To the Members of REGENCY CERAMICS LIMITED Report on the Audit of the Financial
Statements Qualified Opinion
We have audited the accompanying financial statements of REGENCY CERAMICS LIMITED (“the
company”), which comprise the Balance Sheet as at March 31, 2023, the Statement of
Profit and Loss (including other comprehensive income), the Statement of Changes in Equity
and the Statement of Cash Flows for the year ended on that date, and a summary of the
significant accounting policies and other explanatory information (herein after
referred to as “the financial statements”)
In our opinion and to the best of our information and according to the explanations
given to us, except for the possible effects of our observations stated in “Basis for
Qualified Opinion” section below, the accompanying 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 Indian Accounting Standards
prescribed under section 133 of the Act read with the Companies (Indian Accounting
Standard) Rules, 2015, as amended, (“Ind AS”) and other accounting principles
generally accepted in India, of the state of affairs of the Company as at March 31, 2023,
the Profit and total comprehensive income, changes in equity and its cash flows for the
year ended on that date.
Basis for Qualified Opinion
1. Manufacturing operations of the company were stopped due to riots, strike and
malicious
damage at factory since 27.01.2012. The company declared lock out of the plant on
31.01.2012 and the condition of the fixed assets & its realizable value could not be
estimated. The machinery and building were not insured during the year and disclosed at
book value after providing depreciation on account of efflux of time.
2. During the year, the company has not provided the provisional liability towards
salary, wages and other benefits to its factory employees. Further, the company has not
provided for its liability towards Gratuity and leave encashment in accordance to Ind
AS-19
“Employee Benefits”. Since the company could not compute the liability in the
absence of complete records, we are unable to comment upon the impact of non-provision of
additional loss of the company for the year and on the current liabilities as at
31.03.2023.
3. Confirmation of balances was not obtained from Debtors, Creditors, loans and
advances and other current assets.
4. The company did not provide the interest on Unsecured loans receivedfrom Directors
andBody Corporate. Also, interest has not been provided in respect of overdue amount
payable to Micro, Small and Medium Enterprises suppliers for a period exceeding 45 days.
5. The company has not provided the liability towards interest and penalties payable on
account of statutory dues. The Company is of opinion that the statutory authorities shall
the same in view of the unprecedented incident.
In view of the above, the liability of the company in this regard could not be
ascertained. Consequently, we are unable to comment about the impact of the same on the
profit for the year, income tax and shareholders funds.
Emphasis of Matter
i) We draw attention to note no 28 to the financial results wherein it is stated that
the company has received Insurance Claim Rs. 1492.30 Lakhs out which Rs.276.62 Lakhs
adjusted against claim receivable for stock damages. The balance amount Rs. 1215.67 Lakhs
showing under other current liabilities as insurance claim received for
reinstatement/replacement of assets.
ii) We draw attention to note no 1.16 to the financial results wherein it is stated
that the company has charged Rs. 1263.64 Lakhs to the profit and loss account under
exceptional items as excess insurance claim towards stock value is adjusted according to
the award given by Arbitral Tribunal.
We conducted our audit of the 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 responsibility for the Audit of
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 (IC AI) 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 is sufficient
and appropriate to provide a basis for our qualified opinion on the financial statements.
Material Uncertainty Related to Going Concern
We draw attention to note no. 1 to the financial statements regarding the preparation
of the financial statements on a going concern basis, despite erosion of the net worth and
no cash inflows from the existing business activities. However, the accompanying financial
have been prepared on “Going Concern” basis for the reasons stated in the said
note. Our opinion is not modified in respect of this matter.
