To the Members of
KGN INDUSTRIES LIMITED
Report on the Ind AS Financial Statements
We have audited the accompanying Ind AS financial statements of KGN INDUSTRIES LIMITED
("the Company"), which comprise the Balance Sheet as at March 31,2018, the
Statement ofProfit and Loss, the Cash Flow Statement and the Statement of Changes in
Equity for the year then ended, and a summary of significant accounting policies and other
explanatory information.
Managements Responsibility for the IND AS Financial Statements
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 Ind AS financial statementsthat give a true and fair view of the financial position,
financial performance including, cash flows and changes in equity of the Company in
accordance with accounting principles generally accepted in India, including the Indian
Accounting Standards (Ind AS) specified under section 133 of the Act., read with Rule 7 of
the Companies (Accounts) Rules, 2014 and 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 control that were operating effectively for ensuring the
accuracy and completeness of the accounting records, relevant to the preparation and
presentation of the 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
Our responsibility is to express an opinion on these Ind AS financial statements based
on our audit. We have taken into account the provisions of the Act, the accounting and
auditing standards andmatters which are required to be included in the audit report under
the provisions of the Act and theRules made thereunder. We conducted our audit of the Ind
AS financial statements in accordance withthe Standards on Auditing, issued by the
Institute of Chartered Accountants of India, as specifiedunder Section 143(10) of the Act.
Those Standards require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance about whether the IND AS financial statementsare free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosuresin the IND AS financial statements. The procedures selected depend on the
auditors judgment, including theassessment of the risks of material misstatement of the
Ind AS financial statements, whether due tofraud or error. In making those risk
assessments, the auditor considers internal financial control relevant to the Companys
preparation of the Ind AS financial statements that give a true and fair viewin order to
design audit procedures that are appropriate in the circumstances. An audit also
includesevaluating the appropriateness of accounting policies used and the reasonableness
of the accountingestimates made by the Companys Directors, as well as evaluating the
overall presentation of the IndAS financial statements. We believe that the audit evidence
we have obtained is sufficient andappropriate to provide a basis for our audit opinion on
the Ind AS financial statements.
Opinion
In our opinion and to the best of our information and according to the explanations
given to us, theInd AS financial statements give the information required by the Act in
the manner so required andgive a true and fair view in conformity with the accounting
principles generally accepted in India, ofthe state of affairs of the Company as at March
31,2018, its loss including other comprehensiveincome, its cash flows and the changes in
equity for the year ended on that date.
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 specified in paragraphs 3
and 4 of the Order.
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 purpose 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, Statement of Profit and Loss including the Statement of Other
Comprehensive Income, the Cash Flow Statement 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 Ind AS financial statements comply with the
Accounting Standards specified under section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014, Companies (Indian Accounting Standards) Rules, 2015, as
amended;
(e) On the basis of written representations received from the directors as on March 31,
2018, and 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;
(f) 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 Ind AS financial statements - Refer Note 4, 27 and 43(ii) to the Ind AS
financial statements;
ii. The Company has made provision, as required under the applicable law or accounting
standards, for material foreseeable losses, if any, on long-term contracts including
derivative contracts;
iii. There were no amounts which were required to be transferred to the Investor
Education and Protection Fund by the Company
Other Matter
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 prepared in accordance
with Ind AS, included in these Ind AS financial statements, have been audited by the
predecessor auditor who had audited the financial statements for the relevant periods.
For kamlesh Bhojani & Associates
Chartered Accountants
Kamlesh Bhojani
Proprietor
Membership Number: 119808
Firm Registration Number: 127505W
Place of Signature : Ahmedabad
Date : 26.05.2018
Annexure 1 referred to in paragraph 1 of the section on "Report on other legal and
regulatory requirements" of our report of even date
TO THE MEMBERS OF KGN INDUSTRIES LIMITED
1. (a) The Company has maintained proper records showing full particulars, including
quantitative details and situation of fixed assets.
(b) The Fixed Assets have been physically verified by the management in a phased
manner, designed to cover all the items over a period of three years, which in our
opinion, is reasonable having regard to the size of the company and nature of its
business. Pursuant to the program, a portion of the fixed asset has been physically
verified by the management during the year and no material discrepancies between the books
records and the physical fixed as sets have been noticed.
