You are here » Home » Companies » Company Overview » Tulsyan NEC Ltd

Tulsyan NEC Ltd.

BSE: 513629 Sector: Metals & Mining
NSE: TULSYAN ISIN Code: INE463D01016
BSE 00:00 | 04 Mar Tulsyan NEC Ltd
NSE 05:30 | 01 Jan Tulsyan NEC Ltd
OPEN 15.75
PREVIOUS CLOSE 15.75
VOLUME 100
52-Week high 15.75
52-Week low 0.00
P/E
Mkt Cap.(Rs cr) 24
Buy Price 15.75
Buy Qty 100.00
Sell Price 0.00
Sell Qty 0.00
OPEN 15.75
CLOSE 15.75
VOLUME 100
52-Week high 15.75
52-Week low 0.00
P/E
Mkt Cap.(Rs cr) 24
Buy Price 15.75
Buy Qty 100.00
Sell Price 0.00
Sell Qty 0.00

Tulsyan NEC Ltd. (TULSYAN) - Auditors Report

Company auditors report

To

The Members

TULSYAN NEC LIMITED Chennai

Report on the Audit of the Standalone Ind AS Financial Statements Opinion

We have audited the accompanying standalone Ind AS financial statements of TULSYAN NECLIMITED ("the Company") which comprise theBalanceSheetasat31March2019theStatement Profitand Loss (including OtherComprehensive Income) the Statement of Changes in Equity and the Statement of Cash Flowsfor the year policies and other explanatory information.thenendedandasummaryofthesignificant In our opinion and to the best of our informationand according to the explanations given to us except for the effects of the matterdescribed in the Basis for Qualified Opinion section of our report the aforesaidstandalone financial statements give the information required by the Companies Act 2013("the Act") in the manner so required and give a true and fair view inconformity with the Indian Accounting Standards prescribed under section 133 of the Actread with the Companies (Indian Accounting Standards) Rules 2015 as amended("IndAS") and other accounting principles generally accepted in India of the state ofaffairs of the Company as at March 31 2019 and loss (changes in equity) and its cashflows for the year ended on that date.

Basis for Qualified Opinion

We draw attention to the fact that the company is continuously incurring losses and itsnet worth is totally eroded as on 31/03/2019. During the Financial Year 2015-16 theCompany's loans and liabilities were restructured under the ‘Corporate DebtRestructuring' Scheme. As per the said Scheme the Company's repayment applications weredeferred/ restructured. The banks also provided certain reliefs/ waivers/ sacrifices byreducing the rate of interest. Interest was provided in the books at the lower rates ofinterest. However the bankers had withdrawn the concession with retrospective effect andcharged the interest at original interests. Consequent to withdrawal of concessions fewbanks have debited the account of the company for the differential amount of interest andother concessions given as per the CDR Scheme. The period of withdrawal relate from 1stMay 2014 to the date of debit. The company has sought waiver of the said debits in therestructuring proposal submitted to the Bank which is pending with the bankers. Pendingacceptance of the waivers sought the charges as debited has been recognized as financecharges during the year.

Based on the information and explanation given to us the company is also in theprocess of restructuring its borrowings from banks and finalizing alternative businessplans which are expected to result in profits in the near future. The company's ability tocontinue as a Going Concern is depended upon the successful implementation of the same.The above indicates a significant uncertainty and doubt about the company's ability tocontinue as a Going Concern.

Director General of Goods and Service Tax Intelligence officials conducted anInspection during January 2019 during which the said officials expressed objections inputtax credit of GST amounting to Rs.11.10 crores on purchases of Rs.61.64 crores fromcertain parties. The company has deposited Rs.11.10 crores under protest which has notbeen charged off in the financials as expenditures. To this extent the loss isunderstated.

We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Our responsibilities under those standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India (‘ICAI') togetherwith the ethical requirements that statements under the provisions of the Act and therules thereunder and arerelevanttoourauditofthefinancial we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.

Key Audit Matters.

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters. In addition to the matter described in the Basis of Qualified Opinionsection we have determined the matters described below to be the key audit matters to becommunicated in our report.