Key Audit Matters
Except for the matters described in the Basis for Qualified Opinion section and
Material Uncertainty Related to Going Concern section, 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, but does not include
the financial statements and our auditors report thereon.
jv Annual Report
Our opinion on the 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 financial statements, our responsibility is to read
the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained during the
course of our 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 and Those Charged with Governance for the 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 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 Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read with
relevant rules issued there under and other accounting principles generally accepted in
India. 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 the 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
financial statements that give a true and fair view and are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors 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
the Board of Directors either intends to liquidate the company or to cease operations, or
has no realistic alternative but to do so. The Board of Directors are responsible for
overseeing the Companys financial reporting process.
Auditors Responsibility for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the 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 financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and
maintain professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the 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 financial controls 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 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 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 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 financial
statements, including
the disclosures, and whether the 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 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 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.
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
39 Annual Report
in the Annexure A, a statement on the matters specified in the paragraph 3 and 4 of the
Order, to the extent applicable.
2) As required by Section 143(3) of the Act, we report that:
a) We have sought and, except for the matters described in the Basis for qualified
opinion paragraph, 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 effects of the matters described in the Basis for qualified opinion
paragraph above, 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 other comprehensive
income, statement of changes in equity and the cash flow statement dealt with by this
Report are in agreement with the books of account,
d) Except for the effects of the matters described in the basis for qualified opinion
paragraph, in our opinion, the aforesaid Ind AS financial statements comply with the
Accounting Standards specified under Section 133 of the Act.
e) The matters described in Basis for Qualified Opinion and Material Uncertainty
Relation to Going Concern above, in our opinion, may have an adverse effect on the
functioning of the Company.
f) On the basis of written representations received from the directors as on March
31,2023 taken on record by the Board of Directors, none of the directors is disqualified
as on March 31, 2023 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
financial statements of the Company and the operating effectiveness of such controls, we
couldnt evaluate as Company didnt have any manufacturing and business operations during
the year under review.
h) With respect to the matter to be included in the Auditors Report under Section
197(16) of the Act, in our opinion and according to the information and explanations given
to us, no managerial remuneration was paid to any director during the year. The Ministry
of Corporate Affairs has not prescribed other details under Section 197(16) which are
required to be commented upon by us.
i) 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 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 financial statements - Refer Note 29 to the 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 were no amounts which were required to be transferred to the Investor
Education and Protection Fund by the Company.
iv. a. The Management has represented that, to the best of its knowledge and belief, no
funds (which are material either individually or in the aggregate) 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 person or entity, including foreign
entity (“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;
b. The Management has represented, that, to the best of its knowledge and belief, no
funds (which are material either individually or in the aggregate) have been received by
the Company from any person or entity, including foreign entity (“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;
c. Based on the audit procedures that have 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 (a) and (b) above, contain any material misstatement.
v The Company had not declared or paid any dividend during the year under
Report.
for KS.RAO & CO.
Chartered Accountants Firms RegnNo. 003109S
|
Sd/-
(M.NAGA PRASADU) |
Place : Hyderabad |
Partner |
Date : 26.05.2023 |
Membership No. 231388 UDIN: 23231388BGYLDH1735 |
Annexure - A to the Auditors Report:
The Annexure referred to in Para 1 under the heading of "Report on Other Legal and
Regulatory Requirements" of our report of even date, to the members of REGENCY
CERAMICS LIMITED, for the year ended March 31,2023.,
i. In respect of the Companys Property, Plant and Equipment and Intangible Assets:
a- (A) The Company has maintained proper records showing full particulars,
including quantitative details and situation of Property, Plant and Equipment.
(B) The Company does not have any intangible assets. Therefore, the provisions of
paragraph 3(i)(a) (B) of the Order is not applicable.
b- As explained to us, the management could not verify physically the fixed assets
situated at Yanam, due to riots, strike and malicious damage.
c According to the information and explanations given to us and on the basis of
our examination of the records of the Company, the title deeds of all the immovable
properties (other than Properties where the company is the lessee, and the lease
agreements are duly executed in favour of the lessee) are held in the name of the Company.
d. The company did not revalue its Property, Plant and Equipment (including right of
use assets) during the year. Accordingly, para 3 (i)(d) of the Order is not applicable.
e. There are no proceedings initiated or are pending against the Company for holding
any benami property under the Prohibition of Benami Property Transactions Act, 1988 and
rules made thereunder
ii. a- The Company does not have any inventory as on Balance Sheet date.
