Everest Industries Ltd Auditors Report.
TO THE MEMBERS OF
EVEREST INDUSTRIES LIMITED
Report on the Audit of the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements of Everest Industries Limited ("the Company"), which comprise the Balance sheet as at March 31 2019, the Statement of Profit and Loss, including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity 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 standalone Ind AS 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 in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2019, its profit including other comprehensive income its cash flows and the changes in equity for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing (SAs), as specified section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the Standalone Ind AS 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 thereunder, 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 audit opinion on the standalone Ind AS financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significancein our audit of the standalone Ind AS financial statements for the financial year ended March 31, 2019. These matters were addressed in the context of our audit of the standalone Ind AS financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditors responsibilities for the audit of the standalone Ind AS financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone Ind AS financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying standalone Ind AS financial statements.
|Key audit matters||How our audit addressed the key audit matter|
|Revenue recognition for long term projects and recoverability of receivables (as described in note 1.4(a) of the standalone Ind AS financial statements)|
|The Companys significant portion of business is undertaken through long term engineering, procurement and construction contracts. Revenue from these contracts is recognized over a period of time in accordance with the requirements of Ind AS 115, Revenue from Contracts with Customers. Due to the nature of the contracts, revenue recognition involves usage of input method which is determined based on proportion of contract costs incurred to date compared to estimated total contract costs, which involves significant judgments, identification of contractual obligations and the Companys rights to receive payments for performance completed till date, risk on collectability due to liquidation damages and other penalties imposed by the customers, changes in scope and consequential revised contract price and recognition of the liability for loss making contracts/ onerous obligations. Accuracy of revenues, onerous obligations, profits and net receivables may deviate significantly on account of change in judgements and estimates, therefore, this has been considered as key audit matter in our audit of the standalone Ind AS financial statements.|| Our audit procedures included testing of Companys revenue recognition accounting policies in compliance with Ind AS 115.|
| We performed test of controls over management process of assessing its contractual obligation, determining the percentage completion and periodical changes in estimates of project cost and project revenue recognition with specific focus on determination of progress of completion, recording of project costs incurred and estimation of project costs to complete the remaining contract obligations and collection of overdue receivables through inspection of evidence of performance of these controls.|
| We examined the underlying customer contracts, costs incurred with estimated costs to identify significant variations and assess whether those variations if any, have been considered in estimating the remaining costs to complete and consequential determination of stage of completion.|
| We performed tests of details to examine the management assessment of estimated project revenue, possible liquidation damages, estimated project cost and cost incurred till the year end. We also tested the invoices raised and computation for revenue recognized, over a period of time under the input method in Ind AS 115.|
| We examined the management assessment of onerous contracts due to change in estimated project cost, liquidation damages and other penalties charged by the customer.|
| We examined contracts and correspondences where there were significant overdue receivable with marginal or no movement to determine the level of provisioning required in the receivable.|
| We evaluated managements assumption and judgment by comparing to the historical collection trends.|
| We tested the adequacy of disclosure relating to contractual positions and revenue for the year in the standalone Ind AS financial statements.|
|Uncertain tax positions impacting valuation of tax provision (as described in note 1.4(b) of the standalone Ind AS financial statements)|
|The Company has ongoing disputes with the Income Tax department on income tax computation for certain assessment years. These disputes are pending with different Appellate authorities and at the Courts. The management has assessed the future outcome of these ongoing proceedings and exposures which directly affects the valuation of tax provision in the financial statements|| We obtained details of completed tax assessments and demands for the assessment years under dispute as of March 31, 2019.|
| We performed test of control over management process of assessment and estimates with regard to the existing tax disputes and uncertain tax positions.|
|As the future outcome of these matters, and the accounting effects thereof, are based on assessment of complex matters which may take time to finally resolve, the valuation of tax provision related to uncertain tax positions has been considered as key audit matter in our audit of the standalone Ind AS financial statements.|| We inspected written communication between the company and the tax authorities and involved tax specialist to assess the managements underlying assumptions in estimating the tax provision and the possible outcome of the disputes.|
| We also considered the effect of any new information in the current financial year 2018-19 in respect of carried forward uncertain tax positions to evaluate if there is any change in the managements position on these uncertainties.|
| We tested the adequacy of provisioning and disclosure relating to uncertain tax positions in accordance with "Probable, Possible and Remote" (PPR) analysis and compliance with Ind AS 12.|
We have determined that there are no other key audit matters to communicate in our report.
