMITED

(formerly known as Sree Rayalaseema Alkalies and Allied Chemicals Limited)

Report on the Audit of Financial Statements

Opinion

We have audited the financial statements of TGV SRAAC Ltd(formerly known as Sree Rayalaseema Alkalies and Allied Chemicals Limited)(theCompany) which comprise the balance sheet as at 31st March 2019 the statement of profit and loss(including Other Comprehensive Income) statement of changes in equity and statement of cash flows for the year then ended and notes to the financial statements including a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us the aforesaid financial statements give the information required by the Companies Act 2013(Act) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at March 31 2019 and its profit total comprehensive income the 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) specified under section 143(10) ofthe Act. Our responsibilities under those Standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules there under and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

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

Key audit mattersHow the matter was addressed in our audit
Revenue recognition We reviewed the Company's implementation of Ind AS 115 including recognition of the effect on opening equity and changes to procedures accounting guidelines disclosures and systems to support correct revenue recognition. We reviewed and discussed the accounting policy including the key accounting estimates and judgements made by management.
The new accounting standard Ind AS 115 Revenue from Contracts with the Customers has been adopted by the Company from 1st April 2018.
Revenue from sale of goods is recognized when control of the products being sold is transferred to a customer and when there are no longer any unfulfilled obligations.
The recognition of revenue involves significant judgement and estimates made by the management including identification of distinct performance obligations determination of transaction price basis for measurement of revenue over a period.  We tested the relevant internal controls used to ensure the completeness accuracy and timing of revenue recognised.
There is risk of revenue being overstated and also short or excess provisioning of discounts and rebates. We read a sample of contracts to assess whether the method for recognition of revenue was relevant and consistent with Ind AS 115 and had been applied consistently. We focused on contract classification allocation of income and cost to the individual performance obligations and timing of transfer of control.
Key audit mattersHow the matter was addressed in our audit
Past experience is used to estimate the provision for discounts and rebates. We evaluated the significant judgements and estimates made by management in applying accounting policy to sample of contracts and we obtained evidence to support them including contractual agreements delivery records. We also considered the historical out turns of estimates used in prior periods.
Revenue is only recognised to the extent that it is highly probable asignificant reversal will not occur.
Refer note 37 and note 2(Q) of the financial statements. We applied Computer Assisted Audit Techniques to establish whether any revenue has been recognised where no corresponding accounts receivable or cash has been recorded in the general ledger.
Provisions for contingent liabilities We evaluated the design of and tested key controls in respect of litigation and regulatory procedures which we found to be satisfactory for the purposes of our audit.
The Company faces a number of legal and regulatory proceedings. The determination of the provision and/or the level of disclosure required involves a high degree of judgement resulting in provisions and contingent liabilities being considered as a key audit matter.
Our procedures included the following:
 We read the summary of litigation matters provided by the Company's legal team and discussed each of the material cases noted in the report to determine the Company's assessment of the likelihood and magnitude of any liability that may arise.
Refer note 27 of the financial statements. We read where applicable external legal or regulatory advice sought by the Company and reviewed related correspondence.

Other Information

The Company's management and Board of Directors are responsible for the other information. The other information comprises the information included in the Company's annual report but does not include the financial statements and our auditor's report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to read the other information and in doing so consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If based on the work we have performed we conclude that there is a material misstatement of this other information we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and those charged with governance for the financial statements

The Company's Board of Directors are responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these financial statements that give a true and fair view of the financial position financial performance including other comprehensive income cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India including the accounting Standards specified under section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection and application of appropriate application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records relevant to the preparation and presentation of the financial statement that give a true and fair view and are free from material misstatement whether due to fraud or error.

In preparing the financial statements the Board of Director is responsible for assessing the Company's ability to continue as a going concern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operationsor has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing the company's financial reporting process.

Auditor's Responsibilities for the Audit of Financial Statement

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement whether due to fraud or error and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if individually or in the aggregate they could reasonably be expected to influence the economic decisions of users taken on the basis of these Ind AS financial statements.

