| We have audited the accompanying Financial Statements of RAASI
REFRACTORIES LIMITED ("the Company"), which comprises the Balance Sheet
as at 31 March 2015, the Statement of Profit and Loss, the Cash Flow
Statement for the year the ended, and a summary of significant
accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters in
section 134(5) of the Companies Act, 2013 ("the Act") with respect to
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 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 the maintenance of
adequate accounting records in accordance with the provision of the Act
for safeguarding of the assets of the Company and for preventing and
detecting the frauds and other irregularities; selection and
application of appropriate accounting policies; making judgments and
estimates that are reasonable and prudent; and design, implementation
and maintenance of internal financial control, that were operating
effectively for ensuring the accuracy and completeness of the
accounting records, relevant to the preparation and presentation of the
financial statements that give a true and fair view and are free from
material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial
statements based on 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.
We conducted our audit 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 financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. 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. 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 control
system over financial reporting and the operating effectiveness of such
controls. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of the accounting
estimates made by the management as well as evaluating the overall
presentation of the financial statements.
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.
Basis for qualified opinion
i. Attention is invited to Note No: 8 to Financial Statements
regarding Loans from financial Institutions and in respect of the same
an interest of Rs. 239.35 lacs (including previous years) is not
provided. The profits and reserves of the company do not reflect the
correct position to that extent and liability of the company is also
understated to that extent.
ii. Attention is invited to Note No: 8 to Financial Statements
regarding outstanding Statutory Liabilities and in respect of the same
the interest / penalty payable is not provided. Due to absence of full
details the amount of Interest / penalty could not be quantified.
iii. Attention is invited to Note No: 17 to Financial Statements,
regarding the Other Income and in respect of the interest income the
accrued interest of Rs.2.85 lacs on bank deposits is not recognized,
the revenue of the Company & assets of the company are understated to
that extent.
iv. As stipulated in the provisions of Section 138 of Companies Act,
2013, the company has not appointed an Internal Auditor.
Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the effect of the matter described
in the Basis for Qualified Opinion Paragraph, the financial statements
give the information required by the Act in the manner so required and
give a true and fair view inconformity 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 March 31, 2015;
b) in the case of 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.
Emphasis Matter
We draw attention to the following matters:
a) Note No: 10 to the financial statements on the matter of providing
depreciation on fixed assets. The company has provided depreciation on
Straight Line Method as per the provisions of (Schedule XIV) Companies
Act, 1956 where as the company has to provide depreciation as per the
provisions of (Schedule II) Companies Act, 2013.
b) Note No: 12 to the financial statements on matters relating to
Inventories: The factory of the company was not functioning for about
18 Months due to various reasons like shortage of power, labour
problems, shortage of raw materials, financial constraints etc, and the
factory started operations from the middle of the financial year by
which time most of the stocks are reported to be obsolete. Hence there
is substantial depletion in the value of closing stock at the end of
the financial year.
c) The confirmation of balances of payable & receivables have not been
obtained. The receivables are netted from the trade payables and short
term loans. There are some old claims, receivables in respect of which
no provision is made for doubtful/irrecoverable debts as the company is
hopeful of recovery /adjustment. Hence we are unable to express our
opinion on payables & receivables and the consequent effect on the
Financial Statements. Other Matter:
During the financial year on 28th February 2015 on behalf of Mr. Konda
Laxmaiah & M/s. Ram Laxman Parboiled Rice Private Limited an open offer
to the equity share holders of the company was made pursuant to and in
compliance of SEBI Regulations, 2011 for substantial acquisition and
takeover of the company.
Report on other Legal and Regulatory Requirements.
1. As required by the Companies (Auditor's Report) Order, 2015 ("the
Order") issued by the Central Government of India in terms of
sub-section (11) of section 143 of the Act, and on the basis of such
checks of the books and records of the Company 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.
2. As required by section 143(3) of the Act, we report that:
a. We have sought and, except for the possible effect of the matter
described in point (a) of the emphasis paragraph above, 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, except as discussed in the basis for qualified
opinion paragraph above in our opinion, proper books of account as
required by law have been kept by the Company so far as it appears from
our examination of those books
c. The Balance Sheet, the Statement of Profit and Loss, and Cash Flow
Statement dealt with by this Report are in agreement with the books of
account.
d. In our opinion, except as discussed in the basis for qualified
opinion paragraph above, and AS 15 on Accounting for Employee Benefits,
the 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 written representations received from the directors
as on 31 March, 2015, taken on record by the Board of Directors, none
of the directors is disqualified as on 31 March, 2015, from being
appointed as a director in terms of Section 164(2) of the Act.
