TO THE MEMBERS OF EURO CERAMICS LIMITED
Report on the Standalone Indian Accounting Standards (Ind AS) Financial Statements
1. We have audited the accompanying standalone Ind AS financial statements of Euro
Ceramics Limited ("the Company"), which comprise the Balance Sheet as at
March 31, 2018, the Statement of Profit and Loss (including Other Comprehensive Income),
the Statement of Cash Flows and the Statement of Changes in Equity for the year then ended
and a summary of the significant accounting policies and other explanatory information
(herein after referred to as "Standalone Ind AS Financial Statements").
Managements Responsibility for the Standalone Ind AS Financial Statements
2. The Companys Board of Directors is responsible for the matters stated in Section
134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of
these standalone Ind AS financial statements to 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 Indian Accounting Standards ("Ind AS")
specified in the Companies (Indian Accounting Standards) Rules, 2015 (as amended) 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 Company
and for preventing and detecting frauds and other irregularities; selection and
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 standalone Ind AS financial statements that give a true and fair view and are free
from material misstatement, whether due to fraud or error.
Auditors Responsibility
3. Our responsibility is to express an opinion on these standalone Ind AS financial
statements based on our audit.
4. We have taken into account the provisions of the Act and the Rules made thereunder
including the accounting and auditing standards and matters which are required to be
included in the audit report under the provisions of the Act and the Rules made
thereunder.
5. We conducted our audit of the standalone Ind AS financial statements in accordance
with the Standards on Auditing specified under Section 143(10) of the Act and other
applicable authoritative pronouncements issued by the Institute of Chartered Accountants
of India. Those Standards and pronouncements require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether
the standalone Ind AS financial statements are free from material misstatement.
6. An audit involves performing procedures to obtain audit evidence about the amounts
and the disclosures in the standalone Ind AS financial statements. The procedures selected
depend on the auditors judgment, including the assessment of the risks of material
misstatement of the standalone Ind AS financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal financial control
relevant to the Companys preparation of the standalone Ind AS financial statements that
give a true and fair view, in order to design audit procedures that are appropriate in the
circumstances. An audit also includes evaluating the appropriateness of the accounting
policies used and the reasonableness of the accounting estimates made by the Companys
Directors, as well as evaluating the overall presentation of the standalone Ind AS
financial statements.
7. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion on the standalone Ind AS financial statements.
Basis of Qualified Opinion
Our audit opinion is qualified for the following matters:
(a) The Companys current liabilities exceeds its current assets and net worth of the
Company has been fully eroded, these events indicate a material uncertainty that casts a
significant doubt on the Companys ability to continue as a going concern and therefore it
may be unable to realize its assets and discharge its liabilities in the normal course of
business. The financial results do not disclose the fact that the fundamental accounting
assumption of going concern has not been followed.
(b) We draw attention towards the fact that the Companys financial
facilities/arrangements including Term Loans, Working Capital Facilities and Non Fund
Based Credit Facilities have expired and the accounts with the Banks have turned into Non
Performing Assets.
Some of the bank lenders have initiated legal proceedings against the Company for
recovery of their respective debts at the Debt Recovery Tribunal and have taken symbolic
possession of the securities u/s. 13(4) of the SARFAESI Act, 2002. However the Company has
been able to renegotiate with the secured lenders and arrive at an amicable settlement of
its debts. The Company has made the settlement of its total debt outstanding with the
secured lenders. Accordingly some of the lenders have been settled completely on one time
settlement basis and others have agreed for deferred payment along with some upfront
payment based on their respective terms of settlement. In view of the above settlement,
the Company has not provided the interest on the outstanding dues payable as per the
settlement terms on the outstanding agreed amount of settlement amounting to Rs. 1,119
Lakhs for the year ended March 31, 2018 and the interest amount not provided cumulatively
from the date of settlement upto March 31, 2018 was 2,172 Lakhs. Had the same
been accounted for, the net loss (after tax) would have decreased and current liabilities
for the year ended March 31, 2018 would have increased by that amount. In addition to
this, the Company has been continuously incurring substantial losses since past few years
and as on March 31, 2018, the Companys current liabilities exceed its current assets by
25,082.40 Lakhs. Further, the net-worth of the Company has fully eroded and the Company
had also filed registration u/s. 15(1) of the erstwhile Sick Industrial Companies (Special
Provisions) Act, 1985, before the erstwhile Honble Board for Industrial & Financial
Reconstruction.