S.No Key Audit Matter Auditor's Response
Principal Audit Procedures
Accuracy of recognition measurement presentation and disclosures of revenues and other related balances in view of adoption of Ind AS 115 "Revenue from Contracts with Customers" (new revenue accounting standard) The application of the new revenue accounting standard involves certain key judgements relating to identification of distinct performanceSelected a sample of continuing and new contracts and 1. obligations determination of transaction price of the identified performance obligations the appropriateness of the basis used to measure revenue recognised over a period. Additionally new revenue accounting standard contains disclosures which involves collation of information in respect of disaggregated revenue and periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date. Litigations - Contingencies The Company has ongoing litigations with various authorities and third parties which could have a significant impact on the results if the potential exposures were to materialise. 2 The amounts involved are significant and the application of accounting standards to determine the amount if any to be provided as a liability or disclosed as a contingent liability is inherently subjective. . We assessed the Company's process to identify the impact of adoption of the new revenue accounting standard. Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows: Evaluated the design of internal controls relating to implementation of the new revenue accounting standard. tested the operating effectiveness of the internal control relating to identification of the distinct performance obligations and determination of transaction price. We carried out a combination of procedures involving enquiry and observation re-performance and inspection of evidence in respect of operation of these controls. Tested the relevant information technology systems' access and change management controls relating to contracts and related information used in recording and disclosing revenue in accordance with the new revenue accounting standard. Principal Audit Procedures Our audit approach was a combination of test of internal controls and substantive procedures including: Assessing the appropriateness of the design and implementation of the Company's controls over the assessment of litigations and completeness of disclosures. Supporting documentation are tested for the positions taken by the management after the meetings conducted with legal team..Additionally considering the effect of new information in respect of contingencies as at 1st April 2018 to evaluate whether any change was required in the management's position on these contingencies as at 31.03.2019

Information other than the financial statements and Auditor's Report thereon

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report but does not includethe financial statements and our auditor's report thereon.

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

In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the standalonefinancial statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the state of affairs (financial position) profit orloss (financial and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Ind AS specified under Section 133 of the Act.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the financial statements management is responsible for assessing theCompany's as a going concern disclosing as applicable matters related to going concernand using the going concern basis of accounting unless management either intends toliquidate the Company or to cease operations or has no realistic alternative but to doso.

Those Board of Directors are also responsible for overseeing the Company's financial

Auditor's Responsibilities for the Audit of the financial

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance withStandards on Auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial As part of an audit in accordance withStandards on Auditing we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statementswhether design and perform audit procedures responsive to those risks and obtain auditevidence that is sufficient and appropriate to provide a basis for our opinion. The riskof not detecting a material misstatement resulting from fraud is higher than for oneresulting from error as fraud may involve collusion forgery intentional omissionsmisrepresentations or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of theAct we are also responsible for explaining our opinion on whether the Company hasadequate internal financial controls system in place and effectiveness of such controls.

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

Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe 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'sreport.

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

Materiality is the magnitude of misstatements in the Financial Statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.

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

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

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits

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 Section 143(11) of the Act we givein the Annexure A a statement on the matters specified in paragraphs 3 and 4 of theOrder.

2. As required by Section 143 (3) of the Act based on our audit we report that: a) wehave sought and obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purpose of our audit; b) In our opinionproper books of account as required by law have been kept by the Company so far as itappears from our examination of those books; c) The standalone financial statements dealtwith by this report are in agreement with the books of account; d) The balance sheet thestatement of profit and loss including other comprehensive income statement of changes inequity and the statement of cash flow dealt with by this report are in agreement with thebooks of accounts e) on the basis of the written representations received from thedirectors and taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2019 from being appointed as a director in terms of Section164(2) of the Act; f) With respect to the adequacy of the internal financials controlsover financial reporting of the company and the operating effectiveness of such controlsrefer to our separate report in Annexure "B". Our report expresses andunmodified opinion on the adequacy and operating effectiveness of the company's internalfinancial controls over financial reporting; and g) With respect to the other matters tobe 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 explanationsgiven to us the remuneration paid by the company to its directors during the year is inaccordance with provisions of Section 197 of the Act. h) With respect to the other mattersto be included in the Auditor's Report in accordance with rule 11 of the Companies (Auditand Auditors) Rules 2014 (as amended) in our opinion and to the best of our informationand according to the explanations given to us: i. The Company has disclosed theimpactofpendinglitigations financialposition in the standalone its financialfinancial ii. The Company has made provision as required under the applicable law or IndAS for material foreseeable losses if any on long-term contracts including derivativecontracts; iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company during the yearended 31 March 2019;

