Mar 31, 2023
Opinion
1. We have audited the accompanying standalone financial statements of Kesoram Industries Limited (''the Company''), which comprise the Balance Sheet as at 31 March 2023, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flow and the Statement of Changes in Equity for the year then ended, and notes to the standalone financial statements, including a summary of the significant accounting policies and other explanatory information.
2. I n our opinion and to the best of our information and according to the explanations given to us, 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 Indian Accounting Standards (''Ind AS'') specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2023, and its loss (including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.
Basis for Opinion
3. We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. Our responsibilities under those standards are further described in the Auditor''s 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 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 opinion.
Emphasis of Matter - Assets held for sale
4. We draw attention to note 33(b) to the standalone financial statements, which describes that the Company has disclosed certain assets as ''Assets held for sale'' as at year end pursuant to a Memorandum of Understanding with a potential buyer and measured these assets at the lower of their ''carrying value'' and ''fair value less costs to sell'' in accordance with the principles of Ind AS 105 ''Non-current Assets Held for Sale and Discontinued Operations'', which has resulted in a loss of '' 173.07 crores disclosed as ''Exceptional item'' in the accompanying standalone financial statements. Our opinion is not modified in respect of this matter.
Key Audit Matters
5. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. 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.
6. We have determined the matters described below to be the key audit matters to be communicated in our report.
Sr. No. |
Key Audit Matter |
Auditor''s Response |
1 |
Recoverability of deferred tax assets recognized on brought-forward tax losses Refer to Company''s significant accounting policies in note 2.12 and the deferred tax related disclosure in Notes 10 and 34 of the standalone financial statements. The Company has recognised deferred taxes assets on unutilised business loss (including unabsorbed depreciation) (together hereinafter referred to as "tax losses") as at March 31, 2023 amounting to '' 334.08 crores. The deferred tax assets have been recognised on the basis of the Company''s assessment of availability of sufficient future taxable profits to offset such tax losses, which is based on forecast of business operations. The assessment of meeting the recognition criteria as well as recoverability of the deferred tax assets within the time frame allowed under the Income tax Act, 1961, requires significant management judgement as it involves use of assumptions and estimates that are inherently subjective and depend on various factors including future market and economic conditions. Further, the industry that the Company/ Group operated in is a highly competitive and subject to frequent disruptions through changing technology. Any change in aforesaid assumptions could have a material impact on the carrying value of the deferred tax assets. Owing to the materiality of the balances, complexities and judgements involved as described above, we have identified the recoverability of deferred tax assets recognized on brought forward tax losses as a key audit matter for the current year audit. |
Our audit procedures included, but were not limited to the following: ⢠Evaluated the design and tested the operating effectiveness of Company''s key controls implemented with respect to recognition of deferred tax assets. ⢠Assessed the reasonableness of the period of projections used in the deferred tax asset recoverability assessment in accordance with the time period allowed under the Income Tax Act, 1961 with respect to utilisation of the said business losses against future taxable profits. ⢠Compared the Company''s projections of future taxable profit to approved business plans and assessed efficacy of management''s process for financial projections basis past business performance. ⢠Tested the assumptions used in the aforesaid future projections relating to the forecasts of future taxable profits and evaluated the reasonableness of the assumptions, including future growth rate underlying the preparation of these forecasts based on actual historical results, other relevant existing conditions, external data and market conditions. ⢠Tested the arithmetical accuracy of projections including those related to sensitivity analysis performed by management. ⢠Assessed the appropriateness and adequacy of the disclosures included in the accompanying standalone financial statements/ consolidated financial statements in accordance with the applicable standards. |
Sr. No. |
Key Audit Matter |
Auditor''s Response |
2 |
Impairment assessment of investments and loans in wholly-owned subsidiary As detailed in note 6 of standalone financial statements, the carrying value of Company''s investments in Cygnet Industries Limited (''the Subsidiary Company'') as at 31 March 2023 amounts to '' 306.22 crores. Further, as detailed in note 8 to the standalone financial statements, loans given to subsidiary as at 31 March 2023 amounts to '' 163.53 crores. The recoverability of the above-mentioned amounts is dependent on the operational performance of the subsidiary. The subsidiary has incurred losses during the recent years, and the management has identified the aforesaid as possible impairment indicators as per the principles enunciated under Ind AS 36, Impairment of Assets (''Ind AS 36''). The Management has assessed the recoverability of the said investment and loans, by carrying out a valuation of the subsidiary with the help of an external valuation expert using discounted cash flow method, which requires management to make significant estimates and assumptions relating to forecast of future business performance, and selection of the discount rates to determine the recoverable value to be considered for impairment testing of the carrying value of above-mentioned balances. Considering the materiality of the above matter to the standalone financial statements, complexities and judgement involved, and significant auditor attention required to test management''s assessment, we have identified this as a key audit matter for the current year audit. |
Our audit procedures included, but were not limited to the following ⢠Obtained an understanding of process and controls implemented by the Company to identity possible impairment indicators and to determine recoverability of amounts from subsidiary company and tested the design and operating effectiveness of such controls. ⢠Assessed the competence and objectivity of management''s expert involved by the management in determining the enterprise value of the Subsidiary Company; ⢠Assessed the valuation methodology and assumptions used by management''s expert to estimate the recoverability of investment with the help of auditor''s valuation experts. ⢠Reconciled the projected cashflows used in the valuation to approved business plans of the Subsidiary Company; ⢠Evaluated the appropriateness of assumptions applied in determining key inputs such as discount rate and terminal growth rate which included assumptions based on our knowledge of the business and relevant external market conditions; ⢠Tested the mathematical accuracy of the projections and applied independent sensitivity tests to the key assumptions mentioned above to determine and focus on inputs with high estimation uncertainty. ⢠Assessed the appropriateness and adequacy of disclosures made by the management in note 8 to standalone financial statements in accordance with requirements of the accounting standards. |
Sr. No. |
Key Audit Matter |
Auditor''s Response |
Implementation of a new Information Technology (''IT'') system for financial reporting and related migration of data The Company has implemented a new IT system, RAMCO (''new IT system'') with effect from 1 January 2023, for supporting its operations and financial reporting, which required an extensive exercise of data migration from erstwhile IT systems, INDICE/ SAP (''erstwhile IT system''). Such significant IT system change increases the risks to internal financial controls environment of the Company/ Group. These changes create a financial reporting risk while migration takes place as processes and controls that have been established over a number of years are migrated and updated into a new IT environment. The significant data migration required for the above exercise also leads to risk of errors. Considering the significance of the activity and its pervasive impact on the standalone financial statements, this matter has been determined as a key audit matter for current year audit. |
Our audit procedures included, but were not limited to the following: ⢠Obtained the understanding of the process followed and controls implemented by the Company for implementing the new IT system and migration of standing data from erstwhile IT systems into new IT system, which includes understanding the overall project implementation plan, project roles and responsibilities, determination of new system requirements including customisations to off-shelf package, and the plan for go-live. ⢠Evaluated the design and tested the operating effectiveness of key controls over the new system implementation and data migration, which includes controls over change management and system development. ⢠Reviewed the reconciliations prepared by the management relating to the data migration and tested movement of a sample general / sub-ledger accounts and balances, including standing data masters, from erstwhile IT system to the new IT system. ⢠Evaluated the design and operating effectiveness of the IT General Controls (ITGC), business process controls post migration (both automated and manual) of the new IT system and evaluated the impact of results in planning our audit procedures. |
Information other than the Standalone Financial
Statements and Auditor''s Report thereon
7. The Company''s Board of Directors are responsible for the other information. The other information comprises the information included in the Director''s Report but does not include the standalone financial statements and our auditor''s report thereon.
Tur opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
I n 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. 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 Standalone Financial Statements
8. The accompanying standalone financial statements have been approved by the Company''s Board of Directors. The Company''s Board of Directors are responsible for
the matters stated in section 134(5) of the Act with respect to the preparation and presentation of these standalone financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS specified under section 133 of the Act 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 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
9. I n preparing the financial statements, the Board of Directors are responsible for assessing the Company''s 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 intend to liquidate the Company or
to cease operations, or has no realistic alternative but to do so.
10. Those Board of Directors are also responsible for overseeing the Company''s financial reporting process.
Auditor''s Responsibilities for the Audit of the StandaloneFinancial Statements
11. 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 auditor''s 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 Standards on Auditing 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.
12. As part of an audit in accordance with Standards on Auditing, specified under section 143(10) of the Act we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
⢠I dentify 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;
⢠O btain 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 with reference to financial statements in place and the operating effectiveness of such controls;
⢠E valuate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;
⢠Oonclude on the appropriateness of Board of Directors'' 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 Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s 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 auditor''s
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;
13. 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.
14. 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.
15. 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 auditor''s 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.
16. The standalone financial statements of the Company for the year ended 31 March 2022 were audited by the predecessor auditor, Deloitte Haskins & Sells, who have expressed an unmodified opinion on those standalone financial statements vide their audit report dated 11 April 2022.
Report on Other Legal and Regulatory Requirements
17. As required by section 197(16) of the Act based on our audit, we report that the Company has paid remuneration to its directors during the year in accordance with the provisions of and limits laid down under section 197 read with Schedule V to the Act.
18. As required by the Companies (Auditor''s Report) Order, 2020 (''the Order'') issued by the Central Government of India in terms of section 143(11) of the Act we give in the Annexure A, a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
19. Further to our comments in Annexure A, as required by section 143(3) of the Act based on our audit, we report, to the extent applicable, that:
a) W e 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 of the accompanying standalone financial statements;
b) I n 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 standalone financial statements dealt with by this report are in agreement with the books of account;
d) I n our opinion, the aforesaid standalone financial statements comply with Ind AS specified under section 133 of the Act;
e) T n the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2023 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 with reference to financial statements of the Company as on 31 March 2023 and the operating effectiveness of such controls, refer to our separate Report in Annexure B wherein we have expressed unmodified opinion; and
g) W ith respect to the other matters to be included in the Auditor''s 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, as detailed in note 36 to the standalone financial statements, has disclosed the impact of pending litigations on its financial position as at 31 March 2023;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses as at 31 March 2023;
iii. The following delays were noted in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended 31 March 2023:
Amount ('' crores) |
Due date |
Date of payment |
0.02 |
Multiple dates |
Not yet paid |
iv. a. The management has represented that,
to the best of its knowledge and belief, as disclosed in note 47 (iv) to the standalone financial statements, no funds have been advanced or loaned or invested (either from borrowed funds or securities premium or any other sources or kind of funds) by the Company to or in any person(s) or entity(ies), including foreign entities (''the 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 (''the Ultimate Beneficiaries'') or provide any guarantee, security or the like on behalf the Ultimate Beneficiaries;
b. The management has represented that, to the best of its knowledge and belief, as disclosed in note 47 (v) to the standalone financial statements, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities (''the 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; and
c. T ased on such audit procedures performed as considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the management representations under sub-clauses (a) and (b) above contain any material misstatement.
v. The Company has not declared or paid any dividend during the year ended 31 March 2023;
vi. T roviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 requires all companies which use accounting software for maintaining their books of account, to use such an accounting software which has a feature of audit trail, with effect from the financial year beginning on 1 April 2023 and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 (as amended) is not applicable for the current financial year.
For Walker Chandiok & Co LLP
Chartered Accountants Firm''s Registration No.: 001076N/N500013
Manoj Kumar Gupta
Partner
Membership No.: 083906 UDIN:23083906BGXEKF2769
Mar 31, 2022
Opinion
We have audited the accompanying standalone financial statements of Kesoram Industries Limited ("the Company"), which comprise the Balance Sheet as at 31 March 2022, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flows and the Statement of Changes in Equity for the year then ended, and a summary of 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 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 Standards) Rules, 2015, as amended, ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March 2022, and its loss, total comprehensive loss, 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 financial statements in accordance with the Standards on Auditing specified under section 143(10) of the Act (SAs). Our responsibilities under those Standards are further described in the Auditor''s Responsibility 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 standalone 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 ICAI''s Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. 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 matters described below to be the key audit matters to be communicated in our report.
Sr. No. |
Key Audit Matter |
Auditor''s Response |
1 |
Impairment assessment of investment in and Loans and Advances to wholly owned subsidiary (Cygnet Industries Limited) The Company''s wholly owned subsidiary (Cygnet Industries Limited) involved in the business of manufacturing Rayon and Transparent paper, is not performing well due to adverse business conditions. As on March 31, 2022 the Company has an investment of R 926.54 Crores and outstanding loans of R 154.46 Crores in the said subsidiary and has recognised impairment loss on investment of R 154.25 Crores during the year ended 31st March 2022 (Cumulative impairment loss recognised as on 31st March 2022 amounts to R 620.32 Crores). The management at each reporting date assesses if there are any indicators that the investments in and loans to the subsidiary is impaired and, if indicators exist, performs an impairment test on these investments and loans by making an estimate of recoverable amount, being the higher of fair value less costs to sell and value in use. The recoverable amount of the investment in and loan to subsidiary is assessed based on complex assumptions that require the management to exercise their judgment such as future expected revenue, future expected revenue growth rate, EBIDTA (earnings before interest, depreciation and tax) margins, future cash flow, determination of historical trends, the most appropriate discount rate. We focused on this area due to significant carrying amount of the investment and loan to subsidiary and the significant management judgement and estimates involved in evaluation of recoverable amount. Refer note 5 "Investments in subsidiary and joint venture" and note 7 "Loans" of the Standalone Financial Statements. |
Principal audit procedures performed Our audit procedures, included validating the appropriateness of the impairment model and reasonableness of the assumptions used, focusing in particular on the business projections of Cygnet Industries Limited through the following procedures: ⢠Obtained an understanding of controls performed by the management to assess impairment indicators and perform impairment assessment. ⢠Evaluated Design and Operating Effectiveness of the management controls over the impairment assessment process and preparation of impairment workings. ⢠Benchmarked key market-related assumptions in the models, including discount rates and longterm growth rates, against external data, using our valuation specialists. ⢠Involved our fair value specialists to assist in the evaluation of the appropriateness of the model for calculating value in use and reasonableness of significant assumptions like discount rate and industry specific long-term growth rates. ⢠Tested the mathematical accuracy and performed sensitivity analysis in order to assess the potential impact of changes in the inputs used on the recoverable amount. ⢠Performed a detailed analysis of the revenue and cost projections and various assumptions relating to revenue growth for assessing the reliability of cash flow forecast, compared the revenues projections, EBIDTA (earnings before interest, depreciation and tax) margins and coherence the forecast with market trend through a review of actual past performance and comparison to previous forecasts to understand the appropriateness of the management estimates. ⢠Evaluated the adequacy of disclosures in the financial statements with respect to the assumptions and checked whether they were appropriately presented. |
Sr. No. |
Key Audit Matter |
Auditor''s Response |
2 |
Recoverability of deferred tax assets (DTA) |
Principal audit procedures performed |
recognized on carry-forwards tax losses, unabsorbed depreciation and provision for loans and advances |
⢠We obtained an understanding of controls performed by the management to assess the recoverability |
|
of the DTA relating to carry-forwards tax losses, |
||
The Company has recognised R 272.45 Crores as DTA, as at 31st March, 2022, relating to carryforwards tax losses, unabsorbed depreciation, provision for doubtful loans and advances and |
unabsorbed depreciation and provision for loans and advances. ⢠We evaluated Design and Operating Effectiveness |
|
capital losses. |
of the management controls over the process for determining the recoverability of the DTA relating to |
|
The Company exercises significant judgement in |
carry-forwards tax losses, unabsorbed depreciation |
|
assessing the recoverability of DTA relating to these |
and provision for loans and advances which included |
|
items. In estimating the recoverability of DTA, |
amongst others controls over the assumptions and |
|
management uses inputs such as internal business |
judgments used in the projections of future taxable |
|
and tax projections over a 10 year period. |
income. |
|
Recoverability of DTA on carry-forwards tax losses, |
⢠To assess the Company''s ability to estimate future |
|
unabsorbed depreciation and provision for loans |
taxable income, we compared the Company''s |
|
and advances is sensitive to the assumptions used |
previous forecasts to actual results. |
|
by management in projecting the future taxable income, the reversal of deferred tax liabilities which |
⢠We involved our tax professionals with specialized |
|
can be scheduled, and tax planning strategies. |
skills and knowledge to assist in evaluating taxation related matters including the Company''s tax planning |
|
Refer note 2.12 "Taxes on Income" for accounting policies, note 2.19 in "Use of estimates & critical accounting judgements" related to taxes, note |
strategies and interpretation of tax laws. ⢠We performed a sensitivity analysis over the key |
|
18 "Deferred Tax Assets/ Liabilities" and note 30 |
assumptions to assess their impact on the Company''s |
|
"Income tax expense" for disclosures related to |
determination that the DTA relating to carry-forwards |
|
taxes of the Standalone Financial Statements. |
tax losses, unabsorbed depreciation and provision for loans and advances. |
|
⢠We evaluated the adequacy of disclosures in the |
||
financial statements related to Deferred tax in notes 2.12, 2.19, 18 and 30 respectively of the standalone financial statements. |
Information Other than the Financial Statements and Auditor''s Report Thereon
The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Reports of Director and the following Annexures thereto (namely Management Discussion and Analysis, Report of Corporate Governance, Annual Report on Corporate Social Responsibility Activities, Form AOC-1, Conservation of Energy, Technology Absorption and Exchange Earnings and Outgo) but does not include the consolidated financial statements, standalone financial statements and our auditor''s report thereon.
⢠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 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.
Management''s Responsibility for the Standalone Financial Statements
The Company''s Board of Directors is 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 Ind AS 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 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 statement 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, management is responsible for assessing the Company''s 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 Company''s financial reporting process.
Auditor''s Responsibility 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 auditor''s 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 financial 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 the management.
