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Lancor Holdings Ltd.

BSE: 509048 | NSE: | Series: NA | ISIN: INE572G01025 | SECTOR: Construction & Contracting - Housing

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Lancor Holdings is not listed on NSE

Annual Report

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

Auditor's Report

TO THE MEMBERS OF LANCOR HOLDINGS LIMITED

We have audited the accompanying standalone financial statements of Lancor Holdings Limited (the Company), which comprise the Balance Sheet as at March 31, 2018, 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 “the standalone financial statements”).

Management''s Responsibility for the 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 financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and statement of 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 relevant rule of the Companies (Accounts) Rules issued there in. 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.

Auditor''s Responsibility

Our responsibility is to express an opinion on these standalone 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 misstatement.

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 control 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.

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

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, including the Ind AS, of the state of affairs of the Company as at March 31, 2018, and its profit including (other comprehensive income), its cash flows and the changes in equity for the year ended on that date.

The comparative financial information of the Company as on April 1, 2016 and March 31, 2017 prepared in accordance with the Ind AS included in these financial statements have been audited by the predecessor auditor. The report of the predecessor auditor on this comparative financial information dated May 28, 2016 and May 29, 2017 expressed an unmodified conclusion.

Emphasis of Matter

We draw your attention to,

a) Note no. 4.12 (b) to the audited standalone financial statement relating to circumstances which have been considered for determining the period for capitalization of borrowing cost.

b) Note no. 4.02 (a) regarding pending litigation to one of the Commercial Property accounted as investment property having carrying value of Rs 3,424.09 lakhs.

Our report is not qualified in respect of the above matters.

Report on Other Legal and Regulatory Requirements

1. 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 a statement on the matters specified in paragraph 3 and 4 of the said Order, to the extent applicable.

2. 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 Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement and statement of changes in equity 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 Indian Accounting Standards specified under Section 133 of the Act, read with relevant rules issued there under.

(e) On the basis of the written representations received from the directors as on March 31, 2018 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2018 from being appointed as a director in terms of Section 164(2) of the Act.

(f) With respect to adequacy of internal financial controls with reference to financial statements of the Company and operating effectiveness of such controls, we give our separate report in “Annexure B”.

(g) 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. The Company has disclosed the impact of pending litigation on its financial position in its financial statement. Refer note number 4.02 to the financial statement.

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

iii. There has been no delay in transferring the amounts, required to be transferred, to the Investor education and Protection Fund by the Company.

Referred to in Paragraph 3 of our report of even date

i. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of property, plant & equipment and investment property.

(b) As per the plan and programme of the management property, plant & equipment, investment property have been physically verified. The programme of physical verification of property, plant & equipment, investment property in our opinion is considered reasonable having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such verification.

(c) The title deeds of the Immovable Properties classified under the head property, plant & equipment and investment property are held in the name of the Company. However, in one case, with respect to a commercial property which is classified under investment property having gross block value Rs.3,626.02 lakhs & net block value Rs. 3,424.09 lakhs as on March 31, 2018, the dispute with the landowner relating to the land on which the property is situated, the single bench of the Hon’ble High Court of Madras has set aside the invalidation of the sale deed. Subsequently, the landowners have filed an appeal before the division bench of Hon’ble High court of Madras and the matter is pending. We refer to the note no. 4.02 (a) regarding this matter.

ii. The inventories have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable and adequate in relation to the size of the Company and to nature of its business. We have been informed that no material discrepancies were noticed on verification between the physical stocks and the book of accounts.

iii. The Company has granted unsecured loans to one firm covered in the register maintained under Section 189 of the Companies Act, 2013.

a) In our opinion and according to the information and explanation provided to us, the terms and conditions of on which the loan has been granted are not prima facie prejudicial to the interest of the Company.

b) In the case of the firm, as per the information and explanation given to us, no repayment schedule has been specified and accordingly the regularity in repayment of principal and interest amount wherever applicable does not arise.

c) As stated in sub clause (b), as no repayment schedule has been specified, the question of total amount over due for more than 90 days and reasonable step taken for recovery in this regard does not arise.

iv. In our opinion and according to the information and explanation provided to us, in respect to loans, investments, guarantees and securities, provisions of section 185 and 186 of the Companies Act, 2013 has been complied with.

v. In our opinion and according to the information and explanation given to us, the Company has not accepted deposits from the public and therefore, the provisions contained in sections 73 to 76 or any other relevant provisions of the Act and Rules framed there under are not applicable to the Company. We have been informed that no order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

vi. We have broadly reviewed the books of account and records maintained by the Company relating to construction and development activity, pursuant to the Companies (Cost Records and Audit) Rules, 2014 made by the Central Government for the maintenance of cost record under section 148(1) of the Companies Act, 2013 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determining whether they are accurate or complete.