f. The report on matters relating to Internal Financial Controls over
financial reporting and the operating effectiveness of the same as
specified in clause (i), is not mandatory for the Financial Year ending
31st March 2015, as per the Government of India notification dated
October 14, 2014 on the same matter.
g. With respect to the other matters included in the Auditor's Report
and in accordance with Rule 11 of Companies (Audit and Auditors) Rules,
2014 and in our opinion and to the best of our information and
explanations given to us:
i. The Company has disclosed the impact of pending litigations on its
financial position in its financial statements - Refer Note 23.1 to the
financial statements;
ii. The Company has not made provision, as required under the
applicable law or accounting standards, as the company is not
foreseeing any material losses.
iii. There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company
Annexure referred to in paragraph 1 of our report of even date
Re: RAASI REFRACTRORIES LIMITED
I. a) The Company has not maintained proper records showing full
particular including quantitative details and situation of fixed
assets.
b) As explained to us, the fixed assets have been physically verified
by the management at reasonable intervals and no material discrepancies
were noticed on such verification.
ii. a) As explained to us, inventories have been physically verified
during the year by the management. In our opinion, the frequency of
verification is reasonable.
b) The procedures explained to us, which are followed by the management
for physical verification of inventories, are in our opinion reasonable
and adequate in relation to the size of the company and nature of its
business.
c) The Company is maintaining proper records of inventory and the
material discrepancies/ depletion noticed in the value of inventory is
provided at the end of the financial year.
iii. No loans were granted by the Company, to any of the parties
covered in the register maintained under section 189 of the Act. Hence
the report on the related matters of this clause and sub-clauses (a)
and (b) is not applicable.
iv. In our opinion and according to the information and explanations
obtained by us, there is no defined adequate internal control system
commensurate with the size of the company and the nature of its
business with regard to purchase of inventory and fixed assets and for
sale of goods and power.
v. The Company has not accepted any deposits from the public within
the meaning of sections 73 to 76 or any other relevant provisions of
the Act and rules framed there under.
vi. In our opinion and according to the information and explanations
obtained by us the maintenance of cost records as specified under
subsection (1) of section 148 of the companies Act, 2013 is not
applicable.
vii. a) The Company is generally regular in depositing undisputed
statutory dues and the arrears of outstanding statutory dues as at the
end of the financial year for a period of more than 6 months are as
follows:
Nature of statutory dues Amount In Lacs
AP VAT 19.10
CST 4.18
Excise Duty 40.09
ESI Company's Contribution 20.53
ESI Employee's Contribution 5.75
Provident Fund Company's Contribution 51.66
Provident Fund Employee's Contribution 13.83
LIC premium recovered from Employees 10.29
Professional Tax 0.39
TPS 0.59
Total 166.41
b) According to the information and explanations given to us, the
following statutory liabilities are outstanding which are disputed as
at the end of Financial Year 2014-15:
Nature of Dispute Pending Amount Remarks
dues before (In Lacs)
Income Tax Income Tax 14.48 Appeal filed on 13.05.2013
commissioner against the Assessment order
(Appeals) Dt: 28.03.203 for AY 2010-11
Payment of Joint 47.80 Case filed by Labour for
Wage Commissioner payment of wages from Jan 2014
Labour to June 2014
Provident High Court AP 90.47 Writ Petition Filed against the
Fund order of Asst. PF Commissioner
for payment of PY from March,
2010 to Sep, 2012
c) According to the information and explanations given to us, there are
no amounts required to be transferred to Investor Education &
Protection Fund under the provisions of Companies Act, 1956.
viii. The Accumulated losses, Net worth and Cash losses for the
Financial Year ended 31.03.2015 and Immediately preceding year are as
follows:
Particulars Amount in Lacs
As at 31.03.2015 As at 31.03.2014
Accumulated Losses 2280.32 587.99
Net Worth (1624.75) 67.63
Cash Loss 1588.41 251.91
ix. Based on our procedures and as per the information and
explanations given to us, the company has defaulted in re-payment of
dues to Financial Institutions to the Extent of Rs. 906.02 Lacs. There
are no dues to Banks & Debenture holders.
x. According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from bank
or financial institutions.
xi. According to the information and explanations given to us and
records examined by us the company has not availed any term loans
during the current Financial Year.
xii. During the course of our examination of the books and records of
the Company, carried out in accordance with the Generally Accepted
Accounting Practice 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 t he management.
For SRB & Associates,
Chartered Accountants,
Firm Reg. No: 310009E
T. Lakshmi Narayana
Partner
Date: 30.05.2015 Membership No: 014674 |