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Restile Ceramics
BSE: 515085|ISIN: INE298E01022|SECTOR: Ceramics & Granite
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« Mar 13
Auditor's Report (Restile Ceramics) Year End : Mar '14
We have audited the accompanying financial statements of RESTILE
 CERAMICS LIMITED (the Company), which comprise the Balance Sheet as
 at March 31,2014, 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.
 
 Management''s Responsibility for the Financial Statements
 
 Management 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 notified under the Companies Act, 1956 (the
 Act) read with the General Circular 15/2013 dated 13 th September 2013
 of the Ministry of Corporate Affairs in respect of section 133 of the
 Companies Act, 2013. 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.
 
 Auditor''s Responsibility
 
 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.
 
 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 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 but not for the
 purpose of expressing an opinion on the effectiveness of the Company''s
 internal control . 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.
 
 We believe that the audit evidence we have obtained is sufficient and
 appropriate to provide a basis for our audit opinion.
 
 Basis for Qualified Opinion
 
 (a) 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
 been known.
 
 (b) The Company''s building and plant and equipment are carried in the
 Balance Sheet at Rs.967.18 lakhs and Rs.5951.24 lakhs respectively.
 Management has not recognized estimated impairment in value of building
 (Rs.522.17 lakhs) and in value of plant and equipment (Rs. 119.87
 lakhs) in the Statement of Profit and Loss as required by Accounting
 Standard 28 - Impairment of Assets referred to in subsec- tion (3C) of
 Section 211 of the Act. The Company''s records indicate that had
 management stated the value of building and plant and machinery after
 considering the impairment loss mentioned above, the net loss would
 have increased by Rs.642.04 lakhs and share holders fund would have
 reduced by Rs.642.04 lakhs.
 
 (c) The liability for employee gratuity as on March 31, 2014 has been
 determined on the basis of Payment of gratuity Act, 1972 and the
 liability for leave encashment has been provided on actual basis
 instead of on actuarial basis as per mandatory Accounting standard 15
 Employee Benefits. The effects of non compliance of the Accounting
 standard 15 on the financial statement is not quantifiable
 
 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 matters
 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 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 March 31,2014;
 
 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.
 
 Report on Other Legal and Regulatory Requirements
 
 1.  As required by the Companies (Auditor''s Report) Order, 2003 (the
 Order) issued by the Central Gov- ernment of India in terms of
 sub-section (4A) of section 227 of the Act, we give in the Annexure a
 state-ment on the matters specified in paragraphs 4 and 5 of the Order.
 
 2.  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) except for the matters described in the Basis of Qualified Opinion
 paragraph, in our opinion, the Bal-ance Sheet, Statement of Profit and
 Loss, and Cash Flow Statement comply with the Accounting Standards
 notified under the Companies Act, 1956 read with the General Circular
 15/2013 dated 13 September 2013 of the Ministry of Corporate affairs in
 respect of section 133 of the Companies Act, 2013.
 
 e) on the basis of written representations received from the directors
 as on March 31,2014, and taken on record by the Board of Directors,
 none of the directors is disqualified as on March 31,2014, from being
 appointed as a director in terms of clause (g) of sub-section (1) of
 Section 274 of the Act.
 
 ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT
 
 Re: Restile Ceramics Limited
 
 Referred to in paragraph 8 under Report 0n Other Legal and Regulatory
 Requirements section of our report of even date In our opinion and on
 the basis of such checks as we considered appropriate, and according to
 the infor- mation and explanations given to us, the nature of the
 Company''s business/ activities/ results during the year are such that
 clauses (vi), (xiii), (xiv), (xviii), and (xx) of paragraph 4 of the
 Order are not applicable to the Company. Further, in respect of other
 clauses, on the basis of such checks as we considered appropri- ate, we
 report that
 
 1.  (i) the Company is maintaining records showing particulars
 including quantitative details and situation of fixed assets. The same,
 however, needs to be updated.
 
 (ii) 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.
 
 (iii) the Company has not disposed off any of its fixed assets during
 the year and therefore our com- ment on whether the going concern has
 been affected by such disposal does not arise.
 
 2.  (i) inventories have not been physically verified during the year
 by the management.
 