⢠Conclude on the appropriateness of management''s 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 Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor''s 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 auditor''s 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 auditor''s 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 Section 143(3) of the Act, based on our audit 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 Other Comprehensive Income, the Statement of Cash Flows and Statement of Changes
in Equity dealt with by this Report are in agreement with the relevant books of account.
d) In our opinion, the aforesaid standalone financial statements comply with the Ind AS specified under Section 133 of the Act.
e) On the basis of the written representations received from the directors as on 31st March 2022 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March, 2022 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 and the operating effectiveness of such controls, refer to our separate Report in "Annexure A". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls over financial reporting.
g) With respect to the other matters to be included in the Auditor''s 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, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.
h) With respect to the other matters to be included in the Auditor''s 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 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, except the amount pertaining to Unpaid dividend of R 0.02 Crores and the related equity shares which has not been transferred. Based on the information and records available
with the Company, all these relates to the disputed matters with several shareholders.
iv. (a) The Management has represented that, to the
best of its knowledge and belief, as disclosed in the notes to the accounts 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(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, 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, as disclosed in the notes to accounts, no funds (which are material either individually or in the aggregate) 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, 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 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 provide under (a) & (b) above contain any material mis-statement.
v. The company has not declared or paid any dividend during the year and has not proposed final dividend for the year.
2. As required by the Companies (Auditor''s Report) Order, 2016 ("the Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in "Annexure B" a statement on the matters specified in paragraphs 3 and 4 of the Order.
Mar 31, 2019
Report on the Audit of the Standalone Financial Statements
Opinion
We have audited the accompanying standalone financial statements of Kesoram Industries Limited (âthe Companyâ), which comprise the Balance Sheet as at 31st March, 2019, and the Statement of Profit and Loss (including Other Comprehensive Income),the Statement of Cash Flows and the Statement of Changes in Equity for the year then ended, and a summary of 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 financial statements give the information required by the Companies Act, 2013 (âthe Actâ) 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 Standards) Rules, 2015, as amended, (âInd ASâ) and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2019, and its loss, total comprehensive loss, 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 financial statements in accordance with the Standards on Auditing specified under section 143(10) of the Act (SAs). Our responsibilities under those Standards are further described in the Auditorâs Responsibility 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 standalone 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 ICAIâs Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. 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 matters described below to be the key audit matters to be communicated in our report.
Sr. No. |
Key Audit Matter |
Auditorâs Response |
1. |
Impairment of Investment in subsidiary and Loan to |
How the Key Audit Matter Was Addressed in the |
subsidiary (Cygnet Industries Limited) - Notes 5A and |
Audit |
|
7B of the standalone financial statements |
Our audit procedures included challenging |
|
The Company has a wholly owned subsidiary, Cygnet |
management on the appropriateness of the |
|
Industries Limited, which is involved in the business of |
impairment models and reasonableness of the |
|
manufacturing Rayon and Transparent paper. As at 31st |
assumptions used, focusing in particular the |
|
March, 2019, the Company has an investment of 1430.05 |
business projections of Cygnet Industries Limited |
|
crores and has an outstanding loan of 1333.56 crores in |
through the following procedures: |
|
the said subsidiary. Considering the unfavourable financial performance of the subsidiary, the impairment of this investment and the recoverability of the loan could be dependent on projections by the management, which are based on assumptions. |
- We obtained an understanding of controls instituted by the management to assess impairment indicators and tested the effectiveness of the management controls over the impairment assessment process and preparation of impairment workings. |
We have considered impairment of investment and loans to |
- |
Benchmarking key market-related assumptions |
|
subsidiary as a Key Audit Matter considering the fact that |
in the models, including discount rates and long |
||
the investments and the loan are material to the financial |
term growth rates, against external data, using |
||
statements and significant judgements and estimates |
our valuation specialists; |
||
are involved to assess whether there are indicators of |
Tested the mathematical accuracy and performed sensitivity analysis in order to assess the potential |
||
impairment, such as: |
|||
- The determination of recoverable amount, being the |
impact of changes in the inputs used on the |
||
higher of value-in-use and fair value less costs to dispose, |
recoverable amount; |
||
requires estimations on the part of management. Recoverable amounts are based on managementâs |
- |
Performed a detailed analysis of the revenue and |
|
judgement and estimate. We have considered projected volumes, EBITDA margins, discount rate and the long term growth rates as key inputs in the impairment analysis. |
cost projections and various assumptions relating to revenue growth and compared the revenue projections based on the past actual figures to understand the appropriateness/realistic of the |
||
management estimates. |
|||
- Risk regarding the business projections prepared by the management as projected revenue and cost are sensitive to reasonably possible changes in the assumptions used, which could result in the calculated recoverable |
- |
Evaluated the adequacy of disclosures in the financial statements with respect to the assumptions and checked whether they were |
|
amount being lower than the carrying value, resulting |
appropriately presented. |
||
in an impairment charge. |
|||
2. |
Tangible property, plant and equipment - Tyre division |
How the Key Audit Matter was Addressed in the |
|
- impairment assessment [Note 39 of the standalone |
Audit: |
||
financial statements] |
Our audit procedures included challenging manage- |
||
The tyre division of Kesoram Industries Limited has been |
ment on the appropriateness and reasonableness of |
||
making continuous losses in past few previous years due to |
the fair valuation approach and assumptions used for |
||
various internal and external factors. As at 31st March, 2019 |
determining the fair value of assets by external experts |
||
the written down value of the fixed assets amounted to |
through performing the following: |
||
11,321.81 crores [this includes 1749.49 crores for Passenger |
- |
We obtained an understanding of controls |
|
Car Radial Tyres, which is yet to commence commercial |
instituted by the management to assess |
||
operations]. The Company has announced demerger |
impairment indicators and tested the operation |
||
of its tyre business on 4th December, 2018. Considering |
of the management controls over the impairment |
||
the continuous losses incurred by the tyre division, |
assessment process and review of fair valuation |
||
the probability of impairment could be dependent on |
report obtained from the external experts. |
||
assumptions and methodology used for the fair valuation |
|||
of the Property, Plant and Equipment by the management |
- |
Tested the reasonableness of the fair valuation |
|
appointed external experts. |
methodology used and the assumptions made for |
||
determining the fair value of the assets using our |
|||
Impairment assessment of the Property, Plant and Equipment |
internal fair valuation specialists. |
||
of the tyre division is considered as a Key Audit Matter since |
|||
there is significant management judgements and estimates |
- |
Reconciled the carrying amount of the assets |
|
involved in the impairment assessment, such as: |
category wise as per the valuation report provided |
||
- The determination of recoverable amount, being |
by the management and as per the books. |
||
the higher of value-in-use and fair value less costs to |
- |
Evaluated the adequacy of disclosures in |
|
dispose. |
the financial statements with respect to the |
||
- The methodology used in determination of the fair value of assets by management appointed external |
assumptions and checked whether they were appropriately presented. |
||
experts may be dependent on interpretation of the |
|||
valuation standards and the assumptions used such as |
|||
inflation index rates, useful lives, salvage value. |
Information Other than the Financial Statements and Auditorâs Report thereon
- The Companyâs Board of Directors is responsible for the other information. The other information comprises the Report of the Directors and the following Annexures thereto (namely Management Discussion and Analysis, Report on Corporate Governance, Annual Report on Corporate Social Responsibility Activities, Form AOC -1, Conservation of energy, Technology Absorbtion and exchange Earnings and Outgo) but does not include the standalone financial statements and our auditorâs report thereon.
- 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 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.
Managementâs Responsibility for the Standalone Financial Statements
The Companyâs Board of Directors is 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 Ind AS 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 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 statement 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, management is responsible for assessing the Companyâs 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 Companyâs financial reporting process.
Auditorâs Responsibility 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 auditorâs 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 financial 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 the management.
- Conclude on the appropriateness of managementâs 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 Companyâs ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditorâs 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 auditorâs 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 auditorâs 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 Section 143(3) of the Act, based on our audit we report:
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 Other Comprehensive Income, the Statement of Cash Flow 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 financial statements comply with the Ind AS specified under Section 133 of the Act.
e) On the basis of the written representations received from the directors as on 31st March, 2019 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 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 and the operating effectiveness of such controls, refer to our separate Report in âAnnexure Aâ. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Companyâs internal financial controls over financial reporting.
g) With respect to the other matters to be included in the Auditorâs 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, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.
h) With respect to the other matters to be included in the Auditorâs 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 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.
2. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ) issued by the Central Government in terms of Section 143(11) of the Act, we give in âAnnexure Bâ a statement on the matters specified in paragraphs 3 and 4 of the Order.
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (âthe Actâ)
We have audited the internal financial controls over financial reporting of Kesoram Industries Limited (âthe Companyâ) as of 31st March, 2019 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date.
Managementâs Responsibility for Internal Financial Controls
The Board of Directors of the Company is responsible for establishing and maintaining internal financial controls based on âthe internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of Indiaâ. 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 Companyâs policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.
Auditorâs Responsibility
Our responsibility is to express an opinion on the Companyâs internal financial controls over financial reporting of the Company based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (theâGuidance Noteâ) issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditorâs judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained, is sufficient and appropriate to provide a basis for our audit opinion on the Companyâs internal financial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A companyâs internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companyâs internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the Companyâs assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, to the best of our information and according to the explanations given to us the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March, 2019 based on the criteria for internal financial control over financial reporting 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 issued by the Institute of Chartered Accountants of India.
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) The Company has a program of verification of fixed assets to cover all the items in a phased manner over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the program, certain fixed assets were physically verified by the Management during the year. According to the information and explanations given to us, no material discrepancies were noticed on such verification.
(c) According to the information and explanations given to us and the records examined by us and based on the examination of the registered sale deed, transfer deed, conveyance deed, mutation of title papers, provided to us, we report that, the title deeds, comprising all the immovable properties of land and buildings, are held in the name of the Company.
Immovable properties of land and buildings whose title deeds have been pledged as security for loans, guarantees, etc., are held in the name of the Company based on the confirmations directly received by us from lenders. In respect of immovable properties of land that have been taken on lease and disclosed as fixed asset in the financial statements, the lease agreements are in the name of the Company, where the Company is the lessee in the agreement.
(ii) The inventory, except for goods-in-transit and stock lying with third parties, has been physically verified by the management at reasonable intervals during the year. In our opinion, the frequency of such verification is reasonable. For stocks lying with third parties at the year-end, written confirmations have been obtained and in respect of goods-in-transit, subsequent goods receipts have been verified or confirmations have been obtained from the parties. The discrepancies noticed on verification between the physical stocks and the book records were not material.
(iii) According to the information and explanations given to us, the Company has granted loans, unsecured, to companies, covered in the register maintained under section 189 of the Companies Act, 2013, in respect of which:
(a) The terms and conditions of the grant of such loans are, in our opinion, prima facie, not prejudicial to the Companyâs interest except for one loan to Gondkhari Coal Mining Limited a joint venture aggregating 1 7.11 crore as on 31st March, 2019, with a maximum amount of 17.11 crore outstanding during the year, which was granted without any agreement specifying terms and conditions, and is therefore in our opinion prejudicial to the Companyâs interests.
(b) In respect of the aforesaid loan of 17.11 crore, the outstanding towards principal is fully provided for and no interest is being charged. The other loan amounting to 1333.56 crore is repayable on demand. The party is regular in repayment of principal and payment of interest as applicable.
(c) In respect of the aforesaid loans, except for an amount aggregating 17.11 crore which is already provided for, there is no amount which is overdue for more than ninety days.
(iv) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 185 and 186 of the Companies Act, 2013 in respect of grant of loans, making investments and providing guarantees and securities, as applicable.
(v) According to the information and explanations given to us, the Company has not accepted any deposit during the year and had no unclaimed deposits at the beginning of the year as per the provisions of Sections 73 to 76 or any other relevant provisions of the Companies Act, 2013.
(vi) The maintenance of cost records has been specified by the Central Government under section 148(1) of the Companies Act, 2013. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended prescribed by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013, and are of the opinion that, prima facie, the prescribed cost records have been made and maintained . We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.
(vii) According to the information and explanations given to us, in respect of statutory dues:
(a) The Company has been generally regular in depositing undisputed statutory dues, including Provident Fund, Employeesâ State Insurance, Income-tax, Customs Duty, Cess and other material statutory dues applicable to it to the appropriate authorities except for Goods and Service tax (including interest thereon) though the delays in deposit have not been serious.
(b) There were no undisputed amounts payable in respect of Provident Fund, Employeesâ State Insurance, Income-tax, Customs Duty, Cess and other material statutory dues in arrears as at 31st March, 2019 for a period of more than six months from the date they became payable except for Goods and Service tax (including interest) the details of which are given below:
Name of the Statute |
Nature of Dues |
Amount (Rs. In Crores) |
Period to which the amount relates |
Due date |
Date of Payment |
The Central, State and Integrated Goods and Service Tax Act, 2017 |
Goods and Service tax |
7.65 |
2017-2018 |
Various dates in 2017 - 2018 starting from December, 2017 |
Not paid till date |
The Central, State and Integrated Goods and Service Tax Act, 2017 |
Interest on unpaid amount of goods and service tax |
1.51 |
2017-2018 |
Not Applicable |
Not paid till date |
The Central, State and Integrated Goods and Service Tax Act, 2017 |
Goods and Service tax |
11.03 |
2018-2019 |
Various dates in 2018 - 2019 starting from May, 2018 |
Not Paid till date |
The Central, State and Integrated Goods and Service Tax Act, 2017 |
Interest on unpaid amount of goods and service tax |
3.39 |
2018-2019 |
Not Applicable |
Not paid till the date |
The Company was hitherto charging GST @ 18% on sale of Tubes and Flaps even on composite supply with tyres on which the rate was 28%. The Company has started levying GST to its customers @ 28% on Tubes and Flaps instead of 18% on composite supply based on industry position change with retrospective effect from November 2017. The Company has issued debit notes to its customers for the differential amount of GST in the month of March 2019. The above table includes an amount of 116.70 crore and 12.64 crore remained unpaid on account of GST and interest respectively at the end of the year
(c) Details of dues of Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, and Value Added Tax which have not been deposited as on 31st March, 2019 on account of disputes are given below:
Name of the Statute |
Nature of Dues |
Forum where dispute is pending |
Period |
Amount (Rs. In Crores) |
Andhra Pradesh General Sales Tax Act, 1957 |
Sales Tax |
Tribunal |
2003-2004 |
0.11 |
Andhra Pradesh VAT Act |
Sales Tax |
High Court |
2006-2010 |
0.64 |
Bihar VAT Act, 2005 |
Sales Tax |
Commissioner (Appeals) |
2013-2014 |
0.65 |
Bombay Sales Tax Act |
Sales Tax |
Deputy Commissioner of Sales Tax ( Appeals), Amravati Division |
2003-2005 |
0.32 |
Central Excise Act, 1944 |
Central Excise |
Additional Commissioner |
2005-2007 |
2.68 |
Central Excise Act, 1944 |
Central Excise |
Assistant Commissioner |
1991-1992,1992-1993, 1993-1994,1994-1995, 1995-1996,1996-1997, 1997-1998,1998-1999, 1999-2000,2002-2003, 2003-2004,2004-2005, 2005-2006, 2006-2007 |
7.39 |
Central Excise Act, 1944 |
Central Excise |
CESTAT |
1975-1999,1999-2000, 2000-2001,2001-2002, 2002-2003,2003-2004, 2004-2005,2005-2006, 2006-2007,2007-2008, 2008-2009,2009-2010, 2010-2011,2011-2012, 2012-2013,2013-2014, 2014-2015, 2015-2016 |
107.04 |
Central Excise Act, 1944 |
Central Excise |
Commissioner |
1985-1990, 1995-1996, 1996-1997, 1997-1998, 1998-1999, 1999-2000, 2000-2001, 2001-2002, 2003-2005, 2005-2006, 2007-2008, 2009-2010, 2010-2011, 2011-2012, 2012-2013, 2014-2015 |
32.51 |
Central Excise Act, 1944 |
Central Excise |
Commissioner (Appeals) |
1994,1997-1998, 2002-2003,2003-2007, 2007-2011,2016-2017 |
10.24 |
Central Excise Act, 1944 |
Central Excise |
Deputy Commissioner |
2004 |
0.03 |
Central Excise Act, 1944 |
Central Excise |
High Court |
1994,2005-2007 |
0.40 |
Central Excise Act, 1944 |
Central Excise |
Superintendent of Central Excise |
1979-1983, 1992-1993, 1995-2000, 2001-2006, 2011-2013, 2015-2016 |
0.49 |
Central Excise Act, 1944 |
Central Excise |
Supreme Court |
2010 |
0.08 |
Central Sales Tax Act, 1956 |
Sales Tax |
Additional Commissioner |
1996-1997, 2014-2015 |
0.10 |
Central Sales Tax Act, 1956 |
Sales Tax |
Assistant Commissioner |
2016-2017 |
0.06 |
Central Sales Tax Act, 1956 |
Sales Tax |
CESTAT |
2009-2010 |
20.73 |
Central Sales Tax Act, 1956 |
Sales Tax |
Commercial Tax Officer |
2013-2014 |
0.06 |
Central Sales Tax Act, 1956 |
Sales Tax |
Commissioner (Appeals) |
2010-2011 |
0.06 |
Central Sales Tax Act, 1956 |
Sales Tax |
Deputy Commissioner |
2012-2013 |
0.02 |
Central Sales Tax Act, 1956 |
Sales Tax |
High Court |
1999-2000, 2001-2002, 2003-2004, 2006-2007, 2009-2010, 2011-2012, 2015-2016 |
7.83 |
Central Sales Tax Act, 1956 |
Sales Tax |
Joint Commissioner (Appeals) |
2003-2004 |
2.23 |
Central Sales Tax Act, 1956 |
Sales Tax |
Karnataka Appellate Tribunal, Bangalore |
2004-2005 |
1.27 |
Central Sales Tax Act, 1956 |
Sales Tax |
Revisional Board |
2008-2009,2010-2011 |
0.07 |
Central Sales Tax Act, 1956 |
Sales Tax |
Sales Tax Tribunal |
2002-2003,2004-2005, 2007-2008,2008-2009, 2009-2010,2010-2011 |
13.30 |
Central Sales Tax Act, 1956 |
Sales Tax |
Supreme Court |
2003-2004 |
1.83 |
Central Sales Tax Act, 1956 |
Sales Tax |
WB Appellate & Revisional Board |
2003-2004, 2004-2005, 2005-2006, 2006-2007, 2007-2008, 2008-2009, 2009-2010, 2010-2011 |
7.65 |
CST Demanded under UP Trade Act,1948 |
Sales Tax |
Additional Commissioner (Appeals) |
2005-2006, 2006-2007 |
0.01 |
Customs Act 1962 |
Custom Duty |
Assistant Commissioner of Customs |
2008-2010 |
0.02 |
Customs Act 1962 |
Custom Duty |
CESTAT |
2014-2015 |
1.44 |
Finance Act , 1994 |
Service Tax |
CESTAT |
2005-2006 to 2016-2017 |
46.85 |
Finance Act , 1994 |
Service Tax |
Commissioner (Appeals) |
2009-2010 |
0.03 |
Finance Act , 1994 |
Service Tax |
Superintendent of Central Excise |
2013-2014, 2014-2015 |
0.11 |
Gujarat VAT Act |
Sales Tax |
Commercial Tax Officer |
2013-2014 |
0.58 |
Jharkhand VAT Act, 2005 |
Sales Tax |
Commissioner |
2010-2011, 2012-2013 |
0.73 |
Jharkhand VAT Act, 2005 |
Sales Tax |
Tribunal |
2010-2011 |
0.14 |
Kerala VAT Act |
Sales Tax |
Deputy Commissioner |
2011-2012 |
2.14 |
Odisha Value Added Tax Act, 2004 |
Sales Tax |
Additional Commissioner (Appeals) |
2010-2011, 2011-2012 |
11.46 |
Odisha Value Added Tax Act, 2004 |
Sales Tax |
Deputy Commissioner |
2016-2018 |
0.54 |
Odisha Value Added Tax Act, 2004 |
Sales Tax |
Joint Commissioner (Appeals) |
2015-2016 |
0.32 |
Odisha Value Added Tax Act, 2004 |
Sales Tax |
Sales Tax Tribunal |
2005-2006, 2008-2009, 2009-2010 |
5.43 |
Rajasthan VAT Act, 2003 |
Sales Tax |
Deputy Commissioner |
2008-2009 |
0.01 |
UP Trade Tax Act,1948 |
Sales Tax |
Additional Commissioner (Appeals) |
2006-2007 |
0.09 |
UP VAT |
Sales Tax |
Additional Commissioner (Appeals) |
2010-2011, 2011-2012, 2013-2014 |
0.46 |
WB Sales Tax Act,1994 |
Sales Tax |
WB Taxation Tribunal |
1998-1999 |
0.07 |
WB Sales Tax Act,1994 |
Sales Tax |
Deputy Commissioner |
1995-1996, 1997-1998 |
0.21 |
WB VAT Act, 2003 |
Sales Tax |
Revisional Board |
2007-2008, 2008-2009, 2009-2010, 2010-2011 |
8.69 |
WB VAT Act, 2003 |
Sales Tax |
WB Appellate & Revisional Board |
2003-2004, 2004-2005, 2005-2006, 2006-2007, 2007-2008, 2008-2009, 2009-2010 |
6.07 |
WB VAT Act, 2003 |
Sales Tax |
WB Taxation Tribunal |
2006-2007, 2010-2011 |
3.24 |
Delhi Sales Tax Act, 1975 |
Sales Tax |
Assessing Authority |
1999-2000 |
0.42 |
(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of loans or borrowings to financial institutions, banks and government. The Company has not issued any debentures.