As part of an audit in accordance with SAs we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

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

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

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

 Conclude on the appropriateness of management's use of the going concern basis of accounting and based on the audit evidence obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists we are required to draw attention in our auditor's report to the related disclosures in the 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's report. However future events or conditions may cause the Company to cease to continue as a going concern.

 Evaluate the overall presentation structure and content of the financial statements including the disclosures and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding among other matters the planned scope and timing of the audit and significant audit findings including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when in extremely rare circumstances we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be 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 of the Act we give in the Annexure A a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by section 143(3) of the Act based on our audit we report that:

a) we have sought and obtained all the information and explanations which to 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 the Company so far as it appears from our examination of those books;

c) the Balance Sheet the Statement of Profit and Loss including Other Comprehensive IncomeStatement of Changes in Equity and the Statement of Cash Flow dealt with by this report are in agreement with the books of account;

d) in our opinion the aforesaid financial statements comply with the Indian Accounting Standards prescribed under section 133 of the Act;

e) on the basis of the written representations received from the directors of the Company as onMarch 31 2019 taken on record by the Board of Directors none of the directors is disqualified as on March 31 2019 from being appointed as a director in terms of Section 164(2) of the Act;

 f) with respect to the adequacy of the internal financial controls with reference to financial statements of the Company and the operating effectiveness of such controls refer to our separate report in AnnexureB. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company's internal financial controls with reference to financial statements;

g) with respect to the other matters to be included in the Auditor's report in accordance with the requirements of section 197(16) of the Act as amended: In our opinion and to the best of our information and according to the explanations given to us the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act. The Ministry of Corporate Affairs has not prescribed other details under section 197(16) which are required to be commented upon by us.

h) with respect to the other matters to be included in the Auditor's Report in accordance with Rule11 of the Companies (Audit and Auditors) Rules 2014 as amended in our opinion and to the best of our information and according to the explanations given to us:

i. the Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 27 to the Ind AS financial statements;

ii. the Company did not have any long-term contracts including derivative contracts; as such there were no material foreseeable losses thereon;

iii. there are no amounts which are required to be transferred to the Investor Education and Protection Fund;therefore delay in transferring such sums does not arise.

for K S RAO & Co.
Chartered Accountants
Firm's Regn. No. 003109S
Sd/-
P. GOVARDHANA REDDY
Place : HyderabadPartner
Date : 15th May 2019Membership No.029193

ANNEXURE A TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 1 under `Report on Other Legal and Regulatory Requirements' section of our report of even date) Statement on the Companies (Auditor's Report) Order 2016

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of our auditwe report that: i) in respect of the Company's fixed assets:

a) the Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets;

b) the Company has a program of verification to cover all the items of fixed assets in a phased manner which in our opinion is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the program certain fixed assets were physically verified by the management during the year. According to the information and explanations given to us no material discrepancies were noticed on such verification;

c) according to the information and explanations given to us and on the basis of our examination of the records of the Company the title deeds of all immovable properties are held in the name of the Company except the title to the property of 12.17 acres of land situated in Bellary amounting to Rs. 15.29 Lakhs acquired by the Company from Karnataka Industrial Area Development Board (KIADB) is in the process of being transferred in the Company's name.

ii) in respect of Company's inventory: the physical verification of inventory has been conducted at reasonable intervals by the management during the year and no material discrepancies were noticed on physical verification and the small discrepancies if any have been properly dealt with in the books of account;

iii) according to the information and explanations given to us the Company has not granted any loans secured or unsecured to companies firms Limited Liability Partnerships or other parties covered in the Register maintained under Section 189 of the Act;

iv) in our opinion and according to the information and explanations given to us the Company has complied with the provisions of Sections 185 and 186 of the Act in respect of grant of loans making investments and providing guarantees and securities as applicable;

v) the Company has not accepted deposits from public during the year and does not have any unclaimed deposits as at March 31 2019 and therefore the provisions of the clause 3 (v) of the Order are not applicable to the Company;

vi) the maintenance of cost records has been specified by the Central Government under Section 148(1) of the Act. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules 2014 as prescribed by the Central Government under sub-section (1) of Section 148 of theAct and are of the opinion that prima facie the prescribed cost records have been made and maintained.