For M/s CNGSN & ASSOCIATES LLP

CHARTERED ACCOUNTANTS Firm Registration No: 004915S/S200036

K Parathasarathy

Partner

Membership No: 018394

Place : Chennai Date : 25/05/2019

Annexure -A to the Independent Auditors' Report

Referred to in paragraph 1 under the heading ‘Report on Other Legal &Regulatory Requirement' of our report of even date to the financial statements of theCompany for the year ended March 31 2019:

1) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets; (b) We are informed that the companyhas formulated a programme for physical verification of all fixed assets over a period ofthree year which in our opinion is reasonable considering the size of the company and thenature of its assets. Accordingly the fixed assets have been physically verified by themanagement during the year and no material discrepancies were noticed on suchverification.

(c) The title deeds of immovable properties are held in the name of the company.

2) (a) The management has conducted the physical verification of inventory atreasonable intervals.

(b) The discrepancies noticed on physical verification of the inventory as compared tobooks records which has been properly dealt with in the books of account were notmaterial.

3) According to the information and explanation given to us the company has notgranted any loan secured or unsecured to companies firms limited liability partnershipor other parties covered in the register required to be maintained under section 189 ofthe Companies Act 2013. Accordingly clause (iii) of the order is not applicable for theyear under consideration.

4) In our opinion and according to the information and explanations given to us thecompany has complied with the provisions of section 185 and I86 of the Companies Act 2013In respect of loans investments guarantees and security.

5) According to the information and explanations given to us the Company has notaccepted any deposits within the meaning of Sections 73 to 76 or any other relevantprovisions of the Companies Act 2013 and the rules framed there under. Accordinglyreporting under clause 3 (v) of the Order does not arise.

6) We have reviewed the cost records maintained by the company as prescribed by thecentral government under section 148(1) of the companies act 2013 and are of the opinionthat prima facie the prescribed cost records made and maintain. We have however not madea detailed examination of the records with a view to determine whether they are accurateor complete.

7) (a) According to information and explanations given to us and on the basis of ourexamination of the books of account and records the Company has been generally regularin depositing undisputed statutory dues including Provident Fund Employees StateInsurance Income-Tax Sales tax Service Tax Duty of Customs Duty of Excise Valueadded Tax Cess and any other statutory dues with the appropriate authorities. Accordingto the information and explanations given to us there are no arrears of statutory dueswhich are outstanding as at 31st March 2019 for a period of more than six months from thedate they become payable.

(b) According to the records of the company and the information and explanation givento us the details of disputed Excise Value Added Tax and Income Tax not deposited are asfollows:

Nature of Dues Amount in Lacs. Period to which it relates Forum where the Dispute is pending
Excise 1.02 2003-04 CESTAT
Excise 1737.70 Upto June 2017 CESTAT
VAT 0.87 2004-09 Hon'ble High Court Madras
VAT 506.58 2013-14 Commercial Tax Department
VAT 18.82 2012-13 Commercial Tax Department
VAT 14.22 2013-14 Commercial Tax Department

8) According to information and explanation given to us the company has defaulted incertain repayments of principal amount to banks and financial institution.

Period Canara Syndicate SBI Andhra IOB SVC Total for Cumulative No of Days
Bank Bank Bank the quarter Total
30/06/2016 253 221 51 53 127 0 705 705 1004
30/09/2016 263 193 77 84 127 0 744 1448 912
31/12/2016 263 193 77 84 127 0 744 2192 820
31/03/2017 263 193 77 84 127 0 744 2935 730
30/06/2017 435 303 103 166 234 0 1240 4175 639
30/09/2017 435 303 103 166 234 0 1240 5416 547
31/12/2017 435 303 103 166 234 0 1240 6656 455
31/03/2018 435 303 103 166 234 0 1240 7896 365
30/06/2018 584 308 103 265 359 0 1618 9514 274
30/09/2018 584 308 103 265 359 0 1618 11133 182
31/12/2018 584 308 103 265 359 0 1618 12751 90
31/03/2019 584 308 103 265 359 43 1661 14413 0

9) The Company has not raised any money by way of initial public offer or furtherpublic offer (including debt Instruments) during the year. In our opinion and according tothe information and explanations given to us on an overall basis the term loans havebeen applied for the purposes for which they were obtained.