(ix) In our opinion and according to the information and explanations given to us, the term loans taken have been applied by the Company during the year for the purposes for which they were raised.
(x) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company or no material fraud on the Company by its officers or employees has been noticed or reported during the year.
(xi) In our opinion and according to the information and explanations given to us, the Company has paid / provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.
(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of the CARO 2016 Order is not applicable.
(xiii) In our opinion and according to the information and explanations given to us the Company is in compliance with Section 177 and 188 of the Companies Act, 2013, where applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the financial statements etc. as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us, the Company had made preferential allotment of shares and fully convertible warrants under section 42 and 62(1)(c) of the Companies Act, 2013 and other relevant SEBI ICDR Regulations during the year ended 31st March, 2018. The Company had received 90% of the total subscription amount in the year ended 31st March, 2018 and balance 10% has been received in the current year.
In respect of the above issue, we further report that:
a) the requirement of Section 42 of the Companies Act, 2013, as applicable, have been complied with; and
b) the amounts raised have been applied by the Company during the year for the purposes for which the funds were raised.
(xv) In our opinion and according to the information and explanations given to us, during the year the Company has not entered into any non-cash transactions with its directors or directors of its holding, subsidiary or associate company or persons connected with them and hence provisions of section 192 of the Companies Act, 2013 are not applicable.
(xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.
For Deloitte Haskins & Sells
Chartered Accountants
(Firmâs Registration No. 302009E)
Abhijit Bandyopadhyay
Place: Kolkata Partner
Date: 15th May, 2019 (Membership No. 054785)
Mar 31, 2018
Independent Auditor''s Report
TO THE MEMBERS OF KESORAM INDUSTRIES LIMITED
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements of Kesoram Industries Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2018, and the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information.
Management''s Responsibility for the Standalone Ind AS
Financial Statements
The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone Ind AS financial statements 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 the Companies (Indian Accounting Standards) Rules, 2015, as amended, 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 the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors'' Responsibility
Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit.
In conducting our audit, we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under and the Order issued under section 143(11) of the Act.
We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone Ind AS financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements.
We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.
Opinion
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 Act in the manner so required and give a true and fair view in conformity with the Ind AS and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2018, and its loss, total comprehensive loss, its cash flows and the changes in equity for the year ended on that date.
Other Matters
The comparative financial information of the Company for the year ended March 31, 2017 and the transition date opening balance sheet as at April 01, 2016 included in these standalone Ind AS financial statements, are based on the statutory financial statements prepared in accordance with the Companies (Accounting Standards) Rules, 2006 audited by the predecessor auditor whose report for the year ended March 31, 2017 and March 31, 2016 dated April 28, 2017 and May 25, 2016 respectively expressed an unmodified opinion on those standalone financial statements, and have been restated to comply with Ind AS. Adjustments made to the previously issued said financial information prepared in accordance with the Companies (Accounting Standards) Rules, 2006 to comply with Ind AS have been audited by us.
Our opinion on the standalone Ind AS financial statements is not modified in respect of this matter
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act, based on our audit, we report, to the extent applicable 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 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 standalone Ind AS financial statements comply with the Indian Accounting Standards prescribed under section 133 of the Act.
e) On the basis of the written representations received from the directors of the Company as on March 31, 2018 take 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 adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure A". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls over financial reporting.
g) With respect to the other matters to be included in the Auditor''s 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 33;
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.
2. As required by the Companies (Auditor''s Report) Order, 2016 ("the Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in "Annexure B" a statement on the matters specified in paragraphs 3 and 4 of the Order.
Report on the Internal Financial Controls Over Financial
(Referred to in paragraph 1(f) under ''Report on Other Legal and Regulatory Requirements'' section of our report of even date)
Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")
We have audited the internal financial controls over financial reporting of Kesoram Industries Limited ("the Company") as of March 31, 2018 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date.
Management''s Responsibility for Internal Financial
Controls
The Company''s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. 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 company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.
Auditor''s Responsibility
Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting of the Company based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial
Reporting
A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2018, based on the internal financial control over financial reporting 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 issued by the Institute of Chartered Accountants of India.
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) The Company has a program of verification of fixed assets to cover all the items in a phased manner over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the program, certain fixed assets were physically verified by the Management during the year. According to the information and explanations given to us, no material discrepancies were noticed on such verification.
(c) According to the information and explanations given to us and the records examined by us and based on the examination of the registered sale deed, transfer deed, conveyance deed, mutation of title papers, provided to us, we report that, the title deeds, comprising all the immovable properties of land and buildings, are held in the name of the Company as at the balance sheet date. Immovable properties of land and buildings whose title deeds have been pledged as security for loans, guarantees, etc., are held in the name of the Company based on the confirmations directly received by us from lenders. In respect of immovable properties of land that have been taken on lease and disclosed as fixed asset in the financial statements, the lease agreements are in the name of the Company, where the Company is the lessee in the agreement.
(ii) The inventory, except for goods-in-transits and stock lying with third parties, has been physically verified by the management at reasonable intervals during the year. In our opinion, the frequency of such verification is reasonable. For stocks lying with third parties at the year-end, written confirmations have been obtained and in respect of goods-in-transit, subsequent goods receipts have been verified or confirmations have been obtained from the parties. The discrepancies noticed on verification between the physical stocks and the book records were not material.
(iii) According to the information and explanations given to us, the Company has granted loans, unsecured, to companies, covered in the register maintained under section 189 of the Companies Act, 2013, in respect of which:
(a) The terms and conditions of the grant of such loans are, in our opinion, prima facie, not prejudicial to the Company''s interest except for one loan aggregating Rs. 7.11 crore as on at March 31, 2018, with a maximum amount of Rs. 7.11 crore outstanding during the year, which was granted without specifying any repayment terms, and is therefore in our opinion prejudicial to the Company''s interests.
(b) In respect of the aforesaid loans, except for an amount aggregating Rs. 7.11 crore outstanding towards principal and which is fully provided for, the other loan amounting to Rs. 386.23 crore is repayable on demand. However, the party is regular in payment of interest as applicable.
(c) In respect of the aforesaid loans, except for an amount aggregating Rs. 7.11 crore which is already provided for, there is no amount which is overdue for more than ninety days.
(iv) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 185 and 186 of the Companies Act, 2013 in respect of grant of loans, making investments and providing guarantees and securities, as applicable.
(v) According to the information and explanations given to us, the Company has not accepted any deposit during the year and had no unclaimed deposits at the beginning of the year as per the provisions of Sections 73 to 76 or any other relevant provisions of the Companies Act, 2013.
(vi) The maintenance of cost records has been specified by the Central Government under section 148(1) of the Companies Act, 2013. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended prescribed by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013, and are of the opinion that, prima facie, the prescribed cost records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.
(vii) According to the information and explanations given to us, in respect of statutory dues:
(a) The Company has been regular in depositing undisputed statutory dues, including Provident Fund, Employees'' State Insurance, Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Goods and Service Tax, cess and other material statutory dues applicable to it to the appropriate authorities.
(b) There were no undisputed amounts payable in respect of Provident Fund, Employees'' State Insurance, Income-tax, Sales Tax, Service Tax, Customs Duty,
Excise Duty, Value Added Tax, Goods and Service Tax, cess and other material statutory dues in arrears as at March 31, 2018 for a period of more than six months from the date they became payable.
(c) Details of dues of Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, and Value Added Tax which have not been deposited as on March 31, 2018 on account of disputes are given below:
Name of the statute |
Nature of dues |
Forum where dispute is pending |
Period |
Amount |
Andha Pradesh General Sales Tax Act, 1957 |
Sales Tax |
Tribunal |
2003-04 |
0.11 |
Andhra Pradesh VAT Act |
Sales Tax |
High Court |
2006 - 2009 |
0.54 |
Bihar VAT Act, 2005 |
Sales Tax |
Commissioner (Appeals) |
2013-14 |
0.65 |
Bihar VAT Act, 2005 |
Sales Tax |
Joint Commissioner (Appeals) |
2008-09 |
0.01 |
Bombay Sales Tax Act |
Sales Tax |
Deputy Commissioner of Sales Tax ( Appeals), Amravati Division |
2003-04, 2004-05 |
0.32 |
Central Excise Act, 1944 |
Central Excise |
Additional Commissioner |
2005 - 2006,2006 - 2007, 2007 - 2008, 2008 - 2009, 2009 - 2010, 2010 - 2011, 2011 - 2012, 2012 - 2013, 2013 - 2014, 2014 - 2015, 2015 - 2016 |
6.36 |
Central Excise Act, 1944 |
Central Excise |
Assistant Commissioner |
1991- 92, 1993 -94, 1994 - 95, 1995 - 96, 1996 - 97, 1997 - 98, 1998 - 99, 1999 - 2000, 2000 - 2001, 2001 - 02, 2002 - 03, 2003 - 04, 2004 - 05, 2005 - 06, 2006 - 07, 2009 - 10, 2010 - 11, 2013 - 14, 2015 - 16, 2016 - 17 |
7.68 |
Central Excise Act, 1944 |
Central Excise |
CESTAT |
1974 - 75, 1987 - 88, 1993 - 94, 1994 - 95, 1995 - 96, 1996 -97, 1997 - 98, 1998 - 99, 1999 - 2000, 2000 - 01, 2001 - 02, 2002 - 03, 2003 - 04, 2004 - 05, 2005 - 06, 2006 - 07, 2007 - 08, 2008 - 09,2009 - 10,2010 - 11,2011 -12, 2012 - 13 |
142.56 |
Name of the statute |
Nature of dues |
Forum where dispute is pending |
Period |
Amount |
Central Excise Act, 1944 |
Central Excise |
Commissioner |
1985-1990, 1995 - 96, 1996 - 97, 1997 - 98, 1998 - 99, 1999 - 2000, 2000 -01, 2001 - 02, 2002 - 03, 2003 - 04, 2004 - 05, 2005 - 06, 2006 - 07, 2007 - 08, 2008 - 09, 2009 - 10, 2010 - 11, 2011 - 12, 2012 - 13,2013 - 14, 2014 -15, 2015 - 16, 2016 - 17 |
38.48 |
Central Excise Act, 1944 |
Central Excise |
Commissioner (Appeals) |
1994, 1997 - 98, 1998 - 99, 2002 - 03, 2003 - 04, 2004 - 05, 2005 - 06, 2006 - 07, 2007 - 08, 2008 - 09, 2009 - 10, 2010 - 11,2013 - 14, 2014 - 15, 2015 - 16 |
13.81 |
Central Excise Act, 1944 |
Central Excise |
Deputy Commissioner |
2004 |
0.03 |
Central Excise Act, 1944 |
Central Excise |
High Court |
1994, 2005 - 06, 2006 - 07 |
1.16 |
Central Excise Act, 1944 |
Central Excise |
Superintendent of Central Excise |
1979-80, 1980-81, 1982-83, 1992-93, 1995-96, 1996-97, 1997-98, 1998-99, 1999-00, 2000-01, 2001-02, 2002-03, 2004-05, 2005-06, 2011-12, 2012-13, 2013-14, 2014-15, 2015-16 |
0.49 |
Central Excise Act, 1944 |
Central Excise |
Superintendent, Central Excise |
2002 |
0.03 |
Central Excise Act, 1944 |
Central Excise |
Supreme Court |
2010 |
0.08 |
Central Sales Tax Act, 1956 |
Sales Tax |
Additional Commissioner |
1996-97, 1998-99 |
0.07 |
Central Sales Tax Act, 1956 |
Sales Tax |
Appeal |
2013-14 |
0.06 |
Central Sales Tax Act, 1956 |
Sales Tax |
Assistant Commissioner |
2000-01, 2016-17 |
0.07 |
Central Sales Tax Act, 1956 |
Sales Tax |
CESTAT |
2009-10 |
20.70 |
Central Sales Tax Act, 1956 |
Sales Tax |
Commissioner (Appeals) |
2010-11 to 2014-15 |
0.43 |
Central Sales Tax Act, 1956 |
Sales Tax |
Deputy Commissioner |
2012-13, 2015-16, 2016-17 |
0.10 |
Central Sales Tax Act, 1956 |
Sales Tax |
High Court |
2001-02, 2003-04, 2009-10, 2015-16 |
15.57 |
Central Sales Tax Act, 1956 |
Sales Tax |
JCCT |
2011-12, 2012-14 |
2.08 |
Central Sales Tax Act, 1956 |
Sales Tax |
Joint Commissioner of Commercial Taxes (Appeals) |
2009-10 |
0.19 |
Central Sales Tax Act, 1956 |
Sales Tax |
Karnataka Appellate Tribunal, Bangalore |
2004-05 |
1.27 |
Central Sales Tax Act, 1956 |
Sales Tax |
NA |
2001-02 |
0.05 |
Central Sales Tax Act, 1956 |
Sales Tax |
Revisional Board |
2008-09, 2010-11 |
0.07 |
Name of the statute |
Nature of dues |
Forum where dispute is pending |
Period |
Amount |
Central Sales Tax Act, 1956 |
Sales Tax |
Sales Tax Tribunal |
1995-96, 1997-98 |
0.05 |
Central Sales Tax Act, 1956 |
Sales Tax |
Senior Joint Commissioner, Corporate |
2013-14 |
0.05 |
Central Sales Tax Act, 1956 |
Sales Tax |
Supreme Court |
2003-04 |
4.06 |
Central Sales Tax Act, 1956 |
Sales Tax |
Tribunal |
1999-00, 1994-95, 2002-03, 2004-05, 2007-08, 2008-09, 2009-10, 2010-11, 2011-12 |
4.88 |
Central Sales Tax Act, 1956 |
Sales Tax |
Tribunal & High Court |
2006-07 |
0.52 |
Central Sales Tax Act, 1956 |
Sales Tax |
WB Appellate & Revisional Board |
2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2009-10, 2010-11 |
7.02 |
CST Demanded under UP Trade Act,1948 |
Sales Tax |
Addition Commissioner (Appeals) |
2005-06, 2006-07 |
0.01 |
Customs |
Customs |
Assistant Commissioner of Customs |
2008-09 |
0.02 |
Customs |
Customs |
CESTAT |
2014-15 |
1.44 |
Delhi Sales Act, 1975 |
Sales Tax |
Assessing Authority |
1999-00 |
0.42 |
Finance Act, 1994 |
Service Tax |
Assistant Commissioner |
2006-07 to 2007-08 |
0.13 |
Finance Act, 1994 |
Service Tax |
CESTAT |
2007-08, 2008-09, 2009-10 |
0.60 |
Finance Act, 1994 |
Service Tax |
Commissioner (Appeals) |
2005-06, 2006-07, 2007-08, 2009-10, 2010-11, 2011-12 |
1.18 |
Finance Act, 1994 |
Service Tax |
Superintendent of Central Excise |
2013-14, 2014-15 |
0.12 |
Gujarat VAT Act |
Sales Tax |
Appeal |
2013-14 |
0.73 |
Jharkhand VAT Act, 2005 |
Sales Tax |
Commissioner |
2010-11, 2012-13 |
0.73 |
Jharkhand VAT Act, 2005 |
Sales Tax |
Joint Commissioner (Appeals) |
2013-14 |
0.09 |
Jharkhand VAT Act, 2005 |
Sales Tax |
Tribunal |
2010-11 |
0.14 |
Odisha Value Added Tax Act, 2004 |
Sales Tax |
Addition Commissioner (Appeals) |
2010-11 |
8.12 |
Odisha Value Added Tax Act, 2004 |
Sales Tax |
Additional Commissioner |
2005-06, 2007-08 |
0.90 |
Odisha Value Added Tax Act, 2004 |
Sales Tax |
CTC TRIBUNAL |
2008-09 |
1.03 |
Odisha Value Added Tax Act, 2004 |
Sales Tax |
JCCT |
2011-12 |
3.34 |
Odisha Value Added Tax Act, 2004 |
Sales Tax |
Sales Tax Tribunal |
2009-10 |
4.21 |
Rajasthan VAT Act, 2003 |
Sales Tax |
Assistant Commissioner |
2013-14 |
0.02 |
Rajasthan VAT Act, 2003 |
Sales Tax |
Deputy Commissioner |
2008-09 |
0.01 |
Tamil Nadu General Sales Tax Act, 1959 |
Sales Tax |
High Court |
1999-00 |
0.18 |
UP Trade Tax Act,1948 |
Sales Tax |
Addition Commissioner (Appeals) |
2006-07 |
0.09 |
Name of the statute |
Nature of dues |
Forum where dispute is pending |
Period |
Amount |
UP VAT |
Sales Tax |
Addition Commissioner (Appeals) |
2010-11, 2011-12, 2013-14 |
0.46 |
WB Sales Tax Act,1994 |
Sales Tax |
Deputy Commissioner |
1995-96, 1997-98 |
0.21 |
WB Sales Tax Act,1994 |
Sales Tax |
WB Taxation Tribunal |
1998-99 |
0.07 |
WB VAT Act, 2003 |
Sales Tax |
Additional Commissioner |
2014-15 |
0.04 |
WB VAT Act, 2003 |
Sales Tax |
Revisional Board |
2007-08, 2008-09, 2009-10, 2010-11 |
8.69 |
WB VAT Act, 2003 |
Sales Tax |
WB Appellate & Revisional Board |
2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, |
6.71 |
WB VAT Act, 2003 |
Sales Tax |
WB Taxation Tribunal |
2006-07, 2010-11 |
3.24 |
(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of loans or borrowings to financial institutions, banks and government. The Company has not issued any debentures.