We have however not made a detailed examination of the cost records with a view to determine whether they are accurate or complete;

vii) according to the information and explanations given to us in respect of statutory dues:

a. the Company has generally been regular in depositing undisputed statutory dues including Provident Fund Employees' State Insurance Income-tax Goods and Service Tax (GST) Customs Duty Cess and other material statutory as applicable with the appropriate authorities;

b. there were no undisputed amounts payable in respect of Provident Fund Employees' State Insurance Income-tax Goods and Service Tax (GST) Customs Duty Cess and other material statutory dues in arrears as at March 31 2019 for a period of more than six months from the date they became payable;

c. details of dues of Excise Duty Customes Entry Tax Provident Fund Electricity Charges Sales Tax Value Added Tax which have not been deposited as at March 31 2019 on account of dispute are given below:

Name of the StatuteNature of dues

Amount (Rs. in lakhs)

Period to which the amount relatesForum where dispute is pending
The Central Excise Act1944CENVAT Credit disallowed on input services

9.82

Mar 2007 toFeb 2008Commissioner of Central Excise Tirupathi

9.23*

Mar 2008 to Sept. 2015
The Central Excise Act1944CENVAT Credit disallowed on input services

8.40

April 2016 to June 2017Commissioner of Central Excise (Appeals) Guntur
The Central Excise Act1944Charges levied on delayed payments of excise duty

190.48

November 2016 to June 2017High Court of Andhra Pradesh Amaravati
AP VAT Act 2005Interest on delay payment of deferred sales tax

154.29*

2005-06 & 2006-07High Court of Andhra Pradesh Amaravati
Karnataka Tax on entry of goods Act 1979Entry tax on purchase of machinery items and interest

1.78*

2006-07Dy. Commissioner of Commercial Taxes Bellary
2007-08
2009-10
Andhra Pradesh entry tax actEntry tax on purchase of

85.02

2014-15High Court of Andhra
2001electrical equipments2015-16Pradesh Amaravati
2016-17
2017-18
Indian Customs Act 1962Customs Duty claimed on

1036.14*

2000-2006Commissioner of customs
raw materialsChennai
Indian Customs Act 1962Finalisation of assessed bill

7.05

2006-07Dy. Commissioner of
of entries pertaining toCustoms Alibag division
KCLRaigad Maharastra
Indian Customs Act 1962Anti -dumping duty on import of Barium

32.69

2010-11Joint commissioner of
Customs Chennai
Carbonate
Indian Customs Act 1962Differential duty on classification of goods disputed (Lauric Acid)

9.63

2014-15CustomsExcise and Service
Tax Appellate Tribunal
Chennai

10.51

2014-15Assistant Commissioner
Customs Chennai
Employees Provident Fund and Miscellaneous Provisions Act 1952PF delay charges/damages for belated payments

15.34

May 2002 to DecEmployees Provident Fund
2007Appellate Tribunal
NewDelhi.
The Electricity Act 2003Fuel Surcharge

871.93

2008-09Supreme Court of India
Adjustment (FSA) charges

651.87

2009-10
The Electricity Act 2003Interest on amounts pending in court cases

648.11

From 2014-15 toHigh Court of Andhra
March 2018Pradesh Amaravati
AmountPeriod to
Forum where dispute is
Name of the StatuteNature of dues(Rs. inwhich the
pending
lakhs)amount relates
The Electricity Act 2003Electricity Duty Demand551.44July 2003- MaySupreme Court of India Delhi
2013
The Electricity Act2003Fuel Surcharge1591.38May & June 2010High Court of Andhra
Adjustment (FSA) chargesand October2011PradeshAmaravati
to March2012
Levy of interest by598.17
APCPDCL on FSA charges
The Electricity Act2003Wheeling charges on wind generation24.21August 2002Supreme court of India

* Net of amounts paid under protest.