Therefore, the provisions of paragraph 3 (ii) (a) of the Order is not applicable to the
Company.
b- The Company did not obtain any working capital limits during the year. Therefore,
the provisions of paragraph 3 (ii) (b) of the Order is not applicable to the Company.
iii. The company has not granted any loans to companies, firms, Limited Liability
Partnerships or any other parties. Therefore, the provisions of Clauses {a} to (f) of sub
para {iii} of Para 3 of the said Order are not applicable for the year under report:
iv. The Company has not granted any loans or made any investments or provided any
guarantees or security to the parties covered under sections 185 and 186. Therefore, the
provisions of clause 3(iv) of the said order not applicable to the Company
v. The Company has not accepted any deposit or amounts which are deemed to be deposits.
Hence, reporting under clause 3(v) of the Order is not applicable.
vi. During the year, there is no production and its related activity in the factory and
as such, cost records pursuant to sub-section (1) of section 148 of the Companies Act,
2013 have not been maintained.
vii. a. According to the records, the company is not regular in depositingundisputed
statutory dues including Goods and service tax, provident fund, employees state
insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value
added tax, cess and all other material statutory dues with the appropriate authorities.
However, the extent of arrears of outstanding statutory dues as at March 31, 2023 for a
period more than six months from the date they became payable are as below.
Name of the Statute |
Nature of the dues |
Amount (Rs. in Lakhs) |
Period to which the amount relates |
Due Date |
Date of Payment |
CST Act, 1956 |
Central Sales Tax |
33.27 |
2011-12 |
Nov-2011 |
Not yet paid |
VAT Act, 2005 |
VAT |
312.71 |
2011-13 |
Sept-2011 |
Not yet paid |
Central Excise & Service Tax Act, 1994 |
Service Tax |
42.39 |
2011-13 |
Oct-2011 |
Not yet paid |
Professional Tax |
Profession al tax |
4.62 |
2011-12 |
Various dates |
Not yet paid |
Vat Pondicherry and others |
|
10.82 |
2011-12 |
Various dates |
Not yet Paid |
b. According to the records of the Company and the information and explanations given
to us, there were no dues of income tax or sales tax or service tax or duty of customs or
duty of excise or value added tax have not been deposited on account of any dispute,
except the following.
Name of the Statute |
Nature of dues |
Amount (Rs. in Lakhs) |
Period to which the amount relates |
Forum where dispute is pending |
Central Excise & Service Tax Act, 1994 |
Service Tax |
5.33 |
2009-10 |
CESTAT, Hyderabad |
Central Excise & Service Tax Act, 1994 |
Excise Duty |
35.26 |
2011-12 |
CESTAT, Chennai |
Income Tax Act, 1961 |
Income Tax |
90.98 |
2004-2005 |
Income Tax Appellate Tribunal |
The Pondicherry Municipality Act, 1973 |
Municipal Tax |
75.79 |
1998-2007 |
Yanam Municipality |
viii. According to the information and explanations given to us, no transactions were
surrendered or disclosed as income during the year in the tax assessments under the Income
Tax Act, 1961 (43 of 1961) which have not been recorded in the books of accounts.
ix. a. According to the information and explanations given to us, the Company has not
defaulted in repayment of loans or in the payment of interest thereon to any lender as on
Balance Sheet date.
b. According to the information and explanations given to us including representation
received from the Management of the Company, and on the basis of our audit procedures, we
report that the Company has not been declared as willful defaulter by any bank or
financial institution or other lender.
c. The Company has not taken any term loan during the year and there are no unutilized
term loans at the beginning of the year and hence, reporting under clause 3 (ix)(c) of the
Order is not applicable.
d. The Company has not raised funds on short term basis during the year. Hence,
reporting under clause 3(ix)(d) of the Order is not applicable.
e. the Company the does not have subsidiaries, associates or joint ventures. Hence Para
3 (ix) (e) the above mentioned Order is not applicable;
f. the company does not have subsidiaries, associates or joint ventures. Hence Para 3
(ix) ( f) of the above mentioned Order is not applicable
X.a The Company did not raise any money by way of initial public offer or further
public offer (including debt instruments) during the year. Accordingly, para 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.