(ix) In our opinion and according to the information and explanations given to us, the term loans taken have been applied by the Company during the year for the purposes for which they were raised.
(x) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company by its officers or employees has been noticed or reported during the year.
(xi) In our opinion and according to the information and explanations given to us, the Company has paid / provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.
(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of the CARO 2016 Order is not applicable.
(xiii) In our opinion and according to the information and explanations given to us the Company is in compliance with Section 177 and 188 of the Companies Act, 2013, where applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the financial statements etc. as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us, the Company has made preferential allotment of shares and fully convertible warrants during the year under review.
In respect of the above issue, we further report that:
a) the requirement of Section 42 of the Companies Act, 2013, as applicable, have been complied with; and
b) the amounts raised have been applied by the Company during the year for the purposes for which the funds were raised, other than temporary deployment pending application.
(xv) In our opinion and according to the information and explanations given to us, during the year the Company has not entered into any non-cash transactions with its directors or directors of its holding, subsidiary or associate company or persons connected with them and hence provisions of section 192 of the Companies Act, 2013 are not applicable.
(xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.
For DELOITTE HASKINS AND SELLS
Chartered Accountants
Firm Registration Number: 302009E
Abhijit Bandyopadhyay
Kolkata Partner
May 11, 2018 Membership Number 054785
Mar 31, 2017
Report on the Standalone Financial Statements
1. We have audited the accompanying standalone financial statements of Kesoram Industries Limited("the Company"), which comprise the Balance Sheet as at March 31, 2017, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.
Management''s Responsibility for the Standalone Financial
Statements
2. The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements to give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies(Accounts) Rules, 2014. 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors'' Responsibility
3. Our responsibility is to express an opinion on these standalone financial statements based on our audit.
4. We have taken into account the provisions of the Act and the Rules made there under including the accounting standards and matters which are required to be included in the audit report.
5. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards and pronouncements require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
6. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditors'' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the financial statements that give a true and fair view, in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the financial statements.
7. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.
Opinion
8. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2017, and its loss and its cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
9. As required by ''the Companies (Auditor''s Report) Order, 2016'', issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act (hereinafter referred to as the "Order"), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure B a statement on the matters specified in paragraphs 3 and 4 of the Order.
10. 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, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.
(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
(e) On the basis of the written representations received from the directors as on March 31, 2017 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2017 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 and the operating effectiveness of such controls, refer to our separate Report in Annexure A.
(g) With respect to the other matters to be included in the Auditors'' Report in accordance with Rule 11 of the
Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our knowledge and belief and according to the information and explanations given to us:
i The Company has disclosed the impact, if any, of pending litigations as at March 31, 2017 on its financial position in its standalone financial statements - Refer Note 31,
ii. The Company did not have any long-term contracts including derivative contracts as at March 31, 2017;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended March 31, 2017,
iv. The Company has provided requisite disclosures in the financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8th November, 2016 to 30th December, 2016. Based on audit procedures and relying on the management representation we report that the disclosures are in accordance with books of account maintained by the Company and as produced to us by the Management - Refer Note
Referred to in paragraph 10(f)of the Independent Auditors'' Report of even date to the members of Kesoram Industries Limited on the standalone financial statements for the year ended March 31, 2017
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Act
1. We have audited the internal financial controls over financial reporting of Kesoram Industries Limited ("the Company") as of March 31, 2017 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.
Management''s Responsibility for Internal Financial Controls
2. The Company''s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting 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 company''s 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
3. Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing deemed to be prescribed under section 143(10) of the Act to the extent applicable to an audit of internal financial controls, both applicable to an audit of internal financial controls and both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
6. A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2)provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company''s assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
7. Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
8. In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2017, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
Referred to in paragraph 9 of the Independent Auditors'' Report of even date to the members of Kesoram Industries Limited on the standalone financial statements as of and for the year ended March 31, 2017
i. (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation, of fixed assets.
(b) The fixed assets are physically verified by the Management according to a phased programme 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 the nature of its assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by the Management during the year and no material discrepancies have been noticed on such verification.
(c) The title deeds of immovable properties, as disclosed in Note 11 on fixed assets to the financial statements, are held in the name of the Company, except for
Total number of cases |
Whether leasehold / freehold |
Gross block (Rs. /crore) |
Net block (Rs. /crore) |
Remarks |
1 |
Freehold Land |
14.65 |
14.65 |
- |
ii. The physical verification of inventory excluding stocks with third parties have been conducted at reasonable intervals by the Management during the year. In respect of inventory lying with third parties, these have substantially been confirmed by them. The discrepancies noticed on physical verification of inventory as compared to book records were not material and have been appropriately dealt with in the books of accounts.
iii. The Company has granted unsecured loans, to two companies covered in the register maintained under Section 189 of the Act. The Company has not granted any secured / unsecured loans to firms / Limited Liability Partnerships/ Other parties covered in the register maintained under Section 189 of the Act.
(a) In respect of the aforesaid loans, the terms and conditions under which such loans were granted are not prejudicial to the Company''s interest except for one loan aggregating Rs.6.79 crore as at March. 31, 2017, with a maximum amount of Rs.6.79 crore outstanding during the year, which was granted without specifying any repayment terms, and is therefore in our opinion prejudicial to the Company''s interests.
(b) In respect of the aforesaid loans, except for an amount aggregating Rs.6.79 crore outstanding towards principal and which is fully provided for, the other loan amounting to Rs.557.80 crore is repayable on demand. However, the party is regular in payment of interest as applicable.
(c) In respect of the aforesaid loans, except for an amount aggregating Rs.6.79 crore which is already provided for, there is no amount which is overdue for more than ninety days.
iv. 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 the loans and investments made, and guarantees and security provided by it.
v. The Company has not accepted any deposits from the public within the meaning of Sections 73, 74, 75 and 76 of the Act and the Rules framed there under to the extent notified.
vi. Pursuant to the rules made by the Central Government of India, the Company is required to maintain cost records as specified under Section 148(1) of the Act in respect of its products. We have broadly reviewed the same, and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.
vii. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing undisputed statutory dues in respect of service tax and value added tax, though there has been a slight delay in a few cases, and is regular in depositing undisputed statutory dues, including provident fund, employees'' state insurance, sales tax, income tax, duty of customs , duty of excise, cess and other material statutory dues, as applicable, with the appropriate authorities.
(b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of income-tax and duty of customs which have not been deposited on account of any dispute. The particulars of dues of sales tax, service tax, duty of excise and value added tax as at March 31, 2017 which have not been deposited on account of a dispute, are as follows:
Name of the statute |
Nature of dues |
Amount (Rs. /crore) |
Period to which the amount relates |
Forum where the dispute is pending |
|
||
Central Excise Act, 1944 |
Central Excise |
2.83 |
2000-01, 2006-07, 10,2010- 2001-02, 2005-06, 2007-08, 200911, 2014-15 |
Additional Commissioner |
|
||
Central Excise Act, 1944 |
Central Excise |
4.63 |
1993-94, 1994-98, 1996-97, 1998-99, 1999-00, 2001-02, 2003-04, 2005-06, 1993-94, 1994-95, 1995-96, 1995-96, 1997-98, 1997-99 1999-00, 1998-99, 1999-10, 2000-01, 2001-02, 2002-03, 2004-05, 2004-05 to 2006-07 |
Assistant Commissioner |
|
||
Central Excise Act, 1944 |
Central Excise |
1.72 |
1974-75 to 1997-98, 1994-95, 1997-98 to 1998-99, 1998-99, 1999-00, 2004-05, 2005-06 to 2009-10 |
CESTAT |
|
||
Central Excise Act, 1944 |
Central Excise |
37.05 |
1985-90, 1988-89, 1994-95, 1995 -1996, 1996 -97, 1997-98, 1998-99, 1999-00, 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 , 2009-10, 2010-1 1, 201 1-12, 2012-13, 2013-14, 2013-14 and 2015-16 |
Commissioner |
|
||
Central Excise Act, 1944 |
Central Excise |
2.86 |
1994-95, 2003-04 2007-08, 2011-12, 2015-16 1995-96, 2002-03,, 2004-05, 2005-06 , 2009-10 , 2010-11, 2013-14, 2014-15, |
Commissioner (Appeals) |
|
||
Central Excise Act, 1944 |
Central Excise |
171.14 |
1992-93, 1993-97, 1999-2000, 1999-2003, 2000-2004, 200203, 2003-04, 2004-05, 2005-06, 2006-07, 2006-08, 2007-08 2008-09, 2009-10, 2010-11 201 1-12, 2012-13 |
Customs, Excise & Service Tax Appellate Tribunal |
|
||
Central Excise Act, 1944 |
Central Excise |
0.03 |
1994-95, 2004-05, 2010-11 |
Deputy Commissioner |
|
||
Central Excise Act, 1944 |
Central Excise |
0.86 |
1994-95, 2005-06, 2008-09 |
High Court |
|
||
Central Excise Act, 1944 |
Central Excise |
0.20 |
1987-88, 2007-08 1994-95, 1995-96, |
Joint Commissioner |
|
||
Central Excise Act, 1944 |
Central Excise |
0.03 |
1979-81 |
Superintendent of Central Excise |
|
||
Central Excise Act, 1944 |
Central Excise |
2.09 |
1980-81, 1995-96, 1998-99, 2002-03, 2009-10, 2014-15 1982-83, 1992-93, 1996-97, 1997-98, 1999-00, 2001-02, 2004-05, 2005-06, 201 1-12, 2013-14 , , 2015-16 |
Superintendent, Central Excise and Customs |
|
||
Central Excise Act, 1944 |
Central Excise |
0.03 |
2005-06 |
Supreme Court |
|
||
Name of the statute |
Nature of dues |
Amount (Rs. /crore) |
Period to which the amount relates |
Forum where the dispute is pending |
|
||
=inance Act, 1994 |
Service Tax |
0.45 |
2006-07, 2007-08, 2008-09 |
Additional Commissioner |
|
||
=inance Act, 1994 |
Service Tax |
0.72 |
2004-05, 2005-06, 2009-10, 2010-1 1, 201 1-12, 2012-13, 2013-14 |
Assistant Commissioner |
|
||
Finance Act, 1994 |
Service Tax |
22.81 |
2006-07, 2007-08, 2008-09 , 2009-10, 2010-1 1, 201 1-12, 2012-13 |
Commissioner |
|
||
Finance Act, 1994 |
Service Tax |
1.06 |
2002-03, 2003-04, 2004-05, 2007-08, 2008-09, 2009-10, 2010-1 1, 201 1-12, 201 1-12, 2012-13 |
Commissioner (Appeals) |
|
||
Finance Act, 1994 |
Service Tax |
0.04 |
2009-10 |
Deputy Commissioner |
|
||
Andhra Pradesh General Sales Tax Act, 1957 |
Sales Tax |
0.18 |
2001-02 |
High Court |
|
||
Andhra Pradesh General Sales Tax Act, 1957 |
Sales Tax |
0.11 |
2003-04 |
Tribunal |
|
||
Andhra Pradesh VAT Act |
Sales Tax |
0.18 |
2008-09 |
Assistant Commissioner |
|
||
Andhra Pradesh VAT Act |
Sales Tax |
0.26 |
2006-07, 2007-08 |
Sales Tax Appellate Tribunal |
|
||
Andhra Pradesh VAT Act |
Sales Tax |
0.10 |
2007-08 |
Tribunal |
|
||
Bengal Finance Sales Tax Act,1941 |
Sales Tax |
0.04 |
1995-96 |
Revisional Board |
|
||
Bombay Sales Tax Act |
Sales Tax |
0.32 |
2003-04, 2004-05 |
Deputy Commissioner of Sales Tax (Appeals), Amravati Division |
|
||
Central Sales Tax Act, 1956 |
Sales Tax |
0.28 |
1997-98, 1999-00, 1996-97, 1998-99, 2005-06 |
Additional Commissioner |
|
||
Central Sales Tax Act, 1956 |
Sales Tax |
0.75 |
2003-04 , 1995-96 |
Appellate & Revisional Board |
|
||
Central Sales Tax Act, 1956 |
Sales Tax |
0.23 |
2003-04 |
CTO , Karimnagar |
|
||
Central Sales Tax Act, 1956 |
Sales Tax |
0.07 |
2004-05, 2012-13 |
Deputy Commissioner |
|
||
Central Sales Tax Act, 1956 |
Sales Tax |
15.25 |
2003-04, 2009-10 |
High Court |
|
||
Central Sales Tax Act, 1956 |
Sales Tax |
1.20 |
2011-12 |
JCCT |
|
||
Central Sales Tax Act, 1956 |
Sales Tax |
2.34 |
2014-15 |
Joint Commissioner |
|
||
Central Sales Tax Act, 1956 |
Sales Tax |
0.06 |
2010-11 |
Joint Commissioner of Commercial Taxes (Appeals). |
|
||
Central Sales Tax Act, 1956 |
Sales Tax |
0.10 |
201 1-12, 2012-13, 2013-14 |
Joint Commissioner (Appeals) |
|
||
Central Sales Tax Act, 1956 |
Sales Tax |
1.32 |
1991-92, 1995-96, 1997-98, 2001-02, 2004-05, 201 1-12 |
Karnataka Sales Tax Appellate Tribunal |
|
||
Central Sales Tax Act, 1956 |
Sales Tax |
0.28 |
1998-99, 2008-09, 2010-11 |
Revisional Board |
|
||
Name of the statute |
Nature of dues |
Amount (Rs. /crore) |
Period to which the amount relates |
Forum where the dispute is pending |
|||
Central Sales Tax Act, 1956 |
Sales Tax |
0.05 |
1995-96, 1997-98 |
Sales Tax Tribunal |
|||
Central Sales Tax Act, 1956 |
Sales Tax |
2.23 |
2003-04 |
Supreme Court |
|||
Central Sales Tax Act, 1956 |
Sales Tax |
8.05 |
1994-95, 1999-00, 2002-03, 2004-05, 2007-08, 2008-09, 2009-10, 2010-11 |
Tribunal |
|||
Central Sales Tax Act, 1956 |
Sales Tax |
0.52 |
2006-07 |
Tribunal & High Court |
|||
Central Sales Tax Act, 1956 |
Sales Tax |
6.76 |
2004-05, 2005-06, 2006-07, 2007-08, 2008-09 |
WB Appellate & Revisional Board |
|||
Central Sales Tax Act, 1956 |
Sales Tax |
0.05 |
2013-14 |
Senior Joint Commissioner, Corporate |
|||
Central Sales Tax Act, 1956 |
Sales Tax |
0.04 |
2009-10 |
West Bengal Appellate & Revisional Board |
|||
CST demanded under UP Trade Act,1948 |
Sales Tax |
0.01 |
2005-06, 2006-07 |
Addition Commissioner (Appeals) |
|||
Delhi Sales Act, 1975 |
Sales Tax |
0.42 |
1999-00 |
Assessing Authority |
|||
Jharkhand Vat,2005 |
Sales Tax |
0.73 |
2010-1 1, 2012-13 |
Commissioner of Commercial Taxes, Ranchi |
|||
Jharkhand Vat,2005 |
Sales Tax |
0.06 |
2011-12 |
Dy. Commissioner of Sales Tax, Dumka, Jharkhand |
|||
Jharkhand Vat,2005 |
Sales Tax |
0.13 |
201 1-12, 2012-13 |
Joint Commissioner (Appeals) |
|||
Jharkhand Vat,2005 |
Sales Tax |
0.14 |
2010-11 |
Tribunal |
|||
Maharashtra Value Added Tax Act 2002 |
Sales Tax |
0.03 |
2012-13 |
Commissioner of Sales Tax, Solapur |
|||
Odisha Value Added Tax Act, 2004 |
Sales Tax |
8.12 |
2010-11 |
Addition Commissioner (Appeals) |
|||
Odisha Value Added Tax Act, 2004 |
Sales Tax |
1.01 |
2005-06, 2006-07, 2007-08 |
Additional Commissioner |
|||
Odisha Value Added Tax Act, 2004 |
Sales Tax |
0.69 |
2008-09 |
CTC TRIBUNAL |
|||
Odisha Value Added Tax Act, 2004 |
Sales Tax |
3.34 |
2011-12 |
JCCT |
|||
Odisha Value Added Tax Act, 2004 |
Sales Tax |
5.26 |
2009-10 |
Sales Tax Tribunal |
|||
Rajasthan VAT act, 2003 |
Sales Tax |
0.01 |
2013-14 |
Assistant Commissioner Officer Pali |
|||
Tamil Nadu General Sales Tax Act, 1959 |
Sales Tax |
0.18 |
1999-00 |
Chennai High Court |
|||
UP Trade Tax Act,1948 |
Sales Tax |
0.07 |
2006-07 |
Addition Commissioner (Appeals) |
|||
UP VAT |
Sales Tax |
0.43 |
2010-1 1, 201 1-12 |
Addition Commissioner (Appeals) |
|||
Name of the statute |
Nature of dues |
Amount (Rs. /crore) |
Period to which the amount relates |
Forum where the dispute is pending |
|
||
Uttarakhand VAT Act, 2005 |
Sales Tax |
0.17 |
2013-14 |
High Court |
|
||
W.B VAT ACT,2003 |
Sales Tax |
11.56 |
2007-08 , 2008-09 , 2009-10 , 2010-11 |
Revisional Board |
|
||
W.B VAT ACT,2003 |
Sales Tax |
4.60 |
2005-06, 2008-09 |
WB Appellate & Revisional Board |
|
||
W.B VAT ACT,2003 |
Sales Tax |
4.76 |
2010-11 |
WB Revisional Board |
|
||
W.B VAT ACT,2003 |
Sales Tax |
0.78 |
2009-10 |
West Bengal Appellate & Revisional Board |
|
||
W.B VAT ACT,2003 |
Sales Tax |
0.15 |
2006-07 |
West Bengal Taxation Tribunal |
|
||
WB Sales Tax Act,1994 |
Sales Tax |
0.04 |
1999-00 |
Additional Commissioner, Sales Tax |
|
||
WB Sales Tax Act,1994 |
Sales Tax |
0.25 |
1995-96, 1997-98, 2001-02 |
Deputy Commissioner |
|
||
WB Sales Tax Act,1994 |
Sales Tax |
0.24 |
2004-05 |
Sr. Jt. Commissioner (Appellate Authority) |
|
||
WB Sales Tax Act,1994 |
Sales Tax |
1.06 |
1995-96 |
WB Appellate & Revisional Board |
|
||
WB Sales Tax Act,1994 |
Sales Tax |
0.13 |
1998-99 |
West Bengal Taxation Tribunal |
|
||
WB VAT Act, 2003 |
Sales Tax |
1.32 |
2003-04, 2004-05, 2006-07, 2007-08 |
Appellate & Revisional Board |
|
||
WB VAT Act, 2003 |
Sales Tax |
0.02 |
1987-88 |
Assessing Authority (matter remanded by Board) |
|
||
viii. According to the records of the Company examined by us and the information and explanation given to us, the Company has not defaulted in repayment of loans or borrowings to any financial institution or bank or Government or dues to debenture holders as at the balance sheet date.
