To the Members of Everest Kanto Cylinder Limited
Report on the Audit of the Standalone Financial Statements
Opinion
We have audited the accompanying standalone financial statements of Everest Kanto Cylinder Limited ("the Company"), which comprise the Balance Sheet as at 31 March 2024, 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 notes to the standalone financial statements, including summary of material accounting policies and other explanatory information (hereinafter referred to as the "standalone financial statements"), which includes the financial statements of the branch located at Dubai.
In our opinion and to the best of our information and according to the explanations given to us and based on the consideration of the report of the branch auditor as referred to in Other Matters paragraph below, the aforesaid standalone 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 31 March 2024, its profit and other comprehensive income, its cash flows and changes in equity for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the Standalone 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 ("ICAI") together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules made 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 and that obtained by the branch auditor, in terms of their report referred to in Other Matters section below is sufficient and appropriate to provide a basis for our opinion on the standalone financial statements.
Key Audit Matter
Key audit matters are those matters that, in our professional judgement, and based on the consideration of the reports of the branch auditors as referred to in Other Matters paragraph below, were of most significance in our audit of the standalone financial statements for the year ended 31 March 2024. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
We have determined the matter described below to be the key audit matter to be communicated in our report.
Key audit matter | How our audit address the key audit matter |
Assessment of recoverable value of idle Property, plant and equipment including capital work-in-progress | Our audit included, but was not limited to, the following procedures: |
(Refer notes 2 and 3 to the accompanying standalone financial statements) | Assessed the appropriateness of accounting policy in respect of impairment loss of non-financial assets in accordance with Ind AS; |
As at 31 March 2024, the net carrying amount of certain idle property, plant and equipment (PPE) and capital work-in- progress (CWIP) is Rs.1,561.03 lakhs and Rs.1,438.45 lakhs, respectively. | Obtained understanding of managements process of identification of indicators of impairment and impairment provision. Evaluated the design and tested the operating effectiveness of internal controls over impairment assessment process; |
The aforesaid PPE and CWIP have remained idle for a considerable period due to demand contraction for certain products. Therefore, management has considered it as an indicator of possible impairment in the carrying value of these PPE and CWIP. | Assessed the professional competence, and objectivity of the managements valuation specialist; |
Management judgement is required in assessing impairment indicators and recoverable amount for impairment testing. Management, with the help of an independent valuer, has estimated the recoverable amount of the aforesaid idle PPE and CWIP using Depreciated Replacement Cost Valuation Method, under the cost approach, which is a complex exercise and involves the use of significant estimates and assumptions that are dependent on expected future market conditions. | Assessed the appropriateness of valuation method used by the managements valuation specialist to estimate the recoverable value of the PPE and CWIP; |
Based on the above assessment, the carrying value of the said PPE and CWIP was impaired by Rs.74.88 lakhs and Rs.142.29 lakhs respectively. The change was recognised in the standalone profit and loss statement in accordance with Ind AS 36, Impairment of assets, as disclosed in Note 2 and 3. | Evaluated the reasonableness of the estimates including estimation of expected useful lives of PPE and key assumptions including cost of replacement, salvage value and cost of disposal used by the managements valuation specialist in estimating the recoverable value of PPE and CWIP; |
We determined impairment of PPE and CWIP as a key audit matter since these assessments are complex and involve significant management estimation and judgement. | Tested the arithmetical accuracy of the managements workings of valuation, sensitivity analysis and impairment losses; |
Performed sensitivity analysis around aforesaid key assumptions to assess the effect of reasonably possible variations on the estimated recoverable amounts of PPE and CWIP; and | |
Evaluated the adequacy of disclosures in respect of impairment of the said PPE and CWIP in the standalone financial statements. |
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 but does not include the standalone 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 standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
When we read the Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charge with governance.
Responsibilities of Management for the Standalone Financial Statements
The Companys Board of Directors are responsible for the matters stated in section 134(5) of the Act, with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards (Ind AS) specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the 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 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 financial statements, the Board of Directors are 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 the Board of Directors are either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Companys financial reporting process.
