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Hindustan Organic Chemicals Ltd.

BSE: 500449 | NSE: HOCL | Series: NA | ISIN: INE048A01011 | SECTOR: Chemicals

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Hindustan Organic Chemicals is not traded on NSE in the last 30 days

Annual Report

For Year :
2018 2016 2015 2014 2013 2012 2011 2010 2009

Auditor's Report

Report on the Revised Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of M/s. Hindustan Organic Chemicals Limited (“the Company’), which comprise the Balance Sheet as at March 31s, 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 (hereinafter referred to as “standalone Ind AS financial statements”).

Management’s Responsibility for the Revised Standalone 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 IndAS financial statements to 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 accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015.

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 standalone Ind AS 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 standalone Ind AS 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 thereunder.

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 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 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 we have obtained 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 inconformity with the accounting principles generally accepted in India including Ind AS, of the financial position of the Company as at 31s March, 2018, and its financial performance including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Emphasis of Matter

(a) Attention is drawn to Note no. 31 to the standalone IndAS financial statements which state that the Government of India has approved the restructuring plan of the company which includes closure of all the plants at Rasayani unit except the Conc. Nitric Acid/N2O4 Plant which is now handed over to ISRO and VRS to the employees is also provided except those associated with operation of Conc. Nitric Acid / N2O4 plant at Rasayani and the skeletal staff required to implement the proposed restructuring. However, Kochi unit is operational, in view of this, the financial statement has been prepared on Going Concern basis.

(b) The balances of trade payables, loans & advances and other current assets and other debit/credit balances are pending for confirmations and reconciliation (Note no. 36). The effect on the same on the loss is not ascertainable.

(c) Attention is drawn to Note no. 13(c)(iv) to the standalone IndAS financial statements which state that the Company has made provision for penal interest on Government loan, however, no provision has been made for interest on interest as per the sanction terms of the loan. Interest on interest has not been provided from the year 01.04.2001 to 31.03.2018 amounting to Rs.2,41,63 lakhs, accordingly loss to the said extent over the period of years has not been booked.

Other Matter

We did not audit the IndAS financial statements / information of the Kochi unit included in the standalone IndAS financial statements of the Company whose financial statements / information reflecting the total assets of Rs.20,954.81 lakhs (excluding inter-branch balance) as at 31st March, 2018 and total revenue of Rs.22,525.24 lakhs and total comprehensive loss of ‘ (5,031.52) lakhs for the year ended on that date, as considered in the standalone IndAS financial statement. The IndAS financial statement / information of the unit has been audited by the Independent Branch Auditors whose report has been furnished to us and our opinion in so far as it relates to the amounts and disclosures included in respect of this unit is based solely on the report of such Branch Auditor.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. 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 “Order’), we give in the Annexure A, statement of the matters specified in paragraphs 3 and 4 of the Order.

2. As required by the directions and sub-directions issued by the office of the Comptroller & Auditor General of India under section 143(5) of the Act, we give in the Annexure B, a statement on the matters referred to in those directions.

3. 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 report on the accounts of the Branch office of the Company audited under section 143(8) of the Act by the Branch Auditors have been sent to us and have been properly dealt with by us in preparing this report.

d) The Balance Sheet, Statement of Profit and Loss, the Cash Flow Statement and the statement of changes in equity dealt with by this Report are in agreement with the books of accounts of the company.

e) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

f) As per the notification no. G.S.R. 463(E) dated June 05, 2015, the Government companies are exempted from provisions of section 164(2) of the Act. Accordingly we are not required to report whether any directors are disqualified in terms of provisions contained in the said section.

g) 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 C and

h) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule11 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 of pending litigations on it financial position in its financial statements - Refer Note no. 37 to the IndAS financial statements;

ii. The Kochi unit of the Company has entered into long term transmission contract with Gas Authority of India Limited (GAIL) for the supply of Liquefied Natural Gas in the year 2011 for the period of 15 years ending in 2026. Material foreseeable loss on this contract is not quantifiable in current scenario. Other than this, the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company during the year ended March 31, 2018.

4. Based on the observations of the Comptroller and Auditor General of India, additions/revisions have been carried out. We give in the Annexure D, the statements of the said additions/revisions which has been carried out.

Annexure - A to Independent Auditors’ Report

(Referred to in Paragraph 1 of the Independent Auditors’ Report to the Members of even date)

i. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) The fixed assets have been physically been verified by the management at reasonable intervals.