Information Other than the Financial Statements and Auditors Report Thereon
The Companys Board of Directors is responsible for the other information. The other information comprises the information included in the
Annual report 2018-19 of the Company but does not include the financial statements and our auditors report thereon. The Annual Report is expected to be made available to us after the date of this auditors report.
Our opinion on the financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.
In connection with our audit of the standalone Ind AS financial statements, our responsibility is to read the other information and, in doing so, consider whether such other information is materially inconsistent with the standalone Ind AS 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 for the Standalone Ind AS Financial Statements
The Companys Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone Ind AS 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 Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules,
2015, as amended. 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 the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy 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.
In preparing the standalone Ind AS financial statements, management is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Companys financial reporting process.
Auditors Responsibilities for the Audit of the Standalone Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone Ind AS financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors 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 standalone Ind AS financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalone Ind AS financialstatements, 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 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 managements 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 as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors 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 auditors 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 standalone Ind AS financial statements, including the disclosures, and whether the standalone Ind AS 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 con audit findings, including any significant deficiencies in internal ol 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 standalone Ind AS financial statements for the financial year ended March 31, 2019 and are therefore the key audit matters. We describe these matters in our auditors 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 (Auditors 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 1" a statement on the matters specifiedin Order . paragraphs 3 and 4 ofthe
2. As required by Section 143(3) of the Act, we report that:
a. We have sought and obtained all the information and explanations which to the 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 the Statement of and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;
d. In our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;
e. On the basis of the written representations received from the directors as on March 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 over financial reporting of the Company with reference to these standalone Ind AS financial statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure 2" to this report;
g. In our opinion, the managerial remuneration for the year ended March 31, 2019 has been paid/ provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act;
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, 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 standalone Ind AS financial statements Refer Note 2.31 to the standalone Ind AS financial statements;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company
|For S.R. Batliboi & Co. LLP|
|ICAI Firm Registration Number : 301003E/E300005|
|per Sanjay Vij|
|Membership Number : 95169|
|Place : Mumbai|
|Date : 1st May, 2019|
ANNEXURE 1 REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING "REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS" OF OUR REPORT OF EVEN DATE
Re: EVEREST INDUSTRIES LIMITED (the Company)
(i) In respect of Fixed Assets a. The Company has maintained proper records showing full particulars, including quantitative details and situation of the Property, plant and equipment. b. All fixed assets were physically verified by the management in the previous year in accordance with a planned programme of verifying them once in three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification. c. According to the information and explanations given by the management, the title deeds of immovable properties included in property, plant and equipment are held in the name of the Company.
(ii) The inventory has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable. No material discrepancies were noticed on such physical verification. Inventories lying with third parties have been confirmedby them as at year end and no material discrepancies were noticed in respect of such confirmations.
(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 Companies Act, 2013.
Accordingly, the provisions of clause 3(iii) (a), (b) and (c) of the Order are not applicable to the Company and hence not commented upon. (iv) In our opinion and according to the information and explanations given to us, the Company has not advanced loans to directors / to a company in which the Director is interested to which provisions of section 185 of the Companies Act, 2013 apply and hence not commented upon. Further, in our opinion and according to the information and explanations given to us, provisions of section 186 of the Companies Act 2013 in respect of loans and advances given, investments made and, guarantees, and securities given have been complied with by the Company.
(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.
(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Companies Act, 2013, and are of the opinion that prima facie, the specified and records have been made and maintained. We have not, however, made a detailed examination of the same.