Auditors Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone 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 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 financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has in place adequate internal financial controls with reference to the financial statements 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 the 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 doubt on the Companys ability to continue 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 standalone 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 financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the standalone financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the standalone financial statements. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period 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.
Other Matters
(a) The standalone financial statements include the audited financial statements of the Dubai branch, whose financial statements, without giving effects to elimination of intragroup transaction reflect total assets of Rs. 364.40 lakhs as at 31 March 2024 and total revenue of Rs. Nil lakhs, total net loss after tax of Rs. 9.42 lakhs, total comprehensive loss of Rs. 9.42 lakhs and net cash outflow of Rs. 0.27 lakhs for the year ended on 31 March 2024, as considered in the standalone financial statements. These financial statements have been audited by the branch auditor whose reports have been furnished to us by the Management and our opinion on the standalone financial statements, in so far as it relates to the amounts and disclosures included in respect of this branch is based solely on the reports of the branch auditor.
(b) The comparative figures for the previous year ended 31 March 2023 were audited by the predecessor auditor who has expressed an unmodified opinion vide their report dated 29 May 2023.
Our opinion above on the standalone financial statements and our report are not modified in respect of the above matters.
Report on Other Legal and Regulatory Requirements
1) As required by the Companies (Auditors Report) Order, 2020 ("the Order") issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in the "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order.
2) As required by Section 143(3) of the Act, based on our audit and on the consideration of the report of the branch auditor as referred to in Other Matters paragraph above, 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 purpose of our audit.
(b) In our opinion, proper books of account as required by law have been kept by the Company so far, it appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from the branch not visited by us.
(c) The reports on the accounts of the branch office of the Company audited under section 143(8) of the Act by the branch auditor has been sent to us and have been properly dealt with by us in preparing this report.
(d) The standalone balance sheet, the standalone statement of profit and loss (including other comprehensive income), the standalone statement of cash flows and the standalone statement of changes in equity dealt with by this Report are in agreement with the books of account and with the returns received from the branch not visited by us.
(e) In our opinion, the aforesaid standalone financial statements comply with the Ind AS specified under Section 133 of the Act.
(f) On the basis of written representations received from the directors as on 31 March 2024 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2024, 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 with reference to the financial statements and the operating effectiveness of such controls, refer to our separate report in "Annexure B".
3) 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 and based on the consideration of the reports of the branch auditors as referred to in Other Matters paragraph above:
(a) The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer Note 47 to the standalone financial statements.
(b) The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
(c) There were no amounts required to be transferred to the Investor Education and Protection Fund by the Company.
(d) (i) The management has represented that, to the best of its knowledge and belief, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other persons or entities, including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(ii) The management has represented, that, to the best of its knowledge and belief, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(iii) Based on the audit procedures that has been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (i) and (ii) above, contain any material misstatement.
(e) The final dividend paid by the Company during the year in respect of the same declared for the previous year is in accordance with Section 123 of the Act to the extent it applies to payment of dividend.
As stated in note 45 (iii) to the standalone financial statements, the Board of Directors of the Company have proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend declared is in accordance with Section 123 of the Act to the extent it applies to declaration of dividend.
(f) Based on our examination which includes test checks, the Company has used an accounting software for maintaining its books of accounts which has feature of recording audit trail (edit log) facility and the same has been operated throughout the year for all relevant transactions recorded in software. Further, during the course of our audit we did not come across any instance of audit trail feature being tempered with.
4. With respect to the other matters to be included in the Auditors Report in accordance with the requirements of Section 197(16) of the Act, as amended, in our opinion and to the best of our information and according to the explanations given to us and on the consideration of the report of the branch auditor as referred to in Other Matters paragraph above, the remuneration paid/provided by the Company to its directors during the current year is in accordance with the provisions of Section 197 of the Act.