 (ii) the question of our commenting on procedures of the said physical
 verification of the inventory fol- lowed by the management therefore
 does not arise.
 
 (iii) the Company is maintaining records of its inventories.
 Inventories have not been physically verified during the year by the
 management. 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.
 
 3.  (a) The Company has not granted any loans, secured or unsecured, to
 companies, firms or other par- ties listed in the register maintained
 under section 301 of the Act. Consequently, the provisions of Clauses
 iii (b), iii(c) and iii (d) of the order are not applicable to the
 Company.
 
 (b) The Company has taken interest free, unsecured loans from two
 companies listed in the register maintained under Sec.301 aggregating
 to Rs.240.65 lakhs during the year and the year end balance of such
 loans is Rs.238.15 lakhs. The other terms and conditions of the said
 loan are not prejudicial to the interests of the Company.
 
 4.  There is an 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, payments for expenses and for
 sale of goods and services. 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.
 
 5.  In our opinion and to the best of our knowledge and belief the
 contracts or arrangements referred to in section 301 of the Act which
 need to be entered in the register maintained under the said section
 have been so entered. The transactions made in pursuance of such
 contracts or arrangements have been made at prices which are reasonable
 having regard to the prevailing market prices at the relevant time.
 
 6.  The Company did not have an internal audit system during the
 financial year.
 
 7.  We have broadly reviewed the cost records maintained by the Company
 pursuant to the Companies (Cost Accounting Records) Rules, 2011
 prescribed by the Central Government under Section 209(1)
 
 (d) of the Companies Act, 1956 and are of the opinion that prima facie
 the prescribed 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.
 
 8.
 
 (i) The Company has not been regular in depositing undisputed provident
 fund, employees'' state insurance, 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 31,2014 for a period
 of more than six months from the date they became payable are -
 Employees'' state insurance Rs.3.00 lakhs, Tax collected/deducted at
 source Rs.3 lakhs, Sales Tax 20.88 lakhs, Property tax Rs.2.50 lakhs
 and Professional tax Rs.2.95 lakhs. We are informed that the delays
 were caused by unavoidable circumstances.
 
 (ii) there are no dues of income tax, wealth-tax, service tax, customs
 duty, excise duty and cess which have not been deposited on account of
 any dispute. Sales Tax dues not deposited on account of disputes are as
 under
 
 Name of the   Nature of  Forum where Dispute  Year to    Amount of Tax
 Statute       the dues      is Pending        which the     Demanded 
                                               demand      (Rs.  Lakhs)
                                               relates                 
 
 Sales Tax     APVAT       Before High court   2009-10        12.74
                            Andhra Pradesh
 
 9.  The Company has accumulated losses as at March 31,2014 and has
 incurred cash losses in the finan- cial year ended on that date and in
 the immediately preceding financial year.
 
 10.  As per information and explanation given to us, the bank has
 called upon the Company on February 28, 2014 to pay back the entire
 working capital loan of Rs. 500 lakhs and close the account
 immediately.
 
 11.  The Company has not granted loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 12.  The company does not given any guaranty for loan taken by others.
 
 13.  Based on our audit procedures and as per information and
 explanations given to us we report that the Company has not raised any
 term loans during the year.
 
 14.  In our opinion and according to the information and explanations
 given to us and on an overall exami- nation of the financial statements
 of the Company, funds raised on short-term basis have, prima facie, not
 been used for long-term investment.
 
 15.  The Company has not issued any debentures during the year and
 hence the question of creating a charge in respect thereof does not
 arise. The creation of charge in respect of Deep Discount Bonds issued
 in an earlier year and outstanding is in progress.
 
 16.  According to the information and explanation given to us and based
 on the audit procedures per- formed, we report that no fraud of
 material significance on or by the Company has been noticed or reported
 during the year, nor we have been informed of such an occurrence by the
 management.
 
                                            For M.S.Krishnaswami & Rajan
                                               Chartered Accountants
                                               Firm Regn. No. 01554S
 
 Place: Chennai                                  M.S.Murali-Partner
 Date: May 24, 2014                            Membership No. : 26453
Source : Dion Global Solutions Limited
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