(vii) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees state insurance, income-tax, goods and services tax, sales-tax, service tax, customs duty, excise duty, value added tax, cess, goods and services tax and other statutory dues applicable to it.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees state insurance, income-tax, goods and services tax, service tax, sales-tax, duty of custom, duty of excise, value added tax, cess and other statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable. (c) According to the records of the Company, the dues of income tax, sales tax, service tax, duty of custom, duty of excise, value added tax and cess on account of any dispute, are as follows: (##Rs## In Lakhs)
Name of the Nature of dues Forum where the Period to which the Amount Amount Amount applicable dispute is pending amount relates involved Paid unpaid Act
|Income Tax Act, 1961||Demand on account of disallowance of certain claims||High Court CIT(Appeals)||2007-08, 2009-10||79.39||79.39||-|
|AY 2004-05 to 2016-17||3,284.88||3,026.38||258.50|
|The Central Excise Act, 1944||Demand on account of wrong availament of cenvat credit||Assistant Commissioner||2005 to 2007, 2008-12||5.75||0.08||5.67|
|Commissioner||2006-07 to 2011-12||12.65||4.90||7.75|
|Commissioner||2007-08 to 2013-14||424.32||-||424.32|
|Appelate Tribunal||2009-10, 2014-15,||322.52||29.34||293.18|
|Demand on duty under section 11D of Central Excise Act,1944||Appelate Tribunal||1991 to 1996||2,462.40||-||2,462.40|
|Sales Tax Laws||Demand on account of non-collection of statutory forms etc.||Assistant Commissioner||1994-95||0.47||-||0.47|
|Joint Commissioner||1999-2000, 2000-01,||493.29||92.97||400.32|
|2010-11 to 2014-15|
|Additional||2012-13 to 2015-16||91.10||78.79||12.31|
|Commissioner (Appeal)||1997-98, 2000-01 to||26.07||1.59||24.48|
|2002-03 & 2006-07|
|Joint Commissioner||2009-10 to 2011-12 &||126.73||117.16||9.57|
|Deputy Commissioner||2012-13 & 2014-15||207.97||20.56||187.41|
|Appellate Tribunal||1997-98 to 1998-99 and||61.38||40.49||20.89|
|2009-10 to 2013-14|
|Demand on account of purchase tax on fly ash||Madras High Court||1990-91, 1992-93 & 1995-1996||13.18||12.89||0.29|
|Demand on account of reversal of input tax credit||Assessing Officer||2013-14||10.76||3.79||6.97|
|Demand on account of understatement of sales/ purchase||Appellate Tribunal||2011-12||7.59||7.59||-|
|Demand on account of stock transfers considered as Interstate sales||Central Sales Tax Appellate Authority||1994-1995 & 1995-1996||676.34||0.26||676.08|
|Demand on account of differential rate||Joint Commissioner||2013-14||427.17||33.00||394.17|
|Penalty for late payment of Entry tax||High Court, Orissa||2012-13||4.39||4.39||-|
(viii) In our opinion and according to the information and explanations given by the management, the Company has not defaulted in repayment of loans/ borrowings to banks. The Company has not taken any loans/ borrowings from financial institution or government and has not issued any debentures during the year.
(ix) In our opinion and according to information and explanations given by the management, the term loans have been applied for the purpose for which they were raised. The Company has not raised moneys by way of initial public offer or further public offer (including debt instruments).
(x) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no fraud by the company or no material fraud on the company by the officers and employees of the Company has been noticed or reported during the year.
(xi) According to the information and explanations given by the management, the managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013. (xii) In our opinion, the Company is not a nidhi company. Therefore, the provisions of clause 3(xii) of the order are not applicable to the Company and hence not commented upon.
(xiii) According to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and on an overall examination of the balance sheet, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence, reporting requirements under clause 3(xiv) are not applicable to the company and, not commented upon.
(xv) According to the information and explanations given by the management, the Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in section 192 of Companies Act, 2013.
(xvi) According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.
|For S.R. Batliboi & Co. LLP|
|ICAI Firm Registration Number : 301003E/E300005|
|Per Sanjay Vij|
|Membership Number : 95169|
|Place : Mumbai|
|Date : 1st May, 2019|