vii. a) Based on the record produced to us, the Company has generally been regular in depositing with the appropriate authorities undisputed dues, including provident fund, employees’ state insurance, income-tax, sales tax, service tax, goods and service tax, duty of customs, cess and other material statutory dues applicable to it. According to the information and explanations given to us, no undisputed amount payable in respect of outstanding statutory dues were in arrears as at March 31, 2018 for a period of more than six months from the date they became payable.

b) According to the information and explanation given to us, there are no dues of income tax, goods and of service tax, sales tax, duty of customs, duty of excise, value added tax or cess have not been deposited on account dispute except for service tax, interest on service tax and penalty as on March 31, 2018 which has been provided below.

S.No.

Name of the Statute

Nature of Dues

Period to which the amount relates

Forum where the dispute is pending

Amount (Rs.)

1

Finance Act, 1994

Penalty and Interest on Service Tax

February 2009 to June 2009

Customs, Excise and Service tax Appellate Tribunal

Not Yet Determined

2

Finance Act, 1994

Service Tax

October 2007 to August 2009

Customs, Excise and Service tax Appellate Tribunal

1,56,10,334 (Note -1)

Note - 1: The amount is excluding interest and penalty

viii. According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has not defaulted in repayment of dues to any financial institution or bank. The Company has not received any loan from Government and also has not issued any debenture. Accordingly reporting relating to default in repayment of dues to Government and debenture holders does not arise.

ix. In our opinion and according to the information and explanations given to us, the Company has not raised any money by way of initial public offer or further public offer (including debt instruments). The term loans obtained have been applied for the purpose for which the loans were obtained.

x. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, no fraud by the Company or any fraud on the Company by its officers or employees has been noticed or reported during the year, nor have we been informed of such case by the management.

xi. According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has not paid any managerial remuneration. Accordingly the reporting regarding compliance with the provision of section 197 read with schedule V of the Companies Act 2013 does not arise.

xii. The Company is not a Nidhi Company. Therefore, the provisions of paragraph 3 (xii) of the Order are not applicable to the Company.

xiii. According to the information and explanation provided to us and in our opinion, the related party transactions are entered in to by the Company are in compliance with section 177 and section 188 of the Companies Act, 2013 and the same has been disclosed in the financial statements, as required by the applicable Indian accounting standards.

xiv. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly paid convertible debentures during the year. Accordingly the paragraph 3 (xiv) of the Order are not applicable to the Company.

xv. According to the information and explanation provided to us and based on the examination of the books of account, the Company has not entered in to any non- cash transaction with the director or person connected with him. Accordingly the paragraph 3 (xv) of the Order is not applicable to the Company.

xvi. As per the information and explanation provided to us, the Company is not required to register u/s 45-IA of the Reserve Bank of India Act, 1934.

Annexure ''B'' to the Independent Auditor''s Report

Referred to paragraph 2(f) under the heading ‘Report on other Legal and Regulatory Requirements’ of our report on even date to the financial statements of the Company for the year ended March 31, 2018

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

We have audited the internal financial controls with reference to financial statements of Lancor Holdings Limited (the “Company”) as of March 31, 2018 in conjunction with our audit of the standalone financial statements of the company for the year ended on that date.

Management''s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining internal financial controls based on internal control with reference to financial statements 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 its business, including adherence to Company’s policies, the safe guarding 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.

Auditor''s Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls with reference to financial statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (“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. Those standards and 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 with reference to financial statements were established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system with reference to financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements included obtaining an understanding of internal financial controls with reference to financial statements, 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 judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we obtained is sufficient and appropriate to provide a basis for our opinion on the company’s internal financial control with reference to financial statements.

Meaning of Internal Financial Controls with reference to Financial Statements

A Company''s internal financial control with reference to financial statements 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 with reference to financial statements 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 with reference to Financial Statements

Because of the inherent limitations of internal financial controls with reference to financial statements, 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 control with reference to financial statements to future periods are subject to the risk that the internal financial control with reference to financial statements may become inadequate because of changes in conditions or that the degree of compliance with policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material aspects, an adequate internal financial controls system with reference to financial statements and such internal financial controls with reference to financial statements were operating effectively as at March 31, 2018, based on the internal control with reference to financial statements criteria established by the Company considering the essential components of the 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.

For Nayan Parikh &

Co. Chartered Accountants

Firm Registration No.107023W

Sd/-

K.Y. Narayana

Chennai Partner

Dated: May 14, 2018 Membership No. 060639