Hence, reporting under para 3(x)(b) of the order doesnt arise.
xi a.No fraud by the Company and no material fraud on the Company has been noticed or
reported during the year.
b No report under section 143(12) of the Act has been filed with the Central Government
for the period covered by our audit.
c According to the information and explanations given to us including the
representation made to us by the management of the Company, there are no whistle-blower
complaints received by the Company during the year.
xii. In our opinion and according to the information and explanations given to us, the
Company is not a Nidhi Company. Accordingly, paragraph 3(xii) of the Order is not
applicable.
xiii. According to the information and explanations given to us and based on our
examination of the records of the Company, transactions with the related parties are in
compliance with sections 177 and 188 of the Act where applicable and details of such
transactions have been disclosed in the financial statements as required by the applicable
accounting standards.
X1V a. In our opinion, the company has an adequate internal audit system
commensurate with the size and nature of its business; b We have considered the reports of
the Internal Auditors for the period under audit.;
xv. According to the information and explanations given to us and based on our
examination of the records of the Company, the Company has not entered into any non-cash
transactions with its Directors or persons connected with them. Therefore, the provision
of clause 3 {xv) of the Order is not applicable;
XV1 a In our opinion, the Company is not required to be registered under section
45-IA of the Reserve Bank of India Act 1934. Accordingly, para 3(xvi) (a) of the Order is
not applicable.
b The Company is not engaged in any Non-Banking Financial or Housing Finance
activities. Accordingly, para 3 (xvi)(b) of the Order is not applicable.
c The company is not a Core Investment Company (CIC) as defined in the
regulations made by the Reserve Bank of India. Hence Para 3(xvi) (c) of the said Order is
not applicable.
d. The Company is not part of any group (as per the provisions of the Core Investment
Companies (Reserve Bank) Directions, 2016 as amended). Accordingly, para 3(xvi) (d) of the
said Order is not applicable.
xvn The company has not incurred cash loss during the current financial year and
during the immediately preceding financial year.
xv^j There is no resignation of statutory auditors of the Company during the
year.
xix On ^ie basis of the financial ratios, ageing and expected dates of
realisation of financial assets and payment of financial liabilities, other information
accompanying the financial statements and our knowledge of the Board of Directors and
Management plans and based on our examination of the evidence supporting the assumptions,
as stated in para “Material Uncertainty Related to Going Concern” read with Note
no. 1 of the financial statements. We state that material uncertainty exists as on the
date of the audit report, so we are unable comment whether the Company is 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 and we further state that our
reporting is based on the facts up to the date of the audit report.
xx The Company is not obliged to spend amounts for CSR activities since the
Company does not fall in the category of Companies mentioned in section 135 of the
Companies Act. Hence the paras 3(xx) (a) and (b) of the said Order not applicable.
Regency Ceramics Limited 39* Annual Report
XX] The Company does not have subsidiaries, associates or joint ventures. Hence
para 3 {xxi} of the above said Order with regard to qualifications or adverse remarks in
CARO reports of the companies included in the consolidated financial statements, is not
applicable.
for KS.RAO & CO.
Chartered Accountants Firms RegnNo. 003109S
|
|
Sd/-
(M.NAGA PRASADU) |
Place |
: Hyderabad |
Partner |
Date |
: 26.05.2023 |
Membership No. 231388 IIDIN: 23231388BGYLDH1735 |
+91-9892691696