(c) The title deeds of immovable properties are held in the name of the company.
2. (a) The Inventory has been physically verified by the management during the year. In
our opinion, the frequency of verification is reasonable.
(b) The discrepancies noticed on physical verification of the inventory as compared to
books records which has been properly dealt with in the books of account were not
material.
3. (a) The Company has granted unsecured loan to its Subsidiary Companies and parties
in the register maintained under Section 189 of the Companies Act, 2013. The Maximum
amount granted during the year and year end balances of loan to such subsidiaries were as
per details given below. The terms and conditions of such loans are not primafacie
prejudicial to the interest of the Company.
| Sr. No. Name of the Party |
Relation with the Company |
Maximum Outstanding (in Rs.) |
Closing Balance As on 31/03/2018 (in Rs.) |
| 1. KGN Projects Limited |
Subsidiary Company |
16,11,135/- |
16,11,135/- |
| 2. KGN Enterprises Limited |
Associates |
13,80,66,175/- |
13,75,67,699/- |
(b) The Company has not taken loans, secured or unsecured from the companies or other
parties covered in the register maintained u/s 189 of the Companies Act, 2013
4. In our opinion and according to the information and explanations given to us, the
company has complied with the provisions of section 185 and 186 of the Companies Act, 2013
In respect of loans, investments, guarantees, and security.
5. The Company has not accepted any depos its from the public and hence the directives
issued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any other
relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules, 2015 with
regard to the deposits accepted from the public are not applicable.
6. As informed to us, the maintenance of Cost Records has not been specified by the
Central Government under sub-section(1) of Section 148 of the Act, in respect of the
activities carried on by the company.
7. (a) According to information and explanations given to us and on the basis of our
examination of the books of account, and records, the Company has been generally regular
in depositing undisputed statutory dues including Provident Fund, Employees State
Insurance, Income-Tax, Sales tax, Service Tax, Duty of Customs, Duty of Excise, Value
added Tax, Cess and any other statutory dues with the appropriate authorities. According
to the information and explanations given to us, no undisputed amounts payable in respect
of the above were in arrears as at March31,2017 for a period of more than six months from
the date on when they be comepayable.
(b) According to the information and explanation given to us, there are no dues of
income tax, sales tax, service tax, duty of customs, duty of excise, value added tax
outstanding on account of any dispute.
8. In our opinion and according to the information and explanations given to us, the
Company has not defaulted in the repayment of dues to banks. The Company has not taken any
loan either from financial institutions or from the government and has not issued any
debentures.
9. Based upon the audit procedures performed and the information and explanations given
by the management, the company has not raised moneys by way of initial public offer or
further public offer including debt instruments and term Loans. Accordingly, the
provisions of clause 3(ix) of the Order are not applicable to the Company and hence not
commented upon.
10. Based upon the audit procedures performed and the information and explanations
given by the management, we report that no fraud by the Company or on the company by its
officers or employees has been noticed or reported during the year.
11. Based upon the audit procedures performed and the information and explanations
given by the management, the managerial remuneration has been paid or provided in
accordance with the requisite approvals mandated by the provisions of section 197 read
with Schedule V to the Companies Act;
12. In our opinion, the Company is not a Nidhi Company. Therefore, the provisions of
clause 4 (xii) of the Order are not applicable to the Company.
13. In our opinion, all transactions with the related parties are in compliance with
section 177 and 188 of Companies Act, 2013 and the details have been disclosed in the IND
AS Financial Statements as required by the applicable accounting standards.
14. In our opinion, all transactions with the related parties are in compliance with
section 177 and 188 of Companies Act, 2013 and the details have been disclosed in the IND
AS Financial Statements as required by the applicable accounting standards.
15. Based upon the audit procedures performed and the information and explanations
given by the management, 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 and hence not commented upon.
16. In our opinion, the company is not required to be registered under section 45IA of
the Reserve Bank of India Act, 1934 and accordingly, the provisions of clause 3 (xvi) of
the Order are not applicable to the Company and hence not commented upon.
For Kamlesh Bhojani & Associates
Chartered Acountant
Kamlesh Bhojani
Proprietor
M.No.119808
FRN:127505W
Place : Ahmedabad
Date : 26.05.2018
+91-9892691696