(c) We draw attention towards the fact that the Company has not provided for impairment
or diminishing value of its assets/investment as per Ind AS 36 Impairment of Assets as
notified under Section 133 of the Companies Act, 2013. The effect of such Impairment or
diminishing value has not been quantified by the management and hence the same is not
ascertainable.
(d) We draw attention to the fact that financial statements are subject to receipt of
confirmation of balances from many of the debtors, loans & advances, investments,
banks, sundry creditors and other liabilities. Pending receipt of confirmation of these
balances and consequential reconciliations / adjustments, if any, the resultant impact on
the financial statements is not ascertainable.
(e) We draw attention to Note No. 34(d) of the Standalone Ind AS financial statement
which states that, the Company had imported various Capital Goods and Spares and
Consumables for the Capital Goods under the Export Promotion Capital Goods Scheme (EPCG),
of the Government of India, through various licenses, at concessional rates of Custom Duty
on an undertaking to fulfil quantified exports within a period of eight years from the
date of respective licenses.
The Custom Duties so saved amounted to Rs. 30,76,45,374/- and the corresponding Export
obligation to be fulfilled amounted to 2,46,11,62,991/-, however as on March 31,
2018, the Export obligation yet to be fulfilled amounted to Rs. 169,19,04,058/-. The
stipulated period of 8 years to fulfill Export obligation has already expired and the
company is required to pay the said saved Custom Duty together with interest @ 15% p.a.
but the same has not been provided in books of accounts by the Company and the final
liability is presently unascertainable.
(f) We draw attention to the fact that, as required under Section 203 of the Act the
Company is yet to appoint a Company Secretary and the Company is not in compliance with
Regulation 6 of LODR which requires Company Secretary to be appointed as Compliance
Officer.
(g) We draw attention towards the fact that, in respect of deposits accepted by the
Company before the commencement of this Act, within the meaning of section 74 & 75 of
the Act and the Rules framed there under, the principal amount of such deposits and
interest due thereon remained unpaid even after expiry of one year from such commencement
and the Company has not filed a statement within a period of three months from such
commencement or from the date on which such payments, are due, with the Registrar details
as prescribed u/s.74(1)(a).
(h) We draw attention towards overdue receivables aggregating to Rs. 170 Lakhs as on
March 31, 2018, towards purchase of goods included under "Trade Receivables"
owed to the Company by its Foreign Customers due for more than 6 months as on March 31,
2018. These balances have not been settled till March 31, 2018. The Company is yet to make
an application to the authorized dealer or Reserve Bank of India (RBI) for overdue
receivable balances beyond the prescribed time limits in accordance with Foreign Exchange
Management Act (FEMA). Any penalties that may be levied by RBI are presently not known and
not given effect to in the IND AS financial statements.
(i) The Company has interest free borrowings, classified under Non-Current Financial
Liabilities and Current Financial Liabilities which are borrowed from various related
parties and other lenders, the repayment terms of which have not been agreed between the
Company and the lenders. The Company has considered the amount borrowed to be the fair
value and disclosed the same in the financial statements. However in the absence of any
repayment terms and interest rate, the amount disclosed may not be the fair value, in
accordance with the provisions of Ind AS 109 Financial Instrument and Ind AS 113 Fair
Value Measurement. The effect of such treatment has not been quantified by the management
and hence the same is not ascertainable.
(j) We draw attention to the facts that the non-ascertainment of complete particulars
of dues to Micro, Small and Medium enterprises, if any under MSMED Act, 2006, and
provisions towards interest, if any, is not ascertained at this stage which is not in
conformity with Ind AS 37-Provision, Contingent Liabilities and Contingent Assets.
