Report on the Financial Statements
We have audited the accompanying financial statements of RESTILE
CERAMICS LIMITED (the Company), which comprise the Balance Sheet as
at March 31,2013, 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.
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 referred to in sub-section (3C) of section 211
of the Companies Act, 1956 (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.
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. 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
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
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 impairment in value of building
(Rs.522.17lakhs) andin 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 subsection (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
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 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 31,2013;
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 of Matter
We draw attention to note 27.7 of the notes to the Financial Statements
regarding the financial statements having been prepared on going
concern basis although the company has suffered recurring losses.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2003 (the
Order) issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Act, we give in the Annexure a
statement 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
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
c) the Balance Sheet, Statement of Profit and Loss, and Cash Flow
Statement dealt with by this Report are in agreement with the books of1
d) expect for the matter described in the Basis of Qualified Opinion
paragraph, in our opinion, the Balance Sheet, Statement of Profit and
Loss, and Cash Flow Statement comply with the Accounting Standards
referred to in sub-section (3C) of Section 211 of theAct.
e) on the basis of written representations received from the directors
as on March 31, 2013, and taken on record by the Board of Directors,
none of the directors are disqualified as on March 31,2013, from being
appointed as a director in terms of cfause (g) of sub- section (1) of
Section 274 of the Act.
f) Since the Central Government has not issued any notification as to
the rate at which the cess is to be paid under section 441A of the
Companies Act, 1956 nor has it issued any Rules under the said section,
prescribing the manner in which such cess is to be paid, no cess is due
and payable by the Company. ''
Annexure referred to in paragraph 1 of ourReport of even date to the
members of RESTILE CERAMICS LIMITED on the financial statements of the
company for the year ended 31 March, 2013.
On the basis of such checks as we considered appropriate and according
to the information and explanation given to us during the course of our
audit, 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 substantial part of its fixed
assets during the year.
2. (i) inventories otherthan stores and spares have been physically
verified during the year by the management,
(ii) the procedures of the said physical verification of the inventory
followed by the management are reasonable and adequate in relation to
the size of the company and . the nature of its business.
(iii) the company is maintaining records of its inventories and
discrepancies noticed on said physical verification at the end of the
year have been dealt with by adopting the stocks as verified. .
3. The company has not granted any loans, secured or unsecured, to
companies, firms or other parties 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
4. The company had taken a interest free, unsecured loan of Rs.6 Lakhs
from a company listed in the register maintained under Sec.301 which
was also repaid. The other terms and conditions of the said loan are
not prejudicial to the interests of the Company.
5. 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.
6. 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.
7. The company has not accepted any deposits from the public to which
the directives issued by the Reserve Bank of India and provisions of
section 58A and 58AA or any other relevant provisions of the Act and
the Companies (Acceptance of Deposit) Rules, 1975 apply.
8. Internal audit has been carried out by an independent Chartered
Accountant. We are informed, that the Internal Audit function is in the
process of being strengthened to, include operations audit as well. ,
9. 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.
10. (i) According to the records of the company undisputed statutory
dues towards investor education and protection fund, wealth tax,
customs duty, and other material statutory dues as applicable have
generally been deposited with the appropriate authorities.
Delays were, however, noticed 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 31,2013 for a period of
more than six months fromthe date they became payable are - employees''
state insurance Rs.5.11 lakhs sales tax Rs.27.00 lakhs, tax
collected/deducted at source Rs.3.69 lakhs; property tax Rs.2.49 lakhs
(paid in April''2013) and professional tax Rs.1.43 lakhs . We are
informed that the delays were caused by unavoidable circumstances.
11. The company has accumulated losses as at March 31,2013 and has
incurred cash losses in the financial year ended on that date and in
the immediately preceding financial year.
12. Based on our audit procedures, we are of the opinion that the
company has not defaulted in repayment of dues to any financial
institution, bank or debenture holders during the year.
13 The company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
14. The provisions of any special statute applicable to a chit fund,
nidhi or mutual benefit fund / societies are not applicable to the
15. The company is not dealing or trading in shares, securities,
debentures and other investments. Accordingly the provisions of clause
(xiv) of the order are not applicable to the company.
16. No guarantees have been given during the year by the company, for
loans taken by others from banks or financial institutions.
17. Based on audit procedures, we report that the company has not
raised any term loans during the year.
18. On an overall examination of the financial statements of the
company, funds raised on short- term basis have, prima facie, not been
used for long-term investment. -
19. Based on our.audit procedures, we report that the company has not
made any preferential allotment of shares during the year to any party.
20. 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
man earlier year and outstanding is in progress.
21. The company has not raised any money by public issues during the
22. Based on the audit procedures performed, 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
Membership No.: 26453
Date: May 30,2013