In Kochi unit, verification of the fixed assets was carried out during the year.

In Rasayani unit, the Company carried out Impairment study by an external independent agency and incorporated impairment losses appropriately in the books of account.

(c) The title deeds of immovable properties are held in the name of the Company.

ii. (a) The inventory has been physically verified by the management at reasonable intervals during the year,

(b) The Company has made proper records of inventory. As explained to us, the discrepancies between the physical inventory and the books records noticed on physical verification were not material.

iii. According to the information and explanations given to us, the Company has granted secured loan to its subsidiary - Hindustan Flurocarbons Ltd (HFL) and unsecured advance in the nature of loan to its joint venture subsidiary company - HOC Chematur Ltd. covered in the register maintained under section 189 of the Companies Act, 2013, in respect of which :

(a) The loan to HFL is interest free to the extent of Rs.2744.06 lakhs under BIFR agreement and has varying interest rates of 10.25% to 14.5% on amount of Rs.453.01 lakhs. Both the principal amount and interest on this loan has not been received by the Company as per stipulation.

(b) The advance to HOC-Chematur Ltd. ofRs.1064.46 lakhs is interest free and there is no stipulation as to repayment of principal. The advance has been fully written off against provision made as it is doubtful recovery.

(c) In both the cases, except follow up, the company has not taken any other steps for recovery of dues.

iv. The Company has not entered into any transaction regarding the provisions of section 185 and 186 of the Companies Act, 2013 except for guarantee given by the Holding Company of Rs.603 lakhs for the loans taken by the subsidiary -HFL, from bank. Based on the information and explanation given to us, the terms and condition of this guarantee are not prejudicial to the interest of the Holding Company.

v. According to information and explanations provided to us, the company has not obtained deposit from public as defined according to the provisions of Section 73 to 76 of the Companies Act, 2013 and the Rules framed thereunder.

vi. We have broadly reviewed the books of accounts maintained by the company in pursuance to the rules made by the Central Government for maintenance of cost records under sub-section (1) of section 148 of the Act, for the certain products of the company and are of the opinion that prima facie and prescribed accounts and records have been 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 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, employees’ state insurance, duty of customs, duty of excise, income tax, sales tax, service tax, value added tax, goods and service tax, cess and other material statutory dues, as applicable, with the appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees’ state insurance, duty of customs, duty of excise, income tax, sales tax, service tax, value added tax, goods and service tax, cess and other material statutory dues were in arrears as at March 31st, 2018 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us and based on the records of the company examined by us, there are no dues of provident fond, employees’ state insurance, duty of customs, duty of excise, income tax, sales tax, service tax, value added tax, goods and service tax, cess and other material statutory dues which have not been deposited on account of any disputes other than those shown below:

Rasayani Unit:

Sr. No.

Name of Statute

Nature of Dues

Period to which the amount relates (F.Y.)

Amount of dispute (Rs. In lakhs)

Forum where the dispute is pending

1

Central Excise Act, 1944

Molten Sulphur Classification

1997-98

15.53

Customs, Excise and Service Tax Appellate Tribunal

2

Central Excise Act, 1944

Molten Sulphur Classification

1994-95 to 1996-97

15.53

Customs, Excise and Service Tax Appellate Tribunal

3

Central Excise Act, 1944

Shortage of inputs

1998 to 2001

18.66

Bombay High Court

4

Central Excise Act, 1944

Shortage of inputs

2001-02 to 2002-03

5.85

Bombay High Court

5

Central Excise Act, 1944

ARO Case (Aniline product valuation)