For Suresh Surana & Associates LLP
Chartered Accountants
Firms Registration No.: 121750W/W100010
Vinodkumar Varma
Partner
Membership No.: 105545
UDIN: 24105545BKFPDP4155
Place: Mumbai
Date: 24 May 2024
Annexure A to the Independent Auditors Report on the standalone financial statements of Everest Kanto Cylinder Limited for the year ended 31 March 2024
(Referred to in paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date)
In terms of the information and explanations sought by us and given by the Company and books of account and records examined by us in the normal course of audit and based on the consideration of the report of the branch auditor, and to the best of our knowledge and belief, we report that:
1) (a) (A) The Company has maintained proper records showing full particulars including quantitative details and situation of its property, plant and equipment, investment property and right of use assets.
(B) The Company has maintained proper records showing full particulars of its intangible assets.
(b) The Company has a regular program of physical verification of property, plant and equipment, investment property and right of use assets during the year, which in our opinion, is reasonable having regard to size of the Company and nature of its assets. Pursuant to the program, property, plant and equipment have been verified by the Management during the year. No material discrepancies were noticed on such verification.
(c) The title deeds of all the immovable properties (including investment properties) (other than immovable properties where the Company is the lessee) held in the name of the Company. For immovable properties where the Company is a lessee, the lease agreements have been duly executed in favor of the Company, except following:
Description of property | Gross carrying value-Right of use asset (Rs. in lakhs) | Location | Details of lessor | Period held | Reason for not being held in name of Company |
Land | 111.42 | Maharashtra | Maharashtra Industrial Development Corporation | Since 1989 & 2003 | Amalgamation of plots are pending |
(d) The Company has not revalued its property, plant and equipment (including right of use assets) and intangible assets during the year.
(e) No proceedings have been initiated or are pending against the Company for holding any benami property under the "Benami Transactions (Prohibition) Act, 1988 (45 of 1988)" and Rules made thereunder.
2) (a) The inventory has been physically verified by the management at reasonable intervals during the year.
In our opinion, the coverage and procedure of such verification by the management is appropriate and no discrepancies of 10% or more in aggregate for each class of inventory were noticed on such verification by the Management.
(b) The Company has been sanctioned working capital limits in excess of rupees five crores, in aggregate, at point of time during the year from banks on the basis of security of current assets. In our opinion and according to the information and explanation given to us, the quarterly returns or statements, filed by the Company with such banks, are in agreement with the audited books of accounts of the Company for the respective quarters.
3) (a) The Company has not provided any guarantee or security or granted any loans or advances in the nature of loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or any other parties during the year. The Company has made investments in other parties during the year.
(b) The investments made during the year are, prima facie, not prejudicial to the interest of the Company.
(c) In respect of loans granted by the Company, the schedule of repayment of principal and payment of the interest has not been stipulated and accordingly we are unable to comment as to whether the repayments or receipts of principal and interest are regular.
(d) In the absence of stipulated schedule of repayment of principal and payment of the interest in respect of loans, we are unable to comment as to whether there is any overdue amount for more than ninety days.
(e) According to the information and explanations given to us, in respect of loan granted by the Company, the schedule of repayment of principal has not been stipulated. Accordingly, we are unable to comment as to whether the aforesaid loan has fallen due during the year. Further, no fresh loans were granted to any party to settle the overdue loans / advances in nature of loan that existed as at the beginning of the year.
(f) The Company has not given any loans either repayable on demand or without specifying any terms or period of repayment.
4) The Company has complied with the provisions of section 185 and 186 of the Act in respect to loans and investments made and guarantees and securities provided by it, as applicable.
5) The Company has not accepted any deposits or amounts which are deemed to be deposits. Accordingly, reporting under clause 3(v) of the Order is not applicable to the Company.
6) 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 sub-section (1) of Section 148 of the Act in respect of Companys products and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not carried out a detailed examination of the cost records with a view to determine whether they are accurate or complete.
7) (a) The Company has been regular in depositing undisputed statutory dues including Goods and Services Tax, provident fund, employees state insurance, income tax, sales tax, service tax, duty of custom, duty of excise, value added tax, cess and other statutory dues with the appropriate authorities. No undisputed amounts payable in respect of aforesaid statutory dues were outstanding as on the last day of the financial year for a period of more than six months from the date they became payable.