ix. In our opinion, and according to the information and explanations given to us, the moneys raised by way of initial public offer or further public offer (including debt instruments) and term loans have been applied for the purposes for which they were obtained.
x. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud by the Company or on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of any such case by the Management.
xi. The Company has paid/ provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.
xii. As the Company is not a Nidhi Company and the Nidhi Rules, 2014 are not applicable to it, the provisions of Clause 3(xii) of the Order are not applicable to the Company.
xi ii. The Company has entered into transactions with related parties in compliance with the provisions of Sections 177 and 188 of the Act. The details of such related party transactions have been disclosed in the financial statements as required under Accounting Standard (AS) 18, Related Party Disclosures specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
xiv. The Company had made a preferential allotment/ private placement of shares during the previous year under review, in compliance with the requirements of Section 42 of the Act. The amounts raised have been used for the purpose for which funds were raised as described below:
Nature of securities viz. Equity share / Preference shares / Convertible Debenture |
Purpose for for which funds raised |
Total Amount Raised / opening unutilized balance (Rs. /crore) |
Amount utilized for the other purpose (Rs. /crore) |
Un-utilized balance as at Balance sheet date (Rs. /crore) |
Equity share / Preference shares |
General corporate purposes |
180 |
|
|
xv. The Company has not entered into any non cash transactions with its directors or persons connected with him. Accordingly, the provisions of Clause 3(xv) of the Order are not applicable to the Company.
xvi. The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the provisions of Clause 3(xvi) of the Order are not applicable to the Company.
For Price Waterhouse
Firm Registration Number: 301112E
Chartered Accountants
Prabal Kr. Sarkar
Kolkata Partner
April 28, 2017 Membership Number 52340
Mar 31, 2016
TO THE MEMBERS OF KESORAM INDUSTRIES LIMITED
Report on the Financial Statements
1. We have audited the accompanying financial statements of Kesoram Industries Limited (âthe Companyâ), which comprise the Balance Sheet as at March 31, 2016, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.
Managementâs Responsibility for the Financial Statements
2. The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these financial statements to give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditorsâ Responsibility
3. Our responsibility is to express an opinion on these financial statements based on our audit.
4. We have taken into account the provisions of the Act and the Rules made there under including the accounting standards and matters which are required to be included in the audit report.
5. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards and pronouncements require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
6. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditors âjudgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companyâs preparation of the financial statements that give a true and fair view, in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Companyâs Directors, as well as evaluating the overall presentation of the financial statements.
7. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.
Opinion
8. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2016, and its profit and its cash flows for the year ended on that date.
Emphasis of Matter
9. We draw your attention to Note 44 to the financial statements regarding remuneration aggregating Rs 1.70 crore paid to a whole time director of the Company in excess of the limits prescribed under Section 197 read with Schedule V to the Act. The Company is in the process of obtaining Central Government approval in this regard. Our opinion is not qualified in respect of this matter.
Report on Other Legal and Regulatory Requirements
10. As required by âthe Companies (Auditorâs Report) Order, 2016â, issued by the Central Government of India in terms of subsection (11) of section 143 of the Act (hereinafter referred to as the âOrderâ), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure B a statement on the matters specified in paragraphs 3 and 4 of the Order.
11. As required by Section 143 (3) of the Act, we report that:
(a) We have sought and 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, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.
(d) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
(e) On the basis of the written representations received from the directors as on March 31, 2016 taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2016 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 and the operating effectiveness of such controls, refer to our separate Report in Annexure A.
(g) With respect to the other matters to be included in the Auditorsâ Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our knowledge and belief and according to the information and explanations given to us:
i. The Company has disclosed the impact, if any, of pending litigations as at March 31, 2016 on its financial position in its financial statements â Refer Note 31;
ii. The Company has made provision as at March 31, 2016, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts â Refer Note 34;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended March 31, 2016.
Annexure A to Independent Auditorsâ Report
Referred to in paragraph 11(f) of the Independent Auditorsâ Report of even date to the members of Kesoram Industries Limited on the financial statements for the year ended March 31,2016
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Act
1. We have audited the internal financial controls over financial reporting of Kesoram Industries Limited (âthe Companyâ) as of March 31,2016in conjunction with our audit of the financial statements of the Company for the year ended on that date.
Managementâs Responsibility for Internal Financial Controls
The Companyâs management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting 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 companyâs 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.
Auditorâs Responsibility
2. Our responsibility is to express an opinion on the Companyâs internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the âGuidance Noteâ) and the Standards on Auditing deemed to be prescribed under section 143(10) of the Act to the extent applicable to an audit of internal financial controls, both applicable to an audit of internal financial controls and both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
3. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companyâs internal financial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
6. A companyâs internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companyâs internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companyâs assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
7. Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
8. In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
Referred to in paragraph 10 of the Independent Auditorsâ Report of even date to the members of Kesoram Industries Limited on the financial statements as of and for the year ended March 31,2016
i. (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation, of fixed assets.
(b) The fixed assets are physically verified by the Management according to a phased programme 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 the nature of its assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by the Management during the year and no material discrepancies have been noticed on such verification.
(c) The title deeds of immovable properties, as disclosed in Note 11 on fixed assets to the financial statements, are held in the name of the Company, except for
Total number of |
Whether |
Gross block |
Net block |
Remarks |
Cases |
leasehold / freehold |
(Rs,/crore) |
(Rs,/crore) |
|
1 |
Freehold |
14.65 |
14.65 |
- |
ii. The physical verification of inventory excluding stocks with third parties have been conducted at reasonable intervals by the Management during the year. In respect of inventory lying with third parties, these have substantially been confirmed by them. The discrepancies noticed on physical verification of inventory as compared to book records were not material and have been appropriately dealt with in the books of accounts.
iii. The Company has granted unsecured loan, to a company covered in the register maintained under Section 189 of the Act. The Company has not granted any secured/unsecured loans to firms /LLPs/ other parties covered in the said register maintained under Section 189 of the Act.
(a) The aforesaid loan was granted without specifying any repayment terms and is therefore, in our opinion, prejudicial to the interest of the company.
(b) In respect of the aforesaid loans, the principal amount is fully provided for and hence, the question of its repayment does not arise.
(c) In respect of the aforesaid loans, as no repayment terms were stipulated, the question of determining overdue amount does not arise.
iv. The Company, during the year, has not granted any loans or made any investments, or provided any guarantees or security to the parties covered under Section 185 and 186. In our opinion and according to the information and explanations given to us, the company has complied with the provisions of Section 186 of the Act in respect of a loan given prior to the commencement of the Companies Act 2013.
v. The Company has not accepted any deposits from the public within the meaning of Sections 73, 74, 75 and 76 of the Act and the Rules framed there under to the extent notified. In our opinion, and according to the information and explanations given to us, the Company has complied with the provisions of Sections 73,74,75 and 76 or any other relevant provisions of the Act and the Rules framed hereunder to the extent notified, with regard to the deposits accepted from the public prior to the commencement of the Act. According to the information and explanations given to us, no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal on the Company in respect of the aforesaid deposits.
vi Pursuant to the rules made by the Central Government of India, the Company is required to maintain cost records as specified under Section 148(1) of the Act in respect of its products. We have broadly reviewed the same, and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.
vii. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing undisputed statutory dues in respect of value added tax and central sales tax, though there has been a slight delay in a few cases and is regular in depositing undisputed statutory dues, including provident fund, employees'' state insurance, sales tax, income tax, service tax, duty of customs , duty of excise , cess and other material statutory dues, as applicable, with the appropriate authorities.
(b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of income-tax, and duty of customs, which have not been deposited on account of any dispute. The particulars of dues of sales tax, service tax, duty of excise, value added tax as at March 31,2016 which have not been deposited on account of a dispute, are as follows:
Name of the statute |
Nature of dues |
Amount (Rs,/crore) |
Period to which the amount relates |
Forum where the dispute is pending |
Central Excise Act, 1944 |
Central Excise |
3.55 |
2000-01, 2001-02, 2005-06, 2006-07, 2007-08, 2009-10, 2001 20B-4, 20H-15, 2015-16. |
Additional Commissioner |
Central Excise Act, 1944 |
Central Excise |
4.22 |
1991-94, 1993-94, 1994-95 1995-96, 1996-97, 1997-98, 998-99, 999-00 2000-01 2001-02, 2CC2-CB, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2009-0 2001 |
Assistant Commissioner |
Central Excise Act, 1944 |
Central Excise |
59.06 |
1985-90, 1988-89, 1994-95, 1997-98, 1998-03, 1998-99 999-00, 2000-0, 2001-02; 2002-03 , 2003 - 05, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 , 2009-0 201-1 201E, 20E-B, 2013-14, 2014-15,2015-16. |
Commissioner |
Central Excise Act, 1944 |
Central Excise |
2.89 |
1994-95, 1995-96, 1997-98 2002-03,2003-04, 2004-05 2004-06, 2005-06, 2007-11 2009-0 200-11 201E, 20E-B. |
Commissioner (Appeals) |
Central Excise Act, 1944 |
Central Excise |
172.42 |
1992-93, 1993-97, 1997-98 1999-00, 1999-03, 2000-04, 2000-01, 2001-02, 2002-03, 2003 -04, 2003-05 2003-06, 2004-05, 2005-06, 2005-06 to 2008-09, 2006-07, 2006-08, 2006-09, 2006-10, 2007-08, 2007-09, 2008-09, 20(9-0 2009-11 201-1 201E, 2012-3. |
Customs, Excise & Service Tax Appellate Tribunal |
Central Excise Act, 1944 |
Central Excise |
0.03 |
1994-95, 2004-05, 2010-11 |
Deputy Commissioner |
Central Excise Act, 1944 |
Central Excise |
0.86 |
1994-95, 2005-06, 2008-09. |
High Court |
Central Excise Act, 1944 |
Central Excise |
0.99 |
1987-88, 1994-95, 1995-96, 2007-08, 2008-09, 2014-15. |
Joint Commissioner |
Name of the statute |
Nature of dues |
Amount (Rs,/crore) |
Period to which the amount relates |
Forum where the dispute is pending |
Central Excise Act, 1944 |
Central Excise |
1.76 |
1979-81, 1980-81, 1982-83, 1995-96, 1996-97, 1998-99, 1999-00, 2002-03, 2005-06, 2006-07, 2009-10, 2012-13 204-15. |
Superintendent, Central Excise and Customs |
Central Excise Act, 1944 |
Central Excise |
0.73 |
2005-06 |
Supreme Court |
Finance Act, 1994 |
Service Tax |
0.45 |
2006-07, 2007-08, 2008-09. |
Additional Commissioner |
Finance Act, 1994 |
Service Tax |
0.47 |
2004-05, 2004-06, 2009-10, 2009-12, 2009-10, 2010-11, 201-E, 202-3, 203-4. |
Assistant Commissioner |
Finance Act, 994 |
Service Tax |
22.80 |
2006-07, 2007-08, 2008-09, 2008-09 to 20C9-:C; 2009-0 201-11 2012 202-3 |
Commissioner |
Finance Act, 1994 |
Service Tax |
0.98 |
2002-03, 2003-05, 2007-08, 2008-09, 2009-10, 2010-11, 201)-E |
Commissioner (Appeals) |
Finance Act, 1994 |
Service Tax |
0.04 |
2009-10 |
Deputy Commissioner |
Finance Act, 1994 |
Service Tax |
0.03 |
2009-10, 2010-11,2011-12. |
Superintendent, Central Excise and Customs |
Andhra Pradesh General Sales Tax Act, 1957 |
Sales Tax |
0.05 |
2001-02 |
High Court |
Andhra Pradesh General Sales, Tax Act, 1957 |
Sales Tax |
0.24 |
200^^0^ 2003-04. |
Tribunal |
AP VAT Act |
VAT |
0.26 |
2006-07, 2007-08. |
Appellate Tribunal |
AP VAT Act |
VAT |
0.28 |
2007-08, 2008-09. |
Tribunal |
Bengal Finance Sales Tax Act,1941 |
Sales Tax |
0.04 |
1995-96 |
Tribunal |
Bihar VAT Act 2005 |
VAT |
0.00 |
2008^09 |
Tribunal |
Bombay Sales Tax Act |
Sales Tax |
0.32 |
2003-04, 2004-05. |
Tribunal |
Central Sales Tax Act, 1956 |
Central Sales Tax |
0.28 |
1996-97, 1997-98, 1998-99, 1999-00, 2005-06. |
Additional Commissioner |
Name of the statute |
Nature of dues |
Amount (Rs,/crore) |
Period to which the amount relates |
Forum where the dispute is pending |
Central Sales Tax Act, 1956 |
Central Sales Tax |
0.75 |
1995-96, 2003-04. |
Appellate & Provisional Board |
Central Sales Tax Act, 1956 |
Central Sales Tax |
0.03 |
987-88, 200-1 |
Assessing Authority |
Central Sales Tax Act, 1956 |
Central Sales Tax |
0.22 |
1998-99,1999-00. |
Assessing Officer |
Central Sales Tax Act, 1956 |
Central Sales Tax |
0.23 |
2003-04 |
Commercial Tax officer |
Central Sales Tax Act, 1956 |
Central Sales Tax |
0.08 |
2004-05, 2012-13. |
Deputy Commissioner |
Central Sales Tax Act, 1956 |
Central Sales Tax |
84.10 |
2003-04, 2009-10, 2010-11 |
High Court |
Central Sales Tax Act, 1956 |
Central Sales Tax |
14.84 |
2001-02, 2002-03 , 204-15. |
Joint Commissioner |
Central Sales Tax Act, 1956 |
Central Sales Tax |
0.44 |
2007-08, 2008-09, 2009-10 2010-11, 2011-12, 2012-13 2013-14. |
joint Commissioner (Appeals) |
Central Sales Tax Act, 1956 |
Central Sales Tax |
0.47 |
1993-94, 1995-96, 1997-98, 1998-99, 2001-02, 2007-08, 2008-09, 2009-0 200-1 |
Revision Board |
Central Sales Tax Act, 1956 |
Central Sales Tax |
8.55 |
2000-01, 2003-04. |
Supreme Court |
Central Sales Tax Act, 1956 |
Central Sales Tax |
5.45 |
1992-93, 1994-95, 1995-96, 1997-98, 1999-00, 2002-03, 2004-06, 2007-08 2008^09. |
Tribunal |
Central Sales Tax Act, 1956 |
Central Sales Tax |
0.52 |
2006-07 |
Tribunal & High Court |
Central Sales Tax Act, 1956 |
Central Sales Tax |
7.36 |
2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-11 |
WB Appellate & Revisional Board |
UP Trade Act,1948 |
Central Sales Tax |
0.01 |
2005-06, 2006-07. |
Additional Commissioner (Appeals) |
Delhi Sales Act 1975 |
Sales Tax |
0.42 |
999-00 |
Assessing Authority |
Jharkhand VAT 2005 |
VAT |
0.20 |
2010-11 |
Commissioner |
Jharkhand VAT 2005 |
VAT |
0.06 |
2011-12 |
Deputy Commissioner |
Name of the statute |
Nature of dues |
Amount (Rs,/crore) |
Period to which the amount relates |
Forum where the dispute is pending |
Jharkhand VAT 2005 |
VAT |
0.3 |
2011-12, 2012-3. |
Joint Commissioner (Appeals) |
Jharkhand VAT 2005 |
VAT |
0.14 |
201-11 |
Tribunal |
Karnataka Sales Tax Act, 1957 |
Sales Tax |
0.63 |
2001-02 |
High Court |
Maharashtra VAT Act |
VAT |
0.00 |
2012-13 |
Deputy Commissioner |
Maharashtra VAT Act |
VAT |
0.14 |
201-11 |
Joint Commissioner (Appeals) |
Odisha Sales Tax Act, 1947 |
Sales Tax |
1.01 |
2005-06, 2006-07, 2007-08. |
Additional Commissioner |
Odisha Value Added Tax Act, 2004 |
Sales Tax |
8.12 |
2010-11 |
Additional Commissioner (Appeals) |
Odisha Value Added Tax Act, 2004 |
VAT |
6.39 |
2008-09, 2009-10 |
Tribunal |
Rajasthan VAT Act |
VAT |
0.01 |
2008-09 |
Deputy Commissioner |
Tamil Nadu General Sales Tax Act, 1959 |
Sales Tax |
0.18 |
1999-00 |
High Court |
UP Trade Tax Act,1948 |
Sales Tax |
0.09 |
2006-07 |
Additional Commissioner (Appeals) |
UP VAT Act |
VAT |
0.47 |
2010-11,2011-12 |
Additional Commissioner (Appeals) |
Uttarakhand VAT Act, 2005 |
VAT |
0.F |
203-4 |
High Court |
W.B VATACT, 2003 |
VAT |
16.33 |
2007-08, 2008-09, 2009-10, 200-1 |
Revisional Board |
W.B VATACT, 2003 |
VAT |
7.39 |
2003-04, 2004-05, 2005-06, 2006-07,2007-08, 2008-09, 2009-2010 |
WB Appellate & Revisional Board |
W.B VATACT, ACT, 2003 |
VAT |
0.15 |
2006-07 |
West Bengal Taxation Tribunal |
W.B VAT ACT 2003 |
, VAT |
002 |
1987-88 |
Assessing Author it |
Name of the statute |
Nature of dues |
Amount (Rs,/crore) |
Period to which the amount relates |
Forum where the dispute is pending |
WB Sales Tax Act, 1994 |
Sales Tax |
0.04 |
1999-00 |
Additional Commissioner |
WB Sales Tax Act, 1994 |
Sales Tax |
0.25 |
1995-96, 1997-98, 2001-02 |
Deputy Commissioner |
WB Sales Tax Act, 1994 |
Sales Tax |
0.24 |
2004-05 |
Senior Joint Commissioner |
WB Sales Tax Act, 1994 |
Sales Tax |
3.40 |
1995-96, 1998-99, 2003-04 2004-05 |
WB Appellate & Revisional Board |
viii. According to the records of the Company examined by us and the information and explanation given to us, the Company has not defaulted in repayment of loans or borrowings to any financial institution or bank or Government or dues to debenture holders as at the balance sheet date.