viii) in our opinion and according to the information and explanations given to us the Company has not defaulted in the repayment of loans or borrowings to financial institutions banks and government. The Company has not issued any debentures;

ix) in our opinion and according to the information and explanations given to us money raised by way of term loans have been applied by the Company during the year for the purposes for which they were raised. The Company has not raised moneys by way of public offer;

x) to the best of our knowledge and according to the information and explanations given to us no fraud by the Company and no fraud on the Company by its officers or employees has been noticed or reported during the year;

xi) in our opinion and according to the information and explanations given to us and based on our examination of the records the Company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act;

xii) the Company is not a Nidhi Company and hence reporting under clause (xii) of the CARO 2016 Order is not applicable;

xiii) in our opinion and according to the information and explanations given to us the Company is in compliance with Section 188 and 177 of the Act where applicable for all transactions with the related parties and the details of related party transactions have been disclosed in the financial statements etc as required by the applicable accounting standards;

xiv) in our opinion and according to the information and explanations given to us and based on our examination of the records of the Company the Company has not made any preferential allotment or private placement of fully or partly convertible debentures during the year under review.The company has made preferential allotment of Share Warrants and allotment of shares by conversion of warrants during the year under review. The requirements of section 42 of the Act have been complied with and the amounts raised have been used for the purpose for which the funds were raised;

xv) in our opinion and according to the information and explanations given to us during the year the Company has not entered into any non-cash transactions with its directors or persons connected with its directors and hence provisions of Section 192 of the Act are not applicable;

xvi) the Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act 1934.

for K S RAO & Co.
Chartered Accountants
Firm's Regn. No. 003109S
Sd/-
P. GOVARDHANA REDDY
Place : HyderabadPartner
Date : 15th May 2019Membership No.029193

ANNEXURE B TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 2 under `Report on Other Legal and Regulatory Requirements' section of our report of even date)

Report on the Internal Financial Controls Over Financial Statements under Clause (i) of Subsection 3 of Section 143 of the Companies Act 2013 (the Act)

We have audited the internal financial controls over financial statements of TGV SRAAC Ltd(formerly known as Sree Rayalaseema Alkalies and Allied Chemicals Limited) (theCompany) as of March 31 2019 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Board of Directors of the Company is responsible for establishing and maintaining internal financial controls based on the internal control with reference to financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business the safeguarding of its assets the prevention and detection of frauds and errorsthe accuracy and completeness of the accounting records and the timely preparation of reliable financial information as required under the Act.

Auditor's Responsibility

Our responsibility is to express an opinion on the internal financial controls with reference to financial reporting of the Company based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the Guidance Note) issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section143(10) of the Act to the extent applicable to an audit of internal financial controls.Those Standards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to financial statements was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system with reference to financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements included obtaining an understanding of internal financial controls with reference to financial statements assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor's judgement including the assessment of the risks of material misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion onthe Company's internal financial controls system with reference to financial statements.

Meaning of Internal Financial Controls Over Financial Statements

A company's internal financial control with reference to financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. A company's internal financial control with reference to financial statements includes those policies and procedures that(1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of Ind AS financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3)provide reasonable assurance regarding prevention ortimely detection of unauthorised acquisition useor disposition of the company's assets that could have a material effect on the financial statements.

Limitations of Internal Financial Controls with reference to Financial Statements

Because of the inherent limitations of internal financial controls with reference to financial statements including the possibility of collusion or improper management over ride of controls material misstatements due to error or fraud may occur and not be detected. Also projections of any evaluation of the internal financial controls with reference to financial statements to future periods are subject to the risk that the internal financial control with reference to financial statements may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion to the best of our information and according to the explanations given to us the Company has in all material respects an adequate internal financial controls system with reference to financial statements and such internal financial controls with reference to financial statements were operating effectively as at March 31 2019 based on the internal control with reference to financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

for K S RAO & Co.
Chartered Accountants
Firm's Regn. No. 003109S
Sd/-
P. GOVARDHANA REDDY
Place : HyderabadPartner
Date : 15th May 2019Membership No.029193