(k) We draw attention to Note No. 52 of the Standalone Ind AS financial statement which
states that, the Companys non-current investments as at March 31, 2018 include
investments aggregating Rs. 143 Lakhs in two of its subsidiaries (of which Rs. 142.50
Lakhs has been provided); and loans as at that date include dues from such subsidiaries
aggregating 7,608.46 Lakhs (of which Rs. 3,410 Lakhs has been provided), net
amount being considered good and recoverable by the management considering the factors
stated in the aforesaid note. Also, attention is drawn toward Note 34(b), which states
that the Company has given guarantee for loans taken by Subsidiary Company from bank and
the terms and conditions of the same are not prejudicial to the interest of the Company,
as per the management. However, these subsidiaries either have accumulated losses and
their consolidated net worth is fully eroded or have no transactions. Further, these
subsidiaries are facing liquidity constraints due to which they may not be able to realize
projections made as per their respective business plans. In the absence of sufficient
appropriate evidence, we are unable to comment upon the carrying value of these
non-current investments and recoverability of the aforesaid dues and the consequential
impact, if any, on the accompanying standalone financial statements.
Opinion
8. In our opinion and to the best of our information and according to the explanations
given to us, except for the matters illustrated and described in the Basis of
Qualified Opinion the aforesaid standalone Ind AS financial statements give the
information required by the Act in the manner so required and give a true and fair view in
conformity with the accounting principles generally accepted in India including the Ind
AS, of the state of affairs of the Company as at March 31, 2018, and its total
comprehensive income (comprising of loss and other comprehensive income), its cash flows
and the changes in equity for the year ended on that date.
Other Matter
9. The comparative financial information of the Company for the year ended March 31,
2017 and the transition date opening balance sheet as at April 1, 2016 included in these
standalone Ind AS financial statements, are based on the previously issued statutory
financial statements for the years ended March 31, 2017 and March 31, 2016 prepared in
accordance with the Companies (Accounting Standards) Rules, 2006 (as amended) which were
audited by the predecessor auditor who expressed a modified opinion vide reports dated May
30, 2017 and May 30, 2016 respectively. The adjustments to those financial statements for
the differences in accounting principles adopted by the Company on transition to the Ind
AS have been audited by us.
Report on Other Legal and Regulatory Requirements
10. As required by the Companies (Auditors Report) Order, 2016, issued by the Central
Government of India in terms of sub-section (11) of Section 143 of the Act ("the
Order"), and on the basis of such checks of the books and records of the Company as
we considered appropriate and according to the information and explanations given to us,
we give in the "Annexure A" a statement on the matters specified in paragraphs 3
and 4 of the Order.
11. As required by Section 143 (3) of the Act, we report that:
(a) We have sought and except for the possible effect of the matter described in the
Basis of Qualified Opinion paragraph above, 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) Except for the possible effect of the matter described in the Basis of Qualified
Opinion paragraph above, in our opinion, proper books of account as required by law have
been kept by the Company so far as appears from our examination of those books;
(c) The Balance Sheet, the Statement of Profit and Loss (including other comprehensive
income), the Statement of Cash Flows and the Statement of Changes in Equity dealt with by
this Report are in agreement with the books of account;
(d) Except for the possible effect of the matter described in the Basis of Qualified
Opinion paragraph above, in our opinion, the aforesaid standalone Ind AS financial
statements comply with the Indian Accounting Standards specified under section 133 of the
Act read with Rules issued thereunder;
(e) The matters described in the Basis of Qualified Opinion paragraph above, in our
opinion may have an adverse effect on the functioning of the Company;
(f) On the basis of the written representations received from the directors as on March
31, 2018 taken on record by the Board of Directors, none of the directors is disqualified
as on March 31, 2018 from being appointed as a director in terms of Section 164 (2) of the
Act;
(g) With respect to the adequacy of the internal financial controls over financial
reporting of the Company and the operating effectiveness of such controls, refer to our
separate Report in "Annexure B"; and
(h) With respect to the other matters to be included in the Auditors Report in
accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion
and to the best of our knowledge and belief and according to the information and
explanations given to us:
i. The Company has disclosed the impact, of pending litigations as at March 31, 2018 on
its financial position in its standalone Ind AS financial statements Refer Note 34;
ii. The Company did not have any long-term contracts including derivative contracts as
at March 31, 2018; and
iii. There has been no delay in transferring amounts, required to be transferred, to
the Investor Education and Protection Fund by the Company during the year ended March 31,
2018; and
iv. The disclosure requirements relating to holdings as well as dealings in specified
bank notes were applicable for the period from November 8, 2016 to December 30, 2016 which
is not relevant to these standalone financial statements. Hence, reporting under this
clause is not applicable.