ix. In our opinion, and according to the information and explanations given to us, the moneys raised by way of initial public offer or further public offer (including debt instruments) and term loans have been applied for the purposes for which they were obtained.
x. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud by the Company or on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of any such case by the Management.
xi. We draw your attention to note 44 to the financial statements which states that the remuneration paid to a whole-time director is in excess of the limits prescribed under Schedule V to the Act by Rs. 1.70 crore. Except for the above, the managerial remuneration paid/ provided for by the Company is in accordance with the requisite approvals as mandated by the provisions of Section 197 read with Schedule V to the Act. The Company is in the process of obtaining Central Government approval in this regard.
xii. As the Company is not a Nidhi Company and the Nidhi Rules, 2014 are not applicable to it, the provisions of Clause 3(xii) of the Order are not applicable to the Company.
xiii. The Company has entered into transactions with related parties in compliance with the provisions of Sections 177 and 188 of the Act. The details of such related party transactions have been disclosed in the financial statements as required under Accounting Standard (AS) 18, Related Party Disclosures specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
xiv. The Company has made a preferential allotment / private placement of shares during the year under review, in compliance with the requirements of Section 42 of the Act. The money raised amounting to Rs, 180 crore stands unutilized at the year end.
xv. The Company has not entered into any non cash transactions with its directors or persons connected with him. Accordingly, the provisions of Clause 3(xv) of the Order are not applicable to the Company.
xvi. The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the provisions of Clause 3(xvi) of the Order are not applicable to the Company.
For Price Waterhouse
Firm Registration Number 301112E
Chartered Accountants
Prabal Kr. Sarkar
Kolkata, Partner
Date . 25thMay, 2016 Membership Number 52340
Mar 31, 2015
1. We have audited the accompanying financial statements of Kesoram
Industries Limited ("the Company"), which comprise the Balance Sheet as
at March 31, 2015, the Statement of Profit and Loss, the Cash Flow
Statement for the year then ended, and a summary of the significant
accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
2. The Company's 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 financial statements to give a true
and fair view of the financial position, financial performance and cash
flows of the Company in accordance with the accounting principles
generally accepted in India, including the Accounting Standards
specified under Section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014. 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 judgements
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 financial statements that give a true and fair view
and are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
3. Our responsibility is to express an opinion on these financial
statements based on our audit.
4. We have taken into account the provisions of the Act and the Rules
made there under including the Accounting Standards and matters which
are required to be included in the audit report.
5. We conducted our audit in accordance with the Standards on Auditing
specified under Section 143(10) of the Act and other applicable
authoritative pronouncements issued by the Institute of Chartered
Accountants of India. Those Standards and pronouncements require that
we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free from material misstatement.
6. An audit involves performing procedures to obtain audit evidence
about the amounts and the disclosures in the financial statements. The
procedures selected depend on the auditors' judgement, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal financial control relevant
to the Company's preparation of the financial statements that give a
true and fair view, in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing
an opinion on whether the Company has in place an adequate internal
financial controls system over financial reporting and the operating
effectiveness of such controls. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness
of the accounting estimates made by the Company's Directors, as well as
evaluating the overall presentation of the financial statements.
7. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion on the
financial statements.
Opinion
8. In our opinion and to the best of our information and according to
the explanations given to us, the aforesaid financial statements give
the information required by the Act in the manner so required and give
a true and fair view in conformity with the accounting principles
generally accepted in India, of the state of affairs of the Company as
at March 31, 2015, and its loss and its cash flows for the year ended
on that date.
Emphasis of Matter
9. We draw your attention to Note No. 25 regarding the transfer of the
Automotive Tyre Manufacturing Unit at Laksar to Cavendish Industries
Limited (the subsidiary), on a slump sale basis for a consideration of
Rs. 2195.00 crore and recognition of excess of net consideration over and
above the carrying value of the Unit aggregating to Rs. 409.20 crore as
exceptional income. Subsequently, vide a binding term sheet between the
Company, its subsidiary and JK Tyre Group (the acquirer) (together
referred to as the 'parties') dated September 12, 2015, the Company
also intends to sell its investment in the subsidiary to the acquirer
for a consideration of Rs. 2195.00 crore. The closing date of such
transfer is December 31, 2015 and in the eventuality of such
transaction not being complete within the aforesaid date, the parties
can terminate the term sheet. Our opinion is not qualified in respect
of this matter.
Report on Other Legal and Regulatory Requirements
10. As required by 'the Companies (Auditor's Report) Order, 2015',
issued by the Central Government of India in terms of sub- section (11)
of section 143 of the Act (hereinafter referred to as the "Order"), and
on the basis of such checks of the books and records of the Company as
we considered appropriate and according to the information and
explanations given to us, we give in the Annexure a statement on the
matters specified in paragraphs 3 and 4 of the Order.
11. As required by Section 143 (3) of the Act, we report that:
(a) We have sought and 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, and the Cash
Flow Statement dealt with by this Report are in agreement with the
books of account.
(d) In our opinion, the aforesaid financial statements comply with the
Accounting Standards specified under Section 133 of the Act, read with
Rule 7 of the Companies (Accounts) Rules, 2014. .
(e) On the basis of the written representations received from the
directors as on March 31, 2015 taken on record by the Board of
Directors, none of the directors is disqualified as on March 31, 2015
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, in our opinion and to the best of our knowledge and belief
and according to the information and explanations given to us:
i. The Company has disclosed the impact, if any, of pending
litigations as at March 31, 2015, on its financial position in
its financial statements  Refer Note No. 31;
ii. The Company has made provision as at March 31, 2015, as required
under the applicable law or accounting standards, for material
foreseeable losses, if any, on long-term contracts including derivative
contracts  Refer Note No. 34;
iii. There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company during the year ended March 31, 2015.
Annexure to Independent Auditors' Report
Referred to in paragraph 10 of the Independent Auditors' Report of even
date to the members of Kesoram Industries Limited on the financial
statements as of and for the year ended March 31, 2015
i. (a) The Company is maintaining proper records showing full
particulars, including quantitative details and situation, of fixed
assets.
(b) The fixed assets are physically verified by the Management
according to a phased programme 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 the nature of its assets.
Pursuant to the programme, a portion of the fixed assets has been
physically verified by the Management during the year and no material
discrepancies have been noticed on such verification.
ii. (a) The inventory excluding stocks with third parties has been
physically verified by the Management during the year. In respect of
inventory lying with third parties, these have substantially been
confirmed by them. In our opinion, the frequency of verification is
reasonable.
(b) In our opinion, the procedures of physical verification of
inventory followed by the Management are reasonable and adequate in
relation to the size of the Company and the nature of its business.
(c) On the basis of our examination of the inventory records, in our
opinion, the Company is maintaining proper records of inventory. The
discrepancies noticed on physical verification of inventory as compared
to book records were not material.
iii. (a) The Company has granted unsecured loans, to a company covered
in the register maintained under Section 189 of the Act.
The Company has not granted any secured/ unsecured loans to firms or
other parties covered in the register maintained under Section 189 of
the Act.
(b) In respect of the aforesaid loans, the principal amount is fully
provided for hence, its question of repayment does not arise.
(c) In respect of the aforesaid loans, there is no overdue amount more
than Rupees One Lakh.
iv. In our opinion, and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business for the
purchase of inventory and fixed assets and for the sale of goods.
Further, on the basis of our examination of the books and records of
the Company, and according to the information and explanations given to
us, we have neither come across, nor have been informed of, any
continuing failure to correct major weaknesses in the aforesaid
internal control system.
v. The Company has not accepted any deposits during the year from the
public within the meaning of Sections 73, 74, 75 and 76 of the Act and
the rules framed there under to the extent notified. In our opinion,
and according to the information and explanations given to us, the
Company has complied with the provisions of Sections 74 and 75 or any
other relevant provisions of the Act and the Rules framed there under to
the extent notified, with regard to the deposits accepted from the
public prior to the commencement of the Act. According to the
information and explanations given to us, no order has been passed by
the Company Law Board or National Company Law Tribunal or Reserve Bank
of India or any Court or any other Tribunal on the Company in respect
of the aforesaid deposits.
vi. We have broadly reviewed the books of account maintained by the
Company in respect of products where, pursuant to the rules made by the
Central Government of India, the maintenance of cost records has been
specified under sub-section (1) of Section 148 of the Act, and are of
the opinion that, prima facie, the prescribed accounts and records have
been made and maintained. We have not, however, made a detailed
examination of the records with a view to determine whether they are
accurate or complete.
vii. (a) According to the information and explanations given to us and
the records of the Company examined by us, in our opinion, the Company
is generally regular in depositing undisputed statutory dues in respect
of Sales Tax and provident fund, though there has been a slight delay
in a few cases, and is regular in depositing undisputed statutory dues,
including employees' state insurance, wealth tax, duty of customs and
duty of excise. However undisputed statutory dues including service tax
and value added tax have not generally been regularly deposited with
the appropriate authorities though the delays in deposit have not been
serious.