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 anyinstances of fraud by the Company or any instances of frauds on the Company by itsofficers or employees noticed or reported during the year nor we have been informed ofsuch cases by the management..

11) According to the information and explanations given to us and the records of theCompany examined by us in our opinion managerial remuneration has been paid / providedfor in accordance with the requisite approvals mandated by the provisions of Section 197read with Schedule V to the Companies Act 2013.. 12) According to the information andexplanations given to us the Company is not a Nidhi Company. Accordingly reporting underclause 3(xii) of the Order does not arise.

13) According to the information and explanations given to us and the records of theCompany examined by us in our opinion all transactions with the related parties are incompliance with Sections 177 and 188 of the Companies Act 2013 where applicable and thedetails have been disclosed in the Financial Statements as required by the applicableaccounting standards14) In our opinion all transactions with the related parties are incompliance with section 177 and 188 of Companies Act 2013 and the details have beendisclosed in the Financial Statements as required by the applicable accounting standards.

14) According to the information and explanations given to us the Company has not madeany preferential allotment or private placement of shares or fully or partly convertibledebentures during the year under review. Accordingly reporting under clause 3 (xiv) ofthe Order does not arise.

15) According to the information and explanations given to us the Company has notentered into non-cash transactions with directors or persons connected with the directorsduring the year. Accordingly reporting under clause 3 (xv) of the Order does not arise.

16) 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.Accordingly reporting under clause 3 (xvi) of the Order does not arise

For M/s CNGSN & ASSOCIATES LLP

CHARTERED ACCOUNTANTS Firm Registration No: 004915S/S200036

K Parathasarathy

Partner

Membership No: 018394

Place : Chennai Date : 25/05/2019

Annexure B to the Independent Auditor's Report

(Referred to in paragraph 2(f) under ‘Report on Other Legal and Regulatoryrequirements' section of our report to the Members of Tulsyan NEC Limited of even date)

Report on the Internal Financial Controls over Financial Reporting under Clause (i) ofSub – Section 3 of Section 143 of the Companies Act 2013 ("the Act")

Management's Responsibility for Internal financial Controls

The Company's Board of Directors is responsible for establishing and maintaininginternal financial 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 Reporting (the"Guidance Note") issued by the Institute of Chartered Accountants of India(ICAI). These responsibilities include the design implementation andmaintenanceofadequateinternalfinancialcontrols that were operating effectively forensuring the orderly and efficient conduct of the Company's business including adherenceto Company's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Internal Financial Controls overFinancial Reporting based on our audit. We conducted our audit in accordance with theGuidance Note on Audit of Internal Financial Controls over Financial Reporting (the"Guidance Note") issued by the Institute of Chartered Accountants of India andthe Standards on Auditing prescribed under Section 143(10) of the Act to the extentapplicable to an audit of Internal Financial Controls. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate Internal Financial Controls overFinancial Reporting were established and maintained and if such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe Internal Financial Controls 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 over FinancialReporting.

Meaning of Internal financial Controls over financial Reporting

A Company's Internal Financial Controls 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 Controls over FinancialReporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accuratelyandfairlyreflectthe 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

1. 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 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.

Opinion

In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects adequate internal financial controlsover financial reporting and such internal financial controls over financial reportingwere operating effectively as at 31 March 2019 based on the internal control overfinancial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.

For M/s CNGSN & ASSOCIATES LLP

CHARTERED ACCOUNTANTS Firm Registration No: 004915S/S200036

K Parathasarathy

Partner

Membership No: 018394

Place : Chennai Date : 25/05/2019

Tulsyan NEC Limited