| For Rasesh Shah & Associates |
| Chartered Accountants |
| Firm Registration Number: 108671W |
| CA Mehul Shah |
| Partner |
| Membership Number: 137148 |
| Place : Mumbai |
| Date : May 29, 2018 |
"Annexure A" to the Independent Auditors Report
The Annexure A referred to in our Independent Auditors Report to the members of the
Company on the standalone Ind AS financial statements of Euro Ceramics Limited for
the year ended March 31, 2018, we report that:
I. (a) The Company has maintained proper records showing full particulars, including
quantitative details and situation of its fixed assets.
(b) The property, plant and equipment covering significant value were physically
verified during the year by the management at such intervals which in our opinion,
provides for the physical verification of all the property, plant and equipment at
reasonable intervals having regard to the size of the Company and nature of its business.
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, the title deeds of
immovable properties, as disclosed in Note 3 to the standalone Ind AS financial
statements, are held in the name of the Company, except for the following:
| Sr. No. |
Particulars |
Gross Block as at March 31, 2018 |
Net Block as at March 31, 2018 |
Remark |
|
|
(Amount in Rs.) |
(Amount in Rs.) |
|
| (1) |
2.17 Acres |
0.95 Lakhs |
0.95 Lakhs |
Registration with Government Authorities pending |
| (2) |
48.24 Acres |
34.89 Lakhs |
34.89 Lakhs |
Yet to be converted into Non- Agricultural from Agricultural purpose or there are
discrepancies in respect of measurement as compared to Government Records |
ii. In our opinion, the management has conducted physical verification of inventory at
reasonable intervals during the year and no material discrepancies between physical
inventory and book records were noticed on physical verification.
iii. According to the information and explanation given to us, the Company has granted
unsecured loans to party covered in the register maintained under Section 189 of the
Companies Act.
(a) In our opinion and according to the information and explanations given to us, the
terms and conditions of the grant of such loan have not been specifically defined and
hence we are unable to comment as to whether the same are prejudicial to the interest of
the Company or not.
(b) In our opinion and according to the information and explanations given to us, there
are no stipulations made regarding repayment of principal amount and interest in respect
of loans granted by the Company to parties covered in the register maintained under
Section 189 of the Companies Act, 2013. Hence we are unable to comment as to regularity of
repayments of principal and interest amount. In absence of specific stipulations for
repayment of principal and interest we are unable to comment on the overdue amounts in
respect thereof and steps taken for their recovery.
iv. In our opinion and according to the information and explanations given to us, the
Company has generally complied with the provisions of Section 185 and 186 of Companies
Act, 2013 with respect to the loans, investments, guarantees and security.
v. In our opinion and according to the information and explanations given to us, the
Company has not accepted any deposits during the year from the public within the meaning
of Section 73 & Section 76 of the Companies Act, 2013 and the Rules framed there under
to the extent notified. Further in respect of deposits accepted by the company before the
commencement of this Act, within the meaning of Section 74 & Section 75 of the
Companies Act, 2013 and the Rules framed there under to the extent notified, the principal
amount of such deposits and interest due thereon remained unpaid even till date. The
Company had filed an application within the meaning of Section 74(2) with the National
Company Law Tribunal requesting to allow further time for compliance, however the National
Company Law Tribunal has dismissed the extension request.
vi. The Central Government has not specified maintenance of cost records under
sub-Section (1) of Section 148 of the Act, in respect of Companys products. Accordingly,
the provisions of clause 3(vi) of the Order are not applicable.
vii. (a) According to the information and explanation given to us and the records of
the Company examined by us, in our opinion the Company has been facing liquidity stress
since past few years due to which there were delays in depositing various undisputed
statutory dues with appropriate authorities including provident fund, employees state
insurance, income tax, sales tax, service tax, duty of customs, duty of excise, value
added tax, cess and other material statutory dues, as applicable and there are no arrears
of outstanding statutory dues as at the year-end for a period of more than six months from
the date they became payable.