(b) According to the information and explanations given to us and the
records of the Company examined by us, there are no dues of Income tax,
wealth-tax, duty of customs and cess which have not been deposited on
account of any dispute. The particulars of dues of sales tax, service
tax, duty of excise and value added tax as at March 31, 2015 which have
not been deposited on account of a dispute, are as follows:
Name of the statute Nature of Amount
dues (Rs./Crore)
Central Excise Act, 1944 Central Excise 133.01
Central Excise Act, 1944 Central Excise 5.01
Central Excise Act, 1944 Central Excise 7.37
Central Excise Act, 1944 Central Excise 0.10
Central Excise Act, 1944 Central Excise 0.06
Central Excise Act, 1944 Central Excise 0.21
Central Sales Tax Act,1956 Central Sales Tax 0.17
Central Sales Tax Act,1956 Central Sales Tax 0.03
Central Sales Tax Act,1956 Central Sales Tax 8.54
Central Sales Tax Act,1956 Central Sales Tax 8.93
Central Sales Tax Act,1956 Central Sales Tax 0.36
Central Sales Tax Act,1956 Central Sales Tax 0.42
Central Sales Tax Act,1956 Central Sales Tax 0.05
Central Sales Tax Act,1956 Central Sales Tax 18.82
Central Sales Tax Act,1956 Central Sales Tax 6.49
Nature of the Status Period to which the Forum where the dispute
amount relates is pending
Central Excise
Act,1944 1993-1994 to 1996-97 Customs, Excise &
1999-2000 to 2002-03 Service Tax
2001-02, 2002-03, 2005-06, Appellate Tribunal
2003-05, 2004-05, 2003-04,
2001-02, 2002-03, 2003-05,
2003-06, 2004-05, 2005-06,
2006-07, 2006-08, 2006-09,
2006-10, 2007-08, 2007-09,
2008-09, 2009-10, 2010-11,
2011-12
Central Excise
Act,1944 1985-86 to 1989-90, Commissioner
2000-01 to 2003-04,
2004-06, 2006-08, 2007-11,
2012-13
Central Excise
Act,1944 1995-96, 1997-98, 2002-03, Commissioner (Appeals)
2004-05, 2003-04, 2003-05,
2004-05, 2005-06, 2009-10,
2009-11, 2010-11
Central Excise
Act,1944 1994-95, 2008-09 High Court
Central Excise
Act,1944 1987-88, 2014-15 Joint Commissioner
Central Excise
Act,1944 1979-81, 1980-81, 1982-83, Superintendent of
1995-96, 1996-97, 1999-00, Central Excise
2012-13, 2014-15
Central Sales Tax
Act,1956 1997-98, 1993-94, 1999-00, Additional Commissioner
2011-12
Central Sales Tax
Act,1956 2010-11 Assessing Authority
Central Sales Tax
Act,1956 2009-10 Commissioner
Central Sales Tax
Act.1956 2003-04, 2009-10 High Court
Central Sales Tax
Act,1956 2011-12, 2012-13, 2013-14 Joint Commissioner
(Appeals)
Central Sales Tax
Act,1956 1995-96, 1998-99, 2007-08, Revisional Board
2008-09, 2010-11
Central sales Tax
Act,1956 2001-02, 2004-05 Senior Joint
Commissioner
Central Sales Tax
Act,1956 2000-01, 2001-02, 2002-03, Supreme Court
2003-04
Central Sales Tax
Act,1956 1991-92, 1992-93, 1996-97, Tribunal
1998-99, 1999-00, 2002-03,
2004-05, 2005-06, 2007-08,
2008-09, 2009-10, 2010-11
Name of the Statute Nature of Dues Amount
(/Crore)
Central Sales Tax Act,1956 Central Sales Tax 0.04
Central Sales Tax Act,1956 Central Sales Tax 0.52
Central Sales Tax Act,1956 Central Sales Tax 7.36
Central Sales Tax Act,1956 Central Sales Tax 0.03
Central Sales Tax Act,1956 Central Sales Tax 0.23
UP Trade Tax Act,1948 Central Sales Tax 0.01
Andhra Pradesh Sales Tax 0.11
Sales Tax Act, 1957
Andhra Pradesh Sales Tax 0.06
Sales Tax Act, 1957
Andhra Pradesh Sales Tax 0.13
Sales Tax Act, 1957
Bengal Finance Sales Tax 0.05
Sales Tax Act,1941
Bombay Sales Tax Act, 1959 Sales Tax 0.32
Delhi Sales Act, 1975 Sales Tax 0.42
Odisha Sales Tax Act, 1947 Sales Tax 0.02
Tamil Nadu General Sales Tax 0.18
Sales Tax Act, 1959
UP Trade Tax Act,1948 Sales Tax 0.11
WB Sales Tax Act,1994 Sales Tax 0.21
WB Sales Tax Act,1994 Sales Tax 0.28
WB Sales Tax Act,1994 Sales Tax 3.40
WB Sales Tax Act,1994 Sales Tax 0.06
Finance Act,1994 Service Tax 0.02
Finance Act,1994 Service Tax 0.04
Name of the Statute Period to which the Forum where the dispute
amount related is pending
Central Sales Tax Act,1956 1995-96, 2006-07 Appellate &
Revisional Board
Central Sales Tax Act,1956 2006-07 Tribunal & High Court
Central Sales Tax Act,1956 2003-04, 2004-05,
2005-06, WB Appellate &
2006-07, 2007-08,
2008-09, Revisional Board
2009-10, 2010-11
Central Sales Tax Act,1956 2012-13 Deputy Commissioner,
Commercial Taxes
Central Sales Tax Act,1956 2003-04 Commercial Tax Officer
UP Trade Tax Act,1948 2005-06, 2006-07 Additional
Commissioner (Appeals)
Andra Pradesh Sales 2003-04 Appellate and
Tax Act,1957 Revisional Board
Andra Pradesh Sales 2001-02 High Court
Tax Act,1957
Andra Pradesh Sales 2001-02 Tribunal
Tax Act,1957
Bengal Finance 1987-88, 1995-96 Tribunal
Sales Tax Act,1941
Bombay Sales Tax Act,1959 2002-03, 2003-04,
2004-05 Tribunal
Delhi Sales Tax Act,1975 1999-00 Assessing Authority
Odisha Sales Tax Act,1947 1991-92 , 1992-93,
2004-05 Assistant Commissioner,
Commercial Taxes
Tamil Nadu General 1999-00 Chennai High Court
Sales Tax Act,1959
UP Trade Tax Act,1948 2006-07 Additional Commissioner
(Appeals)
WB Sales Tax Act,1994 1995-96, 1997-98 Deputy Commissioner
WB Sales Tax Act,1944 2001-02, 2004-05 Senior Joint
Commissioner
EB Sales Tax Act,1944 1995-96, 2003-04,
2004-05, West Bengal Appellate
&
1998-99 Revisional Board
WB Sales Tax Act,1944 1999-00 Additional Commissioner,
Sales Tax
Finance Act,1994 2007-09 Additional Commissioner
of Central Excise
Finance Act,1944 2007-08, 2008-09,
2009-10, Customs, Excise &
Service
2009 - 2010,
2010-11 Tax Appellate Tribunal
Name of the Statute Nature of Amount
dues (/Crore)
Finance Act,1994 Service Tax 0.46
Finance Act,1994 Service Tax 0.73
Finance Act,1994 Service Tax 0.34
Andhra Pradesh VAT 0.26
VAT Act, 2005
Andhra Pradesh VAT 0.28
VAT Act, 2005
Bihar VAT Act, 2005 VAT 0.01
Jharkhand VAT, 2005 VAT 0.14
Jharkhand VAT, 2005 VAT 0.20
Maharashtra VAT Act, 2002 VAT 0.01
Maharashtra VAT Act, 2002 VAT 0.14
Odisha Value Added VAT 5.26
Tax Act, 2004
Odisha Value Added VAT 1.43
Tax Act, 2004
Odisha Value Added VAT 0.71
Tax Act, 2004
Rajasthan VAT Act, 2003 VAT 0.01
UP VAT Act VAT 0.51
Uttarakhand VAT Act, 2005 VAT 0.17
W.B VAT ACT, 2003 VAT 16.33
W.B VAT ACT, 2003 VAT 0.10
W.B VAT ACT, 2003 VAT 0.16
W.B VAT ACT, 2003 VAT 6.07
W.B VAT ACT, 2003 VAT 1.75
Nature of Statute Period to Which the Forum Where the Dispute
amount relates is Pending
Finance Act,1944 2008-09 to 2009-10,
2012-13 Commissioner
Finance Act,1944 2003-05, 2009-10,
2010,-11, Commissioner (Appeals)
2010-12
Finance Act,1944 2009-12 Assistant Commissioner
Andra Pradesh VAT Act,2005 2006-07, 2007-08 Sales Tax Appellate
Tribunal
Andra Pradesh VAT Act,2005 2007-08, 2008-09 Tribunal
Bihar VAT Act,2005 2008-09 Joint Commissioner
(Appeals)
Jharkhand VAT Act,2005 2010-11 Tribunal
Jharkhand VAT Act,2005 2010-11 Commissioner of
Commercial Taxes
Maharashtra VAT Act,2002 2008-09, 2012-13 Deputy Commissioner
Maharashtra VAT Act.2002 2005-06, 2007-07,
2008-09, Joint Commissioner
(Appeals)
Odisha Value Added
Tax Act, 2004 2009-10 Commissioner
Odisha Value Added 2006-07, 2007-08,
Tax Act,2004 2008-09 CTC TRIBUNAL
Odisha Value Added 2005-06 High Court
Tax Act,2004
Rajasthan VAT Act,2003 2008-09 Deputy Commissioner
UP VAT Act 2010-11, 2011-12 Additional Commissioner
(Appeals)
Uttarakhand VAT Act,2005 2013-14 High Court
W.B VAT Act,2003 2007-08, 2008-09,
2009-10, Revisional Board
2010-11
W.B VAT Act,2003 2005-06 Senior Joint
Commissioner
W.B VAT Act,2003 2006-07 Sales Tax Appellate
Tribunal
W.B VAT Act,2003 2005-06, 2006-07,
2007-08, West Bengal Appellate &
2008-09, 2009-10 Revisional Board
W.B VAT Act,2003 2011-12 Additional Commissioner,
Commercial Taxes
(c) The amount required to be transferred to Investor Education and
Protection Fund has been transferred within the stipulated time in
accordance with the provisions of the Companies Act, 1956 and the rules
made thereunder.
viii. The Company has accumulated losses exceeding fifty percent of its
networth as at the end of the financial year and it has also incurred
cash losses during the financial year ended on that date and in the
immediately preceding financial year.
ix. According to the records of the Company examined by us and the
information and explanation given to us, the Company has not defaulted
in repayment of dues to any financial institution or bank or debenture
holders as at the balance sheet date.
x. In our opinion, and according to the information and explanations
given to us, the Company has not given any guarantee for loans taken by
others from banks or financial institutions during the year.
Accordingly, the provisions of Clause 3(x) of the Order are not
applicable to the Company.
xi. In our opinion, and according to the information and explanations
given to us, the term loans have been applied, on an overall basis, for
the purposes for which they were obtained.
xii. During the course of our examination of the books and records of
the Company, carried out in accordance with the generally accepted
auditing practices in India, and according to the information and
explanations given to us, we have neither come across any instance of
material fraud on or by the Company, noticed or reported during the
year, nor have we been informed of any such case by the Management.
For Price Waterhouse
Firm Registration Number: 301112E
Chartered Accountants
Prabal Kr. Sarkar
Kolkata Partner
October 19, 2015 Membership Number 52340
Mar 31, 2013
Report on the Financial Statements
1. We have audited the accompanying financial statements of Kesoram
Industries Limited (the "Company"), which comprise the Balance
Sheet as at 31st March, 2013, and the Statement of Profit and Loss and
Cash Flow Statement for the year then ended, and a summary of
significant accounting policies and other explanatory information,
which we have signed under reference to this report.
Management''s Responsibility for the Financial Statements
2. The Company''s Managment is responsible for the preparation of
these financial statements that give a true and fair view of the
financial position, financial performance and cash flows of the Company
in accordance with the Accounting Standards referred to in sub-section
(3C) of section 211 of ''the Companies Act, 1956'' of India (the
"Act"). This responsibility includes the design, implementation and
maintenance of internal control relevant to the preparation and
presentation of the financial statements that give a true and fair view
and are free from material misstatement, whether due to fraud or error.
Auditors'' Responsibility
3. Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
4. An audit involves performing procedures to obtain audit evidence,
about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditors'' judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditors consider internal control relevant to the
Company''s preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in
the circumstances. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of
the accounting estimates made by Management, as well as evaluating the
overall presentation of the financial statements.
5. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
Opinion
6. In our opinion, and to the best of our information and according to
the explanations given to us, the accompanying financial statements
give the information required by the Act in the manner so required and
give a true and fair view in conformity with the accounting principles
generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2013;
(b) in the case of the Statement of Profit and Loss, of the loss for
the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
7. As required by ''the Companies (Auditor''s Report) Order,
2003'', as amended by ''the Companies (Auditor''s Report)
(Amendment) Order, 2004'', issued by the Central Government of India
in terms of sub-section (4A) of section 227 of the Act (hereinafter
referred to as the "Order"), and on the basis of such checks of the
books and records of the Company as we considered appropriate and
according to the information and explanations given to us, we give in
the Annexure a statement on the matters specified in paragraphs 4 and 5
of the Order.
8. As required by section 227 (3) of the Act, we report that:
(a) We have 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 appears from our examination of
those books;
(c) The Balance Sheet, Statement of Profit and Loss, and Cash Flow
Statement dealt with by this Report are in agreement with the books of
account;
(d) In our opinion, the Balance Sheet, Statement of Profit and Loss,
and Cash Flow Statement dealt with by this report comply with the
Accounting Standards referred to in sub-section (3C) of section 211 of
the Act;
(e) On the basis of written representations received from the directors
as on 31st March, 2013, and taken on record by the Board of Directors,
none of the directors is disqualified as on 31st March, 2013, from
being appointed as a director in terms of clause (g) of sub-section (1)
of section 274 of the Act.
Annexure to Auditors'' Report
Referred to in paragraph 7 of the Auditors'' Report of even date to
the members of Kesoram Industries Limited on the financial statements
as of and for the year ended 31st March, 2013
i. (a) The Company is maintaining proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) The fixed assets are physically verified by the Management
according to a phased programme designed to cover all the items over a
period of 3 years which, in our opinion, is reasonable having regard to
the size of the Company and the nature of its assets. Pursuant to the
programme, a portion of the fixed assets has been physically verified
by the Management during the year and no material discrepancies have
been noticed on such verification.
(c) In our opinion, and according to the information and explanations
given to us, a substantial part of fixed assets has not been disposed
off by the Company during the year.
ii. (a) The inventory excluding stocks with third parties has been
physically verified by the Management during the year. In respect of
inventory lying with third parties, these have substantially been
confirmed by them. In our opinion, the frequency of verification is
reasonable.
(b) In our opinion, the procedures of physical verification of
inventory followed by the Management are reasonable and adequate in
relation to the size of the Company and the nature of its business.
(c) On the basis of our examination of the inventory records, in our
opinion, the Company is maintaining proper records of inventory. The
discrepancies noticed on physical verification of inventory as compared
to book records were not material.
iii. (a) The Company has granted unsecured loans, to a company covered
in the register maintained under Section 301 of the Act. The maximum
amount involved during the year and the year-end balance of such loans
aggregated to Rs. 14.80 crores and Rs. 6.15 crores, respectively. The
Company has not granted any secured / unsecured loans to firms or other
parties covered in the register maintained under section 301 of the
Act.
(b) In our opinion, the rate of interest and other terms and conditions
of such loans are not prima facie prejudicial to the interest of the
Company.
(c) In respect of the aforesaid loans, the Company is regular in
repaying the principal amount, as stipulated, and is also regular in
payment of interest, as applicable.
(d) In respect of the aforesaid loans, there is no overdue amount more
than Rupees One Lakh.
(e) The Company has taken unsecured loan, from two companies covered in
the register maintained under Section 301 of the Act. The maximum
amount involved during the year and the year-end balance of such loans
aggregated to Rs. 5.00 crores and Rs. nil, respectively. The Company has
not taken any secured /unsecured loans to firms or other parties
covered in the register maintained under Section 301 of the Act.
(f) In our opinion, the rate of interest and other terms and conditions
of such loans are not prima facie prejudicial to the interest of the
Company.
iv. In our opinion, and according to the information and explanations
given to us, exceptfor deficiencies in relation to information
technology general controls (ITGC) for sale of tyre, for which the
management is yet to take remedial measures there is an adequate
internal control system commensurate with the size of the Company and
the nature of its business for purchase of inventory and fixed assets
and for the sale of goods and further on the basis of our examination
of books and records of the company and according to the information
and explanations given to us, except for aforesaid deficiency in
ITGCfor sale of tyre we have neither come across nor have been informed
of any continuing failure to correct major weaknesses in the aforesaid
internal control system.
v. (a) According to the information and explanations given to us, we
are of the opinion that the particulars of all contracts or
arrangements that need to be entered into the register maintained under
section 301 of the Companies Act, 1956 have been so entered.
(b) In our opinion, and according to the information and explanations
given to us, the transactions made in pursuance of such contracts or
arrangements and exceeding the value of Rupees Five Lakhs in respect of
any party during the year have been made at prices which are reasonable
having regard to the prevailing market prices at the relevant time.
vi. In our opinion, and according to the information and explanations
given to us, the Company has complied with the provisions of Sections
58A and 58AA or any other relevant provisions of the Act and the
''Companies (Acceptance of Deposits) Rules, 1975'' with regard to the
deposits accepted from the public. According to the information and
explanations given to us, no order has been passed by the Company Law
Board or National Company Law Tribunal or Reserve Bank of India or any
Court or any other Tribunal on the Company in respect of the aforesaid
deposits.
vii. In our opinion, the Company has an internal audit system
commensurate with its size and the nature of its business.
viii. We have broadly reviewed the books of account maintained by the
Company in respect of products where, pursuant to the rules made by the
Central Government of India, the maintenance of cost records has been
prescribed under clause (d) of sub-section (1) of Section 209 of the
Act, and are of the opinion that, prima facie, the prescribed accounts
and records have been made and maintained. We have not, however, made a
detailed examination of the records with a view to determine whether
they are accurate or complete.
ix. (a) According to the information and explanations given to us and
the records of the Company examined by us, in our opinion, the Company
is generally regular in depositing undisputed statutory dues in respect
of Provident Fund, Service tax, Tax Deducted at Source and Value Added
Tax, though there has been a slight delay in a few cases, and is
regular in depositing undisputed statutory dues, including , investor
education and protection fund, employees'' state insurance, income
tax, wealth tax, customs duty, excise duty and other material statutory
dues, as applicable, with the appropriate authorities.
(b) According to the information and explanations given to us and the
records of the Company examined by us, there are no dues of wealth tax,
customs duty, which have not been deposited on account of any dispute.
