We have audited the accompanying financial statements of RESTILE
CERAMICS LIMITED (the Company) which comprise the Balance Sheet as at
31st March 2015, the Statement of Profit and Loss and 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
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 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
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 financial statements that give a true and fair view
and are free from material misstatement, whether due to fraud or error.
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
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 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 financialcontrol 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 the 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.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion on the financial
Basis for Qualified Opinion
1. The Company has generated negative operating cash flows, incurred
substantial operating losses, significant deterioration in value of
assets used to generate cash flows and its loans from bank have been
recalled by lender all of which indicate existence of material
uncertainty in the Company''s ability to continue as a going concern for
a reasonable period of time. The attached financial statements do not
include any adjustments that might result had the above uncertainties
2. The Company''s building and plant and equipment are carried in the
Balance Sheet at Rs.926.49 lakhs and Rs.5432.70 lakhs respectively.
Independent valuation of the assets of the company in financial year
2010-11 had indicated impairment of Building (Rs.522.17 lakhs) and
Plant and Machinery (Rs.119.87 lakhs). However, considering the lapse
of time and the depreciation being charged on the basis of estimated
useful life of assets, the aforesaid impairment in value of assets need
to be recomputed. /As such, the possible impairment on assets and its
effects on statement of Profit & Loss is to be taken as unascertained
as on March 31, 2015.
In our opinion and to the best of our information and according to the
explanations given to us, except for the effect of the matters
described in the Basis for qualified opinion paragraph, 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 31st March 2015,and its loss and its cash
flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2015 (the
Order), as amended, issued by the Central Government of India in terms
of sub-section (11) of section 143 of the Companies Act, 2013, 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 Companies Act, 2013, 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 in so far as appears from our examination of those
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
d) Except for the matters described in the Basis of Qualified Opinion
paragraph, 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 31st March 2015, and taken on record by the Board of
Directors, none of the directors are disqualified as on 31st March
2015, from being appointed as a director in terms of sub-section (2) of
section 164 of the Companies Act, 2013.
f) With respect to the matters to be included in the Auditor''s Report
in accordance with Rule 11 of the companies (Audit and Auditors) Rules,
2014, in our opinion and to the best of our information and according
to the explanation given to us:
i. The company has, in accordance with the generally accepted
accounting practice, disclosed the impact of pending litigations on its
financial position in its financial statements - Also Refer Note 28.01
to the financial statements.
ii. The company did not have any long-term contracts including
derivative contracts for which there were any material foreseeable
iii. There were no amounts which were required to be transferred to the
Investor Education and Protection Fund by the Company.
ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT
Refer paragraph 1 under ''Report on other Legal and Regulatory
Requirements section'' of our Report of even date on the accounts of
Restile Ceramics Limited for the year ended March 31,2015.
In our opinion and on the basis of such checks as we considered
appropriate, and according to the information and explanations given to
us , the nature of the company''s business/ activities/ matters
specified in clauses (iii),(v), (vi),(x) and (xi) of paragraph 3 of the
Company Audit Report Rules 2015 do not apply to the company. Further,
in respect of other clauses, on the basis of such checks as we
considered appropriate, we report that:
1. In respect of its fixed assets:
(a) The company is maintaining proper records showing full particulars
including quantitative details and situation of fixed assets.The same,
however, needs to be updated.
(b) The fixed assets are being physically verified under a phased
programme of verification, which, in our opinion, is reasonable having
regard to the nature and value of its assets, and no material
discrepancies have been noticed on such verification carried out during
the year in terms of the phased programme.
2. (a) The inventories have not been physically verified at the year-
end by the management.
(b) The question of our commenting on procedures of the said physical
verification of the inventory followed by the management therefore does
(c) In our opinion and on the basis of our examination of the records,
the Company is generally maintaining proper records of its inventory.
The question of our commenting on the material discrepancies noticed on
physical verification and whether the same have been properly dealt
with the books of account does not arise, in view of our observation in
3. In our opinion there is an adequate internal control system
commensurate with the size of the company and the nature of its
business for purchase of fixed assets and inventories, and for sale of
goods and services and for payment of expenses. Further, on the basis
of our examination of the books and records of the company, we have
neither come across nor have been informed of any continuing failure to
correct major weaknesses in the aforesaid internal control system.
4. (a) Delays were noticed in depositing undisputed income tax, sales
tax, service tax, excise duty and cess with the appropriate authorities
during the year. The arrears of such dues outstanding as at March 31,
2015 for a period of more than six months from the date they became
payable are -tax collected/deducted at source Rs.0.20 lakhs , sales Tax
/Value added tax Rs.27.37 Lakhs, property tax Rs.2.50 lakhs and
professional tax Rs.0.19 lakhs. Out of the above,sales Tax /Value added
tax of Rs 4.60 Lakhs have subsequently been paid. We are informed that
the delays were caused due to financial constraints.
(b) There are no dues of income tax, wealth-tax, service tax, excise
duty, cess and customs duty, which have not been deposited on account
of any dispute. Sales Tax dues not deposited on account of dispute are
Year to which
Name of the Forum where the demand
Statute Nature of Dues Dispute is Pending relates
Sales Tax Kerala Sales Tax Dy. Commissioner 2009-2010
Sales Tax APVAT Dy. Commissioner 2010-2011
Sales Tax APVAT Dy. Commissioner 2011-2012
Amount of Tax
Name of the Demanded(Rs.
Sales Tax Tax-Rs.2899184
Total - Rs.8697552
Sales Tax Tax - Rs.3023024
Paid - Rs.378000
Sales Tax Tax - Rs.419876
Penalty - Rs.41988
Balance - Rs.410364
(c) The Company is not required to transfer any amount to Investor
Education and Protection Fund in accordance with relevant provisions of
the Companies Act, 1956 (1 of 1956) and rules made there under.
5. The accumulated losses of the Company as at March 31, 2015
aremorethan fifty per cent of its net worth. The Company has incurred
cash losses in the financial year ended on that date and in the
immediately preceding financial year.
6. As per information and explanation given to us, the bank has called
upon the Company to pay back the entire working capital loan of Rs. 409
lakhs and to close the account immediately.There are no dues to
financial institutions or debenture holders.
7. Based on the audit procedures performed, we report that no fraud of
material significance on the Company or fraud by the Company has been
noticed or reported during the year.
For M.S.Krishnaswami & Rajan
Firm regn No: 01554S
Membership No: 26453
Date: May 30, 2015