(b) According to the information and explanation given to us and the records of the
Company examined by us, there are no dues of income tax, sales tax, service tax, duty of
excise, value added tax, as at March 31, 2018, which have not been deposited on account of
any dispute. However there are dues of duty of customs which have not been deposited on
account of a dispute which are as under:
| Name of the Statute |
Nature of Dues |
Amount |
Period to which the amount relates |
Forum where the dispute is pending |
| Customs Act, 1962 |
Custom Duty |
1185.11 |
F.Y. 2005- 2013 |
High Court of Mumbai |
| Customs Act, 1962 |
Custom Duty |
1782.77 |
F.Y. 2006- 2014 |
High Court of Mumbai |
| Customs Act, 1962 |
Custom Duty |
28.65 |
|
CESTAT, Ahmedabad |
| Central Excise Act, 1961 |
Excise Duty |
171.88 |
|
High Court of Gujarat |
| The Gujarat Value Added Tax Act, 2003 |
Sales Tax / VAT |
13.96 |
F.Y. 2012- 2013 |
Joint Commissioner Of Sales Tax (Appeal)( Rajkot) |
| The Gujarat Value Added Tax Act, 2003 |
Sales Tax / VAT |
|
F.Y. 2013- 2014 |
Joint Commissioner Of Sales Tax (Appeal)( Rajkot) |
(c) There were no amounts required to be transferred to the Investor Education and
Protection Fund by the Company during the year ended March 31, 2018.
viii. In our opinion and according to the information and explanations given to us the
Company had defaulted in repayment of loans and interests dues to the banks. Some of the
bank lenders have initiated legal proceedings against the Company for recovery of their
respective debts at the Debt Recovery Tribunal and have taken symbolic possession of the
securities u/s. 13(4) of the SARFAESI Act, 2002. However the Company has been able to
renegotiate with the secured lenders and arrive at an amicable settlement of its debts.
The Company has made the settlement of its total debt outstanding with the secured
lenders. Accordingly some of the lenders have been settled completely on one time
settlement basis and others have agreed for deferred payment along with some up-front
payment based on their respective terms of settlement. In view of the above settlement,
the Company has not provided the interest on the outstanding dues payable as per the
settlement terms on the outstanding agreed amount of settlement amounting to Rs. 1,119
Lakhs for the year ended March 31, 2018 as given under:
| Name of the Bank |
Principal Outstanding as on the date of turning NPA |
Agreed Settlement Amount |
Amount Paid upto March 31, 2018 as per settlement terms |
Interest Outstanding as per agreed terms of settlement as on March
31, 2018 |
|
(In Lakhs) |
(In Lakhs) |
(In Lakhs) |
(In Lakhs) |
| State Bank of India |
25,598.96 |
14,500.00 |
6,405.10 |
1,557.95 |
| The Cosmos Co-Op Bank Ltd |
5,805.03 |
4,000.00 |
1,482.00 |
613.25 |
| Total |
31,403.99 |
18,500.00 |
7,887.10 |
2,171.20 |
ix. In our opinion, the Company has applied the term loans for the purposes for which
these were raised. The Company did not raised money by way of initial public offer/
further public offer (including debt instruments) during the year.
x. During the course of our examination of the books and records of the Company,
carried out in accordance with the generally accepted auditing practices in India, and
according to the information and explanations given to us, we have neither come across any
instance of material fraud by the Company or on the Company by its officers or employees,
noticed or reported during the year, nor have we been informed of any such case by the
Management.
xi. 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. In our opinion, the Company is not a Nidhi Company. Accordingly, provisions of
clause 3(xii) of the Order are not applicable.
xiii. In our opinion and according to the information and explanations given to us the
Company is incompliance with Section 177 and 188 of the Act, where applicable, for all
transactions with the related parties and the details of related party transactions have
been disclosed in the standalone financial statements as required by the applicable Ind
AS.
xiv. The company has not made any preferential allotment or private placement of shares
or fully or partly convertible debentures during the year under review. Accordingly, the
provisions of clause 3 (xiv) of the Order are not applicable to the Company.
