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ITD Cementation India | Auditor's Report > Construction & Contracting - Civil > Auditor's Report from ITD Cementation India - BSE: 509496, NSE: ITDCEM
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ITD Cementation India

BSE: 509496|NSE: ITDCEM|ISIN: INE686A01026|SECTOR: Construction & Contracting - Civil
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Auditor's Report (ITD Cementation India) Year End : Dec '16

To

The Members of

ITD Cementation India Limited

Report on the Standalone Financial Statements

1. We have audited the accompanying standalone financial statements of ITD Cementation India Limited (the Company), which comprise the Balance Sheet as at 31 December 2016, the Statement of Profit and Loss, 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 Standalone Financial

Statements

2. 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 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 (as amended). This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act; safeguarding the assets of the Company; 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.

Auditor''s Responsibility

3. Our responsibility is to express an opinion on these standalone financial statements based on our audit.

4. 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.

5. 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 standalone financial statements are free from material misstatement.

6. 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 financial controls 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. 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.

7. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

8. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone 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 31 December 2016, its profit and its cash flows for the year ended on that date.

Emphasis of Matter

9. We draw attention to Note 38 to the standalone financial statements which describes the uncertainty related to recoverability of long-term trade receivables and unbilled work in progress aggregating to Rs.2,863.37 lakhs (31 December 2015: Rs.2,863.37 lakhs) and Rs.8,677.57 lakhs (31 December 2015: Rs.8,677.57 lakhs) respectively, outstanding as at 31 December 2016, representing various claims recognized during the earlier period based on the terms and conditions implicit in the contracts. These claims being technical in nature and being subject matter of litigation, the Company has assessed the recoverability of these claims based on legal opinion from an independent counsel. On the basis of such assessment, management is of the opinion that the claims are tenable and would be realized in full and accordingly no adjustments have been made in the audited standalone financial statements. Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

10. As required by the Companies (Auditor''s Report) Order, 2016 (the Order) issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the Annexure I a statement on the matters specified in paragraphs 3 and 4 of the Order.

11. 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 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 it appears from our examination of those books;

c. the standalone financial statements dealt with by this report are in agreement with the books of account;

d. in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended);

e. the matter described in paragraph 9 under the Emphasis of Matter, in our opinion, may have an adverse effect on the functioning of the Company;

f. on the basis of the written representations received from the directors as on 31 December 2016 and taken on record by the Board of Directors, none of the directors is disqualified as on 31 December 2016 from being appointed as a director in terms of Section 164(2) of the Act;

g. we have also audited the internal financial controls over financial reporting (IFCOFR) of the Company as of 31 December 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date and our report dated 21 February 2017 as per Annexure II expressed an unmodified opinion.

h. with respect to the other 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 explanations given to us:

i. as detailed in Note 31 (d) to (g) and 38 to the standalone financial statements, the Company has disclosed the impact of pending litigations on its standalone financial position;

ii. the Company has made provisions as required under applicable law or accounting standards, for foreseeable losses, if any, on long-term contracts. The Company did not have any derivative contracts.

iii. there were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

Annexure I to the Independent Auditor''s Report of even date to the members of ITD Cementation India Limited, on the standalone financial statements for the year ended 31 December 2016

Annexure I

Based on the audit procedures performed for the purpose of reporting a true and fair view on the standalone financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, we report that:

(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 verified by the management during the year and no material discrepancies were noticed on such verification. In our opinion, the frequency of verification of the fixed assets is reasonable having regard to the size of the Company and the nature of its assets.

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

(ii) In our opinion, the management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies between physical inventory and book records were noticed on physical verification.

(iii) The Company has not granted any loan, secured or unsecured to companies, firms, Limited Liability Partnerships (LLPs) or other parties covered in the register maintained under Section 189 of the Act. Accordingly, the provisions of clauses 3(iii)(a), 3(iii)(b) and 3(iii)(c) of the Order are not applicable.

(iv) In our opinion, the Company has complied with the provisions of sections 185 and 186 of the Act in respect of loans, investments, guarantees, and security.

(v) In our opinion, the Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under subsection (1) of Section 148 of the Act in respect of Company''s products/services and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii) (a) Undisputed statutory dues including provident fund,

employees'' state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues, as applicable, have generally been regularly deposited to the appropriate authorities, though there has been a slight delay in a few cases. Further, no undisputed amounts payable in respect thereof were outstanding at the year-end for a period of more than six months from the date they became payable.

(b) There are no dues in respect of service tax and duty of customs that have not been deposited with the appropriate authorities on account of any dispute.

The dues outstanding in respect of income-tax, sales-tax, duty of excise and value added tax on account of any dispute, are as follows:

Name of statue

Nature of disputes

Amount (Rs. in lakhs)

Amount Paid Under Protest (Rs. in lakhs)