2003-04 to 2006-07

19.29

Customs, Excise and Service Tax Appellate Tribunal

6

Central Excise Act, 1944

N2O4 Exemption

2006-07 to 2007-08

104.63

Customs, Excise and Service Tax Appellate Tribunal

7

Central Excise Act, 1944

Duty clearance on Molten Sulphur

1998-99

5.05

Deputy Commissioner Central Excise

8

Central Excise Act, 1944

Duty clearance on Molten Sulphur

1998-99

2.59

Deputy Commissioner Central Excise

9

Finance Act, 1994

Wrong credit availed

2007-08 to 2010-11

1.44

Assistant Commissioner Central Excise

10

Finance Act, 1994

Cleaning, gardening and Rent-a-cab services

2009-10 to 2011-12

8.88

Deputy Commissioner of Central Excise

11

Finance Act, 1994

Service tax on canteen services

2006-07 to 2010-11

66.96

Commissioner of Central Excise, Custom and Service tax

12

Finance Act, 1994

Capital goods bill of entry wrong address

2013-14 to

2014-15

17.58

Commissioner of Central Excise (Appeals) Mumbai

13

Finance Act, 1994

Credit disallowed

2006-07

9.34

CESTAT

14

Finance Act, 1994

Penalty and interest payment

2013-14 to

2014-15

10.95

Superintendent of Service tax

15

Finance Act, 1994

Molten Sulphur classification

1999

7.62

Commissioner of Central Excise

16

Finance Act, 1994

Shortage of input

13.64

Commissioner of Central Excise

17

Finance Act, 1994

Credit disallowed

2006-07

18.66

Commissioner of Central Excise

18

Finance Act, 1994

Credit disallowed

2015-16

17.80

Joint Commissioner of Central Excise

19

Finance Act, 1994

Works contract services

8.90

Commissioner of Central Excise Appeals

20

Income Tax Act 1961

Penalty under section

271(1)(c)

1998-1999

0.00

Before the Income Tax Appellate Tribunal

21

Income Tax Act 1961

Quantum Appeal

1998-1999

0.00

Before High Court

22

Income Tax Act 1961

Penalty under section 271(1)© R.w.s 263

1998-1999

0.00

Commisioner of Income Tax Appeals, Mumbai

23

Income Tax Act 1961

Penalty under section

271(1)(c)

2001-02

yet to be determined

High Court

24

Income Tax Act 1961

Penalty under section

271(1)(c)

2002-03

4.66

Before the Income Tax Appellate Tribunal

25

Income Tax Act 1961

Quantum Appeal

2002-03

No demand

Before High Court

26

Income Tax Act 1961

Penalty under section

271(1)(c)

2003-04

yet to be determined

Before the Income Tax Appellate Tribunal

27

Income Tax Act 1961

Quantum Appeal

2003-04

0.00

Before High Court

28

Income Tax Act 1961

Disallowance of expenses

2005-06

0.00

29

Income Tax Act 1961

Disallowance of expenses

2006-07

0.00

High Court

30

Income Tax Act 1961

Disallowance of expenses

2005 to 2008

0.00

High Court

31

Income Tax Act 1961

Disallowance of expenses

2008-09

0.00

Dispute pending before the high court

32

Income Tax Act 1961

Disallowance of expenses

2009-10

N.A.

33

Income Tax Act 1961

Disallowance of expenses

2010-11

404.71

Commisioner of Income Tax Appeals, Mumbai

34

Income Tax Act 1961

Disallowance of expenses

2011-12

81.03

Commisioner of Income Tax Appeals, Mumbai

35

Income Tax Act 1961

Disallowance of expenses

2012-13

106.51

Commisioner of Income Tax Appeals, Mumbai

36

Income Tax Act 1961

Disallowance of expenses

2012-13

80.71

Commisioner of Income Tax Appeals, Mumbai

Kochi Unit:

1

Finance Act, 1994

Service tax on Inter unit goods transfer

2003 to 2006

43.36

CESTAT, Bangalore

2

Finance Act, 1994

Tyre re trading charges - Service tax

2011-12

3.17

CESTAT, Bangalore

3

Finance Act, 1994

Service tax on Bus transportation to employees

2011-12

1.10

Commissioner (Appeals), Ernakulam

4

Finance Act, 1994

Tyre re trading charges - Service tax

2012-13

10.96

Commissioner (Appeals), Ernakulam

5

Finance Act, 1994

Disallowance of Cenvat Credit

2006 to 2013

83.32

CESTAT, Bangalore

6

ESI Corporation

Payment of ESI contribution during the period from 01.04.1992 to 31.10.1992

2004

2.17

ESI Court, Ernakulam

7

Central Sales Tax Act 1956

Levy of Interest

2005-06

155.23

Tribunal, Dept of Commercial Taxes, Ernakulam

8

KVAT Act 2003

Levy of Interest

2005-06

152.63

Tribunal, Dept of Commercial Taxes, Ernakulam

9

Central Sales Tax Act 1956

Disallowance of Input tax credit

2012-13

73.36

Deputy Commissioner (Appeals), Ernakulam

10

KVAT Act 2003

Demand u/s 25(1)

2011-12

714.58

Commissioner of Commercial Taxes, Thiruvananthpuram

viii. In our opinion and according to the information and explanations given to us, in absence of adequacy of funds the company has made default in repayment of dues to Government loan as per stipulation. Details of default made by the company are as follows :

(Rs. In Lakhs)

S.N.