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 to 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 and hence reporting under clause 3 (xvi) of the Order are not
applicable to the Company.
| For Rasesh Shah & Associates |
| Chartered Accountants |
| Firm Registration Number: 108671W |
| CA Mehul Shah |
| Partner |
| Membership Number: 137148 |
| Place : Mumbai |
| Date : May 29, 2018 |
"Annexure B" to the Independent Auditors Report
Referred to in paragraph 11 (g) of the Independent Auditors Report of even date to the
Members of Euro Ceramics Limited on standalone financial statement for the year ended
March 31, 2018.
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section
143 of the Companies Act, 2013 ("the Act")
We have audited the internal financial controls over financial reporting of Euro
Ceramics Limited ("the Company") as of March 31, 2018 in conjunction with our
audit of the standalone financial statements of the Company for the year ended on that
date.
Managements Responsibility for Internal Financial Controls
The Companys management is responsible for establishing and maintaining internal
financial controls based on, the internal control over 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
("the Guidance Note) issued by the Institute of Chartered Accountants of India
("ICAI"). 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, including adherence to
companys policies, the safeguarding of its assets, the prevention and detection of frauds
and errors, the accuracy and completeness of the accounting records, and the timely
preparation of reliable financial information, as required under the Companies Act, 2013
("the Act").
Auditors Responsibility
Our responsibility is to express an opinion on the Companys internal financial
controls over financial reporting based on our audit. We conducted our audit in accordance
with the Guidance Note and the Standards on Auditing, issued by ICAI and deemed to be
prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to
an audit of internal financial controls, both applicable to an audit of Internal Financial
Controls and, both issued by the Institute of Chartered Accountants of India. Those
Standards and the Guidance Note require that we comply with ethical requirements and plan
and perform the audit to obtain reasonable assurance about whether adequate internal
financial controls over financial reporting 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 over financial reporting and their operating
effectiveness. Our audit of internal financial controls over financial reporting included
obtaining an understanding of internal financial controls over financial reporting,
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 auditors judgment, 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 on the Companys internal financial controls system
over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A companys internal financial control over financial reporting is a process designed
to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A companys internal financial control over financial
reporting 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 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 or timely detection of unauthorised acquisition, use, or disposition of the
companys 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 financial
reporting, including the possibility of collusion or improper management override 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 over financial
reporting to future periods are subject to the risk that the internal financial control
over financial reporting may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
Basis of Qualified Opinion
In our opinion, according to the information and explanations given to us and based on
our audit procedure performed, the following material weakness has been identified in the
operating effectiveness of the Companys internal financial controls over financial
reporting as at March 31, 2018:
The Companys internal financial controls in respect of supervisory and review controls
over process of determining of (a) carrying value of the Companys non-current investments
in its subsidiaries; and (b) recoverability of loans, due from such subsidiaries were not
operating effectively. Absence of aforesaid assessment in accordance with the accounting
principles generally accepted in India could potentially result in a material misstatement
in the carrying value of investments in such subsidiaries and the aforesaid dues from such
subsidiaries and consequently, could also impact the profit (financial performance
including other comprehensive income) after tax.
A material weakness is a deficiency, or a combination of deficiencies, in internal
financial controls over financial reporting, such that there is a reasonable possibility
that a material misstatement of the companys annual or interim financial statements will
not be prevented or detected on a timely basis.
Opinion
In our opinion, except for the possible effects of the material weakness described
above in the Basis for Qualified Opinion paragraph, the Company has, in all material
respects, an adequate internal financial controls system over financial reporting and such
internal financial controls over financial reporting were operating effectively as at
March 31, 2018, based on the internal control over financial reporting criteria
established by the Company considering the essential components of internal control stated
in the Guidance Note issued by the ICAI.
We have considered the material weakness identified and reported above in determining
the nature, timing, and extent of audit tests applied in our audit of the standalone
financial statements of the Company as at and for the year ended March 31, 2018, and the
material weakness has affected our opinion on the standalone financial statements of the
Company and we have issued a qualified opinion on the standalone financial statements.
| For Rasesh Shah & Associates |
| Chartered Accountants |
| Firm Registration Number: 108671W |
| CA Mehul Shah |
| Partner |
| Membership Number: 137148 |
| Place : Mumbai |
| Date : May 29, 2018 |
+91-9892691696