Period to which the amount relates

Forum where dispute is pending

Sales Tax Act/Works Contract Tax Act

Sales Tax

31.97

-

2004-05

Deputy Commissioner of Commercial Taxes, Bihar

Sales Tax Act/Works Contract Tax Act

Value Added Tax

412.02

-

2011-12 and 2012-13

Additional Commercial Tax Officer, Goa

Sales Tax Act/Works Contract Tax Act

Value Added Tax

790.65

72.06

2009-10, 2010-11 and 2011-12

Joint Commissioner of Commercial Taxes, Rajkot

Sales Tax Act/Works Contract Tax Act

Value Added Tax

478.17

70.00

2012-13

The West Bengal Taxation Tribunal, Salt Lake Kolkata

Sales Tax Act/Works Contract Tax Act

Sales Tax

16.60

-

1994-95

Revision Board (Tribunal) Kolkata

Sales Tax Act/Works Contract Tax Act

Value Added Tax

10.38

2.70

2005-06

The Joint Commissioner, Sales Tax, Mumbai

Sales Tax Act/Works Contract Tax Act

Sales Tax/ Value Added Tax

100.29

25.07

2006-07, 2007-08, 2008-09 and 2009-10

Appellate Deputy Commissioner of Commercial Taxes, Tamil Nadu

Sales Tax Act/Works Contract Tax Act

Value Added Tax

235.53

-

2012-13

Deputy Commissioner, Uttar Pradesh

Sales Tax Act/Works Contract Tax Act

Sales Tax/ Value Added Tax

714.58

2004-05, 2006-07, 2007-08, 2010-11 and 2011-12

Appellate and Revisional Board, West Bengal

Sales Tax Act/Works Contract Tax Act

Value Added Tax

44.09

-

2008-09

West Bengal Taxation Tribunal

Sales Tax Act/Works Contract Tax Act

Value Added Tax

307.59

-

2013-14

Senior Joint Commissioner Appeals, West Bengal

Sales Tax Act/Works Contract Tax Act

Sales Tax

0.15

-

1999-00

Joint Commissioner of Commercial Taxes, Bihar

Sales Tax Act/Works Contract Tax Act

Sales Tax

0.19

-

2005-06

Assistant Commissioner, Rajasthan

Sales Tax Act/Works Contract Tax Act

Sales Tax

0.68

0.34

2003-04

Assistant Commissioner of Sales Tax, Orissa

Sales Tax Act/Works Contract Tax Act

Sales Tax

4.29

-

1997-98 and 2007-08

Deputy Commissioner of Commercial Taxes, Uttar Pradesh

Central Excise Act,1944

Excise Duty

51.70

-

May 1998 to January 1999

Commissioner of Central Excise

Income Tax Act, 1961

Income Tax

210.75

-

A.Y. 2004-05

High Court, Mumbai

Income Tax Act, 1961

Income Tax

161.30

-

A.Y. 2012-13 and A.Y. 2013-14

Commissioner of Income Tax (Appeals), Mumbai

Income Tax Act, 1961

Income Tax

153.64

-

A.Y. 2013-14

Commissioner of Income Tax (Appeals), Kolkata

Income Tax Act, 1961

Income Tax

286.84

-

A.Y. 2011-12 & A.Y. 2012-13

Income Tax Appellate Tribunal, Kolkata

Income Tax Act, 1961

Income Tax

206.69

-

A.Y. 2010-11 & A.Y. 2011-12

Income Tax Appellate Tribunal, Mumbai

Income Tax Act, 1961

Income Tax

0.63

-

A.Y. 2010-11

Assessing Officer, Mumbai

(viii) The Company has not defaulted in repayment of loans or borrowings to any financial institution or a bank or government during the year. The Company did not have any outstanding debentures during the year.

(ix) The Company did not raise moneys by way of initial public offer or further public offer (including debt instruments). In our opinion, the term loans were applied for the purpose for which the loans were obtained.

(x) No fraud by the Company or on the company by its officers or employees has been noticed or reported during the period covered by our audit.

(xi) In our opinion, managerial remuneration has been paid in accordance with the requisite approvals mandated by the provisions of section 197 of the Act read with Schedule V to the Act.

(xii) In our opinion, the Company is not a Nidhi Company. Accordingly, provisions of clause 3(xii) of the Order are not applicable.

(xiii) In our opinion all transactions with the related parties are in compliance with sections 177 and 188 of Act, where applicable, and the requisite details have been disclosed in the financial statements etc., as required by the applicable accounting standards.

(xiv) During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures.

(xv) In our opinion, the Company has not entered into any noncash transactions with directors or persons connected with them covered under Section 192 of the Act.

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

Annexure II

Independent Auditor''s report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (the Act)

1. In conjunction with our audit of the standalone financial statements of ITD Cementation India Limited (the Company) as at and for the year ended 31 December 2016, we have audited the internal financial controls over financial reporting (IFCOFR) of the company as at that date.

Management''s Responsibility for Internal Financial Controls

2. The Company''s Board of Directors 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 (the Guidance Note) 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 the company''s 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 Act.

Auditors'' Responsibility

3. Our responsibility is to express an opinion on the Company''s IFCOFR based on our audit. We conducted our audit in accordance with the Standards on Auditing, issued by the ICAI and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of IFCOFR, and Guidance Note 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 IFCOFR were 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 IFCOFR and their operating effectiveness. Our audit of IFCOFR included obtaining an understanding of IFCOFR, 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 IFCOFR.

Meaning of Internal Financial Controls over Financial Reporting

6. A company''s IFCOFR 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 IFCOFR includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) 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 (3) 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 IFCOFR, 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 IFCOFR to future periods are subject to the risk that IFCOFR may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

8. In our opinion, the Company has, in all material respects, adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 December 2016, 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 issued by ICAI.

For Walker Chandiok & Co LLP

Chartered Accountants

Firm''s Registration No.: 001076N/N500013

per Sudhir N. Pillai

Place : Mumbai Partner

Date : 21 February 2017 Membership No.: 105782

Source : Dion Global Solutions Limited
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