Amount of default as at 31st March 2018

Period of Default

1

61.60

2002-03

2

152.60

2003-04

3

212.60

2004-05

4

268.50

2005-06

5

328.50

2006-07

6

388.50

2007-08

7

448.50

2008-09

8

804.50

2009-10

9

749.10

2010-11

10

749.10

2011-12

11

687.50

2012-13

12

828.50

2013-14

13

768.50

2014-15

14

412.00

2015-16

15

844.20

2016-17

16

1336.40

2017-18

Total

8980.60

ix. The company has not raised any money via initial public offer or by way of further public offer or term loans and hence reporting under para 3(ix) of the Order is not applicable.

x. According to the information and explanations given to us, we have neither come across any instance of material fraud on or by 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 or provided managerial remuneration during the year under audit in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act.

xii. In our opinion, the company is not a Nidhi Company. Accordingly, paragraph 3(xii) of the Order is not applicable.

xiii. According to the information and explanations provided to us, and based on our examination of the records of the Company, all transactions with the related parties are in compliance with Section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the standalone Ind AS financial statements as required by the applicable Indian accounting standards.

xiv. During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly paid convertible debentures and hence reporting under clause 3 (xiv) of the Order is not applicable to the Company.

xv. According to the information and explanations provided to us, and based on our examination of the records of the Company, the company has not entered into any non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.

xvi. The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

Annexure B to the Independent Auditors Report

To the Members of Hindustan Organic Chemicals Limited for the year ended 31st March, 2018 (Referred to in paragraph 2 under Report on Other Legal and Regulatory Requirements)

As required by the directions and sub-directions issued by the Office of the Comptroller and Auditor General of India under Section 143(5) of the Act, we give below our comments on the matter referred therein

1. Whether the Company has clear title/lease deeds for freehold and leasehold respectively? If not please state the area of freehold & leasehold land for which title/lease deeds are not available?

Kochi unit :

Based on the information and explanation given to us we report that the unit has clear title deeds for freehold land. The unit does not have any leasehold land.

Rasayani unit:

Based on the information and explanation given to us we report that the unit has clear title/lease deeds for freehold/ leasehold land.

2. Please report whether there are any cases of waiver/ write off of debts/loans/interest etc., if yes, the reasons there for and the amount involved.

Kochi unit :

According to the information and explanation given to us, there are no write offs of debts in the company.

Rasayani unit :

According to the information and explanation given to us, there are no write offs of debts in the company.

3. Whether proper records are maintained for inventories lying with third parties & assets received as gift from Govt. or other authorities?

Kochi unit :

The unit does not maintain inventory at third party locations. The unit has not received any gift from Government or other authorities.

Rasayani unit :

The unit does not maintain inventory at third party locations. The unit has not received any gift from Government or other authorities.

4. State the area of land under encroachment and briefly explain the steps taken by the Company to remove the encroachment.

Rasayani unit:

As informed to us, in Rasayani unit, land measuring 39.63 acres (approx.) is under encroachment as per the report of the consultant appointed in 2015 and there is public road constructed approximating 10.776 acres. In the financial statements, the land at Rasayani to the extent of 39.63 acres have not been revalued total amounting to Rs.5548.20 lakhs.

The company has during the year, initiated Survey proceedings of land by Government of Maharashtra and the survey of entire land is in progress. The impact in the financial statements on account of the above, if any, would be subject to the final encroachment determined on the completion of the survey.

Annexure - C to Independent Auditors’ Report

To the Members of Hindustan Organic Chemicals Limited for the year ended 31st March, 2018

(Referred to in Paragraph 3(f) of the Independent Auditors’ Report of even date)

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

1. We have audited the internal financial controls over financial reporting of Hindustan Organic Chemicals Limited (‘the Company’) as of March 31st, 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

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 Companies Act, 2013.

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, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, 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

(a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(b) 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

(c) 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. According to the information and explanation given to us, the Company has not established its internal financial control over financial reporting on criteria based on or 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. Because of this reason, we are unable to obtain sufficient appropriate audit evidence to provide a basis for our opinion whether the Company had adequate internal financial controls over financial reporting and whether such internal financial controls were operating effectively as at March 31, 2018.

For M B Agrawal & Co.

Chartered Accountants

FRN No: 100137W

Sd/-

Harshal Agrawal

Place: Mumbai Partner

Date: 27th August, 2018 Membership No: 109438