(b) There were no statutory dues referred to in subclause (a) that have not been deposited on account of any dispute except following:
Name of the Statue | Nature of dues | Amount (Rs. in lakhs) | Period to which the amounts relate | Forum where dispute is pending |
Gujarat Commercial Tax | Value Added Tax | 7.16 | F.Y. 2009-10 | Joint Commissioner of Commercial tax (Appeal) |
Central Excise Act, 1944 | Excise Duty | 131.42 | F.Y. 2010-11 | CESTAT, Ahmedabad |
Goods and Services Tax Act, 2017 | Goods and Service Tax | 106.20 | F.Y. 2018-19 | Deputy Commissioner of State Tax, Mumbai |
The Income Tax Act 1961 | Income Tax | 572.73 | AY 2009-10 | Supreme Court of India |
121.00 | AY 2011-12 | Bombay High Court | ||
3.92 | AY 2014-15 | Commissioner of Income Tax (Appeals) | ||
376.77 | AY 2017-18 | Commissioner of Income Tax (Appeals) | ||
112.25 | AY 2018-19 | Commissioner of Income Tax (Appeals) | ||
133.26 | AY 2023-24 | Commissioner of Income Tax (Appeals) |
8) The Company has not surrendered or disclosed any transaction, previously unrecorded in the books of account as income during the year in the tax assessments under the Income Tax Act, 1961 (43 of 1961).
9) (a) The Company has not defaulted in repayment of dues to any lender. Accordingly, reporting under clause 3(ix)(a) of the Order is not applicable.
(b) The Company is not a declared willful defaulter by any bank or financial institution or other lender.
(c) The Company has applied the term loan for the purpose for which loan was obtained.
(d) On an overall examination of the financial statements of the Company, we report that no funds raised on short term basis have been used for long term purposes by the Company.
(e) On an overall examination of the financial statements of the Company, we report that the Company has not taken any funds from any entity or person on account of or to meet the obligations of its subsidiaries. The Company doesnt have associates or Joint ventures.
10) (a) The Company has not raised moneys by way of public offer (including debt instruments) during the year.
Accordingly, reporting under clause 3(x)(a) of the Order is not applicable.
(b) The Company has not made any preferential allotment or private placement of shares or convertible debentures (fully, partially or optionally convertible) during the year. Accordingly, reporting under clause 3(x)(b) of the Order is not applicable.
11) (a) 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 explanation given to us, we report that no fraud by the Company or on the Company has been noticed or reported during the year.
(b) During the year, no report under sub-section (12) of Section 143 of the Act has been filed in Form ADT- 4 as prescribed under Rule 13 of Companies (Audit and Auditors) Rules 2014 with the Central Government.
(c) As represented to us by the management, there were no whistle blower complaints received by the Company during the year.
12) The Company is not a Nidhi Company. Accordingly, reporting under clause 3(xii) of the Order is not applicable.
13) In our opinion, transactions with related parties are in compliance with Sections 177 and 188 of the Act. The details of such related party transactions have been disclosed in the standalone financial statements as required by the applicable accounting standards.
14) (a) In our opinion and based on our examination, the Company has an internal audit system commensurate with the size and nature of its business.
(b) We have considered the internal audit reports of the Company issued till date for the period under audit.
15) The Company has not entered into any non-cash transactions with directors or persons connected with them during the year. Accordingly, provisions of Section 192 of the Companies Act, 2013 are not applicable to the Company.
16) (a) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934 (2 of 1934). Accordingly, reporting under clause 3(xvi)(a) of the Order is not applicable.
(b) The Company has not conducted any Non-Banking Financial or Housing Finance activities.
(c) The Company is not a Core Investment Company (CIC) as defined in the regulations made by the Reserve Bank of India.
(d) The group has no Core Investment Company.
Accordingly, reporting under clause 3(xi)(d) of the Order is not applicable.