The particulars of dues of income tax, sales tax, service tax and
excise duty as at March 31, 2013 which have not been deposited on
account of a dispute, are as follows -
Name of Statute Nature of Amount
Dues Rs. / crore
Andhra Pradesh General Sales Tax 0.80
Sales Tax Act, 1957
Bombay Sales Tax Act,
1959 Sales Tax 0.71
Central Excise Act, 1944 Excise Duty 0.60
Central Excise Act, 1944 Excise Duty 0.19
Name Periods to which Forum where dispute
the Amount relates is pending
Andhra Pradesh General 2006-07 to 2009-10 Andra Pradesh High
2001-02 Court
Bombay Sales Tax Act 2004-05, 2003-04 Deputy Commissioner
2002-03 (Appeal)
Central Excise Act,
1944 2002 - 03, 1999 -00 Additional Commissioner
Central Excise Act,
1944 1979-1981, 1980-1981 Assistant Commissioner
1982-1983, 2003-2004,
2004-2005, 2002-2004
1995-1996
Name of Statute Nature of Amount
Dues Rs. / crore
Central Excise
Act, 1944 Excise Duty 38.23
Central Excise
Act, 1944 Excise Duty 1.65
Central Excise
Act, 1944 Excise Duty 29.40
Central Excise
Act, 1944 Excise Duty 0.76
Central Sales
Tax Act, 1956 Sales Tax 0.37
Central Sales
Tax Act, 1956 Sales Tax 6.26
Central Sales
Tax Act, 1956 Sales Tax 0.55
Central Sales
Tax Act, 1956 Sales Tax 0.05
Central Sales
Tax Act, 1956 Sales Tax 0.11
Central Sales
Tax Act, 1956 Sales Tax 8.48
Name Periods to which Forum where dispute
the Amount relates is pending
Central Excise
Act, 1944 2004-06, 2006-08, Commissioner
2003-05, 1995-96,
1985-90, 2000-04,
1986-87 to 1989-90,
2009-10, 2007-11
Central Excise
Act, 1944 2006-07, 1995-96, Commissioner (Appeal)
2001-02, 2002-03,
2004-05, 2009-10,
2010-11, 2011-12
Central Excise
Act, 1944 2006-07 to 2007-08, Customs, Excise &
Central Excise
Act, 1944 2004-05 to 2005-06, Service Tax Appellate
Central Excise
Act, 1944 2007-08 to 2008-09 Tribunal
2002-03, 2004-05,
1999-03, 2005-06,
2010-12, 2004-06,
2006-08, 2007-08,
2007-09, 2008-09,
2009-10, 2006-07 to
2009-10, 2010-11
Central Excise
Act, 1944 2005-06 Tribunal
Central Excise
Act, 1944 1997-98, 2008-09, Additional Commissioner
2007-08,1999-2000
1995-96, 2006-07, West Bengal
1996-97, 2003-04, Commercial Taxes
2004-05, 2005-06, Appellate and Revision
Central Excise
Act, 1944 2006-07 Board
Central Excise
Act, 1944 2004-05, 1996-97, Assistant Commissioner
Central Excise
Act, 1944 1998-99, 2008-09,
Central Excise
Act, 1944 2009-10, 2010-11,
Central Excise
Act, 1944 2011-12
Central Excise
Act, 1944 2005-06 Commissioner
Central Excise
Act, 1944 2007-08, 2008-09, Deuty Commissioner
2009-10
Central Excise
Act, 1944 2003-04, 2006-07, Odisha High Court
2008-09
Name of Statute Nature of Amount
Dues Rs. / crore
Central Sales Tax
Act, 1956 Sales Tax 0.18
Central Sales Tax
Act, 1956 Sales Tax 4.65
Central Sales Tax
Act, 1956 Sales Tax 2.88
Central Sales Tax
Act, 1956 Sales Tax 0.01
Central Sales Tax
Act, 1956 Sales Tax 0.06
Central Sales Tax
Act, 1956 Sales Tax 16.99
Delhi Sales Tax Act,
1975 Sales Tax 0.42
Finance Act, 1994 Service Tax 0.46
Finance Act, 1994 Service Tax 0.35
Finance Act, 1994 Service Tax 0.02
Income Tax Act, 1961 Income Tax 9.20
Tamil Nadu General Sales Tax 0.18
Sales Tax Act,
1959
UP Trade Tax Act, 1948 Sales Tax 0.09
West Bengal Sales
Tax Act, 1994 Sales Tax 0.07
West Bengal Sales
Tax Act, 1994 Sales Tax 3.90
West Bengal Sales
Tax Act, 1994 Sales Tax 0.21
West Bengal Sales
Tax Act, 1994 Sales Tax 0.38
Name Periods to which Forum where dispute
the Amount relates is pending
Central Sales Tax
Act, 1956 2001-02, 2002-03 Tribunal
Central Sales Tax
Act, 1956 2003-04 Karnataka High Court
Central Sales Tax
Act, 1956 2008-09, 2007-08 Sr. Joint Commissioner
Central Sales Tax
Act, 1956 2006-07 Jt. Commissioner
Central Sales Tax
Act, 1956 2001-02, 2004-05 Sr. Jt. Commissioner
(Appellate Authority)
Central Sales Tax
Act, 1956 2000-01, 2001-02, Supreme Court
2002-2003
Central Sales Tax
Act, 1956 1999-2000 Additional Commissioner
Central Sales Tax
Act, 1956 2008-09 to 2009-10 Commissioner
Central Sales Tax
Act, 1956 2010-11, 2009-10, Commissioner (Appeals),
Central Sales Tax
Act, 1956 2010-11, 2008-09, Central Excise,Customs
Central Sales Tax
Act, 1956 2009-10 & Service Tax.
Central Sales Tax
Act, 1956 2007-09 Additional Commissioner
of Service Tax
Central Sales Tax
Act, 1956 2005-06, 2007-08, CIT (Appeal)
Central Sales Tax
Act, 1956 2010-11, 2003-04
Central Sales Tax
Act, 1956 1999-2000 Chennai High Court
Central Sales Tax
Act, 1956 2005-06,2006-07 Additional Commissioner
Central Sales Tax
Act, 1956 2008-09, 1999-2000 Additional Commissioner
Central Sales Tax
Act, 1956 1998-99, 1995-96, West Bengal
Central Sales Tax
Act, 1956 1996-97, 1987-88, Commercial Taxes
Central Sales Tax
Act, 1956 2003-04, 2004-05 Appellate and Revision Board
Central Sales Tax
Act,1956 1995-96, 1997-98, Deputy Commissioner
Central Sales Tax
Act, 1956 2001-02, 2004-05 Sr. Jt. Commissioner
(Appellate Authority)
x. The Company has no accumulated losses as at the end of the
financial year and it has incurred cash losses in the financial year
ended on that date and in the immediately preceding financial year.
xi. According to the records of the Company examined by us and the
information and explanation given to us, the Company has not defaulted
in repayment of dues to any financial institution or bank or debenture
holders as at the balance sheet date.
xii. The Company has not granted any loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
Therefore, the provisions of Clause 4(xii) of the Order are not
applicable to the Company
xiii. As the provisions of any special statute applicable to chit
fund/ nidhi/ mutual benefit fund/ societies are not applicable to the
Company, the provisions of Clause 4(xiii) of the Order are not
applicable to the Company.
xiv. In our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly, the
provisions of Clause 4(xiv) of the Order are not applicable to the
Company.
xv. In our opinion, and according to the information and explanations
given to us, the Company has not given any guarantee for loans taken by
others from banks or financial institutions during the year.
Accordingly, the provisions of Clause 4(xv) of the Order are not
applicable to the Company.
xvi. In our opinion, and according to the information and explanations
given to us, the term loans have been applied, on an overall basis, for
the purposes for which they were obtained.
xvii. According to the information and explanations given to us and on
an overall examination of the balance sheet of the company, we report
that the Company has used funds raised on short-term basis for
long-term investment. The company has excess current liabilities over
current assets amounting to Rs. 990.59 crores on a short term basis which
has been used for non current assets.
xviii. The Company has not made any preferential allotment of shares
to parties and companies covered in the register maintained under
Section 301 of the Act during the year. Accordingly, the provisions of
Clause 4(xviii) of the Order are not applicable to the Company.
xix. The Company has not issued any debentures during the year and does
not have any debentures outstanding as at the beginning of the year and
at the year end. Accordingly, the provisions of Clause 4(xix) of the
Order are not applicable to the Company
xx. The Company has not raised any money by public issues during the
year. Accordingly, the provisions of Clause 4(xx) of the Order are not
applicable to the Company.
xxi. During the course of our examination of the books and records of
the Company, carried out in accordance with the generally accepted
auditing practices in India, and according to the information and
explanations given to us, we have neither come across any instance of
material fraud on or by the Company, noticed or reported during the
year, nor have we been informed of any such case by the Management.
For Price Waterhouse
Firm Registration Number: 301112E
Chartered Accountants
Prabal Kr. Sarkar
Kolkata Partner
27th April, 2013 Membership Number 52340
Mar 31, 2010
1. We have audited the attached Balance Sheet of Kesoram Industries
Limited (the "Company") as at 31st March, 2010, the related Profit and
Loss Account and Cash Flow Statement for the year ended on that date
annexed thereto, which we have signed under reference to this report.
These financial statements are the responsibility of the Companys
Management. Our responsibility is to express an opinion on these
financial statements based on our audit.
2. We conducted our audit in accordance with the auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by Management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3. As required by the Companies (Auditors Report) Order, 2003, as
amended by the Companies (Auditors Report) (Amendment) Order, 2004,
issued by the Central Government of India in terms of Section 227 (4A)
of The Companies Act, 1956 of India (the Act) and on the basis of
such checks of the books and records of the Company as we considered
appropriate and according to the information and explanations given to
us, we further report tha:
3.1 (a) The Company is maintaining proper records showing full
particulars (other than details regarding revaluations made during
1982-83) including quantitative details and situation of its fixed
assets.
(b) The fixed assets of the Company are physically verified by the
Management according to phased programmes 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 the nature of its assets.
Pursuant to such programmes [without any coverage for items of
Companys Spun Pipes & Foundries Unit (which is under suspension of
work effective 2nd May, 2008 having year-end book value of
Rs.4,09,93,039)], a portion of the fixed assets has been physically
verified by the Management during the year and no material
discrepancies between the book records and the physical inventory have
been noticed.
(c) In our opinion and according to the information and explanations
given to us, a substantial part of fixed assets has not been disposed
off by the Company during the year.
3.2 (a) The inventories [excluding stocks with third parties and
pertaining to the aforesaid Spun Pipes & Foundries Unit (year-end
book value Rs. 99,23,767)] have been physically verified by the
Management during the year. In respect of inventory lying with third
parties, these have substantially been confirmed by them. In our
opinion, the frequency of physical verification is reasonable.
(b) In our opinion, the procedures of physical verification of
inventories followed by the Management are reasonable and adequate in
relation to the size of the Company and nature of its business.
(c) On the basis of our examination of the inventory records, in our
opinion, the Company is maintaining proper records of inventories other
than work-in-process. As in earlier years, work-in-process has been
determined by the Management on the basis of physical verification as
mentioned in paragraph 3.2 (a) above. The discrepancies noticed on
physical verification of inventory as compared to book records were not
material.
3;3 The Company has neither granted nor taken during the year any
loans, secured or unsecured, to / from companies, firms
or other parties covered in the register maintained under Section 301
of the Act.
3.4 In our opinion and according to the information and explanations
given to us, there is an adequate internal control system
commensurate with the size of the Company and the nature of its
business for the purchase of inventory, fixed assets and for the sale
of goods. The Company has not provided any service during the year.
Further, on the basis of our examination of the books and records of
the Company and according to the information and explanations given to
us, we have neither come across nor have we been informed of any
continuing failure to correct major weaknesses in the aforesaid
internal control system.
3.5 (a) In our opinion and according to the information and
explanations given to us, the particulars of contracts or arrangements
referred to in Section 301 of the Act have been entered in the register
required to be maintained under that Section.
(b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of such contracts or
arrangements and exceeding the value of rupees five lakhs in respect of
any party during the year, have been made at prices which are
reasonable having regard to the prevailing market prices at the
relevant time other than transactions of special nature for which
competitive quotations are not available.
3.6 In our opinion and according to the information and explanations
given to us, the Company has complied with the provisions of Sections
58A and 58AA or any other relevant provisions of the Act and the
Companies (Acceptance of Deposits) Rules, 1975 with regard to the
deposits accepted from the public. According to the information and
explanations given to us, no order has been passed by the Company Law
Board or National Company Law Tribunal or Reserve Bank of India or any
Court or any other Tribunal on the Company in respect of the aforesaid
deposits.
3.7 In our opinion, the Company has an internal audit system
commensurate with its size and nature of business.
3.8 We have broadly reviewed the books of account maintained by the
Company in respect of products at its Cement, Tyre, Rayon and Chemicals
Units where, pursuant to the Rules made by the Central Government of
India, the maintenance of cost records has been prescribed under
Section 209(1 )(d) of the Act and are of the opinion that prima facte,
the prescribed accounts and records have been made and maintained. We
have not, however, made a detailed examination of the records with a
view to determine whether they are accurate or complete.
3.9 (a) According to the information and explanations given to us and
the records of the Company examined by us, in our opinion,
the Company is generally regular in depositing the undisputed statutory
dues including provident fund, investor education and protection fund
[other than arrears of Rs. 56,307 (pertaining to cases under
litigation) outstanding for a period of more than six months as on 31st
March, 2010], employees state insurance, income-tax (other than
arrears of Rs. 19,23,892 outstanding for a period of more than six
months as on 31st March, 2010), sales tax, wealth tax, service tax,
custom duty, excise duty, cess and other material statutory dues as
applicable with the appropriate authorities.
(b) According to the information and explanations given to us and the
records of the Company examined by us, the particulars of dues of
income-tax, sales-tax, wealth tax, service tax, custom duty, excise
duty and cess as at 31st March, 2010 which have not been deposited on
account of a dispute (there being no such cases with regard to wealth
tax, custom duty and cess), are as follows -
Name of the Statute Nature of Amount Period to which the
the dues Rs. amount relates
Income Tax Act,
1961 Income Tax 50,000 2000-01
cantral
Sales Tax Act, 1956 Sales Tax 16,99,42,317 2000-01 to 2002-03
3,07,99,841 2001-02,2003-04,
2004-05,2006-07
4,65,12,981 2003-04
2,62,95,867 1999-00,2003-04,
2004-05
29,25,145 1991-92 to 2002-03
1,47,85,118 2006-07
28,37,124 2005-06,2007-08
4,48,082 1999-00
6,23,26,761 1997-98,2001-02,
2003-04 to 2005-06
42,92,465 1991-92 to 2001-02,
2004-05
West Bengal
Sates Tax Act, Sales Tax 2,62,30,154 1987-88,2003-04,
1994 2004-05
5,72,943 1999-00
2,83,64,540 1995-96,1997-98,
1999-00,2001-02,
2003-04,2004-05,
2008-09
Delhi Sales
Tax Act, 1975 Sates Tax 41,70,263 1999-00
Jammu & Kashmir
Sales Sales Tax 9,90,252 1999-00
Tax Act,
1962
Tamil Nadu
General Sales Sales Tax 18,07,934 1999-00
Tax Act,
1959
Andhra Pradesh
General Sales Tax 25,66,651 2001-02
Sales Tax Act,
1957
Madhya Pradesh Sales Tax 6,36,696 2000-01
Commercial Tax Act,
1994
U.P. Trade
Tax Act, 1948 Sales Tax 8,88,138 2005-06,2006-07
Finance Act, 1994 Service Tax 3,85,55,392 2005-06 to 2007-08
Central Excise
Act, 1944 Excise Duty 1,72,232 1993-94,1994-95
4,96,64,997 2003-04 to 2007-08
8,63,13,775 1986-87 to 1989-90
1994-95 to 1996-97
1999-00,2000-01
2002-03 to 2005-06
19,43,327 2003-04
18,86,987 1979-80 to 1982-83
1995-96,
2001-02 to 2004-05
Name of the Statute Forum where
dispute is pending
Income Tax Act, 1961 Commissioner
Central Sales Tax Act, 1956 Supreme Court
Orissa High Court
Kamataka High Court
West Bengal Commercial Taxes
Apellate and Revisional Board
Tribunal
Sr. Joint Commissioner
Commissioner
Additional Commissioner
Deputy Commissioner
Assistant Commissioner
West Bengal Commercial Taxes
Appellate and Revisional Board
Additional Commissioner
Deputy Commissioner
Delhi Sales Tax Act, 1975 Additional Commissioner
Jammu & Kashmir Deputy Commissioner
Tax Act, 1962
Tamil Nadu General Chennai High Court
Tax Act,1959
Andhra Pradesh General Tribunal
Sales Tax Act,1957
Madhya Pradesh Deputy Commissioner
Commercial Tax Act,1994
U.P. Trade Tax Act, 1948 Additional
Finance Act, 1994 Customs Excise & Service Tax
Appellate Tribunl
Central Excise Act, 1944 Calcutta High Court
Customs Excise & Service Tax
Appellate Tribunal
Commissioner
Deputy Commissioner
Assistant Commissioner
3.10 The Company has no accumulated losses as at 31st March, 2010 and
it has not incurred any cash losses in the financial year ended on that
date and in the immediately preceding financial year.
3.11 According to the records of the Company examined by us and the
information and explanations given to us, the Company has not defaulted
in repayment of dues to any financial institution or bank or debenture
holders as at the Balance Sheet date.
3.12 The Company has not granted any loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
3.13 The provisions of any special statute applicable to chit fund/
nidhi/ mutual benefit fund/ societies are not applicable to the
Company.
3.14 In our opinion, the Company is not a dealer or trader in shares,
securities, debentures and other investments.
3.15 In our opinion, and according to the information and explanations
given to us, the Company has not given any guarantee for loans taken by
others from banks or financial institutions during the year.
3.16 In our opinion, and according to the information and explanations
given to us, the term loans have been applied for the purposes for
which they were obtained other than term loans in the region of Rs. 100
crores (obtained towards the end of the financial year) which,
according to management, has been temporarily used for working capital
purposes / repayment of certain short term borrowings pending eventual
utilization for specific purposes.
3.17 On the basis of an overall examination of the Balance Sheet of the
Company, in our opinion and according to the information and
explanations given to us, there are no funds raised on a short-term
basis which have been used for long-term investment.
3.18 The Company has not made any preferential allotment of shares
during the year.
3.19 The Company has not created any security or charge in respect of
Short-term debentures aggregating Rs.145 Crores issued during the year
and outstanding at year-end. The Company has not created security or
charge in respect of short term debentures issued and repaid during the
year. The Company has created security or charge (other than mortgage
on certain immovable properties of the Company) in respect of long term
debentures aggregating Rs. 1,00,00,00,000 issued during the year and
outstanding at year end.
3.20 The Company has not recently raised any money by public issues.
3.21 During the course of our examination of the books and records of
the Company, carried out in accordance with the generally accepted
auditing practices in India, and according to the information and
explanations given to us, we have neither come across any instance of
fraud on or by the Company, noticed or reported during the year, nor
have we been informed of such case by the Management.
4. Further to our comments in paragraph 3 above, we report that:
(a) We have 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 appears from our examination of
those books;
(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account;
(d) In our opinion, the Balance Sheet, the Profit and Loss Account and
the Cash Flow Statement dealt with by this report comply with the
accounting standards referred to in Section 211 (3C) of the Act;
(e) On the basis of the written representations received from the
directors as on 31st March, 2010, and taken on record by the Board of
Directors, none of the directors is disqualified as on 31st March, 2010
from being appointed as a director in terms of Section 274 (1) (g) of
the Act;
(f) In our opinion and to the best of our information and according to
the explanations given to us, the said financial statements together
with the notes thereon and attached thereto give, in the prescribed
manner, the information required by the Act, and subject to Note 7(c)
regarding Directors remuneration of Rs. 27,805 for which shareholders
approval is yet to be obtained, give a true and fair view in conformity
with the accounting principles generally accepted in India:
(i) in the case of the Balance Sheet, of the state of the affairs of
the Company as at 31st March, 2010;
(ii) in the case of the Profit and Loss Account, its profit for the
year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
For Price Watemouse
place: Kolkata Firm Registration No. 301112E
Date: 28th April, 2010 Chartered Accountants
(SK.Deb)
Partner
Membership No. 13390
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