17) The Company has not incurred any cash losses in the financial year covered by our audit and in the immediately preceding financial year.
18) There has been no resignation of the statutory auditors during the year. Accordingly reporting under clause 3(xviii) of the Order is not applicable.
19) According to the information and explanations given to us and on the basis of the financial ratios, ageing and expected dates of realization of financial assets and payment of financial liabilities, other information accompanying the standalone financial statements, our knowledge of the Board of Directors and management plans and based on our examination of the evidence supporting the assumptions, nothing has come to our attention, which causes us to believe that any material uncertainty exists as on the date of the audit report that the Company is not capable of meeting its liabilities existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date. We, however, state that this is not an assurance as to the future viability of the Company. We further state that our reporting is based on the facts up to the date of the audit report and we neither give any guarantee nor any assurance that all liabilities falling due within a period of one year from the balance sheet date, will get discharged by the Company as and when they fall due.
20) According to the information and explanations given to us, the Company has fully spent the required amount towards Corporate Social Responsibility (CSR) and there are no unspent CSR amount for the year requiring a transfer to a Fund specified in Schedule VII to the Act or special account in compliance with the provision of Section 135(6) of the Act. Accordingly, reporting under clause 3(xx) of the Order is not applicable.
For Suresh Surana & Associates LLP
Chartered Accountants
Firms Registration No.: 121750W/W100010
Vinodkumar Varma
Partner
Membership No.: 105545
UDIN: 24105545BKFPDP4155
Place: Mumbai
Date: 24 May 2024
Annexure B to the Independent Auditors Report on the standalone financial statements of Everest Kanto Cylinder Limited for the year ended 31 March 2024
(Referred to in paragraph 2(g) under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date)
Report on the Internal Financial Controls with reference to financial statements under Clause (i) of sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")
We have audited the internal financial controls with reference to financial statements of Everest Kanto Cylinder Limited ("the Company") as of 31 March 2024 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date which includes internal financial controls with reference to financial statements of the Companys branch.
Managements Responsibility for Internal Financial Controls
The Companys Board of Director is responsible for establishing and maintaining internal financial controls based on the internal financial controls 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 the 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 Act.
Auditors Responsibility
Our responsibility is to express an opinion on the Companys internal financial controls with reference to standalone financial statements based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing as specified under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls with reference to financial statements. 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 with reference to standalone financial statements were 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 with reference to standalone financial statements and their operating effectiveness. Our audit of internal financial controls with reference to standalone financial statements included obtaining an understanding of internal financial controls with reference to financial statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained, and the audit evidence obtained by the branch auditors of branch are sufficient and appropriate to provide a basis for our audit opinion on the Companys internal financial controls with reference to standalone financial statements.
Meaning of Internal Financial Controls with Reference to Financial Statements
A Companys internal financial controls with reference to financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal financial controls with reference to standalone financial statements includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of standalone 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 standalone financial statements.
Inherent Limitations of Internal Financial Controls With Reference to Financial Statements
Because of the inherent limitations of internal financial controls with reference to financial statements, including the possibility of collusion or improper management 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 with reference to financial statements to future periods are subject to the risk that the internal financial controls with reference to financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, to the best of our information and according to the explanations given to us and based on the consideration of the reports of the branch auditor, the Company has, in all material respects, an adequate internal financial controls with reference to standalone financial statements and such internal financial controls were operating effectively as at 31 March 2024, based on the internal financial controls with reference to financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note issued by ICAI.
Other Matter
Our aforesaid report under Section 143(3)(i) of the Act on the adequacy and operating effectiveness of the internal financial controls with reference to financial statements insofar as it relates to branch located in Dubai, is based on the corresponding report of the branch auditor.
Our opinion is not modified in respect of this matter.
For Suresh Surana & Associates LLP
Chartered Accountants
Firms Registration No.: 121750W/W100010
Vinodkumar Varma
Partner
Membership No.: 105545
UDIN: 24105545BKFPDP4155
Place: Mumbai
Date: 24 May 2024
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